pre14a
|
|
|
|
|
|
|
OMB APPROVAL |
|
|
|
|
|
OMB Number:
|
|
3235-0059 |
|
|
Expires:
|
|
January 31, 2008 |
|
|
Estimated average burden hours per
response |
14.75 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
|
|
|
Filed by the Registrant
þ |
|
Filed by a Party other than the Registrant o |
|
|
Check the appropriate box: |
|
|
|
þ Preliminary Proxy Statement |
|
o
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
|
o Definitive Proxy Statement |
|
o Definitive Additional Materials |
|
o
Soliciting Material Pursuant to §240.14a-12 |
Euronet Worldwide, 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: |
|
|
|
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.: |
|
|
SEC 1913 (11-01) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
EURONET WORLDWIDE, INC.
4601 COLLEGE BOULEVARD
SUITE 300
LEAWOOD, KANSAS 66211
913-327-4200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 18, 2006
Euronet Worldwide, Inc., a Delaware corporation
(Euronet, we or us), will
hold the Annual Meeting of our Stockholders on Thursday,
May 18, 2006 at 2:00 p.m. (Central time), at the
Hilton Garden Inn Overland Park, 5800 College Boulevard,
Overland Park, Kansas 66211, to consider and vote upon the
following matters:
|
|
|
|
1. |
Election of three Directors, each to serve a three-year term
expiring upon the 2009 Annual Meeting of Stockholders or until a
successor is duly elected and qualified. |
|
|
2. |
Amendment of Euronets Certificate of Incorporation to
increase the authorized Common Stock of Euronet, par value
$0.02 per share, from 60 million shares to
90 million shares. |
|
|
3. |
Approval of the Euronet 2006 Stock Incentive Plan. |
|
|
4. |
Approval of the Euronet Executive Annual Incentive Plan. |
|
|
5. |
Ratification of the appointment of KPMG as Euronets
auditors for the year ending December 31, 2006. |
|
|
6. |
Consideration of such other business as may properly come before
the meeting or any adjournment of the meeting. |
Our Board of Directors (the Board) has fixed the
close of business on March 30, 2006, as the record date for
the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting and at any adjournment of the
meeting.
All stockholders are cordially invited to attend the meeting in
person. However, to assure your representation at the
meeting, you are urged to mark, sign, date and return the
enclosed proxy as promptly as possible in the postage
prepaid envelope provided for that purpose. Any stockholder
attending the meeting may vote in person even if he or she
returned a proxy.
|
|
|
By Order of the Board, |
|
|
|
|
|
Jeffrey B. Newman |
|
Executive Vice President, |
|
General Counsel and Secretary |
April 10, 2006
EURONET WORLDWIDE, INC.
4601 COLLEGE BOULEVARD
SUITE 300
LEAWOOD, KANSAS 66211
913-327-4200
PROXY STATEMENT
Contents
|
|
|
|
|
|
|
|
2 |
|
|
|
|
4 |
|
|
|
|
6 |
|
|
|
|
9 |
|
|
|
|
11 |
|
|
|
|
17 |
|
|
|
|
20 |
|
|
|
|
20 |
|
|
|
|
24 |
|
|
|
|
30 |
|
|
|
|
31 |
|
|
|
|
32 |
|
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 2006
DATE, TIME AND PLACE OF MEETING
Euronet Worldwide, Inc. (Euronet, we or
us) is furnishing this proxy statement in connection
with the solicitation of proxies by our Board of Directors (the
Board), for use at the annual meeting of
stockholders to be held on Thursday, May 18, 2006, at
2:00 p.m. (Central time), at the Hilton Garden Inn Overland
Park, 5800 College Boulevard, Overland Park, Kansas 66211, and
at any adjournment of the meeting (the Annual
Meeting).
Record Date; Quorum; Outstanding Shares
Stockholders at the close of business on March 30, 2006
(the Record Date) are entitled to notice of, and to
vote at, the Annual Meeting. The stockholders will be entitled
to one vote for each share of common stock, par value
$0.02 per share (the Common Stock), held of
record at the close of business on the Record Date. To take
action at the Annual Meeting, a quorum composed of holders of
one-third of the outstanding shares of Common Stock must be
represented by proxy or in person at the Annual Meeting. On
February 28, 2006 there were 36,816,431 shares of
Common Stock outstanding. No shares of preferred stock are
outstanding.
Date of Mailing
We are first sending this proxy statement, the accompanying
proxy and our annual report to stockholders for the year ended
December 31, 2005 (the Annual Report) to
stockholders on or about April 10, 2006.
REVOCABILITY OF PROXIES
Shares of Common Stock represented by valid proxies that we
receive at any time up to and including the day of the Annual
Meeting will be voted as specified in such proxies. Any
stockholder giving a proxy has the right to revoke it at any
time before it is exercised by attending the Annual Meeting and
voting in person or by filing with Euronets secretary an
instrument of revocation or a duly executed proxy bearing a
later date.
VOTING AND SOLICITATION
Each share of Common Stock issued and outstanding as of the
Record Date will have one vote on each of the matters presented
herein. Votes cast by proxy or in person at the Annual Meeting
will be tabulated by the inspector of elections appointed for
the Annual Meeting. We will treat shares that are voted
For, Against or Withheld
From a matter as being present at the meeting for purposes
of establishing a quorum and also as shares entitled to vote at
the Annual Meeting (the Votes Cast). We will
treat abstentions and broker non-votes also as shares that are
present and entitled to be voted for purposes of determining the
presence of a quorum. Abstentions will count in determining the
total number of Votes Cast with respect to a proposal that
requires a majority of Votes Cast and, therefore, will have
the same effect as a vote against such a proposal. Broker
non-votes will not count in determining the number of
Votes Cast with respect to a proposal that requires a
majority of Votes Cast and, therefore, will not affect the
outcome of the voting on such a proposal.
2
PERSONS MAKING THE SOLICITATION
Euronet is making all the solicitations in this proxy statement.
We will bear the entire cost of this solicitation of proxies.
Our Directors, officers, and employees, without additional
remuneration, may solicit proxies by mail, telephone and
personal interviews. We will, if requested, reimburse banks,
brokerage houses and other custodians, nominees and certain
fiduciaries for their reasonable
out-of-pocket expenses
incurred in connection with the distribution of proxy materials
to their principals.
WE WILL FURNISH ADDITIONAL COPIES OF THE ANNUAL REPORT, NOT
INCLUDING EXHIBITS, WITHOUT CHARGE TO ANY STOCKHOLDER UPON
WRITTEN REQUEST TO JEFFREY B. NEWMAN AT OUR ADDRESS SET FORTH
HEREIN. WE WILL FURNISH EXHIBITS TO THE ANNUAL REPORT TO
STOCKHOLDERS UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE
PROCESSING FEE.
3
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of the close of business on February 28, 2006, we had
36,816,431 shares of Common Stock issued and outstanding.
