Equity
Grants
On
October 11, 2007, the Board of Directors of the Company approved the equity
grants set forth below to the Executive Officers of the Company with the
grant
date of such grants to be October 11, 2007 for Restricted Stock Units (“ RSUs”)
and for stock options the grant date will be the third trading day after
the
public release of financial information for the 2007 fiscal year. The
options will vest monthly over a four year period commencing on October 11,
2007. The exercise price of all awards granted in the form of stock
options shall be the closing price of Chordiant’s common stock on the grant
date.
Name
|
Number
of Options
|
Number
of Restricted Stock Units **
|
|
|
|
Steven
R. Springsteel
|
100,000
|
60,000
|
|
|
|
Peter
Norman
|
35,000
|
26,250
|
|
|
|
Prashant
K. Karnik
|
35,000
|
26,250
|
|
|
|
James
St. Jean
|
35,000
|
26,250
|
|
|
|
Frank
Florence
|
20,000
|
15,000
|
|
|
|
Derek
Witte
|
20,000
|
15,000
|
|
|
|
**Vesting
and other terms of the RSU grants will be determined under the terms of the
2008-2009 Performance Share Unit Program described below.
2008-2009
Performance Share Unit Program
The
Board made grants of RSUs to the Officers named above and certain other key
employees of the Company (the “Designated Participants”) on October 11, 2007
under the terms of the 2008-2009 Performance Share Unit Program (the “PSUP”)
that was adopted by the Board on that same day. The PSUP provides
that the RSUs will vest and be convertible into fully paid shares of the
Common
Stock of the Company as a function of the financial performance of the Company
over the two year period constituting the Company’s fiscal years 2008 and 2009
(the “Performance Period”) subject to the Designated Participant’s continuous
service during the entire Performance Period.
Up
to 50% of the award will vest based on achievement of cumulative revenue
goals
for the Performance Period established by the Board and up to 50% of the
award
will vest based on achievement of cumulative operating income for the
Performance Period established by the Board. Subject to the other conditions
of
the PSUP, 66.67% of the RSUs will vest at target performance levels and up
to
the full amount of the RSU grant will vest at maximum performance
levels.
If
there is a Change in Control prior to the date that the Board makes a
determination of the number of RSUs that will vest as a result of the Company’s
financial performance during the Performance Period, then the RSUs granted
to
Designated Participants will be deemed earned, immediately prior to the Change
in Control, as if all performance goals had been achieved during the Performance
Period at 100% of the target level of performance; provided, however,
that as of the Change in Control, the RSUs will be earned and vested only
as to
that number of shares subject to the RSU equal to the lesser of (1) the target
award and (2) the target award, multiplied by the ratio of the length of
the
Performance Period prior to the effective date of the Change in Control plus
12
months, over the length of the entire Performance Period, but not to exceed
the
size of the target RSU award. .
Shares
of stock earned under the RSUs will be issued promptly after
vesting. However, after the issuance of shares of the Company’s
Common Stock under the PSUP, each Designated Participant must not sell or
otherwise transfer (excluding transfers to family trusts for tax planning
purposes) any of the shares issued under the PSUP until the earlier of (1)
the
fourth anniversary of the date of grant of the RSU, (2) a Change in Control
of
the Company, (3) the certification by the Board that the Designated Participant
is suffering an Unforeseeable Emergency, or (4) the termination of the
Designated Participant’s continuous service with the Company as a result of an
Involuntary Termination or as a result of the Designated Participant’s death or
disability. Shares withheld by the Company to cover applicable tax
withholdings will not be deemed a violation of this requirement.
PSUP
Definitions
·
|
“Change
in Control” will have the meaning set forth in the in the Company’s 2005
Equity Incentive Plan (the “2005 Plan”) attached as Appendix A to the
Company’s Proxy Statement on Form 14A as filed with the Securities and
Exchange Commission on March 15, 2007; provided, however, that
Section
2(f)(v) will, for purposes of the PSUP be revised to read as follows:
“individuals who, on the date the PSUP is adopted by the Board,
are
members of the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the members of the Board during
any
12-month period; provided, however, that if the appointment or
election
(or nomination for election) of any new Board member was approved
or
recommended by a majority vote of the members of the Incumbent
Board then
still in office, such new member shall, for purposes of the Plan,
be
considered a member of the Incumbent
Board.”
|
·
|
“Good
Reason” means the Designated Participant has resigned from all positions
he or she then-holds with the Company (or any successor thereto)
if (1)
one of the following actions has been taken: (a) there is a
material diminution of Designated Participant’s authority, duties, or
responsibilities; provided, however, that Good Reason shall not
be satisfied solely by reason of such Designated Participant’s retaining
substantially the same position held prior to a Change of Control,
but in
a distinct legal entity or business unit of a larger entity following
such
Change of Control, (b) there is a material reduction in the Designated
Participant’s annual base salary or target bonus opportunity, except to
the extent the base salaries or target bonus opportunities (as
applicable)
of other similarly situated officers of the Company are accordingly
reduced, (c) the Designated Participant is required to relocate
his or her
primary work location to a facility or location that would increase
the
Designated Participant’s one way commute distance by more than twenty (20)
miles from the Designated Participant’s primary work location as of
immediately prior to such change, or (d) the Company (or any successor
thereto) materially breaches its obligations under this Program
or any
effective written employment agreement with the Designated Participant,
and (2) the Designated Participant provides written notice to the
Company’s General Counsel within thirty (30) days after such material
change or reduction, (3) such material change or reduction is not
remedied
by the Company within thirty (30) days following the Company’s receipt of
such written notice, and (4) the Designated Participant’s resignation is
effective not later than sixty (60) days after the expiration of
such
thirty (30) day cure period.
