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 (Amendment No.      )

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RigNet, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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RIGNET, INC

1880 Dairy Ashford

Suite 300

Houston, Texas 77077

(281) 674-0100

 

March 31, 2011

 

Dear Stockholder:

 

You are cordially invited to attend the 2011 Annual Meeting of Stockholders of RigNet, Inc. (the “Company” or “RigNet”), which will be held at 10:00 a.m., C.S.T., on Wednesday, May 11, 2011, at the Holiday Inn at 1112 Eldridge Parkway, Houston, Texas 77077.

 

Whether or not you plan to attend the annual meeting, it is important that your shares be represented and voted at the meeting. We encourage you to vote your shares according to the instructions on the enclosed proxy card. If you decide to attend the meeting and vote in person, you may withdraw your proxy at that time.

 

This year you will be asked to vote in favor of the election of nine directors; in favor of ratifying the appointment of Deloitte & Touche LLP as the Company’s external auditors; in favor of the 2010 Omnibus Incentive Plan; in favor, as an advisory vote, of the compensation of named executive officers; and to vote, as an advisory vote, on the frequency of the advisory vote on executive compensation.

 

To assist you in voting your shares, you will find enclosed the Notice of Annual Meeting, the 2011 Proxy Statement and our 2010 Annual Report to Stockholders, which includes the Company’s audited financial statements.

 

On behalf of the Board of Directors and employees of RigNet, we thank you for your continued interest in and support of the Company.

 

Sincerely,

 

Thomas M. Matthews

Chairman of the Board

 

Mark B. Slaughter

Chief Executive Officer and President

 

 

 

 

 

NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 11, 2011

 

Dear Stockholder:

 

You are cordially invited to attend the 2011 Annual Meeting of Stockholders (the “Annual Meeting”) of RigNet, Inc., a Delaware corporation (“RigNet”), which will be held on Wednesday, May 11, 2011, at 10:00 a.m., C.S.T. or local time, at the Holiday Inn, 1112 Eldridge Parkway, Houston, Texas 77077. The Annual Meeting will be held for the following purposes:

 

 

6. Consider any other business as may properly come before the meeting.

 

Additional information regarding the Annual Meeting is set forth in the attached proxy statement.

 

Only stockholders of record at the close of business on March 24, 2011 are entitled to receive notice of and to vote at the Annual Meeting or any adjournments or postponement thereof. A list of our stockholders will be available for examination at the Annual Meeting and at RigNet’s Houston office at least ten days prior to the Annual Meeting.

 

Your vote is important. Whether or not you plan to attend the meeting, please cast your vote, as instructed in the Proxy Materials and /or the Proxy Card sent to you, as promptly as possible.

 

By Order of the Board of Directors,

 

William D. Sutton

Vice President, General Counsel and Corporate

Secretary

 

Houston, Texas

March 31, 2011

 

 

 

 

 

RIGNET, INC.

 

PROXY STATEMENT FOR 2011 ANNUAL MEETING OF STOCKHOLDERS

TABLE OF CONTENTS

 

 

1880 S. Dairy Ashford, Suite 300
Houston, Texas 77077-4760

 

 

 

 

PROXY STATEMENT
2011 Annual Meeting of Stockholders

 

 

 

 

 

Date, Time and Place of Meeting

 

Our Board of Directors is asking for your proxy for use at the RigNet, Inc. 2011 Annual Meeting of Stockholders (the “Annual Meeting”) or at any adjournments or postponements thereof. The Annual Meeting will be held on Wednesday, May 11, 2011, at 10:00 am., C.S.T. or local time, at the Holiday Inn, 1112 Eldridge Parkway, Houston, Texas 77077. We have first released this proxy statement to our stockholders beginning on or about March 31, 2011.

 

Proposals

 

At our 2011 Annual Meeting of Stockholders, we are asking our stockholders to consider and act upon proposals to: (1) elect nine directors to serve until our 2012 Annual Meeting; (2) ratify the appointment of Deloitte & Touche LLP as our independent auditor for the fiscal year ending December 31, 2011; (3) approve the 2010 Omnibus Incentive Plan; (4) approve, as an advisory vote, the compensation of named executive officers; and (5) vote, as an advisory vote, on the frequency of future advisory votes on executive compensation.

 

Record Date, Outstanding Shares and Quorum

 

Only stockholders of record at the close of business on March 24, 2011 (the “Record Date”) are entitled to notice of, and to vote at the meeting. As of the Record Date, there were 15,396,034 outstanding shares entitled to vote at the Annual Meeting. The presence, in person or by proxy, of the holders as of the Record Date of a majority of our outstanding shares is necessary to constitute a quorum for purposes of voting on the proposals at the Annual Meeting. Withheld votes will count as present for purposes of establishing a quorum on the proposals.

 

If by the date of the Meeting we do not receive sufficient shares to constitute a quorum or approve one or more of the proposals, the Chair of the Meeting, or the persons named as proxies, may propose one or more adjournments of the Meeting to permit further solicitation of proxies. The persons named as proxies would typically exercise their authority to vote in favor of adjournment.

 

Voting

 

If you are a holder of our common stock, you are entitled to one vote at the meeting for each share that you held as of the Record Date. Cumulative voting for directors is not permitted. The Inspector of Elections appointed for the Meeting will tabulate all votes.

 

You may vote in person at the Annual Meeting or by proxy. Even if you plan to attend the Annual Meeting, we encourage you to vote your proxy card in advance of the Annual Meeting. If you plan to attend the Annual Meeting and wish to vote in person, we will give you a ballot at the meeting. However, please note that if your shares are held in “street name” (in the name of a broker or by a bank or other nominee),

you are considered the beneficial owner of these shares and proxy materials are being forwarded to you by your broker or nominee, which is considered, with respect to these shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker how to vote; however, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain from your brokerage firm an account statement, letter or other evidence satisfactory to us of your beneficial ownership of the shares. Please vote your proxy by mail as soon as possible so that your shares may be represented at the Annual Meeting.

 

Revoking Your Proxy

 

If you submit your proxy by mail, you may still revoke it at any time before voting takes place at the Meeting. If you are the record holder of your shares and wish to revoke your proxy, you may revoke it as follows: (i) by delivering, before or at the Annual Meeting, a new proxy with a later date; (ii) by delivering, on or before the business day prior to the Annual Meeting, a notice of revocation to our Secretary at the address set forth in the notice of the Annual Meeting; (iii) by attending the Annual Meeting in person and voting, although your attendance at the Annual Meeting, without actually voting, will not by itself revoke a previously granted proxy; or (iv) if you have instructed a broker to vote your shares, you must follow the directions received from your broker to change those instructions.

 

If you sign and return your proxy card but do not give any voting instructions, your shares will be voted in favor of the election of each of the director nominees listed in Proposal 1, in favor of Proposals 2, 3 and 4 and in favor of an annual advisory vote on executive compensation. As far as we know, no other matters will be presented at the Meeting. However, if any other matters of business are properly presented, the proxy holders named on the proxy card are authorized to vote the shares represented by proxies according to their judgment.

 

Soliciting Proxies

 

RigNet will pay all expenses of soliciting proxies to be voted at the Meeting. After the proxies are initially distributed, RigNet and/or its agents may also solicit proxies by mail, electronic mail, telephone or in person. We will ask brokers, custodians, nominees and other record holders to forward copies of the proxy materials to beneficial owners for whom they hold shares.

 

Annual Report on Form 10-K and Additional Materials

 

The Notice of Annual Meeting, this Proxy Statement and our Annual Report for the year ended December 31, 2010 have been made available to all stockholders entitled to vote at the Meeting. These materials may also be viewed at www.rig.net.

 

Unless the context requires otherwise, the terms “our,” “we,” “us” and similar terms refer to RigNet, Inc., together with its consolidated subsidiaries.

 

Our Board of Directors currently consists of eight directors who serve terms until the next Annual Meeting of Stockholders. Each director elected to our Board of Directors will serve in such capacity until his or her term expires or his successor has been duly elected and qualified, subject to their earlier death, resignation or removal. All directors, other than our Chief Executive Officer (“CEO”), Mark Slaughter, were “independent directors” and met the independence requirements under the listing standards of the NASDAQ. There are no family relationships among any of our directors or executive officers.

 

At the Annual Meeting, our stockholders will consider and act upon a proposal to elect nine directors to our Board of Directors to serve until the 2012 Annual Meeting of Stockholders. Each of the nominees has consented to serve as a director if so elected. The persons named as proxies in the accompanying proxy card, who have been designated by our Board of Directors, intend to vote FOR the election of the director nominees unless otherwise instructed by a stockholder in a proxy card. If these nominees become unable for any reason

to stand for election as a director, the persons named as proxies in the accompanying proxy card will vote for the election of such other person or persons as our Board of Directors may recommend and propose to replace such nominee or nominees.

 

Information concerning the nine director nominees is set forth below.

 

 

Thomas M. Matthews has served as Chairman of our Board of Directors since May 2008. Mr. Matthews served as Chairman and Chief Executive Officer of Avista Corporation from July 1998 to December 2001, Chairman of Link Energy and its predecessor EOTT Energy from April 2002 to February 2003 and as Chief Executive Officer of Link Energy from March 2003 to January 2005 and has served as Managing Trustee to Link Trust since January 2005. Mr. Matthews received a BSCE from Texas A&M University and attended advanced management programs in International Business at Columbia University and in Finance at Stanford University. Mr. Matthews brings a wealth of public company board experience and knowledge of the energy industry to our board.

 

Mark B. Slaughter has served as the CEO and President since August 2007 and a Director since the completion of our initial public offering (“IPO”) in December 2010. Prior to that, Mr. Slaughter served as our President and Chief Operating Officer from January 2007 to July 2007. Prior to joining us, Mr. Slaughter served as Vice President and General Manager for Security Services Americas, a division of United Technologies Corporation from July 2005 to December 2006 and as President, Broadband Division for Stratos Global Corporation from January 2003 to December 2004. Mr. Slaughter is a graduate of United Technologies’ Executive Program at the University of Virginia’s Darden Graduate School of Business. He received an A.B. in General Studies, C.L.G.S., concentration in Economics, from Harvard College and an MBA from Stanford’s Graduate School of Business. Mr. Slaughter brings an intimate knowledge of our business and our industry to our board.

 

James H. Browning has served as a Director and Chairman of our Audit Committee since December 2010 when we completed our IPO. Mr. Browning served as a partner at KPMG LLP, an international accounting firm, from July 1980 until his retirement in September 2009. Mr. Browning began his career at KPMG LLP in 1971, becoming a partner in 1980. Mr. Browning most recently served as KPMG’s Southwest Area Professional Practice Partner in Houston. Mr. Browning has also served as an SEC Reviewing Partner and as Partner in Charge of KPMG LLP’s New Orleans audit practice. Mr. Browning received a B.S. degree in Business Administration from Louisiana State University and is a Certified Public Accountant. He currently serves on the Board and Audit Committee of Texas Capital Bancshares, Inc., a publicly traded financial holding company. Mr. Browning brings a wealth of knowledge dealing with financial and accounting matters to our board as well as extensive knowledge of the role of public company boards of directors.

 

Charles L. Davis has served as a member of our Board of Directors since June 2005. Mr. Davis has been a partner in SMH Private Equity Group, a United States based investment firm that funds companies that apply technology solutions in the energy sector, since December 2004. Mr. Davis received a Bachelor’s degree in

Business from Washington and Lee University and is a Certified Public Accountant in the Commonwealth of Virginia. Mr. Davis brings experience in finance, accounting and investment banking to our board as well as a wealth of experience in the energy industry.

 

Kevin Neveu has served as a member of our Board of Directors since September 2004. Mr. Neveu has served as the Chief Executive Officer of Precision Drilling Corporation since August 2007 adding the title of President in January 2009. Prior to that, Mr. Neveu was with National Oilwell Varco, serving as President of its Rig Solutions Group from May 2002 to August 2007 and president of its Downhole Tools Business from January 1999 to May 2002. Mr. Neveu has served as a director of Precision Drilling Corporation since August 2007, as a director of Heart and Stroke Foundation of Alberta since December 2009 and was appointed a Member of the Board of Directors and a Member of the Executive Committee of the International Association of Drilling Contractors, Houston, Texas in January 2010. Mr. Neveu received a Bachelor of Science degree in Mechanical Engineering from the University of Alberta. Mr. Neveu brings a wealth of knowledge of the energy industry and international operations to our board as well as experience running a public company and being on a public company board.