The following table sets forth certain information with respect
to the beneficial ownership of our Common Stock as of
February 28, 2006, by (i) each Euronet Director,
nominee for Director and Named Executive Officer, (ii) all
Euronet Directors, nominees for Director and Executive Officers
as a group, and (iii) each stockholder known by Euronet
beneficially to own more than 5% of our Common Stock.
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership | |
|
|
| |
|
|
Number of | |
|
Percent of | |
Stockholder |
|
Shares(1) | |
|
Outstanding(1) | |
|
|
| |
|
| |
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
|
Michael J. Brown(2)
|
|
|
2,654,745 |
|
|
|
7.2 |
% |
|
Rick L. Weller(3)
|
|
|
137,702 |
|
|
|
* |
|
|
Miro I. Bergman(4)
|
|
|
67,308 |
|
|
|
* |
|
|
Daniel R. Henry(5)
|
|
|
48,595 |
|
|
|
* |
|
|
Jeffrey B. Newman(6)
|
|
|
45,540 |
|
|
|
* |
|
|
M. Jeannine Strandjord(7)
|
|
|
39,501 |
|
|
|
* |
|
|
Thomas A. McDonnell(8)
|
|
|
33,001 |
|
|
|
* |
|
|
Dr. Andrzej Olechowski(9)
|
|
|
22,001 |
|
|
|
* |
|
|
Andrew B. Schmitt(10)
|
|
|
10,001 |
|
|
|
* |
|
|
Eriberto R. Scocimara
|
|
|
0 |
|
|
|
* |
|
|
Paul S. Althasen
|
|
|
0 |
|
|
|
* |
|
All Directors, Nominees for Director and Executive Officers as a
Group (12 persons)
|
|
|
3,108,444 |
|
|
|
8.4 |
% |
Five Percent Holders
|
|
|
|
|
|
|
|
|
|
Waddell & Reed Investment Management Company(11)
|
|
|
2,475,800 |
|
|
|
6.7 |
% |
|
6300 Lamar Avenue
|
|
|
|
|
|
|
|
|
|
Overland Park, Kansas 66202
|
|
|
|
|
|
|
|
|
|
|
DST Systems, Inc.(12)
|
|
|
1,884,597 |
|
|
|
5.1 |
% |
|
333 West 11th Street
|
|
|
|
|
|
|
|
|
|
Kansas City, Missouri 64105-1594
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
The percentage of shares of Common Stock beneficially owned does
not exceed one percent of the outstanding shares of Common Stock. |
|
|
|
|
(1) |
Calculation of percentage of beneficial ownership assumes the
exercise by only the respective named stockholder of all options
for the purchase of Common Stock held by such stockholder that
are exercisable within 60 days of February 28, 2006. |
|
|
(2) |
Includes (i) 161,750 shares of Common Stock issuable
pursuant to options (including Milestone Options) exercisable
within 60 days of February 28, 2006,
(ii) 34,000 shares of Common Stock held by
Mr. Browns wife, and (iii) 166,000 shares
of Common Stock held by Mr. Browns wife as guardian
for their children. |
|
|
(3) |
Includes 119,450 shares of Common Stock issuable pursuant
to options exercisable within 60 days of February 28,
2006. |
|
|
(4) |
Includes 39,250 shares of Common Stock issuable pursuant to
options exercisable within 60 days of February 28,
2006. |
|
|
(5) |
Includes 16,750 shares of Common Stock issuable pursuant to
options (including Milestone Options) exercisable within
60 days of February 28, 2006. |
4
|
|
|
|
(6) |
Includes 45,540 shares of Common Stock issuable pursuant to
options exercisable within 60 days of February 28,
2006. |
|
|
(7) |
Includes (i) 30,001 shares of Common Stock issuable
pursuant to options exercisable within 60 days of
February 28, 2006, (ii) 6,500 shares held jointly
with Ms. Strandjords husband,
(iii) 2,000 shares held in Ms. Strandjords
individual retirement account and (iv) 1,000 shares
Ms. Strandjord holds as custodian for her daughter. |
|
|
(8) |
Includes 33,001 shares of Common Stock issuable pursuant to
options exercisable within 60 days of February 28,
2006. Thomas A. McDonnell is also the President of DST Systems,
Inc., which beneficially owns 1,884,597 shares of Common
Stock, but Mr. McDonnell disclaims beneficial ownership of
these shares. |
|
|
(9) |
Includes 12,001 shares of Common Stock issuable pursuant to
options exercisable within 60 days of February 28,
2006. |
|
|
(10) |
Includes 10,001 shares of Common Stock issuable pursuant to
options exercisable within 60 days of February 28,
2006. |
|
(11) |
As reported in a Schedule 13G/ A filed as of
February 1, 2006. These shares are beneficially owned by
one or more open-end investment companies or other managed
accounts which are advised or sub-advised by Ivy Investment
Management Company, an investment advisory subsidiary of
Waddell & Reed Financial, Inc. or Waddell &
Reed Investment Management Company, an investment advisory
subsidiary of Waddell & Reed, Inc. |
|
(12) |
As reported in a Schedule 13D dated as of March 6,
2002. |
5
PROPOSAL 1
ELECTION OF DIRECTORS
Our Directors and Executive Officers are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Age | |
|
Position |
|
Term Expires | |
|
|
| |
|
|
|
| |
Directors
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Brown
|
|
|
49 |
|
|
Chairman, Chief Executive Officer and Class I Director |
|
|
2007 |
|
|
Andrew B. Schmitt(1)(2)(3)
|
|
|
57 |
|
|
Class I Director |
|
|
2007 |
|
|
M. Jeannine Strandjord(1)(2)(3)
|
|
|
60 |
|
|
Class I Director |
|
|
2007 |
|
|
Dr. Andrzej Olechowski(2)(3)
|
|
|
59 |
|
|
Class II Director |
|
|
2008 |
|
|
Eriberto R. Scocimara(1)(2)(3)
|
|
|
70 |
|
|
Class II Director |
|
|
2008 |
|
|
Paul S. Althasen*
|
|
|
41 |
|
|
Executive Vice President and Class III Director |
|
|
2009 |
|
|
Daniel R. Henry*
|
|
|
40 |
|
|
President, Chief Operating Officer and Class III Director |
|
|
2009 |
|
|
Thomas A. McDonnell(1)(2)(3)*
|
|
|
60 |
|
|
Class III Director |
|
|
2009 |
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
Miro I. Bergman
|
|
|
43 |
|
|
Executive Vice President, Chief Operating Officer
Prepaid Processing Division |
|
|
|
|
|
John A. Gardiner(4)
|
|
|
42 |
|
|
Executive Vice President |
|
|
|
|
|
James P. Jerome(5)
|
|
|
48 |
|
|
Executive Vice President, Software Solutions Managing Director |
|
|
|
|
|
Jeffrey B. Newman
|
|
|
51 |
|
|
Executive Vice President, General Counsel |
|
|
|
|
|
John Romney
|
|
|
39 |
|
|
Executive Vice President, Managing Director, EMEA |
|
|
|
|
|
Rick L. Weller
|
|
|
48 |
|
|
Executive Vice President, Chief Financial Officer |
|
|
|
|
|
|
|
|
* |
Nominated for election at this Annual Meeting. |
|
|
(1) |
Member of the Audit Committee. |
|
(2) |
Member of the Compensation Committee. |
|
(3) |
Member of the Nominating & Corporate Governance
Committee. |
|
(4) |
Until February 19, 2006, Mr. Gardiner had
observer rights to attend Board meetings under the
terms of the e-pay Ltd.
