proxystmt2008.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant þ
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
¨
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Preliminary
Proxy Statement
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¨
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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þ
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to Rule 14a-12
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PERFICIENT,
INC.
(Name of
Registrant as Specified in Its Charter)
Payment
of Filing Fee (Check the appropriate box):
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1) Title
of each class of securities to which the transaction applies:
_______________________________________________________________________________________
(2)
Aggregate number of securities to which transaction applies:
_______________________________________________________________________________________
(3) Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_______________________________________________________________________________________
(4)
Proposed maximum aggregate value of transaction:
_______________________________________________________________________________________
(5) Total fee
paid:
_______________________________________________________________________________________
¨
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Fee
paid previously with preliminary
materials.
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¨
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Check
the box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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(1)
Amount previously paid:
_______________________________________________________________________________________
(2) Form,
Schedule or Registration No.:
_______________________________________________________________________________________
(3)
Filing Party:
_______________________________________________________________________________________
_______________________________________________________________________________________
PERFICIENT,
INC.
1120
South Capital of Texas Highway, Building 3, Suite 220
Notice of
Annual Meeting of Stockholders
To Be
Held April 24, 2009
NOTICE IS
HEREBY GIVEN that the 2009 Annual Meeting of the Stockholders of Perficient,
Inc. (“Perficient” or the “Company”) will be held at the Company’s headquarters
located at 1120 South Capital of Texas Highway, Building 3, Suite 220, Austin,
Texas 78746 on April 24, 2009 at 9:00 a.m. local time, for the following
purposes:
1. To
elect six directors to hold office for a term of one year or until their
successors have been duly elected and qualified;
2. To
approve the Company’s 2009 Long-Term Incentive Plan;
3. To
ratify KPMG LLP as the Company’s independent registered public accounting firm;
and
4. To
transact such other business as may properly come before the meeting or any
adjournment thereof.
The Board
of Directors of Perficient has fixed the close of business on March 9, 2009 as
the record date for the determination of stockholders of Perficient entitled to
notice of and to vote at the Annual Meeting. Only holders of record of
Perficient common stock at the close of business on that date will be entitled
to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. A list of such stockholders will be available for
inspection at the Company's headquarters located at 1120 South Capital of Texas
Highway, Building 3, Suite 220, Austin, Texas 78746, during ordinary business
hours for the ten-day period prior to the 2009 Annual Meeting.
Your
attention is directed to the accompanying Proxy Statement for further
information regarding each proposal to be made.
Whether
or not you plan to attend the 2009 Annual Meeting, you are asked to complete,
sign and date the enclosed proxy and return it promptly by mail in the enclosed
self-addressed envelope, which does not require postage if mailed in the United
States, or alternatively, to vote your proxy by telephone or the Internet
according to the instructions on your proxy card. You may revoke your proxy at
any time prior to the 2009 Annual Meeting. If you decide to attend the 2009
Annual Meeting and wish to change your proxy vote, you may do so automatically
by voting in person at the 2009 Annual Meeting.
Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting to be held on
April 24, 2009.
The Proxy Statement and the Annual Report on
Form 10-K are
available at www.perficient.com under the heading “Investor
Relations” and then “SEC Filings”.
By
Order of the Board of Directors
/s/ Paul
E. Martin
Paul
E. Martin
Secretary
|
PERFICIENT,
INC.
1120
South Capital of Texas Highway, Building 3, Suite 220
Proxy
Statement for Annual Meeting of Stockholders
This
Proxy Statement is furnished by the Board of Directors (the “Board of
Directors”) of Perficient, Inc., a Delaware corporation (“Perficient” or the
“Company”), in connection with the solicitation of proxies to be used at the
Annual Meeting of Stockholders (the “Meeting”) to be held on April 24, 2009 at
the Company’s headquarters located at 1120 South Capital of Texas Highway,
Building 3, Suite 220, Austin, Texas 78746 at 9:00 a.m. local time, and at any
adjournment thereof. This Proxy Statement and the accompanying Notice and Proxy
are being mailed to stockholders on or about March 24, 2009. The principal
executive offices of Perficient are located at the address listed
above.
PURPOSE
OF MEETING
The
specific proposals to be considered and acted upon at the Meeting are summarized
in the accompanying Notice of Annual Meeting of Stockholders. Each proposal is
described in more detail in this Proxy Statement.
VOTING
RIGHTS AND SOLICITATION OF PROXIES
Only
holders of record of Perficient common stock, $.001 par value per share (the
“Common Stock”), at the close of business on the record date, March 9, 2009 (the
“Record Date”), will be entitled to vote at the Meeting, and at any adjournment
thereof. On the Record Date, there were outstanding and entitled to
vote 32,113,146 shares of Common Stock. Each outstanding share of Common
Stock is entitled to one vote on each matter to be voted upon. Votes cast,
either in person or by proxy, will be tabulated by The Bank of New York Mellon
Corporation, the Company’s transfer agent.
Quorum
Required
The
Company’s bylaws provide that the holders of a majority of the Company’s
outstanding shares of stock entitled to vote at the Meeting, present in person
or represented by proxy, shall constitute a quorum for the transaction of
business at the Meeting. Abstentions and broker non-votes will be counted as
present for the purpose of determining the presence of a quorum.
Effect
of Broker Non-Votes and Abstentions
A broker
“non-vote” occurs on an item when shares held by a bank, broker or other nominee
are present or represented at the meeting but such nominee is not permitted to
vote on that item without instructions from the beneficial owner of the shares
and no instruction is given. Broker non-votes and shares as to which proxy
authority has been withheld with respect to any matter are not entitled to vote
for purposes of determining whether stockholder approval of that matter has been
obtained and, therefore, will have no effect on the outcome of the vote on any
such matter. Abstentions have the same effect as negative
votes.
Voting
Procedures
Holders
of record of our common stock may vote using one of the following
methods:
In
Person: Stockholders of record may attend the Meeting and vote
in person.
By
Mail: Stockholders of record may vote by completing, signing,
dating and returning the proxy card in the accompanying self-addressed envelope,
which does not require postage if mailed in the United States.
By
Telephone: Stockholders of record may call the toll-free
number on the accompanying proxy card to vote by telephone, in accordance with
the instructions set forth on the proxy card and through voice prompts received
during the call.
By
Internet: Stockholders of record may access the voting website
listed on the accompanying proxy card to vote through the Internet in accordance
with the instructions included on the proxy card and prompts on the voting
website. Stockholders electing to vote through the Internet may incur
telephone and Internet access charges.
Proxies
submitted by telephone or the Internet are treated in the same manner as if the
stockholder had signed, dated and returned the proxy card by mail. Therefore,
stockholders of record electing to vote by telephone or the Internet should not
return their proxy cards by mail.
If a
proxy is properly signed by a stockholder and is not revoked, the shares
represented thereby will be voted at the Meeting in the manner specified on the
proxy, or if no manner is specified with respect to any matter therein, such
shares will be voted by the person designated therein in accordance with the
recommendations of the Board of Directors as indicated in this Proxy Statement.
If any of the nominees for director are unable to serve or for good cause will
not serve, an event that is not anticipated by Perficient, the shares
represented by the accompanying proxy will be voted for a substitute nominee
designated by the Board of Directors or the Board of Directors may determine to
reduce the size of the Board of Directors. A proxy may be revoked by the
stockholder at any time prior to the voting thereof by giving notice of
revocation in writing to the Secretary of Perficient, by duly executing and
delivering to the Secretary of Perficient a proxy bearing a later date, or by
voting in person at the Meeting.
Solicitation
of Proxies
Perficient
will bear the entire cost of solicitation, including the preparation, assembly,
printing, and mailing of this Proxy Statement, the Proxy, and any additional
soliciting material furnished to stockholders. Copies of solicitation material
will be furnished to brokerage houses, fiduciaries, and custodians holding
shares in their names that are beneficially owned by others so that they may
forward this solicitation material to such beneficial owners. Perficient may
reimburse such persons for their costs of forwarding the solicitation material
to such beneficial owners. The original solicitation of proxies by mail may be
supplemented by solicitation by telephone, telegram, or other means by
directors, officers, employees or agents of Perficient. No additional
compensation will be paid to these individuals for any such service. In addition, Perficient has hired Morrow & Co.,
LLC, 470 West Ave, Stamford, CT 06902, to assist with the solicitation of
stockholders for a fee of approximately $5,500 plus costs and expenses to aid in
the solicitation of proxies and to verify records relating to the
solicitation.
PROPOSAL
1. ELECTION OF DIRECTORS.
At this
year’s Meeting, six directors will be elected to hold office for a term expiring
at the next Annual Meeting of Stockholders. The nominees for election
(the “Nominee Directors”) are:
John T.
McDonald
Ralph C.
Derrickson
John S.
Hamlin
Max D.
Hopper
David S.
Lundeen
David D.
May
Each
Nominee Director is currently serving as a director of
Perficient. Each director will be elected to serve until a successor
is elected and qualified or until the director’s earlier resignation or
removal.
If any of
the Nominee Directors listed above becomes unable to serve or for good cause
will not serve, an event that is not anticipated by the Company, (i) the shares
represented by the proxies will be voted for a substitute nominee or substitute
nominees designated by the Board of Directors or (ii) the Board of Directors may
determine to reduce the size of the Board of Directors. At this time, the Board
of Directors knows of no reason why any of the persons listed above may not be
able to serve as directors if elected.
Directors
and Executive Officers
The name
and age of each of the Nominee Directors and executive officers of Perficient
and their respective positions with Perficient are listed in the table below.
Additional biographical information concerning each of the Nominee Directors and
executive officers, including the period during which each such individual has
served Perficient, follows the table.
Name
|
|
Age
|
|
Position
|
John
T. McDonald
|
|
45
|
|
Chairman
of the Board and Chief Executive Officer
|
Jeffrey
S. Davis
|
|
44
|
|
President
and Chief Operating Officer
|
Paul
E. Martin
|
|
48
|
|
Chief
Financial Officer, Treasurer and Secretary
|
Timothy
J. Thompson
|
|
48
|
|
Vice
President of Client Development
|
Richard
T. Kalbfleish
|
|
53
|
|
Controller
and Vice President of Finance and Administration
|
Ralph
C. Derrickson
|
|
50
|
|
Director
|
John
S. Hamlin
|
|
43
|
|
Director
|
Max
D. Hopper
|
|
74
|
|
Director
|
David
S. Lundeen
|
|
47
|
|
Director
|
David
D. May
|
|
45
|
|
Director
|
John T.
McDonald joined the Company in April 1999 as Chief Executive Officer and was
elected Chairman of the Board in March 2001. From April 1996 to October 1998,
Mr. McDonald was president of VideoSite, Inc., a multimedia software
company that was acquired by GTECH Corporation in October 1997, 18 months
after Mr. McDonald became VideoSite's president. From May 1995 to April
1996, Mr. McDonald was a Principal with Zilkha & Co., a New
York-based merchant banking firm. From June 1993 to April 1996,
Mr. McDonald served in various positions at Blockbuster Entertainment
Group, including Director of Corporate Development and Vice President, Strategic
Planning and Corporate Development of NewLeaf Entertainment Corporation, a joint
venture between Blockbuster and IBM. From 1987 to 1993, Mr. McDonald was an
attorney with Skadden, Arps, Slate, Meagher & Flom in New York,
focusing on mergers and acquisitions and corporate finance. Mr. McDonald
currently serves as a member of the board of directors of a number of privately
held companies and non-profit organizations. Mr. McDonald received a B.A.
in Economics from Fordham University and a J.D. from Fordham Law
School.
Jeffrey
S. Davis became the Chief Operating Officer of the Company upon the closing of
the acquisition of Vertecon in April 2002 and was named the Company’s President
in 2004. He previously served the same role of Chief Operating Officer at
Vertecon from October 1999 to its acquisition by Perficient. Prior to Vertecon,
Mr. Davis was a Senior Manager and member of the leadership team in Arthur
Andersen’s Business Consulting Practice starting in January 1999 where he was
responsible for defining and managing internal processes, while managing
business development and delivery of products, services and solutions to a
number of large accounts. Prior to Arthur Andersen, Mr. Davis worked at Ernst
& Young LLP for two years, Mallinckrodt, Inc. for two years, and spent five
years at McDonnell Douglas in many different technical and managerial positions.
Mr. Davis has a M.B.A. from Washington University and a B.S. degree in
Electrical Engineering from the University of Missouri.
Paul E.
Martin joined the Company in August 2006 as Chief Financial Officer, Treasurer
and Secretary. From August 2004 until February 2006, Mr. Martin was the Interim
co-Chief Financial Officer and Interim Chief Financial Officer of Charter
Communications, Inc. (“Charter”), a publicly traded multi-billion dollar in
revenue domestic cable television multi-system operator. From April 2002 through
April 2006, Mr. Martin was the Senior Vice President, Principal Accounting
Officer and Corporate Controller of Charter and was Charter’s Vice President and
Corporate Controller from March 2000 to April 2002. Prior to Charter, Mr. Martin
was Vice President and Controller for Operations and Logistics for Fort James
Corporation, a manufacturer of paper products with multi-billion dollar
revenues. From 1995 to February 1999, Mr. Martin was Chief Financial Officer of
Rawlings Sporting Goods Company, Inc., a publicly traded multi-million dollar
revenue sporting goods manufacturer and distributor. Mr. Martin received a B.S.
degree with honors in accounting from the University of Missouri – St.
Louis. Mr. Martin is also a member of the University of Missouri –
St. Louis School of Business Leadership Council.
Timothy
J. Thompson joined the Company as Vice President of Client Development upon the
closing of the acquisition of Vertecon in April 2002. In this capacity, Mr.
Thompson serves as the top sales and marketing executive for the Company, and is
responsible for major account development, marketing, sales enablement,
territory management, and business partner development. Mr. Thompson has
over 26 years of experience in the Information Technology
industry. This experience includes 6 years as the Director of
Business Development for the Great Plains Market Circle at Arthur Andersen and
12 years in various sales and sales management positions at IBM. Mr.
Thompson has a B.S. in Mathematics from the University of Notre Dame and a
M.B.A. from Washington University. Mr. Thompson is involved in
several charitable organizations and he is on the board of directors of one
of the largest charitable fundraising and grant foundations serving the needs of
the St. Louis community.
Richard
T. Kalbfleish joined the Company as Controller in November 2004 and became Vice
President of Finance and Administration and Assistant Treasurer in May 2005. In
August 2006, Mr. Kalbfleish became the Principal Accounting Officer of the
Company. Prior to joining the Company, Mr. Kalbfleish served as Vice President
of Finance and Administration with IntelliMark/Technisource, a national IT
staffing company, for 11 years. Mr. Kalbfleish has over 23 years of experience
at the Controller level and above in a number of service industries with an
emphasis on acquisition integration and accounting, human resources and
administrative support. Mr. Kalbfleish has a B.S.B.A. in Accountancy from the
University of Missouri - Columbia.
Ralph C.
Derrickson became a member of the Board of Directors in July 2004.
Mr. Derrickson has more than 27 years of technology management
experience in a wide range of settings including start-up, interim management
and restructuring situations. Currently Mr. Derrickson is President and CEO of
Carena, Inc. Prior to joining Carena, Inc., Mr. Derrickson was managing
director of venture investments at Vulcan Inc., an investment management firm
with headquarters in Seattle, Washington from October 2001 to July 2004. Mr.
Derrickson is a founding partner of Watershed Capital, an early-stage venture
capital firm, and is the managing member of RCollins Group, LLC, a management
advisory firm. He served as a board member of Metricom, Inc., a publicly traded
company, from April 1997 to November 2001 and as Interim CEO of Metricom from
February 2001 to August 2001. He served as vice president of product development
at Starwave Corporation, one of the pioneers of the Internet. Earlier,
Mr. Derrickson held senior management positions at NeXT Computer, Inc. and
Sun Microsystems, Inc. He has served on the boards of numerous start-up
technology companies. Mr. Derrickson is on the faculty of the Michael G.
Foster School of Business at the University of Washington, and serves on the
Executive Advisory Board of the Center for Entrepreneurship and Innovation at
the University of Washington, as well as a member of the President’s Circle of
the National Academy of Sciences, The National Academy of Engineering and the
Institute of Medicine. Mr. Derrickson holds a bachelor’s degree in systems
software from the Rochester Institute of Technology.
John S.
Hamlin became a member of the Board of Directors in March 2009. Mr.
Hamlin is President and Managing Partner of Bozeman Limited Partnership, an
Austin, Texas-based private equity firm. He is currently a corporate board
member of Recreational Equipment, Inc. in Seattle, Washington, where he serves
on the compensation committee, Spiceworks, a privately held network management
software company in Austin, Texas, and Bare Escentuals, a premium cosmetic
company based in San Francisco, California. He serves on the advisory boards of
Bazaarvoice, a privately held online ratings and review company in Austin,
Texas, and IMVU, a privately held social networking company in Palo Alto,
California. He was formerly a corporate board member and audit
committee member at Safeco which was sold to Liberty Mutual Insurance for a 51%
premium in the summer of 2008. Prior to Bozeman, Mr. Hamlin spent 11
years at Dell Inc. where he was an Executive Officer and Senior Vice President
reporting directly to the Office of the Chairman. From 2005 to 2007
he was the Senior Vice President responsible for Dell's global online business
and brand strategy. Mr. Hamlin previously served as Senior Vice President and
General Manager of Dell's US consumer business for 5 years, and led that
business from #6 to #1 share in the US. He also served as Vice
President and General Manager of Dell's Home and Small Business division in
Japan, and held marketing and operations positions in the US Home and Small
Business division before moving to Japan. Prior to joining Dell, Mr. Hamlin
worked in the venture capital field for three years and served as a strategic
consultant at Bain & Company for six years.
Max D.
Hopper became a member of the Board of Directors in September 2002.
Mr. Hopper began his information systems career in 1960 at Shell Oil and
served with EDS, United Airlines and Bank of America prior to joining American
Airlines. During Mr. Hopper’s twenty-year tenure at American Airlines he
served as CIO, and as CEO of several business units. Most recently, he founded
Max D. Hopper Associates, Inc., a consulting firm that specializes in the
strategic use of information technology and business-driven technology.
Mr. Hopper currently serves on the board of directors for several companies
such as Gartner Group as well as other private corporations.
David S.
Lundeen became a member of the Board of Directors in April 1998. From March 1999
through 2002, Mr. Lundeen was a partner with Watershed Capital, a private equity
firm based in Mountain View, California. From June 1997 to February 1999, Mr.
Lundeen was self-employed, managed his personal investments and acted as a
consultant and advisor to various businesses. From June 1995 to June 1997, he
served as the Chief Financial Officer and Chief Operating Officer of BSG
Corporation. From January 1990 until June 1995, Mr. Lundeen served as President
of Blockbuster Technology and as Vice President of Finance of Blockbuster
Entertainment Corporation. Prior to that time, Mr. Lundeen was an investment
banker with Drexel Burnham Lambert in New York City. Mr. Lundeen currently
serves as a member of the board of directors of Parago, Inc., and as Chairman of
the Board of Interstate Connections, Inc. Mr. Lundeen received a B.S. in
Engineering from the University of Michigan in 1984 and an M.B.A. from the
University of Chicago in 1988. The Board of Directors has determined that Mr.
Lundeen is an audit committee financial expert, as such term is defined in the
rules and regulations promulgated by the Securities and Exchange Commission
(“SEC”).
David D.
May, CFA, became a member of the Board of Directors in March
2009. Mr. May is the co-founder and portfolio manager of Third Coast
Capital, an Austin-based long-short equity hedge fund. Prior to
forming Third Coast Capital in 2004, Mr. May was a co-founder and Managing
Partner of Ridgecrest Partners, a New York City-based hedge fund founded in
1998. From 1996 to 1998, Mr. May was a Partner at Ardsley Partners, a
Connecticut-based hedge fund, where he served as an analyst and a portfolio
manager. Previously, he was a Vice President at Luther King Capital
Management in Fort Worth, Texas, an investment advisory firm. During
his twelve years with the company, he served as a portfolio manager for a broad
range of investment portfolios and co-founded the LKCM Mutual Funds, of which he
served as President of the Fund group. He received a B.A. in Business
and an M.B.A. from Texas Christian University. Mr. May currently sits
on the Board of Blackhawk Healthcare.
There are
no family relationships between any of the Company’s directors and executive
officers.
Vote
Required and Board of Directors’ Recommendation
The
affirmative vote of the holders of a plurality of the shares of Common Stock
voted in person or by proxy at the Meeting is required for the election of each
director.
The Board
of Directors recommends a vote “FOR” the election of each of the Nominee
Directors.
