Black Box Corporation DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Black Box Corporation
(Name of Registrant as Specified In Its Charter)
N/A
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BLACK BOX
CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
Notice of
Annual Meeting of Stockholders
to be held on October 4, 2007
To the Stockholders of
Black Box Corporation:
The Annual Meeting of Stockholders (the Annual
Meeting) of Black Box Corporation (the
Company) will be held at the offices of Buchanan
Ingersoll & Rooney PC, One Oxford Centre, 301 Grant
Street, 20th Floor, Pittsburgh, Pennsylvania 15219 on
Thursday, October 4, 2007, at 12:30 p.m. Eastern
Daylight Time, to consider and act upon the following matters:
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1.
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The election of five (5) members of the Board of
Directors; and
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2.
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Ratification of the appointment of BDO Seidman, LLP as the
independent registered public accounting firm of the Company for
the fiscal year ending March 31, 2008.
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Stockholders also will be asked to consider such other matters
as may properly come before the Annual Meeting. The Board of
Directors has established the close of business on Monday,
August 13, 2007 as the record date for the determination of
the stockholders entitled to notice of and to vote at the Annual
Meeting.
IT IS REQUESTED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, THAT YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Michael McAndrew, Secretary
August 13, 2007
TABLE OF CONTENTS
BLACK BOX
CORPORATION
1000 Park Drive
Lawrence, Pennsylvania 15055
PROXY
STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
October 4, 2007
This proxy statement is being furnished to the holders of common
stock, par value $.001 per share (Common Stock), of
Black Box Corporation, a Delaware corporation (the
Company), in connection with the solicitation by our
Board of Directors (Board of Directors or
Board) of proxies to be voted at the Annual Meeting
of Stockholders (the Annual Meeting) scheduled to be
held on Thursday, October 4, 2007, at
12:30 p.m. Eastern Daylight Time, at the offices
of Buchanan Ingersoll & Rooney PC, One Oxford Centre,
301 Grant Street, 20th Floor, Pittsburgh, Pennsylvania
15219, or at any adjournment thereof. This proxy statement and
form of proxy were first mailed to stockholders on or about
August 17, 2007. A copy of our Annual Report on Form 10-K
(2007 Form 10-K) for the fiscal year ended
March 31, 2007 (Fiscal 2007) is being furnished
with this proxy statement.
Only holders of Common Stock of record as of the close of
business on Monday, August 13, 2007 are entitled to notice
of and to vote at the Annual Meeting and at any adjournment
thereof. On that date, 17,527,227 shares of Common Stock,
each entitled to one vote per share, were outstanding.
All shares of Common Stock represented by valid proxies received
by the Secretary of the Company prior to the Annual Meeting will
be voted as specified in the form of proxy. If no specification
is made, the shares will be voted FOR each of the nominees named
below for election as director and FOR ratification of the
appointment of BDO Seidman, LLP as our independent registered
public accounting firm for the fiscal year ending March 31,
2008. Unless otherwise indicated by the stockholder, the proxy
card also confers discretionary authority on the Board-appointed
proxies to vote the shares represented by the proxy on any
matter that is properly presented for action at the Annual
Meeting of which management had no knowledge prior to the
mailing of this proxy statement. A stockholder giving a proxy
has the power to revoke it at any time prior to its exercise by
delivering to the Secretary of the Company a written revocation
or a duly executed proxy bearing a later date (although no
revocation shall be effective until actual notice thereof has
been given to the Secretary of the Company) or by attending the
meeting and voting his or her shares in person.
Under our Second Restated Certificate of Incorporation, as
amended (Certificate of Incorporation), Amended and
Restated By-laws (By-laws) and applicable state law,
abstentions and broker non-votes (which arise from proxies
delivered by brokers and others, where the record holder has not
received direction on voting and does not have discretionary
authority to vote on one or more matters) are each included in
the determination of the number of shares present for purposes
of determining a quorum. At the Annual Meeting, directors will
be elected by a plurality vote and all other matters will be
decided by the affirmative vote of a majority of the votes cast.
Abstentions and broker non-votes are not votes cast and will not
be included in calculating the number of votes necessary for
approval of the matter.
Our Board of Directors unanimously recommends a vote FOR each
of the nominees named below for election as director and FOR
ratification of the appointment of BDO Seidman, LLP as our
independent registered public accounting firm for the fiscal
year ending March 31, 2008.
ANNUAL
MEETING MATTERS
Proposal 1 Election
of Directors
Our By-laws provide that the number of directors constituting
our entire Board shall be nine (9), or such other number as
shall be fixed by the stockholders or by our Board. At present,
our Board has fixed the number of directors at five
(5) members. All directors are independent under the
listing standards of The Nasdaq Stock Market
(Nasdaq).
All of our directors stand for election each year. Our Board has
nominated five (5) persons for election to the position of
director at the Annual Meeting. Therefore, five
(5) directors are to be elected at the Annual Meeting to
hold office for a term of one (1) year and until their
respective successors are elected and qualified, subject to the
right of our stockholders to remove any director as provided in
our By-laws. Stockholders may fill any vacancy in the office of
a director. In the absence of a stockholder vote, a vacancy in
the office of a director may be filled by the remaining
directors then in office, even if less than a quorum, or by the
sole remaining director. Any director elected by our Board to
fill a vacancy will serve until his or her successor is elected
and qualified or until his or her earlier death, resignation or
removal. If our Board increases the number of directors, it may
fill any vacancy so created.
The holders of Common Stock have one vote for each share owned
as of the record date in the election of directors. The five
(5) nominees receiving the greatest number of affirmative
votes will be elected as directors for terms expiring in 2008.
The persons named as proxies on the enclosed proxy card were
selected by our Board and have advised our Board that, unless
authority is withheld, they intend to vote the shares
represented by them at the Annual Meeting FOR the election of
the following nominees to our Board of Directors: William F.
Andrews, Richard L. Crouch, Thomas W. Golonski, Thomas G. Greig
and Edward A. Nicholson, Ph.D. All of the nominees
presently serve as directors on our Board.
Our Board knows of no reason why any nominee for director would
be unable to serve as director. If, at the time of the Annual
Meeting, any of the named nominees is unable or unwilling to
serve as a director, the persons named as proxies intend to vote
for such substitute as may be nominated by our Board of
Directors.
The following sets forth certain information concerning nominees
for election to our Board of Directors at the Annual Meeting:
William F. Andrews, 75, was elected as a director
on May 18, 1992. Mr. Andrews currently is Chairman of
Corrections Corporation of America (private prisons), Chairman
of Katy Industries, Inc. (diversified manufacturing company) and
Chairman of SVP Holdings Limited (Singer sewing machines). He
was Chairman of Scovill Fasteners, Inc. and Northwestern Steel
and Wire from 1996 to 2001. He has been a principal with
Kohlberg & Co., a private investment company, since
1995. He is also a director of Corrections Corporation, Katy
Industries, OCharleys, Inc. and Trex Company, Inc.,
all publicly-held companies.
Richard L. Crouch, 60, was elected as a director
on August 10, 2004. Mr. Crouch was a General Partner
with the firm of PricewaterhouseCoopers LLP from 1979 to 2004,
having served as an Audit Partner principally assigned to public
companies. He served in various capacities for the firm,
including service as a regional accounting, auditing and
Securities and Exchange Commission (SEC) services
consultant. He retired from the firm on July 2, 2004.
Thomas W. Golonski, 64, was selected to be a
director on February 11, 2003 and was elected by our
stockholders on August 12, 2003. Mr. Golonski served
as Chairman, President and Chief Executive Officer of National
City Bank of Pennsylvania and Executive Vice President of
National City Corporation from 1996 to 2005. He retired from
National City in 2005. He is a director of several economic
development organizations and active in other charitable and
financial organizations.
Thomas G. Greig, 59, was elected as a director on
August 10, 1999 and appointed as non-executive Chairman of
the Board in May 2004. Mr. Greig has been a Managing
Director of Liberty Capital Partners, a private equity
partnership, since 1998. He is also a director of publicly-held
Rudolph Technologies, Inc., a number of privately-held companies
and a public, not-for-profit foundation.
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Edward A. Nicholson, Ph.D., 67, was elected
as a director on August 10, 2004. Dr. Nicholson
served as President of Robert Morris University from 1989 to 2005 and
is presently a Professor of Management at Robert Morris. He
has served a number of businesses and government agencies as a
consultant in the areas of long-range planning, organization
design and labor relations. He is also a director of Brentwood
Bank, publicly-held Shopsmith Inc. and several regional
economic, charitable and cultural organizations.
Our Board of Directors unanimously recommends that our
stockholders vote FOR each of the nominees for election to our
Board.
Proposal 2 Ratification
of the Appointment of Independent Registered Public Accounting
Firm
In August 2007, the Audit Committee of our Board appointed BDO
Seidman, LLP (BDO) as our independent registered
public accounting firm for the fiscal year ending March 31,
2008. As a sound governance matter, our Audit Committee has
determined to submit the appointment to our stockholders for
ratification at the Annual Meeting.
The affirmative vote of a majority of the votes cast in person
or by proxy at the Annual Meeting is required for the
ratification by our stockholders of such appointment. Unless
otherwise directed by our stockholders, proxies will be voted
FOR the ratification of the appointment of BDO as our
independent registered public accounting firm for the fiscal
year ending March 31, 2008. In the event that this
appointment is not ratified by the stockholders, our Audit
Committee will consider this vote in determining its future
appointment of our independent registered public accounting
firm. Even if the appointment is ratified, our Audit Committee,
in its discretion, may change the appointment at any time during
the year if it determines that such change would be in our and
our stockholders best interests.
A representative of BDO is expected to be present at the Annual
Meeting, will not be making a statement but will be available to
respond to appropriate questions.
Our Board of Directors unanimously recommends that our
stockholders vote FOR approval of Proposal 2.
BOARD OF
DIRECTORS AND CERTAIN BOARD COMMITTEES
Our Board of Directors held seven (7) meetings during
Fiscal 2007. During Fiscal 2007, each director attended all
meetings of our Board and each committee on which such director
served. Most regular Board meetings and certain committee
meetings include an executive session attended only by the
non-employee members of our Board.
Stockholders can communicate with our Board or individual
directors by writing to the Companys Secretary at: Black
Box Corporation, 1000 Park Drive, Lawrence, Pennsylvania 15055.
Our Board believes that our annual meetings are also appropriate
for stockholder communications with our Board. Our Board
strongly encourages board member attendance at all meetings,
including annual meetings with stockholders. All current
directors, and former director Fred C. Young, attended the
annual meeting of stockholders held in August 2006.
Our Board of Directors has four (4) standing committees:
the Audit Committee, the Compensation Committee, the Nominating
Committee and the Governance Committee.
Audit
Committee
Our Audit Committee consists of Mr. Richard L. Crouch, as
chair, Mr. Thomas W. Golonski and
Mr. Thomas G. Greig. Each member of this
committee is independent under Nasdaqs listing standards
for audit committee members.
Our Audit Committees duties include:
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sole authority and direct responsibility over the selection
(subject to stockholder ratification if the committee so elects)
of our independent registered public accounting firm
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evaluation, retention and replacement of our independent
registered public accounting firm
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responsibility for determining the compensation and other terms
of engagement of such independent auditors
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3
Our Audit Committee has such other duties and responsibilities
as are set forth in its written charter adopted by our Board, a
copy of which is posted in the About Us section of
our Web site at
http://www.blackbox.com.
These other duties and responsibilities include pre-approval of
all audit services and permitted non-audit services, oversight
of the independent auditors, review of financial statements and
SEC filings, review of the lead audit partner, review of the
auditors independence, discussions with the auditors
regarding the planning and scope of the audit, discussions
regarding our internal controls over financial reporting and the
establishment of procedures for the receipt, retention and
treatment of complaints regarding accounting, internal controls
and auditing and the confidentiality thereof. Our Audit
Committee may, from time to time, delegate authority for
pre-approval of audit services and permitted non-audit services
to its chair.
