def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
SYNCHRONOSS TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was
determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
April 11,
2008
Dear Stockholder:
I am pleased to invite you to our 2008 Annual Meeting of
Stockholders, which will be held on May 15, 2008, at 10:00
a.m. (local time), at the Bridgewater Marriott Hotel, 700
Commons Way in Bridgewater, New Jersey.
At the meeting, we will be electing one member of our Board of
Directors, as well as considering ratification of the selection
of Ernst & Young LLP as our independent registered
public accountants, approval of an amendment to our equity
incentive plan and approval for the Board of Directors to
establish an employee stock purchase plan.
Enclosed are the following:
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our Notice of Annual Meeting of Stockholders and Proxy Statement
for 2008;
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our Annual Report on
Form 10-K
for 2007; and
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a proxy card with a return envelope to record your vote.
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We encourage you to read these materials carefully.
It is important that your shares be represented and voted at the
meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY OR VOTING INSTRUCTION CARD IN THE
PRE-ADDRESSED ENVELOPE PROVIDED, OR VOTE VIA THE INTERNET
ACCORDING TO THE INSTRUCTIONS IN THE PROXY STATEMENT, AS
SOON AS POSSIBLE TO ASSURE THAT YOUR SHARES WILL BE
REPRESENTED AND VOTED AT THE ANNUAL MEETING. If you attend the
Annual Meeting, you may vote your shares in person even though
you have previously voted by proxy if you follow the
instructions in the Proxy Statement. As discussed in the
Proxy Statement, returning the proxy or voting instruction card
does not deprive you of your right to attend the Annual Meeting.
If you have any questions concerning the annual meeting or the
proposals, please contact our Investor Relations department at
(800) 575-7606.
For questions regarding your stock ownership or voting, you may
contact our transfer agent, American Stock Transfer &
Trust Co., by
e-mail
through their website at www.amstock.com or by phone at
(800) 937-8124
(within the U.S. and Canada) or
(718) 921-8124
(outside the U.S. and Canada).
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of
Synchronoss Technologies.
Sincerely,
Stephen G. Waldis
Chairman of the Board
Bridgewater, New Jersey
April 11, 2008
The use of cameras at the Annual Meeting is prohibited and they
will not be allowed into the meeting or any other related areas,
except by credentialed media. We realize that many cellular
phones have built-in digital cameras, and while these phones may
be brought into the venue, the camera function may not be used
at any time.
SYNCHRONOSS
TECHNOLOGIES, INC.
750 Route 202 South, Suite 600
Bridgewater, New Jersey 08807
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To be Held May 15,
2008
To the Stockholders:
You are cordially invited to attend the Annual Meeting of
Stockholders of Synchronoss Technologies, Inc., a Delaware
corporation. The meeting will be held at the Bridgewater
Marriott Hotel, 700 Commons Way, Bridgewater, New Jersey, on
May 15, 2008, at 10:00 a.m. (local time) for the
following purposes:
1. To elect one member of the Companys Board of
Directors to serve until the 2011 annual meeting of stockholders
of the Company;
2. To ratify the selection by the Audit Committee of
Ernst & Young LLP as the Companys independent
registered public accounting firm for fiscal 2008;
3. To approve an amendment to the Companys 2006
Equity Incentive Plan;
4. To authorize the establishment of an Employee Stock
Purchase Plan; and
5. To act upon such other matters as may properly come
before the meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice. Only stockholders of
record at the close of business on March 31, 2008 are
entitled to vote at the Annual Meeting and at any adjournments
or postponements of the meeting. The stock transfer books will
not be closed between the record date and the date of the Annual
Meeting. A list of stockholders entitled to vote at the meeting
will be available for inspection at Synchronoss principal
executive offices at the address listed above for the
ten-day
period prior to the Annual Meeting.
By order of the Board of Directors
Ronald J. Prague
Secretary
Bridgewater, New Jersey
April 11, 2008
Important
Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be held on May 15,
2008
The proxy statement and annual report to stockholders and the
means to vote by Internet are available at
www.synchronoss.com.
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, sign, date and promptly return the enclosed proxy
card, or vote via the Internet as instructed in these materials,
as promptly as possible in order to ensure your representation
at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for your convenience.
Even if you have voted by proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must provide a valid proxy
issued in your name from that record holder.
TABLE OF
CONTENTS
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Compensation of Executive Officers
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Matters to Be Voted On
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SYNCHRONOSS
TECHNOLOGIES, INC.
750 Route 202 South, Suite 600
Bridgewater, New Jersey 08807
PROXY STATEMENT
FOR THE
2007 ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2008
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We sent you this Proxy Statement and the enclosed proxy card
because the Board of Directors of Synchronoss Technologies, Inc.
(sometimes referred to as the Company or
Synchronoss) is soliciting your proxy to vote at the
2008 Annual Meeting of Stockholders (the Annual
Meeting). You are invited to attend the Annual Meeting to
vote on the proposals described in this Proxy Statement.
However, you do not need to attend the meeting to vote your
shares. Instead, you may simply complete, sign and return the
enclosed proxy card, or follow the instructions below to submit
your proxy on the Internet. The Company intends to mail this
Proxy Statement and accompanying proxy card on or about
April 11, 2008 to all stockholders of record entitled to
vote at the Annual Meeting.
Who can
vote at the Annual Meeting?
Only stockholders of record at the close of business on
March 31, 2008 will be entitled to vote at the Annual
Meeting. On this record date, there were 32,737,107 shares
of Company common stock (Common Stock) outstanding.
All of these outstanding shares are entitled to vote at the
Annual Meeting.
Stockholder
of Record: Shares Registered in Your Name
If on March 31, 2008 your shares were registered directly
in your name with the Companys transfer agent, American
Stock Transfer & Trust Company, then you are a
stockholder of record and may vote in person at the meeting or
vote by proxy. Whether or not you plan to attend the meeting, we
urge you to fill out and return the enclosed proxy card or vote
by proxy on the Internet as instructed below to ensure your vote
is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If on March 31, 2008 your shares were held in an account at
a brokerage firm, bank, dealer, or other similar organization,
then you are the beneficial owner of shares held in street
name and these proxy materials are being forwarded to you
by that organization. The organization holding your account is
considered the stockholder of record for purposes of voting at
the Annual Meeting. As a beneficial owner, you have the right to
direct your broker or other agent on how to vote the shares in
your account. You are also invited to attend the Annual Meeting.
However, since you are not the stockholder of record, you may
not vote your shares in person at the meeting unless you request
and obtain a valid proxy from your broker or other agent.
What am I
voting on?
There are four matters scheduled for a vote:
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Election of Thomas J. Hopkins as a member of to the
Companys Board of Directors to serve until the 2011 annual
meeting of stockholders or until his successor has been duly
elected and qualified;
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Ratification of Ernst & Young LLP as the
Companys independent registered public accounting firm for
its fiscal year ending December 31, 2008;
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To increase the number of shares of common stock available for
issuance under the Companys 2006 Equity Incentive
Plan; and
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To authorize the establishment of an Employee Stock Purchase
Plan.
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How do I
vote?
You may either vote For the nominee to the Board of
Directors or you may abstain from voting for any nominee you
specify. For the other matters to be voted on, you may vote
For or Against or abstain from voting.
The procedures for voting are fairly simple:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at
the Annual Meeting, vote by proxy using the enclosed proxy card
or vote by proxy on the Internet. You may vote in person at the
Annual Meeting only if you bring a form of personal picture
identification with you. You may deliver your completed proxy
card in person or you may vote by completing a ballot, which
will be available at the meeting. Whether or not you plan to
attend the meeting, we urge you to vote by proxy to ensure your
vote is counted.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
Annual Meeting, we will vote your shares as you direct.
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To vote on the Internet, go to
http://www.voteproxy.com
to complete an electronic proxy card. You will be asked to
provide the eleven-digit number beneath the account number on
the enclosed proxy card. Your vote must be received by
11:59 p.m., Eastern Daylight Time on May 14, 2008 to
be counted.
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We provide Internet proxy voting to allow you to vote your
shares on-line, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet
access providers.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received
instructions for granting proxies with these proxy materials
from that organization rather than from the Company. A number of
brokers and banks participate in a program provided through ADP
Investor Communication Services which enables beneficial holders
to grant proxies to vote shares via telephone or the Internet.
If your shares are held by a broker or bank that participates in
the ADP Investor Communication Services program, you may grant a
proxy to vote those shares telephonically by calling the
telephone number on the instructions received from your broker
or bank, or via the Internet at ADP Investor Communication
Services website at
http://www.proxyvote.com.
To vote in person at the Annual Meeting, you must obtain a valid
proxy from your broker, bank, or other agent. Follow the
instructions from your broker or bank included with these proxy
materials, or contact your broker or bank to request a proxy
form.
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How many
votes do I have?
On each matter to be voted upon, you have one vote for each
share of Common Stock you own as of March 31, 2008.
What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted
For the election of the nominee for a
director, For ratification of
Ernst & Young LLP as the Companys independent
registered public accounting firm, For the
increase of the number of shares of common stock available for
issuance under the Companys 2006 Equity Incentive Plan and
For the authorization of the establishment of
an Employee Stock Purchase Plan. If any other matter is properly
presented at the meeting, your proxy (one of the individuals
named on your proxy card) will vote your shares using his best
judgment.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the meeting. You may revoke your proxy in any one of three
ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a written notice that you are revoking your proxy
to the Secretary of the Company at 750 Route 202 South,
Suite 600, Bridgewater, New Jersey 08807.
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You may attend the Annual Meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
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Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and
employees may also solicit proxies in person, by telephone, or
by other means of communication. Directors and employees will
not be paid any additional compensation for soliciting proxies.
We may reimburse brokerage firms, banks and other agents for the
cost of forwarding proxy materials to beneficial owners.
What if I
share an address with another stockholder?
A number of brokers with account holders who are Synchronoss
Technologies, Inc. stockholders will be householding
our proxy materials. A single proxy statement will be delivered
to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement and annual
report, please notify your broker and direct your written
request to Synchronoss Technologies, Inc., 750 Route 202 South,
Suite 600, Bridgewater, NJ 08807 Attn: Secretary or contact
Ronald J. Prague, Secretary at
(866) 620-3940.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker.
What does
it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
3
How are
votes counted?
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count For and (with
respect to proposals other than the election of directors)
Against votes, abstentions and broker non-votes.
Abstentions will be counted towards the vote total for each
proposal, and will have the same effect as Against
votes. Broker non-votes, as described in the next paragraph,
have no effect and will not be counted towards the vote total
for any proposal.
If your shares are held by your broker as your nominee (that is,
in street name), you will need to obtain a proxy
form from the institution that holds your shares and follow the
instructions included on that form regarding how to instruct
your broker to vote your shares. If you do not give instructions
to your broker, your broker can vote your shares with respect to
discretionary items, but not with respect to
non-discretionary items. Discretionary items are
proposals considered routine under the rules of the New York
Stock Exchange on which your broker may vote shares held in
street name in the absence of your voting instructions. On
non-discretionary items for which you do not give your broker
instructions, the shares will be treated as broker non-votes.
How many
votes are needed to approve each proposal?
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For the election of the director, the nominee receiving the most
For votes (among votes properly cast in person or by
proxy) will be elected. Broker non-votes will have no effect.
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To be approved, Proposal No. 2 to ratify the selection
by the Audit Committee of the Board of Directors of
Ernst & Young LLP as the independent registered public
accounting firm of the Company for its fiscal year ending
December 31, 2008 must receive a For vote from
the majority of issued and outstanding shares, present in person
or represented by proxy at the Annual Meeting and entitled to
vote thereon either in person or by proxy. If you
Abstain from voting, it will have the same effect as
an Against vote. Broker non-votes will have no
effect.
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To be approved, Proposal No. 3 to amend the
Companys 2006 Equity Incentive Plan must receive a
For vote from the majority of issued and outstanding
shares, present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon either in person or by
proxy. If you Abstain from voting, it will have the
same effect as an Against vote. Broker non-votes
will have no effect.
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To be approved, Proposal No. 4 to authorize the
establishment of an Employee Stock Purchase Plan must receive a
For vote from the majority of issued and outstanding
shares, present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon either in person or by
proxy. If you Abstain from voting, it will have the
same effect as an Against vote. Broker non-votes
will have no effect.
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If there are insufficient votes to approve any of the above
matters, your proxy may be voted by the persons named in the
proxy to adjourn the Annual Meeting in order to solicit
additional proxies in favor of the approval of such proposals.
If the Annual Meeting is adjourned for any purpose, at any
subsequent reconvening of the meeting, your proxy will be voted
in the same manner as it would have been voted at the original
convening of the Annual Meeting unless you revoke or withdraw
your proxy. Your proxy may be voted in this manner even though
it may have been voted on the same or any other matter at a
previous session of the Annual Meeting.
What is
the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if a majority of all outstanding shares
are represented by stockholders present at the meeting or by
proxy. On the record date, there were 32,737,107 shares of
Common Stock outstanding and entitled to vote. Thus,
16,368,554 shares must be represented by stockholders
present at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you
submit a valid proxy vote or vote at the meeting. Abstentions
and broker non-votes will be counted towards the quorum
requirement.
4
How can I
find out the results of the voting at the Annual
Meeting?
Preliminary voting results will be announced at the Annual
Meeting. Final voting results will be published in the
Companys quarterly report on
Form 10-Q
for the second quarter of 2008.
When are
stockholder proposals due for next years Annual
Meeting?
If you wish to submit a proposal for inclusion in next
years proxy materials or nominate a director, your
proposal must be in proper form according to SEC
Regulation 14A and
Rule 14a-8,
in conformance with the Companys By-laws and submitted in
writing to Synchronoss Technologies, Inc., 750 Route 202 South,
Suite 600, Bridgewater, New Jersey 08807 Attn: Secretary to
be received no later than the close of business on
December 16, 2008. If you wish to submit a proposal to be
presented at the 2009 Annual Meeting of Stockholders but which
will not be included in the Companys proxy materials, your
proposal must be submitted in writing and in conformance with
our Bylaws to Synchronoss Technologies, Inc., 750 Route 202
South, Suite 600, Bridgewater, New Jersey 08807 Attn:
Secretary not before January 29, 2009 and no later than
February 28, 2009. As the rules of the SEC make clear,
simply submitting a proposal does not guarantee that it will be
included. You are advised to review the Companys By-laws,
which contain additional requirements about advance notice of
stockholder proposals and director nominations. You may obtain a
copy of the Companys By-laws by writing to Synchronoss
Technologies, Inc., 750 Route 202 South, Suite 600,
Bridgewater, New Jersey 08807, Attn: Secretary.
5
Corporate
Governance and Board Matters
Board of
Directors and Committees of the Board
There are currently six (6) members of the Board of
Directors:
William J. Cadogan
Charles E. Hoffman
Thomas J. Hopkins
James M. McCormick
Donnie M. Moore
Stephen G. Waldis
Meetings. During 2007, our Board of Directors
held four regular meetings, two special meetings, and acted once
by unanimous written consent. Each director attended at least
75% of the meetings of our Board of Directors and of each
committee of which he served as a member during the period in
which he served. Each director attended the Companys 2007
Annual Meeting of Stockholders other than Mr. Moore who
joined the Board of Directors after such meeting.
Independence of the Board of Directors. As
required under the Nasdaq Global Market (Nasdaq)
listing standards, a majority of the members of a listed
companys board of directors must quality as
independent, as affirmatively determined by the
board of directors. Our Board of Directors consults with our
counsel to ensure that the Board of Directors
determinations are consistent with all relevant laws and
regulations regarding the definition of independent, including
those set forth in pertinent listing standards of Nasdaq, as in
effect from time to time. Consistent with those considerations,
after review of all relevant transactions or relationships
between each director, or any of his family members, and the
Company, its senior management and its independent registered
public accounting firm, our Board of Directors has affirmatively
determined that all of our directors are independent directors
within the meaning of the applicable Nasdaq listing standards
except for Stephen G. Waldis and James M. McCormick.
As required under Nasdaq listing standards, our independent
directors meet in regularly scheduled executive sessions at
which only independent directors are present. Mr. Cadogan
presides over these executive sessions. Stockholders interested
in communicating with the independent directors regarding their
concerns or issues may address correspondence to a director, or
to the independent directors generally, in care of Synchronoss
Technologies, Inc. at 750 Route 202 South, Suite 600,
Bridgewater, New Jersey 08807, Attn: Secretary. The Secretary
has the authority to disregard any inappropriate communications
or to take other appropriate actions with respect to any
inappropriate communications. If deemed an appropriate
communication, the Secretary will forward it, depending on the
subject matter, to the chairperson of a committee of the Board
of Directors or a particular director, as appropriate.
Board Structure and Committees. Our Board of
Directors has established an Audit Committee, a Compensation
Committee, a Business Development Committee and a
Nominating/Corporate Governance Committee. Our Board of
Directors has delegated various responsibilities and authority
to its committees as generally described below. The Board of
Directors has determined that each member of the Audit,
Compensation, Business Development and Nominating/Corporate
Governance Committees other than Mr. Waldis meets
applicable rules and regulations regarding
independence and that each such member is free of
any relationship that would interfere with his individual
exercise of independent judgment with regard to the
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Company. The following table provides membership and meeting
information for each of the Board of Directors committees during
2007:
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Business Development
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Nominating/Corporate
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Audit
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Compensation
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Committee
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Governance
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Stephen G. Waldis
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X
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William J. Cadogan
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(1)
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(1)
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Charles E. Hoffman
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(3)
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Thomas J. Hopkins
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(1)
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James McCormick(2)
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Donnie M. Moore
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X
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Total meetings in fiscal year 2007
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6
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5
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2
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1
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Committee Chairperson |
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Mr. McCormick resigned from the Nominating/Corporate
Governance Committee effective December 2007. |
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Mr. Hoffman was elected to the Nominating/Corporate
Governance Committee effective December 2007. |
Audit Committee. The Audit Committee of our
Board of Directors reviews and monitors our corporate financial
statements and reporting and our external audits, including,
among other things, our internal controls and audit functions,
the results and scope of the annual audit and other services
provided by our independent registered public accounting firm
and our compliance with legal matters that have a significant
impact on our financial statements. Our Audit Committee also
consults with our management and our independent registered
public accounting firm prior to the presentation of financial
statements to stockholders and, as appropriate, initiates
inquiries into aspects of our financial affairs. Our Audit
Committee is responsible for establishing procedures for the
receipt, retention and treatment of complaints regarding
accounting, internal accounting controls or auditing matters,
and for the confidential, anonymous submission by our employees
of concerns regarding questionable accounting or auditing
matters. In addition, our Audit Committee is directly
responsible for the appointment, retention, compensation and
oversight of the work of our independent registered public
accounting firm, including approving services and fee
arrangements. All related party transactions will be approved by
our Audit Committee before we enter into them. Our Audit
Committee charter can be found on the investor relations section
of our website at www.synchronoss.com. Three directors
comprise the Audit Committee: Thomas J. Hopkins, William J.