Share Purchase Agreement dated February 19, 2003.
Mr. Gardiner resigned from his position as Executive Vice
President effective December 30, 2005. |
|
(5) |
Mr. Jerome resigned from his position as Executive Vice
President effective August 28, 2005. |
Classified Board
We currently have eight Directors divided among three classes as
follows:
|
|
|
Class I Michael J. Brown, Andrew B. Schmitt and
M. Jeannine Strandjord; |
|
|
Class II Dr. Andrzej Olechowski and
Eriberto R. Scocimara; and |
|
|
Class III Paul S. Althasen, Daniel R. Henry,
and Thomas A. McDonnell. |
6
Messrs. Althasen, Brown and Henry are management Directors.
The Board has determined that the remaining five Directors are
independent Directors as defined in the listing standards for
the Nasdaq National Market.
Three Class III Directors are to be elected at the Annual
Meeting for three-year terms ending at the Annual Meeting of
Stockholders in 2009. The Board has nominated Paul S. Althasen,
Daniel R. Henry and Thomas A. McDonnell for election as
Class III Directors. Unless otherwise instructed, each
signed and returned proxy will be voted for Paul S. Althasen,
Daniel R. Henry and Thomas A. McDonnell. Messrs. Althasen,
Henry and McDonnell have consented to serve as Directors of
Euronet. If Messrs. Althasen, Henry or McDonnell are unable
or subsequently declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for any
alternative nominees who shall be designated by the present
Board to fill the vacancy. We are not aware of any reason why
Messrs. Althasen, Henry or McDonnell will be unable or will
decline to serve as a director.
The Directors are elected by a plurality of the shares voted by
the stockholders. The three candidates for election as Directors
who receive the highest number of affirmative votes by the
holders of shares present and entitled to be voted at the Annual
Meeting will be elected.
The following information relates to the nominees indicated
above and to our other Directors whose terms of office will
extend beyond 2006. All Directors have served on our Board for
at least five years, except as otherwise indicated.
Nominees for Election at the Annual Meeting
PAUL S. ALTHASEN has served on our Board since May 2003.
Mr. Althasen currently serves as Executive Vice President.
He joined Euronet in February 2003 in connection with
Euronets acquisition of
e-pay Limited, a U.K.
company. Mr. Althasen is a co-founder and former CEO and
Co-Managing Director of
e-pay, and he was
responsible for the strategic direction of
e-pay since its
formation in 1999. From 1989 to 1999, Mr. Althasen was a
co-founder and Managing Director of MPC Mobile Phone Center, a
franchised retailer of cellular phones in the U.K. Previously,
Mr. Althasen worked for Chemical Bank in London where he
traded financial securities. Mr. Althasen has a B.A.
(Honors) degree in business studies.
DANIEL R. HENRY founded the predecessor of Euronet with Michael
J. Brown, our Chairman of the Board and Chief Executive Officer,
in 1994 and is serving as our President and Chief Operating
Officer. Mr. Henry oversees Euronets daily
operations, including our overseas subsidiaries, and is
responsible for our expansion into new markets. Prior to joining
us, Mr. Henry was a commercial real estate broker for five
years in the Kansas City metropolitan area where he specialized
in the development and leasing of premier office properties.
Mr. Henry received a B.S. in Business Administration from
the University of Missouri Columbia in 1988.
Mr. Henry has been a Director of Euronet since our
incorporation in December 1996 and he previously served on the
boards of Euronets predecessor companies. Mr. Henry
is married to the sister of the wife of Michael Brown.
THOMAS A. MCDONNELL has been a Director of Euronet since its
incorporation in December 1996 and he previously served on the
boards of Euronets predecessor companies. Since October
1984, he has served as Chief Executive Officer and since January
1973 (except for a 30 month period from October 1984 to
April 1987) he has served as President of DST Systems, Inc., a
stockholder of Euronet. From 1973 to September 1995, he served
as Treasurer of DST Systems, Inc. He is currently a director of
DST Systems, Inc., Commerce Bancshares, Inc., Garmin Ltd., Blue
Valley Ban Corp and Kansas City Southern. He is a member of the
audit committees of Kansas City Southern, Commerce Bancshares,
Inc. and Garmin Ltd. Mr. McDonnell has a B.S. in Accounting
from Rockhurst College and an M.B.A. from the Wharton School of
Finance.
7
Other Directors
MICHAEL J. BROWN is one of the founders of Euronet and has
served as our Chairman of the Board and Chief Executive Officer
since 1996. He also founded our predecessor in 1994 with Daniel
R. Henry, our President and Chief Operating Officer.
Mr. Brown has been a Director of Euronet since our
incorporation in December 1996 and previously served on the
boards of Euronets predecessor companies. In 1979,
Mr. Brown founded Innovative Software, Inc., a computer
software company that was merged in 1988 with Informix.
Mr. Brown served as President and Chief Operating Officer
of Informix from February 1988 to January 1989. He served as
President of the Workstation Products Division of Informix from
January 1989 until April 1990. In 1993, Mr. Brown was a
founding investor of Visual Tools, Inc. Visual Tools, Inc. was
acquired by Sybase Software in 1996. Mr. Brown received a
B.S. in electrical engineering from the University of
Missouri Columbia in 1979 and a M.S. in molecular
and cellular biology at the University of Missouri
Kansas City in 1997. Mr. Brown is married to the sister of
the wife of Daniel Henry.
DR. ANDRZEJ OLECHOWSKI has served as a Director of Euronet
since May 2002. He previously served as a Director of Euronet
from its incorporation in December 1996 until May 2000. Since
1995, Dr. Olechowski has served as a consultant for Central
Europe Trust, Poland, a consulting firm. He has held several
senior positions with the Polish government: from 1993 to 1995,
he was Minister of Foreign Affairs and in 1992 he was Minister
of Finance. From 1992 to 1993, and again in 1995, he served as
economic advisor to President Walesa. From 1991 to 1992, he was
Secretary of State in the Ministry of Foreign Economic Relations
and from 1989 to 1991 he was Deputy Governor of the National
Bank of Poland. From May 1998 to June 2000, Dr. Olechowski
served as the Chairman of Bank Handlowy. Currently,
Dr. Olechowski sits on the Supervisory Boards of Bank
Handlowy w Warszawie SA (Poland), Vivendi Universal (France),
and PKN Orlen (Poland) as well as the International Advisory
Board of Textron (USA), European Advisory Board of Citigroup
(UK) and the boards of various charitable and educational
foundations. He received a Ph.D. in Economics in 1979 from the
Central School of Planning and Statistics in Warsaw.
