DEF 14A 1 d365303ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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¨    Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12

AGILYSYS, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement)

 

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LOGO

 

 

NOTICE OF 2012 ANNUAL MEETING OF SHAREHOLDERS

To be held on July 26, 2012

 

 

Please join us for the Agilysys, Inc. 2012 Annual Meeting of Shareholders to be held on Thursday, July 26, 2012 at 8:30 a.m., local time, at the Hilton Atlanta Airport, located at 1031 Virginia Avenue, Atlanta, Georgia 30354.

The purposes of the Annual Meeting are:

 

  1. To elect three Class B members of the Board of Directors to hold office for a two-year term expiring at the 2014 Annual Meeting;

 

  2. To vote, on a non-binding advisory basis, to approve the compensation of our named executive officers set forth in the attached Proxy Statement;

 

  3. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2013; and

 

  4. To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

Shareholders of record at the close of business on June 14, 2012 are entitled to vote at the Annual Meeting. It is important to vote your shares at the Annual Meeting, regardless of whether you plan to attend. This year, in addition to voting by mail, you may vote by telephone or Internet. Please refer to your enclosed proxy card and the Proxy Statement for information regarding how to vote by telephone or Internet. If you choose to vote by mail, please sign, date, and promptly return your proxy card in the enclosed envelope.

By Order of the Board of Directors,

Keith M. Kolerus

Chairman of the Board of Directors

June 27, 2012

 

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Shareholders to be held on July 26, 2012.

The Proxy Statement and 2012 Annual Report to Shareholders and

Form 10-K for the fiscal year ended March 31, 2012 are available at www.agilysys.com.


LOGO

 

 

PROXY STATEMENT

2012 ANNUAL MEETING OF SHAREHOLDERS

July 26, 2012

 

 

ANNUAL MEETING INFORMATION

General Information

This Proxy Statement and the enclosed proxy card are being provided in connection with the solicitation by the Board of Directors of Agilysys, Inc., an Ohio Corporation (“Agilysys,” the “Company,” “we,” “our,” or “us”), to be used at the Annual Meeting to be held on July 26, 2012, and any adjournments of the Annual Meeting. The Annual Meeting will be held on Thursday, July 26, 2012 at 8:30 a.m., local time, at the Hilton Atlanta Airport, located at 1031 Virginia Avenue, Atlanta, Georgia 30354. Our principal executive office is located at 425 Walnut Street, Suite 1800, Cincinnati, Ohio 45202. The purposes of the Annual Meeting are stated in the accompanying notice. This Proxy Statement, the enclosed proxy card, and our 2012 Annual Report to Shareholders and Form 10-K for the fiscal year ended March 31, 2012 (“2012 Annual Report”) are first being mailed to shareholders and made available electronically on our website at www.agilysys.com beginning on or about June 27, 2012.

Record Date, Voting Shares, and Quorum

Shareholders of record of our common shares at the close of business on June 14, 2012, the “Record Date,” are entitled to notice of and to vote their shares at the Annual Meeting, or any adjournment of the Annual Meeting. On the Record Date, there were 22,069,014 common shares outstanding and entitled to vote at the Annual Meeting. Each share is entitled to one vote. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the common shares outstanding at the close of business on the Record Date will constitute a quorum for the transaction of business at the Annual Meeting. We will include abstentions and broker non-votes in the number of common shares present at the Annual Meeting for purposes of determining a quorum. A broker non-vote occurs when a nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and does not have discretionary authority to vote the shares. Our common shares are listed on the NASDAQ Global Select Market under the symbol AGYS. References within this Proxy Statement to our common shares or shares refer to our common shares, without par value, the only class of securities entitled to vote at the Annual Meeting.

How to Vote

If you are the record holder of common shares, you or your duly authorized agent may vote by completing and returning the enclosed proxy card in the envelope provided. This year, you may also vote by telephone or Internet. Telephone and Internet voting information is provided on your proxy card. A control number, located on the proxy card, is designed to verify your identity, allow you to vote your shares, and confirm that your voting instructions have been properly recorded. Please note the deadlines for voting by telephone, the Internet, and proxy card as set forth on the proxy card. If you vote by telephone or Internet, you need not return your proxy card. You may also attend the Annual Meeting and vote in person; however, we encourage you to vote your shares in advance of the Annual Meeting even if you plan on attending. If your common shares are held by a bank or broker, or any other nominee, you must follow the voting instructions provided to you by the bank, broker, or nominee. Although most banks and brokers offer voting by mail, telephone, and the Internet, availability and specific procedures will depend on their voting arrangements.

 

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Unless revoked, common shares represented by a properly signed and returned proxy card (or other valid form of proxy), or as instructed via telephone or Internet, received in time for voting will be voted as instructed. If your proxy card is signed and returned with no instructions given, the persons designated as proxy holders on the proxy card will vote as follows:

   

FOR the election of the Board’s Director nominees (proposal 1);

   

FOR the approval, on a non-binding advisory basis, of the compensation of our named executive officers (proposal 2); and

   

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm (proposal 3).

The Company knows of no other matters scheduled to come before the Annual Meeting. If any other business is properly brought before the Annual Meeting, your proxy gives discretionary authority to the proxy holders with respect to such business, and the proxy holders intend to vote the proxy as recommended by our Board with regard to any such business, or, if no such recommendation is given, the proxy holders will vote in their own discretion.

Revocability of Proxies

You may revoke or change your vote at any time before the final vote on the matter is taken at the Annual Meeting by submitting to our Secretary a notice of revocation or by timely delivery of a valid, later-dated, duly executed proxy by mail, telephone, or Internet. You may also revoke or change your vote by attending the Annual Meeting and voting in person. If your shares are held by a bank, broker, or other nominee, you must contact the bank, broker, or nominee and follow their instructions for revoking or changing your vote.

Vote Required, Abstentions, and Broker Non-Votes

If a quorum is present at the Annual Meeting, for proposal 1 (election of Directors), the nominees for election as Directors will be elected if they receive the greatest number of votes cast at the Annual Meeting present in person or represented by proxy and entitled to vote. Abstentions will have no effect on the election of Directors. For proposal 2 (advisory vote on named executive officer compensation) and proposal 3 (ratification of independent registered public accounting firm), if a quorum is present, the affirmative vote of the holders of shares representing a majority of the common shares present in person or represented by proxy and entitled to vote will be required to approve each proposal. The effect of an abstention is the same as a vote against each proposal. If you hold your shares in street name and do not give your broker or nominee instruction as to how to vote your shares with respect to proposals 1 and 2, your broker or nominee will not have discretionary authority to vote your shares on proposals 1 and 2. These broker non-votes will have no effect on these proposals.

Cumulative Voting

If any shareholder gives written notice not less than 48 hours before the Annual Meeting commences to our Chief Executive Officer or Secretary that he, she, or it wants the voting for the election of Directors to be cumulative, the shareholder giving notice, or a representative of such shareholder, the Chairman, or the Secretary, will make an announcement about such notice at the start of the Annual Meeting. Cumulative voting means that each shareholder may cumulate his, her, or its voting power for the election of Directors by distributing a number of votes, determined by multiplying the number of Directors to be elected at the Annual Meeting times the number of such shareholder’s shares. The shareholder may distribute all of the votes to one individual Director nominee or distribute the votes among two or more Director nominees, as the shareholder chooses.

Proxy Solicitation

The cost of solicitation of proxies, including the cost of preparing, assembling, and mailing the notice, Proxy Statement, and proxy card, will be borne by us. In addition to solicitation by mail, arrangements may be made

 

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with brokerage houses and other custodians, nominees, and fiduciaries to send proxy materials to their principals, and we may reimburse them for their expenses in so doing. Our officers, Directors, and employees may, without additional compensation, personally or by other appropriate means request the return of proxies.

Attending the Annual Meeting

All holders of our common shares at the close of business on the Record Date, or their duly appointed proxies, are authorized to attend the Annual Meeting. Cameras, recording devices, and other electronic devices will not be permitted at the Annual Meeting. If you hold your common shares through a bank, broker, or other nominee, you will need to bring a copy of the brokerage statement reflecting your share ownership as of the Record Date, or a legal proxy from your bank or broker, to attend the meeting.

Voting Results

Preliminary voting results will be announced at the Annual Meeting. Within four business days following the Annual Meeting, final results, or preliminary results if final results are unknown, will be announced on a Form 8-K filed with the Securities and Exchange Commission (“SEC”). If preliminary results are announced, final results will be announced on a Form 8-K filed with the SEC within four business days after the final results are known.

Company Information

Our 2012 Annual Report is being mailed with this Proxy Statement. These documents also are available electronically on our website at www.agilysys.com, under Investor Relations. Our 2012 Annual Report is not incorporated into this Proxy Statement and shall not be considered proxy solicitation material. If you wish to have additional copies of our 2012 Annual Report, we will mail copies to you without charge. Requests may be sent to our corporate services office at: Agilysys, Inc., Attn: Investor Relations, 1000 Windward Concourse, Suite 250, Alpharetta, Georgia 30005, or you may request copies through our website, under Investor Relations. These documents have been filed with SEC and also may be accessed from the SEC’s website at www.sec.gov. If you have any questions about the Annual Meeting or these proxy materials, please contact Investor Relations by telephone at 770-810-7970, or by email at investorrelations@agilysys.com, or through our website, under Investor Relations.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

The Corporate Governance Guidelines (the “Guidelines”) adopted by our Board provide a sound framework to assist the Board in fulfilling its responsibilities to shareholders. Under the Guidelines, the Board exercises its role in overseeing the Company by electing qualified and competent officers and by monitoring the performance of the Company. The Guidelines state that the Board and its Committees exercise oversight of executive officer compensation and Director compensation, succession planning, Director nominations, corporate governance, financial accounting and reporting, internal controls, strategic and operational issues, and compliance with laws and regulations. The Guidelines also state Board policy regarding eligibility for the Board, including Director independence and qualifications for Board candidates, events that require resignation from the Board, service on other public company boards, and stock ownership guidelines. The Nominating and Corporate Governance Committee annually reviews the Guidelines and makes recommendations for changes to the Board. The Guidelines are available on our website at www.agilysys.com, under Investor Relations.

Code of Business Conduct

The Code of Business Conduct adopted by our Board applies to all Directors, officers, and employees of the Company and incorporates additional ethics standards applicable to our Chief Executive Officer, Chief Financial Officer, and other senior financial officers of the Company, and any person performing a similar function. The

 

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Code of Business Conduct is reviewed annually by the Audit Committee, and recommendations for change are submitted to the Board for approval. The Code of Business Conduct is available on our website at www.agilysys.com, under Investor Relations. The Company has in place a hotline available for use by all employees, as described in the Code of Business Conduct. Any employee can anonymously report potential violations of the Code of Business Conduct through the hotline, which is managed by an independent third party. Reported violations are promptly reported to and investigated by the Company. Reported violations are addressed by the Company and, if related to accounting, internal accounting controls, or auditing matters, the Audit Committee.

Director Independence

NASDAQ listing standards provide that at least a majority of the members of the Board must be independent, meaning free of any material relationship with the Company, other than his relationship as a Director. The Guidelines state that the Board should consist of a substantial majority of independent Directors. A Director is not independent if he fails to satisfy the standards for Director independence under NASDAQ listing standards, the rules of the SEC, and any other applicable laws, rules, and regulations. During the Board’s annual review of Director independence, the Board considers transactions, relationships, and arrangements, if any, between each Director or a Director’s immediate family members and the Company or its management. In June 2012, the Board performed its annual Director independence review and as a result of such review determined that each of R. Andrew Cueva, Keith M. Kolerus, Robert A. Lauer, Robert G. McCreary, III, and John Mutch qualify as independent Directors. Mr. Dennedy is not independent because of his service as President and Chief Executive Officer.

Director Attendance

The Board held eleven meetings during fiscal year 2012, and no Director attended less than 75% of the aggregate of the total number of Board meetings and meetings held by Committees of the Board on which he served. Independent Directors meet regularly in executive session at Board and Committee meeting, and executive sessions are chaired by the Chairman of the Board or by the appropriate Committee Chairman. It is the Board’s policy that all of its members attend the Annual Meeting absent exceptional cause. All of the Directors were in attendance at the 2011 Annual Meeting.

Shareholder Communication with Directors

Shareholders and others who wish to communicate with the Board as a whole, or with any individual Director, may do so by sending a written communication to such Director(s) in care of our Secretary at our Alpharetta, Georgia office address, and our Secretary will forward the communication to the specified Director(s).

Committees of the Board

 

Director   Audit   Compensation   

Nominating and 

Corporate

Governance

  Special  (2)

R. Andrew Cueva

  X       X   X

James H. Dennedy

              X

Keith M. Kolerus

      X   Chairman    

Robert A. Lauer (1)

  Chairman   X       Chairman

Robert G. McCreary, III

          X    

John Mutch (1)

  X   Chairman        

 

(1) Qualifies as an Audit Committee Financial Expert.
(2) The Special Committee was dissolved on May 19, 2011.

 

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Committee Charters.  The Board adopted a charter for each Committee described below, and each Committee is responsible for the annual review of its respective charter. Charters for the Audit, Compensation, and Nominating and Corporate Governance Committees are available on our website at www.agilysys.com, under Investor Relations.

Audit Committee.  The Audit Committee held seven meetings during fiscal year 2012. The Audit Committee reviews with our independent registered public accounting firm the proposed scope of our annual audits and audit results, as well as interim reviews of quarterly reports; reviews the adequacy of internal financial controls; reviews internal audit functions; is directly responsible for the appointment, determination of compensation, retention, and general oversight of our independent registered public accounting firm; reviews related person transactions; oversees the Company’s implementation of its Code of Business Conduct; and reviews any concerns identified by either the internal or external auditors. The Board determined that all Audit Committee members are financially literate and independent under NASDAQ listing standards for audit committee members. The Board also determined that Messrs. Lauer and Mutch each qualify as an “audit committee financial expert” under SEC rules.

Compensation Committee.  The Compensation Committee held eleven meetings during fiscal year 2012. The purpose of the Compensation Committee is to enhance shareholder value by ensuring that pay available to the Board, Chief Executive Officer, and other executive officers enables us to attract and retain high-quality leadership and is consistent with our executive pay philosophy. As part of its responsibility, the Compensation Committee oversees our pay plans and policies; annually reviews and determines all pay, including base salary, annual cash incentive, long-term equity incentive, and retirement and perquisite plans; administers our incentive programs, including establishing performance goals, determining the extent to which performance goals are achieved, and determining awards; administers our equity pay plans, including making grants to our executive officers; and regularly evaluates the effectiveness of the overall executive pay program and evaluates our incentive plans to determine if the plans’ measures or goals encourage inappropriate risk-taking by our employees. A more complete description of the Compensation Committee’s functions is found in the Compensation Committee Charter.

Our Law and Human Resources Departments support the Compensation Committee in its work and, in some cases, as a result of delegation of authority by the Compensation Committee, fulfill various functions in administering our pay programs. In addition, the Compensation Committee has the authority to engage the services of outside consultants and advisers to assist it. In fiscal year 2012, the Compensation Committee relied on information provided by Towers Watson, its compensation consultant, regarding competitive market assessments of compensation for the Company’s executive officers and non-employee Directors.

