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:
¨ |
Preliminary
Proxy Statement
|
¨ |
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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þ |
Definitive
Proxy Statement
|
¨ |
Definitive
Additional Materials
|
¨ |
Soliciting
Material Pursuant to Rule 14a-12
|
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.
|
(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:
____________________________________________________________________________________________
¨ |
Fee
paid previously with preliminary
materials.
|
¨ |
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
Austin,
Texas 78746
Notice
of
Annual Meeting of Stockholders
To
Be
Held June 26, 2007
NOTICE
IS
HEREBY GIVEN that the 2007 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 June 26, 2007 at 9:00 a.m. Central Time, for the following
purposes:
1.
To
elect five directors to hold office for a term of one year or until their
successors have been duly elected and qualified; and
2.
To
approve the Company’s Omnibus Incentive Bonus Plan; and
3.
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 April 27, 2007
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 2007 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 2007 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. You may revoke your proxy at any time prior to the 2007 Annual Meeting.
If you decide to attend the 2007 Annual Meeting and wish to change your proxy
vote, you may do so automatically by voting in person at the 2007 Annual
Meeting.
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
Austin,
Texas 78746
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 June 26, 2006
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. Central Time, and at
any
adjournment thereof. This Proxy Statement and the accompanying Notice and Proxy
are being mailed to stockholders on or about May 7, 2007. 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, April 27, 2007
(the "Record Date"), will be entitled to vote at the Meeting and at all
adjournments thereof. On the Record Date, there were outstanding and entitled
to
vote 29,296,669 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 Continental Stock Transfer & Trust
Company, 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. Abstentions have the same effect as negative votes.
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.
Proxies
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., Inc. to assist Perficient with
the solicitation of proxies from stockholders for a fee of approximately $6,500
plus costs and expenses to aid in the solicitation of proxies and to verify
records relating to the solicitation.
At
this
year's Meeting, five directors will be elected to hold office for a term
expiring at the next Annual Meeting of Stockholders:
John
T.
McDonald
Ralph
C.
Derrickson
Max
D.
Hopper
Kenneth
R. Johnsen
David
S.
Lundeen
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 us, (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.
The
name
and age of each of the executive officers, current directors and Nominee
Directors of Perficient, and their respective positions with Perficient.
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
|
|
43
|
|
Chairman
of the Board and Chief Executive Officer
|
Jeffrey
S. Davis
|
|
42
|
|
President
and Chief Operating Officer
|
Paul
E. Martin
|
|
46
|
|
Chief
Financial Officer, Treasurer and Secretary
|
Timothy
J. Thompson
|
|
46
|
|
Vice
President of Client Development
|
Richard
T. Kalbfleish
|
|
51
|
|
Controller
and Vice President of Finance and Administration
|
Ralph
C. Derrickson
|
|
48
|
|
Director
|
Max
D. Hopper
|
|
71
|
|
Director
|
Kenneth
R. Johnsen
|
|
53
|
|
Director
|
David
S. Lundeen
|
|
44
|
|
Director
|
John
T.
McDonald joined us 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. 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
executive positions at Blockbuster Entertainment Group. 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 Interstate
Connections, Inc. Mr. McDonald received a B.A. in Economics from Fordham
University and a J.D. from Fordham Law School.
Jeffrey
S. Davis became our Chief Operating Officer upon the closing of the acquisition
of Vertecon in April 2002 and was named our President in 2004. He previously
served the same role since October 1999 at Vertecon prior 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 us 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 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.
Timothy
J. Thompson joined us 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 sales process enablement, territory management, forecasting,
and
various other strategic management duties. From 1999 to 2002, he served as
the
top sales and marketing executive at Vertecon prior to its acquisition by
Perficient. Prior to joining Vertecon in 1999, Mr. Thompson was the Director
of
Business Development for the Great Plains Market Circle at Arthur
Andersen.
Richard
T. Kalbfleish joined us 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 our Principal Accounting Officer. Prior to joining
us, 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 21 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 our Board of Directors in July 2004.
Mr. Derrickson has more than 25 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 the Managing Director of RCollins Group, LLC, a management
advisory firm that provides strategic advisory services to start-up and growth
technology companies. He has served on the boards of numerous companies in
the
past five years including Magis Networks, Inc., Audience, Inc., JiWire, Inc.,
and Carena, Inc. Mr. Derrickson is on the faculty of the School of
Management at the University of Washington and serves as an advisor to the
Director of the Center for Innovation and Entrepreneurship at the University
of
Washington. He is also a member of the Advisory Board of the Center on Materials
and Devices for Information Technology Research at the University of Washington.
Mr. Derrickson holds a Bachelor of Technology degree in Systems Software
Science from the Rochester Institute of Technology.
Max
D.
Hopper became a member of our Board of Directors in September 2002. Mr. Hopper
began his information systems career in 1960 at Shell Oil and served with
Electronic Data Systems, United Airlines and Bank of America prior to joining
American Airlines. During Mr. Hopper's twenty-year tenure at American Airlines,
he served as Chief Information Officer and as Chief Executive Officer 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 eBusiness. Mr. Hopper currently serves on the board of directors for several
companies such as Gartner Group, and several other private
corporations.
Kenneth
R. Johnsen became a member of our board of directors in July 2004. Mr. Johnsen
is currently a partner with Aspen Advisors, LP. From January 1999 to October
2006, Mr. Johnsen served as President, CEO and Chairman of the Board of Parago
Inc., a marketing services transaction processor. Before joining Parago Inc.
in
1999, he served as President, Chief Operating Officer and Board Member of
Metamor Worldwide Inc., an $850 million public technology services company
specializing in information technology consulting and implementation. Metamor
was later acquired by PSINet for $1.7 billion. At Metamor, Mr. Johnsen
grew the IT Solutions Group revenues from $20 million to over
$300 million within two years. His experience also includes 22 years
at IBM where he held general management positions, including Vice President
of
Business Services for IBM Global Services and General Manager of IBM China/
Hong
Kong Operations. He achieved record revenues, profit and customer satisfaction
levels in both business units.
David
S.
Lundeen became a member of our 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. Our 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.
All
directors hold office until the next annual meeting of our stockholders and
until their respective successors have been duly elected and qualified or until
their earlier death, resignation or removal. There are no family relationships
between any of our 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. Accordingly, abstentions and "broker non-votes" will have no effect
on
the outcome of the election of directors assuming a quorum is present or
represented by proxy at the Meeting. Unless otherwise directed, each proxy
executed and returned by a stockholder will be voted for the election of each
of
the Nominee Directors.
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 five directors. The Board of Directors
has affirmatively determined that a majority of the directors qualify as
independent directors as defined by Securities and Exchange Commission
regulations and Nasdaq Stock Market listing standards. The independent directors
are Ralph C. Derrickson, Max D. Hopper, Kenneth R. Johnsen and David S. Lundeen.
During
fiscal year 2006, the Board of Directors held eight meetings and acted by
unanimous written consent six times. Each of the directors participated in
at
least 90% 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, 2006. All members of the Board
of
Directors are encouraged to attend the annual meetings of
stockholders.
Committees
of the Board of Directors
The
Board
of Directors has created a Compensation Committee, a Nominating Committee and
an
Audit Committee. Each member of the committees is independent as defined by
Securities and Exchange Commission 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 three meetings and acted seven times by unanimous
written consent during fiscal year 2006. The members of the Compensation
Committee are Max D. Hopper, Kenneth R. Johnsen, and David S. Lundeen. Mr.
Lundeen serves as chairman of the Compensation Committee. A copy of the current
Compensation Committee charter is available on our website,
www.perficient.com.
Audit
Committee
The
Board
of Directors has created an Audit Committee. Each member of the Audit Committee
is independent as defined by Nasdaq Stock Market listing standards.
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 our independent accountants and must
pre-approve all auditing and permitted non-audit services to be performed for
us
by the independent accountants, subject to certain exceptions provided by the
Securities Exchange Act of 1934. A copy of the current Audit Committee Charter
is available on our website, www.perficient.com.
This
committee held four meetings during fiscal year 2006. 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 our Audit Committee financial expert
within the meaning of Securities and Exchange Commission 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 qualified
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
Committee
The
Nominating Committee is responsible for advising the Board of Directors on
appropriate composition of the board and its committees, evaluating potential
director nominees and nominating directors for election, approving the
compensation for non-employee directors, advising the Board of Directors on
corporate governance practices and overseeing new director orientation and
the
annual review of the performance of the Board of Directors. The Nominating
Committee was created by resolution of the Board of Directors and does not
have
a formal charter.
This
committee held no meetings and did not act by unanimous written consent during
fiscal year 2006. The members of the Nominating Committee are David S. Lundeen
and Max D. Hopper.
The
Nominating 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 Committee will establish
criteria for selecting new director nominees and will determine each proposed
nominee's qualifications for service on the Board of Directors. 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
this paragraph. 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 corporation. 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 corporation 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 under the 1934 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 forwarded directly to the
designated director or directors and may be made anonymously.
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, Johnsen and Lundeen,
with
Mr. Lundeen serving as Chairman. None of these committee members was an officer
or employee of our company or any of our subsidiaries at any time during fiscal
2006 or at any other time. None of our executive officers served on the board
of
directors of any company of which one of our directors was an executive officer.
The
Committee makes all compensation decisions for 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 exercise discretion in accepting,
modifying, or disregarding compensation recommendations.
Executive
Compensation Objectives and Elements of Compensation
During
2006, we awarded varying types of compensation to our named executive officers
set forth in the “Summary Compensation Table” at page 10, who are the CEO, COO,
Chief Financial Officer (“CFO”), Vice President of Strategic Finance (former
CFO), Vice President of Finance and Administration (“VP-Finance &
Administration”), and the Vice President of Client Development (“VP-Client
Development”). The objectives of our compensation programs are:
|
·
|
To
recruit and retain the top management available to support our 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.
|
Our
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 our clients 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 closely with our
shareholders’ interest. 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, health and disability insurance
benefits,
and a qualified savings plan (401(k));
|
|
·
|
Limited
perquisites; and
|
|
·
|
Upon
termination or a change in control, severance and accelerated 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. Salary is the only guaranteed
portion of the compensation items listed, however, because bonus targets
established by the Compensation Committee have been met, bonus has been paid
to
our key executive officers in each of the last three years (while employed
by
the Company). Equity based awards are determined based on a compensation
benchmarking analysis performed by a third party. Awards are approved by the
Compensation Committee when an additional incentive or reward is determined
by
the Compensation Committee to be advisable.