ERIBERTO R. SCOCIMARA has been a Director of Euronet since its
incorporation in December 1996 and previously served on the
boards of Euronets predecessor companies. Since April
1994, Mr. Scocimara has served as President and Chief
Executive Officer of the Hungarian-American Enterprise Fund
(HAEF), a private company that is funded by the
U.S. government and invests in Hungary. Since 1984,
Mr. Scocimara has also been the President of
Scocimara & Company, Inc., an investment management
company. Mr. Scocimara is currently a director of HAEF,
Carlisle Companies, Roper Industries, Quaker Fabrics and several
privately owned companies. He is the chairman of the audit
committees of Roper Industries and Quaker Fabrics. He has a
Licence de Science Economique from the University of St. Gallen,
Switzerland, and an M.B.A. from Harvard University.
ANDREW B. SCHMITT has served on our Board since
September 24, 2003. Mr. Schmitt has served as
President and Chief Executive Officer of Layne Christensen
Company since October 1993. For approximately two years prior to
joining Layne Christensen Company, Mr. Schmitt was a
partner in two privately owned hydrostatic pump and motor
manufacturing companies and an oil and gas service company. He
served as President of the Tri-State Oil Tools Division of Baker
Hughes Incorporated from February 1988 to October 1991.
Mr. Schmitt serves on the board of directors of Layne
Christensen Company, as well as the boards of its subsidiaries
and affiliates. Mr. Schmitt holds a bachelor of science
degree from the University of Alabama School of Commerce and
Business.
M. JEANNINE STRANDJORD has served on our Board since
March 26, 2001. From September 2003 until November 2005,
Ms. Strandjord served as Senior Vice President and Chief
Integration Officer of Sprint Corporation (Sprint)
with responsibility for implementation of Sprints
transformation, including overall program management of
comprehensive process redesign and organizational development.
From November 1998 to September 2003, Ms. Strandjord was
Senior Vice President of Financial Services of Sprint. From 1990
to November 1998, Ms. Strandjord was Senior Vice President
and Treasurer for Sprint. From 1986 to 1990, she served as Vice
President and Controller of Sprint. Ms. Strandjord joined
8
Sprint in January 1985, serving as Vice President of Finance and
Distribution at AmeriSource, Inc., a Sprint subsidiary. Prior to
joining Sprint, Ms. Strandjord was Vice President of
Finance for Macys Midwest and had held positions with
Kansas City Power & Light Co. and Ernst and Whinney.
Ms. Strandjord holds a bachelors degree in accounting
and business administration from the University of Kansas and is
a certified public accountant. She is a member of the board of
six registered investment companies which are a part of American
Century Funds, a member of the board of DST Systems, Inc., and a
member of the audit committee of DST Systems, Inc.
Board Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF MESSRS. ALTHASEN, HENRY AND MCDONNELL AS
CLASS III DIRECTORS OF EURONET.
PROPOSAL 2
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
Our stockholders are being asked to approve a proposal to amend
our Certificate of Incorporation to increase the aggregate
number of shares of Common Stock that we have the authority to
issue from Sixty Million (60,000,000) shares of Common Stock to
Ninety Million (90,000,000) shares of Common Stock.
The proposed amendment to our Certificate of Incorporation was
approved by our Board of Directors on March 8, 2006. Our
Board of Directors believes that it is in the best interests of
Euronet and our stockholders to approve the proposal to amend
our Certificate of Incorporation.
Our Certificate of Incorporation currently authorizes us to
issue 60,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, for a total
authorized capital stock of 70,000,000 shares. We are not
seeking to amend our Certificate of Incorporation with respect
to preferred stock at this time.
Of the presently authorized 60,000,000 shares of Common
Stock, as of February 28, 2006, 36,816,431 shares were
issued and outstanding and a total of 16,750,356 shares
were reserved for issuance as follows: 5,467,337 shares
were reserved for issuance upon the exercise of outstanding
stock options and in connection with future grants of awards
under our existing incentive plans, 347,731 were reserved for
issuance under our Employee Stock Purchase Plan,
10,235,288 shares were reserved for issuance upon
conversion of outstanding convertible debentures, and
700,000 shares were reserved for issuance pursuant to
earn-out and similar provisions in connection with prior
acquisitions. If the proposed amendment to our Certificate of
Incorporation is approved by the stockholders, we would have
available for future issuance, excluding reserved shares,
approximately 36,433,213 shares of Common Stock. If the
proposed amendment to our Certificate of Incorporation is not
approved, we would have available for future issuance, excluding
reserved shares, approximately 6,443,213 shares of Common
Stock. In addition to the shares of Common Stock outstanding and
reserved for issuance as described above, the stockholders are
being asked to approve Proposal 3 approving the 2006 Stock
Incentive Plan, pursuant to which 4,000,000 shares of
Common Stock would be reserved for issuance pursuant to awards
granted under that plan. As of February 28, 2006, there
were no shares of preferred stock outstanding.
If approved by our stockholders at the Annual Meeting, the
proposed amendment to our Certificate of Incorporation will
become effective upon filing with the Secretary of State of the
State of Delaware. We intend to make this filing promptly after
approval by our stockholders. If our stockholders approve the
proposed amendment, Article Fourth (a) of our
Certificate of Incorporation will be amended to read as follows:
FOURTH: (a) The total number of shares of all classes of
capital stock which the Corporation shall have authority to
issue is One Hundred Million (100,000,000) shares, consisting of:
|
|
|
1. Ten Million (10,000,000) shares of preferred stock, par
value two cents ($0.02) per share (Preferred Stock); |
9
|
|
|
2. Ninety Million (90,000,000) shares of Common Stock, par
value two cents ($0.02) per share (Common Stock). |
Reasons and Effect of the Amendment
We are seeking stockholder approval to amend our Certificate of
Incorporation to increase our authorized Common Stock for
several reasons. Although we have no plans or commitments to
issue the proposed additional authorized shares of Common Stock,
our Board of Directors believes it is necessary to increase the
number of shares of our authorized Common Stock in order to
provide us with the flexibility to issue Common Stock for
business purposes that may arise as deemed advisable by our
Board. These purposes could include, among other things,
(i) to declare future stock dividends or stock splits,
which may increase the liquidity of our shares; (ii) the
sale of stock to obtain additional capital or to acquire other
companies or businesses, which could enhance our growth strategy
or allow us to reduce debt if needed; (iii) for use in
additional stock incentive programs, including the proposed 2006
Stock Incentive Program and (iv) for other bona fide
purposes.