COMPOSITION
AND MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board
of Directors is currently comprised of six directors. The Board of Directors has
affirmatively determined that a majority of the directors qualify as independent
directors as defined by SEC regulations and Nasdaq Stock Market listing
standards. The independent directors are Ralph C. Derrickson, John S. Hamlin,
Max D. Hopper, David S. Lundeen, and David D. May.
During
fiscal year 2008, the Board of Directors held eight meetings and did not act by
unanimous written consent. Each of the directors participated in at least 75% of
the aggregate of all meetings of the Board of Directors and the total number of
meetings held by all committees of the Board of Directors of which each
respective director was a member during the time he was serving as such during
the fiscal year ended December 31, 2008. All members of the Board of
Directors are encouraged to attend the Meeting. Three of the directors
attended our 2008 Annual Meeting of Stockholders.
Committees
of the Board of Directors
The Board
of Directors has created a Compensation Committee, an Audit Committee and a
Nominating and Corporate Governance Committee. Each member of the committees is
independent as defined by SEC regulations and Nasdaq Stock Market listing
standards.
Compensation
Committee
The
Compensation Committee establishes salaries, incentives and other forms of
compensation for Perficient's directors, executive officers and key employees,
and administers its equity incentive plans and other incentive and benefit
plans. This committee held six meetings during fiscal year 2008. The members of
the Compensation Committee are Max D. Hopper and David S.
Lundeen. Kenneth R. Johnsen was also a member of the
Compensation Committee until his resignation on March 20, 2009. Mr.
Lundeen serves as chairman of the Compensation Committee. A copy of the current
Compensation Committee charter is available on the Company’s website,
www.perficient.com.
Audit
Committee
The Audit
Committee has the sole authority to appoint, retain and terminate the Company's
independent accountants and is directly responsible for the compensation,
oversight and evaluation of the work of the independent accountants. The
independent accountants report directly to the Audit Committee. The Audit
Committee also has the sole authority to approve all audit engagement fees and
terms and all non-audit engagements with the Company’s independent accountants
and must pre-approve all auditing and permitted non-audit services to be
performed for the Company by the independent accountants, subject to certain
exceptions provided by the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). A copy of the current Audit Committee Charter is available on
the Company’s website, www.perficient.com.
This
committee held four meetings during fiscal year 2008. The members of the Audit
Committee are Max D. Hopper, David S. Lundeen and Ralph C. Derrickson. Mr.
Lundeen serves as chairman of the Audit Committee. The Board of Directors has
determined that Mr. Lundeen is qualified as the Audit Committee financial expert
within the meaning of SEC regulations and that he has accounting and related
financial management expertise within the meaning of the listing standards of
the Nasdaq Stock Market. The Board of Directors has affirmatively determined
that Messrs. Hopper, Lundeen and Derrickson qualify as independent directors as
defined by the Nasdaq Stock Market listing standards and believes that each
member has sufficient knowledge and experience in financial matters to perform
his duties on the committee.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee is responsible for establishing
the criteria for selecting directors, recommending to the Board of Directors
individuals for election or reelection, overseeing orientation and continuing
education programs, advising the Board of Directors on corporate governance
practices, recommending chairpersons of each of the Board of Director
committees, and reporting annually on the performance of the Board of
Directors. A copy of the current Nominating and Corporate Governance
Committee Charter is available on the Company’s website,
www.perficient.com.
This
committee held one meeting during fiscal year 2008. The Committee
also met in 2009 to confirm the recommendation of the Directors nominated by the
Board of Directors for reelection (the Board of Directors approved the
nominations after consultation with members of the Nominating and Corporate
Governance Committee but before the committee’s meeting) and review composition
of its committees. The members of the Nominating and Corporate Governance
Committee are David S. Lundeen and Max D. Hopper. Mr. Hopper serves
as chairman of the Nominating and Corporate Governance Committee.
Identification
of Director Candidates
The
Nominating and Corporate Governance Committee is responsible for evaluating
potential or suggested director nominees and identifying individuals qualified
to become members of the Board of Directors. This committee will also evaluate
persons suggested by stockholders and conduct the appropriate inquiries into the
backgrounds and qualifications of all possible nominees. The Nominating and
Corporate Governance Committee has established criteria for selecting new
director nominees, which includes knowledge of business, industry and economic
environment, educational background, professional experience, and availability
to serve as a director of the Company. The committee also considers
the make up of the Board of Directors as a whole in terms of the professional
diversity represented by various occupations. Each nominee should be
a person of integrity and be committed to devoting the time and attention
necessary to fulfill his or her duties to the Company.
Pursuant
to the bylaws of Perficient, nominations of persons for election to the Board of
Directors may be made at a meeting of stockholders by or at the direction of the
Board of Directors or by any stockholder entitled to vote in the election of
Directors at the meeting who complies with the notice procedures set forth in
the bylaws. Such nominations, other than those made by or at the direction of
the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Company. Such stockholder’s notice shall set
forth:
(A) the
name, age, business address and residence address of such person;
(B) the
principal occupation or employment of such person;
(C) the
class and number of shares of the Company which are beneficially owned by such
person;
(D) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder;
and
(E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required in
each case pursuant to Regulation 14A of the Exchange Act (including without
limitation such person’s written consent to being named in the proxy statement,
if any, as a nominee and to serve as a director if elected).
Any
nominations received from stockholders must be in full compliance with
applicable laws and with the bylaws of Perficient.
Communications
with the Board
Communications
by stockholders or by other parties may be sent to the Board of Directors by
U.S. mail or overnight delivery and should be addressed to the Board of
Directors c/o Secretary, Perficient, Inc., 1120 South Capital of Texas Highway,
Building 3, Suite 220, Austin, Texas 78746. Communications directed to the Board
of Directors, or one or more directors, will be reviewed by the Secretary and
forwarded to the Board of Directors if appropriate and may be made
anonymously.
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
Discussion & Analysis
Overview
The
Compensation Committee of the Board of Directors (“Compensation Committee”) is
responsible for reviewing, evaluating and approving the agreements, plans,
policies and programs of the Company to compensate its officers and directors.
The Compensation Committee consists of Messrs. Hopper and Lundeen. Mr. Lundeen
serves as chairman of the Compensation Committee. None of the committee members
performed as an officer or employee of Perficient or any of its subsidiaries at
any time during fiscal 2008 or at any other time. None of the executive officers
of the Company served on the board of directors of any company of which one of
the Company’s directors was an executive officer.
The
Committee makes all decisions related to the compensation of the Chief Executive
Officer (“CEO”) and Chief Operating Officer (“COO”). The CEO annually reviews
the performance of the named executive officers, other than himself, and
presents individual compensation recommendations to the Compensation Committee.
The Compensation Committee has the authority to accept, modify or disregard the
CEO’s compensation recommendations.
Executive
Compensation Objectives and Elements of Compensation
During
2008, various types of compensation were provided to the named executive
officers of the Company set forth in the “Summary Compensation Table” at page
14, who are:
·
|
Paul
E. Martin, Chief Financial Officer
(“CFO”),
|
·
|
Richard
T. Kalbfleish, Vice President of Finance and Administration (“VP – Finance
& Administration”), and
|
·
|
Timothy
J. Thompson, Vice President of Client Development (“VP – Client
Development”).
|
The
objectives of the compensation programs of the Company are:
·
|
To
recruit and retain the top management available in the industry of the
Company in order to aid and to support its rapid
growth;
|
·
|
To
allow employees to acquire a proprietary interest in the Company as
an incentive to remain employed with the Company;
and
|
·
|
To
reward employees for service to the Company by delivering salaries that
appropriately recognize job responsibilities and individual
performance.
|
The
Company’s compensation programs are designed to attract, retain, and reward
executives who are responsible for achieving the business objectives necessary
to assure both revenue and profit growth while providing clients of the Company
with the highest quality solutions and services. A significant portion of
compensation paid to executives is directly related to delivering revenue and
profit growth and other factors that influence shareholder value, thereby
aligning the executive’s interests closely with our shareholders’ interests.
This leads the Company to focus more on variable compensation than on base
salary. The Company’s variable compensation programs for executives are
structured to pay for high performance and are typically dependent on the
Company’s financial results. It is the Company’s view that an incentive-based
compensation philosophy keeps management motivated and retains top executives to
ensure the Company’s long-term success. Each executive officer is rewarded with
the following types of cash and non-cash compensation:
·
|
Performance
based annual cash bonus award;
|
·
|
Long-term
equity incentive compensation;
|
·
|
Company-sponsored
employee benefits, such as life insurance benefits, and a tax-qualified
savings plan (401(k) plan); and
|
·
|
Upon
a termination for certain specified reasons or a change of control,
severance and the potential acceleration of vesting of long-term equity
awards.
|
There is
no predetermined policy for allocating compensation between these elements, and
each type of compensation is designed to achieve a specific purpose in line with
management’s compensation program objectives.
The
Compensation Committee utilized the analysis of Longnecker & Associates
(“Longnecker”), an independent compensation consulting firm, from Longnecker’s
November 27, 2007 report to determine if the Company’s executive officers’ base
salary was comparable to the Company’s peers and a market average. This market
average was comprised of a combination of market compensation data from peer
company proxy statements as well as published industry sources utilizing
companies that operate in the computer programming services industry with
average revenues of approximately $217 million and average market capitalization
of $703 million (“external market”) in 2007. The following companies were
included in the peer group: Advent Software, Inc., Computer Programs &
Systems, Inc., Computer Task Group, Inc., Diamond Management & Technology
Consultants Inc., EPIQ Systems, Inc., iGATE Corporation, QuadraMed Corporation,
Secure Computing Corporation, Synaptics, Incorporated, and Syntel, Inc.
Published survey compensation data from the following sources was utilized:
William Mercer, Watson Wyatt, World at Work, and the Economic Research
Institute. The report prepared by Longnecker analyzed the compensation paid to
the Company’s top 20 highest paid employees. Therefore, the
comparisons of the compensation paid to the Company’s executive officers to the
external market midpoint included those top 20 highest paid employees and not
merely the Company’s named executive officers. While the data and
input provided by Longnecker is a factor in its analysis of various compensation
elements, the Compensation Committee makes the final determination on all
compensation decisions.
Base
Salary
The named
executive officers are offered a competitive salary in order to retain their
services and to also reward their performance with the Company. For the CEO, COO
and CFO, salary is predetermined as part of a written employment agreement that
has been approved by the Compensation Committee. Several factors are considered
by the Compensation Committee when determining and approving an employment
agreement or arrangement for a named executive officer. These factors include
the executive officer’s performance relevant to the Company’s goals and
objectives, such as the Company’s financial performance and relative shareholder
return. For newly hired executives, the individual’s relevant experience in the
industry is considered. The base salary of other executive officers
of the Company is recommended by the CEO with final approval given by the
Compensation Committee.
From
January 1, 2008 to May 15, 2008, the CFO had a base salary of
$215,000. Effective May 16, 2008, the Compensation Committee
increased the CFO’s base salary to $225,000. The Compensation
Committee determined that the base salaries of the other named executive
officers were appropriate and did not make further adjustments. See
the “Summary Compensation Table” on page 14 for a detailed discussion of the
executives’ base salaries for years 2006, 2007 and 2008.
The
November 27, 2007 report provided by Longnecker showed that, including the
adjustment to the base salary of the CFO for 2008, the base salaries of the
Company’s executives were at the external market midpoint. The
Compensation Committee used this report as verification that the base salaries
are close to the market midpoint or slightly below, which allows for more
emphasis on variable compensation and is in line with the Company’s compensation
program objectives.
Performance
Based Executive Bonus Plan
The named
executive officers, excluding the VP – Client Development, for reasons discussed
below under “Business Development Executive Commission Plan,” are eligible
for cash bonuses under the Executive Bonus Plan, which is tied to operating
performance. The determination of bonus payments is based on various targets and
factors. Annual incentive targets are an integral component of compensation that
link and reinforce executive decision making and performance with the annual
objectives of the Company. The Compensation Committee has the discretion to
determine the appropriate performance criteria, which is objective and
established in writing during the first quarter of each year. Typically, these
targets include Non-Generally Accepted Accounting Principles Earnings Per Share
(“Non-GAAP EPS”) targets and Generally Accepted Accounting Principles Earnings
Per Share (“GAAP EPS”) targets that must be met each quarter and are discussed
and agreed upon by the Compensation Committee and management during the
Company’s annual planning process. Non-GAAP EPS is a performance measure defined
as net income plus amortization of intangibles, stock compensation expense and
other non-cash items, including related tax effects, divided by shares used in
computing diluted net income per share, which is not in compliance with
Generally Accepted Accounting Principles (“GAAP”).
Management
and the Compensation Committee believe in the importance of structuring a bonus
arrangement that pays the Company’s stockholders first. Therefore, no
incentive bonuses are payable to the Company’s executives until the Company
surpasses the Non-GAAP EPS and GAAP EPS targets established by the Compensation
Committee.
The bonus
payments under the 2008 Executive Bonus Plan were contingent upon realization of
fully diluted Non-GAAP EPS and GAAP EPS of at least $0.83 and $0.55,
respectively, for the year. As there were no acquisitions during the year, the
targets were not reassessed by the Compensation Committee during the year and
were not increased. A detailed description of the 2008 Executive
Bonus Plan can be found following the “2008 Grants of Plan-Based Awards” table
on page 17. In addition to amounts that may be payable under the Company’s
Executive Bonus Plan, the Compensation Committee may also award discretionary
bonuses. The form and structure of any bonuses paid to the Company’s named
executive officers must be approved by the Compensation Committee. Bonus
payments are offered to reward management for implementing and monitoring the
objectives of the Company in line with the Company’s financial goals. The effectiveness of the
Company’s annual incentive program was assessed on the basis of total cash
actually received by executives, which includes base salary and annual incentive
bonus payments with respect to 2008.
The 2008
Executive Bonus Plan also incorporated a “stair-step” feature. In
prior years, the bonus pool established with respect to the named executive
officers and other non-executive management employees was funded with each
dollar of earnings in excess of the pre-established Non-GAAP EPS
targets. Pursuant to the Company’s 2008 incentive bonus arrangements,
however, a portion of the bonus pool was to be funded upon the achievement of
Non-GAAP EPS in excess of $0.83 (and earnings in excess of the portion of the
bonus pool funded would be retained by the Company), another portion of the
bonus pool was to be funded upon the achievement of Non-GAAP EPS in excess of
$0.86 (and earnings in excess of the portion of the bonus pool funded would be
retained by the Company), and the bonus pool would not be fully funded until the
achievement of Non-GAAP EPS in excess of $0.90. The Compensation
Committee implemented this feature based on the recommendation of management to
ensure that the Company’s executives and management would share in the benefits
of increased earnings on Common Stock with the Company’s
stockholders. Management and the Compensation Committee believe the
addition of the “stair-step” feature to the 2008 Executive Bonus Plan furthers
the Company’s policy of paying stockholders before executives are rewarded for
Company performance.
The
targets established under the 2008 Executive Bonus Plan were not met and
therefore no bonuses were paid to executives for 2008. Discretionary
bonuses may be paid to non-executive management for 2008 subject to Compensation
Committee approval.
In
February 2009, the Compensation Committee established the annual incentive
targets for the named executive officers, excluding the VP – Client Development
as discussed below under “Business Development Executive Commission Plan,” as
part of the 2009 Executive Bonus Plan. The table below lists the 2009 target
bonus awards as a percent of base salary for the named executive
officers:
|
Target
Bonus
Percentage
|
|
Maximum
Bonus
Percentage
|
CEO
|
200%
|
|
300%
|
COO
|
200%
|
|
300%
|
CFO
|
80%
|
|
120%
|
VP-Finance
& Administration
|
30%
|
|
45%
|
The named
executive officers above are eligible to receive their target bonus if the
following Non-GAAP and GAAP EPS targets are met or exceeded for 2009: $0.45
Non-GAAP EPS and $0.15 GAAP EPS. The named executive officers
may receive up to the maximum bonus percentage to the extent the Non-GAAP and
GAAP EPS targets are exceeded up to 1.5 times the targets. The Compensation
Committee has full discretion to reduce bonus amounts, even if the targets are
met or exceeded. In order to meet these targets, the Company’s Non-GAAP and GAAP
EPS must meet the predetermined targets after considering the estimated bonus
payout. No bonus amounts are paid if the targets are not met.
The 2009
Executive Bonus Plan also incorporates a “stair-step”
feature. Pursuant to the Company’s 2009 incentive bonus arrangements,
a portion of the bonus pool will be funded upon the achievement of Non-GAAP EPS
in excess of $0.45 (and earnings in excess of the portion of the bonus pool
funded would be retained by the Company), another portion of the bonus pool will
be funded upon the achievement of Non-GAAP EPS in excess of $0.50 (and earnings
in excess of the portion of the bonus pool funded will be retained by the
Company), and the bonus pool will not be fully funded until the achievement of
Non-GAAP EPS in excess of $0.55. The Compensation Committee
implemented this feature based on the recommendation of management to ensure
that the Company’s executives and management would share in the benefits of
increased earnings on Common Stock with the Company’s
stockholders. Management and the Compensation Committee believe the
addition of the “stair-step” feature to the 2009 Executive Bonus Plan furthers
the Company’s policy of paying stockholders before executives are rewarded for
Company performance.
Business Development Executive
Commission Plan
The
Company’s VP – Client Development is not eligible for the Executive Bonus Plan;
however, he participates in the Business Development Executive Commission Plan
(the “Commission Plan”). This plan is applicable for all business development
executives and provides a percentage commission on certain revenue targets. Each
business development executive is assigned a services revenue quota and a
software margin quota that is based primarily on prior year results, Company
growth objectives, and projected sales opportunities. Business development
executives must attain a minimum of 60% of their established quota to be
eligible for commissions. Services commissions range from 2% to 6% of project
revenue and software commissions range from 10% to 15% of margin.
Participants
in the Commission Plan may elect to receive a portion of any earned commission
in the form of a restricted stock award granted pursuant to the Perficient, Inc.
1999 Stock Option/Stock Issuance Plan. If such an election is made,
the employee will receive a 20% premium on their “purchase” of the restricted
stock award. The VP – Client Development did not elect to receive any
portion of earned commission in restricted stock during 2009.
Long-Term
Equity Incentive Compensation
Share-based
compensation such as stock options and restricted stock awards are granted to
executive officers on a discretionary basis by the Compensation Committee. The
Company does not have any program, plan or practice to grant stock options or
restricted stock awards to executives in coordination with the release of
material non-public information. Typically, grants of share-based awards to
executive officers include grants to other employees as well, unless the award
is issued as part of a new employment arrangement with the Company. It is the
Company’s current practice to grant awards of restricted stock instead of stock
options. See detail of these awards at the “2008 Grants of Plan-Based Awards”
table on page 17. The Company believes that by offering this type of incentive
compensation, they have rewarded the highest quality management and will retain
that management in the future. Share-based payments allow the executive officers
to obtain a proprietary interest in the Company and therefore participate in the
profit and success of the Company in meeting its objectives and goals. Additionally, by focusing on equity-based
compensation the Company is able to provide competitive total compensation
packages and use cash resources to operate and expand the
business.
These
types of awards usually have a vesting period of five to seven years, giving the
executive officers an inducement to remain with the Company. There are no
performance conditions associated with the share-based awards granted by the
Company. Award amounts and the timing of grants are determined by the
Compensation Committee. In 2008, all of the long-term equity
incentive awards granted by the Company were in the form of restricted
stock. Awards to the named executive officers vest 20% on each
anniversary of the date of grant through 2013. Any potential
acceleration of the vesting schedules pursuant to a change of control or a
termination is discussed below under “Potential Payments Upon Termination and/or
a Change of Control.”
Company
Sponsored Benefit Plans
The named
executive officers are provided with primarily the same company sponsored
health, welfare, and retirement benefits as all other employees, including life
insurance benefits, and a tax-qualified retirement savings plan. The Company
provides all employees with basic life insurance in the amount of two times
their annual salary with a $100,000 minimum benefit and a $400,000 maximum
benefit. In addition to the standard life insurance, the Company retains a $1.5
million life insurance policy for the CEO and another $1.5 million policy for
the COO. The benefit on these policies is payable to the CEO’s or COO’s
beneficiary, as applicable, upon death. The Company also provides a short-term
and a long-term disability benefit to all employees, including the named
executive officers, at no cost for 60% of base salary for up to 90
days. In addition to the standard short-term and long-term disability
benefits, the Company provides compensation to the CEO and COO to pay for
additional disability coverage. This additional coverage includes a
short-term monthly income benefit of $15,000 for five years for both the CEO and
COO, and a long-term monthly income benefit of $7,500 until the age of 65 for
the CEO.