Our Audit Committee or its chair pre-approved all services
performed by BDO during Fiscal 2007.
Our Board has determined that all of the members of our Audit
Committee, Messrs. Crouch, Golonski and Greig, qualify as
audit committee financial experts within the meaning of SEC
regulations and that they have the requisite level of financial
sophistication required under Nasdaqs listing standards.
Our Board has also determined that Messrs. Crouch, Golonski
and Greig are independent within the meaning of
Item 7(d)(3)(iv) of Schedule 14A of the SECs
proxy rules.
Our Audit Committee met thirteen (13) times in Fiscal 2007.
Compensation
Committee
Our Compensation Committee consists of Mr. Thomas W.
Golonski, as chair, Mr. Richard L. Crouch and
Mr. Thomas G. Greig. Each member of this committee is
independent under Nasdaqs listing standards.
Our Compensation Committees duties include:
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reviewing and recommending to our Board the total compensation
of our executive officers
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administering our stock option plans
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Our Compensation Committee operates under a written charter
adopted by our Board, a copy of which is posted in the
About Us section of our Web site. The
committees charter permits it to delegate to subcommittees
such power and authority within the scope of its authority as it
deems appropriate, subject to certain restrictions set forth
therein. Additionally, under our 1992 Stock Option Plan, as
amended (the Employee Plan), our committee
previously had delegated certain authority to our Chief
Executive Officer to make stock option grants to non-executive
employees. For a description of our committees processes
and procedures for the consideration and determination of
executive officer compensation, see the Compensation
Discussion and Analysis section of this proxy
statement.
Our Compensation Committee met five (5) times in Fiscal
2007.
Nominating
Committee
Our Nominating Committee consists of Edward A.
Nicholson, Ph.D., as chair, Mr. William F. Andrews and
Mr. Thomas G. Greig. Each member of this committee is
independent under Nasdaqs listing standards.
Our Nominating Committees duties include:
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identifying and evaluating potential candidates for any Board
vacancies, including any individuals recommended by committee
members, other Board members, management or our current
stockholders or identified by third-party executive search firms
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recommending to our Board individuals to be nominated for
election as directors by stockholders at our annual meeting
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recommending to our Board, from time to time, individuals to be
elected by it to fill Board vacancies
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This committee considers the independence, experience relative
to our business and the needs of our Board, diversity and the
ability to represent our stockholders in evaluating potential
nominees. Potential Board members should show a willingness to
fully participate in Board meetings, a proven track record of
career accomplishments, the ability to make sound judgments and
possess leadership qualities.
4
It is our Nominating Committees policy to consider
stockholder proposals for nominees for election as directors
that are nominated in accordance with our Certificate of
Incorporation and our By-laws, and other applicable laws,
including the rules and regulations of the SEC and any stock
market on which our stock is listed for trading or quotation.
Generally, such recommendations made by a stockholder entitled
to notice of, and to vote at, the meeting at which such proposed
nominee is to be considered are required to be written and
received by the Secretary of the Company within a prescribed
time period prior to the annual or special meeting. See the
Stockholder Nominations and Proposals section
of this proxy statement for a description of the procedures to
be followed in order to submit a recommendation for a nominee.
Our Nominating Committee operates under a written charter
adopted by our Board, a copy of which is posted in the
About Us section of our Web site.
The Nominating Committee met three (3) times in Fiscal 2007.
Governance
Committee
Our Governance Committee consists of Mr. William F.
Andrews, as chair, Mr. Thomas W. Golonski and Edward A.
Nicholson, Ph.D. Each member of this committee is
independent under Nasdaqs listing standards.
Our Governance Committees duties include:
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responsibility for reviewing, on an ongoing basis, the corporate
governance practices and principles established and implemented
by our Board and management
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monitoring trends and regulatory requirements in corporate
governance and recommending to our Board any changes in our
corporate governance practices and functions based upon such
trends and regulatory requirements
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performing an annual evaluation of the objectives and
performance of the members of our Board in connection with its
review of the compensation paid to Board members
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Director compensation is determined based on the collective
experience and knowledge of the members of our Governance
Committee. The committee has engaged an outside compensation
consultant to assist the committee with the determination of
appropriate non-employee director compensation.
Our Governance Committee monitors our corporate governance
scoring as developed by Institutional Shareholder Services
(ISS), an independent service. Our ISS Corporate
Governance Quotient score as of June 2007 indicated that we
outperformed 83% of the companies in the technology hardware and
equipment group and 66% of the companies in the
Standard & Poors 600 Index.
Our Governance Committee operates under a written charter
adopted by our Board, a copy of which is posted in the
About Us section of our Web site.
Our Governance Committee met two (2) times in Fiscal 2007.
LITIGATION
INVOLVING DIRECTORS AND OFFICERS
In November 2006, two stockholder derivative lawsuits were filed
against the Company itself, as a nominal defendant, and several
of our current and former officers and directors, including Fred
C. Young, Roger E. M. Croft, Michael McAndrew, Francis
Wertheimber, William F. Andrews and Thomas G. Greig, in the
United States District Court for the Western District of
Pennsylvania. The two substantially identical stockholder
derivative complaints allege that the individual defendants
improperly backdated grants of stock options to several officers
and directors in violation of our stockholder-approved stock
option plans, improperly recorded and accounted for backdated
stock options in violation of generally accepted accounting
principles (GAAP), improperly took tax deductions
based on backdated stock options in violation of the Internal
Revenue Code of 1986, as amended (the Code),
produced and disseminated false financial statements and SEC
filings to our stockholders and to the market that improperly
recorded and accounted for the backdated option grants,
concealed the alleged improper backdating of stock options and
obtained substantial benefits from sales of our Common Stock while
in the possession of material inside information. The complaints
seek damages on behalf of the Company against certain current
and former officers and directors and allege breach of fiduciary duty,
unjust enrichment, securities law violations and other claims.
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The two lawsuits have been consolidated into a single action as
In re Black Box Corporation Derivative Litigation, Master
File
No. 2:06-CV-1531-TMH,
and plaintiffs filed a consolidated amended complaint on
January 29, 2007. The parties have stipulated that
responses by the defendants, including the Company, are due on
or before September 4, 2007.
POLICIES
AND PROCEDURES RELATED TO THE APPROVAL
OF TRANSACTIONS WITH RELATED PERSONS
Our policies and procedures for review, approval or ratification
of transactions with related persons are not contained in a
single policy or procedure; instead, relevant aspects of such
program are drawn from various corporate documents. Most
importantly, our Audit Committees charter provides that it
must review and, if appropriate, approve or ratify all
transactions between us and any related persons.
Our Standards of Business Conduct require that all of our and
our subsidiaries directors, officers and employees refrain
from activities that might involve a conflict of interest.
Additionally, our Code of Ethics provides that each of our and
our subsidiaries directors, officers and employees must
openly and honestly handle any actual, apparent or potential
conflict between that individuals personal and business
relationships and our interests. Before making any investment,
accepting any position or benefit, participating in any
transaction or business arrangement or otherwise acting in a
manner that creates or appears to create a conflict of interest,
such person must make a full disclosure of all relevant facts
and circumstances to, and obtain the prior written approval of,
our Chief Financial Officer or our General Counsel. Our Chief
Financial Officer and our General Counsel make reports to our
Audit Committee, pursuant to the terms of its charter, regarding
compliance with our Code of Ethics. Further, our Chief Financial
Officer makes reports to the Audit Committee with respect to
proposed related party transactions for which that
committees approval would be required.
COMPENSATION
OF DIRECTORS
The following table sets forth the compensation of our
non-employee directors in Fiscal 2007:
DIRECTOR
COMPENSATION FISCAL 2007
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Name(1)
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Fees Earned
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Option
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Total
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or Paid
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Awards(3)(4)(5)
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($)
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in
Cash(2)
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($)
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($)
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William F. Andrews
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9,750
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56,561
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66,311
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Richard L. Crouch
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35,250
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56,561
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91,811
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Thomas W. Golonski
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29,250
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56,561
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85,811
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Thomas G. Greig
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89,250
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56,561
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145,811
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Edward A.
Nicholson, Ph.D.
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9,750
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56,561
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66,311
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(1)
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Fred C. Young was a director until his resignation on
May 20, 2007. Mr. Youngs compensation for Fiscal
2007 is reported in the Summary Compensation
Table and other tables in this proxy statement. He did
not receive any additional compensation in connection with his
service on our Board.
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(2)
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During Fiscal 2007, each of our non-employee directors received
a fee of $7,500 per annum, paid quarterly, and an additional fee
of $375 for each Board meeting attended in person. Our
non-executive Chairman of the Board also received an annual fee
of $60,000, paid quarterly. Audit Committee members
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received a fee of $1,500 for each meeting of the committee
attended in person or by telephone. Our Audit Committee chair
also received an annual fee of $6,000, paid quarterly.
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(3)
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Our Board and our stockholders have adopted our
1992 Director Stock Option Plan, as amended (the
Director Plan), and have authorized the issuance of
stock options and stock appreciation rights covering up to
270,000 shares of Common Stock under this plan (subject to
appropriate adjustments in the event of stock splits, stock
dividends and similar dilutive events). Under the Director Plan,
our Compensation Committee may grant stock options and stock
appreciation rights to our non-employee directors.
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(4)
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Reflects the dollar amount recognized for financial statement
reporting purposes for Fiscal 2007, in accordance with Statement
of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment (SFAS 123(R)),
and, thus, includes amounts from awards granted in and prior to
Fiscal 2007. See Note 14 of the Notes to the Consolidated
Financial Statements in our 2007
Form 10-K
regarding weighted-average assumptions underlying the valuation
of stock options granted in Fiscal 2007 and Note 1 of the
Notes to Consolidated Financial Statements in our Annual Report
on
Form 10-K
for the fiscal year ended March 31, 2006 (2006 Form
10-K)
regarding weighted-average assumptions underlying the valuation
of stock options granted in the fiscal year ended March 31,
2006 (Fiscal 2006), the fiscal year ended
March 31, 2005 (Fiscal 2005) and the fiscal
year ended March 31, 2004 (Fiscal 2004). In
September 2006, our non-employee directors were each granted an
option to purchase 7,000 shares of Common Stock, under the
Director Plan, at an exercise price of $39.41 per share, the
fair market value of the Common Stock on the grant date. The
grant date fair value of these options, computed in accordance
with SFAS 123(R), was $129,868.
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(5)
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The following table sets forth the outstanding options, both
exercisable and unexercisable, held by each non-employee
director as of March 31, 2007:
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Name
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Outstanding
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Options
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(#)
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William F. Andrews
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59,002
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Richard L. Crouch
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20,000
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Thomas W. Golonski
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31,000
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Thomas G. Greig
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46,002
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Edward A.
Nicholson, Ph.D.
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20,000
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Changes
to Director Compensation
On May 21, 2007, upon recommendation of the Governance
Committee, our Board elected to increase the compensation that
non-employee directors receive with respect to attendance at
Board and Board committee meetings (other than the Audit
Committee). Following the increase, such directors will receive
a fee of $2,000 for each Board meeting attended in person,
$1,000 for each Board meeting attended by telephone and $1,000
for each Board committee meeting attended in person or by
telephone (other than the Audit Committee). Our Governance
Committee has engaged an outside compensation consultant to
assist the committee with the determination of appropriate
non-employee director compensation.
7
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
COMPENSATION
DISCUSSION AND ANALYSIS
Role of
Our Compensation Committee and Our Compensation
Philosophy
Our Compensation Committee evaluates and recommends to our Board
our compensation philosophy and practices and is charged with
administering our compensation program for our named executive
officers: Fred C. Young, our former Chief Executive Officer; R.