If the proposal to amend our Certificate of Incorporation is not
approved by the stockholders, we may find it necessary to seek
stockholder approval in the event we wish to consummate a
transaction in which the number of shares of Common Stock that
would be issued in the transaction would cause our outstanding
shares of Common Stock and shares of Common Stock reserved for
issuance to exceed 60,000,000 shares. This could
potentially increase the costs of a future transaction and the
additional time necessary to prepare for and hold a meeting of
stockholders could serve as a disincentive for third parties
otherwise interested in making an investment in, or entering
into such transaction with, us.
If the stockholders approve the proposal to amend our
Certificate of Incorporation, the additional authorized shares
will be part of the existing class of Common Stock and will
increase the number of shares of Common Stock available for
issuance, but will have no effect upon the terms of the Common
Stock or the rights of the holders of such shares. Any newly
authorized shares of Common Stock will have voting and other
rights identical to those of the currently authorized shares of
Common Stock. Under our Certificate of Incorporation, holders of
our Common Stock do not have preemptive rights.
If the stockholders approve the proposal to amend our
Certificate of Incorporation, our Board of Directors would be
able to issue the additional authorized shares of Common Stock
without notice to or further action by our stockholders, unless
stockholder approval is required by law or the rules of the
Nasdaq Stock Market. The issuance of additional shares of Common
Stock may significantly dilute the equity ownership of the
current holders of our Common Stock.
Potential Anti-Takeover Effect and Other Provisions
The proposal to increase the number of shares of Common Stock
that we are authorized to issue could have a potential
anti-takeover effect, even though our Board of Directors is not
presenting the proposal for that reason and does not presently
anticipate using the increased authorized shares for such
purpose. The effect of the proposed increase in the authorized
number of shares of Common Stock might render more difficult or
discourage a merger, tender offer, proxy contest or change in
control and the removal of management, which stockholders might
otherwise deem favorable. The authority of our Board of
Directors to issue Common Stock might be used to create voting
impediments or to frustrate an attempt by another person or
entity to effect a takeover or otherwise gain control of Euronet
because the issuance of additional Common Stock would dilute the
voting power of the Common Stock and preferred stock then
outstanding. The additional shares of Common Stock could also be
issued to purchasers who would support our Board of Directors in
opposing a takeover bid that our Board of Directors determines
not to be in the best interests of Euronet or our stockholders.
We are not currently aware of any pending or proposed
transaction involving a change in control. While authorization
of additional shares may be deemed to have potential
anti-takeover effects, this proposal is not prompted by any
specific effort or perceived threat of takeover. Our Board of
Directors does not currently have any plans to implement
additional measures that may have an anti-takeover effect.
10
Various provisions of our certificate of incorporation and
bylaws and of Delaware corporate law may discourage, delay or
prevent a change in control or takeover attempt of Euronet by a
third party that is opposed by our Board of Directors, including
the following: (a) authorization of blank check
preferred stock that could be issued by our Board of Directors
to make it more difficult for a third party to acquire, or to
discourage a third party from acquiring, a majority of our
outstanding voting stock; (b) classification of our Board
of Directors into three classes serving staggered three-year
terms; (c) non-cumulative voting for Directors;
(d) control by our Board of Directors of the size of our
Board of Directors; (e) limitations on the ability of
stockholders holding less than 50% of our voting stock to call
special meetings of stockholders; and (f) advance notice
requirements for nominations of candidates for election to our
Board of Directors or for proposing matters that can be acted
upon by our stockholders at stockholder meetings.
In addition, we have adopted a stockholder rights plan, which
permits holders of rights to acquire our Common Stock for
effectively one-half of the market price if a person or entity
acquires 15% or more of our Common Stock, subject to certain
conditions. Also, holders of our outstanding convertible
debentures may require us to purchase the debentures upon a
change of control (as defined in the indentures for
the debentures) and may receive additional shares upon
conversion of the debentures in connection with a change
of control. As of February 28, 2006, we had
$315 million principal amount of convertible debentures
outstanding.
We also are subject to Section 203 of the Delaware General
Corporation Law. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a business
combination with an interested stockholder for a period of three
years following the date the person became an interested
stockholder, unless the business combination or the transaction
in which the person became an interested stockholder is approved
in a prescribed manner. Generally, a business combination
includes mergers, consolidations, sales or other dispositions of
assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation and certain transactions
that would increase the interested stockholders
proportionate share ownership in the corporation. Generally, an
interested stockholder is a person who owns 15% or more of a
corporations voting stock or is an affiliate or associate
of the corporation and owned 15% or more of the
corporations voting stock within three years prior to the
determination of interested stockholder status. The existence of
this provision could prevent a takeover of Euronet with respect
to transactions not approved in advance by our Board of
Directors, including takeover attempts that might result in a
premium over the market price of our Common Stock.
Required Votes and Board Recommendations
The affirmative vote of the holders of a majority of the shares
of Common Stock entitled to vote is required for the approval of
the proposed amendment to our Certificate of Incorporation.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL 2 REGARDING
APPROVAL OF THE PROPOSED AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK.
PROPOSAL 3
APPROVAL OF THE 2006 STOCK INCENTIVE PLAN
We believe that equity compensation aligns the interests of
management and employees with the interests of other
stockholders. We currently provide for equity incentive
compensation through our 2002 Stock Incentive Plan. As of
February 28, 2006, no shares remained available for
issuance under the 2002 Stock Incentive Plan. No stock options
were granted in 2005 to our employees. 526,676 shares of
restricted stock were granted to our employees, independent
contractors or Directors in 2005. A new equity incentive plan
(the 2006 Stock Incentive Plan) is being proposed
for stockholder approval so that we can continue to grant equity
compensation to employees. A copy of the 2006 Stock Incentive
Plan is attached as Appendix 1 to this Proxy statement.
11
The following general description of material features of the
2006 Stock Incentive Plan is qualified in its entirety by
reference to the provisions of the 2006 Stock Incentive Plan set
forth in Appendix 1.
General
The 2006 Stock Incentive Plan provides for grants of
non-qualified stock options and incentive stock options. The
2006 Stock Incentive Plan also provides for grants of restricted
shares, restricted stock units, stock appreciation rights,
performance units and performance shares. The objectives of the
2006 Stock Incentive Plan are to strengthen key employees
commitment to our success, to stimulate key employees
efforts on our behalf and to help us attract new employees with
the education, skills and experience we need and retain existing
key employees.
Eligibility and Limits on Awards
Any director, key employee or independent contractor of Euronet
or any majority owned subsidiary will be eligible to receive
awards under the 2006 Stock Incentive Plan if it is approved by
stockholders. As of February 28, 2006, there were seven
executive officers and approximately 1,012 employees other than
executive officers who are eligible to receive awards. No
determination has been made as to which of our employees will
receive grants under the 2006 Stock Compensation Plan, and,
therefore the benefits to be allocated to any individual or to
any group of employees are not presently determinable.