Cadogan and Donnie M. Moore. Scott Yaphe was a member of the
Audit Committee until he resigned from the Board of Directors
effective May 2007. Mr. Moore joined the Audit Committee at
the time he joined our Board of Directors in May 2007. The Audit
Committee met six times during 2007.
Our Board of Directors annually reviews the Nasdaq listing
standards definition of independence for Audit Committee members
and has determined that all members of our Audit Committee are
independent (as independence is currently defined in
Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq listing
standards). In addition to qualifying as independent under the
Nasdaq rules, each member of our Audit Committee can read and
has an understanding of fundamental financial statements. Our
Board of Directors has determined that Thomas J. Hopkins,
Chairman of the Audit Committee, and Donnie M. Moore are audit
committee financial experts as defined by Item 407(d) of
Regulation S-K
of the Exchange Act. Our Board of Directors made a qualitative
assessment of Messrs. Hopkins and Moores level
of knowledge and experience based on a number of factors,
including his formal education and experience. The designation
does not impose on Messrs. Hopkins or Moore any duties,
obligations or liability that are greater than are generally
imposed on them as members of our Audit Committee and our Board
of Directors, and their designation as Audit Committee financial
experts pursuant to this SEC requirement does not affect the
duties, obligations or liability of any other member of our
Audit Committee or Board of Directors.
Compensation Committee. The Compensation
Committee of our Board of Directors reviews, makes
recommendations to the Board and approves and oversees our
compensation policies and all forms of
7
compensation and other benefits to be provided to our employees
(including our executive officers and directors), including,
among other things, annual salaries, bonuses, stock options,
restricted stock grants and other incentive compensation
arrangements. In addition, our Compensation Committee
administers our stock option plans, including reviewing and
granting stock options and restricted stock grants, with respect
to our directors and employees (including executive officers).
Our Compensation Committee also reviews and approves other
aspects of our compensation policies and matters and each year
evaluates them to ensure that they are consistent with the
compensation and other benefits offered to employees at other
companies. In 2007, our Compensation Committee established a Key
Employee Stock Options Committee whose purpose is to approve
stock option grants to our newly hired employees subject to
guidelines previously approved by our Compensation Committee.
Our Compensation Committee appointed Stephen G. Waldis as the
sole member of this committee. The Key Employee Stock Options
Committee met eight times in 2007. A more detailed description
of the Compensation Committees functions can be found in
our Compensation Committee charter. The charter can be found on
the investor relations section of our website at
www.synchronoss.com. All members of our Compensation
Committee are independent (as independence is currently defined
in Rule 4200(a)(15) of the Nasdaq listing standards). Our
Compensation Committee met five times during 2007. Three
directors comprise our Compensation Committee: William J.
Cadogan, Charles E. Hoffman and Thomas J. Hopkins.
Neither Mr. Waldis, our Chief Executive Officer, nor
Mr. Irving, our Chief Financial Officer, participates in
the determination of his own compensation or the compensation of
directors. However, Mr. Waldis and Mr. Irving do make
recommendations to our Compensation Committee regarding the
amount and the form of the compensation of the other executive
officers and key employees and often participate in our
Compensation Committees deliberations about their
compensation. No other executive officers participate in the
determination of the amount or form of the compensation of
executive officers or directors.
Our Compensation Committee has retained Watson Wyatt Worldwide,
a human resources consulting firm (Watson Wyatt), as
its independent compensation consultant. Watson Wyatt serves at
the pleasure of the Compensation Committee rather than the
Company and its fees are approved by the Compensation Committee.
From time to time, Watson Wyatt provides the Compensation
Committee with data about the compensation paid by our peer
group and other employers who compete with the Company for
executive talent, and is available to advise the Compensation
Committee regarding all of its responsibilities as well as on
new developments in areas applicable to the Compensation
Committees activities pursuant to its charter.
Compensation Committee Interlocks and Insider
Participation. None of the members of our
Compensation Committee was at any time during the 2007 fiscal
year an officer or employee of the Company. No executive officer
serves as a member of the Board of Directors or Compensation
Committee of any other entity that has one or more executive
officers serving as a member of our Board of Directors or
Compensation Committee. In 2007, we did not make any loans to
directors or executive officers relating to purchases of our
common stock or for any other purpose.
Nominating/Corporate Governance Committee. The
Nominating/Corporate Governance Committee of our Board of
Directors reviews and reports to our Board of Directors on a
periodic basis with regard to matters of corporate governance,
and reviews, assesses and makes recommendations on the
effectiveness of our corporate governance policies. In addition,
our Nominating/Corporate Governance Committee reviews and makes
recommendations to our Board of Directors regarding the size and
composition of our Board of Directors and the appropriate
qualities and skills required of our directors in the context of
the then current
make-up of
our Board of Directors. This includes an assessment of each
candidates independence, personal and professional
integrity, financial literacy or other professional or business
experience relevant to an understanding of our business, ability
to think and act independently and with sound judgment and
ability to serve our stockholders long-term interests.
These factors, and others as considered useful by our
Nominating/Corporate Governance Committee, are reviewed in the
context of an assessment of the perceived needs of our Board of
Directors at a particular point in time. As a result, the
priorities and emphasis of our Nominating/Corporate Governance
Committee and of our Board of Directors may change from time to
time to take into account changes in business and other trends,
and the portfolio of skills and experience of current and
prospective directors.
8
Our Nominating/Corporate Governance Committee charter can be
found on the investor relations section of our website at
www.synchronoss.com. The members of our
Nominating/Corporate Governance Committee are William J.
Cadogan, Charles E. Hoffman and Donnie M. Moore. James M.
McCormick served as a member of our Nominating/Corporate
Governance Committee until his resignation from the Committee
effective December 2007 and Scott Yaphe served as a member of
our Nominating/Corporate Governance Committee until his
resignation from the Board effective May 2007. Mr. Moore
joined the Nominating/Corporate Governance Committee at the time
he joined our Board of Directors in May 2007 and
Mr. Hoffman was appointed to the Nominating/Corporate
Governance Committee in December 2007 to replace
Mr. McCormick. All members of the Nominating/Corporate
Governance Committee are independent (as independence is
currently defined in Rule 4200(a)(15) of the Nasdaq listing
standards). The Nominating/Corporate Governance Committee held
one meeting during 2007. Our Nominating/Corporate Governance
Committee has established procedures for the nomination process
and leads the search for, selects and recommends candidates for
election to our Board of Directors. Consideration of new
director candidates typically involves a series of committee
discussions, the review of information concerning candidates and
interviews with selected candidates. Candidates for nomination
to our Board of Directors typically have been suggested by other
members of our Board of Directors or by our executive officers.
From time to time, our Nominating/Corporate Governance Committee
may engage the services of a third-party search firm to identify
director candidates. Our Nominating/Corporate Governance
Committee also considers candidates proposed in writing by
stockholders, provided such proposal meets the eligibility
requirements for submitting stockholder proposals for inclusion
in our next proxy statement and is accompanied by certain
required information about the candidate. Candidates proposed by
stockholders will be evaluated by our Nominating/Corporate
Governance Committee using the same criteria as for all other
candidates.
Business Development Committee. In 2007, our
Board of Directors established a Business Development Committee
to review certain strategic business development and growth
opportunities. Our Business Development Committee charter can be
found on the investor relations section of our website at
www.synchronoss.com. The members of our Business
Development Committee are William J. Cadogan, Thomas J. Hopkins
and Stephen G. Waldis. All members of the Business Development
Committee other than Mr. Waldis are independent (as
independence is currently defined in Rule 4200(a)(15) of
the Nasdaq listing standards). The Business Development
Committee held two meetings during 2007.
Code of Business Conduct. Our Board of
Directors has adopted a code of business conduct that applies to
all of our employees, officers (including our principal
executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions) and directors. The full text of our code of business
conduct is posted on our website at www.synchronoss.com.
If the Company makes any substantive amendments to the code of
business conduct or grants a waiver from a provision of the code
to any executive officer or director, the Company will promptly
disclose the nature of the amendment or waiver on its website.
Stockholder
Communications with the Board of Directors
Stockholders may communicate with the Board of Directors by
sending a letter to Synchronoss Technologies, Inc., 750 Route
202 South, Suite 600, Bridgewater, New Jersey 08807,
Attention: Secretary. Each such communication should set forth
(i) the name and address of such stockholder as they appear
on our books and, if the shares of our Common Stock are held by
a nominee, the name and address of the beneficial owner of such
shares and (ii) the number of shares of our Common Stock
that are owned of record by such record holder and beneficially
by such beneficial owner. The Secretary will review all
communications from stockholders and regularly forward to the
Board of Directors all correspondence that, in his opinion,
deals with the functions of the Board of Directors or committees
thereof, or that he otherwise determines to be appropriate for
their attention.
9
Director
Compensation
The following table sets forth all of the compensation awarded
to, earned by, or paid to each person who served as a director
during 2007, other than a director who also served as a named
executive officer.
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Fees Earned
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|
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or Paid in
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Stock
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Option
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Cash
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Awards
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Awards
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Total
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Name
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($)
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($)(7)
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|
|
($)8
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|
|
($)
|
|
|
William J. Cadogan(1)
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|
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65,625
|
|
|
|
50,204
|
|
|
|
151,000
|
|
|
|
266,829
|
|
Charles E. Hoffman(2)
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|
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39,375
|
|
|
|
60,004
|
|
|
|
151,000
|
|
|
|
250,379
|
|
Thomas Hopkins(3)
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|
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58,125
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|
|
|
50,204
|
|
|
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151,000
|
|
|
|
259,329
|
|
James McCormick(4)
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|
|
35,000
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|
|
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50,204
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|
|
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151,000
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|
|
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236,204
|
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Donnie M. Moore(5)
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|
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33,333
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|
|
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|
|
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493,850
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|
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527,183
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Scott Yaphe(6)
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|
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15,625
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|
|
|
|
|
|
|
|
|
|
|
15,625
|
|
|
|
|
(1) |
|
Mr. Cadogan serves as the chair of both the
Nominating/Corporate Governance Committee and Compensation
Committee, and is a member of the Audit Committee. |
|
(2) |
|
Mr. Hoffman is a member of the Compensation Committee and
was elected a member of the Nominating/Corporate Governance
Committee in December 2007. |
|
(3) |
|
Mr. Hopkins serves as the chair of the Audit Committee and
is a member of the Compensation Committee. |
|
(4) |
|
Mr. McCormick resigned as a member of the
Nominating/Corporate Governance Committee in December 2007. |
|
(5) |
|
In May 2007, Mr. Moore was elected to the Board of
Directors and to the Nominating/Corporate Governance Committee
and the Audit Committee. |
|
(6) |
|
In May 2007, Mr. Yaphe resigned from the Board of Directors
and the Nominating/Corporate Governance Committee and the Audit
Committee. |
|
(7) |
|
The value of stock awards granted to our directors has been
estimated pursuant to SFAS No. 123(R) for 2007. For
the assumptions used for SFAS No. 123(R) value, see
Footnote 2 to the Financial Statements for our Annual Report on
Form 10-K
for the year ended December 31, 2007. Our directors will
not realize the estimated value of these awards until these
awards are vested and sold. As of December 31, 2007,
Messrs. Cadogan, Hopkins and McCormick held 3,586
restricted shares of Common Stock and Mr. Hoffman held
4,286 restricted shares of Common Stock. |
|
(8) |
|
The value of option awards granted to our directors has been
estimated pursuant to SFAS No. 123(R) for 2007. For
the assumptions used for SFAS No. 123(R) value, see
Footnote 2 to the Financial Statements for the Annual Report on
Form 10-K
for the year ended December 31, 2007. Our directors will
not realize the estimated value of these awards until these
awards are vested and exercised or sold. As of December 31,
2007, each of Messrs. Cadogan, Hoffman, Hopkins and
McCormick held options to purchase 45,000 shares of Common
Stock and Mr. Moore held options to purchase
35,000 shares of Common Stock. |
Each non-employee member of our Board of Directors is entitled
to receive an annual retainer of $25,000. In addition, each
non-employee director serving on our Audit Committee,
Compensation Committee and Nominating/Corporate Governance
Committee is entitled to an annual retainer of $10,000, $7,500
and $5,000, respectively, and the chair of each such committee
is entitled to an annual retainer of $20,000, $15,000 and
$10,000, respectively. No fees were paid to any member of the
Business Development Committee in 2007. Beginning in 2008, each
non-employee director who is a member of the Business
Development Committee will receive $750 for attending a meeting
in person and $500 for attending a meeting by telephone. The
retainer fees are paid in four quarterly payments on or about
the first day of each calendar quarter. The per meeting fees
will be paid at the end of each calendar quarter. Non-employee
directors are also entitled to an initial stock option award to
purchase 35,000 shares of our common stock upon such
directors election to our Board of Directors under our
2006 Equity Incentive Plan. The option will become exercisable
for one-third of the shares after one year of service as a
director, with the balance vesting in equal monthly
10
installments over the remaining two years. In January 2007,
options to purchase 10,000 shares of our common stock were
granted to Messrs. Cadogan, Hoffman, Hopkins and McCormick
to increase their respective initial option grants from
25,000 shares to 35,000 shares. In addition, because
the fair market value of our common stock as of such grant date
was greater than the fair market value of our common stock on
the dates Messrs. Cadogan, Hoffman, Hopkins and McCormick
became entitled to receive options for 35,000 shares
instead of 25,000 shares, our Compensation Committee,
granted each of the directors restricted shares of our common
stock having a value equal to the amount by which such
directors option exercise price exceeded the aggregate
option exercise price that would have been applicable had he
initially received an option to purchase 35,000 shares of
our common stock. Specifically, each of Messrs. Cadogan,
Hopkins and McCormick received a grant of 3,586 restricted
shares of our common stock, based on the fair market value of
our common stock on May 30, 2006 and Mr. Hoffman
received a grant of 4,286 restricted shares of our common stock,
based on the fair market value of our common stock on
June 14, 2006. These shares vest one-third after one year
from the date such individual became entitled to receive an
option to purchase 35,000 shares, with the balance vesting
in equal monthly installments over the remaining two years. On
the first Tuesday in January of each year, each non-employee
director receives an annual stock option award to purchase
10,000 shares of our common stock, which will vest in equal
monthly installments over the following year. All such options
will be granted at the fair market value on the date of the
award. We currently have a policy to reimburse directors for
travel, lodging and other reasonable expenses incurred in
connection with their attendance at board and committee meetings.
Compensation
Discussion and Analysis
This section discusses the principles underlying our executive
compensation decisions and the most important factors relevant
to an analysis of these decisions. It provides qualitative
information regarding the manner and context in which
compensation is awarded to and earned by our executive officers
and places in perspective the data presented in the tables and
other quantitative information that follows this section. The
following discussion and analysis contains statements regarding
future individual and company performance targets and goals.
These targets and goals are disclosed in the limited context of
our compensation programs and should not be understood to be
statements of managements expectations or estimates of
results or other guidance. We specifically caution investors not
to apply these statements to other contexts.
Our compensation of executives is designed to attract, as
needed, individuals with the skills necessary for us to achieve
our business plan, to reward those individuals fairly over time,
and to retain those individuals who continue to perform at or
above our expectations. We have a pay for performance philosophy
with the objective of our executive compensation program to
align executive compensation with our long-term business
objectives and performance. We rely upon judgment and not upon
rigid guidelines or formulas in determining the amount and mix
of compensation elements for each executive officer. Factors
affecting our judgments include the nature and scope of the
executive officers responsibilities and his effectiveness
in leading our initiatives to achieve corporate goals. We
believe that the skill, talent, judgment and dedication of our
executive officers are critical factors affecting the long-term
value of our company. Therefore, our goal is to maintain an
executive compensation program that will attract and retain
qualified executives who are able to contribute to our long-term
success and motivate them to a high level of performance.
Our executives compensation has three primary
components salary, a yearly cash bonus, and stock
option
and/or
restricted stock awards granted pursuant to our 2006 Equity
Incentive Plan. These elements implement the compensation
philosophy described above: (i) the salary component is
designed to attract executives and reward satisfactory
performance; (ii) the bonus component is tied to our
overall performance and an individual executives
contribution to our broader goals by setting challenging
performance goals and providing short-term incentives for
achieving these goals; and (iii) the option/restricted
stock component is designed to retain key executives and
motivate them to increase long-term stockholder value and to
align their ownership interests with those of our stockholders.
In addition to these three compensation elements, we provide our
executives with benefits that are generally available to our
salaried employees.
We account for equity compensation paid to our employees under
the rules of FAS 123(R), which requires us to estimate and
record an expense over the service period of the award.
Accounting rules also
11
require us to record cash compensation as an expense at the time
the obligation is incurred. We structure cash bonus compensation
so that it is taxable to our employees at the time it becomes
available to them.
Our Compensation Committees current intent is to perform
at least annually a strategic review of our executive
officers base compensation and restricted stock and option
holdings to determine whether they provide adequate incentives
and motivation to our executive officers. The performance
metrics against which the executives are measured are clearly
communicated, measurable and consistently applied and include
corporate and individual goals. Our Compensation Committee
measures our performance against our specific performance goals
established at the beginning of the fiscal year in determining
the cash bonus pool. Our CEO, as the manager of the members of
the executive team, assesses our overall performance and the
executives achievements over the year against their
individual goals, and makes a recommendation to our Compensation
Committee with respect to any merit increase in salary, cash
bonus and stock option and restricted stock grants for each
member of the executive team, other than himself. Our
Compensation Committee meets to evaluate, discuss and modify or
approve these recommendations, and to conduct a similar
evaluation of our CEOs contributions to corporate goals
and achievement of individual goals. Our Compensation Committee
meetings typically have included, for all or a portion of each
meeting, not only the committee members but also our Chief
Executive Officer, Chief Financial Officer and General Counsel,
in his capacity as Secretary of the Compensation Committee.
We view the three components of our executive compensation as
related but distinct. Although our Compensation Committee does
review total compensation, we do not believe that significant
compensation derived from one component of compensation should
negate or reduce compensation from other components. We
determine the appropriate level for each compensation component
based in part, but not exclusively, on our view of internal
equity and consistency, and other factors we deem relevant, such
as the executives contribution to our overall success. In
addition, our Compensation Committee believes that executive
compensation should be strongly linked to long-term stockholder
value creation in order to provide a strong incentive for future
growth, and that executives should have a significant portion of
compensation at risk. Our Compensation Committee has concluded
that, consistent with our peer companies, stock option and
restricted stock awards are the most effective form of
compensation in aligning the interest of executive officers with
the long-term interests of stockholders and therefore all
long-term incentives are in the form of stock incentives.