 

Kevin J. O’Hara has served as a Director since December 2010 when we completed our IPO. Mr. O’Hara was a co-founder and Chairman of the Board of Troppus Software Corporation, an early stage software company providing technical solutions to service providers that support home technology and networks, since March 2009 until it was acquired by a major service provider in January 2011. He is Chairman of the board of Integra Telecom Inc., a facility-based communications company, and has served on its board since December 2009. Since January 2011, Mr. O’Hara has also served on the Board of Directors of Elemental Technologies, Inc. the leading provider of massively parallel video processing solutions for broadcast and on-line video customers. Prior to that, Mr. O’Hara was a co-founder of Level 3 Communications, Inc. and served as its President from July 2000 to March 2008 and as the Chief Operating Officer of Level 3 Communications, Inc. from March 1998 to March 2008. From August 1997 to July 2000, Mr. O’Hara served as Executive Vice President of Level 3 Communications, Inc. Prior to that, Mr. O’Hara served as President and Chief Executive Officer of MFS Global Network Services, Inc. from 1995 to 1997, and as Senior Vice President of MFS and President of MFS Development, Inc. from October 1992 to August 1995. From 1990 to 1992, he was a Vice President of MFS Telecom, Inc. Mr. O’Hara has a Master of Business Administration from the University of Chicago and a Bachelor of Science in Electrical Engineering from Drexel University. Mr. O’Hara brings a wealth of experience in the communications industry to our board as well as experience running a public company.

 

Keith Olsen has served as a Director since December 2010 when we completed our IPO. Mr. Olsen served as Chief Executive Officer, President and Director of Switch and Data Facilities Company, Inc., a provider of network-neutral data centers that house, power and interconnect the Internet, from February 2004 to May 2010, when Switch and Data Facilities Company, Inc. was acquired by Equinix, Inc. Prior to that, Mr. Olsen served as a Vice President of AT&T, where he was responsible for indirect sales and global sales channel management from May 1993 to February 2004. From 1986 to 1993, Mr. Olsen served as Vice President of Graphnet, Inc., a provider of integrated data messaging technology and services. Mr. Olsen has a Bachelor’s degree from the State University of New York, Geneseo. Mr. Olsen will bring experience in running a public company to our board as well as a wealth of experience in the communications industry.

 

Brent K. Whittington has served as a Director since December 2010 when we completed our IPO. Mr. Whittington has served as the Chief Operating Officer of Windstream Corporation, a publicly-traded communications company providing phone, high-speed Internet and high-definition digital TV services, since August 2009. Prior to that, Mr. Whittington served as the Executive Vice President and Chief Financial Officer of Windstream Corporation from July 2006 to August 2009. From December 2005 to July 2006, Mr. Whittington served as Executive Vice President and Chief Financial Officer of Windstream Corporation’s predecessor, Alltel Holding Corp. From 2002 to August 2005, Mr. Whittington served as Vice President of Finance and Accounting of Alltel Corporation, parent company of Alltel Holding Corp and, from August 2005 to December 2005, Mr. Whittington also served as the Senior Vice President-Operations Support of Alltel Corporation. Prior to joining Alltel, Mr. Whittington was with Arthur Andersen LLP for over eight years. Mr. Whittington has a degree in accounting from the University of Arkansas at Little Rock. Mr. Whittington

brings experience in finance and accounting to our board as well as a wealth of experience in the communications industry.

 

Ditlef de Vibe has not previously served on our Board.  Since 2001, Mr. De Vibe served as Chief Executive Officer of Kistefos Venture Capital, a venture capital firm that primarily invests in the IT and telecommunications industries. During that time, he also served as from 2007 to 2008 as Chief Executive Officer of Global IP Solutions (GIPS) Holdings AB, a company that was publicly traded in Norway until its sale to Google, Inc. From 1996 to 2001, he served as IBM’s Director of Network Outsourcing EMEA from 1999 to 2001, Director of Network Service Sales EMEA from 1998 to 1999, and Director of Network Outsourcing Services EMEA from 1996 to 1998. He holds a Master of Science degree from the University of Oslo. Mr. De Vibe brings a wealth of experience in IT and telecommunications along with extensive operational and commercial competencies.

 

We have adopted a code of business conduct and ethics applicable to our principal executive, financial and accounting officers and all persons performing similar functions. A copy of that code is available on our corporate website at www.rig.net.

 

Our Board of Directors currently consists of eight members, seven of whom are non-employee members. Mr. Slaughter, who serves as the CEO and President, also serves as a director. Each director holds office until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Our by-laws permit our Board of Directors to establish by resolution the authorized number of directors.

 

With respect to the 2011 Annual Meeting, we have nine nominees and nine available board seats. A board member may be removed outside of the normal election process for cause by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of our directors. Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein. The nine nominees receiving the most votes cast at the Annual Meeting will be elected to our Board of Directors.

 

Currently, we separate the role of Chairman and Chief Executive Officer. In addition, each of the committees of our board is presently chaired by an independent director. The Chief Executive Officer is responsible for setting the strategic direction for the company and the day to day leadership and performance of the company, while the Chairman of the Board provides guidance to the Chief Executive Officer, approves the agenda for Board meetings, and presides over meetings of the full Board. The independent members of the Board also regularly meet in executive session without management present. The Board believes this separation is appropriate at this time because of our growth rate and new public status. However, our board does not have a policy on whether or not the roles of Chairman of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee or former employee. The board believes that it should be free to make a choice from time to time in any manner that it believes is in the best interests of our Company and our stockholders at that time. The Board actively oversees management, particularly through regular conferences between the chief executive officer and the chairman.

 

The Board seeks to assess major risks facing our Company and options for their mitigation in order to promote our stockholders’ and other stakeholders’ long-term interests. The Board oversees risk by actively reviewing material management decisions in this area. The Board takes a hands-on role in risk management practices in such areas as credit risk, liquidity risk, operational risk, compliance risk and risks associated with our compensation plans and arrangements by obtaining detailed reports from management, continuous

dialogues with management, and providing input on material corporate decisions in these areas. The Board, primarily through the Audit Committee, also reviews financial and accounting risks through regular meetings with our outside independent accounting firm. The extent of the Board’s oversight function has the effect of solidifying the Board’s leadership structure by providing knowledge and input into material risk decisions.

 

Our Board of Directors has reviewed the independence of each director and considered whether any director had or has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board of Director has determined that Messrs. Matthews, Browning, Davis, Neveu, O’Hara, Olsen, Whittington and de Vibe qualify as “independent” in accordance with the published listing standards of the NASDAQ. Mr. Slaughter is not independent by virtue of his role as CEO and President of our company.

 

In addition, the members of the Audit Committee of our Board of Directors each qualify as “independent” under standards established by the Securities and Exchange Commission (“SEC”) for members of audit committees, and the Audit Committee includes at least one member who is determined by our Board of Directors to meet the qualifications of an “audit committee financial expert” in accordance with SEC rules. Mr. Browning and Mr. Whittington are independent directors who have been determined to be audit committee financial experts. Stockholders should understand that this designation is a disclosure requirement of the SEC related to Mr. Browning and Mr. Whittington’s experience and understanding with respect to certain accounting and auditing matters. The designation does not impose on Mr. Browning or Mr. Whittington any duties, obligations or liability that are greater than are generally imposed on them as a member of the Audit Committee and Board of Directors, and their designation as an audit committee financial expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.

 

Our Company seeks directors who possess, at a minimum, the qualifications and skills described below as set forth in our Policy Governing Director Qualifications and Nominations. Our Company considers diversity in its nomination of directors, and in its assessment of the effectiveness of the Board and its committees. In considering diversity, we evaluate each director candidate in the context of the overall composition and needs of our Board, with the objective of recommending a group that can best manage the business and affairs of the Company and represent stockholder interests using its diversity of experience. Our Corporate Governance and Nominating Committee will consider these and other qualifications, skills, and attributes when recommending candidates to our Board.

 

At a minimum, our Corporate Governance and Nominating Committee must be satisfied that each Committee-recommended nominee meets the following minimum qualifications:

 

 

In addition to the minimum qualifications for each candidate set forth above, our Corporate Governance and Nominating Committee shall recommend that our Board select persons for nomination to help ensure that:

 

 

In addition to any other standards our Corporate Governance and Nominating Committee may deem appropriate from time to time for the overall structure and composition of our Board, the Committee may consider the following factors when selecting and recommending that our Board select persons for nomination:

 

 

Our Board of Directors has a process in place for communication with stockholders. Stockholders should initiate any communications with our Board in writing and send them to our Board of Directors c/o William Sutton, Vice President, General Counsel and Corporate Secretary, RigNet, Inc., 1880 S. Dairy Ashford, Suite 300, Houston, Texas 77077-4760. All such communications will be forwarded to the appropriate directors. This centralized process will assist our Board of Directors in reviewing and responding to stockholder communications in an appropriate manner. If a stockholder wishes for a particular director or directors to receive any such communication; the stockholder must specify the name or names of any specific Board recipient or recipients in the communication. Communications to our Board of Directors must include the number of shares owned by the stockholder as well as the stockholder’s name, address, telephone number and email address, if any.

 

During 2010, our Board of Directors held 3 regular and 7 special meetings. The standing Committees of our Board of Directors held an aggregate of 8 meetings during this period. Each director attended at least 75.0% of the aggregate number of meetings of the Board and Committees on which they served. Messrs. Slaughter, Browning, O’Hara, Olsen and Whittington joined our Board in December 2010; each attended all meetings in 2010 through the date of this proxy following their election.

 

Our Board of Directors currently has standing Audit, Compensation and Corporate Governance and Nominating Committees. Each member of these Committees is an independent director in accordance with the NASDAQ listing standards described above and applicable SEC. Our Board of Directors has adopted a written charter for each of these Committees, which sets forth each Committee’s purposes, responsibilities and authority. These committee charters are available on our website at www.rig.net.

 

The Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities to the Company and our stockholders by overseeing the quality and integrity of our financial reporting; accounting policies and procedures; disclosure controls; compliance with legal and regulatory requirements; independent auditor qualifications, independence and performance; and the internal audit function. During 2010, the Audit Committee held 6 meetings. The Audit Committee is currently comprised of four directors: Messrs. Browning (Chairman), Matthews, Olsen and Whittington. Each member of the Audit Committee is “independent” as defined by the NASDAQ listing standards and applicable SEC rules, and is financially literate. Mr. Browning and Mr. Whittington have been designated an “audit committee financial expert”. From January 1, 2010 through December 20, 2010 our Audit Committee was comprised of Mr. Matthews and Mr. Davis, with Mr. Davis serving as Chairman. Mr. Davis resigned from the Audit Committee on December 21st in conjunction with the completion of our IPO and the addition of Messrs. Browning, Olsen and Whittington to the Audit Committee at that time.

 

The report of our Audit Committee appears under the heading “Report of the Audit Committee” below.

 

The Compensation Committee’s primary responsibilities are to: (i) review and recommend for Board approval the compensation arrangements for the CEO, (ii) review and recommend for Board approval compensation for our directors, (iii) make recommendations with respect to the non-CEO executive officers of our company, (iv) to consider, recommend, administer and implement Board approved compensation plans, policies and programs including incentive-compensation and equity-based plans, and (v) reviewing succession planning for our executive officers. The Compensation Committee also oversees the preparation of a report on executive compensation for inclusion in the annual proxy statement.

 

During 2010, the Compensation Committee held 2 meetings. The Compensation Committee is currently comprised of four directors: Messrs. Neveu (Chairman), Davis, Matthews and O’Hara. Each of the Compensation Committee members is “independent” as defined by the NASDAQ listing standards. All Compensation Committee members are also “non-employee directors” as defined by Rule 16b-3 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). The report of our Compensation Committee appears under the heading “Compensation Committee Report” below.

 

Procedures and Processes for Determining Executive and Director Compensation — Please refer to “Compensation Discussion and Analysis, The Compensation Committee,” below for a discussion of the Compensation Committee’s procedures and processes for making compensation determinations.