The
Perficient 401(k) Employee Savings Plan is a tax-qualified retirement savings
plan to which all employees, including the named executive officers, are able to
contribute from 1% to 100% of their annual salary on a before-tax basis, up to
the limits established by the Internal Revenue Code (the “Code”). During the
2008 year, the Company matched 50% of contributions, up to 6% of salary,
comprised of 25% in cash and 25% in Company stock. Employee contributions to the
401(k) Employee Savings Plan vest upon contribution and Company matching funds
are fully vested after 3 years of service.
Attributed
costs of the benefits described above for the named executive officers for the
year ended December 31, 2008 are included in the “All Other Compensation” column
of the “Summary Compensation Table” on page 14.
Severance
Benefits
The
Company has entered into employment agreements with the CEO, COO and CFO, which
contain severance and change of control provisions. Benefits under the
agreements are payable upon a “double-trigger.” In other words,
although the employment agreements provide for accelerated vesting of equity
upon a change of control, additional payments under the agreements are only
triggered upon termination of employment. The Compensation
Committee believes that termination and change of control protection allows
management to focus their attention and energy on the Company’s business without
any distractions regarding the effects of a change of control. Further, such
protections maximize stockholder value by encouraging management to objectively
review any proposed transaction to determine whether such proposal is in the
best interest of the stockholders. See further information regarding severance
and other change of control benefits under the “Potential Payments upon
Termination and/or Change of Control” section on page 25.
Tax
and Accounting Implications
Deductibility of Executive
Compensation
As part
of its role, the Compensation Committee reviews and considers the deductibility
of executive compensation under Section 162(m) of the Code (“IRS Section
162(m)”), which limits the deductibility of certain executive officer
compensation. Generally, the Company’s policy is to structure compensation so
that executive compensation is tax deductible. However, in certain cases, the
Compensation Committee may approve compensation that will not meet these
requirements in order to ensure competitive levels of total compensation for its
executive officers while creating and improving stockholder value.
The
Company’s stockholders approved the Perficient, Inc. Omnibus Incentive Plan (the
“Omnibus Incentive Plan”) on June 26, 2007. The Omnibus Incentive
Plan formalizes the Company’s practices for awarding bonuses under the Executive
Bonus Plan, and the Executive Bonus Plan is administered pursuant to the Omnibus
Incentive Plan. The Omnibus Incentive Plan is appropriately
structured to avoid the limitations on deductibility imposed by IRS Section
162(m) in order to allow the Company to deduct the bonus amounts paid under the
Executive Bonus Plan. Taxable income associated with restricted stock
awards, however, is subject to the limitations of IRS Section 162(m). During
2008, the CEO and COO were paid bonuses earned under the Omnibus Incentive Plan
in 2007. These bonuses were excluded from 2008 compensation for
purposes of applying IRS Section 162(m). The compensation subject to
IRS Section 162(m) of either the CEO or COO did not exceed $1,000,000 in
2008.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management and based
on such review and discussions, has recommended to the Board of Directors that
the Compensation Discussion & Analysis be included in this Proxy
Statement.
The
Compensation Committee
David S.
Lundeen, Chairman
Max D.
Hopper
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
Compensation Committee consists of David S. Lundeen and Max D.
Hopper. None of the Compensation Committee members has or had a
relationship with the Company that is or was required to be disclosed under the
rules of the SEC.
SUMMARY
COMPENSATION TABLE
The
following table summarizes the total compensation paid or earned by each of the
named executive officers for the fiscal years ended December 31, 2006, 2007 and
2008, including the Principal Executive Officer (“CEO”), the Principal Financial
Officer (“CFO”) and the three other most highly compensated executive officers
based on total compensation:
|
|
SUMMARY
COMPENSATION TABLE
|
|
Name
and Principal Position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)(1)
|
|
|
Stock
Awards
($)(2)
|
|
|
Stock
Options
($)(2)
|
|
|
Non-Equity
Incentive Plan Compensation
($)(3)
|
|
|
All
Other
Compensation
($)(4)
|
|
|
Total
($)
|
|
John
T. McDonald
|
2008
|
|
$ |
285,000 |
|
|
$ |
- |
|
|
$ |
1,194,323 |
|
|
$ |
321,897 |
|
|
$ |
- |
|
|
$ |
12,777 |
(5) |
|
$ |
1,813,997 |
|
Chairman
of the Board and Chief Executive Officer
|
2007
|
|
$ |
276,250 |
|
|
$ |
- |
|
|
$ |
709,336 |
|
|
$ |
499,077 |
|
|
$ |
532,408 |
|
|
$ |
28,844 |
|
|
$ |
2,045,915 |
|
|
|
|
$ |
250,000 |
|
|
$ |
- |
|
|
$ |
337,403 |
|
|
$ |
477,287 |
|
|
$ |
750,000 |
|
|
$ |
44,502 |
|
|
$ |
1,859,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin (6)
|
2008
|
|
$ |
221,250 |
|
|
$ |
- |
|
|
$ |
353,448 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
4,979 |
|
|
$ |
579,677 |
|
Chief
Financial Officer
|
2007
|
|
$ |
215,000 |
|
|
$ |
- |
|
|
$ |
209,646 |
|
|
$ |
- |
|
|
$ |
137,361 |
|
|
$ |
3,597 |
|
|
$ |
565,604 |
|
|
|
|
$ |
71,667 |
|
|
$ |
48,375 |
|
|
$ |
47,800 |
|
|
$ |
- |
|
|
$ |
48,375 |
|
|
$ |
- |
|
|
$ |
216,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
2008
|
|
$ |
285,000 |
|
|
$ |
- |
|
|
$ |
1,115,263 |
|
|
$ |
160,948 |
|
|
$ |
- |
|
|
$ |
11,591 |
(7) |
|
$ |
1,572,802 |
|
President
and Chief Operating Officer
|
2007
|
|
$ |
276,250 |
|
|
$ |
- |
|
|
$ |
665,295 |
|
|
$ |
209,902 |
|
|
$ |
532,408 |
|
|
$ |
18,072 |
|
|
$ |
1,701,927 |
|
|
|
|
$ |
250,000 |
|
|
$ |
- |
|
|
$ |
176,258 |
|
|
$ |
214,429 |
|
|
$ |
750,000 |
|
|
$ |
29,035 |
|
|
$ |
1,419,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
2008
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
$ |
39,918 |
|
|
$ |
- |
|
|
$ |
204,120 |
|
|
$ |
4,785 |
|
|
$ |
408,823 |
|
Vice
President - Client Development
|
2007
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
$ |
24,762 |
|
|
$ |
24,677 |
|
|
$ |
388,219 |
|
|
$ |
6,887 |
|
|
$ |
604,545 |
|
|
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
$ |
12,975 |
|
|
$ |
26,485 |
|
|
$ |
330,488 |
|
|
$ |
12,052 |
|
|
$ |
542,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
2008
|
|
$ |
153,000 |
|
|
$ |
- |
|
|
$ |
56,848 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,393 |
|
|
$ |
213,241 |
|
Vice
President – Finance & Administration
|
2007
|
|
$ |
150,000 |
|
|
|
- |
|
|
$ |
38,741 |
|
|
$ |
28,019 |
|
|
$ |
45,681 |
|
|
$ |
1,557 |
|
|
$ |
263,998 |
|
|
|
|
$ |
140,000 |
|
|
$ |
15,650 |
|
|
$ |
17,460 |
|
|
$ |
27,942 |
|
|
$ |
64,350 |
|
|
$ |
1,543 |
|
|
$ |
266,945 |
|
(1)
|
Amounts
listed represent discretionary bonuses awarded after fiscal year end to
reward certain executives for favorable Company
performance.
|
(2)
|
Amounts
listed represent the amount of expense recognized for financial reporting
purposes with respect to restricted stock and stock option awards in
accordance with Statement of Financial Accounting Standards No. 123R
(As Amended), Share Based
Payment (“SFAS 123R”) and includes amounts from awards
granted prior to the applicable year for which the expense is disclosed.
Following SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. Assumptions used
in the calculation of the 2008 amounts were disclosed in Note 7 to the
Company’s consolidated financial statements for 2008, included in the
Company’s annual report on Form 10-K filed with the SEC on March 6,
2009.
|
(3)
|
Amounts
are earned and accrued during the fiscal year indicated and paid
subsequent to the end of the fiscal year pursuant to the Company’s
performance based Executive Bonus Plan, except for Mr. Thompson, who
earned and was paid amounts under the Business Development Executive
Commission Plan throughout 2008.
|
(4)
|
Other
than as noted in footnotes (5) and (7), the amounts listed represent the
value of the Company’s 401(k) contributions, Company-paid standard life
insurance premiums and cell phone allowance for each executive in
2008. The named executive officers from time to time received
certain immaterial personal benefits or other compensation items from the
Company in 2008; however, the value of these items did not exceed
$10,000.
|
(5)
|
As
part of his overall compensation, Mr. McDonald received Company-paid
401(k) contributions of $3,450, Company-paid Life & Disability
Insurance premiums of $7,836, Company-paid standard life insurance
premiums of $591, and a $900 cell phone
allowance.
|
(6)
|
Mr.
Martin became the Chief Financial Officer of the Company on August 21,
2006. Mr. Martin’s base salary increased from $215,000 to
$225,000 effective May 16, 2008.
|
(7)
|
As
part of his overall compensation, Mr. Davis received Company-paid 401(k)
contributions of $3,450, Company-paid Life & Disability Insurance
premiums of $6,705, Company-paid standard life insurance premiums of $536,
and a $900 cell phone allowance.
|
The table
below summarizes the 2008 total compensation mix for our executive officers by
pay element:
PERCENT
OF 2008 TOTAL COMPENSATION BY PAY ELEMENT
|
|
Name
|
|
Base
Salary (%)
|
|
|
Incentive
Compensation (%)
|
|
|
Other
Compensation (%)
|
|
|
|
|
|
John
T. McDonald
|
|
|
16 |
% |
|
|
83 |
% |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin
|
|
|
38 |
% |
|
|
61 |
% |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
18 |
% |
|
|
81 |
% |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
39 |
% |
|
|
60 |
% |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
|
|
72 |
% |
|
|
27 |
% |
|
|
1 |
% |
Employment
Agreements
Mr. McDonald
The
Company entered into an employment agreement with Mr. McDonald dated March 3,
2009 and effective January 1, 2009 that will expire on December 31,
2011. Mr. McDonald’s previous employment agreement with the Company
was effective January 1, 2006, amended on April 20, 2007, and expired on
December 31, 2008. Mr. McDonald’s current employment agreement
provides for the following compensation:
·
|
an
annual salary of $285,000 that may be increased by the Board of Directors
from time to time;
|
·
|
an
annual performance bonus of up to 200% of Mr. McDonald's annual salary in
the event the Company achieves certain performance targets approved by the
Board of Directors (“Mr. McDonald’s Target Bonus”), which may be increased
up to 300% of Mr. McDonald’s annual salary pursuant to the 2009 Executive
Bonus Plan;
|
·
|
entitlement
to participate in such insurance, disability, health, and medical benefits
and retirement plans or programs as are from time to time generally made
available to executive employees of the Company, pursuant to the policies
of the Company and subject to the conditions and terms applicable to such
benefits, plans or programs; and
|
·
|
death,
disability, severance, and change of control benefits described below in
the section titled “Potential Payments upon Termination or Change of
Control.”
|
Under his
current agreement, Mr. McDonald can choose to reduce his role as Chief Executive
Officer and Chairman of the Board to Chairman of the Board only. If
this were to occur, Mr. McDonald would incur a reduction in salary and bonus by
50% and would only be eligible for equity grants awarded to non-employee
directors. Also, Mr. McDonald would be required to make himself
available to the Company for up to 20 hours per week and his responsibilities
would include presiding over the Board of Directors and committees of the Board
of Directors, providing oversight of corporate strategy, financing,
acquisitions, and investor relations, including presenting on the Company's
quarterly earnings conference calls and presenting at such investor conferences
and handling such other investor relations functions as reasonably requested by
the Company.
Mr. McDonald
has agreed to refrain from competing with the Company for a period of five years
following the termination of his employment. Mr. McDonald’s compensation is
subject to review and adjustment on an annual basis in accordance with the
Company’s compensation policies as in effect from time to time.
Mr.
Davis
The
Company entered into an employment agreement with Mr. Davis dated March 3, 2009
and effective January 1, 2009 that will expire on December 31,
2011. Mr. Davis’ previous employment agreement with the Company was
effective July 1, 2006 and was set to expire on June 30, 2009. Mr. Davis’s
current employment agreement provides for the following
compensation:
·
|
an
annual salary of $285,000 that may be increased by the CEO from time to
time;
|
·
|
an
annual performance bonus of up to 200% of Mr. Davis’s annual salary in the
event the Company achieves certain performance targets (“Mr. Davis’s
Target Bonus”), which may be increased up to 300% of Mr. Davis’s annual
salary pursuant to the 2009 Executive Bonus
Plan;
|
·
|
entitlement
to participate in such insurance, disability, health, and medical benefits
and retirement plans or programs as are from time to time generally made
available to executive employees of the Company, pursuant to the policies
of the Company and subject to the conditions and terms applicable to such
benefits, plans or programs; and
|
·
|
death,
disability, severance, and change of control benefits described below in
the section titled “Potential Payments upon Termination or Change of
Control.”
|
Mr. Davis
has agreed to refrain from competing with the Company for a period of five years
following the termination of his employment. Mr. Davis’s compensation is subject
to review and adjustment on an annual basis in accordance with the Company’s
compensation policies as in effect from time to time.
Mr.
Martin
The
Company entered into an agreement evidenced by an offer letter with Mr. Martin
effective July 20, 2006, which was further amended on May 16, 2008. The offer
letter, as amended, provides for the following compensation:
·
|
an
annual salary of $215,000 that may be increased from time to time
(currently Mr. Martin receives an annual salary of
$225,000);
|
·
|
an
annual performance bonus of up to 80% of Mr. Martin’s base salary in the
event the Company achieves certain performance targets, which may be
increased up to 120% of Mr. Martin’s base salary pursuant to the 2008
Executive Bonus Plan; and
|
·
|
severance
and change of control benefits described below in the section titled
“Potential Payments upon Termination or Change of
Control.”
|
Mr.
Martin’s compensation is subject to review and adjustment on an annual basis in
accordance with the Company’s compensation policies as in effect from time to
time.
GRANTS
OF PLAN-BASED AWARDS
The
following table reflects awards granted to the named executive officers during
2008 under the Company’s equity and non-equity incentive plans:
|
2008
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
Estimated
Future Payouts Under Non-Equity
Incentive
Plan Awards (1)
|
|
All
Other Stock Awards: Number of Shares of
|
|
Grant
Date Fair Value of Stock
|
|
Name
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
Stock(#)(3)
|
|
Awards
($)(4)
|
|
John
T. McDonald
|
12/17/2008
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
250,000
|
|
$
|
1,225,000
|
|
|
N/A
|
|
|
-
|
|
|
|
570,000
|
|
|
|
855,000
|
|
-
|
|
|
-
|
|
Paul
E. Martin
|
12/17/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
130,000
|
|
|
637,000
|
|
|
N/A
|
|
|
-
|
|
|
|
180,000
|
|
|
|
270,000
|
|
-
|
|
|
-
|
|
Jeffrey
S. Davis
|
12/17/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
300,000
|
|
|
1,470,000
|
|
|
N/A
|
|
|
-
|
|
|
|
570,000
|
|
|
|
855,000
|
|
-
|
|
|
-
|
|
Timothy
J. Thompson
|
12/17/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
14,000
|
|
|
68,600
|
|
|
N/A
|
|
|
-
|
|
|
|
388,000
|
(2)
|
|
|
-
|
|
-
|
|
|
-
|
|
Richard
T. Kalbfleish
|
12/17/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
14,000
|
|
|
68,600
|
|
|
N/A
|
|
|
-
|
|
|
|
45,900
|
|
|
|
68,850
|
|
-
|
|
|
-
|
|
(1)
|
Reflects
the target and maximum bonus award amounts that could potentially be
earned by each named executive officer (other than Mr. Thompson) under the
Executive Bonus Plan based on 2008 performance, as described in the
“Annual Incentive Cash Bonus Compensation” section following this table.
Actual amounts paid out with respect to these bonuses have been reported
in the “Non-Equity Incentive Plan Compensation” column of the “Summary
Compensation Table” on page 14.
|
(2)
|
Reflects
a representative amount potentially payable as a single estimated payout
(based upon Mr. Thompson’s sales in 2007) that could potentially be earned
by Mr. Thompson under the Business Development Executive Commission Plan
based on 2008 performance, as described in the “Annual Incentive Cash
Bonus Compensation” section following this table. The actual
amounts paid out with respect to this commission plan have been reported
in the “Non-Equity Incentive Plan Compensation” column of the “Summary
Compensation Table” on page 14.
|
(3)
|
Reflects
the Compensation Committee’s grant of restricted shares to the named
executive officers on December 17, 2008 in the respective amounts listed
in the table. The terms of these restricted share awards are
described below in the section entitled “Restricted Share Award Terms”
following this table.
|
(4)
|
Represents
the grant date fair value of the restricted shares granted on December 17,
2008 for purposes of SFAS 123R. The grant date fair value is based on the
per share closing price of the Common Stock on December 17, 2008 (the date
of grant) which was $4.90.
|
Annual
Incentive Cash Bonus Compensation
The
bonuses that are available to the named executive officers (other than Mr.
Thompson) as an annual incentive bonus under the Executive Bonus Plan are based
upon pre-set percentages of salary and are earned by reaching certain target
performance levels.
In March
2008, the Compensation Committee established the targets for the named executive
officers (other than Mr. Thompson) under the Executive Bonus Plan for
2008. The table below lists the potential bonus awards as a percent
of base salary for the named executive officers as reflected in the “2008 Grants
of Plan-Based Awards” table:
|
Target
Bonus
Percentage
|
|
Maximum
Bonus
Percentage
|
CEO
|
200%
|
|
300%
|
COO
|
200%
|
|
300%
|
CFO
*
|
80%
|
|
120%
|
VP-Finance
& Administration
|
30%
|
|
45%
|
* The CFO’s
Target Bonus increased from 60% to 80% in May 2008.
The named
executive officers above are eligible to receive a bonus (which may be less than
the target bonus) if the following Non-GAAP and GAAP EPS targets are met for
2008: $0.83 total Non-GAAP EPS and $0.55 total GAAP EPS. The
executives share in every dollar of earnings above the targets established
pursuant to the 2009 Executive Bonus Plan up to the maximum bonus percentage of
each. Such executives may receive up to the maximum bonus percentage
to the extent the Non-GAAP and GAAP EPS targets are exceeded up to 1.5 times the
targets. The Compensation Committee has the discretion to decrease
bonus amounts, even if the targets are met or exceeded. In order to meet these
targets, the Company’s Non-GAAP and GAAP EPS must meet the predetermined targets
after considering the estimated bonus payout.
The
targets established under the 2008 Executive Bonus Plan were not met and
therefore no bonuses were paid to executives for 2008. Discretionary
bonuses may be paid to non-executive management for 2008 subject to Compensation
Committee approval.
Additional
information regarding these bonus awards can be found above in the Compensation
Discussion & Analysis under the section entitled “Performance Based
Executive Bonus Plan.”
The bonus
amounts available to Mr. Thompson as an annual incentive bonus under the
Business Development Executive Commission Plan are based upon pre-set percentage
commissions on certain revenue targets. A description of the
applicable performance criteria and other material terms of this arrangement can
be found above in the Compensation Discussion & Analysis under the section
entitled “Business Development Executive Commission Plan.”
Restricted
Share Award Terms
The
restricted shares awarded on December 17, 2008 were granted under the
Perficient, Inc. 1999 Stock Option/Stock Issuance Plan. Under the
terms of the restricted share award agreements, 20% of the shares subject to an
award will vest on each yearly anniversary of December 17, 2008 with the final
tranche vesting on December 17, 2013, provided the recipient continues
employment with the Company through the applicable vesting dates.
The
amount of restricted share awards granted during 2008 was increased due to the
continued deterioration of the U.S. economy and the slow down in the IT
industry. Awards to officers and key employees were increased in
order to reward performance, retain key management in a tough economy and remain
competitive in our industry by providing a competitive total compensation
package. Additionally, being able to provide additional equity
compensation allowed the Company to be able to use cash resources to operate
rather than divert cash to pay compensation.
In the
event of a recipient’s termination of employment with the Company for any reason
(including death or disability) prior to full vesting of the restricted shares,
restricted shares that have not vested as of the date of termination will be
null and void and will be forfeited to the Company, unless the terms of the
recipient’s employment agreement provide otherwise. The employment
agreements for the named executive officers provide for accelerated vesting of
equity awards such as the restricted share awards in the case of certain
involuntary terminations or upon the occurrence of a change of
control. These acceleration provisions are described below in the
section of this proxy entitled “Potential Payments upon Termination and/or
Change of Control.”
