Item 10.
Directors, Executive Officers
and Corporate Governance
Directors
The names of the members of our board of
directors (the “Board” or “Board of Directors”) and certain biographical information concerning each of
them are set forth below:
Name
|
|
Age
|
|
Position
|
Frank Guidone
|
|
49
|
|
Chief Executive Officer, President and Director
|
R. Barry Uber
|
|
69
|
|
Director
|
Satish Rishi
|
|
54
|
|
Director
|
Kenneth E. Thompson
|
|
54
|
|
Director
|
Morton L. Topfer
|
|
77
|
|
Director
|
Frank D. Guidone
has served as Chief
Executive Officer since June 2002 and has been a Director since December 2002. Prior to his service with the Company, Mr. Guidone
was a Managing Director/Principal of Corporate Revitalization Partners, a Dallas-based turnaround/crisis management consultancy
firm, from 2000 to 2006, where he guided multiple companies through complex operational and balance sheet restructurings. Mr. Guidone
has been a partner at Four Corners Capital Partners, a boutique private investment firm of which Mr. Guidone is a co-founder, since
1999, and where he retains interests in partnerships that acquired several private companies through leveraged buyouts. Prior to
forming Four Corners, Mr. Guidone spent 13 years in management consulting with Andersen Consulting and George Group, Inc. Throughout
his career, Mr. Guidone has worked with numerous solvent and insolvent companies, focusing on operational and financial restructurings.
Mr. Guidone received a B.S. in mechanical engineering from The University of Texas at Austin. He is a member of the board of Port-A-Cool
LLC, a private Texas-based company jointly owned by Four Corners and Rosewood Private Investments. In assessing Mr. Guidone’s
qualifications to serve on the Company’s Board, our Directors considered his position, history and performance as our Chief
Executive Officer and his extensive experience directly managing and consulting with various manufacturing and service companies,
particularly in the areas of financial and business analysis, corporate development and operational improvements through lean manufacturing.
Additionally, Mr. Guidone’s leadership and strategic vision has guided the Company down a path of consistent profitability
after he became CEO. Mr. Guidone was also instrumental in building the Company organically and through acquisitions into a leading
global sensor company. Mr. Guidone’s leadership experience gives him insight into business strategies, technology trends,
acquisition strategy and financing, each of which represents key opportunities for the Company.
R. Barry Uber
has been a Director
since October 2003. Since 2005, Mr. Uber has been a partner of Coastal Capital Consultants, L.L.C., an investment firm. Mr. Uber
was President and Chief Operating Officer of American Commercial Lines Inc. (formerly American Commercial Barge Line), a provider
of marine transportation and manufacturing services and solutions, from July 2001 to July 2003. From 1998 to 2000, he served as
President and Chief Executive Officer of North American Van Lines. Prior to joining North American Van Lines, Mr. Uber served for
30 years at Ingersoll-Rand Co. Inc., a diversified commercial products manufacturer, where he held increasingly responsible executive
positions, last serving as Corporate Vice President and President of the Construction Machinery Equipment Group. Mr. Uber received
a B.B.A. in business administration from Penn State University where he was awarded an Alumni Fellow Award in 1996. In assessing
Mr. Uber’s qualifications to serve on the Company’s Board, our Directors considered his experience managing manufacturing
companies, his extensive experience with mergers and acquisitions and his
experience as chairman of the board of two private
companies, Tread Corporation and Oneida Molded Plastics LLC.
Satish Rishi
has been a Director
since September 2005. Since April 2006, Mr. Rishi has served as Senior Vice President, Finance and Chief Financial Officer of Rambus,
Inc., a designer of high-speed chip interfaces. From 2001 to April 2006, he served as Executive Vice President and Chief Financial
Officer of Toppan Photomasks, Inc. (formerly DuPont Photomasks, Inc.), a global provider of photomask technology. During his career,
Mr. Rishi has held senior financial management positions at semiconductor and electronics manufacturers. He served as Vice President
and Assistant Treasurer at Dell Inc. from 1999 until 2001, and prior to his service at Dell, spent 13 years at Intel Corp., where
he held financial management positions of increasing responsibility, both in the United States and overseas. His last position
at Intel was Assistant Treasurer. Mr. Rishi received a B.S. with honors in Mechanical Engineering from Delhi College of Engineering,
Delhi University, and an M.B.A. with a concentration in Finance from the Walter J. Hass School of Business, University of California,
Berkeley. In assessing Mr. Rishi’s qualifications to serve on the Company’s Board, our Directors considered his extensive
experience in the technology products manufacturing industry, and strategic planning experience with other technology and manufacturing
companies, particularly in the areas of financial and business analysis and financial planning. In his prior and current roles,
Mr. Rishi has had responsibility over all aspects of business planning, financial reporting, investor relations and information
technology, which experience allows him to provide oversight over our financial reporting and planning processes. In addition,
the determination by the Company’s Board of Directors that Mr. Rishi is an Audit Committee “financial expert”
lends further support to his financial acumen and qualification for serving on the Board of Directors.
Kenneth E. Thompson
has been a Director
since November 2006. Since April 2011, Mr. Thompson has served as Executive Vice President, General Counsel and Corporate Secretary
of Verisk Analytics, Inc., a provider of data, analytical tools and decision support services that help measure, manage and reduce
risk. From October 2006 to March 2011 he served as Senior Vice President, General Counsel and Corporate Secretary of Verisk and
its predecessor, Insurance Services Office, Inc. From January 1997 through September 2006, Mr. Thompson was a partner of McCarter
& English, LLP, a law firm that provided legal services to the Company. Mr. Thompson received a B.A. in Political Science from
the State University of New York at Stony Brook and a J.D. from Boston University School of Law. In assessing Mr. Thompson’s
qualifications to serve on the Company’s Board, our Directors considered his extensive experience representing and advising
manufacturing and technology companies, as well as his expertise in corporate governance, evaluation, oversight, and public company
reporting gained as General Counsel of a public company.
Morton L. Topfer
has been a Director
since January 2002 and has been Chairman of the Board of Directors since January 2003. Mr. Topfer is Managing Director of
Castletop Capital, L.P., an investment firm. He previously served at Dell, Inc., a global systems and services company, as Counselor
to the Chief Executive Officer, from December 1999 to February 2002, and Vice Chairman, from June 1994 to December 1999. Mr. Topfer
was a member of the Board of Directors of Dell from December 1999 to July 2004. Prior to joining Dell, Mr. Topfer served for
23 years at Motorola, Inc., where he held several executive positions, including CEO of a $5 billion segment of the company,
and last served as Corporate Executive Vice President and President of the Land Mobile Products Sector. Mr. Topfer was conferred
the Darjah Johan Negeri Penang State Award in July 1996 by the Governor of Penang for contributions to the development of the electronics
industry in Malaysia. Mr. Topfer also served as a director for Staktek Technologies until December 31, 2005 and Advanced Micro
Devices until July 2009. In assessing Mr. Topfer’s qualifications to serve on the Company’s Board, our Directors considered
his extensive strategic planning experience with other technology and manufacturing companies, particularly in the areas of financial
and business analysis, his extensive experience with electronics manufacturing in Asia, and his
experience as a board member
of several other public companies, including, in addition to those listed above, Bio-Reference Laboratories, Inc., Pharmacia &
Upjohn, Inc., Bally Technologies, Inc. and Autodesk, Inc, and several private companies. Mr. Topfer holds honorary doctorate degrees
from Brooklyn College and Polytechnic Institute of New York.
Executive Officers
The name, present position with the Company
and age of each of the Company’s executive officers are set forth below. Officers are not appointed for fixed terms. Biographical
information for our current officers who are not also members of the Board is set forth below:
Name
|
|
Age
|
|
Position
|
Frank Guidone
|
|
49
|
|
Chief Executive Officer, President and Director
|
Mark Thomson
|
|
46
|
|
Chief Financial Officer and Secretary
|
Glen MacGibbon
|
|
52
|
|
Executive Vice President
|
Joe Gleeson
|
|
40
|
|
Chief Operating Officer
|
Mitch Thompson
|
|
59
|
|
Chief Technology Officer
|
Jeffrey Kostelni
|
|
47
|
|
Treasurer and Vice President – Finance
|
Mark Thomson
was appointed as Chief
Financial Officer and Secretary of the Company effective April 2007. Prior to his appointment, Mr. Thomson held the position of
Vice President and Chief Financial Officer of Allied Aerospace Industries, Inc., a provider of complex engineering solutions for
aerospace & defense contractors and government agencies, since May 2002. Mr. Thomson served as the Senior Director of Finance
& Accounting at the Launch Systems Group of Orbital Sciences Corporation, a designer and manufacturer of small space and rocket
systems, from January 2001 to May 2002 and Group Controller from June 1998 to January 2001, prior to which he held financial management
positions with several subsidiaries of Lockheed Martin, a global designer and manufacturer of aeronautics, electronic systems,
information systems and space systems, from 1991 to 1998. Mr. Thomson is also a member of the board of directors of the Virginia
Air & Space Center and serves on their finance and strategic planning committees. Mr. Thomson is a graduate of the Lockheed
Martin Financial Management program, holds a MBA from the University of Nevada, Reno, a BA in Financial Economics from Saint Anselm
College, and is a graduate of the Harvard Business School General Management program.
Glen MacGibbon
has served as Executive
Vice President since March 2009. Prior to that, he was Group Vice President – Pressure/Force since April 1, 2007, prior to
which he served as Vice President, Global Sales and Marketing of our Sensor Products Division since March 1, 2005. Prior to that,
he was Director of Global Sales & Marketing since joining the Company in 1998. Mr. MacGibbon joined Measurement Specialties
through our 1998 acquisition of PiezoSensors from AMP Incorporated, where he held various sales management roles since 1989. Previously,
he was working in both regional sales and technical support roles for the Riston Division of Dupont Electronics, a supplier of
electronics and advanced display materials. Mr. MacGibbon holds a B.S. in Mechanical Engineering from Bucknell University, and
an M.B.A. from Illinois Benedictine College.
Joe Gleeson
was appointed Chief Operating
Officer effective April 2014. Prior to that, he held the position of Regional Director of Operations – Europe since May 2010.
Mr. Gleeson joined the Company through its 2006 acquisition of BetaTHERM, a designer and manufacturer of precision thermistors
and customized probes used for temperature sensing, where he held operational and engineering management roles since 2001. Mr.
Gleeson held process engineering positions with both Hewlett Packard and Leoni from 1997 to 2000. He holds a bachelor degree in
production engineering from University of Limerick (Ireland).
Mitch Thompson
was appointed Chief
Technology Officer effective March 2011. Prior to that, he was Vice President – Technology since April 2008, having previously
served as Global Engineering Director, Piezo Electric Products. Dr. Thompson joined Measurement Specialties through our 1998 acquisition
of PiezoSensors from AMP Incorporated, a designer and manufacturer of sensor systems and applications, where he held various technical
and management roles since 1986. He holds a B.S. in Meteorology and a M.S. in Mechanical Engineering from Penn State University
and a Ph.D. in Mechanical Engineering from Drexel University.