Base
Salary
Our
named
executive officers are offered a competitive salary in order to retain their
services and to also reward their performance with the Company. For both the
CEO
and COO, salary is predetermined as part of a written employment agreement
that
has been approved by the Compensation Committee. For 2006, both the CEO and
COO
received a base salary of $250,000. Effective April 1, 2007, the Compensation
Committee changed the structure of executive compensation for these two officers
by eliminating perquisites and increasing base salary to $285,000. The base
salary of our other executive officers is recommended by the CEO and approved
by
the Compensation Committee. See further detail of annual base salary at the
“Summary Compensation Table” on page 10.
Several
factors are considered by the Compensation Committee when determining and
approving an employment agreement or arrangement. These include the executive
officer’s performance relevant to the Company’s goals and objectives, for
example, the Company’s financial performance and relative shareholder return.
For newly hired executives, the individual’s relevant experience is considered.
The
Compensation Committee also utilized the analysis of an independent compensation
consultant to determine if the Company’s executive officer compensation,
including base salary, is 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 $185 million and
average market capitalization of $566 million (“external market”). The following
companies were included in the peer group: Computer Programs & Systems,
Inc., Secure Computing Corporation, Advent Software, Inc., Synaptics,
Incorporated, QuadraMed Corporation, EPIQ Systems, Inc., Computer Task Group,
Inc., iGATE Corporation, Kanbay International, Inc., 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
analysis showed that the Company’s executive officers have a base salary that is
approximately 80% of the external market midpoint. The Compensation Committee
uses this report as verification that the base salary is 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
We
award
our named executive officers, excluding our VP-Client Development, 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 Cash
Earnings Per Share (“CEPS”) 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. CEPS is a performance measure defined as
net income plus amortization of intangibles and stock compensation, 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”). In 2006, the bonus payments were contingent upon realization of fully
diluted CEPS and GAAP EPS of at least $0.508 and $0.336, respectively, for
the
year. These targets were reassessed by the Compensation Committee after any
significant transaction of the Company, such as an acquisition, and can be
changed if the Compensation Committee deems it necessary. The CEO and COO bonus,
as discussed in their respective employment agreements with the Company, can
be
up to 200% of Base Salary, plus additional amounts if approved by the
Compensation Committee. The form and structure of bonuses paid to these or
other
executive officers must be approved by the Compensation Committee. See detail
of
annual bonus payments at the “Summary Compensation Table” on page 10. 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
Compensation Committee also utilized the analysis of an independent compensation
consultant to determine if the Company’s executive officer compensation,
including bonus payments, compared to its peers and a market average (see
discussion above under “Base Salary” for further discussion). The Company’s
annual incentive targets were assessed on the basis of total cash, including
base salary and annual incentive payments. The analysis showed that the
Company’s executive officers receive total cash (including annual incentive
bonus payments) that is approximately 96% of the external market
midpoint.
In
January 2007, the Compensation Committee established the targets for the named
executive officers, excluding the VP-Client Development, as part of the 2007
Executive Officers Bonus Plan. The table below lists the 2007 target bonus
awards as a percent of base salary for our named executive
officers:
|
Target
Bonus
Percentage
|
Maximum
Bonus
Percentage
|
CEO
|
200%
|
300%
|
COO
|
200%
|
300%
|
CFO
|
60%
|
90%
|
VP-Finance
& Administration
|
30%
|
45%
|
The
named
executive officers above are eligible to receive their target bonus if the
following Cash and GAAP EPS targets are met or exceeded for 2007: $0.745 total
Cash EPS and $0.54 total GAAP EPS. The named executive officers may receive
up
to the maximum bonus percentage to the extent the Cash and GAAP EPS targets
are
exceeded up to 1.5 times the targets. The Compensation Committee has full
discretion to alter bonus amounts, even if the targets are met or exceeded.
In
order to meet these targets, the Company’s Cash 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.
Business
Development Executive Commission Plan
Our
VP-Client Development is not eligible for the Executive Bonus Plan; however,
he
participates in the Business Development Executive 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.
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 payments at the “Summary Compensation Table.”
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.
These
types of awards usually have a vesting period of four 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. However, some awards are granted with the potential for accelerated
vesting, dependent on specified performance targets and Compensation Committee
approval. In January 2007, the Compensation Committee approved accelerated
vesting of a portion of stock options and restricted stock awards granted in
December 2004 and 2005 due to the Company’s achievement of the performance
target. The performance target was defined in this particular grant agreement
as
when and if the Company’s trailing four quarters of revenue exceeds $150 million
in aggregate by December 15, 2007 with target EBITDA margins equal to or greater
than 15%. After attainment of this performance target and approval by the
Compensation Committee, vesting was accelerated to a seven year straight-line
vesting schedule instead of the original seven-year back-loaded vesting schedule
described in the award agreement. Award amounts and the timing of grants are
based on the Compensation Committee’s review of the third party analysis
discussed below.
The
Compensation Committee also utilized the analysis of an independent compensation
consultant to determine if the Company’s executive officer compensation,
including long-term incentives like share-based payments, compared to its peers
and a market average (see discussion under “Base Salary” for definition of these
terms). The analysis showed that the Company’s executive officers receive
greater long-term incentives like equity-based awards compared to its peers
and
the market midpoint, which is consistent in pay for companies that significantly
outperform their peers. Specifically, the overall long-term incentive value
provided to Company executives was approximately 220% of the external market
midpoint. This result is closely aligned with the Company’s goals of rewarding
the creation of value and high performance with variable compensation dependent
on that performance.
Company
Sponsored Benefit Plans
We
provide named executive officers with primarily the same company sponsored
health, welfare, and retirement benefits as all other employees, including
life,
health and disability insurance benefits, and a tax qualified retirement savings
plan. The Company provides all employees with basic life insurance in the amount
of two times annual salary with a $100,000 minimum benefit and up to a maximum
benefit of $400,000. In addition to this life insurance benefit, 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. We also provide a
short-term and a long-term disability benefit to all employees, including our
named executive officers, at no cost for 60% of base salary for up to 90
days.
Our
401(k) Employee Savings Plan is a tax-qualified retirement savings plan to
which
all employees, including the named officers, are able to contribute from 1%
to
25% of their annual salary on a before-tax basis, up to the limits established
by the Internal Revenue Code (the “Code”). The Company matches 25% of
contributions up to 6% of salary. Employee contributions to the 401(k) Employee
Savings Plan are vested upon contribution and Company matching funds are vested
after 3 years of service.
Attributed
costs of the these benefits described above for the named executive officers
for
the year ended December 31, 2006, are included in the “All Other Compensation”
column of the “Summary Compensation Table” on page 10.
Limited
Perquisites
For
the
year ended December 31, 2006, we provided certain perquisites to our CEO, COO
and VP-Client Development including an allowance to pay for an automobile used
for personal benefit and reimbursement of organization and club dues. Our CEO
also receives the use of administrative assistant services for personal matters.
Effective April 1, 2007, the Compensation Committee changed the structure of
executive compensation for these officers by eliminating these perquisites
and
increasing base salary $35,000 per year.
Attributed
costs of the these benefits described above for the named executive officers
for
the year ended December 31, 2006, are included in the “All Other Compensation”
column of the “Summary Compensation Table” on page 10.
Severance
Benefits
We
have
entered into employment agreements with our CEO, COO and current CFO, which
also
contain severance and change of control provisions. Although the employment
agreements provide for the accelerated vesting of equity upon a change in
control, additional payments under the agreements are only triggered upon
termination of employment. We believe termination and change in control
protection allows management to focus their attention and energy on our business
without any distractions regarding the effects of a change in 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 of the
specific benefits under the “Potential Payments upon Termination and/or Change
in Control” section on page 17.
Amendment
and Restatement of Employment Agreement After Fiscal Year
End
On
April
20, 2007, the Compensation Committee approved an amendment and restatement
of
our CEO’s employment agreement. See the description of the changes to the
employment agreement under the “Employment Agreements - Mr. McDonald” section on
page 11.
Separation
Agreement Entered Into After Fiscal Year End
In
January 2007, we entered into a separation agreement with Michael Hill, former
Chief Financial Officer. Under the agreement, Mr. Hill will continue to perform
his duties as an officer and employee of the Company until his employment is
terminated on May 16, 2007. The Company will continue to pay Mr. Hill his base
salary and benefits through the termination date. During the two month period
commencing immediately after the termination date, the Company will continue
to
pay Mr. Hill an amount equal to his base salary, as well as an amount equal
to
his COBRA health insurance premiums. Severance salary payments are expected
to
be approximately $20,000. In addition, the remaining unvested stock options
held
by Mr. Hill on the date of termination will immediately vest on that date,
subject to the satisfactory continued performance by Mr. Hill of his duties
to
the Company until the date of termination and final approval by the Compensation
Committee. All remaining unvested restricted stock outstanding on the date
of
termination will be forfeited to the Company.
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, our 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 shareholder value. For the
fiscal year ended December 31, 2006, the total compensation of our CEO and
COO
including their base salary, cash incentive bonus, and vesting of restricted
stock awards was in excess of $1,000,000. The amount of compensation in excess
of $1,000,000 was not deductible for income tax purposes.
To
ensure
the deductibility of our annual performance based cash bonuses to executives,
we
are seeking stockholder approval of our Omnibus Incentive Plan.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management and
based
on such review and discussions, has recommended to the Board of Directors that
the Compensation Discussion & Analysis be included in this Proxy Statement.
The
Compensation Committee
David
S.
Lundeen, Chariman
Max
D.