Dividends
are payable on the restricted shares at the same rate and at the same time that
dividends are paid to stockholders generally; however, the Company has not
historically and does not intend to pay dividends.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table presents (1) the number of unexercised options held by each
named executive officer as of December 31, 2008, and (2) the number and market
value of unvested restricted share awards held by each named executive officer
as of December 31, 2008:
|
2008
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
Stock
Options
|
Stock
Awards
|
|
|
Number
of Securities Underlying Unexercised Options (#)(1)
|
|
Option
Exercise
|
Option
Expiration
|
Number
of Shares or Units
of
Stock That Have
|
|
Market
Value of Shares or
Units
of Stock That Have
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
($)
|
Date
|
Not
Vested (#)
|
|
Not
Vested ($)(9)
|
John
T. McDonald
|
|
|
50,000
|
|
-
|
|
$
|
14.688
|
1/16/2010
|
75,000
(3
|
)
|
$
|
358,500
|
|
|
|
218,820
|
|
-
|
|
|
3.750
|
3/28/2011
|
105,000
(5
|
)
|
|
501,900
|
|
|
|
140,766
|
|
-
|
|
|
2.280
|
12/11/2013
|
120,000
(6
|
)
|
|
573,600
|
|
|
|
228,572
|
|
171,428(2
|
)
|
|
6.310
|
12/15/2014
|
250,000
(8
|
)
|
|
1,195,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin
|
|
|
-
|
|
-
|
|
|
-
|
-
|
42,500
(7
|
)
|
|
203,150
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
11,993
(5
|
)
|
|
57,327
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
38,000
(6
|
)
|
|
181,640
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
130,000
(8
|
)
|
|
621,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
69,285
|
|
85,715(2
|
)
|
|
6.310
|
12/15/2014
|
37,500
(3
|
)
|
|
179,250
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
105,000
(5
|
)
|
|
501,900
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
120,000
(6
|
)
|
|
573,600
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
300,000
(8
|
)
|
|
1,434,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
110,810
|
|
-
|
|
|
1.350
|
10/12/2011
|
4,213
(4
|
)
|
|
20,138
|
|
|
|
13,000
|
|
-
|
|
|
2.280
|
12/11/2013
|
2,100
(5
|
)
|
|
10,038
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
4,000
(6
|
)
|
|
19,120
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
14,000
(8
|
)
|
|
66,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
|
|
20,000
|
|
-
|
|
|
6.240
|
12/14/2014
|
5,618
(4
|
)
|
|
26,854
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
3,920
(5
|
)
|
|
18,738
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
4,800
(6
|
)
|
|
22,944
|
|
|
|
-
|
|
-
|
|
|
-
|
-
|
14,000
(8
|
)
|
|
66,920
|
(1)
|
The
outstanding option awards reported in this table generally vest over a
five year period in 20% increments on each yearly anniversary of the date
of grant of the option, except that the 20,000 options awarded to Mr.
Kalbfleish on December 14, 2004 vest over a four year period with 6.25% of
the option vesting on each quarterly anniversary of the date of
grant. Options generally expire ten years from the date of grant (the
“expiration date”). If the recipient’s employment terminates
(a) due to death or “permanent disability” (as defined in the applicable
award agreement), then the option will remain exercisable for twelve
months following the termination date, (b) as a result of the recipient’s
“misconduct” (as defined in the applicable award agreement), then the
option will terminate immediately and cease to be outstanding, and (c) for
any other reason, then the option will remain exercisable for three months
following the termination date, provided that no option will be
exercisable after its original expiration date. The effect of a
“corporate transaction” (as defined in the applicable award agreement) on
the vesting and exercisability of option awards is described below in the
“Potential Payments upon Termination and/or Change of Control” section of
this proxy.
|
(2)
|
In
January 2007, the Compensation Committee approved the accelerated vesting
of these option awards, which were granted on December 15, 2004, as
follows: (a) two-sevenths of the total option shares, to the extent
unvested, vested as of January 15, 2007, and (b) the remaining option
shares subject to each option vest in 20% increments on each yearly
anniversary of December 15, beginning on December 15,
2007.
|
(3)
|
Represents
awards of 175,000 and 87,500 restricted shares made to Messrs. McDonald
and Davis, respectively, on December 15, 2004, with seven year vesting
schedules. In January 2007, the Compensation Committee approved
the accelerated vesting of these restricted shares as follows: (a)
two-sevenths of the total restricted shares, to the extent unvested,
vested as of January 15, 2007, and (b) the remaining restricted shares
subject to each award vest in 20% increments on each yearly anniversary of
December 15, beginning on December 15,
2007.
|
(4)
|
Represents
awards of 8,427 and 11,236 restricted shares made to Messrs. Thompson and
Kalbfleish, respectively, on December 28, 2005, with six year
vesting. In January 2007, the Compensation Committee approved
the accelerated vesting of these restricted shares as follows: (a)
one-sixth of the total restricted shares, to the extent unvested, vested
as of January 15, 2007, and (b) the remaining restricted shares subject to
each award vest in 20% increments on each yearly anniversary of December
15, beginning on December 15, 2007.
|
(5)
|
Represents
awards of restricted shares made to the named executive officers on
December 21, 2006. Twenty-percent of the restricted shares
subject to each award vest on the yearly anniversary of December 21 with
the final tranche vesting on December 21,
2011.
|
(6)
|
Represents
awards of restricted shares made to the named executive officers on
December 4, 2007. Twenty-percent of the restricted shares
subject to each award vested on December 4, 2008. The remaining
80% of each award will vest in four equal installments on each following
yearly anniversary of December 4.
|
(7)
|
Represents
an award of 50,000 restricted shares made to Mr. Martin in connection with
his appointment as Chief Financial Officer of the Company on August 21,
2006. Ten percent of this award vested on August 21,
2008. The remaining restricted shares will vest in accordance
with the following schedule: (a) 25% of the restricted shares will vest on
August 21, 2009, (b) 25% of the restricted shares will vest on August 21,
2010, and (c) the final 35% of the restricted shares will vest on August
21, 2011.
|
(8)
|
Represents
awards of restricted shares made to the named executive officers on
December 17, 2008. The vesting dates for these awards are
described above in the narrative entitled “Restricted Share Award
Terms.”
|
(9)
|
Based
on the per share closing market price of $4.78 of the Common Stock on
December 31, 2008.
|
OPTION
EXERCISES AND STOCK VESTED
The
following table presents stock options exercised by and stock awards vested on
behalf of the named executive officers during 2008:
|
2008
OPTION EXERCISES AND STOCK VESTED
|
|
Stock
Options
|
|
Stock
Awards
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
|
Value
Realized Upon
Exercise
($)(1)
|
|
Number
of Shares Acquired on Vesting (#)
|
|
Value
Realized on
Vesting
($)(2)
|
|
John
T. McDonald
|
26,800
(3)
|
|
$
|
137,484
|
|
90,000
(4)
|
|
$
|
425,750
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin
|
-
|
|
|
-
|
|
18,497
(5)
|
|
|
99,259
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
-
|
|
|
-
|
|
77,500
(6)
|
|
|
371,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
64,668
(7)
|
|
|
357,813
|
|
3,105
(8)
|
|
|
14,171
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
-
|
|
|
-
|
|
4,379
(9)
|
|
|
20,345
|
|
(1)
|
Calculated
as the aggregate market value on the exercise date of the shares of the
Common Stock received upon exercise of options, less the aggregate
exercise price of options (calculated before payment of any applicable
withholding or other income taxes).
|
(2)
|
Calculated
as the aggregate market value on the date of vesting of the shares with
respect to which restrictions lapsed during 2008 (calculated before
payment of any applicable withholding or other income
taxes).
|
(3)
|
Mr.
McDonald exercised a total of 26,800 stock options during 2008, with an
exercise price of $2.28 and a market price of $7.41 at the time of
exercise.
|
(4)
|
Mr.
McDonald was granted (a) 175,000 restricted shares on December 15, 2004, a
portion of which vested on December 15, 2008, when the market price of the
Company’s stock was $4.38; (b) 175,000 restricted shares on December 21,
2006, a portion of which vested on December 21, 2008, when the market
price of the Company’s stock was $5.41; and (c) 150,000 restricted
shares on December 4, 2007, a portion of which vested on December 4, 2008,
when the market price of the Company’s stock was
$4.23.
|
(5)
|
Mr.
Martin was granted (a) 50,000 restricted shares on August 21, 2006, a
portion of which vested on August 21, 2008, when the market price of the
Company’s stock was $7.49; (b) 19,987 restricted shares on December 21,
2006, a portion of which vested on December 21, 2008, when the market
price of the Company’s stock was $5.41; and (c) 47,500 restricted shares
on December 4, 2007, a portion of which vested on December 4, 2008, when
the market price of the Company’s stock was
$4.23.
|
(6)
|
Mr.
Davis was granted (a) 87,500 restricted shares on December 15, 2004, a
portion of which vested on December 15, 2008, when the market price of the
Company’s stock was $4.38; (b) 175,000 restricted shares on December 21,
2006, a portion of which vested on December 21, 2008, when the market
price of the Company’s stock was $5.41; and (c) 150,000 restricted shares
on December 4, 2007, a portion of which vested on December 4, 2008, when
the market price of the Company’s stock was
$4.23.
|
(7)
|
Mr.
Thompson exercised a total of 64,668 stock options during 2008, with
exercise prices ranging from $0.50 – 2.25 and at a market price of
$7.16 at the time of exercise.
|
(8)
|
Mr.
Thompson was granted (a) 8,427 restricted shares on December 28, 2005, a
portion of which vested on December 15, 2008, when the market price of the
Company’s stock was $4.38; (b) 3,500 restricted shares on December 21,
2006, a portion of which vested on December 21, 2008, when the market
price of the Company’s stock was $5.41; and (c) 5,000 restricted shares on
December 4, 2007, a portion of which vested on December 4, 2008, when the
market price of the Company’s stock was
$4.23.
|
(9)
|
Mr.
Kalbfleish was granted (a) 11,236 restricted shares on December 28, 2005,
a portion of which vested on December 15, 2008, when the market price of
the Company’s stock was $4.38; (b) 6,532 restricted shares on December 21,
2006, a portion of which vested on December 21, 2008, when the market
price of the Company’s stock was $5.41; and (c) 6,000 restricted shares on
December 4, 2007, a portion of which vested on December 4, 2008, when the
market price of the Company’s stock was
$4.23.
|
PENSION
BENEFITS
The
Company does not sponsor or maintain any plans that provide for specified
retirement payments or benefits, such as tax-qualified defined benefit plans or
supplemental executive retirement plans, for the named executive
officers.
NON-QUALIFIED
DEFERRED COMPENSATION
The
following table summarizes information regarding the Company’s named executive
officers’ participation in the Perficient, Inc. Executive Deferred Compensation
Plan (the “Deferred Compensation Plan”).
2008
NON-QUALIFIED DEFERRED COMPENSATION
|
Name
|
|
Executive
Contributions ($)(1)
|
|
|
Company
Contributions ($)
|
|
|
Aggregate
Earnings ($)(2)
|
|
|
Aggregate
Withdrawals/ Distributions ($)
|
|
|
Aggregate
Balance ($)
|
|
John
T. McDonald
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin
|
|
|
27,219
|
|
|
|
-
|
|
|
|
(7,882
|
)
|
|
|
-
|
|
|
|
24,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
102,060
|
|
|
|
-
|
|
|
|
(29,848
|
)
|
|
|
-
|
|
|
|
118,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
All
amounts reported as contributions in this column have been reported in the
Salary and Bonus columns of the “Summary Compensation Table” on page
14.
|
(2)
|
The
amounts in this column represent aggregate earnings that accrued during
2008 on amounts of salary and/or bonus deferred at the election of the
named executive officer pursuant to the Deferred Compensation
Plan. These earnings have not been reported as compensation to
the named executive officers in the “Summary Compensation Table” on page
14.
|
The
Deferred Compensation Plan allows each participant to contribute up to 80
percent of base salary and commission and 100 percent of annual incentive bonus
payments. Contributions may be made to either the retirement account
or the in-service account of the participant; however, no contributions may be
made to a participant’s in-service account during a deferral period when amounts
are scheduled to be distributed from that account. Also, if the
Compensation Committee determines that a participant has incurred a financial
hardship, it may terminate the participant’s deferrals.
In
addition, the Company may, in its discretion, provide a matching contribution of
25% of the participant’s contribution to the Deferred Compensation Plan up to
the first 6% of a participant’s compensation (includes base salary and bonus or
incentive compensation); however, any matching contribution will be reduced by
the amount of matching contributions actually made on the participant’s behalf
under the Company’s 401(k) plan. Matching contributions vest annually
over a three year period. The Company may also make discretionary
contributions on behalf of participants in the Deferred Compensation Plan, which
will be in the amounts and will vest in accordance with the schedule determined
by the Company. The Company made no matching contributions in
2008.
The
Deferred Compensation Plan permits each participant to make investment
allocation choices for both the participant’s contributions and any Company
matching or discretionary contributions made on the participant’s behalf among
the investment choices designated by the Company, which earn market rates of
return. Participants are permitted to change their investment
elections on a daily basis.
A
participant will receive a distribution of amounts deferred in a particular year
upon the earlier to occur of (1) the time specified in the participant’s
deferral commitment election with respect to the participant’s in-service
account, (2) his termination of employment, or (3) his death or
disability. In addition, a participant may receive a distribution if
the Compensation Committee determines that the participant has experienced a
financial hardship, to the extent reasonably necessary to satisfy the
participant’s needs. Upon a participant’s termination of employment, the
participant’s benefits under the Deferred Compensation Plan shall be paid to him
as soon as administratively practicable following the date of the participant’s
termination of employment, unless the participant constitutes a “specified
employee” (within the meaning of section 409A of the Code), in which case the
initial payment will be made no earlier than the first day of the seventh month
following the participant’s termination. A participant’s vested
benefits may, at the option of the participant, be distributed in one cash lump
sum payment, or in up to a maximum of 15 annual installments (or a maximum of
five annual installments with respect to the participant’s in-service
account). Certain small account balances (a retirement account
balance of less than $50,000 and an in-service account balance of less than
$25,000) will be paid in a lump sum regardless of the participant’s
election.
Potential
Payments upon Termination and/or Change of Control
As part
of their employment agreements, Messrs. McDonald, Davis and Martin have certain
provisions detailing payments due to them in the event of termination of their
employment with the Company, including the resulting compensation from a change
of control.
Mr.
McDonald
Mr.
McDonald’s current employment agreement provides for the following death,
disability, severance, and change of control benefits:
·
|
death
benefits of a lump-sum payment equal to two multiplied by the sum of (i)
Mr. McDonald’s annual salary and (ii) Mr. McDonald’s Target
Bonus;
|
·
|
disability
benefits paid over 24 months equal to two multiplied by the sum of (i) Mr.
McDonald’s annual salary and (ii) Mr. McDonald’s Target
Bonus;
|
·
|
severance
benefits, if Mr. McDonald’s employment with the Company is terminated by
the Company prior to a change of control in a Without Cause Termination
(as defined in his employment agreement), of a lump-sum payment equal to
two multiplied by the sum of (i) Mr. McDonald’s annual salary and (ii) Mr.
McDonald’s Target Bonus, acceleration of option and restricted stock
vesting, and welfare benefits and the use of his office and administrative
assistance for 24 months; and
|
·
|
upon
the occurrence of a change of control Mr. McDonald is entitled to receive
the above described benefits if he is terminated Without Cause or for Good
Reason (as defined in his employment agreement) within 2 years of a change
of control.
|
In the
event that any payment or benefit received by Mr. McDonald in connection with a
change of control would constitute an “excess parachute payment” subject to an
excise tax (an “Excise Tax”), the Company will pay him a “gross up payment”
intended to provide him with a net payment, after payment of all Excise Taxes
and all taxes on the “gross up payment,” equal to what he would have received
under his employment agreement had no Excise Taxes been imposed on the “excess
parachute payments.” This amount is determined using the highest marginal
federal, state or local tax rates, but takes into account the maximum reduction
in federal income taxes that can be obtained from deduction of state and local
taxes and any limitations applicable to individuals subject to the highest
marginal federal income tax rate. Mr. McDonald may also elect to receive a
lesser amount by eliminating the accelerated vesting on his stock options and
restricted stock in order to decrease the Excise Taxes owed.
Mr.
Davis
Mr.
Davis’s current employment agreement provides for the following death,
disability, severance, and change of control benefits:
·
|
death
benefits of a lump-sum payment equal to one year’s annual salary and Mr.
Davis’s Target Bonus;
|
·
|
disability
benefits of a lump-sum payment of one year’s annual salary and Mr. Davis’s
Target Bonus, paid over 12 months;
|
·
|
severance
benefits, if Mr. Davis’s employment with the Company is terminated by the
Company in a Without Cause Termination (as defined in his employment
agreement) either before or after a change of control, of a lump-sum
payment equal to one year’s annual salary and Mr. Davis’s Target Bonus,
acceleration of option and restricted stock vesting, and welfare benefits
for one year following termination;
|
·
|
severance
benefits of a lump-sum payment equal to one year’s annual salary and Mr.
Davis’s Target Bonus, and welfare benefits for one year following
resignation if Mr. Davis voluntarily resigns after a Constructive
Termination; and
|
·
|
immediate
vesting of 50% of all unvested stock option grants and restricted stock
grants previously awarded to Mr. Davis upon the occurrence of a change of
control.
|
To the
extent payments and benefits to Mr. Davis in connection with a change of control
would constitute “excess parachute payments” for purposes of Section 280G of the
Code subject to Excise Taxes, Mr. Davis can elect to receive a lesser amount and
eliminate the accelerated vesting of his unvested stock options and restricted
stock in order to decrease or eliminate the Excise Taxes.
The
current employment agreements for Messrs. McDonald and Davis generally use the
following terms:
“Change
of Control” means (A) The acquisition by one person, or more than one
person acting as a group, of ownership of stock of the Company that, together
with stock held by such person or group, constitutes more than 50% of the total
fair market value or total voting power of the stock of the Company; (B) The
acquisition by one person, or more than one person acting as a group, of
ownership of stock of the Company, that together with stock of the Company
acquired during the twelve-month period ending on the date of the most recent
acquisition by such person or group, constitutes 30% or more of the total voting
power of the stock of the Company; (C) A majority of the members
of the Company’s board of directors is replaced during any twelve-month period
by directors whose appointment or election is not endorsed by a majority of the
members of the Company’s board of directors before the date of the appointment
or election; (D) One person, or more than one person acting as a
group, acquires (or has acquired during the twelve-month period ending on the
date of the most recent acquisition by such person or group) assets from the
Company that have a total gross fair market value (determined without regard to
any liabilities associated with such assets) equal to or more than 40% of the
total gross fair market value of all of the assets of the Company immediately
before such acquisition or acquisitions.
This
definition of Change of Control shall be interpreted in accordance with, and in
a manner that will bring the definition into compliance with, the regulations
under Section 409A of the Internal Revenue Code.
“Constructive Termination” means Mr.
Davis’ voluntary termination of his employment with the Company (a) within 30
days of the appointment by the Board of Directors of the Company of a person
other than John T. McDonald or Mr. Davis as the Chief Executive Officer of the
Company, provided that such appointment occurs prior to a Change of Control, or
(b) following (i) a reduction in Mr. Davis’ base compensation
(including benefits) of more than fifteen percent (15%), (ii) a material
reduction of mr. Davis’ performance-based target bonus or other incentive
programs except in conjunction with a Change of Control or, in the case of (i)
and (ii) except where all officers are affected equally, or (iii) a
relocation of Mr. Davis’ place of employment of more than 50 miles without his
consent; in each case where the condition is not remedied or corrected by the
Company within 30 days after Mr. Davis sends notice to the Company in writing
specifying the reason why he claims there exists grounds for a
Constructive Termination, and he sends the notice within one year of discovering the
existence of the condition that gives rise to a right to claim a Constructive
Termination.
“Disability”
means the Board of Directors’ or CEO’s, as applicable, reasoned and good faith
judgment that the executive is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months.
"Good
Reason Termination" means a termination by Mr. McDonald of employment following
(A) a material diminution in Mr. McDonald’s annual salary; (B) a material
diminution in Mr. McDonald’s authority, duties, or responsibilities , including
but not limited to a requirement that he report to a corporate officer or
employee instead of reporting directly to the current Board of Directors, (C) a
material change in the geographic location at which Mr. McDonald must perform
the services, or (D) any other action or inaction that constitutes a material
breach by of the agreement by the Company; in each case where the determination
is made in good faith by Mr. McDonald in his sole discretion and he sends the
notice within two years after first discovering the existence of the condition
that gives rise to a right to seek a Good Reason Termination. The determination
by Mr. McDonald as to whether good reason exists shall be binding absent bad
faith or manifest error.