 

Compensation Committee Interlocks and Insider Participation — No member of the Compensation Committee has any relationship with our company that is required to be disclosed in any of the reports that we file with the SEC other than service on our Board of Directors. None of our named executive officers serves as a member of the Board of Directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee.

 

The Corporate Governance and Nominating Committee’s primary responsibilities are (i) assist our Board of Directors in identifying prospective director nominees and recommending nominees for each annual meeting of the stockholders to the Board of Directors, (ii) review developments in corporate governance practices and developing and recommending governance guidelines, code of conduct, and compliance mechanisms applicable to the Company, (iii) provide ongoing review of risk performance and exposure company-wide in the company risk categories including operational, technological, compliance, reputational and political (it being understood that the Audit Committee will provide ongoing review of financial risk management categories), and (iv) ensure the existence and capability of risk management systems and control including business continuity in all critical business activities and company risk categories.

The Committee will evaluate each nominee based upon a consideration of a nominee’s qualification as independent and consideration of diversity, age, skills and experience in the context of the needs of the Board of Directors as described in our Corporate Governance Guidelines. The Corporate Governance and Nominating Committee may rely on various sources to identify director nominees. These include input from directors, management, professional search firms and others that the Committee feels are reliable.

 

Stockholders may recommend director candidates for consideration by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee will consider such suggestions made by stockholders in the same manner as other candidates. Any such suggestions should be submitted to the Chairman of the Corporate Governance and Nominating Committee, c/o William Sutton, Vice President, General Counsel and Corporate Secretary, RigNet, Inc., 1880 S. Dairy Ashford, Suite 300, Houston, Texas 77077-4760. The written request must include the candidate’s name, contact information, biographical information and qualifications. The request must also include the potential candidate’s written consent to being a nominee and to serving as a director if nominated and elected. Additional information may be requested from time to time by the committee from the nominee or the stockholder or group of stockholders. Stockholder nominations that seek to bypass the consideration of the Corporate Governance and Nominating Committee must follow the procedure set forth in our bylaws which is summarized below in the Section entitled “Stockholder Proposals and Nominations for the 2012 Annual Meeting of the Stockholders.”

 

In 2010, the Corporate Governance and Nominating Committee, which was formed in conjunction with the IPO in December 2010, held no meetings. The Corporate Governance and Nominating Committee is currently comprised of four directors: Messrs. Matthews (Chairman), Browning, Davis and Neveu. Messrs. Matthews Browning, Davis and Neveu are “independent”, as defined by the NASDAQ listing standards.

 

The Audit Committee oversees the financial reporting process of RigNet, Inc. on behalf of its Board of Directors. Management has the primary responsibility for the preparation of the financial statements and the reporting process, including the systems of internal control.

 

With respect to the financial statements for the year ended December 31, 2010, the Audit Committee reviewed and discussed the financial statements of RigNet, Inc. and the quality of financial reporting with management and the independent auditor. It also discussed with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and received from the independent auditor the written disclosures required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), as modified or supplemented and as adopted by the Public Company Accounting Oversight Board in Rule 3600T. Additionally, the Audit Committee has discussed with the independent auditor their independence with respect to RigNet, Inc. The Audit Committee determined that the non-audit services provided to RigNet, Inc. by the independent auditor (discussed below under “Proposal Two: Ratification of Independent Public Accountants”) are compatible with maintaining the independence of the independent auditor.

 

Based on the reviews and discussions described above, the Audit Committee recommended to our Board of Directors that the financial statements of RigNet, Inc. be included in the Annual Report on Form 10-K for the year ended December 31, 2010 for filing with the SEC.

 

Submitted By:

 

Audit Committee

 

James H. Browning, Chairman
Thomas M. Matthews
Keith Olsen
Brent K. Whittington

 

This Report of the Audit Committee is not “soliciting material” and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Act of 1934, as amended, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.

 

The CEO does not receive any compensation specifically related to his service on our Board of Directors. The following summarizes the compensation of each non-employee member of our Board of Directors for the fiscal year ended December 31, 2010.

 

Prior to our IPO in December 2010, all directors who were affiliated with any of our preferred stockholders did not receive any compensation. All directors were entitled to reimbursement for reasonable travel and other business expenses incurred in connection with attending meetings of the Board of Directors or committees of the Board of Directors.

 

Since our IPO, our Board of Directors implemented a compensation policy applicable to all of our non-employee directors, which provides all non-employee directors the following compensation for board and committee services:

 

 

In addition, this compensation policy provides that the chairman of our Audit Committee will receive an additional annual retainer of $10,000; the chairman of the Compensation Committee will receive an additional annual retainer of $7,500; the chairman of the Corporate Governance and Nominating committee will receive an additional annual retainer of $5,000; and the non-executive chairman of the Board of Directors will receive an additional annual retainer of $50,000. For 2011, the approved equity award of restricted stock approximated $63,000.

 

We did not grant any options or other equity compensation to any member of our Board of Directors in 2010. The following table summarizes the cash compensation of each member of our Board of Directors in 2010:

 

 

 

This Compensation Discussion and Analysis addresses the following topics:

 

 

This section of the proxy also describes the compensation paid to the following named executive officers.

 

 

Mark Slaughter has served as our Chief Executive Officer and President since August 2007. See his biographical summary as presented earlier in this proxy statement.

 

Martin Jimmerson has served as our Chief Financial Officer since November 2006. Prior to that, Mr. Jimmerson served as Chief Financial Officer for River Oaks Imaging & Diagnostic, LP from November 2002 to December 2005. Mr. Jimmerson received a B.A. degree in accounting from Baylor University.

 

Lars Eliassen has been with us and our predecessor since May 2003 serving as our Vice President & General Manager, Europe Middle East Africa since November 2007, Vice President — Global Sales from March 2007 to November 2007, Vice President — Americas from March 2005 to March 2007, and as Vice President — Global Operations from May 2003 to March 2005. Mr. Eliassen has completed an executive education course in Emerging Growth Companies at Stanford University’s Graduate School of Business. He received a B.S. degree in Electrical Engineering from Rice University.

 

William Sutton has served as our Vice President, General Counsel and Corporate Secretary since May 2009. Prior to that, Mr. Sutton served as our Vice President and General Counsel from March 2008 through May 2009. Mr. Sutton served as Chairman for Sweeten & Sutton Brokerage, Inc. from March 2007 to February 2008 and President and Chief Executive Officer for Abbey SA, LP from April 2004 to October 2006. Mr. Sutton received a Bachelor of Business Administration degree from the University of Texas at Austin and a Juris Doctorate from the University of Houston.

 

Hector Maytorena has been with us since November 2007 serving as our Vice President & General Manager, Americas since November 2009 and as Vice President, Global Sales & Marketing from November 2007 to October 2009. Prior to joining RigNet, he served as General Manager of Southeast Texas for United Technologies’ UTC Fire & Security (operating under the Chubb Security and Redhawk brands) from November 2006 to November 2007. Prior to that role, he was Director of Sales at Chubb Security USA from

August 2005 to November 2006. Prior to UTC, Mr. Maytorena served in various leadership roles at Stratos Global Corporation’s Broadband Division with his last assignment as Director of Global Sales and Marketing from November 2002 to August 2005. Mr. Maytorena is a graduate of United Technologies’ Emerging Leaders Program at the University of Virginia’s Darden Graduate School of Business.

 

The compensation programs described, however, apply more broadly to other officers and management personnel at the Company, with appropriate changes to reflect different levels and types of responsibility. The Company believes this approach helps to align RigNet employees into a unified team committed to the Company’s corporate objectives.

 

The Compensation Committee of the Board of Directors (the “Compensation Committee” or “Committee”) assists the Board in fulfilling its duties relating to compensation matters. The fundamental responsibilities of the Committee are to:

 

 

The Board approves all compensation plans and compensation arrangements for our named executive officers.

 

Our Compensation Committee holds regularly scheduled meetings which coincide with our Board meetings. It also holds additional meetings as required to carry out its duties. The Committee Chairman works with our management to establish each meeting agenda.

 

At its meetings, the Committee:

 

 

Role of Compensation Consultant

 

The Committee’s Charter grants the Committee the sole and direct authority to retain and terminate compensation advisors and to approve their fees. All such advisors report directly to the Compensation

Committee and all assignments are directed by the Committee Chairman. The Committee has engaged Cogent Compensation Partners (“Cogent”) as the Committee’s independent compensation consultant to assist the Committee in assessing and determining competitive compensation packages for our named executive officers for 2011.

 

In this capacity, Cogent has, from time to time at the Committee’s request and under the direction of the Committee Chairman, assembled information regarding:

 

 

While the Committee relies on data provided by Cogent to assess the reasonableness of our named executive officers’ total compensation, it also considers a number of other factors including:

 

 

In 2011, we established our compensation peer group as the following seventeen companies: Bronco Drilling Company Inc., Dawson Geophysical Company, OYO Geospace Corporation, TGC Industries Inc., Union Drilling, Inc, 8X8 Inc, Anaren Inc., Bigband Networks Inc., Cbeyond Inc., Cogent Communications Group, Communication Systems Inc., Digi International Inc., FiberTower Corp., in Contact Inc, Kvh Industries Inc., Meru Networks Inc. and Shoretel Inc. We selected these companies because they were public companies of similar size and headcount serving the geographies and customer bases in which we operate and compete for senior management personnel. For 2010, Cogent provided a compensation study to gain input on compensation levels and average market increases in the various geographies in which we operate and compete for executives that was based on two general industry published surveys rather than an identifiable peer group. See “Determining the Amount of Each Element of Compensation — Base Compensation” below.

 

Role of Chief Executive Officer in Executive Compensation Decisions

 

Our Compensation Committee generally seeks input from the CEO, when discussing the performance of and compensation levels for our named executive officers other than himself. Mr. Slaughter provides information relating to each named executive officer’s performance to support the Compensation Committee’s decision-making on executive compensation.

 

Compensation Objectives and Philosophy

 

Our executive compensation program is designed to encourage our executives to focus on building stockholder value, maximizing growth consistent with our strategic plan and deliver financial results. Our executive compensation program is intended to align the interests of our named executive officers with those of our stockholders by motivating our named executive officers to achieve strong financial and operating results, which we believe closely correlate to long-term stockholder value. This alignment of interests is primarily reflected through our named executive officers’ participation in variable and equity-based compensation.

 

Our Compensation Committee reviews our executives’ total compensation elements on an annual basis taking into consideration any changes in position or responsibilities. In the event of material changes in position, responsibilities or other factors, the Compensation Committee may consider changes in base pay during the year. Beginning with the compensation packages for 2011 in addition to changes in position or responsibilities, the Committee primarily considered:

 

 

 

Compensation Strategy

 

Executive base salaries are expected over the long-term to be between the 25th percentile and the median for our peer group, adjusted for each individual’s education, experience, performance and potential. In addition, our executives can earn variable compensation in support of our pay-for performance philosophy. Through equity compensation, our executives have a significant portion of compensation “at risk” and accordingly have a potential for earning between the median and 75th percentile of our peer group. “At risk” means executives will not realize value unless they meet performance goals, the majority of which are tied to Company financial, operational and strategic goals, which we believe closely correlate to long-term stockholder value creation.

 

Our compensation program provides for the following elements:

 

 

As we transition to being a public company beginning with our Compensation Committee’s review of compensation for 2011, over the long-term, the Committee is targeting total direct compensation (including base salary and variable cash compensation) for all named executive officers at approximately the median of compensation paid to similarly situated executives of the companies comprising our 2011 compensation peer group. As more fully described below under “Determining the Amount of Each Element of Compensation — Base Compensation”, the Committee set compensation for the CEO for 2011 at the 25^th percentile within the median range to compensate for the transition of responsibilities and risk for public companies adjusted for the overall experience of the CEO for serving in this capacity. The Committee again is seeking over the long-term to place more compensation “at risk” by setting 1) base salaries and management incentive targets at or near the median and 2) awards under our 2010 Omnibus Plan between the median and 75^th percentile of our peer group.