Hopper
Kenneth
R. Johnsen
SUMMARY
COMPENSATION TABLE
The
following table summarizes the total compensation paid or earned by each of
the
named executive officers for the fiscal year ended December 31, 2006, including
the Principal Executive Officer (“CEO”), the Principal Financial Officer
(“CFO”), our former Principal Financial Officer and the three other most highly
compensated executive officers based on total compensation:
|
|
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(2)
|
|
Stock
Awards ($)(3)
|
|
Stock
Options ($)(3)
|
|
Non-Equity
Incentive Plan Compensation ($)(4)
|
|
All
Other Compensation ($)(5)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
T. McDonald
|
|
|
2006
|
|
$
|
250,000
|
|
$
|
-
|
|
$
|
337,403
|
|
$
|
477,287
|
|
$
|
750,000
|
|
$
|
44,502
|
|
$
|
1,859,192
|
|
Chairman
of the Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin (1)
|
|
|
2006
|
|
$
|
71,667
|
|
$
|
48,375
|
|
$
|
47,800
|
|
$
|
-
|
|
$
|
48,375
|
|
$
|
-
|
|
$
|
216,217
|
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Hill (1)
|
|
|
2006
|
|
$
|
121,029
|
|
$
|
-
|
|
$
|
16,896
|
|
$
|
33,658
|
|
$
|
42,350
|
|
$
|
2,265
|
|
$
|
216,198
|
|
Former
CFO and Vice President - Strategic Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
2006
|
|
$
|
250,000
|
|
$
|
-
|
|
$
|
176,258
|
|
$
|
214,429
|
|
$
|
750,000
|
|
$
|
29,035
|
|
$
|
1,419,722
|
|
President
and COO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
2006
|
|
$
|
160,000
|
|
$
|
-
|
|
$
|
12,975
|
|
$
|
26,485
|
|
$
|
330,488
|
|
$
|
12,052
|
|
$
|
542,000
|
|
Vice
President - Client
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
|
|
2006
|
|
$
|
140,000
|
|
$
|
15,650
|
|
$
|
17,460
|
|
$
|
27,942
|
|
$
|
64,350
|
|
$
|
1,543
|
|
$
|
266,945
|
|
Vice
President - Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
&
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Mr.
Hill served as Perficient's Chief Financial Officer through August
20,
2006. On August 21, 2006, Mr. Martin took over as Chief Financial
Officer,
and Mr. Hill moved into the position of Vice President of Strategic
Finance. In January 2007, we entered into a separation agreement
with Mr.
Hill. Under the agreement, Mr. Hill will continue to perform his
duties as
an officer and employee of the Company until his employment is
terminated
on May 16, 2007.
|
|
(2) |
Amounts
listed represent discretionary bonuses awarded after fiscal year
end to
reward certain executives for favorable Company
performance.
|
|
(3) |
Amounts
listed represent the amount of expense recognized for financial
reporting
purposes in 2006 for 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 2006. Following 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 our consolidated financial statements
for 2006
included in our annual report on Form 10-K filed with the SEC on
March 5,
2007. No forfeitures of equity awards to the named executive officers
occurred in 2006.
|
|
(4) |
Amounts
are earned and accrued during the fiscal year indicated and paid
subsequent to the end of the fiscal year pursuant to our performance
based
Executive Bonus Plan, except Mr. Thompson, who earned and was paid
amounts
under the Business Development Executive Commission Plan throughout
2006.
|
|
(5) |
Components
of this column for Messrs. McDonald, Davis, and Thompson are described
within the "All Other Compensation" table on page 11. Only Mr.
McDonald,
Mr. Davis, and Mr. Thompson received perquisites and other compensation
that in the aggregate were greater than
$10,000.
|
|
ALL
OTHER COMPENSATION
|
Name
|
|
Year
|
|
401(k)
Retirement Savings Plan ($)
|
|
Car
Allowance ($)
|
|
Club
Dues ($)
|
|
Life
& Disability Insurance Premiums ($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
T. McDonald
|
|
|
2006
|
|
$
|
3,300
|
|
$
|
25,680
|
|
$
|
7,536
|
|
$
|
7,986
|
|
$
|
44,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
2006
|
|
$
|
3,300
|
|
$
|
15,703
|
|
$
|
3,327
|
|
$
|
6,705
|
|
$
|
29,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
2006
|
|
$
|
1,421
|
|
$
|
6,300
|
|
$
|
4,331
|
|
$
|
-
|
|
$
|
12,052
|
|
For
the
year ended December 31, 2006, base salary accounted for approximately 10-30%
and
incentive compensation accounted for approximately 70-80% of total compensation
for CEO, CFO, COO, and VP - Client Development. Benefits comprised an additional
1-2% of total compensation for the CEO, VP - Strategic Finance, COO, VP - Client
Development and VP - Finance & Administration. For the VP-Strategic Finance
and the VP-Finance & Administration, base salary was approximately 50-55% of
total compensation, while incentive compensation was approximately 40-45% of
total compensation. Benefits accounted for approximately 2% of total
compensation for the VP-Client Development. Perquisites and personal benefits
provided to the CFO, VP-Strategic Finance, and VP-Finance & Administration
were not greater than $10,000 in the aggregate and therefore were not disclosed
above in accordance with Item 402(c)(2)(ix)(A) of Regulation S-K.
Employment
Agreements
Mr.
McDonald
We
have
an employment agreement effective January 1, 2006 with Mr. McDonald which will
expire December 31, 2008. Mr. McDonald's employment agreement provides for
the
following compensation:
|
·
|
an
annual salary of $250,000;
|
|
·
|
an
annual performance bonus of up to 200% of Mr. McDonald's annual
salary in
the event we achieve certain performance targets approved by
our Board of
Directors (“Mr. McDonald’s Target Bonus”);
and
|
|
·
|
Death,
disability, severance, and change in control benefits described
below in
the section titled “Potential Payments upon Termination or Change in
Control.”
|
Mr. McDonald
has agreed to refrain from competing with us for a period of five years
following the termination of his employment. As indicated above, Mr. McDonald’s
employment agreement was amended and restated in April 2007. Effective April
1,
2007, the Compensation Committee increased the base salary for Mr. McDonald
to
$285,000.
On
April
20, 2007, the Compensation Committee approved an amendment and restatement
of
Mr. McDonald’s employment agreement as follows:
|
·
|
To
provide for the continued vesting of Mr. McDonald’s stock options and
restricted stock awards outstanding as of April 20, 2007, in the
event Mr.
McDonald’s employment status changes and he takes a leave of absence
approved by the Compensation Committee, or continues to serve as
an
officer or director of, or a consultant or advisor to the Company
(and to
further provide that such vesting will be accelerated if continued
vesting
would be prohibited by any applicable laws or
regulations).
|
|
·
|
To
provide that Mr. McDonald’s change in control severance benefits,
described in greater detail below, will be paid upon a change in
control
regardless of whether his employment is terminated in connection
therewith.
|
|
·
|
To
clarify that the severance and change in control benefits payable
to Mr.
McDonald under his employment agreement are in consideration of his
noncompetition covenants.
|
This
amendment and restatement initially resulted from the Company’s review of the
application of Sections 162(m), 280G, and 409A of the Code impacting the
Company’s executive compensation arrangements including Mr. McDonald’s
employment agreement. Pursuant to that review, the Company decided to provide
for payment of Mr. McDonald’s change in control benefits regardless of a
termination of employment to avoid the application of section 409A of the Code
with respect to Mr. McDonald’s change in control benefits and to clarify that
his change in control benefits will be paid in consideration for his agreement
not to compete with the Company for a period of five years following his
termination of employment.
In
addition, in its review the Company observed that a post-employment continued
vesting provision provided in Mr. McDonald’s prior employment agreement had been
inadvertently removed when Mr. McDonald entered into his current employment
agreement. Therefore, the Compensation Committee also provided in the amendment
and restatement for the continued vesting of Mr. McDonald’s equity awards
outstanding as of April 20, 2007. The Compensation Committee believes that
it is
appropriate to include this term in the employment agreement because during
such
period Mr. McDonald would continue to be subject to the noncompetition
provisions of his employment agreement. In addition, the Compensation Committee
believes that the relatively long vesting schedule of Mr. McDonald’s equity
awards should not result in the forfeiture of those awards in the event Mr.
McDonald’s status with the Company changes in circumstances where he either
continues to provide services to the Company in a non-employee capacity or
ceases to provide services during a leave of absence approved by the
Compensation Committee.
Mr.
Davis
We
have
an employment agreement effective July 1, 2006 with Mr. Davis which will expire
June 30, 2009. Mr. Davis’s employment agreement provides for the following
compensation:
|
·
|
an
annual salary of $250,000;
|
|
·
|
an
annual performance bonus of up to 200% of Mr. Davis’s annual salary in the
event we achieve certain performance targets (“Mr. Davis’s Target Bonus”);
and
|
|
·
|
death,
disability, severance, and change in control benefits described below
in
the section titled “Potential Payments upon Termination or Change in
Control.”
|
Mr.
Davis
has agreed to refrain from competing with us for a period of five years
following the termination of his employment. Effective April 1, 2007, the
Compensation Committee increased the base salary for Mr. Davis to $285,000.
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
We
have
an agreement evidenced by an offer letter with Mr. Martin effective July 20,
2006, which was further amended effective September 1, 2006. The offer letter,
as amended, provides for the following compensation:
|
·
|
an
annual salary of $215,000;
|
|
·
|
a
restricted stock grant of 50,000 shares of the Company’s common stock,
vesting over five years;
|
|
·
|
an
annual performance bonus of up to 40% of Mr. Martin’s base salary in the
event we achieve certain performance targets;
and
|
|
·
|
severance
and change in control benefits described below in the section titled
“Potential Payments upon Termination or Change in
Control.”
|
In
January 2007, the Compensation Committee increased Mr. Martin’s annual
performance bonus to up to 60% of his base salary. Mr. Martin’s compensation is
subject to review and adjustment on an annual basis in accordance with the
Company’s compensation policies as in effect from time to time.