Benchmarking
of Base Compensation and Equity Holdings
Our Compensation Committee has the authority under its charter
to select and retain consultants and other advisers to assist it
in carrying out its duties. During 2006, our Compensation
Committee, in accordance with this authority, engaged Watson
Wyatt to prepare a report comparing the compensation of our
executives and other employees with those of our peer companies.
In selecting our peer companies, Watson Wyatt analyzed various
factors such as geography, employee headcount, research and
development expenses, capitalization, product candidate
pipeline, and focus. In 2006, with the input of Watson Wyatt, we
used the following 13 companies as our peer companies:
|
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Inphonic, Inc.
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Opnet Tech, Inc.
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Syniverse, Inc.
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Infospace, Inc.
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Rackable Systems, Inc.
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Unica Corporation
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Neustar, Inc.
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Rightnow Technologies, Inc.
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Vocus, Inc.
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Omniture, Inc.
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Shutterfly, Inc.
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Witness Systems, Inc.
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Openwave Systems, Inc.
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|
In 2007, we added Kenexa Corporation and deleted Witness
Systems, Inc. to our 2006 list of peer companies and updated the
information that Watson Wyatt had previously provided in its
2006 report by reviewing these companies proxies and
various other SEC and other public filings. Our Compensation
Committee intends to review the peer companies periodically to
reflect changes in market capitalization and other factors.
Based on this review, our Compensation Committee has elected to
set our respective executive officers salaries, bonuses
and equity holdings at a level that it believes is competitive
with executives with similar roles at our peer companies. For
2007, the Compensation Committees goal was to provide
overall compensation targeted in the mid-range of market
competitive pay practices in our competitive peer group
12
when targeted levels of performance are achieved as determined
by the annual operating plan approved by the Board. In future
years, our Compensation Committee may use other benchmarks to
determine executive compensation as it deems appropriate. In
instances where an executive officer is uniquely key to our
success, our Compensation Committee may provide compensation
above this established benchmark. Our Compensation
Committees choice of using the competitive overall
compensation of these peer companies as its benchmark for
compensation reflects our consideration of stockholders
interests in paying what is necessary, but not significantly
more than necessary, to achieve our corporate goals while
conserving cash and equity as much as is practicable. We believe
that, given the industry in which we operate and the corporate
culture we have created, the total compensation and restricted
stock and options we offer are generally sufficient to retain
our existing executive officers and to hire new executive
officers when and as required. During the meeting of our
Compensation Committee held in December 2007, our Compensation
Committee reviewed information provided by Watson Wyatt and the
recommendations of management relating to additional equity
compensation for our executives. Watson Wyatts information
included an analysis of equity grants provided by our peer
companies, with updated information from its analysis in
connection with our 2006 executive equity grants. In approving
the management equity grants, our Compensation Committees
goal was to provide equity grants to management in the mid-range
of management equity grants provided by our peer companies.
Elements
of Compensation
Base Salary. We fix the base salary of each of
our executives at a level we believe enables us to hire and
retain individuals in a competitive environment and rewards
satisfactory individual performance and a satisfactory level of
contribution to our overall business goals. We also take into
account the base salaries paid by our peer companies and the
base salaries of other private and public companies with which
we believe we compete for talent. As explained above, in 2006
our Compensation Committee retained the compensation consultant
Watson Wyatt to provide us with information regarding the
compensation of executives at our peer companies and we updated
this information based on public filings of our peer companies
filed in 2007. Our Compensation Committee typically reviews
executive salaries annually and makes salary adjustments based
on the factors discussed above. However, in 2007, our
Compensation Committee determined that the base salaries for our
executives were below the median range of base salaries for our
peer group. Accordingly, we increased the salaries of our
executives to be in the mid-range of executives in similar
positions in our peer companies. While some individual base
salaries are above the median to reflect a particular
individuals role, current base salaries are, in the
aggregate, at the competitive median of those of our peer group.
Annual Incentive Bonus. At the beginning of
each year, including 2007, our Compensation Committee adopts an
annual performance incentive compensation plan. The purpose of
this plan is to reward our executives for performance that
achieves our revenue, operating income and key strategic goals,
as well as for their individual achievements. We have designed
the bonuses for each executive to focus that executive on
achieving key operational
and/or
financial objectives within a yearly time horizon. For each of
our named executive officers other than Mr. Putnam, such
officers annual target bonus is set forth in his
employment agreement. Mr. Putnam has a separate incentive
compensation plan, as described below. Under their respective
employment agreements, Mr. Waldis annual target bonus
is set at 65% of his annual base salary, and each of
Messrs. Garcias, Irvings and Tellezs
annual target bonus is set at 50% of his respective annual base
salary. The Compensation Committee reviews these target bonuses
against those of executives at peer companies to determine
whether they should be adjusted. The Compensation Committee did
not revise these targets in 2007. Each of Messrs. Garcia,
Irving, Tellez and Waldis may earn in excess of his annual
target bonus in the event that corporate and individual
objectives set by the Board are exceeded. Under our incentive
compensation plan, the maximum amount each of
Messrs. Irving, Garcia and Tellez could have received in
2007 was 87.5% of their respective salaries and the maximum
amount Mr. Waldis could have received in 2007 was 113.75%
of his salary.
In 2007, our Compensation Committee established the performance
goals and performance targets applicable under the incentive
compensation plan for cash bonuses that Messrs. Waldis,
Garcia, Tellez and Irving were eligible to earn based on our
annual operating plan and such individuals individual
performance. The annual operating plan is developed by
management and presented by Mr. Waldis, as Chief Executive
13
Officer and President, and Mr. Irving, as Chief Financial
Officer, to our Board of Directors for its review and approval.
For each of Messrs. Waldis, Irving, Tellez and Garcia, 40%
of the target bonus was based on our 2007 revenue as compared to
the 2007 operating plan, 40% was based on our 2007 operating
income as compared to the 2007 operating plan, and 20% was based
on such persons individual achievements and was
discretionary. The threshold performance level, at which 25% of
the target payout is warranted, is typically
80-90% of
the target level, depending on the particular performance
measured. The performance level at which a maximum payout would
be made is typically set at 110% of the target level goal for
each performance measure. The target performance levels under
the annual incentive compensation plan are aligned with our
annual operating plan to motivate executives to achieve those
stretch performance goals in a manner that is consistent with
stockholders expectations of our forecasted results. As we
expect to achieve our annual operating plan when it is set, we
have similar expectations regarding the achievement of the goals
under the annual incentive compensation plan. In 2007, our
revenues and operating income exceeded 110% of the target level
for each performance measure and therefore the named executives
received 175% of the target amount for each of these components.
The actual amount paid to the named executives with respect to
these components is shown in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table
below. On average, the named executives received 72.5% of their
target amount for 2007 with respect to their individual
achievements. In addition, our Compensation Committee may pay
discretionary bonuses in addition to the performance bonuses
listed above, but no such bonuses were awarded in 2007. The
actual amount paid to the named executives with respect to these
components is shown in the Bonus column of the
Summary Compensation Table below. Our Compensation Committee
reviews the performance of each executive officer at least once
per year.
For 2007, the incentive compensation plan for Mr. Putnam,
as our Executive Vice President of Sales, is based on the
revenue generated by his sales team. Under his incentive
compensation plan, Mr. Putnam is entitled to receive four
percent (4%) of the total contract value over the life of the
original contract with any customer for which he was solely
responsible in procuring. He receives an initial two percent
(2%) upon the signing of the contract and the remainder based on
our collections during the life of the original contract. In
addition, Mr. Putnam receives one percent (1%) of the
collections received by us from other customers for which his
sales team was responsible but he was not directly the sales
person. The actual amount paid to Mr. Putnam with respect
to the incentive compensation plan is shown in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table below.
The actual amounts paid under the incentive compensation plan in
2007 to each of the named executive officers are shown in the
Non-Equity Incentive Plan Compensation and
Bonus columns of the Summary Compensation Table
below. Our Compensation Committee reviews the performance of
each executive officer at least once per year.
Long-Term Incentive Compensation. As discussed
above, all long-term incentives are in the form of stock
incentives. The authority to make equity grants to executive
officers rests with our Compensation Committee, although the
Compensation Committee does consider the recommendations of our
Chief Executive Officer and Chief Financial Officer. Generally,
the size of each grant is set at a level that the Compensation
Committee deems appropriate to create a meaningful opportunity
for stock ownership based upon the individuals position
with the Company, the individuals potential for future
responsibility and promotion, the individuals performance
in the recent period and the ratio of unvested to vested options
held by the individual at the time of the new grant. Since our
initial public offering, all awards of options to purchase
shares of our common stock have been made at or above the market
price at the time of the award, as reported on Nasdaq on the
date of grant except that for any option grants to any executive
officer or employee who joins us, the options will be granted on
the closing market value of our stock as reported on Nasdaq on
the later of (i) the date of grant or (ii) the date
the executive officer or employee joins the Company.
For those executive officers who joined us after our initial
public offering, a reasonable stock option grant was made in the
year that such executive officer commenced employment. At the
end of each calendar year, at our Compensation Committees
regularly scheduled December meeting, our Compensation Committee
considers annual replenishment equity awards for executive
officers based on recommendations from our Chief Executive
Officer. We believe that the resulting overlapping vesting
schedule from awards made in prior years,
14
together with the number of shares subject to each award, helps
ensure a meaningful incentive to remain in our employ and to
enhance stockholder value over time. Beginning at the end of
2006 and again in 2007, these awards were made through stock
option grants and restricted stock. Our decision to use
restricted stock to satisfy a portion of our annual
replenishment equity awards was based on a desire to reduce
short-term dilution and stock plan share usage, while
simultaneously maintaining competitive rewards to retain
employee talent. Restricted stock gives an employee the right to
receive a specified number of shares of our Common Stock at no
cost to the employee if the employee remains employed with us
until the restricted stock vests. The restricted stock and stock
option grants generally vest 25% after the first year and
monthly thereafter. Although its value may increase or decrease
with changes in the stock price during the period before
vesting, restricted stock will have value in the long term, thus
encouraging retention, while the entire compensation value of a
stock option depends on future stock price appreciation.
Accordingly, restricted stock can deliver significantly greater
share-for-share compensation value at grant than stock options
and we can offer comparable compensation value with fewer shares
and less dilution for our stockholders. The size of each annual
grant is set at a level that our Compensation Committee deems
appropriate and from time to time counseled by experts in the
field such as Watson Wyatt to create a meaningful opportunity to
realize value from equity based upon the employees
position with us, the employees potential for future
responsibility and promotion, the individuals performance
in the recent period, our performance in the recent period and
the competitive marketplace trends.
In 2007, the Compensation Committee retained Watson Wyatt to
provide input on the equity grants to be provided to our
executive officers based on an analysis of grants provided to
executives at our peer companies. In December 2007, in
accordance with our compensation policies, our Compensation
Committee granted each of our executive officers a stock option
and restricted stock grant. The number of stock options and
restricted stock grants awarded to each executive officer was
calculated based on the price of our common stock on the date of
grant and a multiple of the executive officers 2007 base
salary. Based on Watson Wyatts recommendation, we included
one (1) share of restricted stock for every eight
(8) shares subject to a stock option. Also based on Watson
Wyatts recommendation and to be consistent with grants to
executive officers at our peer companies, Messrs. Waldis,
Irving and Garcias multiple was 4.5 of their base salary
and Messrs. Putnams and Tellezs multiple was
3.0 of their base salary. The difference in the multiple was
based on their respective position with the Company. The number
and value of the shares subject to our 2007 option grants to the
named executive officers is reflected in the Summary
Compensation Table and Grants of Plan-Based
Awards tables below.
Chief Executive Officer
Compensation. Mr. Waldis 2007
compensation consisted of base salary, annual bonus and stock
option and restricted stock grants. Our Compensation Committee
determined Mr. Waldis compensation as Chief Executive
Officer and President using methods consistent with those used
for other senior executives at our peer companies. In April
2007, as part of our annual officers compensation review,
Mr. Waldis annual base salary was increased from
$375,000 to $475,000 in recognition of both his performance as
Chief Executive Officer and competitive market salary levels at
our peer companies. Mr. Waldis award under the
incentive bonus plan was paid in accordance with the terms of
defined performance goals and objectives, as discussed above. In
addition, in 2007, Mr. Waldis was awarded a stock option
and restricted stock grant under the long-term incentive
compensation plan at the same time and in accordance with the
same methods used for other executives, as described above. The
actual value of awards paid to Mr. Waldis in 2007 are shown
in the Summary Compensation Table below.
As Chief Executive Officer and President, Mr. Waldis
responsibilities are much greater than those of the other
executives, as he is informed and involved, in a detailed
manner, with each departments progress toward our shared
Company goals. In our industry, the Chief Executive Officer must
be deeply aware of the Companys strengths and obstacles,
and have sharp strategic vision for the Companys future
while maintaining the Companys ability to adapt to changed
circumstances and prospects quickly and thoughtfully. We believe
Mr. Waldis displays these skills. The successful progress
of our research and development programs brings value to the
Company and our stockholders, and we believe
Mr. Waldiss direction in the decisions and actions
that drive this progress merit the compensation that he receives.
15
Post-Termination Protection. We have agreed to
change in control severance arrangements with our executive
officers, each of which is described below under the heading
Severance and Change in Control Arrangements. Our
Compensation Committee believes the change in control severance
arrangements are important to protect our executive officers
from any involuntary termination associated with a change in
control and that the amounts are reasonable when compared with
similar arrangements adopted by peer companies. Within this
change in control severance arrangement, our Compensation
Committee sought uniformity of results among the executive
officers based on their positions at the Company. In addition,
our Compensation Committee believes that the events triggering
payment, both a change in control and an involuntary
termination, and then only when there is no misconduct by the
officer, are fair hurdles for the ensuing rewards. In addition,
each of our executive officers would receive severance under his
respective employment agreements if he is terminated without
cause as defined in his employment agreement. The
severance program is provided as a temporary source of income in
the event of an executives involuntary termination of
employment.
Other Benefits. Our executives are eligible to
participate in all of our employee benefit plans, such as
medical, dental, vision, group life and disability insurance and
our 401(k) plan, in each case on the same basis as our other
employees. We also lease an automobile (and pay applicable
insurance and gas) for Messrs. Waldis and Irving to be used
primarily for business purposes. There were no other special
benefits or perquisites provided to any executive officer in
2007. In 2006, we reimbursed a portion of the expenses incurred
by Mr. Tellez in relocating his family to New Jersey in
connection with his joining our Company and we paid
Mr. Tellez an additional amount to cover taxes on the
reimbursement.
Tax Deductibility of Pay. Section 162(m)
of the Internal Revenue Code of 1986, as amended (the Tax
Code), places a limit of $1,000,000 on the amount of
compensation that the Company may deduct in any one year with
respect to each of its five most highly paid executive officers.
There is an exception to the $1,000,000 limitation for
performance-based compensation meeting certain requirements. To
qualify for an exemption from the $1,000,000 limitation, the
stockholders were asked to approve a limit under the incentive
plan on the maximum number of shares for which a participant may
be granted stock options in any calendar year. Because the
incentive plan and option grants under the incentive plan comply
with the applicable requirements for this exemption, any
compensation deemed paid to a named executive officer when he or
she exercises an option with an exercise price that is at least
equal to the fair market value of the option shares on the grant
date should qualify as performance-based compensation and should
not be subject to the $1,000,000 deduction limitation.
Restricted stock awards are generally not considered
performance-based under Section 162(m) of the Tax Code and,
as such, are generally not deductible by us. To maintain
flexibility in compensating executive officers in a manner
designed to promote varying corporate goals, our Compensation
Committee has not adopted a policy requiring all compensation to
be deductible. Although some amounts recorded as compensation by
us to certain executives may be limited by Section 162(m),
that limitation does not result in the current payment of
increased federal income taxes by the Company due to its
significant net operating loss carry forwards. Our Compensation
Committee may approve compensation or changes to plans, programs
or awards that may cause the compensation or awards not to
comply with Section 162(m) if it determines that such
action is appropriate and in our best interests.
Summary. We believe that our compensation
philosophy and programs are designed to foster a
performance-oriented culture that aligns employees
interests with those of our stockholders. We believe that the
compensation of our executives is both appropriate for and
responsive to the goal of improving stockholder value.
16
Compensation
Committee
Report(1)
The Compensation Committee has reviewed and discussed the
foregoing Compensation Discussion and Analysis with management
and, based on such review and discussions, the Compensation
Committee has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy
Statement submitted by the following members of the Compensation
Committee:
William J. Cadogan, Chairman
Charles E. Hoffman
Thomas J. Hopkins
(1) The
material in this report is not soliciting material,
is not deemed filed with the SEC and is not to be
incorporated by reference in any filing of Synchronoss under the
Securities Act or the Exchange Act, whether made before or after
the date hereof and irrespective of any general incorporation
language in any such filing.
17
Compensation
of Executive Officers
Summary
Compensation Table
The following table sets forth all of the compensation awarded
to, earned by, or paid to the Companys principal
executive officer, principal financial officer
and the three other highest paid executive officers (our
named executive officers) for 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position(a)
|
|
Year
|
|
($)(b)
|
|
($)(c)
|
|
($)(1)(d)
|
|
($)(2)(e)
|
|
(3)(f)
|
|
($)(g)
|
|
($)(h)
|
|
Stephen G. Waldis
|
|
|
2007
|
|
|
|
450,000
|
|
|
|
86,450
|
|
|
|
233,820
|
(4)
|
|
|
1,120,305
|
(6)
|
|
|
432,250
|
|
|
|
15,750
|
(8)
|
|
|
2,338,575
|
|
Chairman of the Board of Directors, President and Chief
Executive Officer
|
|
|
2006
|
|
|
|
343,746
|
|
|
|
68,250
|
|
|
|
80,998
|
(5)
|
|
|
338,108
|
(7)
|
|
|
287,070
|
|
|
|
13,215
|
(8)
|
|
|
1,131,387
|
|
Lawrence R. Irving
|
|
|
2007
|
|
|
|
266,250
|
|
|
|
39,200
|
|
|
|
137,830
|
(9)
|
|
|
660,383
|
(11)
|
|
|
196,000
|
|
|
|
16,638
|
(13)
|
|
|
1,316,301
|
|
Chief Financial Officer and Treasurer
|
|
|
2006
|
|
|
|
221,250
|
|
|
|
33,750
|
|
|
|
47,084
|
(10)
|
|
|
295,978
|
(12)
|
|
|
132,494
|
|
|
|
11,173
|
(13)
|
|
|
741,729
|
|
Robert Garcia
|
|
|
2007
|
|
|
|
281,250
|
|
|
|
42,000
|
|
|
|
147,685
|
(14)
|
|
|
707,558
|
(16)
|
|
|
210,000
|
|
|
|
5,650
|
(18)
|
|
|
1,394,143
|
|
Chief Operating Officer
|
|
|
2006
|
|
|
|
218,749
|
|
|
|
33,750
|
|
|
|
770,860
|
(15)
|
|
|
345,505
|
(17)
|
|
|
132,494
|
|
|
|
1,500
|
(18)
|
|
|
1,502,859
|
|
Christopher Putnam
|
|
|
2007
|
|
|
|
180,000
|
|
|
|
|
|
|
|
59,060
|
(19)
|
|
|
283,027
|
(21)
|
|
|
452,867
|
|
|
|
5,650
|
(18)
|
|
|
980,604
|
|
Executive Vice President of Sales
|
|
|
2006
|
|
|
|
175,000
|
|
|
|
|
|
|
|
36,435
|
(20)
|
|
|
349,202
|
(22)
|
|
|
396,263
|
|
|
|
1,500
|
(18)
|
|
|
958,400
|
|
Omar Tellez
|
|
|
2007
|
|
|
|
212,500
|
|
|
|
19,688
|
|
|
|
73,825
|
(23)
|
|
|
353,790
|
(25)
|
|
|
157,500
|
|
|
|
7,750
|
(18)
|
|
|
825,053
|
|
Chief Marketing Officer
|
|
|
2006
|
|
|
|
100,000
|
|
|
|
160,000
|
|
|
|
18,076
|
(24)
|
|
|
324,432
|
(26)
|
|
|
|
|
|
|
121,774
|
(27)
|
|
|
724,282
|
|
|
|
|
(1) |
|
The value of stock awards granted to our executive officers has
been estimated pursuant to SFAS No. 123(R) for 2007.