Terry Blakemore, our interim President and Chief Executive
Officer; Michael McAndrew, our Vice President, Chief Financial
Officer, Treasurer and Secretary; Roger E. M. Croft, our Senior
Vice President and Francis W. Wertheimber, our Senior Vice
President. Our Compensation Committee believes that the total
executive compensation package paid to our named executive
officers should be designed to pay-for-performance by
facilitating the achievement of our short- and long-range goals,
recognizing individual executive performance and contributions
and promoting increased value creation for our stockholders.
Objectives
of Our Compensation Program
In line with our philosophy, our Compensation Committee has
developed the following objectives for our compensation program
which are to:
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hire, train, develop, compensate and retain high quality
executives for our success
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provide incentives for executives to align their goals with
those of our stockholders in the form of fixed and at-risk,
variable compensation
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Our compensation program rewards our named executive officers
and other key employees for:
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outstanding contributions to the achievement of our goals and
overall success, particularly growth in annual profits and cash
flow
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successful completion of acquisitions of targeted companies and
their integration into the Company
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Components
of Our Executive Compensation Program
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base salary
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annual cash bonus
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long-term incentive compensation in the form of stock options
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In designing our compensation program, our Compensation
Committee, in line with our pay-for-performance philosophy, has
historically placed emphasis upon at-risk, variable compensation
in the form of annual cash bonuses
and/or
grants of stock options. In the case of stock options, stock
options were granted under the Employee Plan which was amended
in the fiscal years ended March 31, 1995 through 2006
pursuant to stockholder votes to increase the number of shares
available for the grant of options thereunder. At our annual
meeting of stockholders in August 2006, the proposed amendment
to the Employee Plan to increase the number of shares available
for issuance was not approved by our stockholders. As a result,
in Fiscal 2007, our Compensation Committee did not have a
sufficient number of shares available to grant stock options to
our named executive officers and other key employees in
accordance with historical practices.
Our Compensation Committee has been and is currently
re-evaluating the nature and structure of our compensation
program and the relative mix of cash and equity incentives to be
awarded to our named executive officers and other key employees.
Our Compensation Committee continues to believe, however, that
some form of equity compensation will continue to be an
important part of our executive compensation program.
Overview
of Annual Setting of Executive Compensation
Under our current process, our Chief Executive Officer meets
with our Compensation Committee and makes recommendations to the
committee regarding each element of compensation to be paid to
our named executive officers (other than our Chief Executive
Officer) and other key employees, which recommendations are
based upon the individuals performance in the prior fiscal
year, the individuals experience, the requirements of the
position
8
and the individuals relative ability to impact
our overall success. Our Compensation Committee considers our
Chief
Executive Officers recommendations and further uses the
committee members collective knowledge of industry and
market pay practices of similarly-situated executives as well as
our overall compensation philosophy in connection with approving
each component of compensation paid to our named executive
officers and other key employees. Our Compensation Committee
then submits its recommendations to our Board for review and
approval. In the case of our Chief Executive Officer, our
Compensation Committee reviews the Chief Executive
Officers performance in the prior fiscal year, experience
and impact on our overall success, and uses the committee
members collective knowledge of industry and market pay
practices regarding chief executive officer compensation and
makes recommendations regarding each element of his compensation
to our Board for review, discussion and approval.
Our Compensation Committee believes that the annual compensation
paid to our named executive officers and other key employees has
been competitive with that paid to other similarly-situated
executives in the industry. As mentioned above, our Compensation
Committee has been and is currently engaged in a re-evaluation
of our compensation program and has hired an outside
compensation consultant to assist the committee with the
development of a more formal, competitive compensation program
for our named executive officers and other key employees for the
fiscal year ending March 31, 2008 (Fiscal 2008)
and beyond.
Summary
of Fiscal 2007 Executive Compensation Program
Decisions
The following is a summary of the compensation decisions,
described in more detail below with respect to our named
executive officers, that were made with respect to Fiscal 2007:
(i) for each named executive officer (other than
Messrs. Blakemore and Croft, for the reasons discussed
below), our Board approved their respective base salaries,
(ii) for Mr. Wertheimber, our Board, based on the
recommendation of our Compensation Committee, approved the
payment of a discretionary bonus of $100,000 and (iii) for
Mr. McAndrew, our Compensation Committee approved the grant
to him of a bonus in the form of cash or stock options as
selected by him.
Base
Salary
Our Compensation Committee and our Chief Executive Officer
together annually review the base salaries of each of our named
executive officers (other than our Chief Executive Officer) and,
in the case of our Chief Executive Officer, the committee
conducts its own review. In line with our pay-for-performance
philosophy, base salaries are typically set below market, with
more emphasis placed upon performance-based compensation in the
form of cash bonuses and stock options. Each year, our
Compensation Committee may recommend to our Board to keep base
salary levels the same or to increase or decrease them based
upon whether they are competitive in the industry, the
executives performance
and/or on
whether an executives contributions to us have been
significant during the year. In Fiscal 2007, the base salaries
of Messrs. Young, Wertheimber and McAndrew were increased,
in light of their respective performance and greater job
responsibilities as a result of our growth, to $600,000,
$250,000 and $250,000, respectively. At the time our
Compensation Committee and our Board reviewed and approved the
base salaries of our named executive officers,
Mr. Blakemore was not an executive officer and, thus,
Mr. Young determined his base salary for Fiscal 2007
(although the committee was aware of Mr. Blakemores
base salary level as determined by Mr. Young).
Mr. Croft and the Company had previously agreed upon his
salary in light of his reduced role in the management of the
Company and, therefore, there was no reason to review his salary
for Fiscal 2007.
For information regarding the Fiscal 2007 base salaries of our
named executive officers, see the Summary Compensation
Table in this proxy statement.
Bonuses
In years prior to Fiscal 2007, our Compensation Committee and
our Board had approved annual cash bonus plans, generally in
which bonus payments were made if the performance goals were
achieved. If the targets were not achieved, the committee
generally did not recommend that our Board approve the payment
of a bonus. In recent years, some of the goals of the annual
cash bonus plans, among others, were achievement of earnings per
share, accounts receivable levels as measured by days sales
outstanding (DSOs) and operating income targets.
Our Compensation Committee, in light of its on-going
re-evaluation of the compensation program, determined not to
adopt an annual cash bonus plan applicable to our named
executive officers in Fiscal 2007 (but did do so for
9
Fiscal 2008
as described below). Instead, a Fiscal 2007 bonus arrangement
for Mr. Blakemore was reviewed by our Board and authorized
by our Chief Executive Officer in February 2006 and, in the case
of our named executive
officers at that time, our Compensation Committee determined to
review Fiscal 2007 performance and then potentially to approve
discretionary bonuses based on performance.
The Fiscal 2007 bonus arrangement for Mr. Blakemore
provided that if revenues generated from merger and acquisition
activities met or exceeded $100 million, he would be
entitled to receive a target bonus of $100,000. Such target was
exceeded and he was paid a $100,000 bonus under this arrangement.
Additionally, in May 2007, our Compensation Committee and our
Board approved the payment of a $100,000 discretionary
bonus to Mr. Wertheimber based on operating margin and DSOs
performance of the business unit under his management in Fiscal
2007. No other bonuses were determined to be paid.
Long-Term
Compensation Stock Options
In determining the number of stock options to grant to our named
executive officers, our Compensation Committee takes into
consideration individual performance, the individuals
contribution to our financial performance for the fiscal year
and the shares available for granting under the Employee Plan,
with the understanding that the Black-Scholes value of the
options granted has remained fairly consistent from year to
year. In Fiscal 2006, based upon individual performance, our
Compensation Committee and our Board had approved stock option
awards to Messrs. Young, Wertheimber and McAndrew.
As described above, given the limited availability of shares
under the Employee Plan to grant option awards in Fiscal 2007,
our Compensation Committee determined to grant only one award to
our named executive officers. In connection with his exceptional
performance in the successful closing of the acquisition of
NextiraOne, LLC (the NXO Acquisition),
Mr. McAndrew was offered the choice of a discretionary cash
bonus of $100,000 or a grant of a stock option to purchase
10,000 shares of Common Stock with an exercise price equal
to the fair market value of the Common Stock on the grant date.
Mr. McAndrew chose an option award, which award vests
ratably over a three-year period and is subject to the terms and
conditions of the Employee Plan and the form of stock option
agreement adopted by our Compensation Committee. In addition,
Mr. Blakemore was awarded a stock option to purchase
10,000 shares of Common Stock for his leading role in the
NXO Acquisition. Since Mr. Blakemore was not an executive
officer at the time of the grant of such award, his grant was
determined by Mr. Young.
For more information regarding the Employee Plan and the Fiscal
2007 stock option awards to Mr. McAndrew and
Mr. Blakemore, see the Summary Compensation
Table and the Grants of Plan-Based Awards
Table in this proxy statement.
Historical
Equity Grant Practices and New Grant Policy
In November 2006, we received a letter of informal inquiry from
the Enforcement Division of the SEC relating to our stock option
practices from January 1, 1997 to the present. As a result,
our Audit Committee, with the assistance of outside legal
counsel, commenced an independent review of our historical stock
option grant practices and related accounting for stock option
grants during the period from 1992 to the present (the Review Period). Our Audit
Committee concluded, among other things, that for a majority of
grants issued by us there was either no or inadequate
documentation of approval actions that satisfies the requisites
for establishing a measurement date under GAAP, that relatively
few option grants were approved in complete compliance with our
stock option plans, that the delegation of authority by our
Compensation Committee to our Chief Executive Officer to approve
grants to rank and file employees was not fully documented,
that, in several cases, the use of grant dates and lower
exercise prices, together with other available evidence,
supports a finding that these dates and exercise prices were
selected with the benefit of hindsight and that our internal
controls with respect to stock option grants were inadequate. In
light of these conclusions, we have restated our historical
financial statements as set forth in our 2007
Form 10-K,
our Quarterly Report on
Form 10-Q
for the fiscal quarter ended December 30, 2006 and our
amended Quarterly Reports on
Form 10-Q/A
for the fiscal quarters ended September 30, 2006 and
July 1, 2006. Such filings contain detailed information
about the restatement, its underlying circumstances and related
matters.
Our Audit Committee expects to recommend to our Board
and/or its
appropriate committees procedural enhancements that
appropriately address the issues raised by the committees
findings. While our Audit Committee
10
has not completed its
consideration of all such steps, procedural enhancements may
include recommendations regarding improved stock option
administration procedures and controls, training and monitoring
compliance with
those procedures, corporate recordkeeping, corporate risk
assessment, evaluation of the internal compliance environment
and other remedial steps that may be appropriate. Any such
procedural enhancements will be recommended by our Audit
Committee to our Board
and/or
appropriate Board committee for adoption. In advance of action
by our Audit Committee, we have implemented additional
procedures to our process for approving stock option grants that
are focused on formalized documentation of appropriate approvals
and determination of grant terms to employees and directors.
Such procedures that have been implemented, as well as any
procedural enhancements and remedial measures that will be
adopted, will apply to our existing stock option plans.
In light of the findings of our Audit Committees review,
William F. Andrews, Thomas W. Golonski and Thomas G. Greig,
three of our current directors who also served during portions
of the Review Period and who hold options as to which the
measurement date was adjusted in connection with our
restatement, agreed voluntarily to reprice those outstanding
options with a recorded exercise price less than the fair market
value of our Common Stock on the accounting measurement date as
determined by our Audit Committee so that the exercise price
matches the fair market value of our Common Stock on such
accounting measurement date. In addition, Michael McAndrew, who
became our Chief Financial Officer in December 2002, also
agreed voluntarily to reprice the one option granted to him
after he became Chief Financial Officer with a recorded exercise price less than the
fair market value of our Common Stock on the accounting
measurement date as determined by our Audit Committee so that
the exercise price matches the fair market value of our Common
Stock on such accounting measurement date.