GRANTS
OF PLAN-BASED AWARDS
The
following table details information previously discussed in the Compensation
Discussion and Analysis related to share-based awards granted to executive
officers during 2006:
|
GRANTS
OF PLAN-BASED AWARDS
|
|
|
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards (4)
|
|
All
Other Stock Awards: Number of Shares of Stock
|
|
Grant
Date Fair Value of Stock
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
(#)
|
|
Awards
($)(5)
|
|
John
T. McDonald (1)
|
|
|
12/21/2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
175,000
|
|
$
|
2,759,750
|
|
|
|
|
N/A
|
|
$
|
500,000
|
|
$
|
625,000
|
|
$
|
750,000
|
|
|
-
|
|
|
-
|
|
Paul
E. Martin (1,2,3)
|
|
|
8/29/2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
50,000
|
|
|
675,500
|
|
|
|
|
12/21/2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,987
|
|
|
315,195
|
|
|
|
|
N/A
|
|
|
129,000
|
|
|
161,250
|
|
|
193,500
|
|
|
-
|
|
|
-
|
|
Michael
D. Hill (2)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Jeffrey
S. Davis (1)
|
|
|
12/21/2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
175,000
|
|
|
2,759,750
|
|
|
|
|
N/A
|
|
|
500,000
|
|
|
625,000
|
|
|
750,000
|
|
|
-
|
|
|
-
|
|
Timothy
J. Thompson (1)
|
|
|
12/21/2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,500
|
|
|
55,195
|
|
Richard
T. Kalbfleish (1)
|
|
|
12/21/2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,532
|
|
|
103,010
|
|
|
|
|
N/A
|
|
|
42,900
|
|
|
53,625
|
|
|
64,350
|
|
|
-
|
|
|
-
|
|
|
(1) |
Mr.
McDonald, Mr. Martin, Mr. Davis, Mr. Kalbfleish, and Mr. Thompson
were
granted 175,000 shares, 19,987 shares, 175,000 shares, 6,532 shares,
and
3,500 shares of restricted stock, respectively, on December 21,
2006.
Twenty percent of the grant will vest on each anniversary of the
date of
grant through 2011.
|
|
(2) |
Mr.
Hill served as Perficient's Chief Financial Officer through August
20,
2006. On August 21, 2006, Mr. Martin took over as Chief Financial
Officer,
and Mr. Hill moved into the position of Vice President of Strategic
Finance.
|
|
(3) |
Mr.
Martin was granted 50,000 shares of restricted stock on August
29, 2006 in
connection with his employment, which began on August 21, 2006.
The grant
will vest as follows: 5% on the first anniversary of the date his
employment commenced, an additional 10% on the second anniversary
of his
employment date, an additional 25% on the third anniversary of
his
employment date, an additional 25% on the fourth anniversary of
his
employment date, and the final 35% on the fifth anniversary of
service.
Should Mr. Martin's employment cease other than for reasons outlined
in
his employment agreement, the remaining unvested shares will be
forfeited
to the Company.
|
|
(4) |
Bonus
amounts represent the amounts paid under the Executive Bonus Plan
for 2006
performance as discussed in the Compensation Discussion & Analysis.
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 10.
|
|
(5) |
Represents
the grant date fair value of the restricted shares granted for
purposes of
SFAS 123R. The grant date fair value is based on the per share
closing
price of our common stock on the date of grant which was $13.51
on August
29, 2006 and $15.77 on December 21, 2006. Dividends are payable
on shares
of restricted stock 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.
|
Please
see the description of the Company’s Executive Bonus Plan in the section of the
Compensation Discussion and Analysis titled “Performance Based Executive Bonus
Plan” for a description of the Cash EPS and GAAP EPS targets established for the
named executive officers with respect to the Company’s performance in
2006.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table presents (1) the number of unexercised options held by each
named executive officer at December 31, 2006 and (2) the number and payout
value
of unvested restricted stock awards at December 31, 2006 based on the per share
closing price of $16.41 of our common stock on December 29, 2006:
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
Stock
Options
|
|
Stock
Awards
|
|
|
|
Number
of Securities Underlying Unexercised Options (#)
|
|
Option
Exercise Price
|
|
Option
Expiration
|
|
Number
of Shares or Units of Stock That Have Not
|
|
Market
Value of Shares or Units of Stock That Have Not
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
Vested
(#)
|
|
Vested
($)
|
|
John
T. McDonald
|
|
|
5,679
|
|
|
-
|
|
$
|
1.150
|
|
|
6/25/2012
|
|
|
148,750
(2
|
)
|
$
|
2,440,988
|
|
|
|
|
36,356
|
|
|
-
|
|
|
1.250
|
|
|
9/21/2011
|
|
|
175,000
(3
|
)
|
|
2,871,750
|
|
|
|
|
63,000
|
|
|
-
|
|
|
1.250
|
|
|
1/1/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
225,000
|
|
|
75,000
(4
|
)
|
|
2.280
|
|
|
12/11/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
250,000
|
|
|
-
|
|
|
3.750
|
|
|
3/28/2011
|
|
|
-
|
|
|
-
|
|
|
|
|
60,000
|
|
|
340,000
(2
|
)
|
|
6.310
|
|
|
12/15/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
50,000
|
|
|
-
|
|
|
14.688
|
|
|
1/16/2010
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin (1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
50,000
(5
|
)
|
|
820,500
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,987
(3
|
)
|
|
327,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Hill (1)
|
|
|
9,875
|
|
|
15,625
(6
|
)
|
|
3.000
|
|
|
1/21/2014
|
|
|
9,551
(2
|
)
|
|
156,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
37,458
|
|
|
31,250
(4
|
)
|
|
2.280
|
|
|
12/11/2013
|
|
|
74,375
(2
|
)
|
|
1,220,494
|
|
|
|
|
30,000
|
|
|
170,000
(2
|
)
|
|
6.310
|
|
|
12/15/2014
|
|
|
175,000
(3
|
)
|
|
2,871,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
110,810
|
|
|
-
|
|
|
1.350
|
|
|
10/12/2011
|
|
|
7,163
(8
|
)
|
|
117,545
|
|
|
|
|
12,501
|
|
|
-
|
|
|
1.150
|
|
|
6/25/2012
|
|
|
3,500
(3
|
)
|
|
57,435
|
|
|
|
|
16,667
|
|
|
-
|
|
|
0.500
|
|
|
2/13/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
37,500
|
|
|
12,500
(4
|
)
|
|
2.280
|
|
|
12/11/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
|
|
10,000
|
|
|
10,000
(7
|
)
|
|
6.240
|
|
|
12/14/2014
|
|
|
9,551
(8
|
)
|
|
156,732
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,532
(3
|
)
|
|
107,190
|
|
|
(1) |
Mr.
Hill served as Perficient's Chief Financial Officer through August
20,
2006. On August 21, 2006, Mr. Martin took over as Chief Financial
Officer,
and Mr. Hill moved into the position of Vice President of Strategic
Finance.
|
|
(2) |
Fifteen
percent of the grant vested or became exercisable on December 15,
2006. In
January 2007, the Compensation Committee approved the accelerated
vesting
of these options and awards, whereby two-sevenths of the total
options or
restricted stock awards granted, to the extent unvested, vested
on January
1, 2007. The remainder will vest in annual installments (20% of
the grant
per year) beginning December 15,
2007.
|
|
(3) |
Twenty
percent of the grant will vest annually on December 21, beginning
in 2007.
|
|
(4) |
Twenty-five
percent of the grant was exercisable on December 11, 2004 and the
remainder is exercisable in annual installments over the subsequent
12
quarters.
|
|
(5) |
Five
percent of the grant will vest on August 21, 2007, an additional
10% will
vest on August 21, 2008, an additional 25% will vest on August
21, 2009
and August 21, 2010, and the final 35% will vest on August 21,
2011.
|
|
(6) |
Twenty-five
percent of the grant was exercisable on January 21, 2005 and the
remainder
is exercisable in annual installments over the subsequent 12 quarters.
|
|
(7) |
Twenty-five
percent of the grant was exercisable on November 29, 2005 and the
remainder is exercisable in annual installments over the subsequent
12
quarters.
|
|
(8) |
Fifteen
percent of the grant vested on December 15, 2006. In January 2007,
the
Compensation Committee approved the accelerated vesting of these
awards,
whereby one-sixth of the total options granted, to the extent unvested,
vested on January 15, 2007. The remainder will vest in annual installments
(20% of the grant per year) beginning December 15,
2007.
|
OPTION
EXERCISES AND STOCK VESTED
The
following table presents stock options exercised by, and stock awards vested
for, our named executive officers during 2006:
|
OPTION
EXERCISES AND STOCK VESTED
|
|
|
Stock
Options
|
|
Stock
Awards
|
|
Name
|
|
Number
of Shares Acquired on Exercise (#)
|
|
Value
Realized Upon Exercise ($)(2)
|
|
Number
of Shares Acquired on Vesting (#)
|
|
Value
Realized on Vesting ($)(3)
|
|
|
|
|
|
|
|
|
|
|
|
John
T. McDonald
|
|
|
464,360
|
|
$
|
6,464,386
|
|
|
26,250
|
|
$
|
451,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
E. Martin (1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Hill (1)
|
|
|
24,500
|
|
|
252,780
|
|
|
1,685
|
|
|
28,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Davis
|
|
|
242,791
|
|
|
2,599,612
|
|
|
13,125
|
|
|
225,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
J. Thompson
|
|
|
-
|
|
|
-
|
|
|
1,264
|
|
|
21,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Kalbfleish
|
|
|
-
|
|
|
-
|
|
|
1,685
|
|
|
28,982
|
|
|
(1) |
Mr.
Hill served as Perficient's Chief Financial Officer through August
20,
2006. On August 21, 2006, Mr. Martin took over as Chief Financial
Officer,
and Mr. Hill moved into the position of Vice President of Strategic
Finance.
|
|
(2) |
Calculated
as the aggregate market value of the shares received upon exercise
on the
exercise date net of the aggregate exercise
price.
|
|
(3) |
Calculated
as the aggregate market value of the shares vesting on the vesting
date,
December 15, 2006.
|
Potential
Payments upon Termination or Change in 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
in control.