For the assumptions used for SFAS No. 123(R) value,
see Footnote 2 to the Financial Statements for our Annual Report
on
Form 10-K
for the year ended December 31, 2007. Our executive
officers will not realize the estimated value of these awards
until these awards are vested and sold. |
|
(2) |
|
The value of option awards granted to our executive officers has
been estimated pursuant to SFAS No. 123(R) for 2007.
For the assumptions used for SFAS No. 123(R) value,
see Footnote 2 to the Financial Statements for the Annual Report
on
Form 10-K
for the year ended December 31, 2007. Our executive
officers will not realize the estimated value of these awards
until these awards are vested and exercised or sold. |
|
(3) |
|
The amounts under this column include amounts paid under the
Companys incentive compensation plan described under
Compensation Discussion & Analysis. |
|
(4) |
|
Relates to a grant to Mr. Waldis of 6,477 restricted shares
on December 4, 2007. |
|
(5) |
|
Relates to a grant to Mr. Waldis of 10,000 restricted
shares on October 2, 2006 and 7,094 restricted shares on
December 5, 2006. |
|
(6) |
|
Represents the aggregate fair market value of options to
purchase 51,818 shares of common stock granted
December 4, 2007 with an exercise price of $36.10. |
|
(7) |
|
Represents the aggregate fair market value of options to
purchase (a) 80,000 shares of common stock granted
April 3, 2006 with an exercise price of $8.98 and
(b) 56,753 shares of common stock granted
December 5, 2006 with an exercise price of $12.68. |
|
(8) |
|
Reflects amounts paid to Mr. Waldis for leasing an
automobile, including insurance premiums, and 401(k) matching
contribution. |
|
(9) |
|
Relates to a grant to Mr. Irving of 3,818 restricted shares
on December 4, 2007. |
|
(10) |
|
Relates to a grant to Mr. Irving of 5,625 restricted shares
on October 2, 2006 and 4,256 restricted shares on
December 5, 2006 |
|
(11) |
|
Represents the aggregate fair market value of options to
purchase 30,545 shares of common stock granted
December 4, 2007 with an exercise price of $36.10. |
18
|
|
|
(12) |
|
Represents the aggregate fair market value of options to
purchase (a) 95,000 shares of common stock granted
April 3, 2006 with an exercise price of $8.98 and
(b) 34,052 shares of common stock granted
December 5, 2006 with an exercise price of $12.68. |
|
(13) |
|
Reflects amounts paid to Mr. Irving for leasing an
automobile, including insurance premiums, and 401(k) matching
contribution. |
|
(14) |
|
Relates to a grant to Mr. Garcia of 4,091 restricted shares
on December 4, 2007. |
|
(15) |
|
Relates to a grant to Mr. Garcia of 75,000 restricted
shares on April 3, 2006, 12,383 restricted shares on
April 5, 2006, 5,625 restricted shares on October 2,
2006 and 4,256 restricted shares on December 5, 2006 |
|
(16) |
|
Represents the aggregate fair market value of options to
purchase 32,727 shares of common stock granted
December 4, 2007 with an exercise price of $36.10. |
|
(17) |
|
Represents the aggregate fair market value of options to
purchase (a) 120,000 shares of common stock granted
April 3, 2006 with an exercise price of $8.98 and
(b) 34,052 shares of common stock granted
December 5, 2006 with an exercise price of $12.68. |
|
(18) |
|
Represents 401(k) matching contributions. |
|
(19) |
|
Relates to a grant to Mr. Putnam of 1,636 restricted shares
on December 4, 2007. |
|
(20) |
|
Relates to a grant to Mr. Putnam of 5,000 restricted shares
on October 2, 2006 and 2,838 restricted shares on
December 5, 2006. |
|
(21) |
|
Represents the aggregate fair market value of options to
purchase 13,091 shares of common stock granted
December 4, 2007 with an exercise price of $36.10. |
|
(22) |
|
Represents the aggregate fair market value of options to
purchase (a) 140,000 shares of common stock granted
April 3, 2006 with an exercise price of $8.98 and
(b) 22,701 shares of common stock granted
December 5, 2006 with an exercise price of $12.68. |
|
(23) |
|
Relates to a grant to Mr. Tellez of 2,045 restricted shares
on December 4, 2007. |
|
(24) |
|
Relates to a grant to Mr. Tellez of 3,153 restricted shares
on December 5, 2006. |
|
(25) |
|
Represents the aggregate fair market value of options to
purchase 16,364 shares of common stock granted
December 4, 2007 with an exercise price of $36.10. |
|
(26) |
|
Represents the aggregate fair market value of options to
purchase (a) 150,000 shares of common stock granted
July 25, 2006 with an exercise price of $6.95 upon joining
the Company and (b) 25,224 shares of common stock
granted December 5, 2006 with an exercise price of $12.68. |
|
(27) |
|
Reflects tax
gross-up on
relocation expenses in the amount of $121,774 paid to
Mr. Tellez. |
Salary
and Non-Equity Incentive Plan Compensation in Proportion to
Total Compensation
The amount of salary and non-equity incentive plan compensation
earned in 2007 in proportion to the total compensation reported
for each of our named executive officers was:
|
|
|
|
|
Mr. Waldis
|
|
|
38
|
%
|
Mr. Irving
|
|
|
35
|
%
|
Mr. Garcia
|
|
|
35
|
%
|
Mr. Putnam
|
|
|
65
|
%
|
Mr. Tellez
|
|
|
45
|
%
|
19
Grants of
Plan Based Awards
The following table sets forth each equity award granted to our
named executive officers during the year ended December 31,
2007. The FAS 123(R) value of these awards is also
reflected in columns (d) and (e) of the Summary
Compensation Table above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-
|
|
|
Shares of
|
|
|
Securities
|
|
|
Exercise or
|
|
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Base Price of
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Option Awards
|
|
Name(a)
|
|
Date(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
(#)(f)
|
|
|
(#)(g)
|
|
|
($/Sh)(h)
|
|
|
Stephen G. Waldis
|
|
|
12/4/07
|
|
|
|
|
|
|
|
308,750
|
|
|
|
540,313
|
|
|
|
6,477
|
|
|
|
51,818
|
|
|
|
36.10
|
|
Lawrence R. Irving
|
|
|
12/4/07
|
|
|
|
|
|
|
|
140,000
|
|
|
|
245,000
|
|
|
|
3,818
|
|
|
|
30,545
|
|
|
|
36.10
|
|
Robert Garcia
|
|
|
12/4/07
|
|
|
|
|
|
|
|
150,000
|
|
|
|
262,500
|
|
|
|
4,091
|
|
|
|
32,727
|
|
|
|
36.10
|
|
Christopher Putnam
|
|
|
12/4/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,636
|
|
|
|
13,091
|
|
|
|
36.10
|
|
Omar Tellez
|
|
|
12/4/07
|
|
|
|
|
|
|
|
112,500
|
|
|
|
196,875
|
|
|
|
2,045
|
|
|
|
16,364
|
|
|
|
36.10
|
|
|
|
|
(1) |
|
Each of the named executive officers was granted a non-equity
incentive plan award pursuant to our 2007 incentive compensation
plan and their respective employment agreements. The amounts
shown in the Target column reflect the target
payment level under their respective employment agreement if the
Company and each executive officer achieve all of their specific
performance objectives and goals previously approved by our
Compensation Committee. The amounts shown in the
Maximum column reflect the target payment levels
under their respective employment agreements if the Company and
each executive officer achieves the maximum of each of the
Company objectives and their individual objectives previously
approved by our Compensation Committee. Mr. Putnam has no
target payment level. The 2007 incentive compensation plan is
discussed in greater detail in Compensation Discussion and
Analysis. The actual amounts paid to each named executive
officer are shown in the Summary Compensation Table above. |
Description
of Awards Granted in 2007
|
|
|
|
|
Stephen G. Waldis: On December 4, 2007,
we granted Mr. Waldis (i) an option to purchase
51,818 shares of our common stock and (ii) 6,477
restricted shares. The option vests with respect to the first
25% of the shares subject to the option upon completion of
12 months of continuous service after December 4,
2007, and with respect to an additional 1/48 of the shares
subject to the option upon completion of each month of
continuous service thereafter; our right to repurchase these
restricted shares lapses with respect to the first 25% of the
shares when Mr. Waldis completes 12 months of
continuous service after December 4, 2007, and with respect
to 1/48 of the shares each month of continuous service
thereafter.
|
|
|
|
Lawrence R. Irving: On December 4, 2007,
we granted Mr. Irving (i) an option to purchase
30,545 shares of our common stock and (ii) 3,818
restricted shares. The option vests with respect to the first
25% of the shares subject to the option upon completion of
12 months of continuous service after December 4,
2007, and with respect to an additional 1/48 of the shares
subject to the option upon completion of each month of
continuous service thereafter; our right to repurchase these
restricted shares lapses with respect to the first 25% of the
shares when Mr. Irving completes 12 months of
continuous service after December 4, 2007, and with respect
to 1/48 of the shares each month of continuous service
thereafter.
|
|
|
|
Robert Garcia: On December 4, 2007, we
granted Mr. Garcia (i) an option to purchase
32,727 shares of our common stock and (ii) 4,091
restricted shares. The option vests with respect to the first
25% of the shares subject to the option upon completion of
12 months of continuous service after December 4,
2007, and with respect to an additional 1/48 of the shares
subject to the option upon completion of each month of
continuous service thereafter; our right to repurchase these
restricted shares lapses with respect to the first 25% of the
shares when Mr. Garcia completes 12 months of
continuous service after December 4, 2007, and with respect
to 1/48 of the shares each month of continuous service
thereafter.
|
20
|
|
|
|
|
Christopher Putnam: On December 4, 2007,
we granted Mr. Putnam (i) an option to purchase
13,091 shares of our common stock and (ii) 1,636
restricted shares. The option vests with respect to the first
25% of the shares subject to the option upon completion of
12 months of continuous service after December 4,
2007, and with respect to an additional 1/48 of the shares
subject to the option upon completion of each month of
continuous service thereafter; our right to repurchase these
restricted shares lapses with respect to the first 25% of the
shares when Mr. Putnam completes 12 months of
continuous service after December 4, 2007, and with respect
to 1/48 of the shares each month of continuous service
thereafter.
|
|
|
|
Omar Tellez: On December 4, 2007, we
granted Mr. Tellez (i) an option to purchase
16,364 shares of our common stock and (ii) 2,045
restricted shares. The option vests with respect to the first
25% of the shares subject to the option upon completion of
12 months of continuous service after December 4,
2007, and with respect to an additional 1/48 of the shares
subject to the option upon completion of each month of
continuous service thereafter; our right to repurchase these
restricted shares lapses with respect to the first 25% of the
shares when Mr. Tellez completes 12 months of
continuous service after December 4, 2007, and with respect
to 1/48 of the shares each month of continuous service
thereafter.
|
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information regarding each
unexercised option and all unvested stock held by each of our
named executive officers as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Market Value of
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or Units of
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Units of Stock
|
|
Stock That
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
That Have
|
|
Have Not
|
|
|
Options (#)
|
|
Options (#)
|
|
Price
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
Name(a)
|
|
Exercisable(b)
|
|
Unexercisable(c)
|
|
($)(d)
|
|
Date(e)
|
|
(#)(f)
|
|
(1)($)(g)
|
|
Stephen G. Waldis
|
|
|
33,333
|
(2)
|
|
|
46,667
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
5,833
|
(5)
|
|
|
206,722
|
|
|
|
|
14,188
|
(3)
|
|
|
42,565
|
(3)
|
|
|
12.68
|
|
|
|
12/5/2016
|
|
|
|
5,321
|
(6)
|
|
|
188,576
|
|
|
|
|
|
|
|
|
51,818
|
(4)
|
|
|
36.10
|
|
|
|
12/4/2014
|
|
|
|
6,477
|
(7)
|
|
|
229,545
|
|
Lawrence R. Irving
|
|
|
20,833
|
(2)
|
|
|
29,167
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
3,281
|
(5)
|
|
|
116,279
|
|
|
|
|
18,750
|
(2)
|
|
|
26,250
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
3,192
|
(6)
|
|
|
113,124
|
|
|
|
|
8,513
|
(3)
|
|
|
25,539
|
(3)
|
|
|
12.68
|
|
|
|
12/5/2016
|
|
|
|
3,818
|
(7)
|
|
|
135,310
|
|
|
|
|
|
|
|
|
30,545
|
(4)
|
|
|
36.10
|
|
|
|
12/4/2014
|
|
|
|
|
|
|
|
|
|
Robert Garcia
|
|
|
14,375
|
(8)
|
|
|
625
|
(8)
|
|
|
0.29
|
|
|
|
2/5/2014
|
|
|
|
43,750
|
(10)
|
|
|
1,550,550
|
|
|
|
|
39,427
|
(9)
|
|
|
21,667
|
(9)
|
|
|
1.84
|
|
|
|
1/3/2015
|
|
|
|
3,354
|
(11)
|
|
|
118,866
|
|
|
|
|
31,250
|
(2)
|
|
|
43,750
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
3,281
|
(5)
|
|
|
116,279
|
|
|
|
|
18,750
|
(2)
|
|
|
26,250
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
3,192
|
(6)
|
|
|
113,124
|
|
|
|
|
8,513
|
(3)
|
|
|
25,539
|
(3)
|
|
|
12.68
|
|
|
|
12/5/2016
|
|
|
|
4,091
|
(7)
|
|
|
144,985
|
|
|
|
|
|
|
|
|
32,727
|
(4)
|
|
|
36.10
|
|
|
|
12/4/2014
|
|
|
|
|
|
|
|
|
|
Christopher Putnam
|
|
|
1,738
|
(12)
|
|
|
521
|
(12)
|
|
|
0.29
|
|
|
|
4/20/2014
|
|
|
|
2,917
|
(5)
|
|
|
103,378
|
|
|
|
|
950
|
(13)
|
|
|
3,750
|
(13)
|
|
|
0.29
|
|
|
|
12/6/2014
|
|
|
|
2,129
|
(6)
|
|
|
75,452
|
|
|
|
|
41,667
|
(2)
|
|
|
58,333
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
1,636
|
(7)
|
|
|
57,960
|
|
|
|
|
16,667
|
(2)
|
|
|
23,333
|
(2)
|
|
|
8.98
|
|
|
|
4/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
5,675
|
(3)
|
|
|
17,026
|
(3)
|
|
|
12.68
|
|
|
|
12/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,091
|
(4)
|
|
|
36.10
|
|
|
|
12/4/2014
|
|
|
|
|
|
|
|
|
|
Omar Tellez
|
|
|
29,340
|
(14)
|
|
|
96,875
|
(14)
|
|
|
6.95
|
|
|
|
7/25/2016
|
|
|
|
2,365
|
(6)
|
|
|
83,816
|
|
|
|
|
6,306
|
(3)
|
|
|
18,918
|
(3)
|
|
|
12.68
|
|
|
|
12/5/2016
|
|
|
|
2,045
|
(7)
|
|
|
72,475
|
|
|
|
|
|
|
|
|
16,364
|
(4)
|
|
|
36.10
|
|
|
|
12/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Computed in accordance with SEC rules as the number of unvested
shares multiplied by the closing market price of our Common
Stock at the end of fiscal year 2007. The actual value (if any)
to be realized by the executive officer depends on whether the
shares vest and the future performance of our Common Stock. On
December 31, 2007, the closing price of our Common Stock
was $35.44 per share. Each of |
21
|
|
|
|
|
the options and restricted shares automatically vest if we are
acquired and the officer is either involuntarily terminated or
voluntarily resigns after his responsibilities are reduced. |
|
(2) |
|
Messrs. Waldis, Irving, Garcia and Putnam received a grant
of an option to purchase shares of our Common Stock under our
2000 Stock Plan on April 3, 2006. Starting with
April 3, 2007, each option could be exercised for a number
of shares equal to 25% of the total amount of shares under the
option. Thereafter, each option becomes exercisable for an
additional 1/48th of the total number of shares when each
additional month of continuous service is completed. As a
result, the option will be fully exercisable four years after
the date of grant. |
|
(3) |
|
Messrs. Waldis, Irving, Garcia, Putnam and Tellez received
a grant of an option to purchase shares of our Common Stock
under our 2006 Equity Incentive Plan on December 5, 2006.
Starting with December 5, 2007, each option could be
exercised for a number of shares equal to 25% of the total
amount of shares under the option. Thereafter, each option
becomes exercisable for an additional 1/48th of the total number
of shares when each additional month of continuous service is
completed. As a result, the option will be fully exercisable
four years after the date of grant. |
|
(4) |
|
Messrs. Waldis, Irving, Garcia, Putnam and Tellez received
a grant of an option to purchase shares of our Common Stock
under our 2006 Equity Incentive Plan on December 4, 2007.