Jeffrey Kostelni
has served as Treasurer
and Vice President of Finance since January 2008, having previously served as Vice President of Finance from November 2006 until
January 2008, as Corporate Controller from May 2005 until November 2006, and as SEC and Technical Accounting Director from June
2004 until May 2005. Prior to joining the Company, he was the Chief Financial Officer and Treasurer of Bontex, Inc., an international
specialty fiberboard manufacturer, from 1994 to 2004, and held various positions in the audit department of Deloitte & Touche,
a public accounting firm, from 1988 to 1993. Mr. Kostelni holds a Bachelor of Science degree in Accountancy from Villanova University
and is a Certified Public Accountant.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act
requires our directors, executive officers, and the persons who beneficially own more than 10% of our common stock, to file
reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to us.
Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons
have complied with all applicable filing requirements during fiscal 2014, except that (i) Messrs. Topfer, Rishi, Uber and K.
Thompson each had one late Form 4 filing reporting one transaction, (ii) John Arnold, a former director, had three late Form
4 filings reporting a total of four transactions, (iii) Joseph Gleeson had a late Form 3 filing reporting a total of four
transactions, and (iv) Mark Thomson had two late Form 4 filings reporting a total of two transactions.
Code of Conduct
Information regarding our code of ethics
is contained in Part I of the 10-K under the caption “Item 1. Business — Website Access.”
Audit Committee
Our Board has established a standing Audit
Committee in accordance with NASDAQ rules and Section 10A of the Exchange Act and related SEC rules and regulations. The current
members of the Audit Committee are Messrs. Rishi, K. Thompson, and Uber, with Mr. Rishi serving as Chairman of the Audit Committee.
The Board has determined that each of these individuals meets the independence requirements of NASDAQ and SEC rules and regulations.
The Board has also determined that each member of our Audit Committee is financially literate and that Mr. Rishi qualifies as an
“audit committee financial expert” as defined by applicable SEC rules and regulations. Our Audit Committee Charter
is published in the “Investor Relations” section of our website at
www.meas-spec.com
.
Shareholder Recommendations for Board Nominees
Our Nominating Committee evaluates and recommends
to the Board of Directors the persons to be nominated for election as Directors at any meeting of shareholders, and the persons
to be elected by the Board of Directors to fill any vacancy on the Board of Directors. The charter for our Nominating Committee
is available to shareholders in the “Investor Relations” section of our website at
www.meas-spec.com
. We did
not implement any changes to our process for shareholder recommendations of director nominees during fiscal year 2014.
Item 11.
Executive Compensation
Compensation Committee Report
Our Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis with our management and based on the review and discussion,
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Amendment. The Board of
Directors accepted the Compensation Committee’s recommendation. This report is made by the undersigned members of the Compensation
Committee:
R. Barry Uber (Chair)
Morton L. Topfer
Kenneth E. Thompson
Compensation Discussion and Analysis
Through the following questions and answers,
we explain the material elements of our compensation program in place for our Chief Executive Officer, Chief Financial Officer
and the three most highly-compensated executive officers other than the Chief Executive Officer and Chief Financial Officer as
of March 31, 2014 (collectively referred to as our “named executive officers”).
What are the
objectives of our executive compensation programs?
Measurement Specialties,
Inc. is a leader in the design, development and manufacture of sensors and sensor-based systems for original equipment manufacturers
and end users, based on a broad portfolio of proprietary technologies. We operate in highly fragmented markets that are characterized
by high levels of competition. We believe that we need qualified executive officers who are capable of independent thinking and
responsible decision making in order to compete in the markets we serve. Under the direction of the Compensation Committee of our
Board of Directors, we seek to compensate our named executive officers at levels that are competitive so that we may attract, retain
and motivate highly capable executive officers. We also seek to design our compensation programs to align our named executive officers’
interests with those of our shareholders and, in doing so, build long-term value for our shareholders.
Our fiscal 2014 executive
compensation, including base compensation and cash and equity incentive awards, reflect our efforts to realize the objectives of
our executive compensation programs.
What are the
principal components of our executive compensation programs?
Overview:
The
Company’s policy for compensating our named executive officers is intended to support the Company’s short-term and
long-term goals by providing an appropriate mix of compensation elements to effectively balance short-term annual incentives that
reward executives for current performance and the achievement of near-term goals with long-term incentives that reward executives
for performance over a sustained period. To support this policy, our executive compensation programs consist of three principal
components:
|
·
|
long-term equity incentive compensation.
|
We have selected programs
that we believe are commonly used by public companies, both within and outside of our industry, because we believe commonly used
programs are well understood by our shareholders, employees and analysts. We describe each of these principal components below.
Relationship of
the principal components:
The Compensation Committee exercises its judgment in making executive compensation decisions, and
considers various factors within the overall framework of our executive compensation program. While we review each element of compensation
individually and in the aggregate, we do not have a specific policy on the percentage of a named executive officer’s total
compensation that should be “short-term” versus “long-term” nor do we have a specific policy on the percentage
of total compensation that should be “cash” versus “equity.” We allocate the three principal components
of our executive compensation programs in a manner that we believe optimizes each named executive officer’s contribution
to the Company.
Base Salary:
We believe base salaries provide basic compensation at a level that allows us to recruit and retain key executive talent. Base
salaries are based on a combination of factors, primarily the performance of the executive, relative level of responsibility and
experience, salaries of similarly situated executive officers at peer companies and, with respect to the base salaries of named
executive officers other than our Chief Executive Officer, the recommendations of our Chief Executive Officer. Although our Compensation
Committee annually reviews salaries of our named executive officers, our Compensation Committee does not automatically adjust base
salaries if it concludes that adjustments to other components of the executive’s compensation would be more appropriate.
In addition, the employment agreements that we have with certain of our named executive officers provide for fixed annual base
salaries or minimum annual base salaries.
Annual Incentives:
We have provided annual incentive opportunities to our named executive officers to motivate their performance in achieving our
current year business goals. In setting the potential bonus level of a named executive officer, the Compensation Committee considers
such factors as the executive officer’s individual performance and relative level of responsibility. Typically, we adopt
an annual incentive compensation plan each year that establishes specifically identified payout opportunities dependent upon achieving
pre-determined financial performance targets and personal performance objectives. When payments are made under our annual incentive
compensation plan, they are made after the fiscal year-end results are finalized. Our Compensation Committee retains discretion
to determine the portion of an actual accrued aggregate bonus amount that will be paid to our named executive officers, or to pay
a bonus to our named executive officers notwithstanding that no amount was accrued in any year.
Long-Term Incentive
Compensation:
The Compensation Committee uses stock options and restricted stock units (“RSUs”) as an important
part of the long-term incentive compensation program and believes such awards continue to be an effective way to link a named executive
officer’s compensation to the performance of the Company and strengthen the alignment of management and shareholder interests.
Awards are intended to encourage each of the named executive officers to achieve established performance goals, to continue in
the employ of the Company, to enhance their incentive to perform at the highest level, and in general, to further the best interests
of the Company and its shareholders.
Long-term incentive
awards granted by the Compensation Committee consist of stock options and RSUs with time-based and, in fiscal year 2014, performance-based
vesting criteria. The Compensation Committee believes that stock options and RSUs promote the objectives of our executive compensation
program in the following ways:
|
·
|
Encourages officers to take a long-term view of our performance and promote stability within our
executive ranks, facilitating realization of our long-term objectives to create shareholder value;
|
|
·
|
Given the long tenure of our named executive officers, each holds significant unexercised stock
options and unvested RSUs that are expected to have significant value over the long term; and
|
|
·
|
Stock options and RSUs have been effective tools in overall compensation in recruiting, motivating
and retaining skilled officers, and we believe they will continue to be effective tools over the long-term.
|
The number of stock
options and RSUs subject to an award has been computed by taking into account the Company’s performance, the named executive
officer’s individual performance, our retention objectives, and other factors. Additionally, a portion of the RSUs awarded
to our named executive officers in June 2013 are subject to Company performance criteria as further described below under “
Fiscal
2014 Executive Compensation – Long-Term Incentive Compensation
.”
Stock options and RSUs
are generally granted on the first day of the month following the day on which they are approved by the Compensation Committee.
Stock options are priced at 100% of fair market value on the date of grant, which under our equity incentive plans is the closing
market price of our common stock on the date of the grant. Named executive officers benefit from stock option grants only to the
extent the price of our common stock appreciates above the exercise price of the stock options.
Other Benefits:
In addition to the components of compensation discussed above, we also provide certain other benefits to our named executive
officers to ensure that our executive compensation program remains competitive. These other benefits include 401(k) matching, and
health, life and long-term disability insurance premiums. Our Compensation Committee reviews annually the dollar value of these
other benefits to the named executive officers and the cost of providing these other benefits to the Company. However, such review
does not influence the Compensation Committee’s decisions regarding the determination of the principal elements of a named
executive officer’s current level of compensation.
What do we seek to reward and accomplish
through our executive compensation programs?
We provide annual incentive
opportunities primarily to provide performance incentives to our key employees to meet annual performance objectives. Our annual
corporate objectives are measured by sales increases, net income, Adjusted EBITDA margins (defined as earnings before deduction
of interest, taxes, depreciation, amortization, share-based compensation, foreign currency exchange gains and losses, and certain
non-recurring items to sales) and other financial metrics of performance, such as working capital reductions. In the case of our
Chief Executive Officer, our Compensation Committee has also taken into account the strategic direction he has provided the Company
and his stewardship of the Company since the beginning of his involvement with the Company. We provide long-term incentive awards
primarily to motivate and reward key employees over longer periods. Through vesting and forfeiture provisions that we include in
awards of stock options and RSUs, we provide an additional incentive to executives to act in furtherance of our longer-term interests.
An executive whose employment with us terminates before equity-based awards have vested because the executive chooses to leave,
will generally forfeit the unvested portion of the award. As a result, the Compensation Committee believes that providing the named
executive officers with compensation in the form of stock options and RSUs serves to encourage retention of the named executive
officers.
How do we determine
the amount of each principal component of compensation to our executives?
Our Compensation Committee
exercises judgment and discretion in setting compensation for our named executive officers. The Compensation Committee exercises
its judgment and discretion after it has reviewed peer company practices, evaluated the recommendations of our Chief Executive
Officer with respect to named executive officers other than our Chief Executive Officer, and evaluated our corporate performance.
See
“
To what extent do we benchmark and what are the benchmarks that we use?
” below.
Our
named executive officers (other than Steve Smith) each have an employment agreement with us that provides for, among other things,
an annual base salary and an annual target bonus, thereby limiting the discretion of the Compensation Committee with respect to
certain of their compensation, as well as certain post-employment severance payments.
Mr.