Mr.
McDonald
Mr.
McDonald’s employment agreement provides for the following death,
disability, severance, and change in 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;
|
|
·
|
acceleration
of option and restricted stock vesting, and welfare benefits and
the use
of his office and administrative assistance for 24 months as well
as
severance 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, if Mr. McDonald is terminated without cause;
and
|
|
·
|
severance
benefits, accelerated vesting and continued welfare benefits and
office
use as specified above if Mr. McDonald's employment is terminated
for any
reason at any time within the two year period following a change
in
control (which provision was amended in April 2007 to provide for
immediate payment upon a change in control regardless of termination
of
employment).
|
In
the
event that any payment or benefit received by Mr. McDonald in
connection with a change in control would constitute an “excess parachute
payment”
subject
to an excise tax (a
“4999
Excise Tax”),
the
Company will pay him a “gross up payment” intended to provide him with a net
payment, after payment of all 4999 Excise Taxes and all taxes on the “gross up
payment,” equal to what he would have received under his employment agreement
had no 4999 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 4999 Excise Taxes owed.
Mr.
Davis
Mr.
Davis’s employment agreement provides for the following death,
disability, severance, and change in 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 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 if Mr. Davis
is
terminated without cause;
|
|
·
|
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 within 30 days after
the
appointment of a new Chief Executive Officer prior to a change in
control;
|
|
·
|
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
in
control; and
|
|
·
|
severance
benefits 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 if Mr. Davis’s
employment is terminated without cause at any time following a change
in
control.
|
To
the
extent payments and benefits to Mr. Davis in connection with a change in control
would constitute “excess parachute payments” for purposes of Section 280G of the
Code
subject
to 4999 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 4999 Excise Taxes.
Mr.
Martin
Mr.
Martin’s employment agreement provides for the following severance,
and change in control benefits:
|
·
|
severance
benefits equal to six month’s annual salary if Mr. Martin is terminated
without cause or resigns with good reason after 270 days of service
with
the Company, with such benefits increasing to one-year’s annual salary
after 450 days of service;
|
|
·
|
immediate
vesting of 50% of all unvested restricted stock grants previously
awarded
to Mr. Martin upon the occurrence of a change in control;
and
|
|
·
|
severance
benefits if Mr. Martin is terminated without cause within the first
year
after a change of control equal to (i) six month’s annual salary if the
change of control occurs within the first 270 days of Mr. Martin’s service
with the Company or (ii) one year’s annual salary if the change of control
occurs thereafter, and immediate vesting of all remaining unvested
restricted stock previously awarded to Mr. Martin.
|
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 or Change in 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, 2006. For purposes of determining Mr. McDonald’s tax
gross up payment it is assumed that no amounts payable to him in connection
with
a change in control described above will be treated as attributable to
reasonable compensation and no value will be attributed to his executing a
non-compete agreement. 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 in control actually
occurs.
|
|
POTENTIAL
PAYMENTS UPON TERMINATION AND/OR CHANGE IN
CONTROL
|
Name
|
|
Year
|
|
Severance
|
|
Accelerated
Restricted Stock Vesting (1)
|
|
Accelerated
Stock Option Vesting (2)
|
|
Continuation
of Benefits (3)
|
|
Tax
Gross-up Payment
|
|
Total
|
|
John
T. McDonald (4)
|
|
|
2006
|
|
$
|
1,500,000
|
|
$
|
5,345,558
|
|
$
|
4,493,750
|
|
$
|
47,574
|
|
$
|
3,481,805
|
|
$
|
14,868,687
|
|
Paul
E. Martin (5)
|
|
|
2006
|
|
|
107,500
|
|
|
1,148,492
|
|
|
-
|
|
|
12,044
|
|
|
-
|
|
|
1,268,036
|
|
Paul
E. Martin (6)
|
|
|
2007
|
|
|
215,000
|
|
|
1,148,492
|
|
|
-
|
|
|
24,087
|
|
|
-
|
|
|
1,387,579
|
|
Jeffrey
S. Davis (7)
|
|
|
2006
|
|
|
750,000
|
|
|
4,092,244
|
|
|
2,158,563
|
|
|
24,087
|
|
|
-
|
|
|
7,024,894
|
|
Timothy
J. Thompson
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Richard
T. Kalbfleish
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1) |
Calculated
as the closing market price per share of our common stock on December
29,
2006 for the total number of restricted shares
accelerated.
|
|
(2) |
Calculated
as the closing market price per share of our common stock on December
29,
2006 less the option price per share for the total number of options
accelerated.
|
|
(3) |
Represents
the estimated present value of all future payments of benefits
which would
be paid to 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.
|
|
(4) |
Upon
a without cause termination or an involuntary or voluntary termination
during the two years following a change in control, 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. No compensation is provided if Mr. McDonald voluntarily terminates
or terminates for cause, except unpaid salary and bonus earned
through the
termination date. As indicated above, in April 2007 the Company
amended
Mr. McDonald’s employment agreement to provide for these payments upon a
change in control regardless of whether Mr. McDonald’s employment is
terminated during the two years following the change in
control.
|
|
(5) |
Upon
the occurrence of a change in control, 50% of Mr. Martin's unvested
restricted stock would immediately vest, amounting to $574,246
in
compensation utilizing the assumptions discussed above. If Mr.
Martin is
terminated without cause within the first year after a change of
control
and within the first 270 days of Mr. Martin's service with the
Company, he
will receive each of the payments and benefits listed in the table
above
for 2006. Upon a without cause termination, for cause termination,
or
voluntary termination at December 31, 2006, Mr. Martin would receive
no
compensation except his unpaid salary and bonus earned through
the
termination date.
|
|
(6) |
If
the termination without cause within the first year after a change
of
control is after the first 270 days of Mr. Martin's service with
the
Company, he will receive each of the payments and benefits listed
in the
table above for 2007.
|
|
(7) |
Upon
a without cause termination, or a without cause termination following
a
change in 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. Upon the occurrence
of a
constructive termination, Mr. Davis would receive the severance
payment
and the continuance of benefits listed in the table above. If a
change in
control were to occur, 50% of Mr. Davis's unvested stock options
and
restricted stock would immediately vest, amounting to $3,125,404
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 stock-based incentive compensation to
attract and retain qualified candidates to serve on the Board. In setting
director compensation, the Company considers the significant amount of time
that
Directors expend in fulfilling their duties to the Company as well as the
skill-level required by the Company of members of the Board.
The
director compensation plan was amended by the Compensation Committee in November
2006. It provides for the following:
|
·
|
Each
new Non-Employee Director of the Board will receive 1,950 shares
of
restricted stock which shall vest and become nonforfeitable in twelve
equal quarterly installments beginning on the first quarterly anniversary
of the date of grant;
|
|
·
|
On
the date of each Annual Stockholders Meeting, each member of the
Board who
is continuing as a Non-Employee Director, whether or not that member
is
standing for re-election, will receive 650 shares of restricted stock
vesting quarterly over one year;
|
|
·
|
On
the date of each Annual Stockholders Meeting, the Chairman of the
Audit
Committee will receive 650 shares of restricted stock vesting quarterly
over one year;
|
|
·
|
On
the date of each Annual Stockholders Meeting, each Non-Employee Director
serving on a committee will receive 650 shares of restricted stock
vesting
quarterly over one year with respect to each committee on which the
Non-Employee Director continues to serve as a committee member;
|
|
·
|
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;
|
|
·
|
Each
Non-Employee
Director serving on the Audit Committee will receive $1,250 for each
meeting of the Audit Committee attended in person or $750 if attended
telephonically;
|
|
·
|
Each
Non-Employee
Director serving on the Compensation Committee will receive $1,000
for
each meeting of the Compensation Committee attended in person or
$500 if
attended telephonically;
|
|
·
|
Each
Non-Employee
Director serving on the Nominating Committee will receive $500 for
each
meeting of the Nominating Committee attended in person or $250 if
attended
telephonically;
|
|
·
|
The
Non-Employee
Director serving as chairman of the Audit Committee will receive
an
additional $5,000 quarterly; and
|
|
·
|
The
Non-Employee
Director serving as chairman of the Compensation Committee will receive
an
additional $2,500 quarterly.
|
The
following table provides information relating to total compensation amounts
paid
to Non-Employee Directors in 2006:
|
|
DIRECTOR
COMPENSATION
|
Name
(1)
|
|
Fees
Earned or Paid in Cash ($)
|
|
Stock
Awards ($)(2)(3)
|
|
Option
Awards ($)(3)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
Ralph
C. Derrickson (4)
|
|
$
|
9,000
|
|
$
|
3,304
|
|
$
|
13,712
|
|
$
|
26,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Max
D. Hopper (5)
|
|
$
|
11,250
|
|
$
|
6,609
|
|
$
|
-
|
|
$
|
17,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
R. Johnsen (6)
|
|
$
|
5,500
|
|
$
|
3,304
|
|
$
|
13,712
|
|
$
|
22,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
S. Lundeen (7)
|
|
$
|
41,750
|
|
$
|
8,261
|
|
$
|
-
|
|
$
|
50,011
|
|
|
(1) |
John
T. McDonald, the Company's CEO and Chairman of the Board, is not
included
in this table since he is an employee and thus receives no compensation
for his service as a Director. Mr. McDonald's compensation as an
employee
of the Company is shown in the "Summary Compensation Table" on
page
10.
|
|
(2) |
Restricted
stock awards were awarded to Non-Employee Directors on November
16, 2006.
Mr. Derrickson and Mr. Johnsen received 1,300 shares of restricted
stock
each with a total fair value of $24,232 on the award date, Mr.
Hopper
received 2,600 shares of restricted stock with a total fair value
of
$48,464 on the award date, and Mr. Lundeen received 3,250 shares
of
restricted stock with a total fair value of $60,580 on the award
date. The
grant date fair value of the restricted stock awards was based
on the
closing price of our common stock on the grant date of $18.64.