The 2006 Stock Incentive Plan places limits on the maximum
amount of awards that may be granted to any employee in any one
year period. Under the 2006 Stock Incentive Plan, no employee
may receive awards of stock options, stock appreciation rights,
restricted stock, restricted stock units, performance units, or
performance shares that cover in the aggregate more than four
hundred thousand (400,000) shares in any one-year period.
Administration
The 2006 Stock Incentive Plan will be administered by our Board
of Directors or one or more committees of our Board
(collectively, the Committee). The Committee will
select the eligible participants to whom awards will be granted
and will set the terms of such awards, including any performance
goals applicable to annual and long-term incentive awards. The
Committee may delegate its authority under the 2006 Stock
Incentive Plan to officers of the Company, subject to guidelines
prescribed by the Committee, but only with respect to employees
who are not subject to Section 16 of the Exchange Act or
Section 162(m) of the Code.
Shares Reserved for Awards
The 2006 Stock Incentive Plan provides for up to 4 million
shares of Common Stock to be used for awards. This represents
approximately 10.86% of the Common Stock outstanding as of
February 28, 2006. The shares issued under the 2006 Stock
Incentive Plan may consist, in whole or in part, of authorized
and unissued shares or treasury shares, and to the extent any
award under the 2006 Stock Incentive Plan is exercised, cashed
out, terminates, expires or is forfeited without payment being
made in the form of shares of Common Stock, the shares subject
to such award that were not so paid will again be available for
distribution under the 2006 Stock Incentive Plan. In addition,
except with respect to certain share limitations applicable to
incentive stock options, any shares of Common Stock that are
used for full or partial payment of the purchase price of shares
of Common Stock with respect to a stock option exercise and any
shares of Common Stock withheld by us for the purpose of
satisfying any tax withholding obligation shall automatically
become available under the 2006 Stock Incentive Plan and not
counted against the authorized limit. Unless otherwise
determined by the Committee, stock options may be exercised by
payment in cash or tendering shares of Common Stock to us in
full or partial payment of the exercise price.
The number of shares of Common Stock authorized for awards is
subject to adjustment for changes in capitalization,
reorganizations, mergers, stock splits, and other corporate
transactions as our Board of
12
Directors or the Committee determines to require an equitable
adjustment. The 2006 Stock Incentive Plan will remain in effect
until all the shares available have been used to pay awards,
subject to the right of our Board of Directors to amend or
terminate the 2006 Stock Incentive Plan at any time. Unless the
2006 Stock Incentive Plan is re-approved by the stockholders, no
awards will be issued pursuant to the Plan after the tenth
(10th) anniversary of the 2006 Stock Incentive Plans
effective date.
General Terms of Awards
The Committee will select the service providers (employees,
non-employee directors and independent contractors) who will
receive awards and set the term of each award. The Committee has
the power to determine the terms of the awards granted,
including the number of shares subject to each award, the form
of consideration payable upon exercise, the period in which the
award may be exercised after termination of employment, and all
other matters.
The Committee will also set the vesting conditions of the award,
except that vesting will be accelerated if there is a change of
control of Euronet and a participants employment is
terminated other than for cause or Good Reason as
defined in the 2006 Stock Incentive Plan.
Awards granted under the 2006 Stock Incentive Plan are not
generally transferable by the holder except in the event of the
employees death or unless otherwise required by law or
provided in an award agreement. An award agreement may provide
for the transfer of an award in limited circumstances to certain
members of the grantees family or a trust or trusts
established for the benefit of such a family member. Any such
transfer, if permitted under the award agreement, cannot be for
consideration, other than nominal consideration. Other terms and
conditions of each award will be set forth in award agreements,
which can be amended by the Committee.
The number and type of awards that will be granted under the
2006 Stock Incentive Plan is not determinable as the Committee
will make these determinations in its sole discretion.
Performance Awards
Performance Unit and Performance Share awards may be granted
under the 2006 Stock Incentive Plan. Such awards will be earned
only if corporate, business unit or individual performance
objectives over performance cycles, established by or under the
direction of the Committee, are met. The performance objectives
may vary from participant to participant, group to group and
period to period and may be based on internal or external
requirements. Awards that are intended to constitute
qualified performance-based compensation (see
discussion below under the heading Federal Income Tax
Consequences) will be based on satisfaction of certain
performance objectives set for the and described in the 2006
Stock Incentive Plan. Awards may be paid in the form of cash,
shares of Common Stock or any combination thereof, as determined
by the Committee.
Restricted Stock
Restricted shares of Common Stock may also be awarded. The
restricted shares will vest and become transferable upon the
satisfaction of conditions set forth in the respective
restricted share award agreement. Restricted share awards may be
forfeited if, for example, the recipients employment
terminates before the award vests.
Stock Options
The 2006 Stock Incentive Plan will permit the granting to
eligible employees incentive stock options (ISOs),
which qualify for special tax treatment, and nonqualified stock
options. No stock option may be exercised more than ten years
after the date of grant.
Stock Appreciation Rights
Stock Appreciation Rights (SARs) may be granted
either singly (freestanding SARs) or in combination with
underlying stock options (tandem SARs). SARs entitle the holder
upon exercise to
13
receive an amount equal in value to the excess of the fair
market value of the shares covered by such right over the grant
price. The payment upon a SAR exercise may be either in cash, in
whole shares of equivalent value or both.
Change of Control Provisions
The 2006 Stock Incentive Plan provides that, if a Change of
Control (as defined in the 2006 Stock Incentive Plan) occurs,
subject to certain limitations on payment as set forth in the
2006 Stock Incentive Plan for specified employees,
then all stock options and SARs will become fully vested and
immediately exercisable, the restrictions applicable to
outstanding restricted stock, and other stock-based awards will
lapse if the participants employment or other relationship
with Euronet is terminated and such termination was by Euronet
without cause or by the participant with Good
Reason, and, under such circumstances, outstanding
performance awards will be vested and paid out on a prorated
basis, based on the maximum award opportunity of such awards and
the number of months elapsed compared with the total number of
months in the performance cycle. The Committee may also make
certain adjustments and substitutions in connection with a
Change of Control or similar transactions or events as described
under Shares Reserved for Awards.
Federal Income Tax Consequences. Based on current
provisions of the Code and the existing regulations thereunder,
the anticipated U.S. federal income tax consequences of
awards granted under the 2006 Stock Incentive Plan are as
described below. The following discussion is not intended to be
a complete discussion of applicable law and is based on the
U.S. federal income tax laws as in effect on the date
hereof:
Non-Qualified Stock Options
An employee receiving a non-qualified option does not recognize
taxable income on the date of grant of the non-qualified option,
provided that the non-qualified option does not have a readily
ascertainable fair market value at the time it is granted. In
general, the employee must recognize ordinary income at the time
of exercise of the non-qualified option in the amount of the
difference between the fair market value of the shares of Common
Stock on the date of exercise and the option price. The ordinary
income recognized will constitute compensation for which tax
withholding generally will be required. The amount of ordinary
income recognized by an employee will be deductible by us in the
year that the employee recognizes the income if we comply with
the applicable withholding requirements.