 

Risk Assessment of Compensation Programs

 

We review our compensation programs company-wide to assess whether they encourage our employees to take unnecessary or excessive risks that could have a material adverse effect on our business. We have concluded that our programs are appropriately tailored to encourage employees to grow our business, but not incent them to do so in a way that poses unnecessary or excessive material risk to us. For example, our Management Incentive Program (“MIP”) and our equity-based compensation, which are our two primary performance-based compensation programs, balance each other by providing compensation that rewards short-term and long-term performance. The MIP balances risk by considering a mix of performance goals, capping the maximum payout a participant can receive and allowing the Compensation Committee to determine the final amounts of all bonuses, and the equity-based awards have four year vesting schedules to encourage long-term growth and provide retentive value. In addition, we have various policies, such as our clawback policy and anti-hedging policy that are designed to discourage undue risk-taking or manipulation of results. In addition, the MIP portion of the executives’ compensation is not so large as to encourage undue risk-taking or

manipulation of results at the risk of the long-term health of our Company. These conclusions have been vetted with the Compensation Committee.

 

 

Base Salary

 

Our Compensation Committee reviews our executives’ base salaries on an annual basis taking into consideration any changes in position or responsibilities. We utilize base salary as the primary means of compensating for performing the essential elements of an executive’s job. We believe our base salaries are set at levels that allow us to attract and retain executive in competitive markets.

 

Variable Compensation

 

Our executives are eligible for variable compensation in the form of an annual cash bonus through our MIP. The MIP is intended to incentivize our executives to meet our corporate objectives and compensate them for achieving these objectives. In addition, our variable pay compensation is intended to reward and incentivize our executives for their personal performance relative to individual objectives. No bonus will be paid if the Company does not achieve at least 80.0% of the annual Adjusted EBITDA target, which we define as earnings before interest, taxes, depreciation and amortization as adjusted to exclude amounts for the impairment of goodwill, gain (loss) on retirement of property and equipment, changes in the fair value of derivatives, stock-based compensation expense and initial public offering costs. During 2010 and 2009, once the bonus was determined, the CEO, for other than himself, had discretion to increase or decrease the bonus by up to 25.0% based upon the achievement of personal objectives and the CEO’s judgment of the executive’s relative contribution to results, subject to board approval. For the CEO’s bonus opportunity during 2010 and 2009, the board had discretion to increase or decrease the bonus by as much as 25.0%. Individual payouts under the MIP cannot exceed 2.5 times target payout. Further, total variable compensation payouts for all employees as a group are limited to 5.0% for 2010 and 5.5% for 2011 of Adjusted EBITDA for management and employee incentives, other than sales commissions.

 

For 2011, consistent with 2010 and 2009, variable compensation will be based on the following performance metrics:

 

 

Since our financial targets are stretch targets, we believe in paying smaller bonuses if we reach at least 80.0% of our target and larger bonuses if we exceed the target level and rewarding performance above the target levels, up to a maximum individual amount, but unlimited as to any single metric. The following

multiplier table will be used to determine each executive’s bonus formula if we achieve the threshold consolidated Adjusted EBITDA and achieve between 80.0% and 140.0% for each financial metric:

 

 

See the table on page 23 of this proxy statement for the application of this matrix for 2010. If the results are between two levels the multiplier will be interpolated on a straight-line basis between those levels.

 

For our executives, variable compensation is based on the achievement of financial targets and further adjusted based on the personal performance. In 2011, adjustments will be based on the achievement of personal objectives for each individual.

 

Equity-Based Compensation

 

Equity-based compensation is intended to enhance our ability to retain executive talent over a longer period of time, reward long-term efforts that enhance future value of the Company, and provide executives with a form of reward that aligns their interests with those of our stockholders. Our executives may receive equity-based awards annually as the Compensation Committee determines consistent with the objectives described above.

 

Our compensation committee does not apply a rigid formula in allocating options to executives as a group or to any particular executive. Instead in making awards, the Compensation Committee exercises its judgment and discretion and considers, among other things, the role and responsibility of the executive, competitive factors, personal performance, the amount of stock-based equity compensation already held by the executive, the non-equity compensation received by the executive and the total number of options to be granted to all participants during the year.

 

In connection with our IPO, we adopted the 2010 Omnibus Incentive Plan which permits the award of (i) incentive or non-qualified stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance stock, (vi) performance units, (vii) director awards (viii) annual cash incentive awards, (ix) cash-based awards, (x) substitution awards or (xi) other stock-based awards, as approved by the Board of Directors or its designated committee. Generally awards will vest over four years, with 25.0% of the shares vesting on each of the first, second, third and fourth year anniversary of the grant date assuming continued employment, and expire on the tenth anniversary date of the applicable award agreement, unless terminated earlier. No further awards can be made under our prior equity incentive plans.

 

Expatriate Compensation

 

When the Company requires an executive to relocate internationally for more than a short-term period of time, the Committee may recommend for Board approval certain cost of living, travel, tax equalization, and other benefits to compensation for increased basic living costs and incentivize long-term retention of the executive.

Nondiscriminatory Health and Welfare Benefits

 

Our benefits, such as our basic health benefits, short-term and long-term disability, life insurance, and accidental death and dismemberment insurance are intended to provide a stable array of support to executives and their families throughout various stages of their careers, and these core benefits are provided to all employees based on the regional programs regardless of their individual performance levels. All U.S. employees have the option to participate in the 401(k) plan, which allows participants to defer up to 100.0% of their annual compensation, subject to the cap set by the Internal Revenue Code. Employee elective deferrals are immediately vested and nonforfeitable upon contribution to the 401(k) plan.

 

Perquisites

 

We believe in a simple, straight-forward compensation program and as such, named executive officers are not provided unique perquisites or other personal benefits, other than those discussed above under expatriate compensation. Consistent with the Committee’s strategy, no perquisites or other personal benefits have or are expected to exceed $10,000 annually for any of our named executive officers.

 

In the review and establishment of our compensation programs, we consider the anticipated accounting and tax implications to us and our executives. While we consider the applicable accounting and tax treatment of alternative forms of equity compensation, these factors alone are not dispositive, and we also consider the cash and non-cash impact of the programs and whether a program is consistent with our overall compensation philosophy and objectives.

 

Deductibility of Compensation and Tax Obligations

 

Our Compensation Committee does not have any particular policies concerning the payment of tax obligations on behalf of our employees. We are required by law to withhold a portion of every compensation payment we make to our employees. In the case of noncash compensation, that means either (i) we withhold a portion of the noncash compensation payment and pay cash to the appropriate tax authorities or (ii) the employees make a direct cash payment to us in lieu of our withholding a portion of the noncash compensation. All payments to or on behalf of our employees, including tax payments, are considered compensation and are evaluated by our Compensation Committee as part of our overall compensation packages.

 

As part of its role, the Committee reviews and considers the deductibility of executive compensation. Section 162(m) of the Internal Revenue Code imposes a limit on the amount of compensation that we may deduct in any one year with respect to the CEO and each of our next three most highly compensated named executive officers, unless specific and detailed criteria are satisfied. Performance-based compensation, as defined in the Internal Revenue Code, is fully deductible if the programs are approved by stockholders and meet other requirements. We believe that grants of equity awards under our existing stock plans qualify as performance- based for purposes of satisfying the conditions of Section 162(m), thereby permitting us to receive a federal income tax deduction in connection with such awards. In general, we have determined that we will not seek to limit executive compensation so that it is deductible under Section 162(m). However, from time to time, we monitor whether it might be in our interests to structure our compensation programs to satisfy the requirements of Section 162(m). We seek to maintain flexibility in compensating our executives in a manner designed to promote our corporate goals and therefore our Compensation Committee has not adopted a policy requiring all compensation to be deductible. Our Compensation Committee will continue to assess the impact of Section 162(m) on our compensation practices and determine what further action, if any, is appropriate.

 

Accounting for Stock-Based Compensation

 

We account for stock-based payments for all awards under our 2010 Omnibus, 2006 Long-Term Incentive and the 2001 Performance Stock Option Plans in accordance with the requirements of ASC Topic 718,

subtopic 10, section 10, Stock Compensation. The Committee reviews stock compensation grant date value in connection with granting equity awards.

 

Clawback Policy

 

In accordance with the requirements of the Dodd-Frank Act, we have inserted into our 2011 MIP a provision that provides that in the event we are required to restate our publicly filed financial statements for any reason, the Compensation Committee will review all incentive-based compensation awarded to any executive that was based on the restated financial statements and may require that the executive return such compensation to the extent it would have been less based on the restated financial statements. We continue to monitor the rule-making actions of the SEC and NASDAQ with respect to the development, implementation, and disclosure of claw-back procedures/policies. We intend to revise our claw-back provisions/policies in the future as required by applicable law.

 

Policy Against Hedging

 

We prohibit our executive officers and directors from engaging in short-term or speculative transactions involving company securities, including activities involving short selling our securities, hedging their ownership in our securities by the purchase or sale of options of any kind, whether puts, calls or other derivative securities, or purchasing of company securities in the open market on margin.

 

The following table sets forth certain information with respect to the compensation paid to our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers for the years ended December 31, 2010 and 2009.

 

 

 

 

 

 

Employment Agreements

 

Mr. Slaughter

 

We entered into an employment agreement with Mark Slaughter, the CEO, effective on August 15, 2007. Through a subsequent amendment, we agreed to employ Mr. Slaughter as the CEO and President through November 15, 2011 and will automatically extend the term of his employment for successive one year periods unless either we or Mr. Slaughter give notice of non-renewal at least 90 days before the end of any term.

 

Mr. Slaughter’s initial annual base salary was set at $225,000, subject to increase from time to time. Mr. Slaughter is entitled to an annual target bonus of at least 50.0% of his annual base salary subject to the terms of our annual bonus plan and payable within four months following the end of the fiscal year to which the bonus relates. In 2010, Mr. Slaughter’s target bonus opportunity was increased to 75.0% of his base salary.

 

If we terminate Mr. Slaughter’s employment without “cause” or Mr. Slaughter terminates his employment with us for “good reason”, he is entitled to (i) a lump sum cash severance in an amount equal to the sum of his then annual base salary and target bonus for the bonus period in which the termination occurs; (ii) COBRA premiums for up to 18 months or a cash payment in the amount of such premiums plus a tax gross up on any tax he would pay on such amounts under Section 409A of the Internal Revenue Code, or an insured product that does not subject Mr. Slaughter to the Section 409A tax; (iii) all earned but unpaid base salary, accrued but unused vacation and unreimbursed business expenses; and (iv) outplacement services of up to $20,000.

 

If Mr. Slaughter’s employment with us is terminated for any reason other than “cause”, any unvested options granted to Mr. Slaughter prior to his termination will become fully vested and exercisable, except any equity awards, including options, issued to Mr. Slaughter by us under a long-term incentive plan after our stock is listed on a public stock exchange or securities market, which awards will vest and continue in accordance with the terms of any such plan. All vested options will be exercisable for the remainder of the original option terms, subject to the same exception noted in the prior sentence.

 

Upon a “change of control” as defined in Section 409A of the Internal Revenue Code, all equity awards granted to Mr. Slaughter shall vest and continue to be exercisable pursuant to their respective terms. Mr. Slaughter may also require us to repurchase our warrants that he owns for their net fair market value.

 

If any payment to Mr. Slaughter would be subject to excise taxes imposed by Section 4999 or Section 409A of the Internal Revenue Code, we must pay Mr. Slaughter a gross-up payment in an amount such that after the payment by Mr. Slaughter of all taxes he retains an amount of the gross-up payment equal to the initial excise taxes.

 

If we terminate Mr. Slaughter’s employment without “cause” or if he terminates his employment for other than “good reason”, he is subject to restrictive covenants of noncompetition and non-solicitation for a period of 12 months from his termination date.