While the Compensation Committee directly retained Towers Watson, in carrying out its assignments, Towers Watson also interacted with our executive officers when necessary and appropriate, including our Chief Executive Officer, Chief Financial Officer, and our General Counsel, who provided data and insight on our compensation programs and business strategies. These executive officers attend Compensation Committee meetings when executive compensation, Company performance, and individual performance are discussed and evaluated by Compensation Committee members, and they provide their thoughts and recommendations on executive pay issues during these meetings and provide updates on financial performance, industry status, and other factors that may impact executive compensation. Decisions regarding the Chief Executive Officer’s compensation were based solely on the Compensation Committee’s deliberations, while compensation decisions regarding other executive officers took into consideration recommendations from the Chief Executive Officer. Only Compensation Committee members make decisions on executive officer compensation and approve all outcomes.

Nominating and Corporate Governance Committee.  The Nominating and Corporate Governance Committee (“Nominating Committee”) held five meetings during fiscal year 2012. The Nominating Committee assists the Board in finding and nominating qualified people for election to the Board; reviewing shareholder-recommended nominees; assessing and evaluating the Board’s effectiveness; and establishing, implementing, and

 

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overseeing our governance programs and policies. The Nominating Committee is responsible for reviewing the qualifications of, and recommending to the Board, individuals to be nominated for membership on the Board. The Board adopted Guidelines for Qualifications and Nomination of Director Candidates (“Nominating Guidelines”), and the Nominating Committee considers nominees using the criteria set forth in the Nominating Guidelines. At a minimum, a Director nominee must:

   

Be of proven integrity with a record of substantial achievement;

   

Have demonstrated ability and sound business judgment based on broad experience;

   

Be able and willing to devote the required amount of time to the Company’s affairs, including attendance at Board and Committee meetings;

   

Be analytical and constructive in the objective appraisal of management’s plans and programs;

   

Be committed to maximizing shareholder value and building a sound Company, long-term;

   

Be able to develop a professional working relationship with other Board members and contribute to the Board’s working relationship with senior management of the Company;

   

Be able to exercise independent and objective judgment and be free of any conflicts of interest with the Company; and

   

Be able to maintain the highest level of confidentiality.

The Nominating Committee considers the foregoing factors, among others, in identifying nominees; however, there is no policy requiring the Nominating Committee to consider the impact of any one factor by itself. The Nominating Committee also will consider the Board’s current and anticipated needs in terms of number, diversity, specific qualities, expertise, skills, experience, and background. In addition, the Corporate Governance Guidelines state that the Board should have a balanced membership, with diverse representation of relevant areas of experience, expertise, and backgrounds. The Nominating Committee seeks nominees that collectively will build a capable, responsive, and effective Board, prepared to address strategic, oversight, and governance challenges. The Nominating Committee believes that the backgrounds and qualifications of the Directors as a group should provide a significant mix of experience, knowledge, and abilities that will enable the Board to fulfill its responsibilities.

The Nominating Committee will consider shareholder-recommended nominees for membership on the Board. For a shareholder to properly nominate a candidate for election as a Director at a meeting of the shareholders, the shareholder must be a shareholder of record at the time the notice of the nomination is given and at the time of the meeting, be entitled to vote at the meeting in the election of Directors, and have given timely written notice of the nomination to the Secretary. To be timely, notice must be received by the Secretary, in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the anniversary of the previous year’s annual meeting; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th calendar day following the day on which public disclosure of the date of such annual meeting is first made. In the case of a special meeting, timely notice must be received by the Secretary not later than the close of business on the 10th day after the date of such meeting is first publicly disclosed. A shareholder’s notice must set forth, as to each candidate:

   

Name, age, business address, and residence address of the candidate;

   

Principal occupation or employment of the candidate;

   

Class and number of shares that are owned of record or beneficially by the candidate;

   

Information about the candidate required to be disclosed in a proxy statement complying with the rules and regulations of the SEC;

   

Written consent of the candidate to serve as a Director if elected and a representation that the candidate does not and will not have any undisclosed voting arrangements with respect to his actions as a Director, will comply with the Company’s Regulations and all other publicly disclosed corporate governance, conflict of interest, confidentiality, and share ownership and trading policies and Company guidelines;

   

Name and address of the shareholder making such nomination and of the beneficial owner, if any, on whose behalf the nomination is made;

 

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Class and number of shares that are owned of record or beneficially by the shareholder and by any such beneficial owner as of the date of the notice;

   

Representation that the shareholder or any such beneficial owner is a holder of record or beneficially of the shares entitled to vote at the meeting and intends to remain so through the date of the meeting;

   

Description of any agreement, arrangement, or understanding between or among the shareholder and any such beneficial owner and any other persons (including their names) with respect to such nomination;

   

Description of any agreement, arrangement, or understanding in effect as of the date of the shareholder’s notice pursuant to which the shareholder, any such beneficial owner, or any other person directly or indirectly has other economic interests in the shares of the Company;

   

Representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; and

   

Representation whether the shareholder intends to deliver a proxy statement and/or form of proxy to holders of outstanding common shares and/or otherwise to solicit proxies in support of the nomination.

The Nominating Committee may request additional information from such nominee to assist in its evaluation. The Nominating Committee will evaluate any shareholder-recommended nominees in the same way it evaluates nominees recommended by other sources, as described above.

Special Committee.  The Special Committee was formed during fiscal year 2011 and continued to serve during fiscal year 2012 to consider potential strategic alternatives for the Company. The Special Committee was comprised solely of independent Directors, and its objectives were to support the Board in a number of matters directly related to the execution of Agilysys’ strategic plan; evaluate a range of alternatives that maximize shareholder value; and review and provide recommendations to the Board on these matters for full Board consideration. The Special Committee held five meetings during fiscal year 2012 and was disbanded in May 2011.

Board Leadership

The Board determined that having an independent Director serve as Chairman of the Board is in the best interest of shareholders at this time. This structure has been particularly important as the Board considered strategic alternatives and direction and implemented changes in the executive management team. The structure ensures a greater role for our independent Directors in the oversight of the Company and the active participation in setting agendas and establishing priorities and procedures for the Board. Pursuant to the Board’s Corporate Governance Guidelines, it is our policy that the positions of Chairman of the Board and Chief Executive Officer be held by different individuals, except as otherwise determined by the Board.

Risk Oversight

Management is responsible for the day-to-day management of risks facing the Company, while the Board, as a whole and through its Committees, is actively involved in the oversight of such risks. The Board’s role in risk oversight includes regular reports at Board and Audit Committee meetings from members of senior management on areas of material risk to the Company, including strategic, financial, operational, and legal and regulatory compliance risks. Management regularly identifies and updates, among other items, the population of possible risks for the Company, assigns risk ratings, prioritizes the risks, assesses likelihood of risk occurrence, develops risk mitigation plans for prioritized risks, and assigns roles and responsibilities to implement mitigation plans. Risks are ranked by evaluating each risk’s likelihood of occurrence and magnitude. Our Compensation Committee of the Board, in consultation with management, evaluates our incentive plans to determine if the plans’ measures or goals encourage inappropriate risk-taking by our employees. As part of its evaluation, our Compensation Committee determined that the performance measures and goals were tied to our business, financial, and strategic objectives. As such, the incentive plans are believed not to encourage risk-taking outside of the range of risks contemplated by the Company’s business plan.

 

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Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee during fiscal year 2012 or as of the date of this Proxy Statement is or has been an officer or employee of the Company, and none of our executive officers served on the compensation committee (or other committee serving an equivalent function) or board of any company that employed any member of our Compensation Committee or our Directors.

DIRECTOR COMPENSATION

Following the sale of the Company’s Technology Solutions Group (“TSG”) business unit in August of 2011, the Compensation Committee re-evaluated the Directors’ compensation structure in light of the smaller Company size and reviewed competitive market assessment data provided by Towers Watson in it analysis. As a result, the Compensation Committee recommended, and the Board approved, a reduced compensation structure for non-employee Directors. The following information and discussion summarize the compensation changes and our non-employee Directors’ fiscal year 2012 compensation:

   

The annual cash retainer for each Director was reduced from $30,000 to $25,000;

   

The additional cash retainer for the Chairman of the Board was reduced from $50,000 to $35,000;

   

The additional cash retainer for each Chairman of the Nominating and Compensation Committees was reduced from $10,000 to $7,500;

   

The additional cash retainer for the Chairman of the Audit Committee was reduced from $15,000 to $10,000;

   

The additional cash retainer for each member of the Audit, Nominating and Compensation Committees, including each Chairman, was reduced from $15,000 to $10,000; and

   

The fiscal year 2012 award of restricted shares to each Director was valued at $70,000 on the grant date, compared to $80,000 for the prior fiscal year’s award.

Each member of the Special Committee received a cash retainer of $15,000, and the Chairman of the Special Committee received an additional cash retainer of $10,000. Each member also received a $5,000 cash bonus upon closing of the TSG sale, in recognition of their efforts. Additionally, Keith Kolerus, Chairman of the Board, received a $50,000 cash payment upon closing of the TSG sale, in recognition of his efforts and the successful closing of the sale.

The fiscal year 2012 equity award for each Director consisted of 9,434 restricted shares, based on a $7.42 grant date price, and was granted under the 2011 Stock Incentive Plan. The restricted shares vested on March 31, 2012 and provided for pro-rata vesting upon retirement prior to March 31, 2012. The grant was made in August 2011, after the closing of the TSG sale, to the then current, non-employee Directors; however, Mr. Cueva declined the award given the significant ownership in the Company by his firm, MAK Capital. Our Directors are subject to share ownership guidelines that require ownership of either (i) three times the Director’s respective annual cash retainer within two years of service and six times the Director’s respective annual cash retainer within four years of service; or (ii) 15,000 shares within the first two years following the Director’s election to the Board and 45,000 shares within four years of election. We pay no additional fees for Board or Committee meeting attendance. Mr. Dennedy ceased receiving compensation for his service as a Director upon his appointment as an executive officer, and all compensation received by Mr. Dennedy thereafter was for his service as an executive officer, except for payments made for his service on the Special Committee prior to its disbandment. All compensation received by Mr. M. Ellis was for his service as an executive officer.

 

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Director Compensation for Fiscal Year 2012

 

Director  

Fees Earned or
Paid in Cash

($)(1)

    Stock Awards
($)(2)
   

Total

($)

 

Thomas A. Commes

    25,000               25,000   

R. Andrew Cueva

    58,750               58,750   

Howard K. Knicely

    23,333               23,333   

Keith M. Kolerus

    140,000        70,000        210,000   

Robert A. Lauer

    67,917        70,000        137,917   

Robert G. McCreary, III

    46,667        70,000        116,667   

John Mutch

    50,000        70,000        120,000   

 

(1) Fees are paid quarterly. Fees reflect partial service during the fiscal year for Messrs. Commes and Knicely (prior to their retirement), reflect payments made during fiscal year 2012 to Special Committee members for their services prior to the Special Committee being disbanded, and reflect changes in Committee membership and fee structure in August 2011. Refer to discussion above for Director compensation structure. Mr. Dennedy’s fees paid for services prior to becoming an executive officer are disclosed in the Summary Compensation Table.
(2) Amounts in this column represent the grant date fair value of the restricted shares computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. As of March 31, 2012, the aggregate number of unexercised stock options held by each non-employee Director was as follows: Mr. Commes, 30,000; Mr. Knicely, 30,000; Mr. Kolerus, 22,500; Mr. Lauer, 30,000; and Mr. McCreary, 30,000.

 

PROPOSAL 1

ELECTION OF DIRECTORS

At the Annual Meeting, shareholders will elect three Class B Directors for a term expiring at the 2014 Annual Meeting. The Board’s nominees for election are James H. Dennedy, Jerry C. Jones and John Mutch. Mr. Jones is a first-time nominee to the Board. If all nominees are elected at the Annual Meeting, the Board will increase its size to seven members. Each nominee has indicated his willingness to serve as a Director, if elected. A biography for each Director nominee and our continuing Directors follows and, if applicable, arrangements under which a Director was appointed to the Board or information regarding any involvement in certain legal or administrative proceedings is provided. Additional information about the experiences, qualifications, attributes, or skills of each Director in support of his service on the Board is also provided.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF MESSRS. DENNEDY, JONES AND MUTCH. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED “FOR” THE ELECTION OF MESSRS. DENNEDY, JONES AND MUTCH UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.

 

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DIRECTOR NOMINEES

(Class B – Term to Expire in 2014)

 

James H. Dennedy

   Age 46    Director since  2009

President and Chief Executive Officer of the Company since October 2011. Interim President and Chief Executive Officer since May 2011. Principal and Chief Investment Officer with Arcadia Capital Advisors, LLC, an investment management company making active investments in public companies, from April 2008 to May 2011. President and Chief Executive Officer of Engyro Corporation, an enterprise software company offering solutions in systems management, from January 2005 to August 2007. Previously a director of Entrust, Inc., I-many, Inc., and NaviSite, Inc. As a former President of a division of a publicly-held software company and as a Chief Executive Officer of a private software company, Mr. Dennedy has experience in the technology industry. In addition, Mr. Dennedy has extensive experience in investment strategy, capital structure, financial strategy, mergers and acquisitions, and significant public company leadership and board experience.

 

John Mutch

   Age 55    Director since 2009

Chief Executive Officer of BeyondTrust, a security software company, since October 2008. Founder and a Managing Partner of MV Advisors, LLC, a strategic block investment firm that provides focused investment and strategic guidance to small and mid-cap technology companies, from 2006 to 2008. Director of Steel Excel Inc., and previously Director of Edgar Online, Inc. and Aspyra, Inc. Mr. Mutch has been an operating executive and investor in the technology industry for over 25 years and has a long, sustained track record of creating shareholder value through both activities. As a Chief Executive Officer of an IT company, Mr. Mutch has extensive experience in the technology industry, restructuring, financial management and strategy, capital markets, sales management, and marketing.

 

Jerry C. Jones

   Age 56     

Chief Legal Officer and Senior Vice President of Acxiom Corporation, a marketing technology and services company, since 1999. Prior to joining Acxiom, Mr. Jones was a partner with the Rose Law Firm in Little Rock, Arkansas, where he specialized in problem solving and business litigation for 19 years, representing a broad range of business interests. Previously he was a director of Entrust, Inc. He is a 1980 graduate of the University of Arkansas School of Law and holds a bachelor’s degree in public administration from the University of Arkansas. As the Chief Legal Officer of a technology company, Mr. Jones has extensive experience with legal, privacy, and security matters. He has also led the strategy and execution of mergers and alliances and international expansion efforts. The Board has determined that Mr. Jones would qualify as an independent Director if elected at the Annual Meeting.