Shares of Common Stock acquired upon the exercise of a
non-qualified option will have a tax basis equal to their fair
market value on the exercise date or other relevant date on
which ordinary income is recognized, and the holding period for
the shares of Common Stock generally will begin on the date of
exercise or such other relevant date. Upon subsequent
disposition of shares of Common Stock, the employee will
recognize long-term capital gain or loss if the employee has
held the shares of Common Stock for more than one year prior to
disposition, or short-term capital gain or loss if the employee
has held the shares of Common Stock for one year or less.
If an employee pays the exercise price, in whole or in part,
with previously acquired shares of Common Stock, the employee
will recognize ordinary income in the amount by which the fair
market value of the shares of Common Stock received exceeds the
exercise price. The employee will not recognize gain or loss
upon delivering the previously acquired shares of Common Stock
to us. Shares of Common Stock received by an employee, equal in
number to the previously acquired common shares exchanged
therefore, will have the same basis and holding period for
long-term capital gain purposes as the previously acquired
shares of Common Stock. Shares of Common Stock received by an
employee in excess of the number of such previously acquired
shares of Common Stock will have a basis equal to the fair
market value of the additional shares of Common Stock as of the
date ordinary income is recognized. The holding period for the
additional shares of Common Stock will commence as of the date
of exercise or such other relevant date.
14
Incentive Stock Options
ISOs are defined by Section 422 of the Internal Revenue
Code.
An employee who is granted an ISO does not recognize taxable
income either on the date of grant or on the date of exercise.
Upon the exercise of an ISO, the difference between the fair
market value of the shares of Common Stock received and the
option price is, however, a tax preference item potentially
subject to the alternative minimum tax.
Upon disposition of shares of Common Stock acquired from the
exercise of an ISO, long-term capital gain or loss is generally
recognized in an amount equal to the difference between the
amount realized on the sale or disposition and the exercise
price. However, if the employee disposes of the shares of Common
Stock within two years of the date of grant or within one year
of the date of the transfer of the shares of Common Stock to the
employee (a Disqualifying Disposition), then the
employee will recognize ordinary income, as opposed to capital
gain, at the time of disposition. In general, the amount of
ordinary income recognized will be equal to the lesser of
(a) the amount of gain realized on the disposition, or
(b) the difference between the fair market value of the
shares of Common Stock received on the date of exercise and the
exercise price. Any remaining gain or loss is treated as a
short-term or long-term capital gain or loss, depending on the
period of time the shares of Common Stock have been held. We are
not entitled to a tax deduction upon either the exercise of an
ISO or the disposition of shares of Common Stock acquired
pursuant to the exercise of an ISO, except to the extent that
the employee recognizes ordinary income in a Disqualifying
Disposition. For alternative minimum taxable income purposes, on
the later sale or other disposition of the shares of Common
Stock, generally only the difference between the fair market
value of the shares of Common Stock on the exercise date and the
amount realized on the sale or disposition is includable in
alternative minimum taxable income.
If an employee pays the exercise price, in whole or in part,
with previously acquired shares of Common Stock, the exchange
should not affect the ISO tax treatment of the exercise. Upon
the exchange, and except as otherwise described herein, no gain
or loss is recognized by the employee upon delivering previously
acquired shares of Common Stock to us as payment of the exercise
price. The shares of Common Stock received by the employee,
equal in number to the previously acquired shares of Common
Stock exchanged therefore, will have the same basis and holding
period for long-term capital gain purposes as the previously
acquired shares of Common Stock. The employee, however, will not
be able to utilize the prior holding period for the purpose of
satisfying the ISO statutory holding period requirements. Shares
of Common Stock received by the employee in excess of the number
of previously acquired shares of Common Stock will have a basis
of zero and a holding period which commences as of the date the
shares of Common Stock are transferred to the employee upon
exercise of the ISO. If the exercise of any ISO is effected
using shares of Common Stock previously acquired through the
exercise of an ISO, the exchange of the previously acquired
shares of Common Stock will be considered a disposition of the
shares of Common Stock for the purpose of determining whether a
Disqualifying Disposition has occurred.
Restricted Stock
The recognition of income from an award of restricted stock for
federal income tax purposes depends on the restrictions imposed
on the shares. Generally, taxation will be deferred until the
first taxable year the shares of Common Stock are no longer
subject to substantial risk of forfeiture. At the time the
restrictions lapse, the employee will recognize ordinary income
equal to the then fair market value of the shares. The employee
may, however, make an election to include the value of the
shares in gross income in the year of award despite such
restrictions. Generally, we will be entitled to deduct the fair
market value of the shares transferred to the employee as a
business expense in the year the employee includes the
compensation in income.
Stock Appreciation Rights
To the extent that the requirements of the Code are met, there
are no immediate tax consequences to an employee when a SAR is
granted. When an employee exercises the right to the
appreciation in fair
15
market value of shares represented by a SAR, payments made in
shares of Common Stock are normally includable in the
employees gross income for regular income tax purposes. We
will be entitled to deduct the same amount as a business expense
in the same year. The includable amount and corresponding
deduction each equal the fair market value of the shares of
Common Stock payable on the date of exercise.
Restricted Stock Units
Restricted Stock Units (RSUs) may be granted under
the Plan. Upon vesting of an RSU, the holder is entitled to
receive the full value of the award payable in either shares or
cash. RSU awards may be granted in connection with or separate
from the grant of Restricted Stock.
Other Stock-Based Performance Awards
Any cash payments or the fair market value of any shares of
Common Stock or other property an employee receives in
connection with other stock-based awards, incentive awards, or
as unrestricted payments equivalent to dividends on unfunded
awards or on restricted stock are includable in income in the
year received or made available to the employee without
substantial limitations or restrictions. Generally, we will be
entitled to deduct the amount the employee includes in income as
a business expense in the year of payment.
Deductibility of Awards
Section 162(m) of the Internal Revenue Code places a
$1,000,000 annual limit on the compensation deductible by us or
a majority owned subsidiary paid to certain executives. The
limit, however, does not apply to qualified
performance-based compensation. We believe that awards of
stock options, SARs and certain other performance-based
compensation awards under the 2006 Stock Incentive Plan to
the executives subject to Section 162(m) will qualify for
the performance-based compensation exception to the
deductibility limit.
Other Tax Consequences. State tax consequences may in
some cases differ from those described above. Awards under the
2006 Stock Incentive Plan will in some instances be made to
employees who are subject to tax in jurisdictions other than the
United States and may result in tax consequences differing from
those described above.