Under the agreement, “cause” is defined as any of the following: (i) executive’s conviction of a felony or a misdemeanor involving moral turpitude, or (ii) if three-fourths of our entire Board approves executive’s termination based upon (a) executive’s intentional or continued failure to perform his or her duties other than by reason of an illness or a disability, (b) executive’s intentional engagement in conduct that is materially injurious to us monetarily or otherwise, or (c) executive’s gross negligence in the performance of his or her duties. The agreement defines “good reason” as any of the following: (i) an adverse change in the executive’s position, authority, duties or responsibilities, including job title, (ii) an adverse change in the executive’s base salary or the taking of any action by us that would diminish, other than in a de minimis amount, the aggregate incentive compensation awards or opportunities of the executive or the level of the executive’s participation relative to other participants, (iii) the relocation of our principal executive offices more than 25 miles from where such offices are located on the effective date of the agreement or the executive being based at any office other than our principal executive offices, except for travel reasonably required in the performance of the executive’s duties and reasonably consistent with the executive’s travel prior to the effective date of the agreement, or (iv) a breach of the employment agreement by us, which remains uncured for 10 days following the executive’s written notice to us of such breach.

 

Mr. Jimmerson

 

We also agreed to a similar agreement with Mr. Jimmerson on August 15, 2007. In that agreement, we agree to employ Mr. Jimmerson as our Chief Financial Officer. That agreement has all of the same terms as Mr. Slaughter’s agreement, including subsequent amendments as to term, except Mr. Jimmerson’s initial annual base salary was set at $180,000, subject to increase from time to time, and his annual target bonus potential was 35.0% of his base salary. In 2010, Mr. Jimmerson’s annual target bonus opportunity was increased to 50.0% of his base salary.

 

Mr. Eliassen

 

Our subsidiary, RigNet AS, is a party to an employment agreement with Mr. Eliassen effective as of June 1, 2010. Our subsidiary agreed to employ Mr. Eliassen as Vice President & General Manager, Europe Middle East Africa. Through a subsequent amendment, we agreed to employ Mr. Eliassen through November 15, 2011, and will automatically extend the term of his employment for successive one year periods unless either we or Mr. Eliassen give notice of non-renewal at least 90 days before the end of any term. Our subsidiary agreed to pay Mr. Eliassen a monthly base salary of $16,667, plus net adjustments of $3,333 per month and an annual target bonus potential of 30.0% of his base salary. Our subsidiary also agreed to provide Mr. Eliassen with housing, a tax equalization benefit equal to the taxes he would have paid in the United States, closing costs on a United States home sale, standard house appliances, repatriation back to the United States if his employment is involuntarily terminated, use of a company car, two trips back to the United States each year, and tax allowance for taxes incurred on these benefits.

 

Mr. Eliassen agreed not to compete with our subsidiary in any geographical area in which our subsidiary does or plans to provide services on the date of termination for a period of 12 months after the date of termination. Mr. Eliassen also will not hire or induce any employees of our subsidiary to cease their employment with our subsidiary during the same 12 month period. The payments due to Mr. Eliassen upon termination of his employment with us under various conditions and the treatment of the shares of stock that he owns in us (including any options for such shares that he may hold) are the same as those stated above in the discussion of Mr. Slaughter’s agreement, except that the lump sum cash severance amount may vary, as it will be negotiated in good faith at the time of termination.

 

Mr. Sutton

 

We also agreed to a similar agreement with Mr. Sutton on May 18, 2010. In that agreement, we agree to employ Mr. Sutton as our Vice President, General Counsel and Corporate Secretary. That agreement has all of the same terms as Mr. Slaughter’s agreement, including a subsequent amendment as to term, except Mr. Sutton’s initial annual base salary was set at $172,784, his annual target bonus potential was 30.0% of his base salary and he is not entitled to a gross-up for excise taxes imposed by Section 4999 of the Internal Revenue Code as discussed above.

Mr. Maytorena

 

We entered into an employment agreement effective as of May 18, 2010 with Mr. Maytorena, our Vice President and General Manager, Americas. That agreement has all of the same terms as Mr. Slaughter’s agreement, including a subsequent amendment as to term, except Mr. Maytorena initial annual base salary was set at $150,000, his annual target bonus potential was 30.0% of his base salary, and he is not entitled to a gross-up for excise taxes imposed by Section 4999 of the Internal Revenue Code as discussed above.

 

Determining the Amount of Each Element of Compensation

 

The amount of each element of our compensation program is determined by our compensation committee on an annual basis taking into consideration the results of our operations, long and short-term goals, individual goals, and the competitive market for our executives and the experience of our compensation committee members with similar companies and general economic factors.

 

Base Compensation

 

In 2010, compensation levels were adjusted based on individual merit, third-party data and cost of living factors considering each individual’s respective level of responsibility within a private company. Our Compensation Committee used data from a purchased a third party compensation report from Cogent as one of the factors that they considered in setting compensation in 2010, but the Committee did not give the study much weight because much of the data was based on compensation of public company executives and the Committee did not attempt to benchmark the compensation of our executives to any particular percentile of the range of compensation in that study. That study did not contain objectively verifiable comparisons for Mr. Eliassen and Mr. Maytorena or an identifiable peer group and was of limited value, since it included public company data and we were still a private company. The Compensation Committee instead relied on an internal review of the executive’s compensation, changes in responsibilities and the Compensation Committee’s experience with other similar companies.

 

For 2010, the Compensation Committee recommended and the Board of Directors approved an aggregate pool for compensation adjustments expressed as a percentage of eligible compensation for all employees. This was equal to 5.0% of eligible compensation of all employees (3.1% for merit increases, 0.9% for market adjustments, and 1.0% for special retention and completion). For our named executive officers, the Compensation Committee considered performance, career potential, need for retention, tenure and skills for the position and overall responsibilities as well as relative compensation based on the 2010 Cogent compensation study subject to the overall funding pools described above. Compensation increases were approved to recognize our executives’ individual performance such that Mr. Slaughter and Mr. Jimmerson each received 7.1% increases. Mr. Sutton’s base compensation was increased 21.5%, based on a recommendation of the CEO, to recognize his performance, level of responsibility and importance to the Company. Mr. Eliassen’s base salary level was increased 17.6% commensurate with his responsibility of managing operations of a large geographic region in our Company and in recognition for his length of service with the Company and the importance of his position. Mr. Maytorena’s base salary was increased 16.7% to a level commensurate with his responsibility of operating another large geographic region for our company and in recognition and increased responsibility in his position.

 

In 2009, due to the harsh economic conditions, we did not provide increases in base salaries to our named executive officers unless they received a promotion or assumed additional duties. Mr. Eliassen received an increase as a result of adding the operations of the Middle East to his duties effective May 2009. Mr. Maytorena received an increase as a result of his promotion and assuming increased operational responsibilities in October 2009. Our other named executive officers received no increases.

Changes in base compensation in 2010 are summarized in the following table:

 

 

In 2011, we have established a peer group and are transitioning to a market-based pay philosophy across base pay, variable compensation and long-term equity awards. On March 21, 2011, our Compensation Committee evaluated data from our peer group and recommended base compensation levels and variable compensation targets, which were approved by the Board for our named executive officers. Mr. Slaughter’s base compensation was increased 17.3% to the 25th percentile based on peer group data and his targeted MIP bonus level was increased to 100.0%, the midpoint of the range of our peer group annual incentive target percentages, to recognize his increased responsibilities in running a public company and incentivize continued achievement of goals. Mr. Jimmerson’s base compensation was increased 6.7%, which represents the 36th percentile compared to our peer group data and his targeted MIP bonus was increased to 60.0%, the midpoint of the range of our peer group annual incentive target percentages, to recognize his increased responsibilities in managing the finances and achieving financial reporting compliance for a public company and in recognition of his past experience and performance in serving as a chief financial officer. Mr. Eliassen’s base compensation was increased 2.8% to the 25th percentile based on peer group data and his targeted MIP bonus level was increased to 50.0%, representing 95.0% of midpoint of the range of our peer group annual incentive target percentages, to recognize his importance and experience in running the operations of a large geographic region within the company and incentivize continued achievement of both financial and individual goals. Mr. Sutton’s base compensation was increased 11.9% to the 39th percentile based on peer group data and his targeted MIP bonus level was increased to 60.0%, the average of the midpoint of the range and average percentage of our peer group’s annual incentive target percentages, to recognize his increased responsibilities in compliance and risk management, increased workload and past experience performing these duties in a public company, as well as to incentivize continued achievement of goals. Mr. Maytorena’s base compensation was increased 2.7% to the 24^th percentile based on peer group data and his targeted MIP bonus level was increased to 50.0%, representing 95.0% of the midpoint of the range of our peer group annual incentive target percentages, to recognize his importance and experience in running the operations of a large geographic region within the company and incentivize continued achievement of both financial and individual goals.

 

 

Variable Compensation

 

The Compensation Committee considers variable cash compensation targets and performance for our executives annually with distributions typically made during the first calendar quarter of the next year after determination of whether goals have been achieved. The Compensation Committee may adjust an executive officer’s variable cash compensation up to 25.0% based on the individual’s performance and contribution to Company results. However, individual payouts under the MIP cannot exceed 2.5 times target payout and total variable compensation payouts for all employees as a group are limited to 5.0% for 2010 and 5.5% for 2011 of Adjusted EBITDA for management and employee incentives, other than sales commissions.

The following summarizes the financial targets and achievement of those targets for 2010:

 

 

The percentage of plan was compared to the table described above in “Elements of our Executive Compensation Program — Variable Compensation” to obtain the target multiplier. The 2010 bonus formula multiplied each executive officer’s potential target bonus as a percentage of their base salary multiplied by the sum of (i) 65.0% of the consolidated Management EBITDA multiplier, plus (ii) 20.0% of the consolidated revenue multiplier and (iii) 15.0% of the consolidated DSO multiplier; provided, however, that for Mr. Eliassen and Mr. Maytorena, the Management EBITDA, Revenue and DSO multipliers were based 70.0% upon their respective operational areas and 30.0% of the consolidated multipliers. The results of which are reported as “non-equity incentive plan compensation” for 2010 in the 2010 Summary Compensation Table. During 2010, the resulting bonuses were adjusted, on a discretionary basis to reflect each individual’s performance during the year, resulting in the following adjustments:

 

 

For 2010, discretionary adjustments were made in recognition of executive team and individual performance related to the achievement of financial goals, the success of the IPO, expansion of operations in Brazil, realization of stockholder return, and increased workloads during a time of market and industry uncertainty related to drilling operations in the Gulf of Mexico. In addition to the 2.45% incremental incentive payout pool established for all employees, the Board approved discretionary adjustments for the named executive officers as follows. Mr. Slaughter received a 2010 discretionary increase of 20.0% over his formulaic payout and company-wide pool adjustment based upon his leadership resulting in the achievement of financial goals, success of the IPO, expansion of operations in Brazil and realization of stockholder return. Mr. Jimmerson received a 2010 discretionary increase of 15% over his formulaic payout and the company-wide pool adjustment based upon his continued strong fiscal management in achieving financial goals, success of the IPO, increased workload, and realization of stockholder return as well as his progress in establishing improvements in our internal controls and remediating our material weakness. Mr. Eliassen received a discretionary increase of 5% over his formulaic payout and the company-wide pool adjustment based upon his strong stewardship over the Europe, Middle East and Africa regions during a time of market and industry uncertainty and his role in achieving financial goals and providing stockholder return. Mr. Sutton received a discretionary increase of 15% over his formulaic payout and the company-wide pool adjustment based upon his strong contributions in continuous improvement related to establishing compliance oversight, improving our contracting process, and helping us prepare for a public listing from a legal perspective. Mr. Maytorena received a discretionary increase of 5% under his formulaic payout and the company-wide pool adjustment for

his increased workload related to the expansion of operations in Brazil and delivery of results during a time of market and industry uncertainty related to drilling operations in the Gulf of Mexico.

 

In addition, IPO success bonuses were awarded to Messrs. Slaughter, Jimmerson and Sutton to reward those who were most directly associated with preparing our Company for its IPO of $100,000, $100,000 and $60,000, respectively. One half of the awarded amount was paid in cash in December 2010 upon completion of the IPO and one half will be paid in cash subject to continued service through December 20, 2011.

 

Equity-Based Awards

 

Our Compensation Committee typically makes annual grants of equity awards to our employees in connection with its annual review of our employees’ compensation and then throughout the year our Compensation Committee evaluates grants for new hires, promotions or other changes that may warrant additional grants. We do not have any program, plan or practice to time option grants in coordination with the release of material non-public information. Prior to completion of our IPO, our Compensation Committee determined the exercise price of options based on valuations determined by the board of directors. As a publicly traded company, our Compensation Committee will utilize the trading price of our common stock on the date of grant as the exercise price of option grants.