CONTINUING DIRECTORS

(Class A – Term to Expire in 2013)

 

R. Andrew Cueva

   Age 41    Director since 2008

Managing Director of MAK Capital Fund, L.P., a value-oriented hedge fund, since 2005. Portfolio manager and analyst at Green Cay Asset Management from 2002 to 2004. As Managing Director of MAK Capital, the Company’s largest shareholder, Mr. Cueva is uniquely qualified to represent the interests of the Company’s shareholders. Additionally, Mr. Cueva’s qualifications and experience include capital markets, investment strategy, and financial management.

 

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Keith M. Kolerus

   Age 66    Director since 1998

Chairman of the Board of the Company since October 2008. Retired Vice President, American Division, National Semiconductor, a producer of semiconductors and a leader in analog power management technology, from 1996 to February 1998. Mr. Kolerus served as Chairman of the Board of Directors, National Semiconductor Japan Ltd., from 1995 to 1998, and Chairman of the Board of Directors of ACI Electronics, LLC, from 2004 to 2008. Mr. Kolerus has extensive experience in engineering, global operations, private and public companies, software and hardware technology companies, government contracting, capital markets, financial management, and the technology industry. Mr. Kolerus’ prior experiences as a board chairman uniquely qualify him to lead the Board as its Chairman.

 

Robert A. Lauer

   Age 68    Director since 2001

Retired from Accenture, a consulting firm (formerly known as Andersen Consulting), in August 2000. Mr. Lauer held numerous operational positions covering regional, national, and global responsibilities during his 31-year career, most recently serving as Managing Partner Global Human Performance Services and Managing Partner Change Management Global Communications and High Tech Industries. Mr. Lauer’s career in the information technology industry provided him with extensive experience and qualifications in global business operations, corporate and organizational restructurings, management of professional services personnel, and the development, implementation and deployment of large-scale business application software solutions in numerous industry verticals.

 

Robert G. McCreary III

   Age 60    Director since 2001

Founder and currently a principal of CapitalWorks, LLC, a private equity group, since 1999. Mr. McCreary has served in numerous managing partner positions in investment banking firms and as a partner in a large regional corporate law firm. Mr. McCreary has extensive experience and qualifications in law, corporate governance, financial strategy, capital markets, investment strategy and mergers and acquisitions, and governance of portfolio companies.

 

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EXECUTIVE OFFICERS

The following are biographies for each of our current, non-Director executive officers. The biography for Mr. Dennedy, our President and Chief Executive Officer, and a Director, is provided above.

 

Name   Age     Current Position   Previous Positions

Robert R. Ellis

    38     

Senior Vice President and Chief

Financial Officer since October 2011

and Treasurer since January 2012.

  Vice President of Accounting and Financial Operations and Principal Accounting Officer at Radiant Systems, Inc. from 2007 to October 2011. Corporate Controller and Director at Radiant from 2003 to 2007.

Kyle C. Badger

    44     

Senior Vice President, General

Counsel and Secretary since October

2011.

  Executive Vice President, General Counsel and Secretary at Richardson Electronics, Ltd. from 2007 to October 2011. Senior Counsel at Ice Miller LLP from 2006 to 2007. Partner at McDermott, Will & Emery LLP from 2003 to 2006.

Paul A. Civils

    61     

Senior Vice President and General

Manager since November 2008.

  Vice President and General Manager, Retail Solutions from October 2003 to November 2008.

Larry Steinberg

    44     

Senior Vice President and Chief

Technology Officer since June 2012.

  Principal Development Manager, Microsoft Corporation from August 2009 to present, and Principal Architect from June 2007 to July 2009; Founder and Chief Technology Officer of Engyro Corporation from March 1995 to May 2007.

Janine K. Seebeck

    36     

Vice President and Controller since

November 2011.

  Vice President of Finance, Asia Pacific, at Premiere Global Services, Inc. from 2008 to April 2011. Vice President, Corporate Controller at Premiere from 2002 to 2008.

 

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BENEFICIAL OWNERSHIP OF COMMON SHARES

The following table shows the number of common shares beneficially owned as of June 14, 2012 by (i) each current Director and Director nominee; (ii) each individual who served as Chief Executive Officer during fiscal year 2012; (iii) each individual who served as Chief Financial Officer during fiscal year 2012; (iv) the other three most highly compensated executive officers who were serving as executive officers at the end of fiscal year 2012 whose total compensation exceeded $100,000; (v) two additional individuals who would have been among the three most highly compensated executive officers but for the fact that they were not serving as executive officers at the end of fiscal year 2012 (together with the individuals covered by (ii), (iii), and (iv) above, the “Named Executive Officers”); (vi) all Directors and executive officers as a group; and (vii) each person who is known by us to beneficially own more than 5% of our common shares.

 

Name   Common Shares    

Shares Subject

to Exercisable
Options

 

Restricted

Shares (1)

 

Total Shares

Beneficially
Owned (1)

 

Percent of

Class (2)

Directors

                                                 

R. Andrew Cueva (3)

      5,284,648             —             —         5,284,648         24.0  

Jerry C. Jones

            —              —              —               —          *  

Keith M. Kolerus

      100,171         22,500         9,383         132,054         *  

Robert A. Lauer

      57,264         30,000         9,383         96,647         *  

Robert G. McCreary, III (4)

      64,048         30,000         9,383         103,431         *  

John Mutch

      34,050             —          9,383         43,433         *  

Named Executive Officers

                                                 

Henry R. Bond

            —              —              —                —          *  

Paul A. Civils

      5,735         133,641         18,773         158,149         *  

James H. Dennedy

      112,985             —          50,938         163,923         *  

Martin F. Ellis

      74,218             —              —          74,218         *  

Robert R. Ellis

      30,473         5,350         22,218         58,041         *  

Anthony Mellina

      71,927             —              —          71,927         *  

Tina Stehle

      11,361         130,348             —          141,709         *  

Curtis C. Stout

      6,631         116,284         4,493         127,408         *  

Kathleen A. Weigand

      26,525             —              —          26,525         *  
All Directors and Executive Officers       5,897,859         473,571         223,185         6,594,615            

Other Beneficial Owners

                                                 

MAK Capital One, LLC et al

590 Madison Avenue, 9th Floor

New York, New York 10022

      7,056,934  (5)                                     32.0  

Dimensional Fund Advisors LP

6300 Bee Cave Road

Palisades West, Building One

Austin, Texas 78746

      1,908,969  (6)                                     8.7  

The Vanguard Group, Inc.

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

      1,293,105  (7)                                     5.9  

Black Rock, Inc.

40 East 52nd Street

New York, New York 10022

      1,344,402  (8)                                     6.1  

 

(1) Beneficial ownership of the shares comprises both sole voting and dispositive power, or voting and dispositive power that is shared with a spouse, except for restricted shares for which individual has sole voting power but no dispositive power until such shares vest.
(2) * indicates beneficial ownership of less than 1% on June 14, 2012.

 

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(3) Comprised entirely of shares beneficially owned by MAK Capital Fund L.P. and excludes shares beneficially owned by Paloma International L.P. Mr. Cueva may be deemed to share beneficial ownership in shares that MAK Capital Fund L.P. may be deemed to beneficially own; however, Mr. Cueva disclaims beneficial ownership of the shares, except to the extent of his pecuniary interest in MAK Capital Fund L.P.’s interest in such shares. The inclusion in this table of the shares beneficially owned by MAK Capital Fund L.P. shall not be deemed an admission by Mr. Cueva of beneficial ownership of all of the reported shares.
(4) On December 1, 2010, Mr. McCreary contributed 30,000 shares to a grantor retained annuity trust pursuant to which Mr. McCreary retains beneficial ownership of the shares.
(5)

As reported on a Schedule 13D/A dated May 31, 2011. MAK Capital One LLC has shared voting and dispositive power with respect to all of the shares. MAK Capital One LLC serves as the investment manager of MAK Capital Fund LP (“MAK Fund”). MAK GP LLC is the general partner of MAK Fund. Michael A. Kaufman, managing member and controlling person of MAK GP LLC and MAK Capital One LLC, has shared voting and dispositive power with respect to all of the shares. MAK Fund and R. Andrew Cueva have shared voting and dispositive power with respect to 5,284,648 shares. Paloma International L.P. (“Paloma”), through its subsidiary Sunrise Partners Limited Partnership, and S. Donald Sussman, controlling person of Paloma, have shared voting and dispositive power with respect to 1,772,286 shares. The principal business address of MAK Capital One LLC, MAK GP LLC and Messrs. Kaufman and Cueva is 590 Madison Avenue, 9th Floor, New York, New York 10022. The principal address of MAK Fund is c/o Dundee Leeds Management Services Ltd., 129 Front Street, Hamilton, HM 12, Bermuda. The principal address of Paloma and Sunrise Partners Limited Partnership is Two America Lane, Greenwich, Connecticut 06836-2571. The principal business address for Mr. Sussman is 6100 Red Hook Quarters, Suites C1-C6, St. Thomas, US Virgin Islands 00802-1348.

On May 31, 2011, MAK Fund, Paloma and Computershare Trust Company, N.A. (the “Trustee”) entered into an Amended and Restated Voting Trust Agreement (the “Revised Voting Trust Agreement”) to clarify the effect on the voting trust created by the Voting Trust Agreement dated as of December 31, 2009, were the reporting persons (named above) to beneficially own one-third or more of the Company’s outstanding voting securities as a result of a decrease in the total number of voting securities outstanding. In such event, regardless of the reporting persons’ economic interest in the Company, its voting power will be effectively limited to no more than 23% or 27% of the voting securities in the event of a shareholder vote on (i) a merger, consolidation, conversion, sale or disposition of stock or assets or other business combination which requires approval of two-thirds of the Company’s voting power (a “Strategic Transaction”) or (ii) a transaction other than a Strategic Transaction which requires approval of two-thirds of the Company’s voting power (an “Other Transaction”), respectively. In connection with a Strategic Transaction or Other Transaction, the reporting persons would continue to possess the total voting power only over a number of voting securities that would equal the total voting power it would possess were it to hold only one-third of the voting securities. The Revised Voting Trust Agreement will become effective if and when the number of shares owned by the reporting persons equals or exceeds one-third of the voting securities then outstanding as a result of a decrease in the total number of voting securities outstanding. Until such time, the Voting Trust Agreement will remain in full force and effect.

The Voting Trust Agreement provides that, for transactions requiring at least two-thirds of the voting power to approve, Trustee will vote shares as follows: (i) for a Strategic Transaction, vote shares that exceed 20% of the outstanding shares in favor of, against, or abstaining from voting in the same proportion as all other shares voted by shareholders (including reporting persons’ shares that do not exceed the 20% threshold); and (ii) for Other Transactions, vote shares that exceed 25% of the outstanding shares in favor of, against, or abstaining from voting in the same proportion as all other shares voted by shareholders (including reporting persons’ shares that do not exceed the 25% threshold). The Voting Trust Agreement terminates (i) if the vote necessary to approve all forms of transactions is lowered to the affirmative vote of holders of shares entitling them to exercise at least a majority of the voting power on the proposal to approve such transactions (from two-thirds); (ii) if MAK Fund and Paloma are no longer members of a “group” for purposes of Section 13(d) of the Securities Exchange Act, then the Voting Trust Agreement terminates with

 

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respect to any of MAK Fund and Paloma that beneficially owns not more than 20% of the outstanding shares; (iii) on February 18, 2020, or February 18, 2025 if MAK Fund continues to hold 20% of the outstanding shares; or (v) if another person or entity holds greater than 20% of the outstanding shares that are not subject to a similar voting agreement.

(6) As reported on a Schedule 13G/A dated February 10, 2012. Dimensional Fund Advisors LP has sole voting power with respect to 1,875,467 shares and sole dispositive power with respect to 1,908,969 shares.
(7) As reported on a Schedule 13G/A dated February 7, 2012. The Vanguard Group, Inc. has sole voting and shared dispositive power with respect to 34,458 shares and sole dispositive power with respect to 1,258,647 shares.
(8) As reported on a Schedule 13G/A dated February 13, 2012. BlackRock, Inc. has sole voting and dispositive power with respect to all of the shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act requires the Company’s Directors and certain of its executive officers and persons who beneficially own more than 10% of the Company’s common shares to file reports of and changes in ownership with the SEC. Based solely on the Company’s review of copies of SEC filings it has received or filed, the Company believes that each of its Directors, executive officers, and beneficial owners of more than 10% of the shares satisfied the Section 16(a) filing requirements during fiscal year 2012, with one exception. On March 31, 2011, restricted shares for Messrs. M. Ellis, Bond, Mellina, Civils, Stout, and Dyer and Mmes. Weigand and Stehle vested, and each executive officer opted to settle his or her tax obligation upon vesting with share withholding. The Form 4’s to report such share withholdings were filed on May 4, 2011.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Highlights

Restructured Management with Reduced Compensation.  The Company’s focus in fiscal year 2012 on streamlining its businesses and restructuring its management team resulted in reduced compensation costs for key executive positions. During fiscal year 2012, key events effecting compensation immediately and for the future, streamlined Company included:

   

Sale of the Company’s TSG business unit, resulting in a smaller, refocused Company and the elimination of the TSG general manager executive officer position; and

   

Restructuring of the management team, including new leadership in key executive positions with comparatively lower compensation arrangements to reflect the smaller, refocused Company.

Performance Linked Compensation.  Our Compensation Committee set fiscal year 2012 compensation, including financial and business targets for performance-based compensation, for our Named Executive Officers (except for Mr. Dennedy) after the closing of the TSG sale, to assure that compensation and goals reflected the Company as it would be for the majority of the fiscal year. In setting compensation targets and goals for the senior management team, the Committee continued to emphasize pay for performance for the new management team by:

   

Comprising the fiscal year’s total compensation opportunity of 25%, on average, of annual cash incentive based on goals focused on significant improvements over fiscal year 2011 results for revenue, gross profit and preservation of cash; and

   

Emphasizing share ownership and granting equity awards after the closing of the TSG sale, such that the ultimate value of the equity awards is dependent on an increase in the share price established after the closing of the TSG sale.

Our Chief Executive Officer’s targeted pay was approximately 65% performance-based, and between 48% and 57% for each of our other active Named Executive Officer’s targeted pay was performance-based, tied directly to annual goals or long-term equity awards, the value of which is tied directly to an increase in share price. As discussed below, targeted annual goals were primarily based on improvements over fiscal year 2011 results for revenue and gross profit, for significant cash preservation, and, for business head executives, significant business unit improvements. Annual incentive payouts ranged from 73% to 112% of target for the Named Executive Officers.

Chief Executive Officer Compensation.  In May 2011, Mr. Dennedy became our Interim Chief Executive Officer, and a one-year compensation package was set at that time in anticipation of successfully closing the TSG sale and his leading the refocused Company through a successful fiscal year 2012. His compensation package reflected the Compensation Committee’s ongoing commitment to link pay to performance and reduced compensation costs, as evidence by the following for Mr. Dennedy:

   

Base salary was set significantly lower, 26%, than his predecessor’s salary;

   

Annual incentive was set at a significantly higher percentage, 100% percent of salary versus 85%;

   

Combined salary and annual incentive were set below median levels for comparable positions based on peer data;

   

Equity award value tied to share price improvement after the sale of TSG;

   

Annual incentive payout of 105% of targeted payout was earned based on Company results; and

   

65% of targeted compensation was variable pay, tied either to performance or significant share price improvement.