Smith announced his retirement as our Chief Operating Officer, effective as of April 1, 2014, and therefore, ceased to be an executive
officer of the Company as of that date and his employment agreement with the Company terminated as of that date.
What is the
role of our executive officers in the compensation process?
Our Compensation Committee
meets periodically with our Chief Executive Officer to address executive compensation, including the rationale for our compensation
programs and the efficacy of the programs in achieving our compensation objectives. The Compensation Committee also relies on our
executive officers to evaluate compensation programs to assure that they are designed and implemented in compliance with laws and
regulations, including SEC reporting requirements. The Compensation Committee relies on the recommendations of our Chief Executive
Officer regarding the performance of individual named executive officers, other than the Chief Executive Officer. At meetings in
fiscal 2014, the Compensation Committee received recommendations from our Chief Executive Officer regarding salary adjustments,
annual incentive, and stock option and RSU awards for our named executive officers. The Compensation Committee believes that it
is important for it to receive the input of the Chief Executive Officer on compensation matters since he is knowledgeable about
the activities of our named executive officers and the performance of their duties and responsibilities, as well as their contributions
to the growth of the Company and its business.
To what extent
do we benchmark and what are the benchmarks that we use?
The Compensation Committee
compares each element of total compensation and total compensation in the aggregate to compensation provided by peer groups of
publicly-traded companies in the sensory devices and similar industries in evaluating the compensation of our named executive officers.
The Compensation Committee typically uses peer group comparisons to assess the reasonableness of its executive compensation decisions
in an effort to ensure that our compensation program remains competitive.
To assist the Compensation
Committee in evaluating the competitiveness of the Company’s executive compensation program for fiscal year 2013, the Compensation
Committee engaged Compensation Consulting Consortium, LLC (“3C Consulting”) to complete a market compensation analysis
of total compensation for the positions held by our named executive officers as compared to a peer group of eighteen companies.
The peer company group was limited by industry and based on annual revenue ranging from approximately one-half to 2.5 times that
of the Company and market capitalization ranging from approximately one-third to 4.5 times that of the Company. The companies comprising
the peer group were Nanometrics Incorporated, Faro Technologies, Inc., Vishay Precision Group, Inc., Mercury Computer Systems,
Inc., X Rite Inc., IPG Photonics Corp., Cognex Corp., American Science & Engineering, Inc., Badger Meter, MTS Systems Corp.,
II-VI Inc., Analogic Corporation, Newport Corp., Park Electrochemical Corp., CTS Corporation, ESCO Technologies, Inc., OSI Systems,
Inc., and Stoneridge, Inc. 3C Consulting’s analyses included the following data collected from the proxy statements of the
peer group companies: (i) base salary, (ii) annual incentive compensation and (iii) long-term incentive compensation including
expected value of stock options. In May 2013, 3C Consulting completed a second market compensation analysis of total compensation
for the positions held by our named executive officers that was used to set executive compensation levels for fiscal 2014. The
May 2013 analysis included a peer group of nineteen companies, removing from the list above X Rite, Inc., which was acquired by
a larger company, and adding MKS Instruments, Inc. and Multi-Fineline Electronics, Inc., based on these companies fitting within
the peer group definition.
The Board of Directors
has adopted a written charter setting forth the functions of the Compensation Committee. This charter is available to shareholders
in the “Investor Relations” section of our website at
www.meas-spec.com
. Under its charter, our Compensation
Committee has the sole authority to retain third party compensation consultants or other advisors to assist the Compensation Committee
in evaluating director, chief executive officer or senior executive compensation, and the sole authority to approve the fees and
other retention terms, and oversee the work of, such consultants or other advisors. As discussed above, 3C Consulting prepared
a market compensation analysis that was used by the Compensation Committee in setting executive compensation for fiscal 2014. The
Compensation Committee considered the independence of 3C Consulting and determined that 3C Consulting is independent based on the
independence factors listed in Nasdaq Rule 5605(d)(3) and that the work performed by 3C Consulting does not raise any conflicts
of interest.
We aim to provide total
target compensation for our Chief Executive Officer that approximates the 65
th
percentile compared to total target compensation
for chief executive officers at companies in our industry and of similar size based on data from published surveys. The Board of
Directors believes that providing our Chief Executive Officer with total target compensation that approximates the 65
th
percentile of the peer group is appropriate given his leadership and role in the growth in sales and profitability that we have
experienced over the past several fiscal years.
What specific
items of corporate performance do we take into account in setting compensation policies and making compensation decisions?
Our corporate performance
primarily impacts the annual incentives and long-term incentive compensation that we provide our named executive officers. We use
or weight items of corporate performance differently in our annual incentive awards and long-term compensation awards and some
items are more determinative than others.
Goals for named executive
officers in fiscal 2014 varied because the scope of responsibility and authority of named executive officers differ. Goals are
generally developed around metrics tied to our growth, profitability and cash flow, including increases in revenue, decreases in
expenses, completion of developments in accordance with budgets and timelines, execution of acquisitions in accordance with targets,
enhanced operational efficiencies and development of additional opportunities for our long-term growth.
How do we determine
when awards are granted, including awards of equity-based compensation?
Historically, our Compensation
Committee has awarded annual bonuses in the quarter following the fiscal year end. The Compensation Committee makes an annual grant
of stock options and/or RSUs following review of pertinent financial information and industry data. In addition, the Compensation
Committee conducts a thorough review of stock option and RSU awards and grant procedures annually. In the case of newly-hired executive
officers or promotions, the Compensation Committee has made awards simultaneous with the executive’s hire or promotion date.
The date on which the Compensation Committee has met has varied from year to year, primarily based on the schedules of Compensation
Committee members and the timing of compilation of data requested by the Compensation Committee.
What factors
do we consider in decisions to increase or decrease compensation materially?
Historically, we have
generally not decreased the base salaries of our named executive officers or materially reduced their annual incentive compensation
targets. Annual incentive compensation may vary since the amount awarded to a named executive officer depends in part upon his
individual performance. As a result, total compensation is effectively decreased if individual or Company performance falls short
of expectations. The factors that we consider in decisions to increase compensation include the individual performance of the executive
and our corporate performance, as discussed above. In recent years, annual incentive compensation has generally been tied to achievement
of Adjusted EBITDA margin as a percentage of sales. For additional discussion of the terms of our fiscal 2014 bonus plan, see below
under “
Fiscal 2014 Executive Compensation – Annual Incentive Compensation
.”
To what extent
does our Compensation Committee consider amounts accumulated or potentially realizable from prior compensation in setting current
compensation?
The primary focus of
our Compensation Committee in setting executive compensation is the named executive officer’s current level of compensation.
Although the Compensation Committee reviews accumulated or potentially realizable compensation, including from previously granted
equity awards, such review generally does not influence the Compensation Committee’s decisions regarding the determination
of a named executive officer’s current level of compensation. This reflects the Compensation Committee’s view that
a named executive officer’s compensation level should reflect the executive’s performance, the Company’s performance
and the executive’s contribution to the Company’s performance. The Compensation Committee further believes that reducing
a named executive officer’s annual direct compensation based on the value of accumulated or potentially realizable compensation
would weaken the competitiveness of the Company’s compensation program and make it more difficult to attract and retain key
executive talent.
What are our
equity or other security ownership requirements for executives?
We provide our named
executive officers with a commensurate portion of their total compensation in the form of stock options and RSUs, which are intended
to reward performance that enhances value for all of our shareholders and strengthen the alignment of management and shareholder
interests. We generally believe that our named executive officers should be able to share in the value they create for all of our
shareholders throughout their careers with us. Therefore, we do not maintain minimum share ownership requirements for our named
executive officers.
Stock options and RSUs
granted by the Compensation Committee generally include time-based vesting criteria. Additionally, a portion of the RSUs awarded
to our named executive officers in June 2013 are subject to Company performance criteria as further described below under “
Fiscal
2014 Executive Compensation – Long –Term Incentive Compensation.”
Why have we
entered into agreements with executive officers that provide for post-employment payments, including following a change-in-control?
The employment agreements
with our named executive officers (other than Mr. Smith, whose employment agreement with us terminated as of April 1, 2014) provide
for post-employment severance if we terminate the applicable executive prior to the expiration of the stated employment term without
“cause” or if the executive terminates for “good reason” (in each case as defined in the executive’s
employment agreement and summarized below). We believe this approach provides us with the flexibility to terminate the applicable
executive at any time and for any reason while providing the executive with the benefit of his or her bargained for compensation.
The Company’s obligations under these agreements would be assumed by a successor to the Company following a “change
in control” (as defined in the executive’s employment agreement and summarized below). We believe it is in our best
interest to have agreements with our named executive officers that maintain their focus on, and commitment to, us notwithstanding
a potential merger or other change of control. The terms of these employment agreements, including the compensation payable thereunder,
were based on our review of the market for key executive talent at the time of hiring and negotiations with the named executive
officer. Additionally, these agreements contain confidentiality and non-competition provisions. For further details on the post-employment
severance payable to our named executive officers, see “—
Potential Payments on Termination or Change in Control
”
below.
Do we have a
policy regarding the recovery of awards or payments if corporate performance measures upon which awards or payments are based are
restated or adjusted in a manner that would reduce the size of an award or payment?
Historically, we did
not have a policy that provided for recovery of an award if a performance measure used to calculate the award was subsequently
adjusted in a manner that would have reduced the size of the award. However, in July 2013 the Company’s Board of Directors
adopted, and our shareholders approved at the Company’s 2013 Annual Meeting, the Performance Incentive Plan (the “Performance
Incentive Plan”). The Performance Incentive Plan provides that in the event our Board of Directors determines that a material
restatement of the Company’s financial results for any of the three prior fiscal years for which audited financial statements
have been prepared is required due to material noncompliance by the Company with any financial reporting requirement under applicable
securities laws and a participant’s award amount would have been lower had the results been properly calculated, the Compensation
Committee will consider such factors related to the restatement as it deems appropriate and has the authority, at its discretion,
to obtain reimbursement from the participant. In addition, the Compensation Committee would take such other actions as it believes
appropriate relating to any such restatement, including potentially seeking recovery of other compensation paid based on the incorrect
results.
How do accounting
considerations impact our compensation practices?
Accounting consequences
are not a material consideration in designing our compensation practices. Under FASB ASC Topic 718, the compensation cost recognized
for an award classified as an equity award is fixed for the particular award and, absent modification, is not revised with subsequent
changes in market prices of our common shares or other assumptions used for purposes of the valuation.
How do tax considerations
impact our compensation practices?
Prior to implementation
of a compensation program and awards under the program, we evaluate the federal income tax consequences, both to us and to our
executives, of the program and awards. In certain cases, we have adjusted the form or manner of some of our compensation programs
in light of tax planning considerations.
Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”) limits our tax deduction each year for compensation to each
of our Chief Executive Officer and our three other highest paid executive officers (excluding the Chief Financial Officer) to $1
million unless, in general, the compensation is paid under a plan that is performance-related, non-discretionary and has been approved
by our shareholders (such as stock options and RSUs that are subject to certain performance criteria). Previously, Section 162(m)
has not had a significant impact on our compensation programs. Going forward, Section 162(m) may impact the Company and the Performance
Incentive Plan will permit the Company to potentially avoid application of certain Section 162(m) tax deduction limitations pursuant
to a qualified performance-based compensation exception under Section 162(m). In any event, we will generally continue to seek
to maximize the tax deductibility of compensation payments to our named executive officers. We may, however, authorize payments
that may not be fully tax deductible, and we reserve the flexibility to do so.
We also seek to structure
compensation in a manner intended to avoid the incurrence of any additional tax, interest or penalties under Section 409A of the
Code. We make no representations or warranty, however, that recipients of any payments, compensation or other benefits will not
incur additional tax, interest or penalties under Section 409A of the Code.
How do risk
considerations impact our compensation practices?
While risk-taking is
a necessary part of growing a business, the Compensation Committee believes that the Company’s executive compensation program
supports the objectives described above without encouraging inappropriate or excessive risk-taking. In reaching this conclusion,
the Compensation Committee considered in particular the following attributes and risk-mitigation features of our program:
|
·
|
Our program’s emphasis on long-term, equity-based compensation, which discourages risk-taking
that produces positive short-term results at the expense of building long-term shareholder value;
|
|
·
|
The balance between stock options and RSUs, which on a combined basis results in what we believe
is an appropriate degree of leverage;
|
|
·
|
Our program’s use of a time horizon over which our executives realize their compensation
consistent with achieving long-term shareholder value; and
|
|
·
|
Our annual cash incentive plan, which encourages annual performance that sustains rather than detracts
from future performance.
|
Non-Binding Advisory Say on Pay Proposal and Recent Changes
in Compensation Practices
In September 2013, our shareholders overwhelmingly
approved the compensation of the Company's named executive officers, with 13,126,645 shares voted in favor of approving such compensation,
99,993 shares voted against and 117,414 shares abstaining. In addition, 1,410,063 shares held by brokers were not voted with respect
to this proposal. The Compensation Committee interpreted these results as a validation of the structure of our pay-for-performance
compensation program and determined to retain our general approach to executive compensation.
Fiscal 2014 Executive Compensation
Base Salaries
In making base salary
decisions for fiscal 2014 for our named executive officers, the Compensation Committee considered (1) the terms of the named executive
officer’s employment agreement, (2) the performance of the named executive officer, (3) his level of responsibility and experience,
(4) overall Company performance levels, and (5) compensation levels of executives of peer companies. The relative weight given
to each of these factors varied by position and individual and was within the sole discretion of the Compensation Committee. As
noted above, although the Compensation Committee reviews base salaries annually, it does not automatically adjust base salaries
on an annual basis.
In June 2013, our Compensation
Committee reviewed the base salaries of Messrs. Guidone, Thomson, MacGibbon, Thompson and Smith and, based on this review, increased
their base salaries to $550,000, $320,000, $260,000, $220,000 and $250,000, respectively, effective November 1, 2013. Mr. Thompson’s
base salary was increased to $237,600 effective July 21, 2014.
Annual Incentive
Compensation
2014 Bonus Plan
For fiscal 2014, we
adopted the fiscal year 2014 Bonus Plan (the “2014 Bonus Plan”). The 2014 Bonus Plan determined the amount of annual
incentive compensation to be awarded to the named executive officers and certain other eligible employees of the Company. The 2014
Bonus Plan established an aggregate target bonus amount for fiscal year 2014 of $5.0 million (the “2014 Aggregate Target
Bonus”). Pursuant to the 2014 Bonus Plan, the Company would accrue an aggregate bonus amount only if the Company’s
fiscal 2014 EBITDA margin as a percentage of sales (excluding the bonus accrual) (“2014 EBITDA Margin”) exceeded 18.5%.
The actual aggregate bonus amount would be based on the amount by which the Company’s fiscal 2014 EBITDA (excluding the bonus
accrual) exceeded the EBITDA (excluding the bonus accrual) that would have resulted if 2014 EBITDA Margin at such level of sales
were equal to 18.5% (the “2014 Excess Amount”). Under the 2014 Bonus Plan, the following amounts would be accrued to
the aggregate bonus amount: (i) 50% of the 2014 Excess Amount up to a maximum accrual equal to the 2014 Aggregate Target Bonus,
plus (ii) 20% of the 2014 Excess Amount above the Aggregate Target Bonus. The actual aggregate bonus amount accrued by the Company
under the 2014 Bonus Plan would be subject to adjustment by the Compensation Committee following the end of the Company’s
2014 fiscal year to determine the amount (if any) that would actually be paid.
The Compensation Committee
determined the portion of an actual accrued aggregate bonus amount under the 2014 Bonus Plan that would be paid to the Company’s
Chief Executive Officer, and determined, in consultation with the Company’s Chief Executive Officer, the amount that will
be paid to the other named executive officers and other eligible employees of the Company. For fiscal 2014, the Company’s
2014 EBITDA Margin as a percentage of sales exceeded 18.5% and a total of $4.1 million was earned based on the Company’s
performance. For the Company’s named executive officers, the Compensation Committee determined that 30% of the total bonus
award earned would be paid in the common stock of the Company and 70% would be paid in cash.
Long-Term Incentive
Compensation
For fiscal 2014, the
Compensation Committee considered the following factors in determining the size of each RSU grant awarded to each named executive
officer:
|
·
|
the executive officer’s individual performance;
|
|
·
|
the executive officer’s potential future contributions to the Company and level of responsibility;
|
|
·
|
retention issues and concerns; and
|
|
·
|
the cost of the awards to the Company.
|
Based on the foregoing,
in June 2013, the Compensation Committee approved awards of time-based restricted stock units (“Time-based Awards”)
and performance-based restricted stock units (“Performance-based Awards”) in accordance with the Company’s 2010
Equity Incentive Plan (the “2010 Equity Incentive Plan”) to certain executives. The purpose of these awards was to
provide members of management the opportunity for additional stock compensation in recognition of the positive performance of the
Company and its stock price and as an important retention tool in light of actual compensation levels in recent years in comparison
to the Company’s executive compensation peer group. The Performance-based Awards also are intended to link a portion of equity
compensation to the continued achievement of operating cash flow performance, a criterion the Compensation Committee believes has
a strong potential to impact longer-term shareholder value creation. Each award, in addition to being subject to customary terms
and conditions as set forth in the 2010 Equity Incentive Plan, is subject to specified vesting conditions summarized below and
represents a contingent right to receive an amount of the Company’s common stock at a future date.
The Time-based Awards
are scheduled to vest based solely on service over a 4-year period, with one-fourth (1/4) of the number of Time-based Awards granted
to each recipient vesting on each of July 1, 2014, 2015, 2016, and 2017. The Performance-based Awards will vest, if at all, on
July 1, 2018 if the Company’s Net Cash Provided by Operating Activities, as reported in the Company’s consolidated
statement of cash flows filed with the SEC or, if such financial statements are not available at the time of determination, as
otherwise disclosed in a press release by the Company (the “Net Cash Provided by Operating Activities”) for at least
one of the fiscal years ending March 31, 2014, 2015, 2016, 2017 or 2018, exceeds the Company’s Net Cash Provided by Operating
Activities for the fiscal year ended March 31, 2013. Following March 31, 2014 the Compensation Committee certified that the performance
condition applicable to the Performance-based Awards had been attained. See the “
Grants of Plan-Based Awards in Fiscal
Year 2014
” table below for information on the equity awards granted to the named executive officers in fiscal 2014.
Subsequent Events
Our Merger with
TE Connectivity Ltd.
On June 18, 2014,
the Company and TE Connectivity Ltd. (“TE”) entered into an agreement and plan of merger (the “Merger Agreement”)
pursuant to which TE agreed to acquire the Company through a merger of an indirect wholly owned subsidiary of TE with and into
the Company (the “Merger”). The Merger Agreement provides for payment to the Company’s shareholders of consideration
at a price of $86.00 in cash per share of Company common stock (the “Merger Consideration”). For further information
regarding the Merger, see “
Background to the Merger
” in the Definitive Proxy Statement filed by the Company
on July 24, 2014.
Treatment of
Our Equity Awards in the Merger
The Merger Agreement
provides that our named executive officers’ equity-based awards (and those of our directors and other employees) will be
treated as set forth below in connection with the Merger. For further information regarding the treatment of our equity awards
in the Merger, see “
Summary—Treatment of Options, Restricted Share Units and Other Equity-Based Awards
”
in the Definitive Proxy Statement filed by the Company on July 24, 2014.
Vested Stock Options and
Restricted Share Units
Stock options and RSUs that
are already vested prior to the effective time of the Merger or are not yet vested prior to the effective time of the Merger but
the vesting of which will fully accelerate at such time will be treated as follows:
|
·
|
Each outstanding stock option to acquire Company common stock that is vested and exercisable as
of the effective time of the Merger will be cancelled and converted into a right to receive the Merger Consideration less the applicable
exercise price of such vested option; and
|
|
·
|
Each award of RSUs that is outstanding and vested immediately prior to the effective time of the
Merger will automatically convert into a right to receive the Merger Consideration.
|
Unvested Stock Options and
Restricted Share Units
Stock options and RSUs that
are not vested prior to the effective time of the Merger and the vesting of which will not accelerate at such time will be treated
as follows:
|
·
|
Each outstanding stock option to acquire Company common stock that is not vested or exercisable
as of the effective time of the Merger will be canceled in exchange for the opportunity to receive the Merger Consideration less
the applicable exercise price of such unvested option; and
|
|
·
|
Each award of RSUs that is outstanding and not vested immediately prior to the effective time of
the Merger will be cancelled in exchange for the opportunity to receive the Merger Consideration.
|
The cash amounts for each unvested option
or RSU will be payable to the applicable holder on the date(s) on which such award was scheduled to become vested pursuant to the
terms of the applicable award agreement in effect as of the date of the Merger Agreement, subject to such holder’s continued
employment with the Company or any of its affiliates until such award becomes vested. However, if at any time prior to the final
scheduled vesting date of such award, the employment of such holder is terminated by the Company or any of its affiliates without
“cause” (as defined in the Merger Agreement), the remaining unpaid cash amount will be paid to such holder within 30
days after such termination. If the employment of such holder terminates for any other reason prior to such final scheduled vesting
date, any unpaid portion of such amount will be forfeited.
Treatment of Our Bonus
Plans in the Merger
For fiscal 2015, we
adopted the fiscal year 2015 Incentive Program (the “2015 Bonus Plan”) under the Performance Incentive Plan. Subject
to the terms and conditions of the Merger Agreement as noted below, the 2015 Bonus Plan determines the amount of annual incentive
compensation to be awarded to the Company’s named executive officers and certain other eligible employees of the Company.