Our Audit Committees ongoing review includes an evaluation
of the role of and possible claims or other remedial actions
against our current and former personnel who may be found to
have had responsibility for identified problems during the
Review Period. Accordingly, our Audit Committee has begun to
address and is addressing and expects to continue to address
issues of individual conduct or responsibility, including those
of our Board, Chief Executive Officers and Chief Financial
Officers serving during the Review Period. In connection
therewith, based on the findings of our Audit Committee as to
Fred C. Young, our former Chief Executive Officer who resigned
on May 20, 2007, our Audit Committee concluded and
recommended to our Board, and our Board determined, that
Mr. Young could have been terminated due to Cause for
Termination (as defined in his agreement dated May 11,
2004) at the time Mr. Young resigned as a director and
as an
officer of the Company on May 20, 2007. In light of that
determination and the terms of the agreements with
Mr. Young, all outstanding stock options held by
Mr. Young terminated as of the date of his resignation.
Our Audit Committee may recommend additional remedial measures
that appropriately address the issues raised by its findings.
Such potential remedial measures may include possible claims or
other remedial actions against our current and former personnel
who may be found to have been responsible for identified
problems during the Review Period.
Description
of Compensation Practices and Policies for Fiscal 2008
In connection with Mr. Blakemore assuming the executive
positions of interim President and Chief Executive Officer, our
Compensation Committee approved the payment to him of a bonus in
the amount of $75,000.
Since the amendment to the Employee Plan was not approved by our
stockholders at our annual meeting of stockholders held in
August 2006, our Compensation Committee determined to place
greater emphasis upon the variable cash component of the
compensation program. In May 2007, our Compensation Committee
approved an executive incentive bonus plan for Fiscal 2008 under
which a bonus pool will be created based on reported operating
earnings per share. Payout of the bonus pool will be based upon
DSOs at fiscal year end with, on the low end, 75% of the pool
payable upon the achievement of approximately 90% of the DSOs
target and, on the high end, 100% payout of the pool upon the
achievement of 100% of the DSOs target. Additionally, payments
may be made at the discretion of our Board.
Messrs. Blakemore, Wertheimber and McAndrew are
participants in this plan as well as other key employees. The
bonus pool, if paid out, will be shared equally by each
participant in the plan and participants must be employed with
us on the payment date to be entitled to such bonus.
11
Change-in-Control
Arrangements
We entered into an agreement with Mr. Young in May 2004,
with Messrs. Croft and Wertheimber in November 2004 and
with Messrs. McAndrew and Blakemore in May 2007.
Mr. Young resigned from his position as our Chief Executive
Officer and as a director on May 20, 2007.
The agreements with Messrs. Croft, Wertheimber, McAndrew
and Blakemore generally provide for certain benefits to these
named executive officers in the event that their respective
employment is terminated within two (2) years of a
change of control either by (i) us for a reason other than
cause, death, disability or retirement or (ii) the named
executive officers resignation for good reason.
Our Compensation Committee and our Board approved these
agreements and the
change-in-control
provisions in the Employee Plan to reduce the distraction
regarding the impact of such a transaction on the personal
situation of a named executive officer and to incent them to
remain with us through the consummation of a
change-in-control
transaction, if any.
Report of
the Compensation Committee
The Compensation Committee reviewed and discussed with
management the Compensation Discussion and Analysis set forth in
this proxy statement. Based on the foregoing review and
discussions, the Compensation Committee recommended to our Board
that the Compensation Discussion and Analysis be included in
this proxy statement.
The information contained in this report does not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates it by reference into such
filing.
Compensation Committee:
Thomas W. Golonski, Chairman
Richard L. Crouch
Thomas G. Greig
12
SUMMARY
COMPENSATION TABLE FISCAL 2007
The following table sets forth cash compensation paid by us and
our subsidiaries, as well as other compensation paid or accrued
during Fiscal 2007, to (i) our principal executive officer
during Fiscal 2007, Fred C. Young, (ii) R. Terry Blakemore,
who was appointed our interim President and Chief Executive
Officer on May 21, 2007 following Mr. Youngs
resignation, (iii) our principal financial officer, Michael
McAndrew, (iv) Francis W. Wertheimber, an executive officer
at the end of Fiscal 2007 who received total compensation
(determined in accordance with SEC rules) in Fiscal 2007 that
exceeded $100,000 and (v) Roger E. M. Croft, who was an
executive officer during Fiscal 2007 but was not serving as an
executive officer as of the last day of Fiscal 2007 (each, a
Named Executive Officer). Such compensation was paid
for services rendered in all capacities to us and our
subsidiaries:
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Name and Principal Position
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Year
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Salary
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Bonus
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Option
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Non-Equity
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Change in
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All Other
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Total
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($)
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($)
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Awards(1)
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Incentive
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Pension
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Compensation
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($)
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($)
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Plan
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Value and
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($)
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Compensation
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Nonqualified
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($)
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Deferred
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Compensation
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Earnings
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($)
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Fred C. Young,
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2007
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481,437
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1,535,561
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5,826
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(3)
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2,022,824
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Chief Executive
Officer(2)
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R. Terry Blakemore,
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2007
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186,058
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351,482
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100,000
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152,746
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(4)
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13,282
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(5)
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803,568
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Interim President and
Chief Executive
Officer
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Michael McAndrew,
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2007
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164,959
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286,697
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4,663
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(3)
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456,319
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Vice President,
Chief Financial
Officer, Treasurer
and Secretary
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Francis W. Wertheimber,
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2007
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217,759(6
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100,000
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299,801
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59,509
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(6)(7)
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677,069
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Senior Vice President
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Roger E. M. Croft,
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2007
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122,010(8
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299,801
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71,639
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(8)(9)
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493,450
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Senior Vice President
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(1)
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Reflects the dollar amount recognized for financial statement
reporting purposes for Fiscal 2007, in accordance with
SFAS 123(R), and, thus, includes amounts from awards
granted in and prior to Fiscal 2007. See Note 14 of the
Notes to the Consolidated Financial Statements in our 2007
Form 10-K
regarding weighted-average assumptions underlying the valuation
of stock options granted in Fiscal 2007 and Note 1 of the
Notes to Consolidated Financial Statements in our 2006
Form 10-K
regarding weighted-average assumptions underlying the valuation
of stock options granted in Fiscal 2006, Fiscal 2005 and Fiscal
2004. |
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(2)
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Mr. Young resigned from his position as our Chief Executive
Officer and as a director on May 20, 2007. |
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(3)
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Represents amounts paid by us for the individual under a 401(k)
plan and payments for life insurance premiums. |
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(4)
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Mr. Blakemore participates in the Retirement and Security
Program of the National Telecommunications Cooperative
Association (the NTCA Plan). One of our subsidiaries
is a member of the National Telecommunications Cooperative
Association, which sponsors the NTCA Plan, a multiple employer
pension plan in which such subsidiary participates as a
contributing employer. The amount in this column represents the
aggregate change in actuarial present value of his accumulated
benefits under the NTCA Plan from December 31, 2005 to
December 31, 2006 (the last day of the NTCA Plans
most recently completed fiscal year). For more information
regarding the NTCA Plan and the assumptions used to calculate
this amount, see the Pension Benefits Table and
Understanding Our Pension Benefits Table in
this proxy statement. |
13
|
|
|
(5)
|
|
Represents the Companys contributions to the NTCA Plan and
payments for life insurance premiums. |
|
(6)
|
|
Represents amounts paid in Japanese yen and converted to U.S.
dollars using an exchange rate as of March 30, 2007
(.008486 U.S. dollars for each Japanese yen). |
|
(7)
|
|
Mr. Wertheimber is a resident of Japan and, under Japanese
law, must enroll in Japans national pension system to
which we make contributions. For Fiscal 2007, we contributed
$47,210 to this pension system on his behalf. We also provided
him with a vehicle allowance and paid certain other
vehicle-related expenses. |
|
(8)
|
|
Represents amounts paid in British pounds sterling and converted
to U.S. dollars using an exchange rate as of March 30, 2007
(1.9679 U.S. dollars for each British pound sterling). |
|
(9)
|
|
Mr. Croft is a resident of the United Kingdom and
participates (along with other similarly-situated employees in
the United Kingdom) in a private pension scheme to which we make
contributions. For Fiscal 2007, we contributed $31,010 to this
pension scheme on his behalf. He also received vehicle and fuel
allowances of $40,629. |
GRANTS OF
PLAN-BASED AWARDS FISCAL 2007
The following table sets forth each grant of awards made to our
Named Executive Officers in Fiscal 2007 under plans established
by us:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Grant Date
|
|
|
Estimated Possible
|
|
|
All Other
|
|
|
Exercise or
|
|
|
Closing
|
|
|
Grant Date
|
|
|
|
|
|
|
Payouts Under
|
|
|
Option
|
|
|
Base Price of
|
|
|
Market Price
|
|
|
Fair Value of
|
|
|
|
|
|
|
Non-Equity
|
|
|
Awards:
|
|
|
Option
|
|
|
on Date of
|
|
|
Stock and
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Number of
|
|
|
Awards
|
|
|
Grant
|
|
|
Option
|
|
|
|
|
|
|
Awards
|
|
|
Securities
|
|
|
($/Sh)
|
|
|
($)
|
|
|
Awards(2)
|
|
|
|
|
|
|
Target
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
($)
|
|
|
|
|
|
|
($)
|
|
|
Options(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred C. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Terry Blakemore
|
|
|
|
04/12/2006
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
39.77
|
|
|
|
|
46.25
|
(4)
|
|
|
|
245,708
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael McAndrew
|
|
|
|
06/15/2006
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
38.97
|
(5)
|
|
|
|
39.19
|
(5)
|
|
|
|
180,300
|
|
Francis W. Wertheimber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger E. M. Croft
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Our Board and our stockholders have adopted the Employee Plan
and have authorized the issuance of options and stock
appreciation rights covering up to 9,200,000 shares of
Common Stock under this plan (subject to appropriate adjustments
in the event of stock splits, stock dividends and similar
dilutive events). Stock options and stock appreciation rights
may be granted under the Employee Plan to key salaried and
hourly employees (including those who may also be directors but
who are not members of our Compensation Committee). |
|
(2)
|
|
Calculated in accordance with SFAS 123(R). |
|
(3)
|
|
For Fiscal 2007, we established a bonus arrangement for
Mr. Blakemore that did not include a threshold or maximum
award level. He achieved the pre-established performance
objectives in connection with his bonus arrangement and was,
therefore, paid the full amount of the target award, as set
forth in the Summary Compensation Table in
this proxy statement. Additional information with respect to his
bonus arrangement is provided in the Compensation
Discussion and Analysis section of this proxy
statement. |
14
|
|
|
(4)
|
|
In connection with the review of our historical stock option
grant practices as described in the Compensation
Discussion and Analysis Historical Equity Grant
Practices and New Grant Policy section of this proxy
statement, this option grant was deemed by our Audit Committee
to have a measurement date for purposes of
SFAS 123(R) of April 12, 2006, the date that such
option was entered into our stock option database. The
Closing Market Price on Date of Grant is the closing
price of our Common Stock on April 12, 2006. |
|
(5)
|
|
SEC rules require disclosure of the closing market price of the
underlying security on the grant date where the exercise price
is less than such closing market price. The exercise price of
this option, in accordance with the provisions of the Employee
Plan, was determined by averaging the high and low sales prices
of our Common Stock on the grant date. |
15
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END FISCAL
2007
The following table sets forth all unexercised stock options
which have been awarded by us to our Named Executive Officers
and are outstanding as of March 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Name
|
|
|
Number of Securities
|
|
|
Number of Securities
|
|
|
Option
|
|
|
Option
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
|
Unexercised Options
|
|
|
Unexercised Options
|
|
|
($)
|
|
|
Date
|
|
|
|
(#)
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred C.