In October, the Board removed “interim” from Mr. Dennedy’s title; however, the Compensation Committee did not revise Mr. Dennedy’s compensation package or annual goals, determining that the level of compensation and goals appropriately matched the Company’s current initiatives and compensation philosophy for fiscal year 2012. References within this Compensation Discussion and Analysis and within our executive compensation tables below to our Chief Executive Officer refer to Mr. Dennedy.

 

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Chief Financial Officer Compensation.  In October 2011, Mr. R. Ellis was appointed to Chief Financial Officer. His compensation package also reflected the Compensation Committee’s ongoing commitment to link pay to performance and reduced compensation costs, as evidence by the following for Mr. R. Ellis:

   

Base salary was set 8% lower than his predecessor’s salary;

   

Annual incentive was set at a higher percentage, 60% percent of salary versus 50%;

   

50% of long-term incentive award value is based entirely on share price improvement after the sale of TSG, while the balance is tied to post-TSG sale share price improvement ;

   

Annual incentive payout of 112% of targeted payout was earned based on Company results; and

   

57% of targeted compensation was variable pay, tied either to performance or significant share price improvement

Compensation Focus for Fiscal Year 2013.  In response to current executive compensation trends, and after considering the results of our 2011 vote on Named Executive Officer compensation, which confirmed the Company’s philosophy and objectives relative to our executive compensation program, the Compensation Committee continued efforts to reduce compensation expense and link executive pay to performance by:

   

Establishing minimal base salary increases;

   

Focusing annual incentive on significant improvements over fiscal year 2012 results;

   

Structuring long-term incentives to reward increases in shareholder value.

Compensation Philosophy, Objectives, and Structure

Our Compensation Committee adopted its pay philosophy, objectives, and structure for Named Executive Officers to achieve financial and business goals and create long-term shareholder value. Our Compensation Committee reaffirmed the pay philosophy, objectives, and structure for fiscal year 2012.

Compensation Philosophy and Objectives.  Our Compensation Committee’s pay philosophy is to pay a base salary and provide target annual cash incentives and long-term equity incentives, each at the 50th percentile of comparative peer group compensation, and to annually review these compensation components based on peer group comparisons and tie compensation to our business strategy. The Compensation Committee’s objective is to establish an overall compensation package to:

   

Reward the achievement of business objectives approved by our Board;

   

Tie a significant portion of compensation to the long-term performance of our common shares;

   

Provide a rational, consistent, and competitive executive compensation program that is well understood by those to whom it applies; and

   

Attract, retain, and motivate executives who can significantly contribute to our success.

Compensation Structure.  Our compensation structure is comprised of:

   

Base Salary — Base salary provides fixed pay levels aimed to attract and retain executive talent. Variations in salary levels among Named Executive Officers are based on each executive’s roles and responsibilities, experience, functional expertise, relation to peer pay levels, competitive assessments, individual performance, and changes in salaries in the overall general market and for all employees of the Company. Salaries are reviewed annually by our Compensation Committee, and changes in salary are based on these factors and input from our Chief Executive Officer, other than for himself. None of the factors are weighted according to any specific formula. New salaries generally are based on the Compensation Committee’s discretion and judgment but may be based on any of the above-mentioned relevant factors.

   

Annual Incentives — Annual incentives provide cash variable pay for achievement of the Company’s financial, strategic, and operational goals and individual goals, with target incentives set as a percentage of salary, designed to reward achievement of goals with an annual cash payment. Variations in incentive components and mix among Named Executive Officers are determined by our Compensation Committee and based on each executive’s respective business unit or corporate goals and each

 

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executive’s individual goals and corporate-wide initiatives, as well as market data, length of time in current role or similar role at another company, and recommendations from our Chief Executive Officer, other than for himself.

   

Long-Term Incentives — Long-term incentives are variable, equity incentives designed to drive improvements in performance that build wealth and create long-term shareholder value by tying the value of earned incentives to the long-term performance of our common shares. Target incentives are set as a percentage of salary. Variations in awards among Named Executive Officers are determined by our Compensation Committee after a review of various factors, including recommendations based on market data, individual ability to influence results, length of time in current role or similar role at another company, and recommendations from our Chief Executive Officer, other than for himself.

Compensation Key Considerations

Annual Goal Setting.  Annual goals for our Named Executive Officers are tied to our financial, strategic, and operational goals and include business specific financial targets relating to our goals. Each Named Executive Officer’s annual incentive goals are established by our Compensation Committee, with input from our Chief Executive Officer (other than for himself). At fiscal year-end, the Compensation Committee evaluates the performance of each Named Executive Officer and determines an appropriate award based on established goals, with input from our Chief Executive Officer (other than for himself) on individual goals. Our Compensation Committee establishes our Chief Executive Officer’s annual incentive goals and determines his appropriate award based on established goals.

Variable Pay at Risk.  Our philosophy drives the provision of greater at-risk pay to our Named Executive Officers, and variable pay at risk comprised approximately 65% of target annual compensation for our Chief Executive Officer and 50% or more for other Named Executive Officers. Our Named Executive Officers have significant opportunities for long-term, equity-based incentive compensation, higher than for annual cash incentive compensation in most cases, as our philosophy is to tie a significant portion of compensation to the long-term performance of our common shares. As a result, significant emphasis is placed on long-term shareholder value creation, thereby minimizing excessive risk taking by our executives.

 

LOGO

 

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Competitive Market Assessments.  During fiscal year 2012, Towers Watson provided the Compensation Committee with two competitive market assessments, one in March and one in August, which updated the March assessment to adjust for expected revenues of the smaller Company after the closing of the TSG sale. The assessments evaluated compensation levels for the Company’s top eight executive positions, including the Named Executive Officers. The assessments compared published survey compensation data for both general industry and the high technology services industry to current compensation levels for the Company’s executives. Competitive compensation levels in these industries were gathered for base salary, annual incentive, total cash compensation, long-term incentive, and total direct compensation. The purpose of the assessments was to compare current market data to our current compensation, which was based on prior benchmarking performed by the Company, where compensation levels were benchmarked to separate, defined peer group companies for corporate executives and each business unit executive. Towers advised that an assessment using the general and high technology services industries data provides more representative and relevant comparisons given the size of the Company. As further detailed below, the assessments showed that all elements of the Company’s overall compensation fell between the 25th and 50th percentiles within both the general and high technology services industries. Typically, an individual position is considered to be paid at market if it is within 15% (above or below) the competitive median and the assessments showed that the Company had individuals above, within, and below that range.

Tally Sheets.  Our Compensation Committee analyzes tally sheets at the beginning of the fiscal year to review overall compensation and pay mix for each Named Executive Officer. Tally sheets include a three-year look-back of total compensation, including annual cash compensation, long-term incentive awards granted and earned, and benefits and perquisites. Tally sheets also include a cumulative inventory of equity grants by fiscal year, including the value of outstanding equity at the Company’s current stock price and the value received for prior vesting and exercises of equity. The tally sheets bring together, in one place, all elements of Named Executive Officers’ actual compensation and information about wealth accumulation so that our Compensation Committee can analyze the individual elements and mix of compensation and the aggregate total amount of annual and accumulated compensation. Tally sheets are also used by the Compensation Committee to evaluate internal pay equity among the Named Executive Officers and to determine the impact of employment termination or change of control events. In support of the philosophy of rewarding future performance, the Compensation Committee does not consider prior pay outcomes in setting future pay levels. Rather, tally sheets are used by the Compensation Committee to review compensation as compared to expectations, and our Compensation Committee determined that annual compensation set for our Named Executive Officers for fiscal year 2012 was consistent with expectations and with the established compensation philosophy and pay mix guidelines driven by that philosophy.

Fiscal Year 2012 Compensation

Salary.  For fiscal year 2012, salary comprised 35% of total target compensation for our Chief Executive Officer and between 43% and 52% for our other Named Executive Officers (who were granted annual and long-term incentives). The Compensation Committee considered the competitive market assessments provided by Towers Watson in determining fiscal year 2012 salaries for the Named Executive Officers. For purposes of the assessments, incumbents were matched to survey benchmarks based upon responsibilities, and market-competitive salaries were determined by regressing each benchmark to each Named Executive Officer’s respective revenue responsibilities, which placed those with corporate responsibilities in one grouping and the business unit heads in their own respective category relative their respective unit’s revenue. As noted above, the assessment was reevaluated after the TSG sale in consideration of the continuing, smaller revenue, Company.

The survey data included values at the 25th, 50th (market median), and 75th percentiles. While overall fiscal year 2012 salaries were evaluated as part of the initial assessment early in the fiscal year, except for our Chief Executive Officer, final salary determinations were not made until the TSG sale was approved and, as such, no salary changes were considered for Messrs. M. Ellis and Mellina, as neither executive continued with the Company after the TSG sale. The Committee set Mr. Dennedy’s salary at the time of his appointment to Interim

 

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President and Chief Executive Officer, and his salary was set significantly lower than the median due to the interim nature of his position, the equal value of, and thus higher emphasis on, his annual and long-term incentives, and the overall fairness of his compensation level. Regarding the remainder of the Named Executive Officers, excluding Mr. R. Ellis, current salaries ranged between 8% below and 17% above median, which was considered competitive. As such, salary increases were made based on individual responsibilities and performance, and increases averaged 2.5%, ranging from 0% to 5.4%, with Ms. Weigand receiving the highest increase in consideration of a 15% premium applied to the top legal benchmark for her additional human resources responsibilities that are not typical in her position. For Mr. R. Ellis, who joined the Company in October 2011, the second assessment, which adjusted benchmarks for the reduced size of the Company, was considered as well as his previous salary level and prior experience in setting his salary, which was set within the competitive range of the median for his position.

Annual Incentives.  For fiscal year 2012, annual goals were set after shareholders approved the TSG sale to reflect the smaller, refocused Company going forward. In prior years, goals were set at the beginning of the fiscal year; however, at the beginning of fiscal year 2011 the eventual size and scope of the Company was uncertain, and thus goals were established when the TSG sale was approved but the outcome of such fiscal year was still substantially uncertain. As such, no awards were granted to Messrs. M. Ellis and Melina. The discussion below, which specifically relates to the table below under “Fiscal Year 2012 Payouts,” provides details regarding fiscal year 2012 annual incentive performance metrics, levels, and payouts for the other Named Executive Officers.

Performance Metrics.  The Compensation Committee set corporate performance metrics, applicable to Messrs. Dennedy, Ellis, Bond, and Stout and Ms. Weigand, for fiscal year 2012 annual incentives to require target level improvements over fiscal year 2011 results of 7.2% for gross profit and 5.8% for revenue. These levels were set based on the Company’s overall operating plan and expected growth and operating improvements in the two continuing business units, Hospitality Solutions Group (“HSG”), for which Ms. Stehle managed development and operations, and Retail Solutions Group (“RSG”), for which Mr. Civils manages all aspects. Target level improvements for HSG, applicable to Ms. Stehle, were set at 3.4% for revenue and 5.7% for gross profit and for RSG, applicable to Mr. Civils, were set at 9.6% for revenue and 10.6% for gross profit. Gross profit was selected as an annual goal component for all Named Executive Officers given the desire to balance sales and margins, as both are manageable by our Named Executive Officers. For the corporate Named Executive Officers, including Messrs. Dennedy, R. Ellis, Bond, and Stout and Ms. Weigand, gross profit goals related to the consolidated Company results, and for the business unit heads, gross profit goals related to their respective business units. The higher percentage for gross profit applicable to the corporate executives was the results of an additional, business specific metric being included as a component (as discussed below) in each business unit head’s mix of metrics for which they each have more direct control. Revenue was also selected as an annual goal component for all Named Executive Officers, as revenue growth has heightened importance in the smaller, refocused Company. For Ms. Stehle, revenue as a percentage of her overall goal was less than for the other Named Executive Officers due to her direct responsibilities over operations and expense management within HSG, as discussed below. While she does not have direct control over revenue, her responsibilities influence revenue.

The cash component metric was added for fiscal year 2012 to promote cash utilization in accordance with the Company’s operating plan. After the TSG sale, the Company stated that its top priorities included improving operating performance and financial results, profitably growing the business, and returning capital to shareholders. To that end, the Company aimed to use its cash, including the proceeds from the TSG sale, to fund working capital needs, make select investments in the businesses, execute its share repurchase plan, and return excess cash to shareholders as prudently as possible. Achieving these objectives required tighter management of operating expenses and focusing investments on growth opportunities with the highest return. The Compensation Committee determined that setting a goal for the fiscal year-end cash balance would promote these objectives. The level of year-end cash applicable to all Named Executive Officers was determined by budgeting fiscal year working capital needs of each business under the operating plan and projecting the targeted level of remaining cash. The importance of achieving this goal at the corporate level made this component the highest weighted for

 

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the corporate executives, while the business unit heads had a lower weighting for corporate cash due to emphasis on other business unit specific goals as discussed below and their reduced ability to influence corporate cash.

After the TSG sale, all assets and liabilities, results of operations, and cash flows of TSG were classified as discontinued operations within the Company’s financial statements. As a result, an EBITDA metric for the consolidated Company was determined to be less predictable, incentivizing, and pertinent to the operating plan than the revenue, gross profit, and cash goals selected for the fiscal year metrics. EBITDA within the discreet RSG business unit, however, is within Mr. Civils control, as general manager of RSG. The Company believes RSG EBITDA is a profitability measure, and a key driver of value, focusing on sales, product mix, margins, and expense management. As such Mr. Civil’s heaviest weighted component was RSG EBITDA, targeted at 105% improvement over fiscal year 2011 RSG EBITDA. Due to Ms. Stehle’s direct responsibilities for operating expenses with HSG, and only indirect influence over revenue, the Compensation Committee determined that the most critical goal for Ms. Stehle in relation to the overall achievement of the Company’s operating plan was the expense management within HSG, and as such, control of cash operating expenses was Ms. Stehle’s heaviest weighted component. As with the corporate cash component, the targeted level of expense was determined by budgeting fiscal year working capital needs with the greater operating plan.

Performance percentages for payouts (with proportionate payouts between the target and maximum achievement levels) were based on varying levels of achievement of fiscal year 2012 budgeted results, as set forth below. Additional detail about threshold and maximum incentives are disclosed in the Grants of Plan-Based Awards for Fiscal Year 2012 table.

 

Component    Threshold      Maximum  
  

Payout

(% of target
incentive)

     Required Achievement
of Performance
Measures (%)
    

Payout

(% of target
incentive)

     Required Achievement
of Performance
Measures (%)
 

Revenue

       1             87.51         250             118.75   

Gross Profit

       25               80.1         250             115.0   

Cash/EBITDA

       50               80.0         250             150.0   

The Compensation Committee believed that the plan involved moderate difficulty at the threshold level, a high degree of difficulty at the 100% target level, given continuing competition and pricing pressure in the market, and significant difficulty at the maximum level, requiring significant improvement over fiscal year 2011 results, in each case relative to future expectations at the time the levels were set, and significant preservation of cash. Threshold levels were based on achievement necessary to successfully execute a minimum level of the operating plan.