“Termination
for Cause” means a termination of the executive’s employment by reason of (a)
the repeated or willful failure of the executive to substantially perform his
duties that has not been cured after written demand from the Board of Directors,
(b) conviction of, or entering a plea of guilty or nolo
contendere to, a crime involving moral turpitude or dishonesty
or to any other crime that constitutes a felony, (c) executive’s intentional
misconduct, gross negligence or material misrepresentation in the performance of
his duties to the Company, or (d) material breach by executive of any written
covenant or agreement with the Company including any covenants not to compete or
to non-disclosure of confidential information.
“Without
Cause Termination” means a termination of the executive’s employment by the
Company other than due to (a) Termination for Cause, (b) Disability, (c) death,
or (d) the expiration of the employment agreement.
Mr.
Martin
Mr.
Martin’s employment agreement provides for the following severance and change of
control benefits:
·
|
severance
benefits, if Mr. Martin’s employment with the Company is terminated by the
Company other than for cause (as defined above) equal to one year’s annual
salary;
|
·
|
immediate
vesting of 50% of all unvested restricted stock grants previously awarded
to Mr. Martin upon the occurrence of a change of control (as defined
above); and
|
Under the
employment agreements with the aforementioned officers, each officer would be
entitled to receive the following estimated benefits. These disclosed amounts
are estimates only and do not necessarily reflect the actual amounts that would
be paid to the aforementioned officers, which would only be known at the time
that they become eligible for payment and would only be payable if the events
set forth in the table below occur.
Quantification
of Potential Payments Upon Termination and/or Change of Control
The table
below reflects the amount that could be payable under the various arrangements
assuming that the triggering event set forth in the title of each column
occurred on December 31, 2008. For purposes of determining Mr. McDonald’s tax
gross up payment the Company has assumed that his change of control payment is
reasonable compensation for services he will refrain from performing (pursuant
to his covenant not to compete with the Company) following the change of
control. Any actual payments that may be made pursuant to the
arrangements described above are dependent on various factors, which may or may
not exist at the time a termination of employment or change of control actually
occurs.
|
|
POTENTIAL
PAYMENTS UPON TERMINATION AND/OR CHANGE OF CONTROL
|
|
Name
(1)
|
|
Year
|
|
Severance/
Change of Control Payment
|
|
|
Accelerated
Restricted Stock Vesting (2)
|
|
|
Accelerated
Stock Option Vesting (3)
|
|
|
Continuation
of Benefits (4)
|
|
|
Tax
Gross-up Payment
|
|
|
Total
|
|
|
John
T. McDonald (5)
|
|
2008
|
|
$
|
1,710,000
|
|
|
$
|
2,748,500
|
|
|
$
|
577,300
|
|
|
$
|
47,365
|
|
|
$
|
-
|
|
|
$
|
5,083,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin (6)
|
|
2008
|
|
|
225,000
|
|
|
|
1,063,517
|
|
|
|
-
|
|
|
|
11,488
|
|
|
|
-
|
|
|
|
1,300,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis (7)
|
|
2008
|
|
|
855,000
|
|
|
|
2,688,750
|
|
|
|
-
|
|
|
|
11,278
|
|
|
|
-
|
|
|
|
3,555,028
|
|
|
(1)
|
Mr.
Thompson and Mr. Kalbfleish are not included in this table since they do
not have arrangements with the Company in the event of termination of
their employment with the Company, including a change of
control.
|
(2)
|
Calculated
using the closing market price per share of $4.78 of the Common Stock on
December 31, 2008 for the total number of restricted shares
accelerated.
|
(3)
|
Calculated
using the closing market price per share of $4.78 of the Common Stock on
December 31, 2008 less the option price per share for the total number of
options accelerated. The potential payment from the accelerated
options includes only the proceeds from the exercise of options with a
strike price greater than $4.78 since there would be no proceeds upon the
exercise of underwater stock options. The number of total
options held and their related strike prices are listed in the “2008
Outstanding Equity Awards at Fiscal Year-End” table on page
19.
|
(4)
|
Represents
the estimated present value of all future payments of premiums for
benefits which would be paid on behalf of the specified executive officers
under the Company’s medical, disability, life, and dental insurance
programs. In addition to these benefits, Mr. McDonald’s benefits also
include the estimated present value of the use of an office and
administrative assistant for a period of two years after the separation
date.
|
(5)
|
Upon
a without cause termination, Mr. McDonald would receive each of the
payments and benefits listed in the table above. Upon Mr. McDonald’s death
or disability, he would receive the severance payment only. If a change of
control were to occur, Mr. McDonald would receive each of the payments and
benefits listed in the table above if he is terminated without cause or
for good reason (as defined in his employment agreement) within two years
of a change of control. If Mr. McDonald were to terminate his employment
with the Company for cause or voluntarily, he would receive no
compensation except his unpaid salary and bonus earned through the
termination date.
|
(6)
|
Upon
the occurrence of a change of control, 50% of Mr. Martin’s unvested
restricted stock would immediately vest, amounting to $531,759 in
compensation utilizing the assumptions discussed above. If Mr. Martin is
terminated without cause within the first year after a change of control
he will receive each of the payments and benefits listed in the table
above for 2008. If Mr. Martin were to terminate his employment with the
Company for cause or voluntarily, he would receive no compensation except
his unpaid salary and bonus earned through the termination
date.
|
(7)
|
Upon
a without cause termination, or a without cause termination following a
change of control, Mr. Davis would receive each of the payments and
benefits listed in the table above. Upon Mr. Davis’s death or disability,
he would receive the severance payment only. Mr. Davis would receive the
severance payment and the continuance of benefits listed in the table
above if he voluntarily resigns upon the occurrence of a constructive
termination. If a change of control were to occur, 50% of Mr. Davis’s
unvested stock options and restricted stock would immediately vest,
amounting to $1,344,375 in compensation utilizing the assumptions
discussed above. If Mr. Davis were to terminate his employment with the
Company for cause or voluntarily, he would receive no compensation except
his unpaid salary and bonus earned through the termination
date.
|
DIRECTOR
COMPENSATION
The
Company uses a combination of cash and equity-based incentive compensation to
attract and retain qualified candidates to serve on the Board of Directors. When
recommending changes to director compensation, the Company considers the
significant amount of time they expend in fulfilling their duties to the
Company, as well as the skill level required of members of the Board of
Directors. No employee receives compensation for serving as a
director.
The Board
of Directors compensation plan for 2008 provided for the following for
non-employee directors:
·
|
Each
new member of the Board of Directors is entitled to receive 1,950 shares
of restricted stock. These shares of restricted stock vest and
become nonforfeitable in twelve equal quarterly installments beginning on
the first quarterly anniversary of the date of
grant.
|
·
|
Each
member of the Board of Directors on the date of the Annual Stockholders
Meeting, whether or not that member was standing for re-election, is
entitled to receive 650 shares of restricted stock. These
shares of restricted stock vest quarterly over one
year.
|
·
|
Each
member of the Board of Directors serving on a committee is entitled to an
annual grant of 650 shares of restricted stock. These shares of
restricted stock vest quarterly over one year provided the non-employee
member of the Board of Directors continues to serve as a member of such
committee.
|
·
|
Each
member of the Board of Directors received $2,000 for each regularly
scheduled quarterly meeting of the Board of Directors attended in person,
or $1,000 if attended
telephonically.
|
·
|
Each
member of the Board of Directors received $500 for each special meeting of
the Board of Directors if attended in person, or $250 if attended
telephonically.
|
·
|
Each
member of the Board of Directors serving on the Audit Committee received
$1,250 for each meeting of the Audit Committee attended in person, or $750
if attended telephonically.
|
·
|
Each
member of the Board of Directors serving on the Compensation Committee
received $1,000 for each meeting of the Compensation Committee attended in
person, or $500 if attended
telephonically.
|
·
|
Each
member of the Board of Directors serving on the Nominating and Corporate
Guidance Committee received $500 for each meeting of the Nominating and
Corporate Guidance Committee attended in person, or $250 if attended
telephonically.
|
·
|
The
member of the Board of Directors serving as chairman of the Audit
Committee received an additional $6,250
quarterly.
|
·
|
The
member of the Board of Directors serving as chairman of the Compensation
Committee received an additional $3,750
quarterly.
|
·
|
On
the date of each Annual Stockholders Meeting, the Chairman of the Audit
Committee and Chairman of the Compensation Committee will each receive
1,300 shares of restricted stock vesting quarterly over one
year.
|
In March
2009, the Compensation Committee amended the director compensation
plan. The amended plan provides for the following compensation in
place of the amounts set forth above:
·
|
Each
new Non-Employee Director will be granted restricted stock under the Plan
with a value of $100,000, based on the closing price of the Company’s
stock price on the date of appointment to the Board of Directors, in
connection with his election or appointment to the Board, vesting ratably
on the last day of each calendar quarter over the immediately succeeding
three years;
|
·
|
Subject
to continuing Compensation Committee approval, on the first business day
in November of each year, each then-serving Non-Employee Director will be
granted an annual award of restricted stock under the Plan with a value of
$20,000, based on the closing price of the Company’s stock price on that
date, vesting ratably on the last day of each calendar quarter over the
immediately succeeding one year;
|
·
|
Each
Non-Employee Director will be entitled to receive an annual fee of $15,000
paid in quarterly installments commencing April 15,
2009;
|
·
|
Each
Non-Employee Director will receive $2,000 for each regularly scheduled
quarterly meeting of the Board attended in person or $1,000 if attended
telephonically;
|
·
|
Each
Non-Employee Director will receive $500 for each special meeting of the
Board if attended in person or $250 if attended
telephonically;
|
·
|
The
Non-Employee Director serving as Chairman of the Audit Committee will
receive an additional fee payable at the rate of $2,500 per quarter;
and
|
·
|
The
Non-Employee Director serving as Chairman of the Compensation Committee
will receive an additional fee payable at the rate of $1,250 per
quarter.
|
The
following table provides information relating to total compensation amounts paid
to non-employee members of the Board of Directors in 2008:
|
|
2008
DIRECTOR COMPENSATION
|
|
Name
(1)
|
|
Fees
Earned or Paid in Cash ($)
|
|
|
Stock
Awards
($)(2)(3)
|
|
|
Option
Awards
($)(3)
|
|
|
Total
($)
|
|
Ralph
C. Derrickson (4)
|
|
$ |
7,500 |
|
|
$ |
11,506 |
|
|
$ |
- |
|
|
$ |
19,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Max
D. Hopper (5)
|
|
|
11,000 |
|
|
|
23,012 |
|
|
|
- |
|
|
|
34,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
R. Johnsen (6)
|
|
|
7,250 |
|
|
|
11,506 |
|
|
|
- |
|
|
|
18,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
S. Lundeen (7)
|
|
|
55,750 |
|
|
|
46,024 |
|
|
|
- |
|
|
|
101,774 |
|
(1)
|
John
T. McDonald, the CEO and Chairman of the Board of Directors, is not
included in this table since he is an employee and thus received no
compensation for his service as a member of the Board of Directors. Mr.
McDonald’s compensation as an employee of the Company is shown in the
“Summary Compensation Table” on page 14. John S. Hamlin and
David D. May are not included in this table since they were appointed to
the Board of Directors on March 20, 2009 and did not receive any
compensation from the Company in
2008.
|
(2)
|
Restricted
stock awards were awarded to non-employee members of the Board of
Directors on December 17, 2008. Messrs. Derrickson and Johnsen
received 2,600 shares of restricted stock each with a total fair value of
$12,740 on the award date, Mr. Hopper received 5,200 shares of restricted
stock with a total fair value of $25,480 on the award date, and Mr.
Lundeen received 10,400 shares of restricted stock with a total fair value
of $50,960 on the award date. The grant date fair value of the
restricted stock awards was based on the closing market price of the
Company’s common stock on the grant date of $4.90. The Company
does not pay dividends on restricted stock
awards.
|
(3)
|
Amounts
listed represent the amount of expense recognized for financial reporting
purposes in 2008 for restricted stock and stock option awards in
accordance with SFAS 123R, and includes amounts from awards granted prior
to 2008. In accordance with SEC rules, the amounts shown exclude the
impact of estimated forfeitures related to service-based vesting
conditions. Assumptions used in the calculation of this amount were
disclosed in Note 7 to the Company’s consolidated financial statements for
2008 included in the Company’s annual report on Form 10-K filed with the
SEC on March 6, 2009.
|
(4)
|
As
of December 31, 2008, Mr. Derrickson had 30,000 option awards outstanding,
which were all vested. These awards range in exercise price from $3.17 to
$9.19. Mr. Derrickson had 2,600 shares of unvested restricted stock
outstanding as of December 31, 2008 with a market value of $12,248, based
on the closing price of the Company’s common stock of $4.78 on December
31, 2008.
|
(5)
|
As
of December 31, 2008, Mr. Hopper had 55,000 option awards outstanding,
which were all vested. These awards range in exercise price from $0.79 to
$9.19. Mr. Hopper had 5,200 shares of unvested restricted stock
outstanding as of December 31, 2008 with a market value of $24,856, based
on the closing price of the Company’s common stock of $4.78 on December
31, 2008.
|
(6)
|
As
of December 31, 2008, Mr. Johnsen had 17,500 option awards outstanding,
which were all vested. These awards range in exercise price from $3.17 to
$9.19. Mr. Johnsen had 2,600 shares of unvested restricted stock
outstanding as of December 31, 2008 with a market value of $12,248, based
on the closing price of the Company’s common stock of $4.78 on December
31, 2008. Mr. Johnsen resigned from the Board of Directors
effective March 20, 2009.
|
(7)
|
As
of December 31, 2008, Mr. Lundeen had no option awards outstanding and
10,400 shares of unvested restricted stock outstanding with a market value
of $49,712, based on the closing price of the Company’s common stock of
$4.78 on December 31, 2008.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security
Ownership of Directors and Executive Officers
The
following table sets forth the beneficial ownership of the Common Stock as of
March 9, 2009 for each Director and nominee for Director, each executive officer
named in the Summary Compensation Table herein, and by all Directors (including
nominees) and executive officers of the Company as a group.
|
|
|
|
|
Name and Company Position
|
Shares
Beneficially Owned (1)
|
|
Percent
of Class (2)
|
|
John
T. McDonald, Chairman of the Board and CEO (3)
|
1,726,720
|
|
|
5.3
|
%
|
Paul
E. Martin, CFO
|
256,895
|
|
|
0.8
|
%
|
Jeffrey
S. Davis, President and COO (4)
|
781,761
|
|
|
2.4
|
%
|
Timothy
J. Thompson, Vice President - Client Development (5)
|
264,986
|
|
|
0.8
|
%
|
Richard
T. Kalbfleish, Vice President - Finance and Administration
(6)
|
59,450
|
|
|
0.2
|
%
|
David
S. Lundeen, Director
|
160,636
|
|
|
*
|
|
Max
D. Hopper, Director (7)
|
65,400
|
|
|
*
|
|
Ralph
C. Derrickson, Director (8)
|
35,200
|
|
|
*
|
|
David
D. May (9)
|
300,000
|
|
|
*
|
|
John
S. Hamlin (9)
|
--
|
|
|
--
|
|
Directors
and officers as a group (8 persons)
|
3,651,048
|
|
|
11.1
|
%
|
(1)
|
Represents
the Company’s only class of voting common
stock.
|
(2)
|
The
percentage of Common Stock owned is based on total shares outstanding of
32,113,146 as of March 9, 2009, and including for each named executive
officer and director the shares of Common Stock issuable upon the exercise
of options issued to such executive officer or director and exercisable
within 60 days of the date hereof.
|
(3)
|
Includes
638,157 shares of Common Stock issuable upon the exercise of
options.
|
(4)
|
Includes
69,285 shares of Common Stock issuable upon the exercise of
options.
|
(5)
|
Includes
123,810 shares of Common Stock issuable upon the exercise of
options.
|
(6)
|
Includes
20,000 shares of Common Stock issuable upon the exercise of
options.
|
(7)
|
Includes
55,000 shares of Common Stock issuable upon the exercise of
options.
|
(8)
|
Includes
30,000 shares of Common Stock issuable upon the exercise of
options.
|
(9)
|
Messrs.
Hamlin and May were appointed to the Board of Directors effective March
20, 2009. Mr. May owned 300,000 shares of the Company’s Common
Stock prior to his appointment to the Board of
Directors.
|
*
Represents less than 1% of the Company’s Common Stock outstanding as of March 9,
2009.
Security
Ownership of Certain Beneficial Owners
The
following table sets forth, as of March 9, 2009, information for each entity
that, to the knowledge of the Company, beneficially owned more than five percent
(5%) of the Common Stock, based on statements filed with the SEC pursuant to
Section 13(g) or 13(d) of the Exchange Act:
Name
and Address of Beneficial Owner
|
|
Amount
and Nature of Shares
Beneficially
Owned
|
|
Percent
of Class
|
Barclays
Global Investors, NA
400
Howard Street
San
Francisco, CA 94105
|
|
|
2,276,481
(1)
|
|
7.03%
|
(1)
|
Included
in the shares of Common Stock that are beneficially owned by Barclays
Global Investors, NA are (a) 855,268 shares beneficially owned by Barclays
Global Investors, NA, (b) 1,400,834 shares beneficially owned by Barclays
Global Fund Advisors, and (c) 20,379 shares beneficially owned by Barclays
Global Investors, LTD.
|
Equity
Compensation Plan Information
The
following table provides information with respect to the equity securities that
are authorized for issuance under the Company’s compensation plans as of
December 31, 2008:
Plan
Category
|
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 Security Holders (1)
|
1,943,731
|
|
$
|
4.73
|
|
557,843
|
Equity-Compensation
Plans Not Approved by Security Holders (2)(3)
|
94,189
|
|
$
|
6.21
|
|
--
|
TOTAL
|
2,037,920
|
|
$
|
4.80
|
|
557,843
|
(1)
|
Represents
shares issuable from the 12,189,063 shares authorized for issuance under
the Perficient, Inc. 1999 Stock Option/Stock Issuance Plan. The automatic
share increase program provides for an increase each year equal to 8% of
the outstanding Common Stock on the last trading day in December of the
previous year, but in no event will any such annual increase exceed
1,000,000 shares of Common Stock. Pursuant to the Company’s automatic
share increase program, 1,000,000 additional shares were authorized for
issuance under the Plan as of January 1, 2009. Note the
Perficient, Inc. 1999 Stock Option/Stock Issuance Plan expires on May 2,
2009.
|
(2)
|
These
amounts include (i) options to purchase 18,938 shares of the Common Stock
with an exercise price of $0.03 per share and options to purchase 1,071
shares of the Common Stock with an exercise price of $3.55 per share that
were assumed in connection with the Company’s acquisition of Javelin
Solutions, Inc. in April 2002 and (ii) options to purchase approximately
4,428 shares of the Common Stock exercisable for a weighted-average
exercise price of $4.40 per share that were assumed in connection with the
Company’s acquisition of Primary Webworks, Inc. d/b/a Vertecon, Inc. in
April 2002. These options are fully vested and exercisable for a period of
approximately 10 years from the date of grant. Upon termination of
employment the options will be exercisable for 90 days. No
future awards may be made under these
plans.
|
(3)
|
The
amounts include options to purchase 24,080 shares of the Common Stock with
an exercise price of $16.94 per share and options to purchase 45,672
shares of the Common Stock with an exercise price of $3.36 per share that
were assumed in connection with the Company’s acquisition of Compete, Inc.
in May 2000. These options are fully vested and exercisable for
a period of 10 years from the date of grant. Upon termination of
employment the options will be exercisable for the remainder of their
option term. No future awards may be made under these
plans.
|
PROPOSAL
2. APPROVAL OF THE COMPANY’S 2009 LONG-TERM INCENTIVE PLAN
Background
of the Incentive Plan
The
Company’s 1999 Stock Option/Stock Issuance Plan (the “1999 Plan”) will expire on
May 2, 2009 and consequently no further awards can be granted under that plan
after that date. The Board of Directors has recommended, subject to stockholder
approval, the approval and adoption of the Perficient, Inc. 2009 Long-Term
Incentive Plan (the “Incentive Plan”), which includes a maximum number of shares
of Common Stock that can be granted of 1.5 million shares that expires in April
2012. The purposes of the Incentive Plan are to encourage employees
and directors to acquire a proprietary and vested interest in the growth and
performance of the Company, to generate an increased incentive to contribute to
the Company’s future success and prosperity, thus enhancing the value of the
Company for the benefit of stockholders, and to enhance the ability of the
Company to attract and retain individuals of exceptional management
talent. Like the Company’s 1999 Plan, the Incentive Plan allows
officers, Board members and other key employees of the Company to be eligible to
receive a grant of stock options, stock appreciation rights (“SAR’s”),
restricted stock awards, performance awards, and/or other stock unit
awards. If approved, the Incentive Plan will be effective as of April
24, 2009 (the “Effective Date”). The 1999 Plan will remain active
through the expiration date.