Young(1)
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
21.4400
|
|
|
|
|
04/23/2007
|
|
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
30.2500
|
|
|
|
|
01/13/2008
|
|
|
|
|
|
195,000
|
|
|
|
|
|
|
|
|
|
21.9375
|
|
|
|
|
10/08/2008
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
32.1407
|
|
|
|
|
04/08/2009
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
45.0625
|
|
|
|
|
08/30/2009
|
|
|
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
49.3125
|
|
|
|
|
10/21/2009
|
|
|
|
|
|
140,402
|
|
|
|
|
|
|
|
|
|
42.2500
|
|
|
|
|
10/11/2010
|
|
|
|
|
|
195,000
|
|
|
|
|
|
|
|
|
|
41.4500
|
|
|
|
|
09/21/2011
|
|
|
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
44.3700
|
|
|
|
|
11/13/2012
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
40.5500
|
|
|
|
|
10/01/2013
|
|
|
|
|
|
133,333
|
|
|
|
|
66,667
|
|
|
|
|
34.7650
|
|
|
|
|
08/18/2014
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
39.7700
|
|
|
|
|
10/31/2015
|
|
R. Terry Blakemore
|
|
|
|
|
|
|
|
|
6,667
|
(2)
|
|
|
|
34.2900
|
|
|
|
|
08/11/2014
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
39.7700
|
|
|
|
|
10/31/2015
|
|
Michael McAndrew
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
30.2500
|
|
|
|
|
01/13/2008
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
45.0625
|
|
|
|
|
08/30/2009
|
|
|
|
|
|
8,552
|
|
|
|
|
|
|
|
|
|
42.2500
|
|
|
|
|
10/11/2010
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
41.4500
|
|
|
|
|
09/21/2011
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
28.5400
|
|
|
|
|
10/09/2012
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
40.5500
|
(3)
|
|
|
|
10/01/2013
|
|
|
|
|
|
26,666
|
|
|
|
|
13,334
|
(2)
|
|
|
|
34.2900
|
|
|
|
|
08/11/2014
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
39.7700
|
|
|
|
|
10/31/2015
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(4)
|
|
|
|
38.9650
|
|
|
|
|
06/15/2016
|
|
Francis W. Wertheimber
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
45.0625
|
|
|
|
|
08/30/2009
|
|
|
|
|
|
21,772
|
|
|
|
|
|
|
|
|
|
42.2500
|
|
|
|
|
10/11/2010
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
41.4500
|
|
|
|
|
09/21/2011
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
44.3700
|
|
|
|
|
11/13/2012
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
44.9100
|
|
|
|
|
12/19/2012
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
40.5500
|
|
|
|
|
10/01/2013
|
|
|
|
|
|
33,333
|
|
|
|
|
16,667
|
(2)
|
|
|
|
34.2900
|
|
|
|
|
08/11/2014
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
39.7700
|
|
|
|
|
10/31/2015
|
|
Roger E. M. Croft
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
45.0625
|
|
|
|
|
08/30/2009
|
|
|
|
|
|
26,817
|
|
|
|
|
|
|
|
|
|
42.2500
|
|
|
|
|
10/11/2010
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
41.4500
|
|
|
|
|
09/21/2011
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
44.3700
|
|
|
|
|
11/13/2012
|
|
|
|
|
|
|
|
|
|
|
16,667
|
(2)
|
|
|
|
34.2900
|
|
|
|
|
08/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The option in the above table with an option expiration date of
April 23, 2007 terminated unexercised as of that date. All
of Mr. Youngs other stock options outstanding as of
March 31, 2007 shown in the table terminated as of
May 20, 2007, the date of his resignation. See
Potential Payments Upon Termination or
Change-in-Control Estimated Termination and
Change-in-Control Payments Fred C. Young in
this proxy statement. |
16
|
|
|
(2)
|
|
The remaining unvested options vested on August 11, 2007. |
|
(3)
|
|
Mr. McAndrew voluntarily agreed to reprice this option
exercise price to $42.93. See Executive Compensation
and Other Information Compensation Discussion and
Analysis Historical Equity Grant Practices and New
Grant Policy in this proxy statement. |
|
(4)
|
|
These options will vest in three (3) equal annual
installments beginning on June 15, 2007. |
OPTION
EXERCISES AND STOCK VESTED TABLE FISCAL
2007
The following table sets forth information concerning each
exercise of stock options by our Named Executive Officers during
Fiscal 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Name
|
|
|
Number of
|
|
|
Value Realized
|
|
|
|
Shares
|
|
|
on Exercise
|
|
|
|
Acquired
|
|
|
($)
|
|
|
|
on Exercise
|
|
|
|
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
Fred C. Young
|
|
|
|
65,000
|
|
|
|
|
1,011,725
|
|
R. Terry Blakemore
|
|
|
|
13,333
|
|
|
|
|
85,398
|
|
Michael McAndrew
|
|
|
|
|
|
|
|
|
|
|
Francis W. Wertheimber
|
|
|
|
|
|
|
|
|
|
|
Roger E. M. Croft
|
|
|
|
16,667
|
|
|
|
|
112,086
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION
BENEFITS TABLE FISCAL 2007
The following table provides information with respect to each
plan that provides for specified retirement payments or
benefits, or payments or benefits that will be provided
primarily following retirement to our Named Executive Officers,
including tax-qualified defined benefit plans and supplemental
employee retirement plans, but excluding defined contribution
plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Plan Name
|
|
|
Number of
|
|
|
Present
|
|
|
Payments
|
|
|
|
|
|
|
Years Credited
|
|
|
Value of
|
|
|
During Last
|
|
|
|
|
|
|
Service
|
|
|
Accumulated Benefit
|
|
|
Fiscal Year
|
|
|
|
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred C. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Terry Blakemore
|
|
|
NTCA Plan
|
|
|
|
26
|
(1)
|
|
|
|
1,240,955
|
(2)
|
|
|
12,466
|
Michael McAndrew
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis W. Wertheimber
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger E. M. Croft
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Blakemore commenced participation in the NTCA Plan in
October 1985 and was granted service credit back to March 1981.
This additional service credit granted to him only has the
effect of making him retirement eligible, without any benefit
reduction, at an earlier date and does not result in any
augmentation of benefits paid to him. |
17
|
|
|
(2)
|
|
The actuarial present value of Mr. Blakemores
accumulated benefits under the NTCA Plan was computed as of
December 31, 2006 (the last day of the most recently
completed fiscal year of the NTCA Plan). The amount was computed
using the following assumptions and valuation methods:
(i) a retirement age of 55 (the earliest age at which he
could retire without any benefit reduction due to age),
(ii) an annual increase of 2% of compensation,
(iii) 2003 Group Annuity Reserving mortality table and
(iv) a discount rate of 7.5%. |
UNDERSTANDING
OUR PENSION BENEFITS TABLE
The
Retirement and Security Program of the National
Telecommunications Cooperative Association
The NTCA Plan is a multiple employer pension plan which is the
main pension plan for over 390 employers who are members of the
National Telecommunications Cooperative Association (of which
one of our subsidiaries is a member). The NTCA Plan will pay
retirement benefits to Mr. Blakemore based on his years of
service with us and his compensation. As a qualified plan, the
NTCA Plan is subject to various requirements on coverage,
funding, vesting and the amount of compensation which may be
taken into account in calculating benefits.
Normal Retirement. The normal retirement
benefit under the NTCA Plan is the benefit which will be
received at the normal retirement date, which is the first day
of the month containing Mr. Blakemores
65th birthday. The normal retirement benefit is expressed
as a life annuity with ten (10) years certain.
The normal retirement benefit is the sum of the basic normal
retirement benefit that Mr. Blakemore has accrued on the
basis of active participation and certain other types of
benefits such as fixed benefits, supplemental benefits and
benefit upgrades. The basic normal retirement benefit increases
as Mr. Blakemores average compensation increases and
is based on: (i) High-5 Compensation which
means the average of his
W-2+
Compensation (defined below) for the five (5) years of the
last ten (10) years during which his
W-2+
Compensation was the highest
(W-2+
Compensation means
W-2 wages,
including any bonuses, overtime and commissions, plus pre-tax
401(k) contributions, Section 125 contributions (cafeteria
plan contributions) and Section 457 contributions
(contributions to a non-qualified deferred compensation plan
adopted after 1986 by a tax-exempt employer) and, effective for
plan years beginning after December 31, 2000,
Section 132(f)(4) income (qualified transportation fringe
benefit income), but excluding income attributable to
employer-sponsored group term life insurance over $50,000),
(ii) total accruals, which is generally the sum of certain
contribution percentages (both employer and employee) made on
his behalf plus contribution percentages added through program
upgrades, rollovers and prior service benefits, (iii) the
applicable program actuarial factor and (iv) applicable
uplift multiplier.
Additionally, the maximum annual pension which
Mr. Blakemore accrues may never exceed 100% of his average
W-2+
Compensation (taxable compensation prior to January 1,
1998) for his High-3 (High-3
compensation refers to the average of the highest three
(3) consecutive years of Mr. Blakemores
W-2+
Compensation) years before retirement.
Early Retirement. The NTCA Plan permits early
retirement on or after the first day of the month in which
Mr. Blakemore reaches the age of 55. At age 55,
Mr. Blakemore (assuming continued employment with us) will
be entitled to unreduced retirement benefits at that time
pursuant to the Rule-of-85. The Rule-of-85 allows
certain plan participants to retire early (before the age of 65
but not before age 55) without an actuarial reduction
in their accrued benefits for retiring before age 65. Under
this formula, the sum of a participants age at retirement
and number of years of service must equal or exceed 85 in order
for the participant to be eligible for Rule-of-85
benefits.
Late Retirement. The NTCA Plan permits late
retirement (retirement after the age of 65). If a participant
retires late, the participants retirement benefits
automatically will be increased by one-quarter of one percent
(.25%) for each month the participant delays retirement beyond
age 65. Additionally, if a participant continues working
after his 65th birthday, benefits may increase through
additional accruals and higher High-5 Compensation.
Forms of Payment. The NTCA Plan provides for the
following forms of payment options:
(i) 10-years
certain and life thereafter,
(ii) 5-years
certain and life thereafter, (iii) life only, (iv) if
married, a qualified joint and survivor annuity (with 50% of the
monthly amount payable during the participants lifetime
continued after the participants death to his surviving
spouse for the life of the surviving spouse), (v) if
married, a qualified joint and survivor
18
annuity (with
662/3%
of the monthly amount payable during the participants
lifetime continued after the participants death to his
surviving spouse for the life of the surviving spouse),
(vi) if married, a qualified joint and survivor annuity
(with 100% of the monthly amount payable during the
participants lifetime continued after the
participants death to his surviving spouse for the life of
the surviving spouse), (vii) if married, a qualified joint
and survivor annuity under (iii) (vi) (with the
annuity that is payable guaranteed for 10 years following
retirement and then payable at 50%,
662/3%
or 100% to the spouse (if the participant predeceases the
surviving spouse)), (viii) an annuity under
(i) (vii) that is supplemented by a
certain amount between the time of retirement and either
age 62 or normal social security retirement age, and then
actuarially reduced once that age is reached, (ix) a
combination of a partial single sum and any one of the foregoing
annuity options, (x) a guaranteed annuity option or
(xi) a single lump sum.
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
We do not have employment agreements with our Named Executive
Officers. We entered into an agreement with Fred C. Young in May
2004, into agreements with Roger E. M. Croft and Francis W.
Wertheimber in November 2004 and into agreements with Michael
McAndrew and R. Terry Blakemore in May 2007, which agreements
provide for certain benefits to the Named Executive Officers in
the event of a qualifying termination of their employment as
described below. The original term of each of the agreements is
five (5) years with an automatic renewal on a one-year
basis thereafter absent notice of nonrenewal six (6) months
prior to the renewal date; provided, however, that if a
Change-in-Control
(as defined below) occurs during the initial or any renewal
period, the agreement will survive until the second anniversary
(third anniversary in the case of Mr. Young) of the date of
the
Change-in-Control.