 

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MBO’s.  In addition to objective performance metrics, management by objective goals (“MBOs”) comprise 25% of the Named Executive Officer’s annual incentive and represent individual performance-based goals, with both quantitative and qualitative measures, relative to individual responsibilities. MBOs emphasize the importance of specific tasks and company-wide initiatives; however, MBOs receive a lesser weighting than the combined performance metric goals due to their indirect and lesser impact on shareholder value. The Compensation Committee has discretion in deciding whether each MBO was achieved and in determining the level of achievement, and thus payout, for the MBO components. Achievement of MBOs results in a payout ranging from the target MBO amount to 150% for maximum achievement, and Named Executive Officers are eligible for proportionate payouts between the target and maximum achievement levels, except there is no payout for MBOs below target achievement level. Consistent with the other elements of compensation, MBOs were established after the TSG sale was approved. Fiscal year 2012 MBO goals and payout allocations for the active Name Executive Officers were as follows:

 

Executive   Strategic Initiatives  

% of

MBOs

    Operational Initiatives  

% of

MBOs

 

James H. Dennedy

  Product related initiatives, successful Company relocation and transition, and increased analyst coverage     60      Identification of expense reduction opportunities and successful execution of transition services (to TSG purchaser)     40   

Robert R. Ellis

  Successful Company relocation and transition and increased analyst coverage     40      Successful execution of transition services (to TSG purchaser), IT initiatives, close process improvements, and identification of expense reduction opportunities     60   

Tina Stehle

  Product related initiatives     60      Reorganization efforts and identification of expense reduction opportunities     40   

Paul A. Civils

  Time and budget goals for delivery under significant vendor contracts     40      Operational improvements and optimization of select business opportunities     60   

Curtis C. Stout

  Competitive analysis, growth strategy development, and increased analyst coverage     40      Development of analysis tools, forecasting initiatives, and identification of expense reduction opportunities     60   

Weight differences between initiatives among the Named Executive Officers corresponded to importance of each initiative in respect of the overall Company operating plan. For Mr. Bond and Ms. Weigand, MBOs were focused on the Company’s successful transition and relocation of corporate services and operational improvements similar to the other Named Executive Officers, and due to their departure in October, MBO goals were not executed on, and thus neither received payment for MBOs.

Annual Incentive Levels.  For all Named Executive Officers, fiscal year 2012 target annual incentives were set as a percentage of salary, with the percentage correlating to the overall competitive total target compensation level for each executive. Our Chief Executive Officer’s percentage was set at 100% of his salary, as opposed to approximately 50-60% of salary for other executives, to increase the performance-base nature of his total compensation. Annual incentives comprised 35% of total target compensation for Mr. Dennedy, due to his greater ability to influence corporate goals and initiatives and to directly link a significant portion of his pay, when combined with long-term incentives, to performance. Annual incentive comprised between 22% and 26% for our other Named Executive Officers (who were granted annual and long-term incentives). As with salaries, the Compensation Committee considered the competitive market assessments provided by Towers Watson in evaluating current annual incentive levels and for determining fiscal year 2012 levels. Target levels were based on survey data from companies of comparable revenue and were interpolated for each executive based on calculated competitive salaries, as described above.

The survey data included values at the 25th, 50th (market median), and 75th percentiles and, on average, current target annual incentive percentages of salary were aligned with market median, and total target cash

 

22


compensation (salary and annual incentive) was in the competitive range for the positions evaluated, ranging from 8% below to 19% above market median. As such, increased annual incentive opportunities were a factor of increased salary, as discussed above, as annual incentives as a percentage of salary approximated current levels. For Mr. R. Ellis, the second (August) assessment was considered, and his annual incentive as a percentage of salary was set higher than market median to link a greater percentage of his compensation to performance, given his ability to influence corporate goals and initiatives, and to set his total target cash compensation in line with market median and his current level of compensation. As with his salary, Mr. Dennedy’s annual incentive level was set at the time of his appointment to heavily weight performance.

Fiscal Year 2012 Payouts.  The chart below sets forth the fiscal year 2012 annual incentive opportunity for each participating Named Executive and the components, weightings, and actual annual incentive payouts based on the Compensation Committee’s review of the achievement of the performance measures. At the corporate level, a threshold level of revenue and target levels of gross profit and cash goals were achieved, resulting in corresponding payouts for those components. At the business segment level, Ms. Stehle achieved threshold levels of revenue and gross profit and near target level of cash operating expenses goals, resulting in corresponding payouts for achievement of those goals within HSG. Mr. Civils achieved target levels of revenue and gross profit and a threshold level of EBITDA, resulting in corresponding payouts for achievement of those goals within RSG. Ms. Stehle and M. Civils also earned a payout for the corporate target level achievement of cash goal. The attainment by each Named Executive Officer of their respective MBOs is reflected in the table below.

 

23


     Performance Metrics     Annual Incentive  
Target Incentive as a % of salary   Component         Weight   Target     Actual     Target (1)     Payout (1)  

James H. Dennedy – 100%

  Revenue: AGYS      20%     $213.2M        $209.6M        $70,000        $60,648   
    Gross Profit: AGYS      25%     $81.1M        $81.2M        $87,500        $89,586   
    Cash: AGYS      30%     $84.3M        $97.6M        $105,000        $154,644   
    MBO      25%         $87,500        $64,167   

Total

                 $350,000        $369,045   
               
                                              

Robert R. Ellis – 60%

  Revenue: AGYS      20%     $213.2M        $209.6M        $15,805        $13,693   
    Gross Profit: AGYS      25%     $81.1M        $81.2M        $19,756        $20,227   
    Cash: AGYS      30%     $84.3M        $97.6M        $23,707        $34,916   
    MBO      25%         $19,756        $19,756   

Total

                 $79,023        $88,591   
               
                                              

Henry R. Bond – 50%

  Revenue: AGYS      20%     $213.2M        $209.6M        $16,700        $14,540   
    Gross Profit: AGYS      25%     $81.1M        $81.2M        $20,875        $21,477   
    Cash: AGYS      30%     $84.3M        $97.6M        $25,050        $37,074   
    MBO      25%         $20,875            —       

Total

                 $83,500        $73,091   
               
                                              

Tina Stehle – 50%

  Revenue: HSG      15%     $95.9M        $87.4M        $21,188        $6,034   
    Gross Profit: HSG      20%     $57.8M        $56.5M        $28,250        $25,876   
    Cash Exp: HSG      30%     ($45.8)M        ($47.2)M        $42,375        $39,335   
    Cash: AGYS      10%     $84.3M        $97.6M        $14,125        $20,803   
    MBO      25%         $35,313        $10,594   

Total

                 $141,250        $102,642   
               
                                              

Paul A. Civils – 51%

  Revenue: RSG      20%     $119.1M        $122.3M        $26,010        $31,524   
    Gross Profit: RSG      20%     $23.2M        $24.7M        $26,010        $42,494   
    EBITDA: RSG      25%     $7.8M        $6.6M        $32,513        $19,654   
    Cash: AGYS      10%     $84.3M        $97.6M        $13,005        $19,154   
    MBO      25%         $32,513        $16,256   

Total

                 $130,050        $129,082   
               
                                              

Curtis C. Stout – 50%

  Revenue: AGYS      20%     $213.2M        $209.6M        $22,750        $19,711   
    Gross Profit: AGYS      25%     $81.1M        $81.2M        $28,438        $29,115   
    Cash: AGYS      30%     $84.3M        $97.6M        $34,125        $50,259   
    MBO      25%         $28,438        $23,698   

Total

                 $113,750        $122,783   
               
                                              

Kathleen A. Weigand – 50%

  Revenue: AGYS      20%     $213.2M        $209.6M        $18,667        $16,040   
    Gross Profit: AGYS      25%     $81.1M        $81.2M        $23,333        $23,693   
    Cash: AGYS      30%     $84.3M        $97.6M        $28,000        $40,900   
    MBO      25%         $23,333            —       

Total

                 $93,333        $80,663   
               
                                              

 

(1) Pro-rated from hire date for Mr. R. Ellis and pro-rated from separation date for Mr. Bond and Ms. Weigand. See Grants of Plan-Based Awards table for annualized award amounts.
(2) Mr. Mellina received no annual incentive award; however, as part of his severance package, a payment of $32,235 was made in lieu of full participation in the annual incentive plan. This was based on achievement, at the time of his separation, of threshold TSG revenue and near-target TSG gross profit goals representative of goals that would have been in place for Mr. Mellina for the fiscal year 2012.

 

24


Long-Term Incentives.  As with the annual incentives, the Compensation Committee approved fiscal year 2012 long-term incentive (“LTI”) awards after shareholders approved the TSG sale, except for our Chief Executive Officer. LTI awards to Named Executive Officers consisted of stock-settled appreciation rights (“SSARs”) and restricted shares, both with three-year vesting schedules, pursuant to the Company’s shareholder-approved 2011 Stock Incentive Plan. The Committee considered various LTI award alternatives. While annual incentives targeted specific performance goals, the focus on LTI awards was to link compensation directly to shareholder gains and to improve retention of key management during the Company’s time of transition. SSARs provided the direct link between compensation and shareholder gains in a less dilutive manner than with stock options, and the three-year vesting schedule also enhances retention. Restricted shares also tie compensation to shareholder gains and highly bolster retention over the vesting period.

LTI awards comprised 31% of total target compensation for Mr. Dennedy to directly link a significant portion of his pay, when combined with his annual incentive, to performance and comprised between 23% and 33% for our other Named Executive Officers (who were granted annual and long-term incentives). As with salaries and annual incentives, the Compensation Committee considered the competitive market assessments provided by Towers Watson in evaluating current LTI levels and for determining fiscal year 2012 LTI levels. The Compensation Committee also received input and recommendations from our Chief Executive Officer regarding each Named Executive Officer’s relative ability to influence results in a business segment or in the corporate office. Target levels were based on survey data from companies of comparable revenue and were interpolated for each executive based on calculated competitive salaries, as described above. The data included LTI values at the 25th, market median, and 75th percentiles, and LTI’s as a percentage of base salary at those values. In the aggregate, current LTI values and as a percentage of salary fell between the 25th percentile and market median, with several values outside of the competitive range for the positions evaluated. However, as total target direct compensation was still within a competitive range, despite the lower LTI comparative positions, only slight increases (and only for those below market median) were made for fiscal year 2012 LTI awards in light of compensation cost control efforts. For Mr. R. Ellis, the second (August) assessment was considered, and his LTI value and as a percentage of salary were set just below market median to link a greater percentage of his compensation to performance, given his ability to influence corporate goals and initiatives, and to set his total target cash compensation in line with market median and his current level of compensation. As with his other compensation, Mr. Dennedy’s LTI level was set at the time of his appointment to interim Chief Executive Officer to heavily link compensation to shareholder gains, and thus Mr. Dennedy had the highest percentage of salary for his LTI award as compared to the other Named Executive Officers. Mr. Dennedy’s award consisted solely of restricted stock to accelerate share ownership and align his compensation with shareholder interests. Based on the competitive assessments, input and recommendations, the Compensation Committee set the 2012 LTI awards for each Named Executive Officer as follows:

 

Name   

Percent of

Salary (%)

        Total LTIP
Value ($)
       

SSARs

Granted (#)

       

Restricted Shares

Granted (#)

    

James H. Dennedy

   89        311,640               42,000    

Robert R. Ellis

   75        205,700        16,050        15,135    

Henry R. Bond

   73        220,000        23,656        14,825    

Tina Stehle

   65        183,625        19,745        12,374    

Paul A. Civils

   65        165,750        17,823        11,169    

Curtis C. Stout

   44        100,000        10,753        6,739    

Kathleen A. Weigand

   69        220,000        23,656        14,825    

All SSARs and restricted shares (except for Mr. Dennedy’s) vest in one-third increments on March 31, 2012, 2013 and 2014. The SSARs were granted at an exercise price $7.42 per share, and $8.14 for Mr. R. Ellis (the closing price of the common shares on the grant date), have a seven-year term, and are settled in common shares upon exercise. Mr. Dennedy’s restricted shares vested monthly over the one-year period of his initial employment agreement entered into upon his appointment to Interim President and Chief Executive Officer. All

 

25


of Mr. Bond’s and Ms. Weigand’s SSARs and restricted shares were forfeited upon separation. As with the annual incentives, Messrs. M. Ellis and Melina did not receive 2012 LTIP awards.

Additional Compensation – Executive Benefits.  We provide executive benefits to our Named Executive Officers including additional life and long-term disability insurance plans. From time to time, Named Executive Officers also may participate in supplier sponsored events. Executive benefits are further described in the Summary Compensation Table. We believe these benefits enhance the competitiveness of our overall executive compensation package. We have, however, limited executive benefits offered to reduce compensation costs. Additionally, welfare benefits offered to our Named Executive Officers are the same level of benefits offered to all Company employees, except that we pay for the cost of physicals to promote the health and well-being of our executives.

Employment Agreements and Change of Control

The material termination and change of control provisions of various agreements are summarized below for each Named Executive Officer and are covered in more detail in the Termination and Change of Control table and accompanying discussion.

Employment Agreements.  All of the Named Executive Officers, except for Mr. M. Ellis, entered into an employment agreement with the Company, all with substantially the same terms (except as described below for Mr. Dennedy). Upon termination without cause, we must pay severance equal to one year’s salary and target annual incentive, and continue health benefits for the severance period. If the executive’s position is changed such that his or her responsibilities are substantially lessened or, except for Messrs. Dennedy and R. Ellis, if the executive is required to relocate to a facility more than 50 miles away (a “change in position”), the executive may terminate his or her employment within 30 days of the change in position, and the termination will be deemed to be a termination without cause and the executive is entitled to his or her severance benefits. None of these Named Executive Officers is entitled to excise tax gross-up payments. In consideration of the severance benefits, each employment agreement contains a 12-month non-solicitation provision, an indefinite confidentiality provision, and a 12-month non-compete provision that is automatically triggered if termination is for cause or voluntary and may be enforced by the Company if termination is without cause or for a change in position. Our Compensation Committee believes that the terms of these employment agreements enhance our ability to retain our executives and contain severance costs by providing reasonable severance benefits competitive with market practice. Severance costs are contained by limiting pay to one year, limiting personal benefits, not providing accelerated vesting for awards under the agreements, and narrowly defining a voluntary termination that triggers severance benefits. Additionally, the Company benefits greatly from the non-competition, non-disclosure, and non-solicitation clauses contained in the employment agreements. Except for Mr. Dennedy, the employment agreements do not contain a change of control provision. For Mr. Dennedy, if there is a change of control within two years after April 1, 2012 (the date of his employment agreement), and within the same two-year period his employment with the Company or its successor is terminated without cause, then he will be paid severance equal to two years of each of his base salary and target annual incentive. This change in control benefit enhances our ability to maintain a shareholder focused approach to change of control situations and provides our Chief Executive Officer reasonable support following both a change of control and termination (commonly called a “double trigger” requirement). The Compensation Committee believes Mr. Dennedy’s payments are reasonable, particularly in light of the double trigger requirement, and consistent with market practice for his position.