Consequences
of Failing to Ratify the Incentive Plan
In the
event our stockholders fail to approve the proposal to adopt and approve the
Incentive Plan, the Incentive Plan will not become effective and due to the
expiration of the Company’s 1999 Plan, no further awards may be
granted. In such event, we will be required to re-evaluate our
compensation structure to ensure that it remains competitive. This
evaluation may result in the modification of the amount and types of
compensation that is payable to our employees.
The
stockholders are urged to read this entire proposal and the complete plan
document. The Company believes that the Incentive Plan is necessary
to recruit and retain key employees critical to the Company’s success, and thus
is in the best interest of the Company’s stockholders. The Company
has explained the reasons for supporting this proposal under the “Why We Believe
You Should Vote For this Proposal” below.
Why
We Believe You Should Vote For this Proposal
The Board
of Directors believes that the Incentive Plan is essential for the ongoing
success of the Company and its ability to recruit, retain and reward key
employees. The Board of Directors believes that if the Incentive Plan is not
approved, the Company’s ability to align the interests of key employees with
stockholders through equity-based compensation would be compromised, disrupting
the Company’s compensation program and impairing the Company’s ability to
recruit and retain key employees. The Board of Directors recommends approval of
the Incentive Plan for the following reasons:
Historical Company Equity
Usage. We believe that our historical equity usage has been in
line with industry norms on an aggregate basis. We set targets for equity
compensation based on industry standards and other data provided to the
compensation committee by management and compensation consultants. Based on this
information, we believe that our equity usage is relatively consistent with the
broader market as well as with the peer group of companies we use to benchmark
executive compensation. Our equity grant levels are consistent with our overall
compensation philosophy of pay-for-performance and below average cash-based
compensation. This philosophy resulted in no incentive compensation for our
executive officers for 2008 as financial performance goals were not achieved. We
believe our compensation philosophy aligns our management’s compensation with
shareholder interest.
The Need to Provide Competitive
Compensation. Similar to other companies in our industry, we
believe equity compensation is integral in providing a competitive total
compensation package necessary to recruit, retain and reward key employees.
Equity awards are commonly used by companies our size and the ability to provide
competitive grants is essential to competing in our labor markets. Therefore, we
believe it is imperative to provide long-term incentive awards as a component of
our compensation program. We will seek an appropriate balance between meeting
employee hiring, retention and compensation goals and avoiding excessive
stockholder dilution.
Cash Compensation Expense
Increase. If our ability to provide equity compensation is
impaired, the Company’s cash compensation costs could increase substantially to
offset equity compensation typically provided in the marketplace. It is
important that we use our cash resources to operate and expand our business,
rather than unnecessarily divert cash to pay compensation.
Our Continuing Emphasis on Providing
Performance-Based Compensation. We believe it is essential to
provide a long-term link between compensation and shareholder value creation and
rely on equity compensation as one of the most efficient and effective means to
create such a relationship. The long-term equity incentive program is designed
to align the interests of our officers and other key employees with those of
stockholders, motivate the executive officer team to achieve key financial goals
and reward superior performance over a multi-year period. We have historically
utilized restricted stock awards instead of stock options to create this link
between pay and performance. We believe that by offering this type of
incentive compensation, we have rewarded the highest quality management and will
retain that management in the future. Share-based payments allow the
officers and other key employees to obtain a proprietary interest in the Company
and therefore participate in the profit and success of the Company in meeting
its objectives and goals. Restricted stock awards usually have a
vesting period of five to seven years, giving the officers and other key
employees an inducement to remain with the Company. If stockholders
do not approve the Incentive Plan, our ability to create long-term incentives
for key employees will be substantially diminished.
Plan
Benefits
Since all
awards will be made at the discretion of the Compensation Committee, it is not
possible to determine the amount, timing or recipients of future awards.
Therefore, it is not presently possible to determine the benefits or amounts
that will be received by particular eligible persons or groups pursuant to the
Incentive Plan in the future. The maximum number of shares of Common
Stock that can be granted under the Incentive Plan is 1.5 million
shares.
Summary
of the Material Terms of the Incentive Plan
|
Key Plan
Features. The incentive plan generally provides
for:
|
·
|
ten-year
maximum term for stock options and stock appreciation
rights;
|
·
|
three-year
minimum vesting period for awards;
|
·
|
no
granting of awards below fair market value on the date of
grant;
|
·
|
no
re-pricing of stock options or stock appreciation rights without prior
stockholder approval;
|
·
|
no
reload or “evergreen” share replenishment
features;
|
·
|
no
accelerated vesting upon a change of control;
and
|
·
|
independent
plan administration by an independent compensation
committee.
|
Administration
of the Incentive Plan
The
Compensation Committee will administer the Incentive Plan pursuant to its terms
and all applicable state, federal, or other rules or laws, except in the event
our Board of Directors chooses to take action under the Incentive
Plan. Unless otherwise limited by the Incentive Plan, our listing
agreement with NASDAQ, Rule 16b-3 of the Exchange Act, or the Code, the
Compensation Committee has broad discretion to administer the Incentive Plan,
interpret its provisions, and adopt policies for implementing the Incentive
Plan. This discretion includes the power to determine to whom and
when awards will be granted, determine the amount and type of such awards,
prescribe and interpret the terms and provisions of each award agreement (the
terms of which may vary), terminate, modify or amend the Incentive Plan (subject
to ratification by our Board of Directors), and exercise and perform all other
rights, duties and responsibilities permitted or required under the Incentive
Plan.
The
Compensation Committee may delegate the authority to grant awards to employees
that are not subject to Section 16 of the Exchange Act to the CEO, and to
determine the terms and conditions of the awards subject to the limitations of
the Incentive Plan or other limitations as the Compensation Committee deems
appropriate.
Eligibility
to Participate
All
employees and all of our officers, the officers of our subsidiaries or parent,
and directors (each an “Eligible Person”) are eligible to participate in and
receive awards under the Incentive Plan. At the current time there
are approximately 1,140 Eligible Persons. Each Eligible Person who is
designated by the Compensation Committee to receive an award under the Incentive
Plan will be a “Participant.” An employee on leave of absence may be
considered still employed by us and/or our subsidiaries or parent for
determining eligibility under the Incentive Plan. Any individual
granted an award which remains outstanding under the Incentive Plan will
continue to be a Participant for purposes of the Incentive Plan.
Types
of Awards
Stock Options. Options
may be granted to Participants either alone or in additions to other types of
awards allowed under the Incentive Plan. The Company receives no
consideration upon the granting of an option. The Compensation
Committee has the sole discretion to determine the option price, period,
exercisability, and method of exercise.
The
options may be granted as non-qualified stock options or incentive stock
options, which qualify for favorable tax treatment as described
below. With respect to incentive stock options granted to a ten
percent stockholder, the option price cannot be less than the fair market value
of the Company’s stock on the date of grant of the option and the term of the
option cannot exceed five years. Also incentive stock options are not
exercisable during the year ending on the day before the first anniversary date
of the grant. For non-qualified stock options, the option price cannot be less
than the fair market value of the Company’s stock on the date of grant of the
option and the term of the option cannot exceed ten years.
Stock Appreciation
Rights. The Compensation Committee may grant an award in the form of
an SAR which may, but need not, relate to a specific stock option
granted. The exercise price of an SAR shall not be less than the fair
market value of the Company’s stock on the date of grant. The term of
the SAR will be determined by the Compensation Committee at its discretion, but
it cannot exceed ten years.
An SAR
related to a non-qualified stock option may be granted at the same time as the
related stock option is granted, or any time thereafter before the stock option
is exercised or expired. If an SAR is related to an incentive stock option, it
must be granted at the same time the stock option is granted, and may be
exercised only if and when the fair value of the Company’s stock subject to the
stock option exceeds the aggregate purchase price for the stock
option.
Restricted Stock
Awards. The Compensation Committee may grant restricted stock
awards for no cash consideration or for minimum cash consideration as required
by applicable law. If an employee is granted a restricted stock award
and terminates employment with the Company for any reason, any restricted stock
still subject to restriction will be forfeited.
Performance
Awards. The Compensation Committee may issue performance
awards to eligible personnel and will determine the related performance criteria
to be achieved as well as the length of the performance
period. Performance Awards may be paid in cash, shares or other
property as determined by the Compensation Committee only at the end of the
relevant performance period. The Compensation Committee will have
full discretion when determining if the performance levels have been achieved
and the amount granted relative to that achievement.
Other Stock Unit
Awards. The Compensation Committee may grant other stock unit
awards pursuant to the Incentive Plan and may determine to whom the awards will
be granted, the amount and all other conditions of the awards. Other
stock unit awards may be paid in shares, cash or other property as determined by
the Compensation Committee.
Stock
Awards under the Incentive Plan
The
maximum aggregate number of shares of our common stock that may be issued under
the Incentive Plan (subject to any adjustment due to recapitalization or
reorganization permitted under the Incentive Plan) will not exceed a number
equal to (i) 1.5 million shares of our common stock, plus (ii) the number of
shares that become available for issuance under the Incentive Plan after the
Effective Date with respect to awards that lapse or are terminated and with
respect to which shares are not issued.
If any
share of our common stock subject to any award under the Incentive Plan is not
issued or transferred, or ceases to be issuable or transferable for any reason,
including (but not exclusively) because an award is forfeited, terminated, is
settled in cash in lieu of shares of our common stock or is otherwise terminated
without a delivery of shares to an award recipient, the shares that were subject
to that award will again be available for issue, transfer or exercise pursuant
to awards under the Incentive Plan (to the extent allowable by
law). The shares of our common stock issued pursuant to the Incentive
Plan may be authorized but unissued shares, shares held by us in treasury or
shares which have been reacquired by us including shares which have been bought
in the open market for the purposes of the Incentive Plan.
Other
Provisions
Tax
Withholding. An award recipient’s tax withholding with respect
to an award will be satisfied by withholding from any payment related to the
award or, with respect to awards settled in our common stock, at the discretion
of the Compensation Committee and subject to conditions that the Compensation
Committee may impose, by the withholding of shares of stock based on the fair
market value of the shares.
Amendment and
Termination. The Board of Directors may amend or terminate the
Incentive Plan or the Compensation Committee’s authority to grant awards under
the Incentive Plan without the consent of stockholders or award
recipients. However, our Board of Directors may condition any such
amendment on the approval of our stockholders if such approval is necessary or
advisable under tax, securities or other applicable laws, policies or
regulations. No amendment or termination of the Incentive Plan may
adversely affect any award previously granted under the Incentive Plan without
written consent of the affected award recipient. Except as prohibited
by applicable law (including, without limitation, IRS Section 162(m)), the
Compensation Committee may amend or terminate any outstanding award, or waive
any conditions or rights under such award, but any such amendment or termination
may require the consent of the award recipient.
Federal
Tax Consequences
The
following discussion is for general information only and is intended to briefly
summarize the U.S. federal tax consequences to Participants arising from
participation in the Incentive Plan. This description is based on
current law, which is subject to change (possibly retroactively). The
tax treatment of an award granted under the Incentive Plan may vary
depending on the Participant’s particular situation and may, therefore, be
subject to special rules not discussed below. No attempt has been
made to discuss any potential foreign, state or local tax consequences or
additional guidance that may be issued by the U.S. Treasury Department under
Section 409A of the Code.
Non-qualified Stock Options
(“NSO’s”). At the time an NSO is granted, no income will be recognized by
the Participant. When the NSO is exercised, the Participant will
recognize ordinary income in an amount equal to the difference between the
option price paid for the Common Stock and the fair market value of the stock on
the date of exercise. When the Common Stock acquired through exercise
of an NSO is sold, the appreciation (or depreciation) in the value of the stock
after the date of exercise will be treated as a short-term or long-term capital
gain (or loss) depending on how long the shares have been held.
Incentive Stock Options
(“ISO’s”). At the time an ISO is granted, no income will be
recognized by the award recipient. In general, no income is
recognized upon the exercise of an ISO. If the Participant exercises
an ISO and holds the stock acquired from that exercise for at least one year
after the exercise date, and two years after the option grant date, then the
Participant will recognize a long-term capital gain upon the sale of the Common
Stock for the amount realized in excess of the option price (or a long-term
capital loss if the amount realized is less than the option
price). If the Participant sells the shares acquired through exercise
of an ISO within two years of the option grant date or within one year after the
transfer of the shares to the award recipient, ordinary income will be
recognized in the year of disposition in an amount equal to the excess of the
fair market value of the stock at the time of exercise over the option
price.
Stock Appreciation
Rights. No income will be recognized by the recipient of an
SAR grant. When the SAR is exercised, the Participant will include an
amount equal to the cash received and fair market value of unrestricted stock or
property received on the exercise as ordinary income.
Restricted Stock
Awards. Generally, restricted stock awards are not subject to
tax until the shares are no longer subject to forfeiture or other restrictions,
at which time the Participant must recognize ordinary income for the fair market
value of the shares. If a Participant elects under Section 83(b) of
the Code within 30 days of the date of transfer of the shares, the shares will
be taxable to the Participant upon receipt of the award as ordinary income for
the fair market value of the shares. Short-term or long-term capital
gain (or loss) will be recognized upon sale of the shares depending on how long
the shares have been held and the amount of appreciation (or
depreciation).
Subject
to the discussion immediately below, we (or our subsidiaries) will be entitled
to a deduction for federal income tax purposes that corresponds as to timing and
amount with the ordinary compensation income recognized by an award recipient
under the foregoing rules.
Tax Code Limitations on
Deductibility. For the amounts described above to be deductible by us (or
by our subsidiaries), such amounts must constitute reasonable compensation for
services rendered or to be rendered and must be ordinary and necessary business
expenses.
Our
ability (and the ability of our subsidiaries) to obtain a deduction for future
payments under the Incentive Plan could also be limited by the golden parachute
payment rules of Section 280G of the Code, which prevent the deductibility of
certain excess parachute payments made in connection with a change of control of
an employer-corporation.
Finally,
our ability (and the ability of our subsidiaries) to obtain a deduction for
amounts paid under the Incentive Plan could be limited by IRS Section 162(m),
which limits the deductibility, for federal income tax purposes, of compensation
paid to a Covered Employee to $1,000,000 during any taxable
year. Although the Incentive Plan has been drafted to satisfy the
requirements for the performance-based compensation exception to this $1,000,000
deduction limit with respect to performance awards, we may determine that it is
in our best interests not to satisfy the requirements for the
exception. Further, we may grant awards which do not qualify as
performance-based compensation under IRS Section 162(m).
Application of Code Section
409A. Code Section 409A imposes an additional 20% tax and
interest on an individual receiving non-qualified deferred compensation under a
plan that fails to satisfy certain requirements. For purposes of Code
Section 409A, “non-qualified deferred compensation” includes certain
equity-based incentive programs, including performance award programs. Generally
speaking, Code Section 409A does not apply to incentive awards that are paid at
the time the award vests. Likewise, Section 409A typically does not
apply to restricted stock. Code Section 409A does, however, apply to
incentive awards the payment of which is delayed beyond the calendar year in
which the award vests.
The
Company intends that awards made pursuant to the Incentive Plan will be designed
to comply with the requirements of Code Section 409A to the extent such awards
are not exempt from coverage. However, if an award fails to comply
with Code Section 409A in operation, a Participant could be subject to the
additional taxes and interest.
The above
summary relates to U.S. federal income tax consequences only and applies to U.S.
citizens and foreign persons who are U.S. residents for U.S. federal income tax
purposes. The U.S. federal income tax consequences associated with
the issuance of shares of our common stock to nonresident aliens depends upon a
number of factors, including whether such issuance is considered to be U.S.
source income and whether the provisions of any treaty are
applicable. The acquisition, ownership or disposition of shares of
our common stock may also have tax consequences under various state, local and
foreign laws.
Vote
Required and Board of Directors’ Recommendation
The
affirmative vote of the holders of a majority of the shares present or
represented by proxy at the meeting and entitled to vote on the matter will be
required to approve the Incentive Plan.
The Board
of Directors recommends a vote “For” the proposal to adopt and approve our 2009
Long-Term Incentive Plan.
PROPOSAL
3. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit
Committee has appointed the firm of KPMG LLP (“KPMG”) as the Company’s
independent registered public accounting firm for 2009. Although action by the
stockholders in this matter is not required, the Audit Committee believes that
in light of the critical role played by the independent registered public
accounting firm in maintaining the integrity of the Company’s financial controls
and reporting, it is a matter of good practice.
In the
event our stockholders fail to approve the proposal to appoint KPMG as the
Company’s independent registered public accounting firm, the Audit Committee
will reconsider whether or not to retain the firm. Even if the
selection is ratified, the Audit Committee in its discretion may direct the
appointment of a different independent registered public accounting firm at any
time during the year if it determines that such a change would be in the best
interest of the Company and our stockholders.
The Board
of Directors recommends a vote “FOR” the proposal to ratify the independent
registered public accounting firm.
AUDIT
COMMITTEE REPORT
The Audit
Committee reports to and acts on behalf of the Board of Directors of the Company
by providing oversight of the financial management, legal compliance programs,
independent auditors and financial reporting controls and accounting policies
and procedures of the Company. The Company’s management is responsible for
preparing the Company’s financial statements and systems of internal control and
the independent auditors are responsible for auditing those financial statements
and expressing its opinion as to whether the financial statements present
fairly, in all material respects, the financial position, results of operations
and cash flows of the Company in conformity with generally accepted accounting
principles. The Audit Committee is responsible for overseeing the conduct of
these activities by the Company’s management and the independent
auditors.
In this
context, the Audit Committee has met and held discussions with management and
the independent auditors. Management represented to the Audit Committee that the
Company’s consolidated financial statements, as of and for the fiscal year ended
December 31, 2008, were prepared in accordance with GAAP, and the Audit
Committee has reviewed and discussed the consolidated financial statements with
management and the independent auditors.
The Audit
Committee has discussed with the independent auditors matters required to be
discussed by the applicable Auditing Standards as periodically amended
(including significant accounting policies, alternative accounting treatments
and estimates, judgments and uncertainties). In addition, the independent
auditors provided to the Audit Committee the written disclosures required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the audit committee
concerning independence, and the Audit Committee and the independent auditors
have discussed the auditors’ independence from the Company and its management,
including the matters in those written disclosures.
The Audit
Committee also has discussed with the Company’s independent auditors, with and
without management present, their evaluations of the Company’s internal
accounting controls and the overall quality of the Company’s financial
reporting.
In
further reliance on the reviews and discussions with management and the
independent auditors referred to above, the Audit Committee recommended to the
Board of Directors the inclusion of the audited financial statements in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, for filing with the SEC.
Submitted
by the Audit Committee of the Board of Directors:
David S.
Lundeen (Chairman)
Max D.
Hopper
Ralph C.
Derrickson
PRINCIPAL
ACCOUNTING FIRM FEES AND SERVICES
The
following table discloses the approximate fees paid to KPMG LLP (“KPMG”) for the
fiscal year ending December 31, 2008 and KPMG and BDO Seidman, LLP (“BDO”) for
the fiscal year ending December 31, 2007:
|
|
|
Year
Ended December 31,
|
|
2008
|
|
2007
|
Audit
fees
|
|
$
|
643,501
|
|
|
$
|
784,000
|
Audit-related
fees
|
|
|
--
|
|
|
|
2,000
|
Tax
fees
|
|
|
--
|
|
|
|
--
|
All
other fees
|
|
|
--
|
|
|
|
--
|
Total
fees
|
|
$
|
643,501
|
|
|
$
|
786,000
|
Audit
fees represent fees for professional services provided in connection with the
audit of the Company’s annual financial statements and of management's
assessment and the operating effectiveness of internal control over financial
reporting included in the Company’s Annual Report on Form 10-K, the quarterly
reviews of financial statements included in the Company’s Quarterly Reports on
Form 10-Q, other statutory or regulatory filings, and services that are normally
provided in connection with such filings.
Audit-related
fees are fees for assurance and related services that are reasonably related to
the performance of the audit or review of the Company’s annual or quarterly
financial statements.
On March
16, 2007, the Company dismissed BDO as its principal accountants and on March
22, 2007, the Company engaged KPMG as its principal accountants. The Audit
Committee of the Company’s Board of Directors participated in, recommended and
authorized the decision to change its principal accountants.