Each of the above-mentioned agreements contains a provision
prohibiting the respective Named Executive Officer from
competing with us during his employment with us and for five
(5) years thereafter. Specifically, without our prior
written consent, the Named Executive Officers may not directly
or indirectly engage in, assist or have an active interest in
(whether as proprietor, partner, investor, stockholder, officer,
director or any type of principal whatsoever), or enter the
employ of or act as agent for, or advisor or consultant to, any
person, firm, partnership, association, corporation or business
organization, entity or enterprise which is or is about to
become directly or indirectly engaged in any business that is
competitive with any of our businesses in which the Named
Executive Officer is or was engaged.
Our Named Executive Officers are also bound, during the term of
their agreement and at all times thereafter, by restrictive
covenants with respect to confidential information, as more
fully described in their respective agreements. They are not
permitted, unless authorized in writing by us, to disclose or
cause to be disclosed, such confidential information or to
authorize or permit such disclosure of the confidential
information to any unauthorized third party, or to use the
confidential information (i) for their own benefit or
advantage, (ii) for the benefit or advantage of any third
party or (iii) in any manner which is intended to injure or
cause loss, whether directly or indirectly, to us. At any time
upon our request, and immediately upon termination, the Named
Executive Officers must surrender all written or otherwise
tangible documentation representing such confidential
information to us.
A description of the other material terms of these agreements
and estimates of the payments and benefits which each Named
Executive Officer would receive upon a qualifying termination
are set forth below. The estimates have been calculated assuming
a termination date of March 30, 2007, which was our last
business day in Fiscal 2007, and are based upon the closing
price of our Common Stock on that date ($36.54). Due to the
number of factors that affect the nature and amount of any
benefits provided upon the events discussed below, such as the
timing during the year of any triggering event and our stock
price, the actual amounts to be paid or distributed may be
different.
Termination
Payments and Benefits Outside of a
Change-in-Control
Fred C.
Young:
If Mr. Youngs employment with the Company is
terminated (i) due to his death or Disability (as defined
below), (ii) by Mr. Young other than for Good Reason
(as defined below) or (iii) by the Company due to Cause for
Termination or in accordance with Retirement (each as defined
below), then, except as otherwise set forth below, we
19
have no payment obligations to him other than as provided by our
various policies, procedures and practices generally applicable
to all employees.
If, however, during the term of Mr. Youngs agreement,
and prior to a
Change-in-Control,
his employment is terminated (i) by us other than due to
Cause for Termination, death, Disability or Retirement or
(ii) upon his resignation if our Board removes or fails to
reelect him to the chief executive officer position or otherwise
reduces the power and status of such position at any time other
than at a time when he could have been terminated due to Cause
for Termination, he is entitled to, in addition to any accrued
but unpaid benefits:
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three (3) times the sum of his then current annual base
salary for the year in which the employment termination occurs
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three (3) times one-third (1/3) of the aggregate cash
bonuses or awards received by him as incentive compensation or
bonus during the three (3) calendar years immediately
preceding the termination date
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an amount equal to the total cash award or bonus that would have
been received by him under any long-term incentive plan,
assuming that, in addition to any goals met prior to the
termination date, all goals that were to be measured after such
date were achieved and he remained employed, less any portion of
the cash award or bonus for that award period previously paid to
him
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medical insurance and other similar benefits for the period of
three (3) years following the termination date, as if he
remained in our continuous employ during such period
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unvested options will vest and remain outstanding in accordance
with their respective terms
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The above-described payments are to be made to Mr. Young on
or before the sixtieth (60th) day following the termination date.
Mr. Youngs agreement further provides that in the
event his employment is terminated due to his death, or
termination occurs on or after May 11, 2007 by his
resignation at any time other than at a time when he could have
been terminated due to Cause for Termination, all of his
unvested options vest and all of his options remain outstanding
in accordance with their respective terms until their stated
expiration date.
Named
Executive Officers other than Mr. Young:
The agreements with Messrs. Blakemore, Croft, McAndrew and
Wertheimber do not provide for any benefits outside of a
change-in-control
context. If their respective employment is terminated due to
death or Disability or by them or by us at any time prior to a
Change-in-Control,
then we have no payment obligations to them other than as
provided by our various policies, procedures and practices
generally applicable to all employees.
Certain
Definitions:
The following definitions are contained in the agreements with
Messrs. Young, Blakemore, Croft, McAndrew and Wertheimber:
Cause for Termination: Named Executive
Officers deliberate and intentional failure to devote his
best efforts to the performance of duties, gross misconduct
materially and demonstrably injurious to us, conviction of
criminal fraud, embezzlement against us or a felony involving
moral turpitude, continuing failure after notice to adhere to
the nondisclosure and noncompete portions of the agreements
(described above) or willful failure to follow instructions of
our Board. For purposes of this definition, no act, or failure
to act, on the Named Executive Officers part shall be
considered deliberate and intentional or to
constitute gross misconduct unless done, or omitted to be done,
by the Named Executive Officer not in good faith and without
reasonable belief that the Named Executive Officers action
or omission was in the best interests of the Company.
Change-in-Control: a
change in control of the Company is deemed to occur if:
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i. |
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it is reportable as such by SEC rules;
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ii. |
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twenty percent (20%) or more of the combined voting power of our
then-outstanding capital stock is acquired, coupled with or
followed by a change in a majority of the members of our
Board; or
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iii. |
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we sell all or substantially all of our assets or merge,
consolidate or reorganize with another company and (x) upon
conclusion of the transaction less than fifty-one percent (51%)
of the outstanding
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20
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securities entitled to vote in the election of directors of the
acquiring company or resulting company are owned by the persons
who were our stockholders prior to the transaction, and
following the transaction there is a change in a majority of the
members of our Board or (y) following the transaction, a
person or group would be the owner of twenty percent (20%) or
more of the combined voting power of the acquiring company or
resulting company, and there is a change in a majority of the
members of our Board.
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Disability: incapacity due to physical or
mental illness or injury which causes a Named Executive Officer
to be unable to perform his duties to us during ninety
(90) consecutive days or one hundred twenty (120) days
during any six (6) month period.
Good Reason: our failure to have any successor
assume the agreement or the occurrence of any of the following
after a
Change-in-Control:
(i) the assignment of new duties materially and
substantially inconsistent with prior duties, responsibilities
and status, or a material change in reporting responsibilities,
titles or offices, (ii) reduction in base salary,
(iii) failure to continue comparable incentive
compensation, (iv) failure to continue comparable stock
option and other fringe benefits, (v) relocation beyond
fifty (50) miles or (vi) any purported termination of
the Named Executive Officer other than for Cause, Disability or
Retirement or made without a specified written notice of
termination.
Retirement: termination of the Named Executive
Officers employment after age sixty-five (65) or in
accordance with any mandatory retirement arrangement with
respect to an earlier age agreed to by such Named Executive
Officer.
Termination
Payments and Benefits After a
Change-in-Control
The agreements with Messrs. Young, Blakemore, Croft,
McAndrew and Wertheimber provide for payments and other benefits
if such Named Executive Officer is terminated within two
(2) years (three (3) years in the case of
Mr. Young) following a
Change-in-Control
either by (i) us other than for Cause, death, Disability or
Retirement or (ii) the individuals resignation for
Good Reason. Additionally, Mr. Young is entitled to
payments and benefits if he terminates his employment for any
reason during a thirty (30) day period commencing six
(6) months after a
Change-in-Control.
In addition to any accrued but unpaid benefits, the agreements
entitle each Named Executive Officer to an amount of cash equal
to the sum of:
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two (2) times (three (3) times in the case of
Mr. Young) the sum of his then current annual base salary
in the year of termination (or, if greater, (x) in the case
of termination for Good Reason, the Named Executive
Officers salary preceding the date giving rise to his Good
Reason or (y) the Named Executive Officers salary for
the year in effect on the date of the
Change-in-Control)
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two (2) times (three (3) times in the case of
Mr. Young) the greater of (x) one-third (1/3) of the
aggregate cash bonuses or awards received by the Named Executive
Officer as incentive compensation or bonus during the three
(3) calendar years immediately preceding the date of
termination, (y) in the case of termination for Good
Reason, one-third (1/3) of the aggregate cash bonuses or awards
received by the Named Executive Officer as incentive
compensation or bonus during the three (3) calendar years
preceding the date giving rise to the Named Executive
Officers Good Reason or (z) one-third (1/3) of the
aggregate cash bonuses or awards received by the Named Executive
Officer as incentive compensation or bonus during the three
(3) calendar years preceding the date of the
Change-in-Control
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an amount equal to the total cash award or bonus that would have
been received by the Named Executive Officer under any long-term
incentive plan, assuming that, in addition to any goals met
prior to the termination date, all goals that were to be
measured after such date were achieved and the Named Executive
Officer remained employed, less any portion of the cash award or
bonus for that award period previously paid to the Named
Executive Officer
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medical insurance and other similar benefits for the period of
two (2) years (three (3) years in the case of
Mr. Young) following the termination date, as if such Named
Executive Officer remained in our continuous employ during such
period
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unvested options will vest and remain outstanding in accordance
with their respective terms
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21
Such payments are to be made to Messrs. Young, Blakemore,
Croft, McAndrew and Wertheimber on or before the sixtieth (60th)
day following the termination date.
Estimated
Termination and
Change-in-Control
Payments
The following table sets forth the potential
payments(1),
in addition to accrued benefits, that Mr. Young would be
entitled to receive assuming that his employment was terminated
on March 30, 2007 (our last business day in Fiscal
2007) pursuant to the terms described above:
Fred C.
Young
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Type of Termination
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Salary
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Bonus
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Medical and
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Acceleration of
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($)
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($)
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Other Similar
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Unvested Stock
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Benefit
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Options(2)(3)
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Continuation
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($)
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($)
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Qualifying termination prior to a
Change-in-Control
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1,800,000
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237,500
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23,489
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(4)
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118,334
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Death
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118,334
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Qualifying termination following a
Change-in-Control
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1,800,000
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237,500
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23,489
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(4)
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118,334
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(1)
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The payments shown reflect the maximum amount that would have
been paid. Mr. Youngs agreement contains a provision
which could have the effect of reducing such payments based on
the effect of excise taxes applicable to such payments under the
Code. |
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(2)
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Represents the value of the acceleration of unvested options as
of March 30, 2007 based on the difference between the
exercise price of the unvested options and the closing price of
the Common Stock on Nasdaq as of March 30, 2007. |
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(3)
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In addition, the Employee Plan provides that, regardless of
employment termination, in the event of a
change-in-control,
all then-outstanding options will vest immediately and become
exercisable. For purposes of the Employee Plan, a
change-in-control
of the Company occurs if (i) any person becomes the
beneficial owner, directly or indirectly, of our securities
representing (a) fifty percent (50%) or more of the
combined voting power of our then-outstanding securities or
(b) twenty-five percent (25%) or more but less than fifty
percent (50%) of the combined voting power of our
then-outstanding securities if such transaction(s) giving rise
to such beneficial ownership are not approved by our Board; or
(ii) at any time a majority of the members of our Board
have been elected or designated by any such person; or
(iii) our Board approves a sale of all or substantially all
of our assets or any merger, consolidation, issuance of
securities or purchase of assets, the result of which would be
the occurrence of any event described in clause (i) or
(ii) above. |
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(4)
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Represents the value of continued health, dental and vision
benefits for a three (3) year period based on COBRA
(Consolidated Omnibus Budget Reconciliation Act) rates as of
March 31, 2007. |
Mr. Young resigned from his position as our Chief Executive
Officer and as a director on May 20, 2007. He was not
entitled to any severance, bonus, medical or other similar
benefits under his agreement as a result of such resignation,
although he was entitled to elect to receive medical benefits
under COBRA at his cost. As noted above, Mr. Youngs
agreement provided that, in the event his employment terminated
on or after May 11, 2007 by his resignation at any time
other than at a time when he could have been terminated due to
Cause for Termination, all of his unvested options would have
vested and all of his options would have remained outstanding in
accordance with their respective terms until their stated
expiration date. Our Audit Committee concluded and recommended
to our Board, and our Board determined, that Mr. Young
could have been terminated due to Cause for Termination (as
defined in his agreement) at the time Mr. Young resigned as
a director and as an officer of the Company on May 20, 2007. In
light of that determination and the terms of his agreement and
his stock option agreements, all outstanding stock options held by
Mr. Young terminated as of the date of his resignation.