The 2015 Bonus Plan establishes an aggregate target bonus amount for fiscal year 2015 of $5.0 million (the “2015 Aggregate
Target Bonus”). Pursuant to the 2015 Bonus Plan, the Company will accrue an aggregate bonus amount only if the Company’s
fiscal 2015 Adjusted EBITDA margin as a percentage of net sales (excluding the bonus accrual) (“2015 Adjusted EBITDA Margin”)
exceeds 18.5%. The actual aggregate bonus amount will be based on the amount by which the Company’s fiscal 2015 Adjusted
EBITDA (as defined under the Performance Incentive Plan and excluding the bonus accrual) exceeds the Adjusted EBITDA (excluding
the bonus accrual) that would have resulted if the 2015 Adjusted EBITDA Margin at such level of net sales were equal to 18.5% (the
“2015 Excess Amount”). Under the 2015 Bonus Plan, the following amounts will be accrued to the aggregate bonus amount:
(i) 50% of the 2015 Excess Amount up to a maximum accrual equal to the 2015 Aggregate Target Bonus, plus (ii) 20% of the 2015 Excess
Amount above the 2015 Aggregate Target Bonus. The foregoing summary of the 2015 Bonus Plan reflects the Compensation Committee’s
decision in April 2014.
Under the terms of
the Merger Agreement, the performance period for all our annual cash bonus plans (including the 2015 Bonus Plan) will end on the
later of September 30, 2014 or the date of the closing of the Merger, and following such time, TE will pay to each employee of
the Company who participates in such plans and who continues employment with the surviving corporation a cash bonus for such shortened
performance period. For further information regarding the payment of annual cash bonuses in connection with the Merger, see “
The
Merger Agreement—Employee Benefits and Service Credit
” in the Definitive Proxy Statement filed by the Company on
July 24, 2014.
Executive Compensation Tables
Summary Compensation
.
The following table contains summary information concerning the annual compensation for our named executive officers for the fiscal
years ended March 31, 2014, March 31, 2013 and March 31, 2012:
Name and
Principal
Position
|
|
Year
|
|
|
Salary ($)
(1)
|
|
|
Stock
Awards
($) (2)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity Incentive
Plan Compensation
($)
|
|
|
All Other
Compensation
($) (3)
|
|
|
Total ($)
|
|
Frank Guidone, President and Chief Executive Officer
|
|
|
2014
|
|
|
|
522,855
|
|
|
|
1,920,800
|
|
|
|
—
|
|
|
|
500,000
|
(4)
|
|
|
24,774
|
(5)
|
|
|
2,968,429
|
|
|
|
|
2013
|
|
|
|
500,000
|
|
|
|
704,440
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,788
|
(6)
|
|
|
1,222,228
|
|
|
|
|
2012
|
|
|
|
484,615
|
|
|
|
202,118
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,326
|
(7)
|
|
|
704,059
|
|
Mark Thomson, Chief Financial Officer
|
|
|
2014
|
|
|
|
298,308
|
|
|
|
1,200,500
|
|
|
|
—
|
|
|
|
200,000
|
(8)
|
|
|
22,264
|
(9)
|
|
|
1,721,072
|
|
|
|
|
2013
|
|
|
|
275,385
|
|
|
|
288,180
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,278
|
(10)
|
|
|
578,843
|
|
|
|
|
2012
|
|
|
|
260,385
|
|
|
|
65,012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,105
|
(11)
|
|
|
340,502
|
|
Glen MacGibbon, Executive Vice President
|
|
|
2014
|
|
|
|
254,577
|
|
|
|
720,300
|
|
|
|
—
|
|
|
|
115,000
|
(12)
|
|
|
23,110
|
(13)
|
|
|
1,112,987
|
|
|
|
|
2013
|
|
|
|
246,923
|
|
|
|
256,160
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,110
|
(14)
|
|
|
519,193
|
|
|
|
|
2012
|
|
|
|
236,923
|
|
|
|
70,690
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,588
|
(15)
|
|
|
323,201
|
|
Mitch Thompson, Chief Technology Officer
|
|
|
2014
|
|
|
|
208,069
|
|
|
|
960,400
|
|
|
|
—
|
|
|
|
110,000
|
(16)
|
|
|
20,440
|
(17)
|
|
|
1,298,909
|
|
|
|
|
2013
|
|
|
|
194,000
|
|
|
|
240,150
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
434,150
|
|
|
|
|
2012
|
|
|
|
181,923
|
|
|
|
41,374
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
223,297
|
|
Steve Smith, Former Chief Operating Officer
|
|
|
2014
|
|
|
|
239,154
|
|
|
|
384,160
|
|
|
|
—
|
|
|
|
105,000
|
(18)
|
|
|
22,558
|
(19)
|
|
|
750,872
|
|
|
|
|
2013
|
|
|
|
228,462
|
|
|
|
240,150
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,958
|
(20)
|
|
|
482,570
|
|
|
|
|
2012
|
|
|
|
221,923
|
|
|
|
55,921
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,738
|
(21)
|
|
|
291,582
|
|
|
(1)
|
The amounts in this column reflect the actual amounts of salary paid to our named executive officers in fiscal 2014, and reflect
the increase in each executive's base salary, effective as of November 1, 2013. For further details, see “—
Fiscal
2014 Executive Compensation—Base Salaries
” above.
|
|
(2)
|
Reflects the aggregate grant date fair value of stock options and restricted stock units granted
during the fiscal year calculated in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The actual
value, if any, realized by our named executive officers for these awards is a function of the value of the underlying shares if
and when these awards vest and, in the case of the Performance-based Awards, the attainment of the applicable performance condition.
The amounts for the Performance-based Awards granted in June 2013 were calculated based on the probable outcome of the performance
condition as of the grant date, consistent with the estimate of aggregate compensation cost to be recognized over the service period
determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. Following March 31, 2014
the Compensation Committee certified that the performance condition applicable to the Performance-based Awards had been attained.
For a more detailed discussion on assumptions used to calculate the fair value of our awards, refer to Notes 2 and 12 of the Notes
to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2014.
|
|
(3)
|
Excludes perquisites and other personal benefits unless the aggregate amount of such compensation
exceeds $10,000.
|
|
(4)
|
Represents annual incentive compensation award of $350,001 in cash and 2,357 shares of the Company’s
common stock valued at $149,999 earned in fiscal 2014 but paid in June 2014.
|
|
(5)
|
Represents reimbursement of dental expenses of $627, reimbursement of medical expenses of $6,140,
payment of disability insurance premium of $3,982 and employer matching contribution of $14,025 under the Company’s 401(k)
plan.
|
|
(6)
|
Represents reimbursement of dental expenses of $579, reimbursement of medical expenses of $5,727,
payment of disability insurance premium of $3,982 and employer matching contribution of $7,500 under the Company’s 401(k)
plan.
|
|
(7)
|
Represents reimbursement of dental expenses of $532, reimbursement of medical expenses of $5,530,
payment of disability insurance premium of $3,914 and employer matching contribution of $7,350 under the Company’s 401(k)
plan.
|
|
(8)
|
Represents annual incentive compensation award of $139,987 in cash
and 943 shares of the Company’s common stock valued at $60,013
earned in fiscal 2014
but paid in June 2014.
|
|
(9)
|
Represents reimbursement of dental expenses of $627, reimbursement of medical expenses of $6,140,
payment of disability insurance premium of $1,472 and employer matching contribution of $14,025 under the Company’s 401(k)
plan.
|
|
(10)
|
Represents reimbursement of dental expenses of $579, reimbursement of medical expenses of $5,727,
payment of disability insurance premium of $1,472 and employer matching contribution of $7,500 under the Company’s 401(k)
plan.
|
|
(11)
|
Represents reimbursement of dental expenses of $532, reimbursement of medical expenses of $5,530,
payment of disability insurance premium of $1,693 and employer matching contribution of $7,350 under the Company’s 401(k)
plan.
|
|
(12)
|
Represents annual incentive compensation award of $80,507 in cash
and 542 shares of the Company’s common stock valued at $34,493
earned in fiscal 2014
but paid in June 2014.
|
|
(13)
|
Represents reimbursement of dental expenses of $627, reimbursement of medical expenses of $6,140,
payment of disability insurance premium of $2,466 and employer matching contribution of $13,876.92 under the Company’s 401(k)
plan.
|
|
(14)
|
Represents reimbursement of dental expenses of $579, reimbursement of medical expenses of $5,727,
payment of disability insurance premium of $2,466 and employer matching contribution of $7,338 under the Company's 401(k) plan.
|
|
(15)
|
Represents reimbursement of dental expenses of $532, reimbursement of medical expenses of $5,530,
payment of disability insurance premium of $2,488 and employer matching contribution of $7,038 under the Company's 401(k) plan.
|
|
(16)
|
Represents annual incentive compensation award of $76,971 in cash and 519 shares of the Company’
common stock valued at $33,029 earned in fiscal year 2104 but paid in June 2014.
|
|
(17)
|
Represents reimbursement of dental expenses of $627, reimbursement of medical expenses of $6,140,
payment of disability insurance premium of $2,504 and employer matching contribution of $11,169.23 under the Company’s 401(k)
plan.
|
|
(18)
|
Represents annual incentive compensation award of $73,498 in cash and 495 shares of the Company’s
common stock valued at $31,502 earned if fiscal year 2014 but paid in June 2014.
|
|
(19)
|
Represents reimbursement of dental expenses of $242, reimbursement of medical expenses of $3,017,
payment of disability insurance premium of $6,395 and employer matching contribution of $12,903.85 under the Company’s 401(k)
plan.
|
|
(20)
|
Represents reimbursement of dental expenses of $56, reimbursement of medical expenses of $688,
payment of disability insurance premium of $6,395 and employer matching contribution of $6,819 under the Company’s 401(k)
plan.
|
|
(21)
|
Represents payment of disability insurance premium of $7,150 and employer matching contribution
of $6,588 under the Company's 401 (k) plan.
|
Grants of Plan-Based
Awards in Fiscal Year 2014
.
The following table contains information related to (i) the grant of RSUs under the 2010 Equity
Incentive Plan during the fiscal year ended March 31, 2014 to our named executive officers, and (ii) annual incentive compensation
earned by our named executive officers during the fiscal year ended March 31, 2014 and awarded in shares of the Company’s
common stock during the fiscal year ending March 31, 2015. There were no other equity awards granted to our named executive officers
during the fiscal year ended March 31, 2014.