During
the two years ended December 31, 2006 and through March 16, 2007, there were no
disagreements between the Company and BDO on any matter of accounting principles
or practices, financial statement disclosure, auditing scope or procedure, or
matter of the kind described in Item 304(a)(1)(v) of Regulation S-K, which if
not resolved to the satisfaction of BDO, would have required BDO to make
reference to the subject matter of such disagreement in connection with its
opinion on the financial statements of the Company for such years. During the
Company’s two years ended December 31, 2006 and through March 16, 2007, there
were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K, except that BDO advised the Company of the material weakness
identified in internal controls over financial reporting for the year ended
December 31, 2005, as discussed in the Company’s Form 8-K filed with the SEC on
March 22, 2007.
The audit
report of KPMG on the Company’s financial statements as of December 31, 2008 and
2007 and for the years then ended did not contain an adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. The audit report of KPMG on the
effectiveness of internal control over financial reporting as of December 31,
2008 and 2007 did not contain any adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope, or accounting
principles. KPMG’s audit report on the effectiveness of internal control over
financial reporting as of December 31, 2008 and 2007 indicated that in KPMG’s
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2008 and
2007.
During
the year ended December 31, 2008, there were no disagreements between the
Company and KPMG on any matter of accounting principles or practices, financial
statement disclosure, auditing scope or procedure, or matter of the kind
described in Item 304(a)(1)(v) of Regulation S-K, which if not resolved to the
satisfaction of KPMG, would have required KPMG to make reference to the subject
matter of such disagreement in connection with its opinion on the financial
statements of the Company for such year. During the Company’s year ended
December 31, 2008, there have been no reportable events of the kind described in
Item 304(a)(1)(v) of Regulation S-K.
Representatives
of KPMG are not expected to be present at the Meeting.
Audit
Committee Pre-Approval Policies and Procedures
The Audit
Committee has adopted policies and procedures relating to the pre-approval of
all audit services and non-audit services that are permitted by applicable laws
and regulations, that are to be performed by the Company’s independent auditors.
As part of those policies and procedures, the Audit Committee has pre-approved
specific audit and audit-related services that may be provided by the Company’s
independent auditors subject to certain maximum dollar amounts. No further
approval by the Audit Committee is required in advance of services falling
within the specific types of services and cost-levels included in the
pre-approved services. Any proposed services not specifically pre-approved or
exceeding pre-approved cost levels require specific pre-approval by the Audit
Committee. No services of any kind were approved pursuant to a waiver permitted
pursuant to 17 CFR 210.2-01(c)(7)(i)(C).
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, requires executive officers and directors, and
persons who beneficially own more than ten percent of a registered class of the
Company’s equity securities to file reports of ownership and changes in
ownership with the SEC and the Nasdaq Stock Market. Based solely on a review of
the copies of reports furnished to the Company and written representations from
the Company’s executive officers, directors and persons who beneficially own
more than ten percent of the Company’s equity securities, the Company believes
that, during the preceding year, all filing requirements applicable to the
Company’s officers, directors and ten percent beneficial owners under Section
16(a) were satisfied except as noted below:
The
following individuals each failed to timely file one Statement of Change in
Beneficial Ownership on Form 4 with regard to one transaction:
David S.
Lundeen
Director
Max D.
Hopper Director
For
fiscal 2008, due to an administrative oversight the following individual failed
to timely file one Statement of Change in Beneficial Ownership on Form 4
reporting a total of six transactions. For fiscal years 2006 and
2007, due to the same administrative oversight the following individual failed
to timely file one Initial Statement of Beneficial Ownership in Securities on
Form 3, and eleven Statements of Change in Beneficial Ownership on Form 4
reporting a total of fifteen transactions. Steps have been taken to
correct the administrative oversight:
Timothy J.
Thompson Vice
President – Client Development
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In order
to identify and address concerns regarding related party transactions and their
disclosures, the Company uses Directors and Officers Questionnaires and Business
Ethics and Code of Conduct policies. The Company also considers the
independence of its directors. The discussion of the independence of
the directors contained herein under the caption “Composition and Meetings of
the Board of Directors and Committees” is incorporated by reference into this
section.
Directors
and Officers Questionnaires are distributed to executive officers and directors
at the beginning of each fiscal year to identify any potential related-party
transactions. Within the questionnaire, executive officers and directors are
asked to describe any transaction, arrangement or relationship or any series of
similar transactions, arrangements or relationships, occurring since January 1,
2008, in which the Company was or is to be a participant and the amount involved
exceeds $120,000, and in which any of the following had or will have a direct or
indirect interest: (i) the individual, (ii) any director or executive officer of
the Company, (iii) a nominee for director, (iv) an immediate family member of a
director or executive officer of the Company, (v) an immediate family member of
a nominee for director, (vi) a security holder of 5% or more of the Common
Stock, or (vii) an immediate family member of the security holder. Responses
provided within the questionnaire are reviewed by management of the Company to
determine any necessary course of action. No such transaction was entered into
since January 1, 2008 other than the Employment Agreements described on pages
15-16 of this Proxy Statement.
It is the
policy of the Company that all employees, directors and agents maintain the
highest ethical standards and comply with all applicable legal requirements when
conducting Company business. Guidelines regarding conflicts of interest are
detailed in the Company’s Code of Conduct for employees and in the Financial
Code of Ethics for the CEO, CFO and Other Senior Financial Officials,
both adopted by the Board of Directors. These policies are available on the
Company’s website at www.perficient.com. All
Company employees must deal with vendors, customers and others doing business
with the Company in a manner that avoids even the appearance of conflict between
personal interests and those of the Company. Potential conflicts of interest can
arise from any of the following:
·
|
a
direct or indirect financial interest in any business or organization that
is a Company vendor or competitor, if the employee or director can
influence decisions with respect to the Company’s business with respect to
such business or organization; and
|
·
|
serving
on the Board of Directors of, or being employed in any capacity by, a
vendor, competitor or customer of the
Company.
|
Relationships,
including business, financial, personal and family, may give rise to conflicts
of interest or the appearance of a conflict. Employees should carefully evaluate
their relationships as they relate to Company business to avoid conflict or the
appearance of a conflict. To avoid conflicts of interest or the appearance of a
conflict:
·
|
Employees
and directors should not have an undisclosed relationship with, or
financial interest in, any business that competes or deals with the
Company; provided that the ownership of less than 1% of the outstanding
shares, units or other interests of any class of publicly traded
securities is acceptable.
|
·
|
Employees
are prohibited from directly or indirectly competing, or performing
services for any person or entity in competition with, the
Company.
|
·
|
Employees
should comply with the policies set forth in this Code regarding the
receipt or giving of gifts, favors or
entertainment.
|
·
|
A
full-time employee should obtain the approval of his or her supervisor
before serving as a trustee, regent, director or officer of a
philanthropic, professional, national, regional or community organization
or educational institution. This policy applies where significant time
spent in support of these functions may interfere with time that should be
devoted to the Company's business.
|
·
|
Employees
may not sell or lease equipment, materials or property to the Company
without appropriate corporate
authority.
|
·
|
Employees
should purchase Company equipment, materials or property only on terms
available to the general public.
|
Any
employee or director who becomes aware of a conflict is required to bring it to
the attention of a supervisor, management or other appropriate
personnel.
Directors
are expected and required to uphold the same dedication to corporate ethics as
the Company’s employees.
If a
conflict of interest arises involving an executive officer or director, the
Board of Directors must approve a waiver to the Code of Conduct and if a
director has the conflict, that director must abstain from the
approval. Waivers are made on a case-by-case basis. The
Board of Directors has not adopted a formal written policy with respect to
waiving conflict of interests or approving related party
transactions. In making this determination, the Board considered the
infrequency in occurrence of these transactions. Any waivers to the
Code of Conduct granted to an executive officer or director shall be disclosed
by the Company on its website at www.perficient.com.
STOCKHOLDER
PROPOSALS FOR NEXT ANNUAL MEETING
OTHER
MATTERS
The Board
of Directors does not intend to bring any matters before the Meeting other than
as stated in this Proxy Statement, and is not aware that any other matters will
be presented for action at the Meeting. If any other matters come before the
Meeting, the persons named in the enclosed form of proxy will vote the proxy
with respect thereto in accordance with their best judgment, pursuant to the
discretionary authority granted by the proxy. Whether or not you plan to attend
the Meeting in person, please complete, sign, date and return the enclosed proxy
card promptly.
FORM
10-K
Perficient
will furnish, without charge to each person solicited and to each beneficial
owner of its securities, on the written request of such person, a copy of its
Annual Report on Form 10-K, except for the exhibits to such Form 10-K but
including the financial statements filed with such Form 10-K. Perficient will
furnish any exhibit to the Form 10-K upon the payment of a reasonable fee which
shall be limited to its reasonable expenses in furnishing such exhibit. Requests
should be directed to Mr. Paul E. Martin, Perficient, Inc., 520 Maryville Centre
Drive, Suite 400, St. Louis, MO, 63141, telephone number (314)
529-3551.
By
Order of the Board of Directors
/s/ Paul E. Martin
Paul
E. Martin
Secretary
March
24, 2009
|
PERFICIENT,
INC.
2009
LONG-TERM INCENTIVE PLAN
SECTION
1. PURPOSE. Perficient,
Inc. previously adopted the Perficient, Inc. 1999 Stock Option/Stock Issuance
Plan (the "Plan") to encourage employees, directors and other persons providing
significant services to Perficient, Inc. and its subsidiaries to acquire a
proprietary and vested interest in the growth and performance of the Company, to
generate an increased incentive to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of share
owners, and to enhance the ability of the Company to attract and retain
individuals of exceptional managerial talent upon whom, in large measure, the
sustained progress, growth and profitability of the Company
depends. The following provisions constitute an amendment and
restatement of the Plan, which on and after the Effective Date shall be known as
the “Perficient, Inc. 2009 Long-Term Incentive Plan”. The amended and
restated Plan shall apply to Awards granted on or after the Effective
Date.
SECTION
2. DEFINITIONS. As
used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Acquiring
Person" means any person (any individual, firm, corporation or other entity) who
or which, together with all Affiliates and Associates, has acquired or obtained
the right to acquire the beneficial ownership of fifty percent (50%) or more of
the Shares then outstanding.
(b) "Affiliate"
and "Associate" shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
(c) "Award"
shall mean any Option, Stock Appreciation Right, Restricted Share Award,
Performance Share, Performance Unit, Other Stock Unit Award, or any other right,
interest, or option relating to Shares or other securities of the Company
granted pursuant to the provisions of the Plan.
(d) "Award
Agreement" shall mean any written agreement, contract, or other instrument or
document evidencing any Award granted by the Committee hereunder and signed by
both the Company and the Participant.
(e) "Beneficiary"
means the person or persons to whom an Award is transferred by his or her will
or by the laws of descent and distribution of the state in which the Participant
resided at the time of his or her death.
(f) "Board"
shall mean the Board of Directors of Perficient, Inc.
(g) "Cause"
shall mean any of the following events, as determined by the
Committee:
(1) The
commission of an act which, if proven in a court of law, would constitute a
felony violation under applicable criminal laws;
(2) A breach
of any material duty or obligation imposed upon the Participant by the
Company;
(3) Divulging
the Company's confidential information, or breaching or causing the breach of
any confidentiality agreement to which the Participant or the Company is a
party;
(4) Engaging
or assisting others to engage in business in competition with the
Company;
(5) Refusal
to follow a lawful order of the Participant's superior or other conduct which
the Board or the Committee determines to represent insubordination on the part
of the Participant; or
(6) Other
conduct by the Participant which the Board or the Committee, in its discretion,
deems to be sufficiently injurious to the interests of the Company to constitute
cause.
(h) "Code"
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
any successor thereto.
(i) "Committee"
shall mean the Compensation Committee of the Board, composed of no fewer than
three directors, each of whom is a Non-Employee Director, an "outside director"
within the meaning of Section 162(m) of the Code and an "independent director"
within the meaning of applicable standards of the National Association of
Securities Dealers, Inc. ("NASD") or any national securities exchange upon which
the Shares are traded.
(j) "Company"
shall mean Perficient, Inc., its subsidiaries and/or Affiliates.
(k) "Covered
Employee" shall mean a "covered employee" within the meaning of Section
162(m)(3) of the Code.
(l) "Disability"
means, with respect to an Employee, disability as defined under the Company's
long term disability insurance plan under which such Employee is then covered
and, with respect to any other Participant, has the meaning set forth in Section
22(e)(3) of the Code, as determined by the Committee in its sole
discretion.
(m) "Effective
Date" shall have the meaning set forth in Section 16 hereof.
(n) "Employee"
shall mean any employee of the Company or of any Affiliate.
(o) "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended from time to
time, and any successor thereto.
(p) "Fair
Market Value" shall mean (i) with respect to a Share, the last reported sale
price of a Share on the date of determination, or on the most recent date on
which the Share is traded prior to that date, as reported on the Nasdaq National
Market, and (ii) with respect to any other property, the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee.
(q) "Incentive
Stock Option" shall mean an Option granted under Section 6 hereof that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto. Only Employees may be awarded Incentive Stock
Options.
(r) "Involuntary
Termination for Economic Reasons" means that the Participant's Termination Date
occurs due to involuntary termination of employment by the Company by reason of
a corporate restructuring, a disposition or acquisition of a business or
facility, or a downsizing or layoff, as determined by the Company's Chief
Executive Officer, in his sole discretion, or by the Committee in the case of a
Participant subject to Section 16 of the Exchange Act.
(s) "Non-Employee
Directors" shall mean individuals who qualify as such within the meaning of Rule
16b-3 under the Exchange Act (or any successor definition thereto).
(t) "Nonstatutory
Stock Option" shall mean an Option granted under Section 6 hereof that is not
intended to be an Incentive Stock Option.
(u) "Option"
shall mean any right granted to a Participant under the Plan allowing such
Participant to purchase Shares at such price or prices and during such period or
periods as the Committee shall determine.
(v) "Other
Stock Unit Awards" shall mean Awards of Shares and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, Shares or other
property, other than Awards which are Options, Stock Appreciation Rights,
Restricted Share Awards, Performance Shares or Performance Units.
(w) "Participant"
shall mean an Employee or director of, or a consultant or other person providing
significant services to, the Company who is selected by the Committee to receive
an Award under the Plan.
(x) "Performance
Award" shall mean any Award of Performance Shares or Performance Units pursuant
to Section 9 hereof.
(y) "Performance
Period" shall mean that period established by the Committee at the time any
Performance Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to such Award are to
be measured.
(z) "Performance
Share" shall mean any grant pursuant to Section 9 hereof of a unit valued by
reference to a designated number of Shares, which value may be paid to the
Participant by delivery of such property as the Committee shall determine,
including, without limitation, cash, Shares, or any combination thereof, upon
achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.
(aa) "Performance
Unit" shall mean any grant pursuant to Section 9 hereof of a unit valued by
reference to a designated amount of property other than Shares, which value may
be paid to the Participant by delivery of such property as the Committee shall
determine, including, without limitation, cash, Shares, or any combination
thereof, upon achievement of such
performance
goals during the Performance Period as the Committee shall establish at the time
of such grant or thereafter.
(bb) "Person"
shall mean any individual, corporation, partnership, association, joint-stock
company, Company, unincorporated organization, limited liability company, other
entity or government or political subdivision thereof.
(cc) "Prior
Stock Plans" shall mean the Perficient, Inc. 1999 Stock Options/Stock Issuance
Plan.
(dd) "Restricted
Share" shall mean any Share issued with the restriction that the holder may not
sell, transfer, pledge, or assign such Share and with such other restrictions as
the Committee, in its sole discretion, may impose (including, without
limitation, any restriction on the right to vote such Share, and the right to
receive any cash dividends), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.
(ee) "Restricted
Share Award" shall mean an award of Restricted Shares under Section 8
hereof.
(ff) "Retirement"
means a Participant's Termination Date which occurs (i) pursuant to a voluntary
early retirement program approved by the Board or the Committee, (ii) after
attaining age 65, or (iii) after attaining age 60 with ten or more years of
service with the Company. For this purpose, a year of service shall
be a completed 12-month period of service beginning on the first day of the
Participant's service with the Company as an employee or director, or an
anniversary of such date.
(gg) "Shares"
shall mean shares of common stock, without par value, of Perficient, Inc. and
such other securities of the Company as the Committee may from time to time
determine.
(hh) "Stock
Appreciation Right" shall mean any right granted to a Participant pursuant to
Section 7 hereof to receive, upon exercise by the Participant, the excess of (i)
the Fair Market Value of one Share on the date of exercise over (ii) the grant
price of the right on the date of grant, or if granted in connection with an
outstanding Option on the date of grant of the related Option, as specified by
the Committee in its sole discretion, which shall not be less than the Fair
Market Value of one Share on such date of grant of the right or the related
Option, as the case may be. Any payment by the Company in respect of
such right may be made in cash, Shares, other property, or any combination
thereof, as the Committee, in its sole discretion, shall determine.
(ii) "Ten
Percent Shareholder" means a person who owns (after taking into account the
attribution rules of Section 424(b) of the Code or any successor provision
thereto) more than 10% of the combined voting power of all classes of shares
beneficial interest of the Company.
(jj) "Termination
of Employment" means the date a Participant separates from service with the
Company and under Section 409A of the Code (generally, a decrease in the
performance of services to no more than 20% of the average of the preceding 36
month period, and
disregarding
leave of absences up to six months where there is reasonable expectation the
Participant will return).
SECTION
3. ADMINISTRATION.
(a) AUTHORITY
OF COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full power and authority, subject
to such orders or resolutions not inconsistent with the provisions of the Plan
as may from time to time be adopted by the Board, to: (i) select the
Participants to whom Awards may from time to time be granted hereunder; (ii)
determine the type or types of Award to be granted to each Participant
hereunder; (iii) determine the number of Shares to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property or canceled or suspended; (vi) determine whether,
to what extent and under what circumstances cash, Shares and other property and
other amounts payable with respect to an Award under this Plan shall be deferred
either automatically or at the election of the Participant; (vii) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan. Decisions of the
Committee shall be final, conclusive and binding upon all persons, including the
Company, any Participant, and shareholder, and any Employee, director or
consultant of the Company or of any Affiliate.
(b) DELEGATION. The
Committee may delegate to the Company's Chief Executive Officer the authority to
grant Awards to Participants, other than Participants who are subject to Section
16 of the Exchange Act, and to determine the terms and conditions of such
Awards, subject to the limitations of the Plan and such other limitations and
guidelines as the Committee may deem appropriate.
SECTION
4. DURATION
OF, AND SHARES SUBJECT TO PLAN.
(a) TERM. The
Plan shall remain in effect until terminated by the Board, provided, however,
that no Award may be granted under the Plan more than ten (10) years after the
Effective Date, but any Award theretofore granted may extend beyond that
date.
(b) SHARES
SUBJECT TO THE PLAN. The maximum number of Shares in respect for
which Awards may be granted under the Plan, subject to adjustment as provided in
Section 4(c) of the Plan, is (i) 2,000,000 plus (ii) the number of Shares
that remained available for issuance under the Prior Stock Plan as of the
Effective Date. No further awards shall be made under the Prior Stock
Plans after the Original Effective Date. No Participant may be
granted Awards in any one calendar year with respect to more than 600,000
Shares. The maximum amount payable in cash to a Covered Employee for
any calendar year with respect to any Award subject to Section 13 shall be
$1,000,000.
For the
purpose of computing the total number of Shares available for Awards under the
Plan, there shall be counted against the foregoing limitations the number of
Shares subject to issuance
upon
exercise or settlement of Awards as of the dates on which such Awards are
granted. Shares which were previously subject to Awards shall not
again be available for Awards under the Plan if any such Awards are forfeited,
terminated, expire unexercised, settled in cash or exchanged for other Awards,
or if the Shares subject thereto can otherwise no longer be issued. Further, any
Shares which are used as full or partial payment to the Company by a Participant
of the purchase price of Shares or the tax withholding requirement with respect
to any Awards granted under the Plan shall not be available for Awards under the
Plan. If a Stock Appreciation Right is settled in Shares, Shares that
are in excess of the net Shares delivered on exercise of such Stock Appreciation
Right shall not be added back to the number of Shares available for future
Awards under the Plan.
Shares
which may be issued under the Plan may be either authorized and unissued shares
or issued shares which have been reacquired by the Company. No
fractional shares shall be issued under the Plan.
(c) CHANGES
IN SHARES. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, reverse stock split, spin off or
similar transaction or other change in corporate structure affecting the Shares,
the Committee shall make equitable adjustments and substitutions with respect to
(i) the aggregate number, class and kind of Shares which may be delivered under
the Plan, in the aggregate or to any one Participant, (ii) the number, class,
kind and option or exercise price of Shares subject to outstanding Options,
Stock Appreciation Rights or other Awards granted under the Plan, and (iii) the
number, class and kind of Shares subject to, Awards granted under the Plan
(including, if the Committee deems appropriate, the substitution of similar
options to purchase the shares of, or other awards denominated in the shares of,
another company). The Committee shall have the sole discretion to
determine the manner of such equitable adjustment or substitution, provided that
the number of Shares or other securities subject to any Award shall always be a
whole number.