22
Estimated
Change-in-Control
Payments
The following table sets forth the potential
payments(1),
in addition to accrued benefits, that the Named Executive
Officers, other than Mr. Young, would be entitled to
receive assuming that the Named Executive Officers
employment was terminated on March 30, 2007 (our last
business day in Fiscal 2007) pursuant to the terms
described above in connection with a
Change-in-Control:
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Name
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Salary
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Bonus
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Medical and
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Acceleration of
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($)
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($)
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Other Similar
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Unvested Stock
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Benefit
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Options(2)(3)
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Continuation
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($)
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($)
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R. Terry Blakemore
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500,000
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162,500
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24,966
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(4)
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15,001
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Michael McAndrew
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500,000
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91,576
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19,888
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(4)
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30,002
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Francis W. Wertheimber
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495,551
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(5)
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113,108
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(5)
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7,823
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(6)
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37,501
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Roger E. M. Croft
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244,020
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(5)
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2,825
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(7)
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37,501
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(1)
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The payments shown reflect the maximum amount that would have
been paid. Each agreement with Messrs. Blakemore, McAndrew,
Wertheimber and Croft contains a provision which could have the
effect of reducing such payments based on the effect of excise
taxes applicable to such payments under the Code. |
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(2)
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Represents the value of the acceleration of unvested options as
of March 30, 2007 based on the difference between the
exercise price of the unvested options and the closing price of
the Common Stock on Nasdaq as of March 30, 2007. |
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(3)
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In addition, the Employee Plan provides that, regardless of
employment termination, in the event of a
change-in-control,
all then-outstanding options will vest immediately and become
exercisable. For purposes of the Employee Plan, a
change-in-control
of the Company occurs if (i) any person becomes the
beneficial owner, directly or indirectly, of our securities
representing (a) fifty percent (50%) or more of the
combined voting power of our then-outstanding securities or
(b) twenty-five percent (25%) or more but less than fifty
percent (50%) of the combined voting power of our
then-outstanding securities if such transaction(s) giving rise
to such beneficial ownership are not approved by our Board; or
(ii) at any time a majority of the members of our Board
have been elected or designated by any such person; or
(iii) our Board approves a sale of all or substantially all
of our assets or any merger, consolidation, issuance of
securities or purchase of assets, the result of which would be
the occurrence of any event described in clause (i) or
(ii) above. |
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(4)
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Represents the value of continued health, dental and vision
benefits for a two (2) year period based on COBRA rates as
of March 31, 2007. |
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(5)
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For Messrs. Wertheimber and Croft, this value represents a
conversion from Japanese yen and British pounds sterling,
respectively, to U.S. dollars using exchange rates on
March 30, 2007. |
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(6)
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Represents the value of continued medical and similar benefits
for a two (2) year period beginning March 31, 2007
based on rates determined under the Japanese health care system
and is converted from Japanese yen to U.S. dollars using an
exchange rate as of March 30, 2007. |
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(7)
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Represents the value of continued medical and similar benefits
for a two (2) year period beginning March 31, 2007
based on rates estimated using the amount paid for such benefits
in Fiscal 2007 and is converted from British pounds sterling to
U.S. dollars using an exchange rate as of March 30, 2007. |
23
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is the report of the Audit Committee with respect
to the audited financial statements for Fiscal 2007 included in
the 2007
Form 10-K.
The information contained in this report shall not be deemed to
be soliciting material or to be filed
with the SEC, nor shall such information be incorporated by
reference into any future filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically
incorporates it by reference in such filing.
Review
with Management
The Audit Committee has reviewed and discussed the
Companys audited financial statements with management.
Review
and Discussions with Independent Registered Public Accounting
Firm
The Audit Committee has discussed with BDO, the Companys
independent registered public accounting firm for Fiscal 2007,
the matters required to be discussed by SAS 61, as amended
(Codification of Statements on Accounting Standards), which
includes, among other items, matters related to the conduct of
the audit of the financial statements.
The Audit Committee has also received written disclosures and
the letter from BDO required by Independence Standards Board
Standard No. 1 (which relates to the accountants
independence from the Company and its related entities) and has
discussed with BDO their independence from the Company.
Conclusion
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the Companys
audited financial statements be included in its 2007
Form 10-K.
Audit Committee:
Richard L. Crouch, Chairman
Thomas W. Golonski
Thomas G. Greig
24
EQUITY
PLAN COMPENSATION INFORMATION
The following table sets forth information about our equity
compensation plans as of March 31, 2007:
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|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
Plans
|
|
|
Number of Securities to Be
|
|
|
Weighted-Average
|
|
|
Number of Securities
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Remaining Available for
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Future Issuance Under
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Equity Compensation Plans
|
|
|
|
(#)
|
|
|
($)
|
|
|
(Excluding Securities
|
|
|
|
|
|
|
|
|
|
Reflected in Column (a))
|
|
|
|
|
|
|
|
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved
by security holders
|
|
|
|
4,620,675
|
(1)
|
|
|
|
38.66
|
|
|
|
|
70,918
|
|
Equity compensation plans not
approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
4,620,675
|
|
|
|
|
38.66
|
|
|
|
|
70,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes both vested and unvested options. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information publicly available,
as of March 31, 2007, regarding the beneficial ownership of
our Common Stock by all stockholders, other than Fred C. Young
(whose information is disclosed in the Security
Ownership of Management table set forth below), known
by us to be beneficial owners of more than five percent (5%) of
our outstanding Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
Shares
|
|
|
Shares(8)
|
FMR
Corp.(1)
|
|
|
1,981,025
|
|
|
|
11.3%
|
|
82 Devonshire Street, Boston, MA
02109
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors
LP(2)
|
|
|
1,447,232
|
|
|
|
8.3%
|
|
1299 Ocean Avenue, Santa Monica, CA
90401
|
|
|
|
|
|
|
|
|
|
|
Royce & Associates,
LLC(3)
|
|
|
1,053,078
|
|
|
|
6.0%
|
|
1414 Avenue of the Americas, New
York, NY 10019
|
|
|
|
|
|
|
|
|
|
|
AXA(4)
|
|
|
1,011,756
|
|
|
|
5.8%
|
|
26, rue Drouot, 75009 Paris, France
|
|
|
|
|
|
|
|
|
|
|
Barclays Global Investors,
NA(5)
|
|
|
921,560
|
|
|
|
5.3%
|
|
45 Fremont Street,
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
|
|
LSV Asset
Management(6)
|
|
|
885,161
|
|
|
|
5.1%
|
|
1 N. Wacker Drive, Suite
4000, Chicago, IL 60606
|
|
|
|
|
|
|
|
|
|
|
Sterling Capital Management
LLC(7)
|
|
|
882,972
|
|
|
|
5.0%
|
|
Two Morrocroft Centre, 4064 Colony
Road, Suite 300, Charlotte, NC 28211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes 1,981,025 shares beneficially owned by Fidelity
Management & Research Company (Fidelity),
a wholly-owned subsidiary of FMR Corp. and a registered
investment advisor, of which 1,981,025 shares are owned by
one investment company, Fidelity Low Priced Stock Fund. Edward
C. Johnson 3d, FMR Corp. and the funds each has sole power to
dispose of the 1,981,025 shares owned by the funds. Neither
|
25
|
|
|
|
|
FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power
to vote or direct the voting of the shares owned directly by the
funds, which power resides with the funds Boards of
Trustees. Fidelity carries out the voting of the shares under
written guidelines established by the funds Boards of
Trustees. This information is derived from FMR Corp.s
Schedule 13G filed with the SEC on February 14, 2007. |
|
|
|
(2) |
|
Dimensional Fund Advisors LP (formerly, Dimensional
Fund Advisors Inc. (Dimensional)) is a
registered investment advisor that furnishes investment advice
to four registered investment companies and serves as investment
manager to certain other commingled group trusts and separate
accounts. Dimensional beneficially owns 1,447,232 shares,
of which it has sole voting power and sole dispositive power.
This information is derived from Amendment No. 1 to
Dimensionals Schedule 13G filed with the SEC on
February 1, 2007. |
|
(3) |
|
Royce & Associates, LLC is a registered investment
advisor and beneficially owns 1,053,078 shares, of which it
has sole voting power and sole dispositive power. This
information is derived from Royce & Associates,
LLCs Schedule 13G filed with the SEC on
January 18, 2007. |
|
(4) |
|
Includes 1,200 shares beneficially owned by AXA Konzern AG
(Germany), of which it has sole voting power and sole
dispositive power. Includes 846,758 shares beneficially
owned by AXA Rosenberg Investment Management LLC, of which it
has sole voting power with respect to 358,928 shares and
sole dispositive power with respect to 846,758 shares.
Includes 162,398 shares beneficially owned by
AllianceBernstein L.P., of which it has sole voting power with
respect to 147,623 shares, shared voting power with respect
to 925 shares and sole dispositive power with respect to
162,398 shares. Also includes 1,400 shares
beneficially owned by AXA Equitable Life Insurance Company, of
which it has sole voting power and sole dispositive power. AXA
and its controlling entities, AXA Assurances Vie Mutuelle, AXA
Courtage Assurance Mutuelle and AXA Assurances I.A.R.D.
Mutuelle, are members of a group which is deemed to beneficially
own the shares reported. This information is derived from
Amendment No. 1 to AXAs Schedule 13G filed with
the SEC on February 14, 2007. |
|
(5) |
|
Includes 371,972 shares beneficially owned by Barclays
Global Investors, NA, of which it has sole voting power with
respect to 301,386 shares and sole dispositive power with
respect to 371,972 shares. Includes 538,544 shares
beneficially owned by Barclays Global Fund Advisors, of which it
has sole voting power and sole dispositive power. Includes
11,044 shares beneficially owned by Barclays Global
Investors, Ltd, of which it has sole voting power and sole
dispositive power. This information is derived from
Barclays Schedule 13G filed with the SEC on
January 9, 2007. |
|
(6) |
|
LSV Asset Management (LSV) is a registered
investment advisor and beneficially owns 885,161 shares, of
which it has sole voting power and sole dispositive power. This
information is derived from LSVs Schedule 13G filed with
the SEC on February 12, 2007. |
|
(7) |
|
Sterling Capital Management LLC (Sterling) is a
registered investment advisor whose clients have the right to
receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of the shares of the Companys
Common Stock. Sterling beneficially owns 882,972 shares, of
which it has shared voting power and shared dispositive power.
This information is derived from Sterlings Schedule 13G
filed with the SEC on February 14, 2007. |
|
(8) |
|
Based on 17,527,227 shares outstanding as of March 31,
2007. |
26
SECURITY
OWNERSHIP OF MANAGEMENT
The following table sets forth certain information available to
us, as of March 31, 2007, regarding the shares of our
Common Stock beneficially owned by (i) each of our
directors; (ii) each of our Named Executive Officers and
(iii) all of our directors and executive officers as a
group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
Shares
|
|
|
Shares(4)
|
William F.
Andrews(1)
|
|
|
|
60,002
|
|
|
|
|
*
|
|
R. Terry
Blakemore(2)
|
|
|
|
60,000
|
|
|
|
|
*
|
|
Roger E. M.
Croft(2)
|
|
|
|
121,818
|
|
|
|
|
*
|
|
Richard L.
Crouch(1)
|
|
|
|
11,300
|
|
|
|
|
*
|
|
Thomas W.
Golonski(1)
|
|
|
|
22,500
|
|
|
|
|
*
|
|
Thomas G.
Greig(1)
|
|
|
|
43,003
|
|
|
|
|
*
|
|
Michael
McAndrew(2)
|
|
|
|
157,719
|
|
|
|
|
*
|
|
Edward A.