Starting with December 4, 2008, each option could be
exercised for a number of shares equal to 25% of the total
amount of shares under the option. Thereafter, each option
becomes exercisable for an additional 1/48th of the total number
of shares when each additional month of continuous service is
completed. As a result, the option will be fully exercisable
four years after the date of grant. |
|
(5) |
|
Messrs. Waldis, Irving, Garcia and Putnam received a grant
of restricted shares of our Common Stock under our 2006 Equity
Incentive Plan on October 2, 2006. Starting with
April 3, 2007, 25% of the shares vest. Thereafter, 1/48th
of the shares vest when each additional month of continuous
service is completed. As a result, the shares will fully vest
four years after the date of grant. |
|
(6) |
|
Messrs. Waldis, Irving, Garcia, Putnam and Tellez received
a grant of restricted shares of our Common Stock under our 2006
Equity Incentive Plan on December 5, 2006. Starting with
December 5, 2007, 25% of the shares vest. Thereafter,
1/48th of the shares vest when each additional month of
continuous service is completed. As a result, the shares will
fully vest four years after the date of grant. |
|
(7) |
|
Messrs. Waldis, Irving, Garcia, Putnam and Tellez received
a grant of restricted shares of our Common Stock under our 2006
Equity Incentive Plan on December 4, 2007. Starting with
December 4, 2008, 25% of the shares vest. Thereafter,
1/48th of the shares vest when each additional month of
continuous service is completed. As a result, the shares will
fully vest four years after the date of grant. |
|
(8) |
|
Mr. Garcia received a grant of an option to purchase shares
of our Common Stock under our 2000 Stock Plan on
February 19, 2004. Starting on February 19, 2005, each
option could be exercised for a number of shares equal to 25% of
the total amount of shares under the option. Thereafter, each
option becomes exercisable for an additional 1/48th of the total
number of shares when each additional month of continuous
service is completed. As a result, each option became fully
exercisable on February 5, 2008. |
|
(9) |
|
Mr. Garcia received a grant of an option to purchase shares
of our Common Stock under our 2000 Stock Plan on April 12,
2005. Starting on April 12, 2005, each option could be
exercised for a number of shares equal to 25% of the total
amount of shares under the option. Thereafter, each option
becomes exercisable for an additional 1/48th of the total number
of shares when each additional month of continuous service is
completed. As a result, the option will become fully exercisable
four years after the date of grant. |
|
(10) |
|
Mr. Garcia received a grant of restricted shares of our
Common Stock under our 2000 Stock Plan on April 3, 2006.
Starting with April 3, 2007, 25% of the shares vested.
Thereafter, 1/48th of the shares vest when each additional month
of continuous service is completed. As a result, the shares will
fully vest four years after the date of grant. |
|
(11) |
|
Mr. Garcia received a grant of restricted shares of our
Common Stock under our 2000 Stock Plan on April 5, 2006. A
total of 5,934 of the restricted shares vested on
January 1, 2007; thereafter, 1/48th of |
22
|
|
|
|
|
the shares vested when each additional month of continuous
service is completed. As a result, the shares will fully vest
four years after January 3, 2005. |
|
(12) |
|
Mr. Putnam received a grant of an option to purchase shares
of our Common Stock under our 2000 Stock Plan on April 15,
2004. Starting on April 15, 2005, each option could be
exercised for a number of shares equal to 25% of the total
amount of shares under the option. Thereafter, each option
becomes exercisable for an additional 1/48th of the total number
of shares when each additional month of continuous service is
completed. As a result, the option will become fully exercisable
four years after the date of grant. |
|
(13) |
|
Mr. Putnam received a grant of an option to purchase shares
of our Common Stock under our 2000 Stock Plan on
December 21, 2004. Starting on December 6, 2005, each
option could be exercised for a number of shares equal to 25% of
the total amount of shares under the option. Thereafter, each
option becomes exercisable for an additional 1/48th of the total
number of shares when each additional month of continuous
service is completed. As a result, the option will become fully
exercisable four years after the date of grant. |
|
(14) |
|
Mr. Tellez received a grant of an option to purchase shares
of our Common Stock under our 2006 Equity Incentive Plan on
July 25, 2006 at the commencement of his employment.
Starting on July 25, 2007, each option could be exercised
for a number of shares equal to 25% of the total amount of
shares under the option. Thereafter, each option becomes
exercisable for an additional 1/48th of the total number of
shares when each additional month of continuous service is
completed. As a result, each option will become fully
exercisable four years after the date of grant. |
Option
Exercises and Stock Vested During 2007
The following table shows the number of shares acquired upon
exercise of options by each named executive officer during the
year ended December 31, 2007 and the number of shares of
restricted stock held by each named executive officer that
vested during the year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name(a)
|
|
(#)(b)
|
|
|
($)(c)
|
|
|
(#)(d)
|
|
|
($)(1)(e)
|
|
|
Stephen G. Waldis
|
|
|
|
|
|
|
|
|
|
|
5,938
|
|
|
|
165,888
|
|
Lawrence R. Irving
|
|
|
|
|
|
|
|
|
|
|
3,406
|
|
|
|
95,673
|
|
Robert Garcia
|
|
|
33,906
|
|
|
|
1,196,632
|
|
|
|
43,690
|
|
|
|
1,036,198
|
|
Christopher Putnam
|
|
|
13,912
|
|
|
|
447,965
|
|
|
|
2,792
|
|
|
|
76,613
|
|
Omar Tellez
|
|
|
23,785
|
|
|
|
722,816
|
|
|
|
788
|
|
|
|
28,187
|
|
|
|
|
(1) |
|
For stock awards, value realized is based on the fair market
value of our Common Stock on date of vesting. For option awards,
value realized is based on the fair market value of our Common
Stock on date of exercise minus the exercise price and does not
necessarily reflect proceeds actually received by the executive
officer. |
Potential
Payments on Termination or Change in Control
We have entered into employment agreements with our executives
that contain severance/change in control provisions as described
below. These individuals will only be eligible to receive
severance payments if each such officer signs a general release
of claims following an eligible termination. These severance
arrangements are designed to promote stability and continuity of
senior management.
Stephen G. Waldis. If prior to, or more than
12 months following, the occurrence of a change in control
of Synchronoss, Mr. Waldiss employment is terminated
for reasons other than cause or permanent disability, he shall
receive a lump sum severance payment equal to two times his base
salary, plus two times his average bonus received in the
immediately preceding two years and, if Mr. Waldis resigns
for good reason, the
23
severance payment will be one and one-half times his base salary
and average bonus. If within 12 months following a change
in control, Mr. Waldis is terminated for reasons other than
cause or permanent disability, or Mr. Waldis terminates his
employment for good reason, he shall receive a lump sum
severance payment equal to 2.99 times his base salary in effect
at the time, plus two times his average bonus received in the
immediately preceding two years.
Lawrence R. Irving. If prior to, or more than
12 months following, the occurrence of a change in control
of Synchronoss, Mr. Irvings employment is terminated
for reasons other than cause or permanent disability, he shall
receive a lump sum severance payment equal to one and one-half
times his base salary, plus one and one-half times his average
bonus received in the immediately preceding two years and, if
Mr. Irving resigns for good reason, the severance payment
will be one times his base salary and average bonus. If within
12 months following a change in control, Mr. Irving is
terminated for reasons other than cause or permanent disability,
or Mr. Irving terminates his employment for good reason, he
shall receive a lump sum severance payment equal to two times
his base salary in effect at the time, plus two times his
average bonus received in the immediately preceding two years.
Robert Garcia. If prior to, or more than
12 months following, the occurrence of a change in control
of Synchronoss, Mr. Garcias employment is terminated
for reasons other than cause or permanent disability, he shall
receive a lump sum severance payment equal to one and one-half
times his base salary, plus one and one-half times his average
bonus received in the immediately preceding two years and, if
Mr. Garcia resigns for good reason, the severance payment
will be one times his base salary and average bonus. If within
12 months following a change in control, Mr. Garcia is
terminated for reasons other than cause or permanent disability,
or Mr. Garcia terminates his employment for good reason, he
shall receive a lump sum severance payment equal to two times
his base salary in effect at the time, plus two times his
average bonus received in the immediately preceding two years.
Christopher Putnam. If prior to, or more than
12 months following, the occurrence of a change in control
of Synchronoss, Mr. Putnams employment is terminated
for reasons other than cause or permanent disability, he shall
receive a lump sum severance payment equal to one and one-half
times his base salary, plus all unpaid sales commissions earned
by Mr. Putnam as of the time of the termination of his
employment, and, if Mr. Putnam resigns for good reason, the
severance payment will be one times his base salary plus all
unpaid sales commissions earned by Mr. Putnam as of the
time of the termination of his employment. If within
12 months following a change in control, Mr. Putnam is
terminated for reasons other than cause or permanent disability,
or Mr. Putnam terminates his employment for good reason, he
shall receive a lump sum severance payment equal to two times
his base salary in effect at the time, plus all unpaid sales
commissions earned by Mr. Putnam as of the time of the
termination of his employment.
Omar Tellez. If prior to, or more than
12 months following, the occurrence of a change in control
of Synchronoss, Mr. Tellezs employment is terminated
for reasons other than cause or permanent disability, he shall
receive a lump sum severance payment equal to one and one-half
times his base salary, plus one and one-half times his average
bonus received in the immediately preceding two years and, if
Mr. Tellez resigns for good reason, the severance payment
will be one times his base salary and average bonus. If within
12 months following a change in control, Mr. Tellez is
terminated for reasons other than cause or permanent disability,
or Mr. Tellez terminates his employment for good reason, he
shall receive a lump sum severance payment equal to two times
his base salary in effect at the time, plus two times his
average bonus received in the immediately preceding two years.
Our Compensation Committee of our Board of Directors, as plan
administrator of our 2000 Stock Plan and 2006 Equity Incentive
Plan, has the authority to provide for accelerated vesting of
the shares of common stock subject to outstanding options held
by our named executive officers and any other person in
connection with certain changes in control of us.
In April 2006, our Compensation Committee approved agreements
with each of Stephen G. Waldis, our President, Chief Executive
Officer and Chairman, Lawrence R. Irving, our Chief Financial
Officer and Treasurer, Robert Garcia, currently our Chief
Operating Officer, and Christopher Putnam, our Executive Vice
President of Sales, to provide that, effective upon the closing
of our initial public offering, each of their
24
outstanding options and restricted shares will vest and become
exercisable in full if the officers employment is
Involuntarily Terminated (as defined below) within twelve
(12) months following a Change in Control (as defined
below). Involuntary Termination includes the executive
officers (i) discharge without cause or
(ii) resignation following a change in position that
materially reduces the officers level of authority or
responsibility, a reduction in compensation or benefits, or
relocation of the optionees workplace. A Change in Control
includes: (i) a merger of Synchronoss after which our own
stockholders own 50% or less of the surviving corporation or its
parent company; (ii) a sale of all or substantially all of
our assets; (iii) a proxy contest that results in the
replacement of more than one-half of our directors over a
24 month period; or (iv) an acquisition of 50% or more
of our outstanding stock by any person or group, other than a
person related to Synchronoss, such as a holding company owned
by our stockholders. Upon joining the Company, we agreed to
provide Omar Tellez, currently our Chief Marketing Officer, with
the same vesting right with respect to any grants of options or
restricted shares in the event of his Involuntary Termination
within 12 months after a Change in Control as is provided
for the above executive officers.
The table below reflects the potential payments and benefits to
which the named executive officers would be entitled under the
Companys change in control severance plan adopted by the
Board of Directors. There are no agreements, arrangements or
plans that entitle executive officers to severance, perquisites,
or other enhanced benefits in connection with the termination of
their employment other than pursuant to the change in control
severance plan described above. The amounts shown in the table
below assume that each termination was effective as of
December 31, 2007, and that all eligibility requirements
under the change in control severance plan were met.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus for
|
|
|
|
Unexercisable
|
|
Restricted
|
|
|
|
|
Year of
|
|
Cash
|
|
Options that
|
|
Stock that
|
|
|
|
|
Termination
|
|
Severance
|
|
Vest
|
|
Vests
|
|
Total
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
Stephen G. Waldis
|
|
|
874,020
|
|
|
|
950,000
|
|
|
|
2,203,539
|
|
|
|
624,807
|
|
|
|
4,652,366
|
|
President, Chief Executive Officer and Chairman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence R. Irving
|
|
|
301,083
|
|
|
|
420,000
|
|
|
|
2,047,575
|
|
|
|
364,713
|
|
|
|
3,133,371
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Garcia
|
|
|
313,683
|
|
|
|
450,000
|
|
|
|
3,183,421
|
|
|
|
2,043,718
|
|
|
|
5,990,823
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher Putnam
|
|
|
139,551
|
|
|
|
270,000
|
|
|
|
2,698,497
|
|
|
|
236,739
|
|
|
|
3,344,787
|
|
Executive Vice President of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Omar Tellez
|
|
|
252,891
|
|
|
|
337,500
|
|
|
|
3,190,514
|
|
|
|
156,255
|
|
|
|
3,937,160
|
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Beneficial
Ownership of Common Stock
The following table sets forth information as of March 6,
2008 with respect to the beneficial ownership of our common
stock by persons known to us to own beneficially more than 5% of
our Common Stock, each of our directors, our executive officers
named in the Summary Compensation Table, and all of our
executive officers and directors as a group. We have no other
class of equity securities outstanding.
As of March 6, 2008, 32,721,855 shares of our Common
Stock were outstanding. The amounts and percentages of our
Common Stock beneficially owned are reported on the basis of
regulations of the Securities and Exchange Commission
(SEC) governing the determination of beneficial
ownership of securities. Under the SEC rules, a person is deemed
to be a beneficial owner of a security if that
person has or shares voting power, which includes
the power to vote or direct the voting of such security, or
investment power, which includes the power to
dispose of or to direct the disposition of such security. A
person is also deemed to be a beneficial owner of any securities
of which that person has a right to acquire beneficial ownership
within 60 days. Under these rules, more than one person may
be deemed a beneficial owner of securities as to which such
person has no economic interest.
|
|
|
|
|
|
|
|
|
|
|
Beneficially
|
|
|
|
|
Name of Beneficial Owner
|
|
Owned(1)
|
|
|
Percent(2)
|
|
|
Stephen G. Waldis
|
|
|
1,862,662
|
(3)
|
|
|
5.7
|
%
|
James M. McCormick
|
|
|
3,963,378
|
(4)
|
|
|
12.1
|
%
|
William J. Cadogan
|
|
|
275,664
|
(5)
|
|
|
|
*
|
Charlie E. Hoffman
|
|
|
35,902
|
(6)
|
|
|
|
*
|
Thomas J. Hopkins
|
|
|
49,113
|
(7)
|
|
|
|
*
|
Donnie M. Moore
|
|
|
14,050
|
(8)
|
|
|
|
*
|
Lawrence R. Irving
|
|
|
264,576
|
(9)
|
|
|
|
*
|
Robert Garcia
|
|
|
171,606
|
(10)
|
|
|
|
*
|
Christopher Putnam
|
|
|
73,202
|
(11)
|
|
|
|
*
|
Omar Tellez
|
|
|
48,838
|
(12)
|
|
|
|
*
|
All executive officers and directors as a group (12 persons)
|
|
|
8,809,924
|
|
|
|
26.9
|
%
|
Vertek Corporation
463 Mountain View Drive
Colchester, VT 05446
|
|
|
2,000,000
|
(13)
|
|
|
6.1
|
%
|
Institutional Venture Partners XI, L.P.
3000 Sand Hill Road
Building 2, Suite 250
Menlo Park, CA 94025
|
|
|
3,289,770
|
(14)
|
|
|
10.1
|
%
|
Fred Alger Management, Inc.
111 Fifth Avenue
New York, NY 10003
|
|
|
1,667,000
|
(15)
|
|
|
5.1
|
%
|
AXA Financial, Inc.
1290 Avenue of the Americas
New York, NY 10104
|
|
|
1,641,860
|
(16)
|
|
|
5.0
|
%
|
FMR LLC
82 Devonshire Street
Boston, MA 02109
|
|
|
2,002,760
|
(17)
|
|
|
6.1
|
%
|
|
|
|
* |
|
The aggregate holding of the group is less than 1% of the shares
of common stock outstanding as of March 6, 2008. |
|
(1) |
|
Represents sum of shares owned and shares which may be purchased
upon exercise of options exercisable within 60 days of
March 6, 2008. |
|
(2) |
|
Any shares not outstanding which are subject to options
exercisable within 60 days of March 6, 2008 are deemed
outstanding for the purpose of computing the percentage of
outstanding shares owned by any |
26
|
|
|
|
|
person holding such shares but are not deemed outstanding for
the purpose of computing the percentage of shares owned by any
other person. |
|
(3) |
|
Includes 239,148 shares held by the Waldis Family
Partnership, L.P. Includes 10,000 restricted shares granted on
October 2, 2006, 25% of such shares vested on April 3,
2007, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Waldis thereafter. Includes 7,094 restricted shares
granted on December 5, 2006, 25% of such shares vested on
December 5, 2007, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Waldis thereafter. Includes 6,477 restricted shares
granted on December 4, 2007, 25% of such shares will vest
on December 4, 2008, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Waldis thereafter. Includes 61,767 shares subject
to options exercisable within 60 days of March 6,
2008. Excludes 126,804 shares subject to options not
exercisable within 60 days of March 6, 2008. |
|
(4) |
|
Excludes 889,000 shares held in two separate trusts for the
benefit of certain of his family members, as to which he has no
voting or investment power and disclaims beneficial ownership.