SECTION
5. ELIGIBILITY. Any
Employee, director, consultant or other person providing material services to
the Company shall be eligible to be selected as a Participant.
SECTION
6. STOCK
OPTIONS. Options may be granted hereunder to Participants either
alone or in addition to other Awards granted under the Plan. Any
Option granted under the Plan shall be evidenced by an Award Agreement in such
form as the Committee may from time to time approve. Any such Option
shall be subject to the following terms and conditions and to such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable:
(a) OPTION
PRICE. The purchase price per Share purchasable under an Option shall
be determined by the Committee in its sole discretion; provided that (i) such
purchase price shall not be less than the Fair Market Value of the Share on the
date of the grant of the Option, and (ii) such purchase price for an Incentive
Stock Option granted to a Ten Percent Shareholder shall be not less than 110% of
the Fair Market Value of the Share on the date of grant of the
Option.
(b) OPTION
PERIOD. The term of each Option shall be fixed by the Committee in
its sole discretion; provided that (i) no Option shall be exercisable after the
expiration of ten years from the date the Option is granted, and (ii) no
Incentive Stock Option granted to a Ten Percent Shareholder shall be exercisable
after the expiration of five years from the date the Option is
granted.
(c) EXERCISABILITY. Options
shall be exercisable at such time or times as determined by the Committee at or
subsequent to grant. Unless otherwise determined by the Committee at
or subsequent to grant, no Option shall become fully exercisable prior to the
third anniversary of the grant. Unless otherwise determined by the
Committee at or subsequent to grant, no Incentive Stock Option shall be
exercisable during the year ending on the day before the first anniversary date
of the granting of the Incentive Stock Option.
(d) METHOD OF
EXERCISE. Subject to the other provisions of the Plan and any
applicable Award Agreement, any Option may be exercised by the Participant in
whole or in part at such time or times, and the Participant may make payment of
the option price in such form or forms, including, without limitation, payment
by delivery of cash, Shares or other consideration (including, where permitted
by law and the Committee, Awards) having a Fair Market Value on the exercise
date equal to the total option price, or by any combination of cash, Shares and
other consideration as the Committee may specify in the applicable Award
Agreement.
(e) INCENTIVE
STOCK OPTIONS. In accordance with rules and procedures established by
the Committee, the aggregate Fair Market Value (determined as of the time of
grant) of the Shares with respect to which Incentive Stock Options held by any
Participant which are exercisable for the first time by such Participant during
any calendar year under the Plan (and under any other benefit plans of the
Company or of any parent or subsidiary corporation of the Company) shall not
exceed $100,000 or, if different, the maximum limitation in effect at the time
of grant under Section 422 of the Code, or any successor provision, and any
regulations promulgated thereunder. The terms of any Incentive Stock
Option granted hereunder shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder. An Incentive Stock Option must be exercised
within three months following the Participant's termination of employment with
the Company, or within twelve months if such termination is by reason of death
or Disability. If for any reason an Option intended to be an
Incentive Stock Option fails to satisfy the requirements of Section 422 of the
Code, such Option will automatically convert to a Nonstatutory Stock
Option.
(f) REPRICING. Except
in connection with a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization , reorganization, merger, consolidation, split-up,
spin-off, combination, or exchange of shares), the terms of outstanding Awards
may not be amended to reduce the exercise price of outstanding Options or Stock
Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights
in exchange for cash, other Awards or Options or Stock Appreciation Rights with
an exercise price that is less than the exercise price of the original Options
or Stock Appreciation Rights, without the approval of the Company's
shareholders.
(g)
DIVIDEND EQUIVALENTS. No dividend equivalent units shall be awarded
in
connection
with any Option.
SECTION
7. STOCK
APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
hereunder to Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option granted under
Section 6. Each Share subject to a Stock Appreciation Right shall
have an exercise price of not less than Fair Market Value of a Share on the date
of grant of the Stock Appreciation Right. The term of the Stock
Appreciation Right shall be fixed by the Committee in its sole discretion,
provided that no Stock Appreciation Right shall be exercisable after the
expiration of ten years from the date the Stock Appreciation Right is
granted. Unless otherwise determined by the Committee at or
subsequent to grant, no Stock Appreciation Right shall be fully vested or become
fully exercisable prior to the third anniversary of the grant
date. The Committee, in its sole discretion, shall establish or
impose such other terms and conditions with respect to Stock Appreciation Rights
as it shall deem appropriate, which need not be the same with respect to each
recipient.
Any Stock
Appreciation Right related to a Nonstatutory Stock Option may be granted at the
same time such Option is granted or at any time thereafter before exercise or
expiration of such Option. Any Stock Appreciation Right related to an
Incentive Stock Option must be granted at the same time such Option is granted,
and may be exercised only if and when the Fair Market Value of the Shares
subject to the Incentive Stock Option exceeds the aggregate purchase price for
the Option. In the case of any Stock Appreciation Right related to
any Option, the Stock Appreciation Right or applicable portion thereof shall
terminate and no longer be exercisable upon the termination or exercise of the
related Option, except that a Stock Appreciation Right granted with respect to
less than the full number of Shares covered by a related Option shall not be
reduced until the exercise or termination of the related Option exceeds the
number of shares not covered by the Stock Appreciation Right. Any
Option related to any Stock Appreciation Right shall no longer be exercisable to
the extent the related Stock Appreciation Right has been
exercised. No dividend equivalent units shall be awarded in
connection with any Stock Appreciation Right.
SECTION
8. RESTRICTED
SHARES.
(a) ISSUANCE. Restricted
Share Awards may be issued hereunder to Participants, for no cash consideration
or for such minimum consideration as may be required by applicable law, either
alone or in addition to other Awards granted under the Plan. Unless
otherwise determined by the Committee at or subsequent to grant, the
restrictions on a Restricted Share Award at or subsequent to shall not lapse as
to all shares subject to the award prior to the third anniversary of
the grant date. The provisions of Restricted Share Awards need not be
the same with respect to each recipient.
(b) REGISTRATION. Any
Restricted Shares issued hereunder may be evidenced in such manner as the
Committee in its sole discretion shall deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect
of Restricted Shares awarded under the Plan, such certificate shall be
registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Award.
(c) FORFEITURE. Except
as set forth in Section 11 or otherwise determined by the Committee at the time
of grant, upon a Participant's Termination Date for any reason during the
restriction period, all Restricted Shares still subject to restriction shall be
forfeited by the Participant and reacquired by the Company; provided that the
Committee may, in its sole discretion, when it finds that a waiver would be in
the best interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to such Participant's Restricted Shares,
except for Restricted Share Awards that are intended to comply with the
performance-based compensation requirements of Section
13. Unrestricted Shares, evidenced in such manner as the Committee
shall deem appropriate, shall be issued to the grantee promptly after the period
of forfeiture, as determined or modified by the Committee, shall
expire.
(d)
DIVIDENDS. No dividends or dividend equivalents shall be paid with
respect to any Restricted Share while such Restricted Share is subject to
restriction.
SECTION
9. PERFORMANCE
AWARDS. Performance Awards may be issued hereunder to Participants,
for no cash consideration or for such minimum consideration as may be required
by applicable law, either alone or in addition to other Awards granted under the
Plan. The performance criteria to be achieved during any Performance
Period and the length of the Performance Period shall be determined by the
Committee upon the grant of each Performance Award. Except as
provided in Section 12, Performance Awards will be distributed only after the
end of the relevant Performance Period. Performance Awards may be
paid in cash, Shares, other property or any combination thereof, in the sole
discretion of the Committee at the time of payment. The performance
levels to be achieved for each Performance Period and the amount of the Award to
be distributed shall be conclusively determined by the
Committee. Performance Awards may be paid in a lump sum or in
installments following the close of the Performance Period. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Participants to whom and the time or times at which
such Awards shall be made, and all other conditions of the
Awards. The provisions of Performance Awards need not be the same
with respect to each recipient. No dividend equivalent units shall be
awarded in connection with any Performance Award.
SECTION
10. OTHER
STOCK UNIT AWARDS.
(a) STOCK AND
ADMINISTRATION. Other Stock Unit Awards may be granted hereunder to
Participants, either alone or in addition to other Awards granted under the
Plan. Other Stock Unit Awards may be paid in Shares, other securities
of the Company, cash or any other form of property as the Committee shall
determine. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Participants to whom and the
time or times at which such Awards shall be made, the number of shares of Stock
to be granted pursuant to such Awards, and all other conditions of the
Awards. Unless otherwise determined by the Committee at or subsequent
to grant, no Stock Unit Award shall fully vest prior to the third anniversary of
the grant date. The provisions of Other Stock Unit Awards need not be
the same with respect to each recipient.
(b) TERMS AND
CONDITIONS. Shares (including securities convertible into Shares)
granted under this Section 10 may be issued for no cash consideration or for
such minimum consideration as may be required by applicable law; Shares
(including securities
convertible
into Shares) purchased pursuant to a purchase right awarded under this Section
10 shall be purchased for such consideration as the Committee shall in its sole
discretion determine, which shall not be less than the Fair Market Value of such
Shares or other securities as of the date such purchase right is
awarded. No dividend equivalent units shall be awarded in connection
with any Stock Unit Award.
SECTION
11. EFFECT OF
TERMINATION DATE.
The
Committee shall have the discretion to establish terms and conditions relating
to the effect of the Participant's Termination Date on Awards under the
Plan. Unless the Committee determines otherwise with respect to any
individual Award, as stipulated in the applicable Award Agreement, the following
provisions shall apply to Options, Stock Appreciation Rights and Restricted
Shares on a Participant's Termination Date.
(a) DEATH,
DISABILITY, RETIREMENT. If the Participant's Termination Date occurs
for reasons of death, Disability or Retirement, (i) the restriction period with
respect to any Restricted Shares shall lapse, and (ii) the Participant's
outstanding Options and Stock Appreciation Rights shall immediately vest in full
and may thereafter be exercised in whole or in part by the Participant (or the
duly appointed fiduciary of the Participant's estate or Beneficiary in the case
of death, or conservator of the Participant's estate in the case of Disability)
at any time prior to the expiration of the respective terms of the Options or
Stock Appreciation Rights, as applicable.
(b) INVOLUNTARY
TERMINATION FOR ECONOMIC REASONS. If the Participant's Termination
Date occurs by reason of Involuntary Termination for Economic Reasons, the
Participant may exercise his or her Options and Stock Appreciation Rights, to
the extent vested, at any time prior to the earlier of (i) the date which is 6
months after such Termination Date, or (ii) the expiration of the respective
terms of the Options or Stock Appreciation Rights.
If the
Participant dies after the Termination Date while his or her Options or Stock
Appreciation Rights remain exercisable under this paragraph (b), the duly
appointed fiduciary of the Participant's estate or his or her Beneficiary may
exercise the Options and Stock Appreciation Rights (to the extent that such
Options and Stock Appreciation Rights were vested and exercisable prior to
death), at any time prior to the later of the date which is (i) 6 months after
the date of death, but in no event later than the expiration of the respective
terms of the Options and Stock Appreciation Rights.
(c) TERMINATION
DATE FOR CAUSE. If the Participant's Termination Date occurs for
reasons of Cause, at the time such notice of termination is given by the Company
(i) any Restricted Shares subject to a restriction period shall be forfeited,
and (ii) the Participant's right to exercise his or her Options and Stock
Appreciation Rights shall terminate. If within 90 days of a
Participant's Termination Date the Company discovers circumstances which would
have permitted it to terminate the Participant's employment or service for
Cause, such Termination Date shall be deemed to have occurred for reasons of
Cause. Any Shares, cash or other property paid or delivered to the
Participant under the Plan within 90 days of such
Termination
Date shall be forfeited and the Participant shall be required to repay such
amount to the Company.
(d) OTHER
TERMINATION OF EMPLOYMENT OR SERVICE. In the event the Participant's
Termination Date occurs for reasons other than described in the foregoing
provisions of this Section 11, the Participant shall have the right to exercise
his or her Options and Stock Appreciation Rights at any time prior to the
earlier of (i) the date which is 3 months after such Termination Date, or (ii)
the expiration date of the respective terms of the Options or Stock Appreciation
Rights, as applicable, but only to the extent such Option or Stock Appreciation
Right, as applicable, was vested prior to such Termination Date. Any
Options or Stock Appreciation Rights which are not vested at such Termination
Date shall be forfeited on the Termination Date.
If the
Participant dies after the Termination Date while his or her Options or Stock
Appreciation Rights remain exercisable under this paragraph (d), the duly
appointed fiduciary of the Participant's estate or his or her Beneficiary may
exercise the Options or Stock Appreciation Rights (to the extent that such
Options or Stock Appreciation Rights were vested and exercisable prior to
death), at any time prior to the earlier of (i) 3 months after the date of
death, or (ii) the expiration of the respective terms of the Options or Stock
Appreciation Rights, as applicable.
SECTION
12. CHANGE IN
CONTROL.
(a) Unless
the terms of an employment or similar agreement provide to the contrary, a
change in control of the Company shall not trigger the acceleration of vesting,
exercisability or the lapse of restrictions with respect to any
Award. Subject to any employment or similar agreement, the Committee
may provide that an Award shall be assumed or otherwise continued in full force
and effect by any successor corporation or parent thereof.
SECTION
13. CODE
SECTION 162(M) PROVISIONS.
(a) Notwithstanding
any other provision of this Plan, if the Committee determines at the time any
Restricted Shares, Performance Awards or Other Stock Unit Awards are granted to
a Participant that such Participant is, or is likely to be at the time he or she
recognizes income for federal income tax purposes in connection with such Award,
a Covered Employee, then the Committee may provide that this Section 13 is
applicable to such Award.
(b) If an
Award is subject to this Section 13, then the lapsing of restrictions thereon
and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be subject to the achievement of one or more objective
performance goals established by the Committee, which shall be based on the
attainment of one or any combination of the following: cash flow; cash flow from
operations; net income, total earnings; earnings per share, diluted or basic;
earnings per share from continuing operations, diluted or basic; earnings before
interest and taxes; earnings before interest, taxes, depreciation, and
amortization; earnings from operations; net asset turnover; inventory turnover;
capital expenditures; net earnings; operating earnings; gross or operating
margin; debt; working capital; return on equity; return on net assets; return on
total assets; return on capital; return on invested capital; return on
investment; return on sales; net or gross sales; market share; economic value
added; cost of capital; change in assets;
expense
reduction levels; cost control; debt reduction; productivity; delivery
performance; safety record; stock price; stock price appreciation; and total
stockholder return, of the Company or the Affiliate or division of the Company
for or within which the Participant is primarily employed. Such
performance goals also may be based upon the attaining specified levels of
Company performance under one or more of the measures described above relative
to the performance of other corporations. Such performance goals
shall be set by the Committee within the times period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m) of the Code and the
regulations thereunder.
(c) Notwithstanding
any provision of this Plan other than Section 12, with respect to any Award that
is subject to this Section 13, the Committee may not adjust upwards the amount
payable pursuant to such Award, nor may it waive the achievement of the
applicable performance goals except in the case of the death or disability of
the Participant.
(d) The
Committee shall have the power to impose such other restrictions on Awards
subject to this Section 13 as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for "performance-based compensation"
within the meaning of Section 162(m)(4)(B) of the Code or any successor
thereto.
SECTION
14. AMENDMENTS
AND TERMINATION.
The Board
may amend, alter or discontinue the Plan at any time; provided, however, no
amendment, alteration, or discontinuation shall be made that would impair the
rights of an optionee or Participant under an Award theretofore granted, without
the optionee's or Participant's consent; provided, further that, any amendment
that would (i) except as is provided in Section 4(c) of the Plan, increase the
total number of shares reserved for the purpose of the Plan, (ii) change the
employees or class of employees eligible to participate in the Plan, (iii)
change the minimum exercise price for any Option or Stock Appreciation Right
below the minimum price set forth in Section 6(a) and Section 7 of the Plan, as
applicable, or (iv) materially (within the meaning of rules of NASD) change the
terms of the Plan, shall not be effective without the approval of Perficient,
Inc.'s shareholders.
The
Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively; provided, that no such amendment shall impair the rights of any
Participant without his or her consent.
SECTION
15. GENERAL
PROVISIONS.
(a) Unless
the Committee determines otherwise with respect to an Award other than an
Incentive Stock Option, no Award, and no Shares subject to Awards described in
Section 10 which have not been issued or as to which any applicable restriction,
performance or deferral period has not lapsed, may be sold, assigned,
transferred, pledged or otherwise encumbered, except by will or by the laws of
descent and distribution; provided that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, designate a
beneficiary to exercise the rights of the Participant with respect to any Award
upon the death of the Participant. Unless the Committee determines
otherwise, each Award shall be exercisable, during the Participant's lifetime,
only by the Participant or, if permissible under applicable law,
by the
Participant's guardian or legal representative. Notwithstanding the
foregoing, subject to such rules as the Committee may establish, a Nonstatutory
Stock Option may be transferred by a Participant during his or her lifetime to a
trust, partnership or other entity established for the benefit of the
Participant and his or her immediate family which, for purposes of the Plan,
shall mean those persons who, at the time of such transfer, would be entitled to
inherit part or all of the estate of the Participant under the laws of intestate
succession then in effect in the state in which the Participant resides if the
Participant had died on such transfer date without a will.
(b) Subject
to the provisions of Section 6(b) and Section 7, the term of each Award shall be
for such period of months or years from the date of its grant as may be
determined by the Committee.
(c) No
Employee or Participant shall have any claim to be granted any Award under the
Plan nor to remain in the employment or service of the Company and there is no
obligation for uniformity of treatment of Employees or Participants under the
Plan. The Committee may, in its sole discretion, condition
eligibility for an Award on the execution of a noncompete or similar-type
agreement.
(d) The
prospective recipient of any Award under the Plan shall not, with respect to
such Award, be deemed to have become a Participant, or to have any rights with
respect to such Award, until and unless such recipient shall have executed an
agreement or other instrument evidencing the Award and delivered a fully
executed copy thereof to the Company, and otherwise complied with the then
applicable terms and conditions.
(e) Except as
provided in Section 13, the Committee shall be authorized to make adjustments in
Performance Award criteria or in the terms and conditions of other Awards in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in applicable laws, regulations or accounting
principles. The Committee may correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem desirable to carry it into effect. In the event
the Company shall assume outstanding employee benefit awards or the right or
obligation to make future such awards in connection with the acquisition of
another corporation or business entity, the Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall deem
appropriate.
(f) The
Committee shall have full power and authority to determine whether, to what
extent and under what circumstances any Award shall be canceled or
suspended.
(g) All
certificates for Shares delivered under the Plan pursuant to any Award shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, NASD, any stock exchange upon which the
Shares are then listed, and any applicable Federal or state securities law, and
the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(h) The
Committee shall be authorized to establish procedures pursuant to which the
payment of any Award may be deferred. Subject to the provisions of this Plan and
any Award
Agreement,
the recipient of an Award (including, without limitation, any deferred Award)
may, if so determined by the Committee, be entitled to receive, currently or on
a deferred basis, interest or dividends, or interest or dividend equivalents,
with respect to the number of shares covered by the Award, as determined by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested.
(i) Except as
otherwise required in any applicable Award Agreement or by the terms of the
Plan, recipients of Awards under the Plan shall not be required to make any
payment or provide consideration other than the rendering of
services.
(j) The
Company shall be authorized to withhold from any Award granted or payment due
under the Plan the amount of any withholding taxes due in respect of an Award or
payment hereunder and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such
that. The Committee shall be authorized to establish procedures for
election by Participants to satisfy such withholding taxes by delivery of, or
directing the Company to retain, Shares.
(k) Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such approval is
otherwise required; and such arrangements may be either generally applicable or
applicable only in specific cases.
(l) The terms
of this Plan and any agreement containing the terms and conditions of an award
made pursuant to the Plan shall be interpreted: first, in a manner that causes
the award to comply with Section 409A of the Code; and second, in accordance
with the laws of the State of Delaware.
(m) If any
provision of this Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
(n) Awards
may be granted to Employees, directors or consultants of the Company or
Affiliates who are foreign nationals or employed outside the United States, or
both, on such terms and conditions different from those specified in the Plan as
may, in the judgment of the Committee, be necessary or desirable in order to
recognize differences in local law or tax policy. The Committee also
may impose conditions on the exercise or vesting of Awards in order to minimize
the Company's obligation with respect to tax equalization for Participants on
assignments outside their home country.
SECTION
16. EFFECTIVE
DATE OF PLAN. This amendment and restatement of the Plan shall be
effective on the date that it is approved by the Company's stockholders (the
"Effective Date").
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