M. Ellis Agreements.  Mr. M. Ellis entered into both a change of control and non-competition agreement (referred to collectively as his severance arrangement). Under his severance arrangement, upon his separation without cause, Mr. M. Ellis became eligible to receive 24 months of his base salary and a sum equal to two times his target annual incentive, continued health benefits for 24 months, and payment equal to 24 months of his auto allowance. Mr. M. Ellis’ severance arrangement provided that, if any payment received by him in connection with a change of control is deemed a “parachute payment” under Section 280G of the Internal Revenue Code resulting in an “excess parachute payment,” he would be entitled to payment equal to the 20% excise tax, if any,

 

26


payable by him, and the aggregate amount of any federal, state, and local income taxes and excise taxes for which he became liable on account of the receipt of the excise tax gross up payment; however, Mr. M. Ellis’ severance payments did not trigger the excess parachute payment and as such he received no gross up payment. In the absence of a change of control, the same aforementioned severance benefits were to be provided under the non-competition agreement in the event of termination without cause, and the non-competition agreement contains a two-year non-solicitation provision, an indefinite confidentiality provision, and a two-year non-compete provision that is automatically triggered if termination is for cause or voluntary and may be enforced by the Company if termination is without cause. The Compensation Committee established the terms of Mr. Ellis’ change of control agreement to enhance our ability to maintain a shareholder focused approach to change of control situations and provide our Chief Executive Officer reasonable support following both a change of control and termination. The Compensation Committee believes Mr. Ellis’ severance arrangement is reasonable and consistent with market practice for his position.

Accelerated Vesting.  None of the employment agreements discussed above provide for accelerated vesting of equity. Under our 2011 Stock Incentive Plan, the only plan for which any of the Named Executive Officers have unvested equity, vesting is accelerated upon the actual occurrence of a change in control for all stock options, SSARs, and restricted shares (including performance shares). The Compensation Committee believes that during a change of control situation, a stable business environment is in the shareholders’ best interests, and accelerated vesting provisions provide stability. The accelerated vesting provisions are applicable to all employees who receive equity awards, not just executive management.

Additional Compensation Policies

Clawback – Recoupment of Bonuses, Incentives, and Gains.  Under the Company’s “clawback” policy, if the Board determines that our financial statements are restated due directly or indirectly to fraud, ethical misconduct, intentional misconduct, or a breach of fiduciary duty by one or more executive officers or vice presidents, then the Board will have the sole discretion to cancel any stock-based awards granted and to take such action, as permitted by law, as it deems necessary to recover all or a portion of any bonus or incentive compensation paid and recoup any gains realized in respect of equity-based awards, provided recoveries cannot extend back more than three years. Additionally, under Section 304 of the Sarbanes-Oxley Act, if we are required to restate our financial statements due to material noncompliance with any financial reporting requirements as a result of misconduct, our Chief Executive Officer and Chief Financial Officer must reimburse us for any bonus or other incentive-based or equity-based compensation received during the 12 months following the first public issuance of the non-complying document, and any profits realized from the sale of our securities during those 12 months.

 

27


Stock Ownership Guidelines.  To underscore the importance of strong alignment between the interests of management and shareholders, the Board approved stock ownership guidelines for Directors and executives, with our Chief Executive Officer having the highest ownership requirement. Director and executive compensation is designed to provide a significant opportunity to tie individual rewards to long-term Company performance. The objective of our stock ownership guidelines is to support this overall philosophy of alignment and to send a positive message to our shareholders, customers, suppliers, and employees of our commitment to shareholder value. Each Director and executive officer is expected to maintain minimum share ownership of either: (i) a multiple of base salary or Director annual retainer listed below, or (ii) the number of shares listed below:

 

Title    Multiple of Director
Annual Retainer  and
Executive Base Salary
     Number of Shares  
  

 

2 Years

    

 

4 Years

    

 

2 Years

    

 

4 Years

 

Director

     3x         6x         15,000         45,000   

Chief Executive Officer

     2.5x         5x         125,000         250,000   

Senior Vice President

     0.5x         2x         15,000         75,000   

LTIP Participants

     —           0.5x         2,500         15,000   

Stock ownership that is included toward attainment of the guidelines includes (i) shares held of record or beneficially owned, either directly or indirectly; (ii) shares acquired upon exercise of stock options or SSARs; (iii) vested restricted or deferred shares; (iv) phantom or deferred share units held in a deferred compensation plan; and (v) shares or deferred shares acquired by dividend reinvestment. Directors and executives are expected to attain the specified target ownership levels within both two and four years from the later of the effective date of this policy or becoming a Director or an executive, and remain at or above that level until retirement. Annually, the Board reviews progress toward achieving these ownership levels. Director and executives who have not attained the specified ownership guidelines will be required to hold 75% of shares acquired upon exercise of stock options and SSARs or vesting of performance or restricted shares until they meet their target ownership level. If ownership guidelines are not met within two and four years, our Compensation Committee has the right to pay an executive’s annual incentives in shares until ownership guidelines are achieved.

Impact of Tax and Accounting Considerations. In general, the Compensation Committee considers the various tax and accounting implications of the pay mechanisms used to provide pay to our Named Executive Officers, including the accounting cost associated with long-term incentive grants, when determining compensation. Section 162(m) of the Internal Revenue Code generally prohibits any publicly held corporation from taking a federal income tax deduction for pay to the chief executive officer and the three other highest compensated executive officers (other than the chief financial officer) in excess of $1 million in any taxable year. Exceptions are made for certain qualified performance-based pay. It is the Compensation Committee’s objective to maximize the effectiveness of our executive pay plans in this regard. The pay instruments used, including salaries, annual incentives, and equity, are tax deductible to the extent that they are performance-based or less than $1 million for such Named Executive Officer in a given year.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Company’s management. Based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be incorporated into the Company’s 2012 Annual Report on Form 10-K for the fiscal year ended March 31, 2012 and this Proxy Statement.

The Compensation Committee of the Board of Directors

John Mutch, Chairman

Keith M. Kolerus

Robert A. Lauer

 

28


RELATIONSHIP WITH COMPENSATION COMMITTEE CONSULTANT

During fiscal year 2012, the Compensation Committee retained Towers Watson as compensation consultant for executive compensation matters. All fees paid to Towers Watson in fiscal year 2012 were for executive compensation consultation.

 

29


EXECUTIVE COMPENSATION

Summary Compensation Table

The following table and related notes provide information regarding fiscal year 2012 compensation for our Named Executive Officers, including each Chief Executive Officer and Chief Financial Officer who served during fiscal year 2012, the other three most highly compensated executive officers whose total compensation exceeded $100,000 for fiscal year 2012, and two executives who would be among the three most highly compensated executive officers but for the fact that they were not serving as executive officers at the end of fiscal year 2012. Ms. Stehle was serving as an executive officer at fiscal-year end, but has since separated from the Company.

Summary Compensation Table for Fiscal Year 2012

 

Name and Principal Position   Year    

Salary

($)(1)

   

Bonus

($)(2)

   

Stock
Awards

($)(3)(4)

   

Option
Awards

($)(3)

   

Non-

Equity

Incentive

Plan

Compen-
sation

Earnings

($)(5)

   

Change in

Pension

Value and

Non-

qualified

Deferred

Compen-

sation

Earnings

($)(6)

   

All

Other

Compen-

sation

($)(7)

   

Total

($)

 

James H. Dennedy

    FY12        309,928               311,640               369,045               10,780        1,001,393   
President and
Chief Executive Officer
                           
                           
                   
                                                                         

Martin F. Ellis

    FY12        154,859                                    10,459        1,797,455        1,962,773   
Former President and
Chief Executive Officer
    FY11        463,333                      727,160        184,569        38,698        33,944        1,447,704   
    FY10        450,000               530,008        268,320        150,750        12,683        40,242        1,452,003   
                   
                                                                         

Robert R. Ellis

    FY12        131,705               123,199        82,497        88,591               3,520        429,511   

Senior Vice President, Chief

Financial Officer and Treasurer

                           
                           
                   
                                                                         

Henry R. Bond

    FY12        167,816        75,000        110,002        110,000        73,091               698,876        1,234,785   

Former Senior Vice President

and Chief Financial Officer

    FY11        137,500        75,000        219,000        216,500        29,476               66,309        743,785   
                           
                   
                                                                         

Tina Stehle

    FY12        282,500               91,815        91,814        102,642               24,174        592,945   

Former Senior Vice President

and Chief Operating Officer

    FY11        276,833                      172,480        122,627               27,802        599,742   
    FY10        275,000               144,113        72,584        71,044               22,817        585,558   
                   
                                                                         

Paul A. Civils

    FY12        255,000               82,874        82,877        129,082               22,656        572,489   

Senior Vice President and

General Manager

                           
                           
                   
                                                                         

Curtis C. Stout

    FY12        227,500        75,000        50,003        50,001        122,783               14,685        539,972   

Vice President, Corporate

Development

                           
                           
                   
                                                                         

Kathleen A. Weigand

    FY12        185,134        75,000        110,002        110,000        80,633               501,659        1,062,428   

Former General Counsel,

Secretary and Senior Vice President

    FY11        302,333                      196,000        95,511               27,851        621,695   
    FY10        300,000               394,938        295,734        65,500               13,610        1,069,782   
                   
                                                                         

Anthony Mellina

    FY12        103,514        55,000                                    517,566        676,080   

Former Senior Vice President

and General Manager

    FY11        304,667                      196,000        36,380               26,955        564,002   
    FY10        300,000               161,188        81,184        22,500               17,148        582,020   

 

30


(1) For fiscal year 2012, for Messrs. Dennedy and R. Ellis, salary is from start date through March 31, 2012. For Mr. Dennedy, also includes $16,250 in retainer and fees he received for service on the Board prior to becoming an executive officer. For Messrs. M. Ellis, Bond, and Mellina and Ms. Weigand, salary is from April 1, 2011 through separation date. Mr. Bond’s fiscal year 2011 salary is from start date through March 31, 2011.
(2) For fiscal year 2012, amounts represent bonus payments for the successful closing of the TSG sale. For fiscal year 2011 for Mr. Bond, amount represents hiring bonus paid upon his joining the Company.
(3) Stock Awards include grants of restricted shares and performance shares. Option Awards include SSAR grants. Amounts disclosed do not represent the economic value received by the Named Executive Officers. The value, if any, recognized upon the exercise of a SSAR will depend upon the market price of the shares on the date the SSAR is exercised. The value, if any, recognized for restricted and performance shares will depend upon the market price of the shares upon vesting. In accordance with SEC rules, the values for restricted and performance shares and SSARs are equal to the aggregate grant date fair value for each award computed in accordance with FASB ASC Topic 718. The values for restricted and performance shares are based on the closing price on the grant date. The values for SSARs are based on the Black-Scholes option pricing model. A discussion of the assumptions used in determining these valuations is set forth in Note 14 of the Notes to Consolidated Financial Statements of the Company’s 2012 Annual Report.
(4) Fiscal year 2010 stock awards are performance shares granted under the 2010 long-term incentive plan. These amounts represent the grant date fair value of shares that would have been earned for achievement of target performance, which was the probable outcome on the grant date. If maximum performance had been achieved, the Named Executive Officer would have earned 175% of the target award, and the grant date fair value of such maximum award for each Named Executive Officer is set forth below. Based on pre-established performance criteria, a portion of the performance shares was earned by each Named Executive Officer as set forth below, with the value of those shares based on the grant date fair value. The earned shares are fully vested.

 

Name   Target (#)     Max (#)     Max ($)     Earned (#)  

Martin F. Ellis

    77,600        135,800        927,514        38,971   

Tina Stehle

    21,100        36,925        252,198        12,320   

Kathleen A. Weigand

    23,600        41,300        282,079        11,852   

Anthony Mellina

    23,600        41,300        282,079        16,742   

 

(5) Amounts represent annual incentive payments received in 2012, 2011, and 2010 based on pre-set incentive goals established at the beginning of each fiscal year and tied to the Company’s financial, strategic, and operational goals.
(6) For Mr. M. Ellis, represents amounts accrued by the Company in 2012, 2011, and 2010 in accordance with the requirements of FASB ASC Topic 715 as they relate to the change in present value of the accumulated benefit obligation under the Supplement Executive Retirement Plan, which was terminated in March 2011. No other Named Executive Officer participated in the plan. The change in value from year to year is typically a function of age, years of service, salary, and time to retirement; however, as the plan was terminated prior to the beginning of fiscal year 2012, the change in value for fiscal year 2012 was due solely to interest accrued during the fiscal year on Mr. Ellis’ accrued benefit, as distribution of Mr. Ellis’ accrued benefit was made in April 2012. None of the Named Executive Officers had above-market or preferential earnings on nonqualified deferred compensation.
(7) All other compensation includes the following compensation, calculated based on the aggregate incremental cost to the Company of the benefits noted.

 

31


All Other Compensation for Fiscal Year 2012

 

Name  

401(k)

Company

Match ($)

      

Executive

Life

Insurance ($)

      

Relocation

($)(a)

      

Severance

($)(b)

        

Gross-ups

($)(c)

        

All Other

($)(d)

         Total ($)  

J. Dennedy

  8,100          996                                     1,684            10,780   

M. Ellis

  5,468          362               1,786,178                       5,447            1,797,455   

R. Ellis

  2,650          495                                     375            3,520   

H. Bond

  5,950          622       92,898         466,980            127,894            4,532            698,876   

T. Stehle

  8,468       4,183                          521            11,002            24,174   

P. Civils

  8,158       5,363                                     9,135            22,656   

C. Stout

  8,483          726                          1,014            4,462            14,685   

K. Weigand

  5,964       1,186               485,400            658            8,451            501,659   

A. Mellina

  4,855          608               509,031                       3,072            517,566   

 

(a) Mr. Bond received travel and relocation assistance during his transition to the Company’s corporate offices, including expenses for travel, temporary housing, car rental, moving, and incidentals. Amount disclosed represents actual cost to the Company, or amount reimbursed to Mr. Bond, for such expenses.
(b) Description and itemization of severance benefits received is described below under Termination and Change of Control.
(c) Includes tax gross-ups for the cost of executive physical exams for Mmes. Stehle and Weigand and Mr. Stout and for relocation expenses for Mr. Bond.
(d) Includes executive physical exams as noted in (c) above, auto allowance for each executive except Messrs. Dennedy, R. Ellis, and Stout, executive long-term disability coverage for each executive, and personal umbrella liability coverage for each executive (except Mr. R. Ellis) up through elimination of such coverage in November 2011. For separated employees, amounts are through respective separation dates.

 

32


Grants of Plan-Based Awards

The following table and related notes summarize grants of equity and non-equity incentive compensation awards to our Named Executive Officers for fiscal year 2012. All equity awards were made under the Company’s 2011 Stock Incentive Plan.