 

Grants were made on January 1, 2010 as part of our normal annual review of equity awards and annual compensation to incentivize our executives for the long-term success of our Company. 2010 awards were consistent with levels provided in prior years based on each executive’s level of responsibility within our Company.

 

 

 

 

 

 

 

In addition, Committee recommended and the Board approved the following equity awards to our named executive officers on March 23, 2011 as part of the executives’ approved 2011 compensation:

 

 

The above equity awards were made consistent with our philosophy that such awards should enhance our ability to retain executives and align individual performance with the objectives of our stockholders. In determining the above awards, the number of share awards for our named executive officers were allocated 70.0% to stock options and 30.0% to restricted stock awards. All awards vest ratably over the next four years. Total stock awards for each individual were determined as the amount that would provide a potential total compensation for 2011 approximating the 75th percentile compared to total direct compensation of our peer group for each position, subject to achievement of financial and individual performance results which will be evaluated based on planned versus actual financial and individual performance goals.

 

 

None of our named executive officers exercised any stock options during 2010 or had any restricted stock that vested.

 

 

We do not provide pension benefits for our named executive officers or other employees. Retirement benefits are provided through the Savings Plan discussed below.

 

 

We do not have a non-qualified deferred compensation plan and as such, no compensation has been deferred by our named executive officers or our other employees. The Savings Plan is a 401(k) deferred compensation arrangement and a qualified plan under section 401(a) of the Internal Revenue Code (the “Code”).

 

 

Payments Made Upon Termination

 

Regardless of the manner in which an executive officer’s employment terminates, the executive will be entitled to receive amounts earned (but unpaid) during his term of employment. Such amounts include:

 

 

If the executive’s separation is the result of death or “Disability”, the executive or his or her estate shall receive the above benefits, any long-term disability benefits and all unexercisable equity awards shall immediately vest and become exercisable.

 

The employment agreements with each of our executives also provide certain benefits if their employment is terminated by us by other than cause, by then for “good reason” or as a result of “Change of Control” the executive officer shall receive:

 

 

 

Excise Taxes

 

If any benefits payable or otherwise provided under each named executive officer’s employment agreement would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Board may, in its sole discretion, provide for the payment of, or otherwise reimburse the executive for, an amount up to such Excise Tax and any related taxes, fees or penalties thereon as the Board may consider to be customary and appropriate for a comparable public company.

 

Quantification of Payments on Termination

 

The chart below reflects the amount of compensation to each of our named executive officers in the event of termination of such executive’s employment pursuant to his employment agreement and our stock compensation plans. The amount of compensation payable to each executive officer upon voluntary termination with “Good Reason,” involuntary termination other than for “Cause,” termination following a “Change of Control” and the occurrence of the “Disability” or death of the executive is shown below. The amounts shown are calculated assuming that such termination was effective as of December 31, 2010, and thus include amounts earned through such time (other than amounts payable pursuant to our Savings Plan) and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out may only be determined at the time of the executive’s actual separation from us.

 

POST EMPLOYMENT COMPENSATION TABLE

 

 

 

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

Submitted By:

 

Compensation Committee

 

Kevin Neveu, Chairman

Charles L. Davis

Thomas M. Matthews

Kevin J. O’Hara

 

The following table sets forth as of March 24, 2011, the number of shares beneficially owned by: (i) each person who is known to us to beneficially own more than 5.0% of a class of shares; (ii) the current directors and nominees of our Board of Directors; (iii) each named executive officer included in the Summary Compensation Table; and (iv) all current directors and named executive officers as a group. We obtained certain information in the table from filings made with the SEC. Unless otherwise noted; each beneficial owner has sole voting power and sole investment power.

 

Unless indicated in the notes, to our knowledge each stockholder has sole voting and investment power for all shares shown, subject to community property laws that may apply to create shared voting and investment power. Unless indicated in the notes, the address of each beneficial owner is c/o RigNet, Inc., 1880 S. Dairy Ashford, Suite 300, Houston, Texas 77077-4760.

 

We calculated the percentage of shares outstanding based on 15,396,034 shares of common stock outstanding on March 24, 2011. In accordance with SEC regulations, we also include (1) shares subject to options that are currently exercisable or will become exercisable within 60 days of March 24, 2011, and (2) shares issuable upon settlement of restricted stock units that are vested, or will become vested within 60 days of March 24, 2011. Those shares are deemed to be outstanding and beneficially owned by the person holding such option or restricted stock unit for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 

 

 

 

Section 16(a) of the Exchange Act requires our named executive officers and directors and persons who own more than 10.0% of our common shares to file reports of ownership and changes in ownership concerning our common shares with the SEC and to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of the Section 16(a) filings that have been received by us and repetitions to us by our executive officers and directors, we believe that all filings required to be made under Section 16(a) during 2010 were made timely, except that the original Form 3 for SMH Private Equity Group II, L.P. and related persons was filed one day late.

 

In the ordinary course of our business, we purchase products or services from, or engage in other transactions with, various third parties. Occasionally, these transactions may involve entities that are affiliated with one or more members of our Board of Directors. When they occur, these transactions are conducted in the ordinary course and on an arms-length basis.

 

 

Under our code of business conduct and ethics, our employees, officers and directors are discouraged from entering into any transaction that may cause a conflict of interest for us. In addition, they must report any potential conflict of interest, including related party transactions, to their managers or our general counsel who then reviews and summarizes the proposed transaction for our Audit Committee. Pursuant to its charter, our Audit Committee must then approve any related-party transactions, including those transactions involving our directors. In approving or rejecting such proposed transactions, the Audit Committee considers the relevant facts and circumstances available and deemed relevant to the Audit Committee, including the material terms of the transactions, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence. Our Audit Committee will approve only those transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our Audit Committee determines in the good faith exercise of its discretion. A copy of our code of business conduct and ethics and Audit Committee charter may be found at our corporate website www.rig.net upon the completion of this offering.

 

Currently, there are no proposed transactions or series of similar transactions to which we are party for which the amount involved would exceed $120,000 with one or more of our directors, named executive officers, holders of more than 5.0% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons. However, between January 1, 2008 and through the completion of our IPO, there were transactions to which we were or are a party for which the amount involved exceeded or exceeds $120,000 and in which had or will have a direct or indirect material interest, which are described below other than compensation arrangements with directors and named executive officers, which are described under the captions “Director Compensation and “Executive Compensation” appearing elsewhere in this proxy.

 

Board of Directors

 

Prior to the completion of our IPO in December 2010, the holders of our preferred stock had contractual rights to appoint four members of our Board of Directors. The only appointee that remained on our board following the IPO was Mr. Charles L. Davis, but we are under no contractual obligation to retain him.

 

Registration Rights

 

Previous holders of our preferred stock, including Cubera, funds managed by Altira and funds affiliated with Sanders Morris, have registration rights with respect to the shares that they hold beginning 180 days after completion of the IPO or such earlier date as is agreed by Deutsche Bank Securities Inc.

 

Stockholder Transactions

 

In connection with the IPO in December 2010, the Company converted all preferred stock to 3,470,224 shares of common stock, settled preference rights through the issuance of 1,678,065 shares of common stock, and redeemed accrued dividends through the payment of $0.2 million in cash and issuance of

513,013 shares of common stock. The following is a summary of transactions with our 5.0% stockholders during 2010:

 

 

 

 

Warrants

 

The Company issued warrants in conjunction with certain financing arrangements with stockholders, including Messrs. Slaughter and Jimmerson and funds and persons associated with Cubera, Altira, and Sanders Morris. In May 2009, we repaid all stockholder notes. At December 31, 2010, the following warrants were outstanding to our 5.0% stockholders and named executive officers:

 

 

 

 

Indemnification Agreements

 

We have entered into indemnification agreements with each of our current directors and officers. Each of our named executive officers also has indemnification provisions in his employment agreement. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

 

Precision Drilling Corporation

 

One of our directors, Kevin Neveu, is the Chief Executive Officer of Precision Drilling Corporation. We received an aggregate of approximately $0.1 million in 2009 and approximately $0.6 million in 2010 from Precision Drilling Corporation for services performed by us in the ordinary course of business.

 

 

Any stockholder who intends to present a proposal for inclusion in our 2012 proxy statement and form of proxy must submit the proposal, in writing, so that our Corporate Secretary receives it at our principal executive offices, located at 1880 S. Dairy Ashford, Suite 300, Houston, Texas 77077-4760, by December 1, 2011, which is 120 days prior to the one year anniversary of the date this proxy statement is being sent to our stockholders. Any stockholder who wishes to bring a proposal or nominate a person for election to our Board of Directors at the 2012 Annual Meeting of Stockholders must provide written notice of the proposal or nomination to our Corporate Secretary, at our principal executive offices, between December 1, 2011 and December 31, 2011, which is 90 to 120 days prior to the one year anniversary of the upcoming Meeting. In addition, our stockholders must comply with the requirements of the SEC related to nominations and stockholder proposals and the procedural requirements in our bylaws, which stockholders can obtain from us upon request and which are also on file with the SEC or available on our website at www.rig.net.

 

Our bylaws provide that if a stockholder wishes to nominate a person for election as director (which is separate from simply recommending someone to be considered by our Corporate Governance and Nominating Committee for inclusion on the Company’s slate of directors) or to propose other business to be considered at one of our annual meetings of stockholders, that stockholder must follow the procedures contained in our bylaws and satisfy the requirements of Regulation 14A of the Securities Exchange Act of 1934. The stockholder proposing such business or making such nomination must be a stockholder of record of our Company on the date the nomination is delivered to our Corporate Secretary and at the time of our annual meeting and be entitled to vote at the annual meeting. The proposal or nomination must be received by our Corporate Secretary at our principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting, except that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder must be delivered not earlier than the close of business 120 days prior to the annual meeting and no later than 90 days prior to such annual meeting or 10 days following our first public announcement of the date of the annual meeting. In addition, if the number of directors to be elected to our Board of Directors at an annual meeting is increased and there is no public announcement by us naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s nomination shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our Corporate Secretary at our principal executive offices not later than the close of business on the 10th day following the day on which we first make such public announcement. These time periods are designed to allow us time to adequately consider all proposals and nominees.

 

To be considered, each nomination must include the following information:

 

 

 

To be considered, proposals for business to be considered by our stockholders at an annual meeting, other than the nomination of persons for election as directors, must include the following information:

 

 

 

 

Such information must include any such interests held by members of such stockholder’s or such beneficial owner’s immediate family sharing the same household. All such information must be supplemented by such stockholder and such beneficial owner, if any, not later than 10 days after the record date for the annual meeting to disclose such ownership as of the record date, 10 days before the annual meeting date, and immediately prior to the commencement of the annual meeting, by delivery of such supplemented information to our Corporate Secretary. Such information shall also include any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitation of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, a representation that the stockholder is a holder of record of our stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group that intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to approve or adopt the proposal or elect the nominee or otherwise to solicit proxies from stockholders in support of such proposal or nomination.

 

The proposing stockholder must also include such other information as we may reasonably require or that is otherwise reasonably necessary to determine the eligibility of such proposed nominee to serve as a director of our Company, to determine whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any of our publicly-disclosed corporate governance guidelines or committee charters; including our policy governing director qualifications and nominations, and that could be material to a reasonable stockholder’s understanding of the independence and qualifications, or lack thereof, of such nominee.

 

 

We file annual, quarterly and current reports and proxy statements with the SEC. Our SEC filings are available to the public over the internet at the SEC’s website at www.sec.gov. You may also read and copy any document that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,

Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further information on the public reference room and its copy charges. We maintain a website at www.rig.net, where we post our SEC filings.

 

You may request copies of our filings, including any documents incorporated by reference in this proxy statement as described below, without charge, by calling our Investor Relations representative at (281) 674-0100 or write to Investor Relations, 1880 S. Dairy Ashford, Suite 300, Houston, Texas 77077-4760.

 

If you would like to request documents from us, please do so at least five business days before the date of the Annual Meeting in order to receive timely delivery of the documents before the Annual Meeting. If you request any incorporated documents from us, we will mail them to you by first class mail or other equally prompt means within one business day of receipt of your request, provided that we will not mail any exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into the information that this proxy statement incorporates.