Dividends
are payable on shares of restricted stock 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.
|
|
(3) |
Amounts
listed represent the amount of expense recognized for financial
reporting
purposes in 2006 for 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 2006. Following 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 our consolidated financial statements
for 2006
included in our annual report on Form 10-K filed with the SEC on
March 5,
2007. No forfeitures of equity awards to the named executive officers
occurred in 2006.
|
|
(4) |
As
of December 31, 2006, Mr. Derrickson had 30,000 option awards outstanding,
of which 3,750 were not vested. These awards range in exercise
price from
$3.17 to $9.19. Mr. Derrickson had 1,300 shares of unvested restricted
stock outstanding as of December 31, 2006 with a market value of
$21,333,
based on the closing price of our common stock of $16.41 on December
29,
2006.
|
|
(5) |
As
of December 31, 2006, 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 2,600 shares of unvested restricted stock
outstanding as of December 31, 2006 with a market value of $42,666,
based
on the closing price of our common stock of $16.41 on December
29, 2006.
|
|
(6) |
As
of December 31, 2006, Mr. Johnsen had 17,500 option awards outstanding,
of
which 3,750 were not vested. These awards range in exercise price
from
$3.17 to $9.19. Mr. Johnsen had 1,300 shares of unvested restricted
stock
outstanding as of December 31, 2006 with a market value of $21,333,
based
on the closing price of our common stock of $16.41 on December
29,
2006.
|
|
(7) |
As
of December 31, 2006, Mr. Lundeen had 25,000 option awards outstanding
which were all vested. These awards have an exercise price of $9.19.
Mr.
Lundeen had 3,250 shares of unvested restricted stock outstanding
as of
December 31, 2006 with a market value of $53,333, based on the
closing
price of our common stock of $16.41 on December 29,
2006.
|
SECURITY
OWNERSHIP
Security
Ownership of Directors and Executive Officers
The
following table sets forth the beneficial ownership of our Common Stock as
of
March 30, 2007 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)
|
1,227,735
|
4.3%
|
Paul
E. Martin, CFO
|
69,987
|
0.3%
|
Michael
D. Hill, Former CFO and Vice President - Strategic Finance
(4)
|
19,785
|
0.1%
|
Jeffrey
S. Davis, President and COO (5)
|
300,375
|
1.1%
|
Timothy
J. Thompson, Vice President - Client Development (6)
|
229,522
|
0.8%
|
Richard
T. Kalbfleish, Vice President - Finance and
Administration(7)
|
29,018
|
0.1%
|
David
S. Lundeen, Director (8)
|
329,736
|
1.2%
|
Max
D. Hopper, Director (9)
|
57,600
|
*
|
Kenneth
R. Johnsen, Director (10)
|
16,300
|
*
|
Ralph
C. Derrickson, Director (11)
|
28,800
|
*
|
Directors
and officers as a group
|
2,308,858
|
8.3%
|
|
(1) |
Represents
our only class of voting common
stock.
|
|
(2) |
The
percentage of Common Stock owned is based on total shares outstanding
of
27,661,622 as of March 30, 2007, and including for each named executive
officer the shares of common stock issuable upon the exercise of
options
issued to such executive officer and exercisable within 60 days
of the
date hereof.
|
|
(3) |
Includes
685,399 shares of common stock issuable upon the exercise of options.
Does
not include options to purchase 415,001 shares of common stock
that are
not exercisable within 60 days of the date hereof. Mr. McDonald's
total
share ownership, including options that are not exercisable within
60
days of the date hereof, is
1,642,736.
|
|
(4) |
Includes
9,000 shares of common stock issuable upon the exercise of
options.
|
|
(5) |
Includes
12,142 shares of common stock issuable upon the exercise of options.
Does
not include options to purchase 174,108 shares of common stock
that are not exercisable within 60 days of the date hereof. Mr.
Davis’s
total share ownership, including options that are not exercisable
within
60
days of the date hereof, is
474,483.
|
|
(6) |
Includes
177,468 shares of common stock issuable upon the exercise of options.
|
|
(7) |
Includes
11,250 shares of common stock issuable upon the exercise of
options.
|
|
(8) |
Includes
125,000 shares of common stock issuable upon the exercise of
options.
|
|
(9) |
Includes
55,000 shares of common stock issuable upon the exercise of
options.
|
|
(10) |
Includes
15,000 shares of common stock issuable upon the exercise of
options.
|
|
(11) |
Includes
27,500 shares of common stock issuable upon the exercise of
options.
|
|
* |
Represents
less than 1% of the Company’s common stock outstanding as of March 30,
2007.
|
Security
Ownership of Certain Beneficial Owners
The
following table sets forth information for each entity that, to the knowledge
of
the Company, beneficially owned more than five percent (5%) of the Company’s
common stock as of March 30, 2007:
|
|
|
|
|
|
Name
and Address of Beneficial Owner
|
|
Amount
and Nature of Shares Beneficially Owned
|
|
Percent
of Class
|
|
Robert
H. Drysdale
P.O.
Box 3911
Incline
Village, NV 89450
|
|
|
1,680,676
|
|
|
6.1%
|
|
Equity
Compensation Plan Information
The
following table provides information with respect to the equity securities
that
are authorized for issuance under our compensation plans as of December 31,
2006:
|
|
|
|
|
|
|
|
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)
|
|
|
3,367,521
|
|
$
|
3.99
|
|
|
1,571,625
|
|
Equity-Compensation
Plans Not Approved by Security Holders (2)(3)
|
|
|
192,648
|
|
$
|
4.61
|
|
|
--
|
|
TOTAL
|
|
|
3,560,169
|
|
$
|
4.03
|
|
|
1,571,625
|
|
|
(1) |
Represents
shares issuable from the 9,189,063 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 our automatic share
increase
program, 1,000,000 additional shares were authorized for issuance
under
the Plan as of January 1, 2007. Also includes 500,000 shares reserved
for
issuance under the Perficient, Inc. Employee Stock Purchase Plan,
which
was approved by stockholders on November 17, 2005 Annual
Meeting.
|
|
(2) |
In
connection with our acquisition of Javelin Solutions, Inc. and
our
acquisition of Primary Webworks, Inc. d/b/a Vertecon, Inc., we
assumed
Javelin's stock option plan and Vertecon's stock option plan and
all the
outstanding options thereunder. Each outstanding option under the
Javelin
plan and the Vertecon plan was converted into an option to purchase
our
Common Stock. No future awards may be made under the respective
plans.
These amounts include (i) options to purchase approximately 38,356
shares
of our Common Stock exercisable for a weighted-average exercise
price of
$1.23 per share issued in connection with our assumption of the
Javelin
plan and (ii) options to purchase approximately 15,582 shares of
our
Common Stock exercisable for a weighted-average exercise price
of $4.40
per share issued in connection with our assumption of the Vertecon
plan.
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.
|
|
(3) |
The
amounts include options to purchase 32,136 shares of our Common
Stock with
an exercise price of $16.94 per share, options to purchase 67,875
shares
of our Common Stock with an exercise price of $3.36 per share,
and options
to purchase 38,699 shares of our Common Stock with an exercise
price of
$0.02 per share that were issues to certain employees of Compete,
Inc. and
assumed in connection with our May 2000 acquisition of Compete,
Inc. 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.
|
PROPOSAL
2. ADOPTION OF THE OMNIBUS INCENTIVE PLAN
Background
of the Incentive Plan
The
Board
of Directors has recommended, subject to stockholder approval, the approval
and
adoption of the Perficient, Inc. Omnibus Incentive Plan (the “Incentive Plan”).
The material features of the Incentive Plan are described below. The purposes
of
the Incentive Plan are to attract and retain able persons as employees and
provide such employees with incentive and reward opportunities designed to
enhance our profitable growth. The Incentive Plan is further intended to provide
us with flexibility to motivate the employees and officers upon whose judgment,
interest and special effort the successful conduct of our operation is largely
dependent. We will seek to achieve the Incentive Plan’s purposes by providing
grants of (i) performance awards (“Performance Awards”) (ii) annual incentive
awards (“Annual Incentive Awards”), (iii) discretionary awards (“Discretionary
Awards”) or (iv) a combination of such awards (collectively referred to as
“Awards”). Awards under the Incentive Plan may be paid in cash or in shares of
our common stock. Any shares of our common stock used to settle Awards will
be
issued under the 1999 Stock Option/Stock Issuance Plan (“1999 Plan”) and will
count against the maximum number of shares that may be issued under section
1.5(b) of the 1999 Plan. If approved, the Incentive Plan will be effective
as of
January 1, 2007 (the “Effective Date”).
Reasons
for Seeking Approval of the Incentive Plan
We
are
requesting that stockholders ratify the adoption of the Incentive Plan so that
Awards under the Incentive Plan which are intended to qualify as “performance
based compensation” within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “Code”) will be fully deductible by us. Under
Section 162(m) of the Code, the federal income tax deductibility of compensation
paid to our Chief Executive Officer and our four other most highly compensated
executive officers (“Covered Employees”) may be limited to the extent such
compensation exceeds $1,000,000 in any one year. However, we may deduct
compensation paid to our Covered Employees in excess of that amount if it
qualifies as “performance-based compensation” as defined in Section 162(m). We
intend that Annual Incentive Awards and Performance Awards made pursuant to
the
Incentive Plan will qualify for exemption from the deduction limitations of
Section 162(m) of the Code. Accordingly, we are asking our stockholders to
approve the Incentive Plan so that Performance Awards and Annual Incentive
Awards under the Incentive Plan which are intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code will be fully deductible by us. We do not intend that Discretionary Awards
under the Plan qualify as “performance-based compensation” under Section 162(m)
of the Code. No Discretionary Award will be granted to a Covered Employee in
order to increase the amount of Annual Incentive Award or Performance Award
that
would have been paid had the applicable performance targets been met. Rather,
any Discretionary Award granted to a Covered Employee will be independent from
any Annual Incentive Award or Performance Award that may have also been granted
to such Covered Employee and payment of the Discretionary Award will be
conditioned on the terms and conditions of such Discretionary
Award.