Grants of Plan-Based Awards for Fiscal Year 2012

 

Name (1)          Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards ($)(2)
    Estimated Future Payouts
Under Equity Incentive
Plan Awards ($)
 

All Other

Stock

Awards:

Number

of Shares

of Stock

(#)(3)

   

All Other

Option

Awards:

Number

of

Securities

Underlying

Options

(#)(4)

   

Exercise

or

Base

Price

of Option

Awards

($/share)

   

Grant Date

Fair Value

of Stock

and Option

Awards

($)(5)

 
 

Grant

Date

   

 

 

Threshold

($)

   

Target

($)

   

Maximum

($)

   

Threshold 

(#)

 

Target 

(#)

 

Maximum 

(#)

       

James H. Dennedy

    7/27/11        75,075        350,000        787,500                                           
      8/11/11                                            42,000                      311,640   
               
                                                                             

Robert R. Ellis

    10/10/11        35,393        165,000        371,250                         
      10/10/11                                            15,135        16,050        8.14        205,696   
               
                                                                             

Henry R. Bond

    7/27/11        32,175        150,000        337,500                         
      8/11/11                                            14,825        23,656        7.42        220,002   
               
                                                                             

Tina Stehle

    7/27/11        35,524        141,250        317,813                         
      8/11/11                                            12,374        19,745        7.42        183,629   
               
                                                                             

Paul A. Civils

    7/27/11        29,521        130,050        292,613                         
      8/11/11                                            11,169        17,823        7.42        165,751   
               
                                                                             

Curtis C. Stout

    7/27/11        24,399        113,750        255,938                         
      8/11/11                                            6,739        10,753        7.42        100,005   
               
                                                                             

Kathleen A. Weigand

    7/27/11        34,320        160,000        360,000                         
      8/11/11                                            14,825        23,656        7.42        220,002   

 

(1) Messrs. M. Ellis and Mellina received no fiscal year 2012 awards under the annual incentive plan. Please see the Compensation Discussion and Analysis – Annual Incentives and Termination and Change of Control for payment received by Mr. Mellina in lieu of participation in the annual incentive plan.
(2) Amounts shown in the columns under Estimated Future Payouts Under Non-Equity Incentive Plan Awards represent fiscal year 2012 annual threshold, target, and maximum cash-based annual incentives granted under the annual incentive plan. Total threshold, target, and maximum payouts were conditioned on achievement of weighted goals based on revenue, gross profit, EBITDA, cash, and achievement of individual MBOs as applicable for each Named Executive Officer. Fiscal year 2012 payouts for each Named Executive Officer pursuant to these awards are shown in the Summary Compensation Table above in the column titled Non-Equity Incentive Plan Compensation. Threshold, target, and maximum amounts represent annualized award amounts. Actual payouts for fiscal year 2012 for Messrs. R. Ellis and Bond and Ms. Weigand were pro-rated based on their respective hire or separation date. Further explanation of potential and actual payouts by component is set forth in the Compensation Discussion and Analysis – Annual Incentives.
(3) The share amounts shown represent grants of restricted shares to each Named Executive Officer either as part of the executive’s annual long-term equity grant or as a long-term inducement award upon the executive’s hire.
(4) The share amounts represent SSARs granted at the fair market value of the shares on the grant date as fiscal year 2012 long-term incentive awards. The SSARs are exercisable in thirds beginning on March 31, 2012. All SSARs have a seven-year term.
(5) The dollar amount shown for each equity grant represents the grant date fair value of the SSARs and restricted shares, calculated in accordance with FASB ASC Topic 718. The actual value, if any, recognized upon the exercise of a SSAR or vesting of restricted shares will depend upon the market price of the shares on the date the SSAR is exercised or restricted shares vest.

 

33


Outstanding Equity Awards

The following table and related notes summarize the outstanding equity awards held by the Named Executive Officers as of March 31, 2012.

Outstanding Equity Awards at 2012 Fiscal Year-End

 

Name (1)   Grant
Date
    Option Awards     Stock Awards  
   

Number of

Securities Underlying
Unexercised Options (#)

    Option
Exercise
Price ($)
   

Option

Date
Expiration

   

Number of
Shares

of Stock
That Have
Not
Vested (#)(3)

    Market
Value of
Shares of
Stock That
Have Not
Vested ($)(4)
 
   

 

Exercisable

    Unexercisable (2)          

James H. Dennedy

    8/11/11                                        7,000  (e)      62,930   
           
                                                         

Robert R. Ellis

    8/11/11        5,350        10,700  (a)      8.14        10/10/2018        10,757  (f)      96,705   
           
                                                         

Tina Stehle

    5/23/2006        5,000          16.58        5/23/2016           
    7/28/2006        3,000          15.85        7/28/2016           
    5/21/2007        12,000          22.21        5/21/2017           
    5/23/2008        12,000          9.82        5/23/2018           
    11/13/2008        26,667          2.51        11/13/2018           
    5/22/2009        21,100          6.83        5/22/2016           
    6/7/2010        44,000          6.20        6/7/2017           
      8/11/11        6,581        13,164  (b)      7.42        8/11/2018        8,250  (g)      74,168   
           
                                                         

Paul A. Civils

    7/28/2006        8,000          15.85        7/28/2016           
      5/21/2007        12,000          22.21        5/21/2017           
      5/23/2008        12,000          9.82        5/23/2018           
      11/13/2008        40,000          2.51        11/13/2018           
      5/22/2009        15,700          6.83        5/22/2016           
      6/7/2010        40,000          6.20        6/7/2017           
      8/11/11        5,941        11,882  (c)      7.42        8/11/2018        7,446  (h)      66,940   
           
                                                         

Curtis C. Stout

    5/23/2006        10,000          16.58        5/23/2016           
      5/21/2007        12,000          22.21        5/21/2017           
      5/23/2008        12,500          9.82        5/23/2018           
      11/13/2008        40,000          2.51        11/13/2018           
      5/22/2009        13,200          6.83        5/22/2016           
      6/7/2010        25,000          6.20        6/7/2017           
      8/11/11        3,584        7,169  (d)      7.42        8/11/2018        4,493  (i)      40,392   

 

(1) For Messrs. M. Ellis, Bond, and Mellina and Ms. Weigand, all unvested options, SSARs, and restricted shares were forfeited upon separation, and unexercised vested SSARs expired 90 days after separation.
(2) As of March 31, 2012, the vesting schedule for the time-vested SSARs was as follows:
  (a) 5,350 on March 31, 2013 and 2014
  (b) 6,582 on March 31, 2013 and 2014
  (c) 5,941 on March 31, 2013 and 2014
  (d) 3,584 on March 31, 2013 and 3,585 on March 31, 2014
(3) As of March 31, 2012, the vesting schedule for the time-vested SSARs was as follows:
  (e) 3,500 on April 30, 2012 and May 31, 2012
  (f) 5,378 on March 31, 2013 and 5,379 on March 31, 2014

 

34


  (g) 4,125 on March 31, 2013 and 2014
  (h) 3,723 on March 31, 2013 and 2014
  (i) 2,246 on March 31, 2013 and 2,247 on March 31, 2014
(4) Calculated based on the closing price of the shares on March 30, 2012 of $8.99 per share.

Option Exercises and Stock Vested

The following table and related notes summarize the exercise of stock options and/or SSARs and the vesting of other stock awards by the Named Executive Officers during fiscal year 2012.

Option Exercises and Stock Vested for Fiscal Year 2012

 

Name   Option Awards   Stock Awards
 

Number of

Shares
Acquired on

Exercise (#)(1)  

 

Value

Realized on  

Exercise
($)(2)

 

Number of

Shares
Acquired on

Vesting (#)(3)  

  Value
Realized on
Vesting ($)(4)   

James H. Dennedy

                      35,000         294,105  

Martin F. Ellis

      453,500         1,559,420         13,329         90,770  

Robert R. Ellis

                      4,378         39,358  

Henry R. Bond

      50,000         67,500         20,000         136,200  

Tina Stehle

                      8,337         65,765  

Paul A. Civils

                      4,613         39,531  

Curtis C. Stout

                      4,512         35,623  

Kathleen A. Weigand

      118,600         316,264         9,055         61,665  

Anthony Mellina

      133,600         595,308         5,726         38,994  

 

(1) For the following individuals, number includes SSARs for which shares were issuable upon exercise in amounts as follows: M. Ellis: 263,500 SSARs, with 66,906 shares issuable; H. Bond: 50,000 SSARs, with 7,803 shares issuable; K. Weigand: 73,600 SSARs, with 15,212 share issuable; and A. Mellina: 73,600 SSARs, with 21,877 issuable.
(2) The value realized on option/SSAR exercises is determined by multiplying the number of shares underlying the stock awards exercised by the difference between the closing price on the date of exercise and the exercise price.
(3) For Messrs. Dennedy, R. Ellis, Civils and Stout and Ms. Stehle, includes partial vesting of time-vested restricted shares granted in August 2011. For Messrs. M. Ellis, Bond, Civils, Stout, and Mellina and Mmes. Stehle and Weigand, includes vesting on May 31, 2011 of restricted shares (including dividend shares) upon announcement of the TSG sale.
(4) The value realized on vesting of stock awards is determined by multiplying the number of shares underlying the stock awards by the closing price of the shares on the vesting date of the awards.

Retirement Benefits

As part of the Company’s continued efforts to reduce compensation expenses, the Supplemental Executive Retirement Plan (“SERP”) and Benefit Equalization Plan (“BEP”) were terminated in March of 2011.

Mr. M. Ellis was the only Named Executive Officer who participated in the SERP. The following table provides information relating to his accumulated benefit at 2012 fiscal year-end, since distribution of his benefit was made in April 2012. The SERP was a nonqualified defined benefit plan that provided benefits to participants equal to 50% of covered pay, defined as annual salary plus actual annual incentive pay paid in a given year. The average of the highest three years of covered pay in the last five consecutive fiscal years prior to retirement was used as the basis for calculating benefits. The benefit formula was defined as 3.33% of final average covered pay

 

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multiplied by the number of years of continuous service, capped at 15 years. The SERP benefit was offset by matching and profit sharing contributions under both the 401(k) Plan and the BEP, as well as 50% of the participant’s estimated Social Security retirement benefits payable at age 62, attributable to wages earned from the date of hire. Normal retirement was defined as the attainment of age 65 with early retirement defined as age 55 plus seven years of continuous service. The benefit was actuarially reduced for any benefits taken prior to age 60. Benefits were permitted to be taken in the form of life or joint-and-survivor annuities or as a lump sum.

Pension Benefits for Fiscal Year 2012

 

      Plan Name      Number of Years
Credited  Service (#)
     Present Value of
Accumulated  Benefit ($)(1)
     Payment During
Last Fiscal  Year ($)(1)
 

Martin F. Ellis

     SERP         7         494,659           

 

(1) As the SERP was terminated in March 2011, no additional years of service were credited in fiscal year 2012. The accumulated benefit was distributed in April 2012 in accordance with the SERP.

Nonqualified Deferred Compensation Plan

The table below sets forth deferred compensation under the BEP for the Named Executive Officers. Prior to the BEP’s termination, BEP participants could make elections to defer salary and annual incentive amounts into the BEP, and the Company previously provided profit sharing and matching amounts in the BEP as if the amounts deferred by the participant in the BEP were the equivalent to a pre-tax participant contribution to the 401(k) Plan. The BEP disregarded certain regulatory limitations applicable to the 401(k) Plan. Participants directed investment of their accounts by choosing from among investment funds.

Under the BEP, participants received amounts upon separation from service. If separation was due to disability or qualified as early or normal retirement (age 55 with seven years of service or age 65 regardless of service, respectively) the account was paid pursuant to the elected number of installments. Participants were permitted to elect to have benefits paid in a lump sum or in a series of substantially equal installments, which may range between two and twenty years. In the event of a termination of employment for reason of death, the participant’s entire account would be paid to their beneficiary in a single sum. If a participant’s employment was terminated for cause, amounts credited for matching and profit sharing purposes were forfeited, although salary and annual incentive amounts deferred by the participant were still paid. Upon the BEP’s termination, participants were entitled to receive a distribution of their BEP balance either immediately or, if required for compliance under Section 409A of the Internal Revenue Code of 1986, a later date, as noted below.

Nonqualified Deferred Compensation for Fiscal Year 2012

 

Name (1)   

Executive

Contributions

in Last

Fiscal Year

($)(2)

  

Company

Contributions

In Last

Fiscal Year

($)(2)

  

Aggregate
Earnings

In Last

Fiscal Year

($)(3)

    

Aggregate

Withdrawals/

Distribution

($)(4)

  

Aggregate

Balance at

Last Fiscal

Year-End

($)(5)

Martin F. Ellis

   —      —        30,439       565,055    —  

Tina Stehle

   —      —        8,925       —      130,902

Paul A. Civils

   —      —        22,468       —      401,257

Kathleen A. Weigand

   —      —        49,048       —      322,142

Anthony Mellina

   —      —        471       32,059    —  

 

(1) Messrs. Dennedy, R. Ellis, Bond, and Stout did not participate in the BEP.
(2) The BEP was terminated effective March 31, 2011, and as such, no individual or Company contributions were made during fiscal year 2012.

 

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(3) None of the amounts under Aggregate Earnings in Last Fiscal Year represent above-market or preferential earning required to be disclosed in the Summary Compensation Table above.
(4) For Messrs. M. Ellis and Mellina, balances were valued 6 months after separation from service and paid in February 2012.
(5) For Mmes. Stehle and Weigand and Mr. Civils, balances were distributed in April 2012.

Amounts previously reported as compensation in summary compensation tables for previous years for each Named Executive Officer are as follows: Mr. M. Ellis: $503,677; Ms. Stehle: $33,555; Mr. Civils: $166,207; Ms. Weigand: $246,354; Mr. Mellina: $27,675; and $0 for Messrs. Dennedy, R. Ellis, Bond, and Stout. Amounts were previously disclosed as salary, bonus, and/or All Other Compensation as BEP matches and profit sharing for each year the Named Executive Officer appeared in the summary compensation table.

Termination and Change of Control

The following table and discussion summarize certain information related to the total potential payments which would have been made to the Named Executive Officers in the event of termination of their employment with the Company, including in the event of a change of control, effective March 31, 2012, the last business day of fiscal year 2012, for Messrs. Dennedy, R. Ellis, Civils, and Stout and Ms. Stehle. For Messrs. M. Ellis, Bond, and Mellina and Ms. Weigand, the disclosure reflects his or her actual severance benefits received in connection with his or her separation with the Company.