 

You should rely only on the information contained or incorporated by reference in this proxy statement to vote your shares at the Annual Meeting. We have not authorized anyone to provide you with information that is different from what is contained or incorporated by reference in this proxy statement.

 

The information contained in this document or any document incorporated by reference herein speaks only as of the date indicated on the cover of this document or the document incorporated by reference unless the information specifically indicates that another date applies.

 

 

As of the date of this proxy statement, our Board of Directors knows of no matters to be acted upon at the Annual Meeting other than the proposals included in the accompanying notice and described in this proxy statement. If any other matter requiring a vote of stockholders arises, including a question of adjourning the Annual Meeting, the persons named as proxies in the accompanying proxy card will have the discretion to vote thereon according to their best judgment of what they consider to be in the best interests of our company. The accompanying proxy card confers discretionary authority to take action with respect to any additional matters that may come before the annual meeting or any adjournment or postponement thereof.

 

 

Members of our Board of Directors are elected each year at the annual meeting of stockholders. All eight of our current Board members have been nominated to stand for re-election at the Annual Meeting. Our Corporate Governance and Nominating Committee, consisting solely of independent directors, as determined by our Board of Directors recommended the directors for nomination by our full Board of Directors. Based on that recommendation, our Board of Directors has nominated nine directors for election at the Meeting.

 

Nominees

 

The following nine directors have all been nominated to serve on our Board of Directors until the 2012 Annual Meeting of Stockholders: Thomas M. Matthews, Mark B. Slaughter, James H. Browning, Charles L. Davis, Kevin Neveu, Kevin J. O’Hara, Keith Olsen, Brent K. Whittington and Ditlef deVibe. Each of the nominees has consented to serve as a director if so elected. Each nominee who is elected to our Board of Directors will serve in such capacity until his term expires or his successor has been duly elected and qualified or, if earlier, until such director dies, resigns or is removed.

 

Directors will be elected by a plurality of the votes cast by the share of common stock present in person or represented by proxy at the Meeting. As a result, the nine nominees with the most votes will be elected. Broker non-votes will have no effect on the outcome of the election of directors.

Our Board recommends that you vote
“FOR” the election of each of the nominated directors.

 

The Audit Committee has selected Deloitte & Touche LLP, an independent registered public accounting firm, to audit our consolidated financial statements for fiscal year 2011. Deloitte & Touche LLP has served as our independent registered public accounting firm since 2007. We are asking the stockholders to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2011. Deloitte & Touche LLP was selected by the Audit Committee in accordance with its charter.

 

The submission of this matter for ratification by stockholders is not legally required; however, the Audit Committee and Board of Directors believe that such submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback on an important issue of corporate governance. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. The Audit Committee continually monitors the services and fees of the independent registered public accounting firm and even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our Company and our stockholders.

 

The Audit Committee has approved all services provided by Deloitte & Touche LLP. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting, will have the opportunity to make a statement, and is expected to be available to respond to appropriate questions you may ask.

 

The following table reflects fees for professional audit services rendered by Deloitte & Touche LLP for (i) the audit of our financial statements for the year ended December 31, 2010; and (ii) fees billed for other services rendered by Deloitte & Touche LLP.

 

 

 

 

Pursuant to its charter, the Audit Committee of our Board of Directors is responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement between the Company and its independent auditors. Deloitte & Touche LLP’s engagement to conduct the audit of RigNet, Inc. for fiscal 2010 was approved by the Audit Committee on November 15, 2010. All of the services covered under the caption “Audit Related Fees” were approved by the Audit Committee and none were provided under the de minimis exception of Section 10A of the Securities Exchange Act of 1934, as amended.

We have been advised by Deloitte & Touche LLP that substantially all of the work done in conjunction with its 2010 audit of the Company’s financial statements for the most recently completed fiscal year was performed by full-time employees and partners of Deloitte & Touche LLP. The Audit Committee has determined that the provisions of services rendered for all other fees, as described above, is compatible with maintaining independence of Deloitte & Touche LLP.

 

Proposal No. 2 must be approved by a majority of the votes cast on the proposal. Broker non-votes will not affect the outcome of the vote on this proposal but abstentions have the same effect as a vote against this proposal under Delaware law. If the selection of Deloitte & Touche LLP is not ratified accordingly, our Board of Directors will consider whether we should select another independent registered public accounting firm.

 

Our Board recommends that you vote
“FOR” the ratification of Independent Public Accountants

 

Background

 

Our Board of Directors has adopted, and our stockholders have previously approved, the RigNet, Inc. 2010 Omnibus Incentive Plan, or our 2010 Plan, prior to our becoming a public company. Our 2010 Plan is a broad-based incentive plan that provides for the grant of incentive stock options that satisfy the requirements of Section 422 of the Internal Revenue Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, annual cash incentive awards, other stock-based awards and certain other cash awards. Our Board of Directors believes that our company’s success and long-term progress are dependent upon attracting and retaining qualified individuals who may serve as directors, officers, employees, consultants, and advisers, and aligning the interests of such individuals with those of its stockholders. Our 2010 Plan gives our Board of Directors and Compensation Committee the maximum flexibility to use various forms of incentive awards as part of our company’s overall compensation programs.

 

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) and the guidance issued by the Internal Revenue Service thereunder generally prohibit our company from deducting for federal income tax purposes compensation in excess of $1 million that is paid to each of the CEO and the other three highest compensated officers of our company (excluding the Chief Financial Officer). That deduction limit does not apply; however, to certain compensation that satisfies the requirements of Section 162(m).

 

The deduction limit in Section 162(m) does not apply to performance-based compensation that satisfies the requirements of Section 162(m). The requirements of Section 162(m) for performance-based compensation include stockholder approval of the material terms of the performance goals under which the compensation is paid. The material terms include (1) the employees eligible to receive compensation upon attainment of a goal, (2) the business criteria on which the goals may be based, and (3) the maximum amount payable to an employee upon attainment of a goal. Those terms were previously approved by the stockholders of our company when they approved our 2010 Plan prior to the completion of our IPO.

 

Section 162(m) requires that now that we are a public company we obtain stockholder re-approval of the performance goals for performance-based awards that are authorized to be granted under our 2010 Plan to certain employees in order for certain future awards to qualify as performance-based compensation that is exempt from the deduction limitation in Section 162(m) and thereby preserve our company’s federal income tax deduction for performance-based compensation paid to certain named executive officers.

 

Material Terms of Performance Goals under Our 2010 Plan

 

The following summary of the material terms of the performance goals for performance-based awards under our 2010 Plan is qualified in its entirety by reference to the full text of our 2010 Plan attached as Appendix A to this proxy statement.

Performance stock awards and performance unit awards may be granted under our 2010 Plan to any common law employee of our company or any affiliate, any non-employee director and to certain consultants, agents, representatives, advisors, and independent contractors who render services to our company or an affiliate, and other persons designated by our Board of Directors. Annual cash incentive awards may be granted under our 2010 Plan to key executive employees of our company or an affiliate who, by the nature and scope of their positions, regularly and directly make or influence policy decisions which significantly impact the overall results or success of our company.

 

Under our 2010 Plan, the maximum number of shares of our common stock with respect to which performance stock awards may be granted to an employee during a calendar year is equal to 3,000,000 shares and the maximum number of shares of our common stock with respect to which performance unit awards payable in shares of our common stock may be granted to an employee during a calendar year is equal to 3,000,000 shares. Under our 2010 Plan the maximum value of cash with respect to which performance unit awards payable in cash may be granted to an employee during a calendar year is $3,000,000 and the maximum amount that may be paid to a key executive employee under an all annual cash incentive awards granted to the employee during a calendar year is $3,000,000.

 

Under our 2010 Plan, performance stock awards, performance unit awards, and annual cash incentive awards are subject to the satisfaction of one or more performance goals during the applicable performance period. Performance goals for such awards will be determined by our Compensation Committee and will be designed to support our company’s business strategy and align participants’ interests with stockholder interests. Performance goals for performance stock awards, performance unit awards, and annual cash incentive awards to a “covered employee” (as defined in Section 162(m) and the regulations or other guidance promulgated by the Internal Revenue Service under Section 162(m)) (“Covered Employee”) that are intended to qualify as performance-based compensation under Section 162(m) will be based on the criteria contained in our 2010 Plan, including one or more of the following business criteria which were previously approved by our stockholders: earnings per share, earnings per share growth, total stockholder return, economic value added, cash return on capitalization, increased revenue, revenue ratios (per employee or per customer), net income, stock price, market share, return on equity, return on assets, return on capital, return on capital compared to cost of capital, return on capital employed, return on invested capital, stockholder value, net cash flow, operating income, earnings before interest and taxes, cash flow, cash flow from operations, cost reductions, cost ratios (per employee or per customer), proceeds from dispositions, project completion time and budget goals, net cash flow before financing activities, customer growth, and total market value.

 

Achievement of the goals may be measured:

 

 

Our Compensation Committee may, in its discretion, decrease the amount payable under any award. The Compensation Committee may not increase the amount payable under an award.

 

In addition to the performance-based awards described above, our Compensation Committee may issue options and stock appreciation rights to Covered Employees that may constitute performance-based compensation under Section 162(m). Under our 2010 Plan, the maximum number of shares of our common stock with respect to which incentive stock options may be granted to an employee during a calendar year is equal to 3,000,000 shares, the maximum number of shares of our common stock with respect to which nonqualified stock options may be granted to an employee during a calendar year is equal to 3,000,000 shares, and the maximum number of shares of our common stock with respect to which stock appreciation rights may be granted to an employee during a calendar year is equal to 3,000,000 shares.

 

We initially reserved 3,000,000 shares of our common stock for issuance under our 2010 Plan. At December 31, 2010, there were 3,000,000 shares still available for issuance under our 2010 Plan.

Vote Required

 

The approval required by Section 162(m) of the material terms of the performance goals under our 2010 Plan requires the affirmative vote of the holders of at least a majority of the votes cast; provided that the total votes cast on this proposal represent over 50.0% of the outstanding shares of our common stock. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal. Under Delaware law, abstentions are counted as votes cast, so abstentions have the same effect as a vote against this proposal. Broker non-votes are not counted as votes cast so they would not affect the vote on this proposal. However, broker non-votes could prevent the total votes cast on the proposal from representing 50.0% of our outstanding shares.

 

Plan Summary

 

Certain features of our 2010 Plan are summarized below. This summary does not purport to be complete, and is qualified in its entirety by reference to the full text of our 2010 Plan attached as Appendix A to this proxy statement.

 

Our employees are eligible to receive awards under our 2010 Plan. In addition, the non-employee directors of our company and consultants, agents, representatives, advisors and independent contractors who render services to our company and its affiliates that are not in connection with the offer and sale of our company’s securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for our company’s securities will be eligible to receive awards settled in shares of our common stock, other than incentive stock options, under our 2010 Plan.

 

Our Board of Directors will administer our 2010 Plan with respect to awards to non-employee directors and our Compensation Committee will administer our 2010 Plan with respect to awards to employees and other non-employee service providers other than non-employee directors. In administering awards under our 2010 Plan our Board of Directors or the Compensation Committee, as applicable (the “committee”), has the power to determine the terms of the awards granted under our 2010 Plan, including the exercise price, the number of shares subject to each award and the exercisability of the awards. The committee also has full power to determine the persons to whom and the time or times at which awards will be made and to make all other determinations and take all other actions advisable for the administration of the plan.

 

Under our 2010 Plan, the committee may grant:

 

 

Under our 2010 Plan, the committee may also grant performance stock, performance unit and annual cash incentive awards. Performance stock, performance unit and annual cash incentive awards are awards that will result in a payment to a participant only if performance goals established by the committee are achieved or the award otherwise vests. It is intended that our 2010 Plan will conform to the standards of Section 162(m). The committee will establish organization or individual performance goals which, depending on the extent to which

they are met, will determine the number and the value of performance stock and performance units to be paid out to participants. Payment under performance unit awards may be made in cash or in shares of our common stock with equivalent value, or in some combination, as determined by the committee.

 

The amount of, the vesting and the transferability restrictions applicable to any performance stock, performance unit and annual cash incentive award will be based upon the attainment of such performance goals as the committee may determine.