Name
|
|
Award Type
or
Opportunity
|
|
Grant
Date
|
|
Date of
Compensation
Committee
Meeting at which
Grant was
Approved
|
|
All Other Stock
Awards:
Number of
Shares of Stock
or Units (#)
|
|
|
Grant Date Fair
Value of Stock and
Option Awards
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Guidone
|
|
RSU
|
|
7/1/2013
|
|
6/27/2013
|
|
|
40,000
|
(2)(4)
|
|
|
1,920,800
|
|
|
|
AIP (3)
|
|
6/2/2014
|
|
5/28/2014
|
|
|
2,357
|
|
|
|
149,999
|
|
Mark Thomson
|
|
RSU
|
|
7/1/2013
|
|
6/27/2013
|
|
|
25,000
|
(2)(5)
|
|
|
1,200,500
|
|
|
|
AIP (3)
|
|
6/2/2014
|
|
5/28/2014
|
|
|
943
|
|
|
|
60,013
|
|
Glen MacGibbon
|
|
RSU
|
|
7/1/2013
|
|
6/27/2013
|
|
|
15,000
|
(2)(6)
|
|
|
720,300
|
|
|
|
AIP (3)
|
|
6/2/2014
|
|
5/28/2014
|
|
|
542
|
|
|
|
34,493
|
|
Mitch Thompson
|
|
RSU
|
|
7/1/2013
|
|
6/27/2013
|
|
|
20,000
|
(2)(7)
|
|
|
960,400
|
|
|
|
AIP (3)
|
|
6/2/2014
|
|
5/28/2014
|
|
|
519
|
|
|
|
33,029
|
|
Steve Smith
|
|
RSU
|
|
7/1/2013
|
|
6/27/2013
|
|
|
8,000
|
(2)(8)
|
|
|
384,160
|
|
|
|
AIP (3)
|
|
6/2/2014
|
|
5/28/2014
|
|
|
495
|
|
|
|
31,502
|
|
|
(1)
|
Reflects the aggregate grant date fair value of restricted stock units granted during the 2014 fiscal year, and the awards
granted during the 2015 fiscal year related to annual incentive compensation earned in the 2014 fiscal year, calculated in accordance
with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The amounts in this column for Performance-based Awards
were calculated based on the probable outcome of the Net Cash Provided by Operating Activities performance condition as of the
grant date, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as
of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. The actual value, if any, realized by
our named executive officers for these awards is a function of the value of the underlying shares if and when these awards vest
and, in the case of the Performance-based Awards, the attainment of the applicable performance condition. Following March 31, 2014
the Compensation Committee certified that the performance condition applicable to the Performance-based Awards had been attained.
|
|
(2)
|
These amounts reflect the number of shares of the Company’s common stock underlying Time-based Awards and Performance-based
Awards granted during fiscal 2014. For the Performance-based Awards, the amounts reflect the number of shares that will vest, if
at all, on July 1, 2018 if the Company’s Net Cash Provided by Operating Activities for at least one of the fiscal years ending
March 31, 2014, 2015, 2016, 2017 or 2018, exceeds the Company’s Net Cash Provided by Operating Activities for the fiscal
year ended March 31, 2013. For a discussion of the vesting of these awards, see above under “
Fiscal 2014 Executive Compensation
– Long –Term Incentive Compensation
.”
|
|
(3)
|
Represents annual incentive compensation earned for fiscal year 2014 awarded in shares of the Company’s
common stock in June 2014. For a discussion of the performance incentive opportunity available to our named executive officers
and other employees, see above under “
Fiscal 2014 Executive Compensation
–
Annual Incentive Compensation
”.
|
|
(4)
|
Consist of 22,000 Time-based Awards and 18,000 Performance-based Awards.
|
|
(5)
|
Consist of 6,000 Time-based Awards and 19,000 Performance-based Awards.
|
|
(6)
|
Consist of 5,000 Time-based Awards and 10,000 Performance-based Awards.
|
|
(7)
|
Consist of 5,000 Time-based Awards and 15,000 Performance-based Awards.
|
|
(8)
|
Consist of 8,000 Time-based Awards.
|
Outstanding
Equity Awards at Fiscal Year-End 2014.
The following table contains information concerning unexercised options and RSUs
held as of March 31, 2014 by our named executive officers. There were no other outstanding equity awards held by our named executive
officers as of March 31, 2014.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exerciseable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexerciseable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or Units
of Stock
that
Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares
or Units
of Stock
that
Have Not
Vested
($)(1)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Guidone
|
|
|
48,000
|
(2)
|
|
|
—
|
|
|
|
26.91
|
|
|
12/1/2020 (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
60,000
|
(3)
|
|
|
—
|
|
|
|
7.10
|
|
|
7/1/2017 (3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
280,410
|
(4)
|
|
|
—
|
|
|
|
25.52
|
|
|
3/31/2016 (4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
13,334
|
(5)
|
|
|
—
|
|
|
|
23.90
|
|
|
12/3/2015 (5)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
16,500
|
(21)
|
|
|
1,119,525
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
22,000
|
(22)
|
|
|
1,492,700
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
18,000
|
(23)
|
|
|
1,221,300
|
|
Mark Thomson
|
|
|
24,000
|
(6)
|
|
|
—
|
|
|
|
26.91
|
|
|
12/1/2020 (6)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
30,000
|
(7)
|
|
|
—
|
|
|
|
7.10
|
|
|
7/1/2017 (7)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
21,124
|
(8)
|
|
|
—
|
|
|
|
22.53
|
|
|
4/2/2017 (8)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,667
|
(9)
|
|
|
—
|
|
|
|
23.90
|
|
|
12/3/2015 (9)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
6,750
|
(21)
|
|
|
457,988
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
6,000
|
(22)
|
|
|
407,100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
19,000
|
(23)
|
|
|
1,289,150
|
|
Glen MacGibbon
|
|
|
24,000
|
(10)
|
|
|
—
|
|
|
|
26.91
|
|
|
12/1/2020 (10)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
30,000
|
(11)
|
|
|
—
|
|
|
|
7.10
|
|
|
7/1/2017 (11)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
25,000
|
(12)
|
|
|
—
|
|
|
|
4.85
|
|
|
12/1/2017 (12)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,600
|
(13)
|
|
|
—
|
|
|
|
24.14
|
|
|
11/9/2015 (13)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,666
|
(14)
|
|
|
—
|
|
|
|
23.90
|
|
|
12/3/2015 (14)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8,000
|
(15)
|
|
|
—
|
|
|
|
23.63
|
|
|
7/2/2017 (15)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
6,000
|
(21)
|
|
|
407,100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,000
|
(22)
|
|
|
339,250
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
(23)
|
|
|
678,500
|
|
Mitch Thompson
|
|
|
21,000
|
(16)
|
|
|
—
|
|
|
|
26.91
|
|
|
12/1/2020 (16)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10,000
|
(17)
|
|
|
—
|
|
|
|
7.10
|
|
|
7/1/2017 (17)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,000
|
(18)
|
|
|
—
|
|
|
|
4.85
|
|
|
12/1/2017 (18)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,334
|
(19)
|
|
|
—
|
|
|
|
17.08
|
|
|
5/1/2016 (19)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,000
|
(20)
|
|
|
—
|
|
|
|
23.09
|
|
|
11/22/2016 (20)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,625
|
(21)
|
|
|
381,656
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,000
|
(22)
|
|
|
339,250
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
(23)
|
|
|
1,017,750
|
|
Steve Smith
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,625
|
(21)
|
|
|
381,656
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
8,000
|
(24)
|
|
|
542,800
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
The market value of the restricted stock units was calculated by multiplying the number of restricted
stock units by $67.85, the closing price of our common stock on March 31, 2014.
|
|
(2)
|
Represents the grant of 48,000 non-qualified stock options that vested in three equal installments
of 16,000 on December 1, 2011, 2012 and 2013 and expire on December 1, 2020.
|
|
(3)
|
Represents the grant of 60,000 non-qualified stock options that vested in three equal installments
of 20,000 on July 1, 2010, 2011 and 2012 and expire in three equal installments of 20,000 on July 1, 2015, 2016 and 2017.
|
|
(4)
|
Represents the grant of 280,410 non-qualified stock options that vested in five equal installments
of 56,082 on March 31, 2007, 2008, 2009, 2010, and 2011 and expire on March 31, 2016.
|
|
(5)
|
Represents the grant of 20,001 non-qualified stock options that vested in three equal installments
of 6,667 on December 3, 2008, 2009 and 2010 and expire in three equal installments of 6,667 on December 3, 2013, 2014 and 2015.
|
|
(6)
|
Represents the grant of 24,000 non-qualified stock options that vested in three equal installments
of 8,000 on December 1, 2011, 2012 and 2013 and expire on December 1, 2020.
|
|
(7)
|
Represents the grant of 30,000 non-qualified stock options that vested in three equal installments
of 10,000 on July 1, 2010, 2011 and 2012 and expire in three equal installments of 10,000 on July 1, 2015, 2016 and 2017.
|
|
(8)
|
Includes (a) 27,810 non-qualified stock options that vested in five equal installments of 5,562
on April 2, 2008, 2009, 2010, 2011 and 2012 and expire in five equal installments of 5,562 on April 2, 2013, 2014, 2015, 2016 and
2017, and (b) 25,000 non-qualified stock options that vested in five equal installments of 5,000 shares on April 2, 2008, 2009,
2010, 2011 and 2012 and expire in five equal installments on April 2, 2013, 2014, 2015, 2016 and 2017.
|
|
(9)
|
Represents the grant of 5,001 non-qualified stock options that vested in three equal installments
of 1,667 on December 3, 2008, 2009, and 2010 and expire in three equal installments of 1,667 on December 3, 2013, 2014, and 2015.
|
|
(10)
|
Represents the grant of 24,000 non-qualified stock options that vested in three equal installments
of 8,000 on December 1, 2011, 2012 and 2013 and expire on December 1, 2020.
|
|
(11)
|
Represents the grant of 30,000 non-qualified stock options that vested in three equal installments
of 10,000 on July 1, 2010, 2011 and 2012 and expire in three equal installments of 10,000 on July 1, 2015, 2016 and 2017.
|
|
(12)
|
Represents the grant of 25,000 non-qualified stock options that vested in four equal installments
of 6,250 on December 1, 2009, 2010, 2011 and 2012 and expire in four equal installments of 6,250 on December 1, 2014, 2015, 2016
and 2017.
|
|
(13)
|
Represents the grant of 4,000 incentive stock options that vested in five equal installments of
800 on November 9, 2006, 2007, 2008, 2009 and 2010 and expire in five equal installments of 800 on November 9, 2011, 2012, 2013,
2014 and 2015.
|
|
(14)
|
Represents the grant of 9,999 non-qualified stock options that vested in three equal installments
of 3,333 on December 3, 2008, 2009 and 2010 and expire in three equal installments of 3,333 on December 3, 2013, 2014 and 2015.
|
|
(15)
|
Represents the grant of 10,000 non-qualified stock options that vested in five equal installments
of 2,000 on July 2, 2008, 2009, 2010, 2011 and 2012 and expire in five equal installments of 2,000 on July 2, 2013, 2014, 2015,
2016, and 2017.
|
|
(16)
|
Represents the grant of 21,000 non-qualified stock options that vested in three equal installments
of 7,000 on December 1, 2011, 2012 and 2013 and expire on December 1, 2020.