Nicholson, Ph.D.(1)
|
|
|
|
11,000
|
|
|
|
|
*
|
|
Francis W.
Wertheimber(2)
|
|
|
|
220,106
|
|
|
|
|
1
|
.2
|
%
|
Fred C.
Young(2)
|
|
|
|
1,572,588
|
|
|
|
|
8
|
.3
|
%
|
All directors and executive
officers as a group of eight
(8) persons(3)
|
|
|
|
2,098,218
|
|
|
|
|
10
|
.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes for Messrs. Andrews, Crouch, Golonski and Greig
and Dr. Nicholson: 50,002, 11,000, 22,000, 37,002 and
11,000 shares, respectively, pursuant to rights to acquire
such shares as a result of vested options, as of March 31,
2007 or within sixty (60) days thereafter, granted under
the Director Plan. |
|
(2) |
|
Includes for Messrs. Blakemore, Croft, McAndrew,
Wertheimber and Young: 60,000, 121,817, 157,718, 220,105 and
1,433,735 shares, respectively, pursuant to rights to
acquire such shares as a result of vested options, as of
March 31, 2007 or within sixty (60) days thereafter,
granted under the Employee Plan. For Mr. Young, includes
1,611 shares held by his children or in trust for his
children over which he has shared voting power and shared
investment power. As noted above, one of Mr. Youngs
vested options terminated unexercised as of April 23, 2007
and all other options held by Mr. Young as reflected
in this table terminated as of May 20, 2007, the date of
his resignation. |
|
(3) |
|
Includes for all directors and executive officers as a group
1,942,562 shares pursuant to rights to acquire such shares
as a result of vested options as of March 31, 2007 or
within sixty (60) days thereafter, granted under the
Employee Plan and the Director Plan. Excludes
Messrs. Blakemore and Croft who were not executive officers
as of March 31, 2007. |
|
(4) |
|
Based on 17,527,227 shares outstanding as of March 31,
2007. |
The difference between the amounts set forth in the above table
and the amounts indicated in the footnotes are shares owned
outright either directly or indirectly.
|
|
|
*
|
|
Represents less than 1% of our outstanding Common Stock. |
27
INDEPENDENT
PUBLIC ACCOUNTANTS
Fees
Billed to Us by BDO during Fiscal 2007 and Fiscal 2006
Audit Fees: An aggregate of $2,681,100
was billed for professional services and expenses rendered for
the audit of our annual financial statements for Fiscal 2007,
attestation of managements report on our internal controls
over financial reporting and for the review of financial
statements included in our quarterly reports on
Form 10-Q
during Fiscal 2007. An aggregate of $1,445,000 was billed for
professional services and expenses rendered for the audit of our
annual financial statements for Fiscal 2006, attestation of
managements report on our internal controls over financial
reporting and for the review of financial statements included in
our quarterly reports on
Form 10-Q
during Fiscal 2006.
Audit-Related Fees: An aggregate of
$91,188 in audit-related fees were billed by BDO during Fiscal
2007. No audit-related fees were billed by BDO during Fiscal
2006.
Tax Fees: No tax fees were billed by
BDO during Fiscal 2007 or Fiscal 2006.
All Other Fees: BDO did not render any
other professional services to us during Fiscal 2007 or Fiscal
2006.
All services performed by BDO were pre-approved by our Audit
Committee or its chair.
ADDITIONAL
INFORMATION
FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION
A copy of the 2007
Form 10-K
is available to stockholders. A stockholder may obtain such copy
free of charge on our Web site at
http://www.blackbox.com
or by writing to the Investor Relations Department, Black Box
Corporation, 1000 Park Drive, Lawrence, Pennsylvania 15055 (a
copy of any exhibits thereto will be provided upon payment of a
reasonable charge limited to our cost of providing such
exhibits).
SOLICITATION
OF PROXIES
We will pay the expenses in connection with the printing,
assembling and mailing to the holders of our Common Stock the
Notice of Annual Meeting of Stockholders, this proxy statement
and the accompanying form of proxy. In addition to the use of
the mails, our directors, officers or regular employees may
solicit proxies personally or by telephone or telegraph. We may
request the persons holding stock in their names, or in the
names of their nominees, to send proxy material to, and obtain
proxies from, their principals, and will reimburse such persons
for their expense in so doing.
STOCKHOLDER
NOMINATIONS AND PROPOSALS
Stockholders who believe they are eligible to have their
proposals included in our proxy statement for the annual meeting
expected to be held in August 2008, in addition to other
applicable requirements established by the SEC, must ensure that
their proposals are received by the Secretary of the Company not
later than March 3, 2008.
Our By-laws establish an advance notice procedure for
stockholders to make nominations for the position of director
and to propose business to be transacted at an annual meeting.
Our By-laws provide that notice of nominations for director and
proposals for business must be given to the Secretary of the
Company not later than 150 days prior to the anniversary
date of the prior years annual meeting. For the annual
meeting expected to be held in August 2008, notice of
nominations and proposals under this provision must be received
by May 7, 2008.
Such notice must set forth in reasonable detail information
concerning the nominee (in the case of a nomination for election
to our Board) or the substance of the proposal (in the case of
any other stockholder proposal), and shall include: (i) the
name and residence address and business address of the
stockholder who intends to present the nomination or other
proposal or of any person who participates or is expected to
participate in making such nomination and of the person or
persons, if any, to be nominated and the principal occupation or
employment and the
28
name, type of business and address of the business and
address of the corporation or other organization in which such
employment is carried on of each such stockholder, participant
and nominee; (ii) a representation that the proponent of
the proposal is a holder of record of our stock entitled to vote
at such meeting and intends to appear in person or by proxy at
the meeting to present the nomination or other proposal
specified in the notice; (iii) a description of all
arrangements or understandings between the proponent and any
other person or persons (naming such person or persons) pursuant
to which the nomination or other proposal is to be made by the
proponent; (iv) such other information regarding each
proposal and each nominee as would have been required to be
included in a proxy statement filed pursuant to the proxy rules
of the SEC had the nomination or other proposal been made by our
Board and (v) the consent of each nominee, if any, to serve
as a director on our Board, if elected. Within fifteen
(15) days following the receipt by the Secretary of a
notice of nomination or proposal pursuant hereto, the Secretary
will advise the proponent in writing of any deficiencies in the
notice and of any additional information we require to determine
the eligibility of the proposed nominee or the substance of the
proposal. A proponent who has been notified of deficiencies in
the notice of nomination or proposal
and/or of
the need for additional information must cure such deficiencies
and/or
provide such additional information within fifteen
(15) days after receipt of the notice of such deficiencies
and/or the
need for additional information. The presiding officer of a
meeting of stockholders may, in his or her sole discretion,
refuse to acknowledge a nomination or other proposal presented
by any person that does not comply with the foregoing procedure
and, upon his or her instructions, all votes cast for such
nominee or with respect to such proposal may be disregarded.
Our By-laws do not limit or restrict the ability of a
stockholder to present any proposal made by such stockholder in
accordance with SEC requirements. A copy of our By-laws is
available upon request.
OTHER
MATTERS
Management does not intend to present nor, in accordance with
our By-laws, has it received proper notice from any person who
intends to present, any matter for action by stockholders at the
Annual Meeting to be held on October 4, 2007, other than as
stated in the Notice of Annual Meeting of Stockholders
accompanying this proxy statement. The enclosed proxy, however,
confers discretionary authority with respect to the transaction
of any other business that properly may come before the meeting,
and it is the intention of the persons named in the enclosed
proxy to vote on any such matters in accordance with their best
judgment.
29
q 1000 Park Drive
x Lawrence, Pennsylvania 15055
Y This Proxy is Solicited on Behalf of the |
Board of Directors of the Company |
The undersigned stockholder hereby appoints R. Terry Blakemore and Thomas G. Greig, and each
of them, as proxies for the undersigned, each with full power of substitution for and in the name
of the undersigned to act for the undersigned and to consider and vote, as designated on the
reverse, all of the shares of stock of Black Box Corporation (the Company) that the undersigned
is entitled to vote at the 2007 Annual Meeting of Stockholders of the Company to be held on
Thursday, October 4, 2007, at 12:30 p.m. Eastern Daylight Time, at the offices of Buchanan
Ingersoll & Rooney PC, One Oxford Centre, 301 Grant Street, 20th Floor, Pittsburgh,
Pennsylvania 15219, on the following matters: |
Unless otherwise specified in the squares provided, the proxies shall vote in the election
of directors FOR the nominees listed and FOR proposal number 2, and shall have discretionary power
to vote upon such other matters as may properly come before the meeting or any adjournment
thereof. |
(Continued and to be signed on the reverse side) |
ANNUAL MEETING OF STOCKHOLDERS OF |
Please date, sign and mail |
your proxy card in the
envelope provided as soon
as possible. |
7 Please detach along perforated line and mail in the envelope provided. |
The Board of Directors recommends a vote FOR each of the nominees listed and FOR proposal
number 2. |
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE [x] |
1. Election of five (5) members of the Board of Directors: 2. Ratification of the appointment
of BDO Seidman, LLP as the |
independent registered public accounting firm of the Company
nominees: for the fiscal year ending March 31,2008. |
for all nominees
William F.
Andrews Richard L.
Crouch |
I withhold authority Thomas W. Golonski The Board of Directors has established the close of business on Monday,
I for all nominees Thomas G. Greig August 13, 2007 as the record date for the determination of the stockholders
Edward A. Nicholson, Ph.D. entitled to notice of and to vote at the Annual Meeting. |
INSTRUCTION: To withhold
authority to vote for any individual
nominee(s), mark FOR ALL EXCEPT |
and fill in the circle next to each
nominee you wish to withhold, as
shown here: To change the address on
your account, please check the box at
right and |
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
Signature of Stockholder Date: Signature of Stockholder Date: |
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full |
title as such. If the signer is a corporation, please sign by duly authorized officer, giving
full title as such. If signer is a partnership, please sign in partnership name by authorized
person. |
ANNUAL MEETING OF STOCKHOLDERS OF |
October 4, 2007 PROXY
VOTING INSTRUCTIONS |
MAIL - Date, sign and mail your proxy card in the
|
envelope provided as soon as possible.
-OR-
TELEPHONE Call toll-free 1-800-PROXIES COMPANY NUMBER
(1-800-776-9437) in the United States or 1-718-
921-8500 from foreign countries and follow the ACCOUNT NUMBER |
instructions. Have your proxy card available when |
INTERNET Access www.voteproxy.com and |
follow the on-screen instructions. Have your control number available when you access
the web page. |
You may enter your voting instructions at 1-800-PROXIES in the United States or
1-718-921-8500 from foreign countries or www.voteproxy.com up until 11:59 PM Eastern Time the
day before the cut-off or meeting date. |
Please detach along perforated line and mail in the envelope provided IF you
are not voting via telephone or the Internet, |
The Board of Directors recommends a vote FOR each of the nominees listed and FOR proposal
number 2. |
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE |
1. Election of five (5) members of the Board of Directors: 2. Ratification of the appointment
of BDO Seidman, LLP as the |
independent registered public accounting firm of the Company
I .. NOMINEES: for the fiscal year ending March 31, 2008. |
for all nominees
William F.
Andrews Richard L.
Crouch |
I withhold authority Thomas W. Golonski The Board of Directors has established the close of business on Monday,
for all nominees Thomas G. Greig August 13, 2007 as the record date for the determination of the stockholders
Edward A. Nicholson, Ph.D. entitled to notice of and to vote at the Annual Meeting. |
INSTRUCTION: To withhold
authority to vote for any individual
nominee(s), mark FOR ALL EXCEPT and fill
in the circle next to each nominee you
wish to withhold, as shown here: |
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via I
this method.
Signature of Stockholder | ......................................... | Date: | ............................... [signature of Stockholder | .. | Date: |
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full |
title as such. If the signer is a corporation, please sign by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person. |