 

Awards may be granted under our 2010 Plan in substitution for stock options and other awards held by employees of other corporations who are about to become employees of our company or any of its subsidiaries. The terms and conditions of the substitute awards granted may vary from the terms and conditions set out in our 2010 Plan to the extent our Board of Directors may deem appropriate.

 

The existence of outstanding awards will not affect in any way the right or power of our company to make any adjustments, recapitalizations, reorganizations or other changes in our company’s capital structure or its business. If our company shall effect a capital readjustment or any increase or reduction of the number of shares of our common stock outstanding, without receiving compensation therefore in money, services or property, then the number and per share price of our common stock subject to outstanding awards under our 2010 Plan shall be appropriately adjusted.

 

If we are not the surviving entity in any merger, consolidation or other reorganization; if we sell, lease or exchange or agree to sell, lease or exchange all or substantially all of our assets; if we are to be dissolved; or if we are a party to any other corporate transaction, then the committee may:

 

 

After a merger or consolidation involving our company each holder of a restricted stock award granted under our 2010 Plan shall be entitled to have his restricted stock appropriately adjusted based on the manner in which the shares of our common stock were adjusted under the terms of the agreement of merger or consolidation.

 

Awards under our 2010 Plan shall be designed, granted and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Internal Revenue Code.

 

Our Board of Directors may alter, amend, or terminate our 2010 Plan and the committee may alter, amend, or terminate any award agreement in whole or in part; however, no termination, amendment, or modification shall adversely affect in any material way any award previously granted, without the written consent of the holder.

Our 2010 Plan became effective May 26, 2010. No awards may be granted under our 2010 Plan on or after the tenth anniversary of the effective date, unless our 2010 Plan is subsequently amended, with the approval of stockholders, to extend the termination date.

 

U.S. Federal Income Tax Consequences of Awards Granted Under Our 2010 Plan

 

The following is a general summary of certain of the U.S. Federal income tax consequences to participants who are either U.S. citizens or residents of certain transactions with respect to awards granted under our 2010 Plan.

 

Incentive Stock Options

 

When the committee grants an employee an incentive stock option to purchase shares of our common stock under our 2010 Plan, the employee will not be required to recognize any U.S. Federal taxable income as a result of the grant or as a result of the employee’s exercise of the incentive stock option; however, the difference between the exercise price and the fair market value of the shares of our common stock at the time of exercise is an item of tax preference that may require payment of an alternative minimum tax. On the sale of the shares acquired through exercise of an incentive stock option (assuming such sale does not occur within two years of the date of grant of the option or within one year from the date of exercise), any gain (or loss) will be taxed as long term capital gain (or loss) and our company will not be entitled to any deduction in connection with the sale (or the grant or exercise) of the incentive stock option. With respect to a sale of shares that occurs after the later of two years from the date of grant and one year from the date of exercise, the tax basis of the shares for the purpose of a subsequent sale includes the option price paid for the shares.

 

However, if the employee sells the shares acquired upon exercise of an incentive stock option before the later of (i) two years from the date of grant and (ii) one year from the date of exercise, the employee will be treated as having received, at the time of sale, compensation taxable as ordinary income, and our company will be entitled to a corresponding deduction. The amount treated as compensation income is the excess of the fair market value of the shares at the time of exercise over the exercise price, and any amount realized in excess of the fair market value of the shares at the time of exercise would be treated as long or short term capital gain, depending on how long such shares were held. With respect to a sale of shares that occurs before the later of two years from the date of grant and one year from the date of exercise, the tax basis of the shares for the purpose of a subsequent sale includes the option price paid for the shares and the compensation income reported at the time of sale of the shares.

 

Nonqualified Stock Options

 

When the committee grants a nonqualified stock option to purchase shares of our common stock under our 2010 Plan, the recipient will not be required to recognize any U.S. Federal taxable income as a result of the grant. However, the recipient will be required to recognize ordinary income on the date the recipient exercises the nonqualified stock option. Generally, the measure of the income will be equal to the difference between the fair market value of the shares of our common stock acquired on the date the shares are acquired and the option price. The tax basis of the shares acquired on exercise of the nonqualified stock option for the purpose of a subsequent sale includes the option price paid and the ordinary income reported on exercise of the nonqualified stock option. The income reportable on exercise of the nonqualified stock option by an employee is subject to Federal tax withholding. Generally, our company will be entitled to a deduction in the amount reportable as income by the recipient on the exercise of a nonqualified stock option.

 

Stock Appreciation Rights

 

The grant of SARs under our 2010 Plan generally will not result in the recognition of any U.S. Federal taxable income by the recipient or a deduction for our company, at the time of grant. However, the recipient will be required to recognize ordinary income on the date the recipient exercises the SAR. Generally, the measure of the income will be equal to the amount realized on exercise of the SAR. The income reportable on

exercise of the SAR by an employee is subject to Federal tax withholding. Generally, our company will be entitled to a deduction in the amount reportable as income by the recipient on the exercise of a SAR.

 

Restricted Stock Awards

 

The grant of a restricted stock award under our 2010 Plan generally will not result in the recognition of any U.S. Federal taxable income by the recipient or a deduction for our company, at the time of grant unless the recipient timely makes an election under Section 83(b) of the Internal Revenue Code, as described below. Upon the expiration of the forfeiture restrictions applicable to the restricted stock award (i.e., as the shares become vested), the recipient will recognize ordinary income in an amount equal to the excess of the fair market value of those shares at that time over the amount (if any) the recipient paid for the shares. The income realized by an employee is subject to Federal tax withholding. The Company will be entitled to a deduction in the amount and at the time the recipient recognizes income. If an election under Section 83(b) of the Internal Revenue Code has not been made, any dividends received with respect to any restricted shares that are not vested (i.e., the forfeiture restrictions have not yet lapsed) generally will be treated as compensation that is taxable as ordinary income to the recipient and our company will be entitled to a corresponding deduction. With respect to any restricted shares that are vested (i.e., the forfeiture restrictions have lapsed), the recipient will be taxed on any dividends on such shares as the dividends are paid to the recipient and our company will not be entitled to deductions with respect to the dividends.

 

If a participant makes an election under Section 83(b) of the Internal Revenue Code within 30 days of the date of transfer of the restricted shares awarded under the restricted stock award, the participant will recognize ordinary income on the date the shares are awarded. The amount of ordinary income required to be recognized is an amount equal to the excess, if any, of the fair market value of the shares on the date of award over the amount, if any, paid for such shares. In such case, the participant will not be required to recognize additional ordinary income when the shares vest. However, if the shares are later forfeited, a loss may only be recognized up to the amount the participant paid, if any, for the shares.

 

Restricted Stock Unit Awards

 

The grant of a restricted stock unit award under our 2010 Plan generally will not result in the recognition of any U.S. Federal taxable income by the recipient or a deduction for our company at the time of grant. At the time a restricted stock unit award vests or is paid, the recipient will recognize ordinary income and our company will be entitled to a corresponding deduction. Generally, the measure of the income and deduction will be the fair market value of our company’s common stock at the time the restricted stock unit is settled. The income realized under the restricted stock unit award that is reportable by an employee is subject to Federal tax withholding.

 

Performance Stock and Performance Unit Awards

 

Performance stock awards granted under our 2010 Plan generally have the same tax consequences as restricted stock awards as discussed above (except that the compensation deduction limitation described below generally will not apply). A recipient of a performance unit award under our 2010 Plan generally will not realize U.S. Federal taxable income at the time of grant of the award, and our company will not be entitled to a deduction at that time with respect to the award. When the performance goals applicable to the performance unit award are attained and amounts are due under the award, the holder of the award will be treated as receiving compensation taxable as ordinary income, and our company will be entitled to a corresponding deduction.

 

Annual Cash Incentive Awards

 

The grant of an annual cash incentive award under our 2010 Plan generally will not result in the recognition of any U.S. Federal taxable income by the recipient or a deduction for us at the time of grant. At the time the annual cash incentive award is settled in cash, the recipient will recognize ordinary income and

our company will be entitled to a corresponding deduction, in the amount of cash received by the recipient under the award at that time.

 

Other Cash-Based and Stock-Based Awards

 

The grant of a cash-based award under our 2010 Plan generally will not result in the recognition of any U.S. Federal taxable income by the recipient or a deduction for us at the time of grant. At the time a cash-based award is settled in cash, the recipient will recognize ordinary income and our company will be entitled to a corresponding deduction, in the amount of cash received by the recipient under the award at that time.

 

Other stock-based awards granted under our 2010 Plan generally have the same tax consequences as restricted stock unit awards.

 

Compensation Deduction Limitation

 

Under Section 162(m) our company’s Federal income tax deductions for certain compensation paid to Covered Employees is limited to $1,000,000 per year. Section 162(m) provides an exception to this limitation for certain “performance based” compensation approved by a committee consisting solely of at least two “outside directors.” We believe that options to purchase shares of our common stock, stock appreciation rights and performance-based awards granted under our 2010 Plan generally should qualify as performance based compensation for purposes of Section 162(m) of the Code.

 

New Plan Benefits

 

Our Compensation Committee and our Board of Directors, as applicable, in their discretion determine awards granted under our 2010 Plan and, therefore, our company is unable to determine the awards that will be granted in the future under our 2010 Plan. The following table sets forth the type and amount of awards that have been granted to the named executive officers and the specified groups of individuals through December 31, 2009 under our 2010 Plan.

 

2010 Plan

 

THE 2011 AWARDS IN THIS TABLE FOR THE NAMED EXECUTIVE OFFICERS ARE NOT INCLUDED IN THE 2010 SUMMARY COMPENSATION TABLE AND IN THE 2010 GRANTS OF PLAN-BASED AWARDS TABLE SET FORTH IN THIS PROXY STATEMENT BUT ARE NEW AWARDS REPRESENTING 2011 COMPENSATION AS DISCUSSED IN OUR COMPENSATION DISCUSSION AND ANALYSIS. THE 2011 AWARDS IN THIS TABLE FOR THE NON-EMPLOYEE DIRECTORS ARE NOT INCLUDED IN THE 2010 DIRECTOR COMPENSATION TABLE SET FORTH IN THIS PROXY STATEMENT.

 

 

Our 2010 Plan will continue for 2010 and future years as permitted by applicable law. If our stockholders do not approve the material terms of the performance goals under our 2010 Plan the plan will still continue but awards to certain executives under the plan will not satisfy the requirements for “performance-based”

compensation within the meaning of Section 162(m) and thus will not qualify for the exclusion from the $1 million deduction limitation that is available to our company under Section 162(m).

 

Equity Compensation Plan Information

 

The table below sets forth the following information as of the end of December 31, 2010 for (i) all compensation plans previously approved by our stockholders and (ii) all compensation plans not previously approved by our stockholders.

 

 

 

 

In addition to our 2010 Plan, we maintain the RigNet, Inc. 2006 Long-Term Incentive Plan and the RigNet, Inc. 2001 Performance Stock Option Plan, both of which were previously approved by our stockholders in connection with their adoption prior to our IPO. We do not maintain any equity compensation plans that have not been approved by our stockholders.

 

Our Board recommends that you vote

“FOR” the approval of the 2010 Omnibus Incentive Plan

 

At the meeting, the stockholders will vote on a non-binding, advisory resolution regarding the compensation of the Company’s named executive officers.

 

We believe that our compensation policies and procedures are competitive, focused on pay-for-performance and strongly aligned with the long-term interests of our stockholders. This advisory stockholder vote, commonly known as “Say-on-Pay,” gives you as a stockholder the opportunity to express approval or withhold approval of the compensation we pay our named executive officers through voting for or against the following resolution:

 

“Resolved, that the stockholders approve the compensation of the Company’s named executive officers as disclosed in the Company’s 2011 proxy statement, which includes the Compensation Discussion and Analysis, the Summary Compensation Table and the other executive compensation tables and related discussion).”

 

The Company and the Compensation Committee remain committed to the compensation philosophy, policies and objectives outlined under the heading “Compensation Discussion and Analysis” in this proxy statement. As always, the Compensation Committee will continue to review all elements of the executive compensation program and take any steps it deems necessary to continue to fulfill the objectives of the program.