|
|
(17)
|
Represents the grant of 15,000 non-qualified stock options that vested in three equal installments
of 5,000 on July 1, 2010, 2011 and 2012 and expire in three equal installments of 5,000 on July 1, 2015, 2016 and 2017.
|
|
(18)
|
Represents the grant of 12,000 non-qualified stock options that vested in four equal installments
of 3,000 on December 1, 2009, 2010, 2011 and 2012 and expire in four equal installments of 3,000 on December 1, 2014, 2015, 2016
and 2017.
|
|
(19)
|
Represents the grant of 10,000 non-qualified stock options that vested in two installments of 3,333
on each of May 1, 2009 and 2010 and one installment of 3,334 on May 1, 2011 and expire in two installments of 3,333 on each of
May 1, 2014 and 2015 and one installment of 3,334 on May 1, 2016, respectively.
|
|
(20)
|
Represents the grant of 5,000 incentive stock options that vested in five equal installments of
1,000 on November 22, 2007, 2008, 2009, 2010 and 2011 and expire in five equal installments of 1,000 on November 22, 2012, 2013,
2014, 2015 and 2016.
|
|
(21)
|
Amounts represent grants of restricted stock units outstanding as of March 31, 2014, which are
scheduled to vest solely based on service in equal installments on July 2, 2014, 2015 and 2016 and vest in full upon a change in
control of the Company.
|
|
(22)
|
Amounts represent grants of restricted stock units outstanding as of March 31, 2014, which are
scheduled to vest solely based on service in four equal installments on July 1, 2014, 2015, 2016 and 2017 and vest in full upon
a change in control of the Company.
|
|
(23)
|
Amounts represent grants of Performance-based Awards outstanding as of March 31, 2014. The Performance-based Awards will vest,
if at all, on July 1, 2018 if the Company’s Net Cash Provided by Operating Activities Net Cash Provided by Operating Activities
for at least one of the fiscal years ending March 31, 2014, 2015, 2016, 2017 or 2018, exceeds the Company’s Net Cash Provided
by Operating Activities for the fiscal year ended March 31, 2013, and vest in full upon a change in control of the Company. Following
March 31, 2014 the Compensation Committee certified that the performance condition applicable to the Performance-based Awards had
been attained.
|
|
(24)
|
Amounts represent grants of restricted stock units outstanding as of March 31, 2014, which are
scheduled to vest solely based on service in four equal installments on July 1, 2014 and 2015 and vest in full upon a change in
control of the Company.
|
Option Exercises and Stock Vested
in Fiscal Year 2014
.
The following table sets forth certain information concerning option exercises by our named executive
officers and vesting of RSUs held by them during the fiscal year ended March 31, 2014:
Name
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
shares acquired
on exercise
|
|
|
Value realized on
exercise ($)(1)
|
|
|
Number of shares
acquired on
vesting
|
|
|
Value realized on
vesting ($)(2)
|
|
Frank Guidone
|
|
|
76,257
|
|
|
|
3,418,615
|
|
|
|
5,500
|
|
|
|
263,505
|
|
Mark Thomson
|
|
|
54,710
|
|
|
|
1,929,110
|
|
|
|
2,250
|
|
|
|
107,798
|
|
Glen MacGibbon
|
|
|
6,133
|
|
|
|
184,758
|
|
|
|
2,000
|
|
|
|
95,820
|
|
Mitch Thompson
|
|
|
4,667
|
|
|
|
239,487
|
|
|
|
1,875
|
|
|
|
89,831
|
|
Steve Smith
|
|
|
26,000
|
|
|
|
697,311
|
|
|
|
1,875
|
|
|
|
89,831
|
|
|
(1)
|
Based on the market price of our common stock on the date of exercise.
|
|
(2)
|
Based on the market price of our common stock on the vesting date.
|
Potential Payments on Termination or Change in Control
The Company maintains employment agreements with Messrs. Guidone,
Thomson, MacGibbon, Thompson and Smith that generally set forth the terms and conditions of the named executive officer’s
employment with us and provide for certain payments and benefits upon the named executive officer’s termination of employment
with us under certain circumstances. Pursuant to the terms of these agreements, Messrs. Guidone, Thomson, MacGibbon and Thompson
are each entitled to compensation and vesting of equity awards in the case of (i) termination of employment by death or disability,
(ii) termination by the Company other than for “cause” or by the executive for “good reason”, and (iii)
termination by the Company within two years after a “change in control” other than for “cause” or by the
executive for “good reason”. A summary of the terms “cause”, “good reason”, and “change
in control” is below.
Potential Payments on Termination
by Death or Disability
. The employment agreements with Messrs. Guidone, Thomson, MacGibbon and Thompson provide that, in
the event of such executive’s death or permanent disability prior to the termination of his employment with the Company,
the estate of such executive or the executive, as applicable, will be entitled to:
|
·
|
a pro rata portion of his target annual bonus for the fiscal year in which such termination occurs;
|
|
·
|
reimbursement of the employer portion of the applicable premium for 12 months of continued health and dental coverage; and
|
|
·
|
full vesting of all outstanding unvested equity awards.
|
Potential Payments on Termination
Other Than for Cause or for Good Reason.
In the event of termination by the Company other than for “cause”
or by the executive for “good reason”, each of Messrs. Guidone, Thomson, MacGibbon and Thompson would receive the following
payments and benefits (subject to the executive’s execution and non-revocation of a release of claims in favor of the Company):
|
·
|
an amount equal to 100% (150% for Mr. Guidone) of his base salary in effect as of the date of such termination, payable in
equal installments over 12 months (or for Mr. Guidone, in a lump sum within 20 days) following the effective date of the release;
|
|
·
|
a pro rata portion of his target annual bonus for the fiscal year in which such termination occurs;
|
|
·
|
reimbursement of the employer portion of the applicable premium for 12 months of continued health and dental coverage; and
|
|
·
|
full vesting of all outstanding unvested equity awards.
|
Potential Payments on Termination
Following a Change In Control.
In the event of termination by the Company coincidental with or within two years after a
“change in control” other than for “cause” or by the executive for “good reason”, each of Messrs.
Guidone, Thomson, MacGibbon and Thompson would receive the following payments and benefits (subject to the executive’s execution
and non-revocation of a release of claims in favor of the Company):
|
·
|
an amount equal to 150% (200% for Mr. Guidone) of the sum of (i) his base salary in effect as of the date of such termination
and (ii) his target annual bonus for the fiscal year in which such termination occurs, payable in equal installments over 18 months
(or for Mr. Guidone, in a lump sum within 20 days) following the effective date of the release;
|
|
·
|
a pro rata portion of his target annual bonus for the fiscal year in which such termination occurs;
|
|
·
|
reimbursement of the employer portion of the applicable premium for 18 months of continued health and dental coverage; and
|
|
·
|
full vesting of all outstanding unvested equity awards.
|
If such payments and benefits would result
in the executive’s being subject to the 20% excise tax imposed on “excess” transaction-related payments and benefits
under Section 4999 of the Code, the total amount of such payments and benefits would be reduced if and to the extent that such
reduction would result in a greater after-tax payment to the executive.
“Cause” is defined as follows in each executive’s
employment agreement:
|
·
|
any act or omission that constitutes a material breach by the executive of any of his obligations under the agreement or any
material written policy of the Company or any of its affiliates, assuming such obligations are lawful;
|
|
·
|
the failure by the executive to follow any lawful reasonable direction of the Board (or the Chief Executive Officer, for each
executive other than Mr. Guidone) that is material and is consistent with the executive’s obligations under his employment
agreement; or
|
|
·
|
the executive’s refusal to discharge his duties pursuant to the agreement, assuming such duties are lawful;
|
|
·
|
the conviction of the executive of a felony or a crime involving fraud, moral turpitude, misappropriation or dishonesty.
|
In each case (other than in the case of
conviction of a felony or a crime described above), the executive has the right to cure the event alleged to constitute cause for
30 days after he receives written notice from the Board (or the Chief Executive Officer, in the case of each executive other than
Mr. Guidone).
“Good Reason” is defined as follows in each executive’s
employment agreement:
|
·
|
the Company is in default of any material obligations under the agreement;
|
|
·
|
any material diminution in title, job responsibilities, power, authority, or duties of the executive (other than a change in
the executive’s reporting structure);
|
|
·
|
without the executive’s consent, the executive’s principal place of employment is relocated beyond 40 miles from
his current office location; or
|
|
·
|
any reduction of the executive’s target annual bonus percentage.
|
In each case (i) the executive must provide
written notice to the Company of such action, (ii) such action must exist for 30 days after the executive provides notice, (iii)
the executive must provide the Company at least ten days to cure such action after the Company’s receipt of notice and (iv)
the executive must resign within 30 days following the occurrence of such action.
“Change in Control” is defined as follows in each
executive’s employment agreement:
|
·
|
any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary;
|
|
·
|
any merger, consolidation, conversion transaction or reorganization of the Company with or into any other entity or entities
that results in the conversion or exchange of outstanding common stock (or any securities into which such common stock may be converted
or exchanged) of the Company for securities issued or other consideration paid or caused to be issued or paid by any such entity
or affiliate thereof (other than a merger of the Company with or into another entity that does not result in the holders of common
stock immediately prior to the consummation of such transaction ceasing to own a majority of the voting securities of the entity
surviving or resulting from the merger); or
|
|
·
|
any sale, transfer or disposition of all or substantially all of the property or assets of the Company (the sale, transfer
or disposition of substantially all of the property or assets of the Company shall mean the sale of property or assets, in a single
transaction or a series of related transactions, having a value in excess of 50% of the value of assets reflected on the balance
sheet of the Company immediately prior to the first such sale).
|
The employment agreement that was in place
with Mr. Smith provided that if the Company terminated his employment other than in the event of death, unwillingness or inability
to perform his duties, a criminal conviction, or acts of dishonesty, fraud or gross negligence in connection with the performance
of his duties to the Company (after those acts have been disclosed and Mr. Smith was accorded an opportunity to respond to the
Company), Mr. Smith would be entitled to receive, subject to his execution and non-revocation of a release of claims in favor of
the Company, (i) 100% of his annual salary in effect at the time of such termination to be paid in equal installments over 12 months
following the date of termination, (ii) a pro-rata portion of his accrued annual bonus for the fiscal year of termination, and
(iii) an allowance for repatriation and relocation of up to a maximum of $10,000. Mr. Smith announced his retirement as our Chief
Operating Officer, effective as of April 1, 2014 and his employment agreement with the Company terminated as of that date.
The following table quantifies the payments
and benefits that each of our named executive officers would have received had his employment terminated or had a change in control
of the Company occurred, in each case on March 31, 2014, under the Company’s compensation and benefit plans and arrangements,
and under each such executive’s respective employment agreement, as applicable. For summaries of the treatment of our named
executive officers’ equity awards under the terms of the Merger Agreement, see “
Subsequent Events—Treatment
of Our Equity Awards in the Merger
” above and “
Summary—Interests of Company Directors and Executive Officers
in the Merger
”
in the Definitive Proxy Statement filed by the Company on July 24, 2014.