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 the Annual
Incentive Awards granted with respect to our 2007 performance described below
will not be paid. 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 Covered Employees and such compensation may not be fully
deductible due to the limitations of Section 162(m) of the Code.
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. However, the Compensation Committee has
established performance goals with respect to Annual Incentive Awards for 2007.
If all of the goals are attained the currently estimated maximum amount payable
pursuant to those Annual Incentive Awards based upon current base salaries
of
the participants is set forth in the following table.
Name
and Principal Position
|
Maximum
Dollar Amount Payable Upon Attainment of 2007 Performance
Goals
|
|
|
John
T. McDonald
|
$855,000
|
Chairman
and Chief Executive Officer
|
|
|
|
Jeffrey
S. Davis
|
$855,000
|
President
and Chief Operating Officer
|
|
|
|
Paul
E. Martin
|
$193,500
|
Chief
Financial Officer
|
|
|
|
Timothy
J. Thompson
|
$0
|
Vice
President of Client Development
|
|
|
|
Richard
T. Kalbfleish
|
$64,350
|
Controller,
Vice President of Finance and Administration
|
|
|
|
All
Executives as a Group
|
$1,967,850
|
Non-Executive
Director Group
|
$0
|
Non-Executive
Officer Employee Group
|
$5,332,150
|
|
|
Total
|
$7,300,000
|
Summary
of the Material Terms of the Incentive Plan
The
following summary describes the principal features of the Incentive Plan.
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 Securities Exchange Act of 1934 (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 of such Awards (measured in cash,
shares of our common stock, or as otherwise designated), 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.
Eligibility
to Participate
All
employees and all of our officers and the officers of our subsidiaries or parent
(each an “Eligible Person”) are eligible to participate in and receive awards
under the Incentive Plan. As of March 30, 2007, there are approximately 875
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.
Authorized
Awards
Performance
Awards.
The
Compensation Committee may designate that certain Awards granted under the
Incentive Plan constitute Performance Awards. A Performance Award is a
conditional Award to receive after the end of a specified fiscal year or other
period specified by the Compensation Committee a cash payment, shares of our
common stock or other property determined by the Compensation Committee based
upon one or more performance goals. The achievement of performance goals in
respect of Performance Awards will be measured over a performance period of
up
to five years, as specified by the Compensation Committee.
Annual
Incentive Awards.
The
Compensation Committee may designate that certain Awards granted under the
Incentive Plan constitute Annual Incentive Awards. An Annual Incentive Award
is
a conditional Award to receive after the end of a specified fiscal year or
other
twelve (12) month period specified by the Compensation Committee a cash payment,
shares of our common stock or other property determined by the Compensation
Committee based upon one or more performance goals.
Discretionary
Awards.
The
Compensation Committee may designate that certain Awards granted under the
Incentive Plan constitute Discretionary Awards. Discretionary Awards shall
be
subject to such terms and conditions as the Compensation Committee determines,
including the performance goals set forth below. Discretionary Awards are not
intended to qualify as “performance-based compensation” for purposes of Section
162(m) of the Code, but such Awards will be subject to the maximum limit on
Plan
Awards set forth below.
Performance
Goals.
The
performance goals for Performance Awards and Annual Incentive Awards will
consist of one or more of the following business criteria applicable to us
on a
consolidated basis and/or (excluding total stockholder return and earnings
per
share criteria) for specified subsidiaries or business or geographical units:
(i) earnings per share (including cash earnings per share and GAAP earnings
per
share); (ii) increase in revenues; (iii) increase in cash flow; (iv) increase
in
cash flow return; (v) return on net assets, return on assets, return on
investment, return on capital, or return on equity; (vi) economic value added;
(vii) operating margin or contribution margin; (viii) net income; net income
per
share; pretax earnings; pretax earnings before interest, depreciation and
amortization; pretax operating earnings after interest expense and before
incentives, service fees, and extraordinary or special items; or operating
income; (ix) total stockholder return; (x) debt reduction; and (xi) any of
the
above or similar goals determined on an absolute or relative basis or as
compared to the performance of a published or special index deemed applicable
by
the Compensation Committee including, but not limited to, the Standard &
Poor’s 500 Stock Index or a group of comparable companies, including the group
selected by us for purposes of the stock performance graph contained in this
proxy statement. Cash earnings per share is
a
performance measure defined as net income plus amortization of intangibles
and
stock compensation, 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”).
Adjustment
Due to Material Changes.
At the
time the performance goals are set with respect to Performance Awards and Annual
Incentive Awards, such goals will specify the extent to which acquisitions,
dispositions and equity financings will modify the determination of whether
such
performance goals have been met for the applicable performance period. The
Committee may, also, to the extent permitted by Section 162(m) of the Code,
adjust the performance goals based on objective criteria in the event of any
extraordinary gain or loss or other event that is treated for accounting
purposes as an extraordinary item under generally accepted accounting
principles, or any material change in accounting policies or practices affecting
the Company and/or the performance goals, if the event was not anticipated
at
the time the performance goals were established to neutralize the effect of
the
event on the applicable Award.
Settlement
of Awards.
Performance Awards and Annual Incentive Awards will be settled (i.e.,
paid)
after the end of each performance period and calculation of the amount of the
Awards (including, to the extent applicable, the certification of the attainment
of such Awards for Covered Employees, as described below) based on the
attainment of the applicable performance goals. Discretionary Awards will be
settled (paid) upon satisfaction of the conditions in such awards. Settlement
of
Awards will be in cash, shares of our common stock, or other property, as
determined by the Compensation Committee and set forth in an Award agreement.
Any shares of common stock awarded in settlement of an Award may be subject
to a
vesting schedule as determined by the Compensation Committee.
Section
162(m) Requirements
Performance
Awards and Annual Incentive Awards granted to Covered Employees which are
intended to qualify as performance-based compensation within the meaning of
Section 162(m) of the Code must comply with the following additional
requirements:
Establishment
of Performance Goals.
Performance goals must be established by the Compensation Committee not later
than the earlier of (i) ninety (90) days after the beginning of any performance
period, (ii) the expiration of twenty-five percent (25%) of the performance
period applicable to such Awards, or (iii) such other date as may be required
or
permitted for “performance-based compensation” under Section 162(m) of the
Code.
Calculation
of Awards.
Not
later than ninety (90) days following the expiration of each performance period,
or at such other date as may be required or permitted under Section 162(m)
of
the Code, the Compensation Committee must calculate the amount of the
Performance Award or Annual Incentive Award payable to each Covered Employee.
Such amount will be based upon the achievement of one or more of the performance
goals described above in the given performance period and will be subject to
the
limitation on Awards described below. The Compensation Committee must certify
that the applicable performance goals were met prior to the payment of any
such
Awards to a Covered Employee.
Adjustment
of Awards.
The
Compensation Committee may not exercise discretion to increase any amount
payable to a Covered Employee in respect of a Performance Award or Annual
Incentive Award subject to the requirements of Section 162(m) of the Code.
No
pro rata payment of any such Award that is subject to the requirements of
Section 162(m) of the Code may be made to a Covered Employee except in the
event
of such Participant’s death, disability, termination without “Cause,”
resignation for “Good Reason” or a “Change of Control,” as such terms are
defined in the Incentive Plan.
Deferral
of Awards.
In the
event that payment of a Performance Award or an Annual Incentive Award to a
Covered Employee, would not be deductible by us pursuant to Section 162(m)
of
the Code, then payment of the amount of such Award which is not deductible
will
automatically be deferred, with interest equivalent to 120% of the long term
applicable federal rate, up to earliest of (i) the date at which we reasonably
anticipate that the deduction of the payment of the amount will not be limited
or eliminated by application of Section 162(m) of the Code or (ii) the date
which is six (6) months and one (1) day following the Covered Employee’s
termination of employment.
Limitation
on Awards
A
Participant under the Incentive Plan will be eligible to receive an Award
pursuant to the terms of the Incentive Plan subject to any limitations imposed
by appropriate action of the Compensation Committee. The maximum amount of
compensation that can be paid pursuant to the Plan with respect to any twelve
(12) month period specified by the Compensation Committee to Eligible Persons
likely to be Covered Employees is $2,000,000. In the case of Performance Awards
which are based on a period in excess of twelve (12) months, or Discretionary
Awards that are based on a period in excess of twelve (12) months, this annual
limit will be multiplied by the number of years, or portions thereof in the
performance or award period (e.g.,
if the
performance period is 24 months, the limit will be $4,000,000). In the event
that Awards granted under the Incentive Plan are settled in shares of our common
stock, this per person Award limit will be determined based on the “Fair Market
Value” (as defined in the Incentive Plan) of such shares on the date the Award
is settled. Additionally, no Award may be settled in shares of our common stock
if such Award relates to a number of shares which exceeds the number of shares
which remain available under the 1999 Plan minus the number of shares issuable
in settlement of or relating to outstanding awards under the 1999
Plan.
Stock
Awards under the Incentive Plan
The
maximum aggregate number of shares of our common stock that may be issued under
the 1999 Plan in settlement of Awards under the Incentive Plan (subject to
any
adjustment due to recapitalization or reorganization permitted under the 1999
Plan) will not exceed a number equal to (i) 1,078,003 shares of our common
stock
(the number of shares available for awards under the 1999 Plan as of the
Effective Date), plus (ii) the number of shares that become available for
issuance under the 1999 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
shares of our common stock subject to any award under the 1999 Plan, including
stock granted for the purpose of settling Awards 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 a Participant, the shares
that were subject to that award will again be available for issue, transfer
or
exercise pursuant to awards under the 1999 Plan (to the extent allowable by
law). The shares of our common stock issued pursuant to the 1999 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 1999 Plan.
Other
Provisions
Tax
Withholding.
A
Participant’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 Participants. 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 Participant. Except as prohibited by
applicable law (including, without limitation, Section 162(m) of the Code),
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 Participant.
Federal
Tax Consequences
The
following discussion is for general information only and is intended to
summarize briefly 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 a
Participant in the Incentive Plan may vary depending on his 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. You should consult with your tax advisor concerning
the specific tax consequences of participating in the Incentive
Plan.