Employment Agreements – Fiscal Year 2012 Active Named Executive Officers.  Messrs Dennedy, R. Ellis, Civils, and Stout and Ms. Stehle (who separated from the Company in April 2012) are each a party to an employment agreement with the Company. If we terminate his or her employment without cause, he or she will receive his or her base salary and applicable health benefits for 12 months and his or her target annual incentive following termination. If the Company changes his or her position such that his or her compensation or responsibilities are substantially lessened, or if he or she is required to relocate more than 50 miles away (except for Messrs. Dennedy and R. Ellis), he or she may terminate his or her employment within 30 days of the change in position and will receive his or her severance benefits. If he or she is terminated for cause or voluntarily terminates his or her employment for any reason other than a change in position, he or she is prohibited for a one-year period following termination (the “Noncompetition Period”) from being employed by, owning, operating, controlling, or being connected with any business that competes with the Company. If any of these executives is terminated without cause or terminates his or her employment due to change in position, we may, in our sole discretion, elect to pay his or her severance benefits for all or any part of the Noncompetition Period, which payments are in lieu of the severance payments and benefits coverage described above and, so long as we make such payments, he or she will be bound by the non-competition provisions described above. Each executive’s agreement also contains an indefinite non-disclosure provision for the protection of the Company’s confidential information and one-year non-solicitation and non-compete provisions. For Mr. Dennedy, if there is a change of control within two years after April 1, 2012 (the date of his employment agreement), and within the same two-year period his employment with the Company or its successor is terminated without cause, then he will be paid severance equal to two years of each of his base salary and target annual incentive.

Severance Benefits – Fiscal Year 2012 Separated Named Executive Officers.  Messrs. M. Ellis, Bond, and Mellina and Ms. Weigand all received severance benefits pursuant to their respective employment agreements. Mr. M. Ellis had both a change of control agreement and non-competition agreement (referred to collectively hereinafter as his severance arrangement). Under his severance arrangement, upon his separation without cause, Mr. M. Ellis became eligible to receive 24 months of his current base salary. He also became entitled to a sum equal to two times his target annual incentive, continued health benefits coverage for 24 months, and payment equal to 24 months of his auto allowance. Mr. M. Ellis’ severance arrangement provided that, if any payment received by him in connection with a change of control is deemed a “parachute payment” under Section 280G of the Internal Revenue Code resulting in an “excess parachute payment” within the meaning of Section 280G(b), he would be entitled to a cash payment equal to the 20% excise tax, if any, payable by him pursuant to the

 

37


provisions of Section 4999, which amount would be increased by the aggregate of the amount of any federal, state, and local income taxes and excise taxes for which he became liable on account of the receipt of the excise tax gross up payment; however, Mr. M. Ellis’ severance payments did not trigger the excess parachute payment and he received no gross up payment.

Messrs. Bond and Mellina and Ms. Weigand each received severance benefits pursuant to their respective employment agreements, which were similar to the employment agreements described above for Messrs. Civils and Stout and Ms. Stehle, providing for 12 months of base salary and applicable health benefits (if he or she participated in the Company’s health plan) and his or her annual target incentive following separation. Additionally, these executives received the sum of one year’s auto allowance under a Company policy which has since been discontinued. Mr. Mellina and Ms. Weigand received their severance benefits for separation without cause, and Mr. Bond received his severance benefits for separation due to change of position, as his duties were transferred to Mr. R. Ellis prior to Mr. Bond’s separation. Cause and change of position are defined in footnote 1 to the chart below.

Termination and Change of Control

 

Voluntary Termination or
Termination for Cause ($)(1)
 

James

Dennedy

   

Martin

Ellis

   

Robert

Ellis

   

Henry

Bond

   

Tina

Stehle

   

Paul

Civils

   

Curtis

Stout

    Kathleen
Weigand
   

Anthony

Mellina

 

Base and Incentive

                                                              

Accelerated Vesting

                                                              

Termination without Cause

or by Employee for Change

in Position ($)(1)

                                                                       

Base & Incentive (2)

    700,000               440,000        450,000        423,750        385,050        341,250        480,000        492,735   

Auto Allowance

                  —           5,400        —           —           —           5,400        5,400   

Health Insurance (3)

    9,509               5,189        11,580        7,059        7,781        10,935        —           10,896   

Accelerated Vesting

                  —           —           —           —           —           —           —      
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    709,509               445,189        466,980        430,809        392,831        352,185        485,400        509,031   

Change of Control ($)(4)

                                                                       

Base & Incentive

    1,050,000        1,739,000        —           —           —           —           —           —           —      

Auto Allowance

           24,000        —           —           —           —           —           —           —      

Health Insurance (3)

           23,178        —           —           —           —           —           —           —      

Accelerated Vesting/SSARs (5)

           75,437        9,095        —           20,667        18,655        11,255        20,334        20,344   

Accelerated Vesting/Stock (5)

    62,930        90,770        96,705        136,200        74,168        66,940        40,392        61,665        38,994   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    1,112,930        1,952,385        105,800        136,200        94,835        85,595        51,647        81,999        59,328   

Death or Disability ($)(6)

                                                                       

Accelerated Vesting/SSARs (5)

                  9,095        —           20,667        18,655        11,255        —           —      

Accelerated Vesting/Stock (5)

    62,930               96,705        —           74,168        66,940        40,392        —           —      
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    62,930               105,800        —           94,835        85,595        51,647        —           —      

 

(1) “Cause” is defined as (i) breach of employment agreement or any other duty to the Company, (ii) dishonesty, fraud, or failure to abide by the published ethical standards, conflicts of interest, or material breach of Company policy, (iii) conviction of a felony crime or crime involving misappropriation of money or other Company property, (iv) misconduct, malfeasance, or insubordination, or (v) gross failure to perform (not including failure to achieve quantitative targets). Mr. Dennedy has 30 days to cure a breach of his employment agreement, any duty to the Company, or a material breach of Company policy. A “change in position” is the substantial lessening of compensation or responsibilities or, except for Messrs. Dennedy and R. Ellis, the requirement to relocate to a facility more than 50 miles away. After a change in position, the executive has 30 days to notify the Company of his termination of employment. A “voluntary termination” includes death, disability, or legal incompetence.

 

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(2) In lieu of participation in annual incentive plan for FY12, Mr. Mellina received a payout as part of his separation payment. The payout was based on achievement, as of the first quarter of the fiscal year, of threshold TSG revenue and near-target TSG gross profit goals representative of goals that would have been in place for Mr. Mellina for the fiscal year 2012.
(3) Health Insurance consists of health care and dental care benefits. The amount reflects the sum of 24 months of health and dental benefits for Mr. Ellis and 12 months of benefits for the other Named Executive Officers that participate in the Company’s plans. These benefits have been calculated based on actual cost to us for fiscal year 2012.
(4) Messrs. M. Ellis and Dennedy are the only Named Executive Officers with change of control provisions. Mr. M. Ellis’ payments reflect actual payments payable under his severance arrangements.
(5) SSARs and restricted shares vest upon a change of control. For SSARs (except as qualified below) the value of accelerated vesting is calculated using the closing price of $8.99 per share on March 30, 2012 less the exercise price per share for the total number of SSARs accelerated. The potential payment from the accelerated SSARs includes only the proceeds from the exercise of SSARs with an exercise price less than $8.99 since there would be no proceeds upon the exercise of “underwater” SSARs. All stock options are currently vested. The value of restricted shares upon vesting reflects that same $8.99 closing price. For Messrs. Dennedy, R. Ellis, Civils, and Stout and Ms. Stehle, values represent potential vesting under a hypothetical change of control situation on March 31, 2012. For Messrs. M. Ellis, Bond, and Mellina and Ms. Weigand, values represent vesting upon and as of the date of the announcement of the TSG sale, although accelerated vesting occurred for all Named Executive Officers upon the announcement of the TSG sale.
(6) All SSARs and restricted shares vest upon death or disability.

 

PROPOSAL 2

ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) and SEC rules require us to allow our shareholders to vote, on a non-binding, advisory basis, on whether to approve the compensation of our Named Executive Officers as disclosed in this Proxy Statement, in accordance with the SEC’s compensation disclosure rules. As described more fully in our Compensation Discussion and Analysis section of this Proxy Statement, our compensation programs applicable to our Named Executive Officers are designed to retain executives who can significantly contribute to our success, reward the achievement of specific annual and long-term goals and strategic objectives, and tie a significant portion of compensation to the long-term performance of our shares to align executive pay and shareholders’ interests. The Compensation Committee continually reviews the compensation programs for our Named Executive Officers to ensure the alignment of our executive compensation structure with our shareholders’ interests and market practices. As a result of this review, the Compensation Committee:

   

In connection with the restructuring of the management team after the TSG sale, reduced compensation costs for key executive positions as appropriate for the smaller, refocused Company;

   

Imposed minimal salary increases to ensure that a significant amount of our Named Executive Officers’ pay is variable, based on achievement of annual performance goals and long-term gains in shareholder value, with our Chief Executive Officer having the highest variable pay percentage link a substantial percentage of target pay to performance;

   

Continued focus on revenue and gross profit improvements, cash preservation, and business unit EBITDA and expense minimization goals appropriate for the smaller, refocused Company;

   

Structured long-term incentive awards to directly tie realization of any value of the award received by the Named Executive Officers to improved share price after the closing of the TSG sale;

   

Reevaluated peer group comparisons to more appropriately reflect the size and focus of the Company in benchmarking efforts; and

   

Continues to enforce share ownership guidelines to align management’s interests with those of our shareholders, with our Chief Executive Officer having the highest share ownership requirement.

 

39


We are asking shareholders to approve our Named Executive Officers’ compensation as described in this Proxy Statement. Currently, we ask shareholders to vote on such compensation annually. This vote is not intended to address any specific item of compensation, but rather the overall compensation, and the philosophy, objectives, and structure applicable to such compensation. This advisory vote is not binding on the Company, the Compensation Committee, or our Board; however, we value the opinions of our shareholders and to the extent there is any significant vote against this proposal, we will consider our shareholders’ concerns and evaluate whether any actions are necessary to address those concerns. Accordingly, we are asking our shareholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2012 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the discussion under Executive Compensation, including the 2012 compensation tables and the related disclosure and narratives to those tables.”

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL 2. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED “FOR” PROPOSAL 2 UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides certain information with respect to all of the Company’s equity compensation plans in effect as of March 31, 2012.

 

      Number of Securities to
be  Issued upon Exercise
of Outstanding Options,
Warrants and Rights
   Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
   Number of  Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
Equity compensation plans approved by shareholders (2000 Stock Option Plan for Outside Directors and 2000, 2006, and 2011 Stock Incentive Plans)    1,577,835    $ 10.98    3,362,851
       
Equity compensation plans not approved by shareholders    0    0    0
    

 

  

 

  

 

Total

   1,577,835    $ 10.98    3,362,851

AUDIT COMMITTEE REPORT

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. The Audit Committee’s activities are governed by a written charter adopted by the Board. The Board adopted an Amended and Restated Audit Committee Charter, which is available at the Company’s website www.agilysys.com. The Audit Committee currently consists of three Directors, all of whom are independent in accordance with the rules of the NASDAQ Stock Market, Section 10A(m) of the Securities Exchange Act of 1934, and the rules and regulations of the SEC. The Board has determined that Directors Robert A. Lauer and John Mutch each qualify as an “audit committee financial expert” as defined by the SEC.

Management has the primary responsibility for the Company’s financial statements and the reporting process, including the system of internal controls over financial reporting. PricewaterhouseCoopers LLP (“PwC”), the Company’s independent registered public accounting firm, audits the annual financial statements prepared by management and expresses an opinion on whether those financial statements conform with United States generally accepted accounting principles, and also audits the internal controls over financial reporting and management’s assessment of those controls. The Audit Committee hires the Company’s independent registered public accounting firm and monitors these processes.

 

40


In carrying out its responsibilities, the Audit Committee has reviewed and has discussed with the Company’s management the Company’s 2012 audited financial statements. Management represented to the Audit Committee that the Company’s financial statements were prepared in accordance with United States generally accepted accounting principles. In addition, the Audit Committee discussed with the Company’s financial management and independent registered public accounting firm the overall scope and plans for the audit. The Audit Committee also met with the independent registered public accounting firm, with and without management present, to discuss the results of the audit, their evaluation of the Company’s internal controls over financial reporting, including both the design and usefulness of such internal controls, and the overall quality of the Company’s financial reporting.

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 114, The Auditor’s Communication With Those Charged With Governance.

The Audit Committee has also received annual written disclosures from PwC regarding their independence from the Company and its management as required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, has discussed with the independent registered public accounting firm their independence, and has considered the compatibility of non-audit services with the registered public accounting firm’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the Company’s 2012 audited financial statements be included in the Company’s 2012 Annual Report and Form 10-K for the fiscal year ended March 31, 2012.

Submitted by the Audit Committee of the Board of Directors as of June 4, 2012

Robert A. Lauer, Chairman

R. Andrew Cueva

John Mutch

 

PROPOSAL 3

RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

By NASDAQ and SEC rules, appointment of the Company’s independent registered public accounting firm (“Independent Accountant”) is the direct responsibility of the Audit Committee, and the Audit Committee has appointed PwC as our Independent Accountant for the fiscal year ending March 31, 2013. On December 9, 2011, the Company dismissed Ernst & Young LLP (“E&Y”) as its Independent Accountant. The dismissal was approved by the Company’s Board of Directors and recommended by the Audit Committee. On December 9, 2011, the Company appointed PwC as the Company’s Independent Accountant. At the direction of the Audit Committee, the Company conducted a competitive process to determine the Independent Accountant for the remainder of fiscal year 2012. The Company invited several global accounting firms to participate in this process and, following careful deliberation, the Board approved the appointment of PwC based upon the Audit Committee’s recommendation.

During the fiscal years ended March 31, 2011 and 2010 and the subsequent interim period through December 9, 2011, the Company had (i) no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which that, if not resolved to E&Y’s satisfaction, would have caused it to make reference to the subject matter of any such disagreement in connection with its reports for such years and interim period and (ii) no reportable events within the meaning of Item 304(a)(1)(v) of SEC Regulation S-K (“Reg SK”) during the two most recent fiscal years or the subsequent interim period. E&Y’s reports on the Company’s consolidated financial statements for the fiscal years ended

 

41


March 31, 2011 and 2010 do not contain any adverse opinion or disclaimer of opinion, nor are qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended March 31, 2011 and 2010 and the subsequent interim period through December 9, 2011, neither the Company nor anyone on its behalf has consulted with PwC regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements, (iii) any matter that was the subject of a disagreement within the meaning of Reg S-K, or (iv) any reportable event within the meaning of Reg S-K.

Shareholder ratification of the selection of PwC as our Independent Accountant is not required by our Amended Code of Regulations or otherwise; however, the Board has determined to seek shareholder ratification of that selection to provide shareholders an avenue to express their views on this important matter. If our shareholders fail to ratify the selection, the Audit Committee will seek to understand the reasons for the vote against ratification and will take those views into account in this and future appointments. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different Independent Accountant at any time during the year if it is determined that such a change would be in the best interests of the Company and our shareholders. Representatives of PwC are expected to be present at the Annual Meeting and be available to respond to appropriate questions. A representative of E&Y will not be present at the Annual Meeting.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL 3. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED “FOR” PROPOSAL 3 UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.

The Audit Committee reviewed the fees of E&Y, our Independent Accountant for fiscal year 2011 and the first two quarters of fiscal year 2012, and of PwC, our Independent Accountant for the third quarter and at 2012 fiscal year-end. Fees for services rendered by E&Y and PwC for fiscal years 2012 and E&Y for fiscal year 2011 were:

 

Fiscal Year

  Audit
Fees ($)
   

Audit-Related

Fees ($)