Name
|
|
Cash Severance
Payment ($)
|
|
|
Acceleration of
Equity Awards
($)(1)
|
|
|
Benefits
($)(2)
|
|
|
Total Termination
Benefits ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Guidone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Death
or Permanent Disability
|
|
|
550,000
|
(3)
|
|
|
3,833,525
|
|
|
|
19,388
|
|
|
|
4,402,913
|
|
Termination Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
·
Without
Cause or for Good Reason
|
|
|
1,375,000
|
(3)(4)
|
|
|
3,833,525
|
|
|
|
19,388
|
|
|
|
5,227,913
|
|
Termination Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
3,833,525
|
|
|
|
—
|
|
|
|
3,833,525
|
|
·
Without
Cause or for Good Reason
|
|
|
2,750,000
|
(3)(5)
|
|
|
3,833,525
|
|
|
|
29,082
|
|
|
|
6,612,607
|
|
Mark Thomson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Death
or Permanent Disability
|
|
|
176,000
|
(3)
|
|
|
2,154,238
|
|
|
|
19,418
|
|
|
|
2,349,655
|
|
Termination Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
·
Without
Cause or for Good Reason
|
|
|
496,000
|
(3)(4)
|
|
|
2,154,238
|
|
|
|
19,418
|
|
|
|
2,669,655
|
|
Termination Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
2,154,238
|
|
|
|
—
|
|
|
|
2,154,238
|
|
·
Without
Cause or for Good Reason
|
|
|
920,000
|
(3)(5)
|
|
|
2,154,238
|
|
|
|
29,127
|
|
|
|
3,103,365
|
|
Glen MacGibbon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Death
or Permanent Disability
|
|
|
143,000
|
(3)
|
|
|
1,424,850
|
|
|
|
19,608
|
|
|
|
1,587,458
|
|
Termination Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause, Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
·
Without Cause or for Good Reason
|
|
|
403,000
|
(3)(4)
|
|
|
1,424,850
|
|
|
|
19,608
|
|
|
|
1,847,458
|
|
Termination Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
1,424,850
|
|
|
|
—
|
|
|
|
1,424,850
|
|
·
Without
Cause or for Good Reason
|
|
|
747,500
|
(3)(5)
|
|
|
1,424,850
|
|
|
|
29,411
|
|
|
|
2,201,761
|
|
Mitch Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Death
or Permanent Disability
|
|
|
110,000
|
(3)
|
|
|
1,738,656
|
|
|
|
19,543
|
|
|
|
1,868,199
|
|
Termination Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
1,738,656
|
|
|
|
—
|
|
|
|
1,738,656
|
|
·
Without
Cause or for Good Reason
|
|
|
330,000
|
(3)(4)
|
|
|
1,738,656
|
|
|
|
19,543
|
|
|
|
2,088,199
|
|
Termination Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
1,738,656
|
|
|
|
—
|
|
|
|
1,738,656
|
|
·
Without
Cause or for Good Reason
|
|
|
605,000
|
(3)(5)
|
|
|
1,738,656
|
|
|
|
29,314
|
|
|
|
2,372,970
|
|
Steve Smith (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Death
or Permanent Disability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Termination Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
·
Without
Cause or for Good Reason
|
|
|
375,000
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
385,000
|
|
Termination Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause,
Voluntary Resignation, or Retirement
|
|
|
—
|
|
|
|
924,456
|
|
|
|
—
|
|
|
|
924,456
|
|
·
Without
Cause or for Good Reason
|
|
|
375,000
|
|
|
|
924,456
|
|
|
|
10,000
|
|
|
|
1,309,456
|
|
|
(1)
|
The terms of stock options and restricted stock units awarded to the named executive officers provide
that the vesting of such awards is accelerated upon a change in control of the Company. This acceleration occurs whether or not
there is a termination of employment. The acceleration of any unvested restricted stock units at March 31, 2014 is based on the
closing price of our common stock on March 31, 2014.
|
|
(2)
|
Benefits are for health and dental coverage premium reimbursement except for Mr. Smith which is
an allowance for repatriation and relocation (in each case as described above).
|
|
(3)
|
The employment agreements for Messrs. Guidone, Thomson, MacGibbon and Thompson provide for the payment of a pro rata portion
of such executive’s target annual bonus for the fiscal year of termination on a termination of employment due to death, disability,
by the Company other than for “cause” or by the executive for “good reason” (whether or not coincidental
with or within two years following a “change in control”). Because the amounts in this column assume termination on
the last day of fiscal 2014, the amounts for the executives' bonuses reflect the full amounts of their target bonuses. Pursuant
to their employment agreements, our named executive officers (other than Mr. Smith) would have also been eligible for the following
target annual bonuses, expressed as a percentage of their annual base salary in effect as of March 31, 2014: for Mr. Guidone, 100%,
for Mr. Thomson, 55%, for Mr. MacGibbon, 55% and for Mr. Thompson, 50%. For each executive’s annual base salary in effect
as of March 31, 2014, see “—
Fiscal 2014 Executive Compensation—Base Salaries
” above.
|
|
(4)
|
This amount includes the payment of an amount equal to 100% (150% for Mr. Guidone) of the executive’s
base salary in effect as of March 31, 2014, assuming his employment was terminated by the Company other than for “cause”
or by the executive for “good reason” (in each case as defined above) as of such date.
|
|
(5)
|
This amount includes the payment of an amount equal to 150% (200% for Mr. Guidone) of the sum of
(i) the executive’s base salary in effect as of March 31, 2014 and (ii) the executive’s target annual bonus for the
fiscal year 2014, assuming his employment was terminated by the Company on March 31, 2014 other than for “cause” or
by the executive for “good reason”, and such termination was within two years following a “change in control”
(as defined above).
|
|
(6)
|
Mr. Smith’s employment agreement provides for the payment of (i) an amount equal to 100%
of Mr. Smith’s annual base salary in effect as of March 31, 2014 and (ii) a pro-rata portion of his accrued annual bonus
for fiscal 2014 if the Company terminated his employment other than in the event of death, unwillingness or inability to perform
his duties, a criminal conviction, or acts of dishonesty, fraud or gross negligence in connection with the performance of his duties
to the Company (after those acts have been disclosed and Mr. Smith was accorded an opportunity to respond to the Company). Because
the amounts in this column assume termination on the last day of fiscal 2014, the amount for Mr. Smith’s bonus reflects the
full amount of the bonus payment. Mr. Smith retired as the Company’s Chief Operating Officer effective April 1, 2014 and
his employment agreement with the Company terminated as of such date.
|
Director Compensation
For fiscal 2014, each
of our non-employee directors received an annual cash retainer of $40,000 payable in equal quarterly installments. In addition,
for fiscal 2014 service, each of our non-employee directors received an annual grant on May 1, 2013 of options to purchase 6,500
shares of our common stock at an exercise price of $41.09 per share. The options were granted under the 2010 Equity Incentive Plan
and vested on May 1, 2014. Directors who are our employees do not receive additional compensation for serving on our Board of Directors
or on committees of the Board of Directors. Mr. Guidone, as President and Chief Executive Officer, is the only member of the Board
of Directors who is also an employee. For fiscal 2014, directors who are not employees or full-time consultants of the Company
each received compensation as follows:
Name
|
|
Fees Earned or
Paid in Cash ($)
|
|
|
Option Awards ($)(1)
|
|
|
Total ($)
|
|
Satish Rishi
|
|
|
40,000
|
|
|
|
267,085
|
(2)
|
|
|
307,085
|
|
Kenneth E. Thompson
|
|
|
40,000
|
|
|
|
267,085
|
(3)
|
|
|
307,085
|
|
Morton L. Topfer
|
|
|
40,000
|
|
|
|
267,085
|
(4)
|
|
|
307,085
|
|
R. Barry Uber
|
|
|
40,000
|
|
|
|
267,085
|
(5)
|
|
|
307,085
|
|
John D. Arnold
|
|
|
40,000
|
|
|
|
267,085
|
(6)
|
|
|
307,085
|
|
|
(1)
|
Reflects the aggregate grant date fair value of the 6,500 stock options granted to each non-employee
director on May 1, 2013 with one-year vesting for fiscal 2014 calculated in accordance with FASB ASC Topic 718. For a more detailed
discussion on the assumptions used to calculate the fair value of our options, refer to Notes 2 and 12 of the Notes to the Consolidated
Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2014.
|
|
(2)
|
At March 31, 2014, Mr. Rishi held vested options to purchase 21,500 shares, and unvested options
to purchase 6,500 shares, of our common stock.
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|
(3)
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At March 31, 2014, Mr. Thompson held vested options to purchase 21,500 shares, and unvested options
to purchase 6,500 shares, of our common stock.
|
|
(4)
|
At March 31, 2014, Mr. Topfer did not hold vested options to purchase shares, and held unvested
options to purchase 6,500 shares, of our common stock.
|
|
(5)
|
At March 31, 2014, Mr. Uber held vested options to purchase 11,500 shares, and unvested options
to purchase 6,500 shares, of our common stock.
|
|
(6)
|
At March 31, 2014, Mr. Arnold did not hold vested options to purchase shares, and held unvested
options to purchase 6,500 shares, of our common stock. Mr. Arnold resigned from the Company’s Board of Directors effective
May 2, 2014.
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For details regarding
the treatment of equity awards held by our directors in connection with the Merger, see “
Subsequent Events—Treatment
of Our Equity Awards in the Merger
”
above
and
“
Summary— Interests of Company Directors
and Executive Officers in the Merger
”
in the Definitive Proxy Statement filed by the Company on July 24, 2014.
It is the responsibility
of the Compensation Committee to review and recommend to the Board of Directors the appropriate structure and amount of Board of
Directors compensation. The Board of Directors makes the final determination with respect to Board of Directors compensation. The
Compensation Committee will consider whether directors’ independence may be jeopardized if director compensation exceeds
customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated,
or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an
organization with which the director is affiliated. Under its charter, the Compensation Committee has the authority to retain third-party
consultants, including compensation consultants. For fiscal 2014, the Compensation Committee did not engage a compensation consultant
in connection with its recommendation of director compensation. For fiscal year 2015, each of our non-employee directors will receive
an annual cash retainer of $40,000 payable in equal quarterly installments in arrears and a grant of 1,500 RSUs.
Compensation Committee Interlocks and
Insider Participation
During fiscal year
2014, the Compensation Committee consisted of R. Barry Uber (Chairman), Morton L. Topfer and Kenneth E. Thompson. None of the members
has ever been an officer or employee of the Company or any of its subsidiaries, and none of our executive officers currently serves,
or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one
or more executive officers serving on our Board of Directors or Compensation Committee.