|
·
|
“Involuntary
Termination” means a termination without Cause (as such term is defined in
the 2005 Plan) or a resignation for Good Reason. A termination
by reason of death or disability shall not be considered an Involuntary
Termination.
|
·
|
“Unforeseeable
Emergency” means a severe financial hardship to the Designated Participant
after the issuance of the shares under the Actual Award, which
hardship
results from (1) an illness or accident of the Designated Participant
or
his or her spouse, registered domestic partner, parent or
child; (2) loss of the Designated Participant’s property due to casualty
(including the need to rebuild the Designated Participant’s primary
residence following damage to the home not otherwise covered by
insurance); or (3) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control
of the
Designated Participant.
|
Cash
Compensation
On
October 11, 2007, the Board of Directors (the “Board”) of Chordiant Software,
Inc. (the “Company”) approved the following cash compensation arrangements for
the Executive Officers of the Company, effective as of October 1,
2007:
Name
|
Title
|
Base
Salary
|
Annual
Bonus Target*
|
|
|
|
|
|
|
Steven
R. Springsteel
|
Chairman,
President and
|
$550,000
|
100%
|
|
|
CEO
|
|
|
|
|
|
|
|
|
Peter
Norman
|
Vice
President and
|
$280,000
|
60%
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
Prashant
K. Karnik
|
Vice
President and General
|
$275,000
|
60%
|
|
|
Manager,
Worldwide
|
|
|
|
|
Professional
Services
|
|
|
|
|
|
|
|
|
James
St. Jean
|
Vice
President and Chief
|
$270,000
|
60%
|
|
|
Technology
Officer
|
|
|
|
|
|
|
|
|
Frank
Florence
|
Vice
President and Chief
|
$270,000
|
40%
|
|
|
Marketing
Officer
|
|
|
|
|
|
|
|
|
Derek
Witte
|
Vice
President, General
|
$300,000
|
30%
|
|
|
Counsel
and Secretary
|
|
|
|
|
|
|
|
|
*Actual
bonus payments will be determined under the terms of the 2008 Executive Bonus
Plan for Messrs. Springsteel, Norman, St. Jean and Florence, under the terms
of
the 2008 General Counsel Bonus Plan for Mr. Witte and under the terms of
the
2008 Worldwide Vice President of Professional Services Bonus Plan for Mr.
Karnik. All such payments are subject to the approval of the Board of
Directors.
Bonus
Plans
2008
Executive Plan
At
the October 11, 2008 meeting, the Board approved the 2008 Executive Incentive
Bonus Plan (the “Executive Plan”) which provides that cash bonuses will be paid
to participants in the Executive Plan pursuant to a formula that compares
the
Company’s actual 2008 performance against the 2008 Financial Plan approved by
the Board. For officers other than the CEO, the formula measures
corporate performance in each of the following categories with each result
weighted as set forth opposite the category: (i) bookings – 25%, (ii)
revenue – 25%, (iii) non GAAP operating profit – 25%, and (iv) cash flow
generation – 15%. Additionally, for those plan participants who
report to the CEO, the CEO will use his or her discretion to evaluate that
officer’s performance during the year with such evaluation having a 10%
weighting under this formula. For the CEO, the formula measures
corporate performance in each of the following categories with each result
weighted as set forth opposite the category: (i) bookings – 25%, (ii)
revenue – 25%, (iii) non GAAP operating profit – 35%, and (iv) cash flow
generation – 15%.
Notwithstanding
the foregoing, in its discretion, the Compensation Committee of the Board
may
recommend, and the Board has the authority to approve, a payment of up to
50% of
an executive’s bonus opportunity without regard to the performance criteria set
forth in the Executive Plan.
Payment
of bonuses in any one quarter will be limited to a maximum of 100% of the
participant’s targeted bonus for that quarter. At the end of the
fiscal year, the Board will review the Company’s financial performance for
Fiscal 2008 compared to the approved financial plan for 2008 and determine
the
amount payable under the Executive Plan. The actual amount payable
under the Executive Plan to each individual participant has a maximum payment
of
300% of such individual’s bonus target at 130% achievement of plan
goals. Actual payments are subject to the approval of the
Board.
2008
Worldwide Vice President of Professional Services Bonus Plan
The
2008 Worldwide Vice President of Professional Services Bonus Plan contains
terms
identical to the Executive Plan except that the bonus shall be determined
on the
following criteria:
·
|
50%
of the bonus will be based on the criteria and payment calculation
formulas established in the Chordiant Fiscal Year 2008 Executive
Incentive
Bonus Plan
|
·
|
50%
of the bonus will be based on the actual worldwide cumulative Professional
Services direct controllable contribution margin versus that specified
in
the 2008 Financial Plan approved by the
Board
|
2008
General Counsel Bonus Plan
The
2008 General Counsel Incentive Bonus Plan contains terms identical to the
Executive Plan except that the bonus shall be determined on the following
criteria:
·
|
75%
of the bonus will be based on the criteria and payment calculation
formulas established in the Chordiant Fiscal Year 2008 Executive
Incentive
Bonus Plan
|
·
|
25%
of the bonus will be based on the General Counsel’s performance as the
Company’s Chief Compliance Officer as evaluated by the Compensation
Committee
|
Travel
Expense Reimbursement
On
October 11, 2007, the Board of Directors of the Company approved the payment
of
the travel expenses for the spouses of each of the executive officers in
connection with attendance at the Company’s November 2007 sales achiever’s trip
and tax gross up for such expenses.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
Dated
October 16, 2007
|
CHORDIANT
SOFTWARE, INC
|
|
|
|
|
|
|
By:
|
/s/ STEVEN
R. SPRINGSTEEL
|
|
|
|
Steven
R. Springsteel
Chairman,
President and Chief
Executive
Officer
|
|