Includes 3,586 restricted shares granted on January 3,
2007, 33% of such shares vested on May 30, 2007 and 0.278%
of such shares shall vest each month thereafter provided
Mr. McCormick remains a director. Includes
36,906 shares subject to options exercisable within
60 days of March 6, 2008. Excludes 18,094 shares
subject to options not exercisable within 60 days of
March 6, 2008. |
|
(5) |
|
Includes 3,586 restricted shares granted on January 3,
2007, 33% of such shares vested on May 30, 2007 and 0.278%
of such shares shall vest each month thereafter provided
Mr. Cadogan remains a director. Includes 50,000 shares
held by Barbara Cadogan, Mr. Cadogans wife. Includes
36,906 shares subject to options exercisable within
60 days of March 6, 2008. Excludes 18,094 shares
subject to options not exercisable within 60 days of
March 6, 2008. |
|
(6) |
|
Includes 4,286 restricted shares granted on January 3,
2007, 33% of such shares vested on June 14, 2007 and 0.278%
of such shares shall vest each month thereafter provided
Mr. Hoffman remains a director. Includes 33,838 shares
subject to options exercisable within 60 days of
March 6, 2008. Excludes 21,162 shares subject to
options not exercisable within 60 days of March 6,
2008. |
|
(7) |
|
Includes 3,586 restricted shares granted on January 3,
2007, 33% of such shares vested on May 30, 2007 and 0.278%
of such shares shall vest each month thereafter provided
Mr. Hopkins remains a director. Includes 36,906 shares
subject to options exercisable within 60 days of
March 6, 2008 Excludes 18,094 shares subject to
options not exercisable within 60 days of March 6,
2008. |
|
(8) |
|
Includes 14,050 shares subject to options exercisable
within 60 days of March 6, 2008 Excludes
30,950 shares subject to options not exercisable within
60 days of March 6, 2008. |
|
(9) |
|
Includes 5,625 restricted shares granted on October 2,
2006, 25% of such shares vested on April 3, 2007 and
1/48th
of such shares shall vest each month of continuous service by
Mr. Irving thereafter. Includes 4,256 restricted shares
granted on December 5, 2006, 25% of such shares vested on
December 5, 2007 and
1/48th
of such shares shall vest each month of continuous service by
Mr. Irving thereafter. Includes 3,818 restricted shares
granted on December 4, 2007, 25% of such shares will vest
on December 5, 2008 and
1/48th
of such shares shall vest each month of continuous service by
Mr. Irving thereafter. Includes 61,539 shares subject
to options exercisable within 60 days of March 6,
2008. Excludes 98,058 shares subject to options not
exercisable within 60 days of March 6, 2008. |
|
(10) |
|
Includes 75,000 restricted shares granted on April 3, 2006,
25% of such shares vested on April 3, 2007, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Garcia thereafter. Includes 12,383 shares granted
on April 5, 2006, of which 6,448 shares vested as of
February 28, 2007, and
1/48th
of such shares shall vest for each month of continuous service
by Mr. Garcia thereafter. Includes 5,625 restricted shares
granted on October 2, 2006, 25% of such shares vested on
April 3, 2007, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Garcia thereafter. Includes 4,256 restricted shares
granted on December 5, 2006, 25% of such shares will vest
on December 5, 2007, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Garcia thereafter. Includes 4,091 restricted shares
granted on December 4, 2007, 25% of such shares vested on
December 4, 2008, and
1/48th
of such shares will vest for each month of continuous service by
Mr. Garcia |
27
|
|
|
|
|
thereafter. Includes 113,573 shares subject to options
exercisable within 60 days of March 6, 2008. Excludes
125,552 shares subject to options not exercisable within
60 days of March 6, 2008. |
|
(11) |
|
Includes 5,000 restricted shares granted on October 2,
2006, 25% of such shares vested on April 3, 2007 and
1/48th
of such shares shall vest each month of continuous service by
Mr. Putnam thereafter. Includes 2,838 restricted shares
granted on December 5, 2006, 25% of such shares vested on
December 5, 2007 and
1/48th
of such shares shall vest each month of continuous service by
Mr. Putnam thereafter. Includes 1,636 restricted shares
granted on December 4, 2007, 25% of such shares will vest
on December 4, 2008 and
1/48th
of such shares shall vest each month of continuous service by
Mr. Putnam thereafter. Includes 66,685 shares subject
to options exercisable within 60 days of March 6,
2008. Excludes 97,023 shares subject to options not
exercisable within 60 days of March 6, 2008. |
|
(12) |
|
Includes 3,153 restricted shares granted on December 5,
2006, 25% of such shares vested on December 5, 2007 and
1/48th
of such shares will vest for each month of continuous service by
Mr. Tellez thereafter. Includes 2,045 restricted shares
granted on December 4, 2007, 25% of such shares will vest
on December 4, 2008 and
1/48th
of such shares will vest for each month of continuous service by
Mr. Tellez thereafter. Includes 43,640 shares subject
to options exercisable within 60 days of March 6,
2008. Excludes 117,030 shares subject to options not
exercisable within 60 days of March 6, 2008. |
|
(13) |
|
Mr. McCormick, one of our directors, is the Chief Executive
Officer and the sole stockholder of Vertek Corporation.
Mr. McCormick exercises sole voting and dispositive power
with respect to such shares. |
|
(14) |
|
Information on the holdings of Institutional Venture Partners
XI, L.P. (IVP XI) includes the holdings of
Institution Venture Partners XI GmbH & Co.
Beteiligungs KG (IVP XI KG), Institutional Venture
Management XI, LLC (IVM XI), Institutional Venture
Partners XII, LP (IVP XII), Institutional Venture
Management XII LLC (IVM XII), Todd C. Chaffee, Reid
W. Dennis, Norman A. Fogelsong, Stephen J. Harrick, J. Sanford
Miller and Dennis B. Phelps (collectively, the IVP
Entities) and is taken from its Schedule 13G filed on
March 6, 2008. The IVP Entities disclaim status as a
group. Includes: 1,982,600 shares held by IVP
XI; 317,400 shares held by IVP XI KG and
989,770 shares held by IVP XII. IVM XI serves as the sole
general partner of IVP XI and the sole managing limited partner
of IVP XI KG, and owns no securities directly.
Messrs. Chaffee, Dennis, Fogelsong, Harrick, Miller and
Phelps are managing directors of IVM XI and share voting and
dispositive power over the shares held by IVP XI and IVP XI KG,
however, they own no securities directly and they disclaim
beneficial ownership of the shares held by IVP XI and IVP XI KG,
except to the extent of their respective pecuniary interests
therein. Messrs. Chaffee, Fogelsong, Harrick, Miller and
Phelps are managing directors of IVM XII and share voting and
dispositive power over the shares held by IVP XII; however, they
own no securities directly and they disclaim beneficial
ownership of the shares held by IVP XII, except to the extent of
their respective pecuniary interests therein. |
|
(15) |
|
Information on the holdings of Fred Alger Management, Inc.
includes the holdings of Fred Algers Management, Inc. and Alger
Associates, Inc. and is taken from its Schedule 13G filed
on January 15, 2008 |
|
(16) |
|
Information on the holdings of AXA Financial, Inc. includes the
holdings of Alliance Bernstein L.P. and AXA Equitable Life
Insurance Company, and is taken from its Schedule 13G filed
on February 14, 2008. |
|
(17) |
|
Information on the holdings of FMR LLC includes the holdings of
Fidelity Management & Research Company (Fidelity
Management), and is taken from its Schedule 13G filed
on February 14, 2008. Edward C. Johnson 3d and FMR LLC,
through its control of Fidelity Management, have sole power to
dispose of the shares.. Members of the family of Edward C.
Johnson 3d, Chairman of FMR LLC, are the predominant owners,
directly or through trusts, of Series B voting common
shares of FMR LLC, representing 49% of the voting power of FMR
LLC. The Johnson family group and all other Series B
shareholders have entered into a shareholders voting
agreement under which all Series B voting common shares
will be voted in accordance with the majority vote of
Series B voting common shares. Accordingly, through their
ownership of voting common shares and the execution of the
shareholders voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940,
to form a controlling group with respect to FMR LLC. Neither FMR
LLC nor Edward C. Johnson 3d, Chairman of FMR LLC, has the sole
power to vote or direct the voting of the shares owned directly
by |
28
|
|
|
|
|
the Fidelity Funds, which power resides with the Funds
Boards of Trustees. Fidelity carries out the voting of the
shares under written guidelines established by the Funds
Boards of Trustees. |
Section 16(a)
Beneficial Ownership Reporting Compliance
We believe that, during the fiscal year ended December 31,
2007, our directors, executive officers, and greater than 10%
stockholders complied with all applicable Section 16(a)
filing requirements, except that, due to administrative error,
Lawrence R. Irving filed one late report on Form 4 related
to one transaction, his March 8, 2007 stock sale. In making
these statements, we have relied upon a review of the copies of
Section 16(a) reports furnished to us and the written
representations of our directors, executive officers, and
greater than 10% stockholders.
Certain
Related Party Transactions
During 2007, there has not been, nor is there currently
proposed, any transaction or series of similar transactions to
which we were or are a party in which the amount involved
exceeded or exceeds $10,000 and in which any of our directors,
executive officers, holders of more than 5% of any class of our
voting securities, or any member of the immediate family of any
of the foregoing persons, had or will have a direct or indirect
material interest, other than compensation arrangements, which
are described where required under Executive
Compensation and Director Compensation.
Other
Matters
The Board of Directors does not intend to bring any other
business before the meeting, and so far as is known to the
Board, no matters are to be brought before the meeting except as
specified in the notice of the meeting. In addition to the
scheduled items of business, the meeting may consider
stockholder proposals (including proposals omitted from the
Proxy Statement and form of Proxy pursuant to the proxy rules of
the SEC) and matters relating to the conduct of the meeting. As
to any other business that may properly come before the meeting,
it is intended that proxies will be voted in respect thereof in
accordance with the judgment of the persons voting such proxies.
29
Report of
the Audit
Committee1
The Audit Committee of the Board of Directors consists of the
three non-employee directors named below. The Board annually
reviews the Nasdaq listing standards definition of
independence for audit committee members and has determined that
each member of the Audit Committee meets that standard. The
Board of Directors has also determined that Thomas J. Hopkins
and Donnie M. Moore are audit committee financial experts as
described in applicable rules and regulations of the Securities
and Exchange Commission.
The principal purpose of the Audit Committee is to assist the
Board of Directors in its general oversight of the
Companys accounting and financial reporting processes and
audits of the Companys financial statements. The Audit
Committee is responsible for selecting and engaging the
Companys independent registered public accounting firm and
approving the audit and non-audit services to be provided by the
independent registered public accounting firm. The Audit
Committees function is more fully described in its
Charter, which the Board has adopted and which the Audit
Committee reviews on an annual basis.
The Companys management is responsible for preparing the
Companys financial statements and the Companys
financial reporting process. Ernst & Young LLP, the
Companys independent registered public accounting firm, is
responsible for performing an independent audit of the
Companys consolidated financial statements and expressing
an opinion on the conformity of those financial statements with
U.S. generally accepted accounting principles.
The Audit Committee has reviewed and discussed with the
Companys management the audited financial statements of
the Company included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 (the
10-K).
The Audit Committee has also reviewed and discussed with
Ernst & Young LLP the audited financial statements in
the 10-K. In
addition, the Audit Committee discussed with Ernst &
Young LLP those matters required to be discussed by Statement on
Auditing Standards No. 61, as amended or supplemented,
entitled Communications with Audit Committees.
Additionally, Ernst & Young LLP provided to the Audit
Committee the written disclosures and the letter required by
Independence Standards Board Standard No. 1, entitled
Independence Discussions with Audit Committees, as
amended, by the Independence Standards Board. The Audit
Committee also discussed with Ernst & Young LLP its
independence from the Company.
Based upon the review and discussions described above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in the
10-K for
filing with the United States Securities and Exchange Commission.
Submitted by the following members of the Audit Committee:
Thomas J. Hopkins, Chairman
William J. Cadogan
Donnie M. Moore
1 The
material in this report is not soliciting material,
is not deemed filed with the SEC and is not to be
incorporated by reference in any filing of Synchronoss
Technologies, Inc. under the Securities Act or the Exchange Act,
whether made before or after the date hereof and irrespective of
any general incorporation language in any such filing.
30
PROPOSAL 1
Our Board of Directors currently consists of six directors. The
director who is nominated for election to the Board of Directors
this year, his age as of April 14, 2008, his position and
office held with the Company and certain biographical
information are set forth below. The director to be elected will
hold office until the 2011 Annual Meeting of Stockholders and
until his successor is elected, or until the directors
death, resignation or removal. The nominee listed below is
currently a director of the Company who was previously elected
by the stockholders. It is the Companys policy to
encourage nominees for director to attend the Annual Meeting.
Directors are elected by a plurality of the votes properly cast
in person or by proxy. The nominee receiving the highest number
of affirmative votes will be elected. Shares represented by
executed proxies will be voted, if authority to do so is not
withheld, for the election of the nominee named below. If the
nominee becomes unavailable for election as a result of an
unexpected occurrence, your shares will be voted for the
election of a substitute nominee proposed by our current Board
of Directors, if any. The person nominated for election has
agreed to serve if elected. We have no reason to believe that
the nominee will be unable to serve.
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|
|
|
|
|
Name
|
|
Age
|
|
Position Held with the Company
|
|
Thomas J. Hopkins
|
|
|
51
|
|
|
Director
|
Nominee
Thomas J. Hopkins, 51, has been a member of our board of
directors since December 2004. Mr. Hopkins is a Managing
Director of Colchester Capital, LLC, an investment and advisory
firm. Prior to Colchester Capital, Mr. Hopkins was involved
in investment banking, principally at Deutsche Bank (and its
predecessor Alex, Brown & Sons), Goldman,
Sachs & Co. and Bear Stearns. He began his investment
banking career at Drexel Burnham Lambert. Prior to investment
banking, Mr. Hopkins was a lawyer for several years.
Mr. Hopkins received a bachelor of arts degree from
Dartmouth College, a juris doctorate from Villanova University
School of Law and a master in business administration degree
from the Wharton School at the University of Pennsylvania.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE.
Continuing
Directors Term Ending in 2009
William J. Cadogan, 59, has been a member of our board of
directors since October 2005. From April 2001 until December
2006, Mr. Cadogan served as a Senior Managing Director with
Vesbridge Partners, LLC, formerly St. Paul Venture Capital, a
venture capital firm. Mr. Cadogan served as Chief Executive
Officer and Chairman of the board of directors of Mahi Networks,
Inc., a leading supplier of multi-service optical transport and
switching solutions, from November 2004 until its merger with
Meriton Networks in October 2005. Prior to joining St. Paul
Venture Capital in April 2001, Mr. Cadogan was Chairman and
Chief Executive Officer of Minnesota-based ADC, Inc., a leading
global supplier of telecommunications infrastructure products
and services. Mr. Cadogan received a bachelors degree
in electrical engineering from Northeastern University and a
master in business administration degree from the Wharton School
at the University of Pennsylvania.
Stephen G. Waldis, 40, has served as Chairman of the
Board of Directors since February of 2001 and has served as our
President and Chief Executive Officer since founding Synchronoss
in 2000. From 1994 to 2000, Mr. Waldis served as Chief
Operating Officer at Vertek Corporation, a privately held
professional services company serving the telecommunications
industry (Vertek). From 1992 to 1994,
Mr. Waldis served as Vice President of Sales and Marketing
of Logical Design Solutions, a provider of telecom and
interactive solutions. From 1989 to 1992, Mr. Waldis worked
in various technical and product management roles at AT&T.
Mr. Waldis received a degree in corporate communications
from Seton Hall University.
31
Continuing
Directors Term Ending in 2010
Charles E. Hoffman, 59, has been a member of our board of
directors since June 2006. Mr. Hoffman has served as the
President and Chief Executive Officer of Covad Communications
Group, Inc. since joining Covad in 2001. Prior to 2001,
Mr. Hoffman was President and Chief Executive Officer of
Rogers AT&T. Prior to his time with Rogers,
Mr. Hoffman served as President, Northeast Region, for
Sprint PCS. Preceding his time with Sprint PCS, Mr. Hoffman
spent 16 years at SBC Communications in various senior
management positions, including Managing Director-Wireless for
SBC International. Mr. Hoffman also serves as a director of
Chordiant Software, Inc. Mr. Hoffman received a bachelor of
science degree and a master in business administration degree
from the University of Missouri, St. Louis.
James M. McCormick, 48, is a founder of Synchronoss, has
been a member of our Board of Directors since our inception in
2000 and served as our Treasurer from September 2000 until
December 2001. Mr. McCormick is founder and Chief Executive
Officer of Vertek. Prior to founding Vertek in 1988,
Mr. McCormick was a member of the Technical Staff at
AT&T Bell Laboratories. Mr. McCormick received a
bachelor of science in computer science from the University of
Vermont and a master of science degree in computer science from
the University of California Berkeley.
Donnie M. Moore, 59, has been a member of our board of
directors since April 2007. From 1989 until his retirement in
2001, Mr. Moore was Senior Vice President, Finance and
Administration and Chief Financial Officer for Cognos
Incorporated, a publicly-held company providing business
intelligence and performance management solutions. From 1986 to
1989, Mr. Moore was Vice President, Finance and Chief
Financial Officer of Cognos. Before joining Cognos,
Mr. Moore held various positions at the Burroughs
Corporation from 1973 to 1986, including Corporate Director,
Plans and Analysis. Mr. Moore also serves on the Board of
Trustees of OFI Income Fund, a manufacturer of fiberglass
insulation products located in Canada and listed on the Toronto
Stock Exchange. Mr. Moore holds a bachelor of science
degree in engineering from the University of Oklahoma and a
master in business administration degree from the University of
Houston.
32
PROPOSAL 2
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee of the Board of Directors has selected
Ernst & Young LLP, independent registered public
accounting firm, as the Companys independent registered
public accounting firm for the fiscal year ending
December 31, 2007 and has further directed that management
submit the selection of independent registered public accounting
firm for ratification by the stockholders at the Annual Meeting.
Ernst & Young LLP has audited the Companys
financial statements since its formation in 2000.
Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting. They will have an opportunity
to make a statement if they so desire and will be available to
respond to appropriate questions.
Neither the Companys Bylaws nor other governing documents
or law require stockholder ratification of the selection of
Ernst & Young LLP as the Companys independent
registered public accounting firm. However, the Board is
submitting the selection of Ernst & Young LLP to the
stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the
Audit Committee of the Board will reconsider whether or not to
retain that firm. Even if the selection is ratified, the Audit
Committee of the Board in its discretion may direct the
appointment of 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 the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the Annual Meeting will be required to ratify the selection
of Ernst & Young LLP. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether this matter
has been approved.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRMS FEES
The following table represents aggregate fees billed to the
Company for fiscal years ended December 31, 2007 and
December 31, 2006 by Ernst & Young LLP, the
Companys principal accountant.
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|
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|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands)
|
|
|
Audit Fees(1)
|
|
$
|
786
|
|
|
$
|
1,044
|
|
Tax Fees
|
|
$
|
10
|
|
|
|
-0-
|
|
All Other Fees(2)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
796
|
|
|
$
|
1,044
|
|
|
|
|
(1) |
|
For professional services rendered for the audits of annual
financial statements, including the audit of annual financial
statements for the years ended December 31, 2007 and 2006.
For the year ended 2007, the audit fees include the review of
quarterly financial statements included in the Companys
quarterly reports on
Form 10-Q
and other regulatory filings or similar engagements. |
|
(2) |
|
Represented fees for services in connection with a study of
Internal Revenue Code Section 382. |
All fees described above for 2007 were approved by the Audit
Committee.
PRE-APPROVAL
POLICIES AND PROCEDURES
The Audit Committees policy is to pre-approve all audit
and permissible non-audit services rendered by Ernst &
Young LLP, our independent registered public accounting firm.
The Audit Committee can pre-approve specified services in
defined categories of audit services, audit-related services and
tax services up to specified amounts, as part of the Audit
Committees approval of the scope of the engagement of
Ernst & Young LLP or on an individual
case-by-case
basis before Ernst & Young LLP is engaged to provide a
service. The Audit Committee has determined that the rendering
of the services other than audit services by Ernst &
Young LLP is compatible with maintaining the principal
accountants independence.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
33
PROPOSAL 3
APPROVAL
OF AN AMENDMENT TO THE
SYNCHRONOSS TECHNOLOGIES, INC. 2006 EQUITY INCENTIVE PLAN
The Board of Directors unanimously recommends that stockholders
approve an amendment to the Companys 2006 Equity Incentive
Plan (the 2006 Plan). The amendment increases the
maximum total number of shares of common stock we may issue
under the 2006 Plan by 2,000,000 shares.