Cash
Awards.
A
Participant will recognize ordinary compensation income (subject to withholding,
as discussed under “Withholding” below) upon receipt of cash pursuant to a cash
Award or, if earlier, at the time the cash is otherwise made available for
the
Participant to draw upon.
Stock
Awards.
A
Participant will generally recognize ordinary compensation income (subject
to
withholding, as discussed under “Withholding” below) upon receipt of shares of
our common stock pursuant to a Stock Award equal to the fair market value of
the
shares received; provided, however, that if the shares are not transferable
and
are subject to a substantial risk of forfeiture when received (e.g.,
the
shares are “restricted stock”), a Participant will recognize ordinary
compensation income in an amount equal to the fair market value of the shares
(i) when the shares first become transferable and are no longer subject to
a
substantial risk of forfeiture in cases where a Participant does not make an
valid election under Section 83(b) of the Code or (ii) when the shares are
issued in cases where a Participant makes a valid election under Section 83(b)
of the Code.
Withholding.
A
Participant will be subject to withholding for federal, and generally for state
and local, income taxes at the time he recognizes income under the rules
described above with respect to shares of our common stock or cash received.
Dividends that are received by a Participant prior to the time that the receipt
of shares of our common stock becomes taxable to the Participant under the
rules
described in the preceding paragraph are taxed as additional compensation,
not
as dividend income. The tax basis in the shares received by a Participant will
equal the amount recognized by the Participant as ordinary compensation income
under the rules described in the preceding sentence and preceding paragraph,
and
the Participant’s capital gains holding period in those shares will commence on
the date on which the Participant recognizes ordinary income compensation with
respect to such shares.
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 a Participant 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 in 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 Section 162(m) of
the
Code, 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 and Annual Incentive Awards, we may determine
that
it is in our best interests not to satisfy the requirements for the exception.
Further, we may grant Discretionary Awards which do not qualify as
performance-based compensaation under Section 162(m) of the Code. In the case
of
Performance Awards or Annual Incentive Awards, the amount of any such Award
payable to a Covered Employee that would not be deductible under Section 162(m)
of the Code will be deferred until payment of such Award will satisfy the
requirements for deductibility under the code. See“Section
162(m) Requirements—Deferral of Awards,” above. This automatic deferral feature
does not apply to grants of Discretionary Awards.
Application
of Code Section 409A.
Code
Section 409A imposes an additional 20% tax and interest on an individual
receiving nonqualified deferred compensation under a plan that fails to satisfy
certain requirements. For purposes of Code Section 409A, “nonqualified 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.
Awards
made pursuant to the Incentive Plan are designed to comply with the requirements
of Code Section 409A to the extent such awards are not exempt from coverage.
However, if the Incentive Plan 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. Accordingly, abstentions and “broker
non-votes” will have no effect on the outcome of the vote to approve the
Incentive Plan assuming a quorum is present or represented by proxy at the
Meeting. Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted in favor of approval of the Incentive
Plan.
In
the
event the stockholders do not approve the Incentive Plan, the Incentive Plan
will not become effective and the performance-based awards contemplated for
2007
described above will not be paid. In such event, we will be required to
re-evaluate our compensation structure to ensure that it remains competitive
for
our industry. This evaluation may result in the modification of the amount
and
types of compensation that will be payable to our Covered Employees which
compensation may not be fully deductible due to the limitations of Section
162(m) of the Code.
The
Board
of Directors recommends a vote "FOR" the proposal to adopt and approve our
2007
Omnibus Incentive Plan.
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 internal and 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, 2006 were prepared in accordance with
generally accepted accounting principles, 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
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), 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, 2006, for filing with the Securities and Exchange Commission.
Submitted
by the Audit Committee of the Board of Directors:
David
S.
Lundeen (Chairman)
Max
D.
Hopper
Ralph
Derrickson
INDEPENDENT
PUBLIC ACCOUNTANTS
The
following table discloses the approximate fees paid to BDO Seidman, LLP ("BDO
Seidman") for the fiscal years ending December 31, 2006 and 2005:
|
|
|
|
|
|
Year
Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
Audit
fees
|
|
$
|
767,000
|
|
$
|
1,056,000
|
|
Audit-related
fees
|
|
|
2,100
|
|
|
5,000
|
|
Tax
fees
|
|
|
--
|
|
|
--
|
|
All
other fees
|
|
|
--
|
|
|
--
|
|
Total
fees
|
|
$
|
769,100
|
|
$
|
1,061,000
|
|
Audit
fees represent fees for professional services provided in connection with the
audit of our annual financial statements and of management's assessment and
the
operating effectiveness of internal control over financial reporting included
in
our Annual Report on Form 10-K, the quarterly reviews of financial statements
included in our Quarter 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 our annual or quarterly financial
statements.
On
March
16, 2007, the Company dismissed BDO Seidman 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.
The
audit
reports of BDO Seidman on the Company's financial statements as of December
31,
2006 and 2005 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 reports of BDO Seidman on
management’s assessment of the effectiveness of internal control over financial
reporting and the effectiveness of internal control over financial reporting
as
of December 31, 2006 and 2005 did not contain any adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope,
or accounting principles, except as discussed below. BDO Seidman’s audit report
on management’s assessment of the effectiveness of internal control over
financial reporting and the effectiveness of internal control over financial
reporting as of December 31, 2005 indicated that the Company did not maintain
effective internal control over financial reporting because of a material
weakness on the achievement of the objectives of the control criteria and
contained an explanatory paragraph that stated the Company did not maintain
a
sufficient number of personnel to fill key accounting functions which resulted
in the following: the assignment of existing accounting staff to incompatible
duties, the Company’s limited reliance on preventive and application controls
and over reliance on detective controls, and the lack of detail reviews of
key
spreadsheet controls. BDO Seidman’s audit report on management’s assessment of
the effectiveness of internal control over financial reporting and the
effectiveness of internal control over financial reporting as of December 31,
2006 indicated that in BDO Seidman’s opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2006.
During
the two years ended December 31, 2006 and through March 16, 2007, there were
no
disagreements between the Company and BDO Seidman 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 Seidman, would have
required BDO Seidman 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 have been no reportable events of the kind
described in Item 304(a)(1)(v) of Regulation S-K, except that BDO Seidman
advised the Company of the material weakness identified in internal controls
over financial reporting for the year ended December 31, 2005 as discussed
above.
The
Company engaged the accounting firm of KPMG LLP to serve as its principal
accountants as of March 22, 2007. During the fiscal years ended December 31,
2006 and 2005, and through March 21, 2007, the Company did not consult with
KPMG
on any of the matters or events set forth in Item 304(a)(2) of Regulation
S-K.
Representatives
of KPMG LLP are expected to be telephonically available during the Meeting
and
will have the opportunity to make a statement if they wish to do so, and are
expected to be available to respond to appropriate questions. Representatives
of
BDO Seidman 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 our 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 our 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 Securities Exchange Act of 1934, as amended, requires executive
officers and directors, and persons who beneficially own more than ten percent
of a registered class of our equity securities to file reports of ownership
and
changes in ownership with the Securities and Exchange Commission and the Nasdaq
Stock Market. Based solely on a review of the copies of reports furnished to
us
and written representations from our executive officers, directors and persons
who beneficially own more than ten percent of our equity securities, we believe
that, during the preceding year, all filing requirements applicable to our
officers, directors and ten percent beneficial owners under Section 16(a) were
satisfied except that the following individuals failed to timely file a
Statement of Change in Beneficial Ownership on Form 4:
John
T. McDonald
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Chairman
of the Board and Chief Executive Officer
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David
S. Lundeen
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Director
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RELATED
PARTY DISCLOSURE
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.
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,
2006, in which the Company was or is to be a participant and the amount involved
exceeds $120,000 and in which (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 Company’s common stock, or (vii) an immediate family member of the security
holder (if a transaction in which the person had a direct or indirect material
interest occurred or existed). 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, 2006 other than
the Employment Agreements described on pages 11-12 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
external and internal websites and accessible to all employees. 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:
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·
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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;
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·
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serving
on the board of directors of, or being employed in any capacity by,
a
vendor, competitor or customer of the Company;
and
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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:
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·
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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.
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·
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Employees
are prohibited from directly or indirectly competing, or performing
services for any person or entity in competition with, the
Company.
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Employees
should comply with the policies set forth in this Code regarding
the
receipt or giving of gifts, favors or
entertainment.
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·
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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.
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·
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Employees
may not sell or lease equipment, materials or property to the Company
without appropriate corporate
authority.
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·
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Employees
should purchase Company equipment, materials or property only on
terms
available to the general public.
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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.
STOCKHOLDER
PROPOSALS FOR NEXT ANNUAL MEETING
Any
stockholder proposals intended to be presented at Perficient's next annual
meeting of stockholders must be received by Perficient at its offices at 1120
South Capital of Texas Highway, Building 3, Suite 220, Austin, Texas 78746,
on
or before September 30, 2007 for consideration for inclusion in the proxy
material for such annual meeting of stockholders.
For
any
proposal that is not submitted for inclusion in next year's Proxy Statement,
but
is instead sought to be presented directly at the 2008 Annual Meeting,
Securities and Exchange Commission rules permit management to vote proxies
in
its discretion if: (1) management receives notice of the proposal before the
close of business on September 30, 2007, and advises stockholders in the 2008
Proxy Statement about the nature of the matter and how management intends to
vote on such matter; or (2) management does not receive notice of the proposal
prior to the close of business on September 30, 2007. Notices of intention
to
present proposals at the 2008 Annual Meeting should be addressed to Perficient
at its offices at 1120 South Capital of Texas Highway, Building 3, Suite 220,
Austin, Texas 78746.
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.
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, as amended, 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., One CityPlace Drive, Suite 190, St. Louis, MO, 63141, telephone number
(314) 785-1470.
By
Order of the Board of Directors
/s/
Paul E. Martin
Paul
E. Martin
Secretary
April
30, 2007
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