The 2006 Plan is a successor to our 2000 Stock Plan and provides
a means whereby eligible individuals may be given an opportunity
to acquire shares of our common stock and to benefit from
increases in value of our Common Stock. The 2006 Plan is
designed to assist us in the recruitment, retention and
motivation of key employees who are experienced, highly
qualified and in a position to make material contributions to
our success. We believe that stock options are critical in
attracting and retaining these key contributors. Accordingly,
our Board of Directors has approved an increase to the share
reserve to ensure a sufficient number of shares will be
available for recruitment and retention purposes.
First, given our recent growth in the number of our employees,
together with our anticipated future growth, we believe that
there are insufficient shares available under our 2006 Plan to
meet our requirements for equity awards to our current and
future employees. In fiscal 2007, we increased our employee
population from 170 employees to 232 employees, or by
36%. We anticipate continued growth through fiscal 2008 and in
the future, as business warrants. The limited number of skilled
and experienced employees are in demand by a growing number of
employers, and competition for such employees is increasing.
Equity awards are used as compensation devices by most, if not
of all, of the companies with which we compete for talent, and
we believe that the provision of equity awards is critical to
attract and retain key contributors.
The principal terms and provisions of the 2006 Plan are
summarized below. The summary, however, is not intended to be a
complete description of all the terms of the 2006 Plan. This
summary is qualified in its entirety by reference to the
complete text of the 2006 Plan. A copy of the 2006 Plan will be
furnished by the Company to any stockholder upon written request
to the Corporate Secretary at the executive offices in
Bridgewater, New Jersey. To the extent there is a conflict
between this summary and the 2006 Plan, the terms of the 2006
Plan will govern.
Structure. Five separate types of equity
compensation may be issued under the 2006 Plan. First, stock
options may be granted to eligible individuals under the 2006
Plan. Stock options give optionees the right to purchase shares
of our common stock at an exercise price determined at the time
the option is granted. Second, direct issuances of restricted
stock may be made to eligible persons under the 2006 Plan.
Persons receiving direct issuances of restricted stock may
acquire shares of our common stock at a price determined by our
Compensation Committee or as a bonus for the performance of
services. Third, stock appreciation rights (SAR) may
be granted to eligible persons under the 2006 Plan. A SAR allows
eligible persons to benefit from increases in the value of our
common stock, but does not provide any ownership interest in our
common stock. Fourth, stock units may be issued to eligible
persons under the 2006 Plan. Stock units allow persons to obtain
shares of our common stock without any cash consideration.
Fifth, stock options shall be granted to the non-employee
members of our Board of Directors under the Annual Director
Option Grant Program.
Administration. Our Compensation Committee,
which is currently comprised of three (3) outside members
of our Board of Directors, administers the 2006 Plan.
Compensation Committee members serve for such period of time as
our Board of Directors may determine. The 2006 Plan may also be
administered with respect to optionees who are not executive
officers subject to the short-swing profit rules of the federal
securities laws by our board of directors or a secondary
committee comprised of two or more members of our board of
directors. Our Compensation Committee (or our Board of Directors
or secondary committee to the extent acting as plan
administrator) has full authority (subject to the express
provisions of the 2006 Plan) to determine the eligible
individuals who are to receive awards under the 2006 Plan, the
number of shares to be covered by each granted option or other
award, the date or dates on which the option is to become
exercisable or the award is to vest, the maximum term for which
the option or award is to remain outstanding, whether
34
the granted option will be an incentive stock option that
satisfies the requirements of Section 422 of the Internal
Revenue Code or a non-statutory option not intended to meet such
requirements and the remaining provisions of the option grant or
award.
Eligibility. Employees (including officers),
directors and consultants who render services to us or our
subsidiary corporations (whether now existing or subsequently
established) are eligible to receive awards under the 2006 Plan.
As of February 29, 2008, approximately 221 persons
(including 7 executive officers) were eligible to participate in
the 2006 Plan.
Securities Subject to Incentive Plan. The
number of shares of our common stock that may be currently
issued under the Incentive Plan shall not exceed
4,000,000 shares of our common stock plus any shares
reserved against options or awards outstanding under the 2000
Stock Plan as of the date of effectiveness of the 2006 Plan not
including the 2,000,000 shares that are the subject of this
Proposal 3. No one person participating in the 2006 Plan
may receive options or SARs for more than 2,000,000 shares
of our common stock per fiscal year. However, we may grant to a
new employee options or stock appreciation rights covering a
maximum of 3,000,000 shares in the fiscal year in which his
or her service as an employee first begins. Should an option or
award under the 2006 Plan (including any options or shares
incorporated from the Companys 2000 Stock Plan) expire or
terminate for any reason prior to exercise in full or should
restricted shares acquired upon exercise of an option or award
under the 2006 Plan or the 2000 Stock Plan be repurchased by us
for any reason, the shares subject to the termination or
repurchase will be available for subsequent options or awards
under the 2006 Plan.
Option
Grants
Price and Exercisability. The option exercise
price per share may not be less than one hundred percent (100%)
of the fair market value of our Common Stock on the grant date.
Options become exercisable at such time or times and during such
period as our Compensation Committee may determine and set forth
in the instrument evidencing the option grant. The exercise
price may be paid in cash or in shares of Common Stock. Options
may also be exercised through a
same-day
sale program, pursuant to which a designated brokerage firm is
to effect the immediate sale of the shares purchased under the
option and pay over to us, out of the sale proceeds on the
settlement date, sufficient funds to cover the exercise price
for the purchased shares plus all applicable withholding taxes.
Neither our Compensation Committee nor any other person may
decrease the exercise price for any outstanding option after the
date of grant nor cancel or allow an optionee to surrender an
outstanding option to us as consideration for the grant of a new
option with a lower exercise price or the grant of another type
of award the effect of which is to reduce the exercise price of
any outstanding option. No optionee is to have any stockholder
rights with respect to the option shares until the optionee has
exercised the option, paid the exercise price and become a
holder of record of the shares. Options are not assignable or
transferable other than by will or the laws of descent and
distribution, and during the optionees lifetime, the
option may be exercised only by the optionee.
Termination of Service. Any option held by the
optionee at the time of cessation of service will not remain
exercisable beyond the designated post-service exercise period,
which generally is three months from termination date. Under no
circumstances, however, may any option be exercised after the
specified expiration date of the option term. Each such option
will normally, during such limited period, be exercisable only
to the extent of the number of shares of Common Stock in which
the optionee is vested at the time of cessation of service. Our
Compensation Committee has complete discretion to extend the
period following the optionees cessation of service during
which his or her outstanding options may be exercised
and/or to
accelerate the exercisability of such options in whole or in
part. Such discretion may be exercised at any time while the
options remain outstanding, whether before or after the
optionees actual cessation of service. The shares of
Common Stock acquired upon the exercise of one or more options
may be subject to repurchase by us at the original exercise
price paid per share upon the optionees cessation of
service prior to vesting in such shares. Our Compensation
Committee has complete discretion in establishing the vesting
schedule to be in effect for any unvested shares and may cancel
our outstanding repurchase rights with respect to those shares
at any time, thereby accelerating the vesting of the shares
subject to the canceled rights.
35
Incentive Stock Options. Incentive stock
options may only be granted to individuals who are employees of
the Company or our parent or subsidiary corporation. During any
calendar year, the aggregate fair market value (determined as of
the grant date(s)) of our Common Stock for which one or more
options granted to any employee under the Incentive Plan (or any
other equity plan of the Company or its parent or subsidiary
corporations) may for the first time become exercisable as
incentive stock options under Section 422 of the Code shall
not exceed $100,000.
Stock Appreciation Rights. One or more
eligible individuals may, at the discretion of our Compensation
Committee, be granted SARs either in tandem with or independent
of their option grants under the 2006 Plan. Upon exercise of an
independent SAR, the individual will be entitled to a cash
distribution from us in an amount per share equal to the excess
of (i) the fair market value per share of Common Stock on
the date of exercise over (ii) the exercise or base price.
The exercise or base price may not be less than fair market
value on the grant date. Tandem SARs provide the holders with
the right to surrender their options for an appreciation
distribution from us equal in amount to the excess of
(i) the fair market value of the vested shares of Common
Stock subject to the surrendered option on the date of exercise
over (ii) the aggregate exercise price payable for such
shares. An appreciation distribution may, at the discretion of
our Compensation Committee, be made in cash or in shares of
Common Stock.
Awards of Restricted Stock. Restricted stock
may be sold at a price per share determined by our Compensation
Committee on the date of issuance, payable in cash. Shares may
also be issued solely as a bonus for past or future services. In
no event shall more than 2,000,000 restricted shares that are
subject to performance-based vesting conditions be granted to
any participant in a single fiscal year of the Company. In no
event shall vesting be at a rate faster than (a) one
(1) year following the date of grant if vesting is subject
to achievement of performance goals, and (b) three
(3) years following the date of grant if vesting is not
subject to achievement of performance goals. The issued shares
may be subject to a vesting schedule tied to the performance of
service or the attainment of performance goals. Our Compensation
Committee may include among such conditions the requirement that
the performance of the Company or a business unit of the Company
for a specified period of one or more fiscal years equal or
exceed a target determined in advance by our Compensation
Committee.
Awards of Stock Units. Stock units may be
awarded for no cash consideration. Stock units may also be
granted in consideration of a reduction in the recipients
other compensation or in consideration of services rendered.
Each award of stock units may or may not be subject to vesting,
and vesting, if any, shall occur upon satisfaction of the
conditions specified by our Compensation Committee. Settlement
of vested stock units may be made in the form of cash, shares of
Common Stock or a combination of both. In no event shall more
than 2,000,000 stock units that are subject to performance-based
vesting conditions be granted to any participant in a single
fiscal year of the Company. In order to enable the Company to
avail itself of the tax deductibility of qualified
performance-based compensation, within the meaning of
Section 162(m) of the Code, the vesting of restricted stock
and stock units may be dependent upon the attainment of
objective performance targets relative to certain performance
measures, as described above. The performance goals that may be
used by our Compensation Committee for awards of restricted
stock or stock units shall consist of: operating profits
(including EBITDA), net profits, earnings per share, profit
returns and margins, revenues, stockholder return
and/or
value, stock price and working capital. Performance goals may be
measured solely on a corporate, subsidiary or business unit
basis, or a combination thereof. Further, performance criteria
may reflect absolute entity performance or a relative comparison
of entity performance to the performance of a peer group of
entities or other external measure of the selected performance
criteria. Profit, earnings and revenues used for any performance
goal measurement shall exclude: gains or losses on operating
asset sales or dispositions; asset write-downs; litigation or
claim judgments or settlements; accruals for historic
environmental obligations; effect of changes in tax law or rate
on deferred tax liabilities; accruals for reorganization and
restructuring programs; uninsured catastrophic property losses;
the cumulative effect of changes in accounting principles; and
any extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30
and/or in
managements discussion and analysis of financial
performance appearing in the Companys annual report to
stockholders for the applicable year. Our Compensation Committee
shall determine such performance. The performance target shall
be based on one or more of the criteria discussed below. Our
36
Compensation Committee shall identify such target not later than
the 90th day of such period. Our Compensation Committee can
select other goals not listed here for awards that are not
intended to meet the requirements of qualified
performance-based compensation. Our Compensation Committee
may specify that the performance-based awards will become
payable in whole or in part in the event of the recipients
termination of employment as a result of death, disability or
retirement. Our Compensation Committee will also have the
discretionary authority at any time to accelerate the vesting of
any and all unvested shares outstanding under the 2006 Plan or
to provide for accelerated vesting in connection with death,
disability, retirement, or similar events.
Annual
Director Option Grant Program
Under the Annual Director Option Grant Program, non-employee
members of our Board of Directors will receive option grants at
specified intervals over their period of Board service. In
addition, non-employee members of our Board of Directors are
eligible for discretionary awards under the 2006 Plan. These
special grants may be summarized as follows:
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Each individual who becomes a non-employee Board member after
the effective date of the 2006 Plan, whether through election by
the stockholders or appointment by our board of directors, will
be granted under the 2006 Plan, at the time of such initial
election or appointment, a non-statutory stock option to
purchase 35,000 shares of Common Stock. A non-employee
Board member who previously was an employee shall not receive a
grant under this provision.
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On the first Tuesday of January beginning in 2007 and each year
thereafter (Annual Director Option Grant Date), each
individual who continues to serve as a non-employee Board member
will receive an additional grant of a non-statutory stock option
under the 2006 Plan to purchase 10,000 shares of Common
Stock. A non-employee Board member who previously was an
employee shall be eligible to receive a grant under this
provision.
|
Each option grant under the Annual Director Option Grant Program
will be subject to the following terms and conditions:
The option price per share will be equal to the fair market
value per share of Common Stock on the Annual Director Option
Grant Date and each option is to have a maximum term of ten
years from the grant date or such shorter term specified by our
Board of Directors. Each initial option grant to a director will
be exercisable for 33% of the option shares upon completion of
one year of service from the grant date and 1/36th each
month thereafter. Each annual option grant under the Annual
Director Option Grant Program will be exercisable for the option
shares in 12 equal monthly installments commencing on the grant
date. The option will remain exercisable for a three month
period following the optionees termination of service as a
Board member for any reason (or such shorter period as may be
specified by our Board of Directors) and may be exercised
following our Board of Directors members death by the
personal representatives of the optionees estate or the
person to whom the grant is transferred by the optionees
will or the laws of inheritance. In no event, however, may the
option be exercised after the expiration date of the option
term. During the applicable exercise period, the option may not
be exercised for more than the number of shares (if any) for
which it is exercisable at the time of the optionees
cessation of Board service. The option shares will become fully
vested in the event of a Change in Control (as defined below).
Option grants under the Annual Director Option Grant Program
will be made in strict compliance with the express provisions of
that program. Our Compensation Committee may provide that the
options that otherwise would be granted to an outside director
under the Annual Director Option Grant Program shall instead be
granted to an affiliate of such outside director. The remaining
terms and conditions of the option will in general conform to
the terms described below for option grants under the 2006 Plan
and will be incorporated into the option agreement evidencing
the grant.
General
Provisions
Acceleration of Options and Awards. The
Compensation Committee has the discretion to accelerate
outstanding options and awards
and/or
terminate the Companys outstanding repurchase rights
whether or not
37
upon a Change in Control, which acceleration or termination may
or may not be conditioned upon the subsequent termination of the
optionees service within a specified period following the
transaction. Upon the occurrence of a Change in Control each
outstanding option or award under the 2006 Plan will,
immediately prior to the effective date of the Change in
Control, become fully exercisable for all of the shares at the
time subject to such option. However, an outstanding option or
award shall not accelerate if, and to the extent such option or
award is, in connection with the Change in Control, either to be
assumed by the successor corporation (or parent) or to be
replaced with a comparable option or award to purchase shares of
the capital stock of the successor corporation (or parent).
A Change in Control includes:
The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate
reorganization, if persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization own immediately after such merger, consolidation
or other reorganization 50% or more of the voting power of the
outstanding securities of each of (i) the continuing or
surviving entity and (ii) any direct or indirect parent
corporation of such continuing or surviving entity;
The sale, transfer or other disposition of all or substantially
all of the Companys assets;
A change in the composition of our board of directors, as a
result of which fewer than 50% of the incumbent directors are
directors who either:
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Had been directors of the Company on the date 24 months
prior to the date of such change in the composition of our board
of directors (the Original Directors); or
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Were appointed to our board of directors, or nominated for
election to our board of directors, with the affirmative votes
of at least a majority of the aggregate of (A) the Original
Directors who were in office at the time of their appointment or
nomination and (B) the directors whose appointment or
nomination was previously approved in a manner consistent with
this paragraph; or
|
Any transaction as a result of which any person is the
beneficial owner (as defined in
Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the
Exchange Act)), directly or indirectly, of
securities of the Company representing at least 50% of the total
voting power represented by the Companys then outstanding
voting securities. For purposes of this subparagraph, the term
person shall have the same meaning as when used in
sections 13(d) and 14(d) of the Exchange Act but shall
exclude (i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a parent or
subsidiary and (ii) a corporation owned directly or
indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of the Common Stock of
the Company.
In the event that the Company is a party to a merger or
consolidation, outstanding Awards shall be subject to the
agreement of merger or consolidation. Such agreement shall
provide for (a) the continuation of the outstanding Awards
by the Company, if the Company is a surviving corporation,
(b) the assumption of the outstanding Awards by the
surviving corporation or its parent or subsidiary, (c) the
substitution by the surviving corporation or its parent or
subsidiary of its own awards for the outstanding Awards,
(d) full exercisability or vesting and accelerated
expiration of the outstanding Awards or (e) settlement of
the full value of the outstanding Awards in cash or cash
equivalents or securities of the acquirer or its parent followed
by cancellation of such Awards. The acceleration of options or
awards in the event of a Change in Control may be seen as an
anti-takeover provision and may have the effect of discouraging
a merger proposal, a takeover attempt, or other efforts to gain
control of the Company.
Valuation. For purposes of establishing the
option price and for all other valuation purposes under the 2006
Plan, the fair market value of a share of Common Stock on any
relevant date will be the closing price per share of Common
Stock on that date, as such price is reported on Nasdaq. The
market value of the Common Stock as reported on Nasdaq as of
March 6, 2008 was $16.43 per share.
Changes in Capitalization. In the event any
change is made to the Common Stock issuable under the 2006 Plan
by reason of any stock split, stock dividend, combination of
shares, exchange of shares, or other
38
change affecting the outstanding Common Stock as a class without
the Companys receipt of consideration, appropriate
adjustments will automatically be made to (i) the maximum
number
and/or class
of securities issuable under the 2006 Plan, (ii) the
maximum number
and/or class
of securities for which any one person may be granted options,
stock appreciation rights, restricted stock and stock units per
fiscal year, (iii) the number
and/or class
of securities and the exercise price per share in effect under
each outstanding option (including any option incorporated from
the predecessor plans), and (iv) the number
and/or class
of securities to be granted as options under the Annual Director
Option Grant Program in order to prevent the dilution or
enlargement of benefits thereunder. Each outstanding option or
award that is assumed in connection with a Change in Control
will be appropriately adjusted to apply and pertain to the
number and class of securities that would otherwise have been
issued, in consummation of such Change in Control, to the
optionee or participant had the option or award been exercised
immediately prior to the Change in Control. Appropriate
adjustments will also be made to the exercise price payable per
share and to the class and number of securities available for
future issuance under the 2006 Plan on both an aggregate and a
per-participant basis.
Incentive Plan Amendments and Termination. Our
Board of Directors may amend or modify the 2006 Plan in any and
all respects whatsoever. The approval of our stockholders will
be obtained to the extent required by applicable law. Our Board
of Directors may, at any time and for any reason, terminate the
2006 Plan. Any options or awards outstanding at the time of such
termination will remain in force in accordance with the
provisions of the instruments evidencing such grants.
As of March 6, 2008, options covering 2,814,027 shares
were outstanding under the 2006 Plan with exercise prices
ranging from $0.29 to $38.62, and 678,675 shares remained
available for future option grant. The expiration dates for all
such options range from 2008 to November 2017.
New Plan
Benefits and Option Grant Table
Because the 2006 Plan is discretionary, benefits to be received
by individual participants are not determinable. However, each
of the Companys independent members of our board of
directors will receive an option grant to purchase
10,000 shares under the Annual Director Option Grant
Program on the first Tuesday of January of each year. The table
below shows, as to each of the current executive officers named
in the Summary Compensation Table and the various indicated
groups (a) the number of shares of Common Stock for which
options have been granted for (i) the one (1)-year period
ended December 31, 2007 and (ii) the period through
March 6, 2008, (b) the weighted-average exercise price
per share and (c) the direct stock issuance received during
each period.
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Number of
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Shares of Restricted
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Option Shares
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Weighted-Average
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Stock Issued
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Through
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Exercise Price of
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Through
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Name and Position
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2007
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March 6, 2008
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Granted Options
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2007
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March 6, 2008
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Stephen G. Waldis,
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51,818
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$
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36.10
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6,477
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President & CEO
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Lawrence R. Irving,
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30,545
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$
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36.10
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3,818
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Chief Financial Officer & Treasurer
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Robert Garcia,
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32,727
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$
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36.10
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4,091
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Chief Operating Officer
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Christopher Putnam,
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13,091
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$
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36.10
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1,636
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Executive Vice President of Sales
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Omar Tellez,
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16,364
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$
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36.10
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2,045
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Chief Marketing Officer
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All current executive officers as a group
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289,090
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$
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34.85
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32,385
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All current directors who are not executive officers as a group
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115,000
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50,000
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$
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20.02
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15,044
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39
Federal Income Tax Consequences of Options Granted under the
Incentive Plan. Options granted under the
Incentive Plan may be either incentive stock options that
satisfy the requirements of Section 422 of the Code or
non-statutory options that are not intended to meet such
requirements. The federal income tax treatment for the two types
of options differs, as follows:
Incentive Stock Options. No taxable income is
recognized by the optionee at the time of the option grant, and
no taxable income is generally recognized at the time the option
is exercised. However, the excess of the fair market value of
the purchased shares on the exercise date over the exercise
price paid for the shares generally is includable in alternative
minimum taxable income. The optionee will recognize taxable
income in the year in which the purchased shares are sold or
otherwise made the subject of disposition.
For federal tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. The
optionee will make a qualifying disposition of the purchased
shares if the sale or other disposition of such shares is made
after the optionee has held the shares for more than two
(2) years after the grant date of the option and more than
one (1) year after the exercise date. If the optionee fails
to satisfy either of these two holding periods prior to the sale
or other disposition of the purchased shares, then a
disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will
recognize long-term capital gain in an amount equal to the
excess of (i) the amount realized upon the sale or other
disposition of the purchased shares over (ii) the exercise
price paid for such shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair
market value of those shares on the date the option was
exercised (or if later the date any forfeiture restriction
lapsed) over (ii) the exercise price paid for the shares
will be taxable as ordinary income. Any additional gain
recognized upon the disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the
purchased shares, then the Company will be entitled to an income
tax deduction for the taxable year in which such disposition
occurs equal to the excess of (i) the fair market value of
such shares on the date the option was exercised (or if later
the date any forfeiture restriction lapsed) over (ii) the
exercise price paid for the shares. In no other instance will
the Company be allowed a deduction with respect to the
optionees disposition of the purchased shares. The Company
anticipates that any compensation deemed paid by the Company
upon one or more disqualifying dispositions of incentive stock
option shares by the Companys executive officers will
remain deductible by the Company and will not have to be taken
into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid
to certain executive officers of the Company.
Non-Statutory Options. No taxable income is
recognized by an optionee upon the grant of a non-statutory
option. The optionee will in general recognize ordinary income
in the year in which the option is exercised equal to the excess
of the fair market value of the purchased shares on the exercise
date over the exercise price paid for the shares, and the
optionee will be required to satisfy the tax withholding
requirements applicable to such income.
Special provisions of the Code apply to the acquisition of
Common Stock under a non-statutory option if the purchased
shares are subject to repurchase by the Company. These special
provisions may be summarized as follows:
(i) If the shares acquired upon exercise of the
non-statutory option are subject to repurchase by the Company at
the original exercise price in the event of the optionees
termination of service prior to vesting in such shares, the
optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income, as and when
the Companys repurchase right lapses, an amount equal to
the excess of (A) the fair market value of the shares on
the date such repurchase right lapses with respect to such
shares over (B) the exercise price paid for the shares.
(ii) The optionee may, however, elect under
Section 83(b) of the Code to include as ordinary income in
the year of exercise of the non-statutory option an amount equal
to the excess of (A) the fair market value of the purchased
shares on the exercise date (determined as if the shares were
not subject to the Companys repurchase right) over
(B) the exercise price paid for such shares. If the
Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right
lapses.
40
The Company will be entitled to a business expense deduction
equal to the amount of ordinary income recognized by the
optionee with respect to the exercised non-statutory option. The
deduction will in general be allowed for the taxable year of the
Company in which such ordinary income is recognized by the
optionee. The Company anticipates that the compensation deemed
paid by the Company upon the exercise of non-statutory options
with exercise prices equal to the fair market value of the
option shares on the grant date will remain deductible by the
Company and will not have to be taken into account for purposes
of the $1 million limitation per covered individual on the
deductibility of the compensation paid to certain executive
officers of the Company.
Stock Appreciation Rights. A participant who
is granted a SAR will recognize ordinary income in the year of
exercise equal to the amount of the appreciation distribution.
The Company will be entitled to a business expense deduction
equal to the appreciation distribution for the taxable year of
the Company in which the ordinary income is recognized by the
participant.
Stock Issuances. The tax principles applicable
to direct stock issuances under the Incentive Plan will be
substantially the same as those summarized above for the
exercise of non-statutory options.
If Proposal No. 3 is not approved by the stockholders,
the Company intends to continue the Incentive Plan based on the
existing provisions.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
41
PROPOSAL 4
APPROVAL
OF THE AUTHORIZATION TO
ESTABLISH
AN EMPLOYEE STOCK PURCHASE PLAN
The Companys executive management has been reviewing the
possible establishment of an Employee Stock Purchase Plan to
permit employees of the Company or any designated subsidiary to
purchase shares of our Common Stock directly from us through a
series of offerings. Subject to stockholder approval,
managements plan is to establish an Employee Stock
Purchase Plan and reserve 500,000 shares of our Common
Stock for issuance thereunder. Upon stockholder approval, our
Board of Directors intends to establish and implement an
Employee Stock Purchase Plan which would include the features
described below.
The purpose of the Employee Stock Purchase Plan will be to
provide eligible employees with the opportunity to purchase
shares of our Common Stock at a discount through payroll
deductions. The Company deems it appropriate and advisable to
establish the Employee Stock Purchase Plan because employee
stock ownership can aid in the recruitment, retention, and
motivation of our employees.
The following is a summary of the material features of the
proposed Employee Stock Purchase Plan.
Administration. The Employee Stock Purchase
Plan will be administered by our Board of Directors or, if
appointed by the Board of Directors, by a Committee appointed by
the Board of Directors. The Board of Directors or its Committee
will have authority to make rules and regulations for the
administration of the Employee Stock Purchase Plan, to interpret
its provisions, and to supervise its administration and to take
any other actions related to the Employee Stock Purchase Plan as
it deems necessary or advisable. The interpretation and
decisions of the Board of Directors or its Committee with regard
to these matters shall be final and conclusive. All costs and
expenses incurred in the administration of the Employee Stock
Purchase Plan will be paid by the Company without charge to
participants.
Shares Available; Offerings. The stock
issuable under the Employee Stock Purchase Plan is the
Companys authorized but unissued or reacquired Common
Stock. The maximum number of shares of Common Stock which may be
issued over the term of the Employee Stock Purchase Plan is
500,000.
The Employee Stock Purchase Plan will be implemented by offering
periods that will generally have a duration of three or six
months. A new offering period will commence every three or six
months and may run concurrently with prior offering periods. The
Board of Directors or Committee in its discretion may vary the
beginning date and ending date of the offering periods, provided
no offering period shall exceed 24 months in length, and
may vary the duration of an offering period or purchase period.
A new offering period will commence on a date selected by the
Board of Directors or the Compensation Committee. The
participant will have a separate purchase right for each
offering period in which he or she participates. The purchase
right will be granted on the first day of the offering period
and will be automatically exercised in successive installments
on the last day of each offering period or on a designated
exercise date.
Eligibility. An employee is eligible to
participate in an offering if he or she (1) is employed by
the Company, or by one of the Companys subsidiaries
designated by the Board of Directors or its Committee, at the
beginning of an offering period; and (2) is customarily
employed by the Company or designated subsidiary for more than
20 hours per week and for more than five months in a
calendar year. The Company may not grant an employee a purchase
right under the Employee Stock Purchase Plan if such employee,
immediately after the purchase right is granted, owns or would
own (as determined pursuant to Section 424(d) of the
Internal Revenue Code) 5% or more of the total combined voting
power or value of the stock of the Company. Nor may the Company
grant an employee a purchase right that gives such employee the
right to purchase under the Employee Stock Purchase Plan more
than $25,000 worth of Common Stock (based on the fair market
value of the Common Stock at the beginning of an offering
period) in any calendar year. As of March 6, 2008,
213 employees and 7 officers were eligible to participate
in the Employee Stock Purchase Plan.
Payment of Purchase Price; Payroll
Deductions. Payment for shares by participants
shall be by accumulation of after-tax payroll deductions during
an offering period. The deductions may not exceed 10% of
42
a participants cash compensation paid during an offering
period. Cash compensation for this purpose shall be defined in
the Employee Stock Purchase Plan document.
The participant will receive a purchase right for each offering
period in which he or she participates to purchase up to the
number of shares of Common Stock determined by dividing such
participants payroll deductions accumulated prior to the
purchase date by the applicable purchase price (subject to the
limitations discussed herein). Unless the Board of Directors or
Committee determines otherwise, no fractional shares shall be
purchased. No interest shall accrue on the payroll deductions of
a participant in the ESPP except to the extent required by
applicable law.
Option Exercise Price. The purchase price of
each share of Common Stock purchased with payroll deductions
made during each offering will be 85% of the average closing
price of the Common Stock on Nasdaq for the five trading days
immediately preceding either (1) the Offering Commencement
Date or (2) the Exercise Date (as defined in the Employee
Stock Purchase Plan), whichever average closing price is less.
Our obligation to sell and deliver Common Stock under the Plan
is subject to listing on Nasdaq and the approval of all
governmental authorities required in connection with the
authorization, issuance or sale of such stock.
Sale Restrictions. The Board may choose to
implement the program with a required holding period, such as
requiring that shares of Common Stock purchased under the
Employee Stock Purchase Plan may not be sold for a period of at
least six months from the date of purchase.
Nontransferability of Interests. The terms of
the Employee Stock Purchase Plan shall provide that employees
may not transfer their rights under the Employee Stock Purchase
Plan other than by will or the laws of descent and distribution.
Termination of Employment. Upon termination of
a participating employees employment before an Exercise
Date, no payroll deduction shall be taken from any pay due and
owing and the balance of the employees account shall be
refunded.
Amendment; Termination. The Employee Stock
Purchase Plan shall continue in effect until the earlier of
(i) twenty (20) years from the date of adoption,
(ii) the date on which all shares available for issuance
under the Employee Stock Purchase Plan shall have been issued or
(iii) a corporate transaction (as defined below), unless
the Employee Stock Purchase Plan is earlier terminated by the
Board of Directors in its discretion. The terms of the Employee
Stock Purchase Plan shall provide that the Board of Directors
may at any time modify, terminate or amend the Employee Stock
Purchase Plan in any respect, except that (1) if the
approval of the stockholders of the Company is required under
Section 423 of Code, the Board of Directors may not effect
such modification or amendment without such approval, and
(2) in no event may any amendment be made which would cause
the Plan to fail to comply with Section 423 of the Code.
Adjustments. If any change in the Common Stock
occurs (through re-capitalization, stock dividend, stock split,
combination of shares, exchange of shares, or other change
affecting the outstanding Common Stock as a class without our
receipt of consideration), appropriate adjustments shall be made
by the Company to the class and maximum number of shares subject
to the Employee Stock Purchase Plan, to the class and maximum
number of shares purchasable by each participant on any one
purchase date, and the class and number of shares and purchase
price per share subject to outstanding purchase rights in order
to prevent the dilution or enlargement of benefits thereunder.
Corporate Transaction. The terms of the
Employee Stock Purchase Plan shall provide that, in the event of
a dissolution or liquidation of the Company, the offering period
will terminate immediately prior to the completion of such event
unless otherwise provided by the Board of Directors. In the
event of (1) a proposed sale of all or substantially all of
the assets of the Company or (2) a merger or consolidation
of the Company with or into another corporation (other than a
merger in which the Company is the surviving corporation and the
holders of the capital stock of the Company immediately prior to
such merger continue to hold at least 50% by voting power of the
capital stock of the Company), then the surviving corporation
will assume each option under the Employee Stock Purchase Plan,
or will substitute an equivalent option unless the Board of
Directors determines either to cancel each option and refund the
payroll withholding amounts or to give each participant the
right to exercise the option immediately prior to the corporate
transaction.
43
The grant of purchase rights under the Employee Stock Purchase
Plan will in no way affect the right of the Company to adjust,
reclassify, reorganize, or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
Summary
of Federal Income Tax Consequences.
The following is only a summary of the principal United States
Federal income taxation consequences to the participant and the
Company with respect to the Employee Stock Purchase Plan, based
on advice received from counsel to the Company regarding current
United States Federal income tax laws. This summary is not
intended to be exhaustive and among other things, does not
discuss the tax consequences of a participants death or
the income tax laws of any city, state or foreign country in
which the participant may reside.
The Employee Stock Purchase Plan is intended to qualify as an
employee stock Employee Stock Purchase Plan under
Section 423 of the Code. Under a plan that so qualifies, no
taxable income will be reportable by a participant, and no
deductions will be allowable to the Company, by reason of the
grant or exercise of the purchase rights issued thereunder. A
participant will, however, recognize taxable income in the year
in which the purchased shares are sold or otherwise made the
subject of disposition.
A sale or other disposition of the purchased shares will be a
disqualifying disposition if made before the later of two years
after the start of the offering period in which such shares were
acquired or one year after the shares are purchased. If the
participant makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax
deduction, for the taxable year in which such disposition
occurs, equal to the amount by which the fair market value of
such shares on the date of purchase exceeded the purchase price,
and the participant will be required to satisfy the employment
and income tax withholding requirements applicable to such
income. In no other instance will the Company be allowed a
deduction with respect to the participants disposition of
the purchased shares.
Any additional gain or loss recognized upon the disposition of
the shares will be a capital gain, which will be long-term if
the shares have been held for more than one (1) year
following the date of purchase under the Employee Stock Purchase
Plan.
New
Employee Stock Purchase Plan Benefits
Since purchase rights are subject to discretion, including an
employees decision not to participate in the Employee
Stock Purchase Plan, awards under the Employee Stock Purchase
Plan for the current fiscal year are not determinable. The
Companys executive officers and directors are not
currently participating in the Employee Stock Purchase Plan
because the Employee Stock Purchase Plan has not yet been
implemented.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4
44
ANNUAL MEETING OF STOCKHOLDERS OF
SYNCHRONOSS TECHNOLOGIES, INC.
May 15, 2008
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
ê Please
detach along perforated line and mail in the envelope
provided. ê
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10030303000000000000 1 |
051508 |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTOR AND FOR PROPOSALS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
ý |
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1. |
To elect the following nominee of the Board of Directors to serve until the
2011 annual meeting of stockholders or until his successor has been duly
elected and qualified:
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FOR
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AGAINST
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ABSTAIN |
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To ratify the appointment of Ernst & Young, LLP as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2008.
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NOMINEE: |
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FOR THE NOMINEE |
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Thomas J. Hopkins |
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WITHHOLD AUTHORITY FOR THE NOMINEE
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To approve an amendment to the Companys 2006 Equity Incentive Plan. |
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4. |
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To authorize the establishment of an Employee Stock Purchase Plan.
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In his discretion, the proxy holder is authorized to vote upon such other business
as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |
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SYNCHRONOSS TECHNOLOGIES, INC.
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders to be held on May 15, 2008
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The undersigned appoints Ronald J. Prague and Lawrence R. Irving, or either of them, proxies for the undersigned, to attend the Annual Meeting of Stockholders of Synchronoss Technologies, Inc. (the Company), to be held on May 15, 2008 at 10:00 a.m., Eastern Standard Time, at the Bridgewater Marriott Hotel, 700 Commons Way, Bridgewater, New Jersey 08807, and at any adjournments or postponements of
the Annual Meeting, and hereby authorizes such person to represent and to vote as specified in this Proxy all the Common Stock of the Company that the undersigned would be entitled to vote if personally present.
This Proxy, when properly executed, will be voted in accordance with your indicated directions. If no direction is made, the proxy holder will have the authority to vote FOR the election of Director and FOR proposals 2, 3 and 4 as set forth on the reverse side.
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(Continued and to be signed on reverse side.)
ANNUAL MEETING OF STOCKHOLDERS OF
SYNCHRONOSS TECHNOLOGIES, INC.
May 15, 2008
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the envelope
provided as soon as possible.
OR
TELEPHONE - Call toll-free 1800PROXIES
(1-800-776-9437) in the United States or 1-718-
921-8500 from foreign countries and follow the
instructions. Have your proxy card available when
you call.
- OR -
INTERNET - Access www.voteproxy.com and follow the on-screen instructions. Have your proxy card available when you access the web page.
- OR -
IN
PERSON - You may vote your shares in person
by attending the Annual Meeting.
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COMPANY NUMBER |
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ACCOUNT NUMBER |
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You may enter your voting instructions at 1-800-PROXIES in the United States or 1-718-921-8500 from foreign countries or www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off or meeting date.
ê Please
detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. ê
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10030303000000000000 1 |
051508 |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTOR AND FOR PROPOSALS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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1. |
To elect the following nominee of the Board of Directors to serve until the
2011 annual meeting of stockholers or until his successor has been duly
elected and qualified:
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FOR
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AGAINST
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ABSTAIN |
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To ratify the appointment of Ernst & Young, LLP as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2008.
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NOMINEE: |
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FOR THE NOMINEE |
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Thomas J. Hopkins |
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WITHHOLD AUTHORITY FOR THE NOMINEE
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To approve an amendment to the Companys 2006 Equity Incentive Plan. |
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To authorize the establishment of
an Employee Stock Purchase Plan. |
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In his discretion, the proxy holder is authorized to vote upon such other business
as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |
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