Other Information
If approved by stockholders, the 2006 Stock Incentive Plan will
be effective May 18, 2006, and will remain in effect,
subject to the right of our Board of Directors to amend or
terminate the 2006 Stock Incentive Plan (subject to certain
limitations set forth in the 2006 Stock Incentive Plan), at any
time until all shares subject to it shall have been purchased or
acquired according to the 2006 Stock Incentive Plans
provisions. Any awards granted before the 2006 Stock Incentive
Plan is terminated may extend beyond the expiration date. No
awards will be issued under the 2006 Stock Incentive Plan after
May 18, 2016 unless the 2006 Stock Incentive Plan is
re-approved by stockholders.
Our Board of Directors may amend the 2006 Stock Incentive Plan
at any time, provided that no such amendment will be made
without stockholder approval if such approval is required under
applicable law, regulation, or stock exchange rule, or if such
amendment would increase the number of shares of Common Stock
that may be distributed under the 2006 Stock Incentive Plan. No
amendment may be made without the written consent of the grantee
of an Award if such amendment adversely affects in any material
way any Award previously granted under the 2006 Stock Incentive
Plan.
Required Votes and Board Recommendations
The affirmative vote of the holders of a majority of the shares
of Common Stock entitled to vote is required for the approval of
the 2006 Stock Incentive Plan.
16
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL 3 REGARDING
APPROVAL OF THE 2006 STOCK INCENTIVE PLAN.
PROPOSAL 4
APPROVAL OF THE EURONET EXECUTIVE ANNUAL INCENTIVE PLAN
Our Board of Directors recommends approval of the Euronet
Executive Annual Incentive Plan (the Performance
Plan). The Performance Plan is designed to qualify bonuses
paid under the Performance Plan as qualified
performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code (the
Code). This enables us to exclude compensation
payable under the Performance Plan from the deduction
limitations of Section 162(m), which generally precludes a
deduction for compensation paid to a public companys chief
executive officer and next four highest compensated executive
officers employed with the public company on the last day of the
companys tax year to the extent compensation for a taxable
year to any such individual exceeds $1 million. The
purposes of the Performance Plan are to promote our success; to
provide designated executive officers with an opportunity to
receive incentive compensation dependent upon that success; to
attract, retain and motivate such individuals; and to provide
awards that are qualified performance-based
compensation under Section 162(m).
Our Board of Directors has determined that it is appropriate and
in the best interests of the stockholders to maximize the tax
deductibility of amounts payable under the Performance Plan. Our
Board of Directors has determined, by resolution adopted on
March 8, 2006, to submit the plan to stockholders for their
approval at this years Annual Meeting. If the stockholders
approve the Performance Plan, all amounts paid to employees and
executive officers pursuant to the plan in forthcoming periods,
including at the end of 2006, will be fully tax-deductible to
Euronet, generating substantial after-tax savings.
General Description of the Performance Plan
The following description is a summary of the significant
provisions of the Performance Plan, including the executive
feature. Stockholders may obtain a copy of the plan for their
review upon request to Jeffrey B. Newman, General Counsel,
Euronet Worldwide, Inc., 4601 College Boulevard, Leawood, Kansas
66211.
Eligibility
Only those executive officers who are selected by the
Compensation Committee of our Board of Directors are eligible to
participate in the Performance Plan.
Modifications
Our Board of Directors reserves the right to amend or terminate
the Performance Plan at any time. However, unless otherwise
prohibited by applicable law, any amendment required to conform
the Performance Plan to the requirements of Code
Section 162(m) may be made by our Compensation Committee.
No amendment may increase the maximum award payable under the
Performance Plan without stockholder approval or otherwise be
effective without stockholder approval if such approval is
necessary so that awards will be qualified
performance-based compensation under Section 162(m)
of the Code.
Administration
The Performance Plan must be administered by a committee or
subcommittee of our Board of Directors designated by it to
administer the Performance Plan that consists of not less than
two Directors, each of whom is intended to be an outside
director within the meaning of Section 162(m) of the
Code. The Compensation Committee of our Board of Directors will
administer the Performance Plan.
17
Tax Law Requiring Stockholder Approval
Section 162(m) of the Code provides that a publicly-traded
company will not be able to deduct for federal income tax
purposes any compensation in excess of $1 million paid by
it in any one year to any covered employee of the
company, subject to certain exemptions. Covered
employees are essentially the individuals who were, at the
end of the fiscal year, our chief executive officer and our four
other most highly compensated executive officers, i.e., the
officers listed in the Summary Compensation Table in this Proxy
Statement. The annual compensation that is counted under
Section 162(m) for purposes of the $1 million limit
includes, among other things, base salary and cash bonuses.
However, various forms of compensation are exempt from
Section 162(m)s general limitation on deductible
compensation, including performance-based compensation paid
under stockholder-approved plans that meet certain criteria. The
Performance Plan meets these criteria.
Performance Measures and Goals
Payment of compensation to participants is conditioned upon the
attainment of pre-established performance goals measured over a
performance period designated by the committee. A performance
period may be one or more periods of time over which the
attainment of one or more performance goals will be measured for
the purposes of determining a participants right to
payment in respect of an award under the Performance Plan. The
performance goals applicable to a performance period must be
established in writing by the committee no later than the
earlier of (i) 90 days after the start of the
performance period, or (ii) the date upon which 25% of the
performance period has elapsed.
Performance goals shall be based upon one or more of the
following business criteria for Euronet as a whole or any of its
subsidiaries, operating divisions or other operating units:
(i) earnings (either in the aggregate or on a per-share
basis); (ii) growth or rate of growth in earnings (either
in the aggregate or on a per-share basis); (iii) net income
or loss (either in the aggregate or on a per-share basis);
(iv) cash flow provided by operations, either in the
aggregate or on a per-share basis; (v) growth or rate of
growth in cash flow (either in the aggregate or on a per-share
basis); (vi) free cash flow (either in the aggregate on a
per-share basis); (vii) reductions in expense levels,
determined either on a company-wide basis or in respect of any
one or more business units; (viii) operating and
maintenance cost management and employee productivity;
(ix) stockholder returns (including return on assets,
investments, equity, or gross sales); (x) return measures
(including return on assets, equity, or sales); (xi) growth
or rate of growth in return measures (including return on
assets, equity, or sales); (xii) share price (including
attainment of a specified per-share price during the applicable
incentive period; growth measures and total stockholder return
or attainment by the shares of a specified price for a specified
period of time); (xiii) strategic business criteria,
consisting of one or more objectives based on meeting specified
revenue, market share, market penetration, geographic business
expansion goals, objectively identified project milestones,
production volume levels, cost targets, and goals relating to
acquisitions or divestitures; and/or (xiv) achievement of
business or operational goals such as market share and/or
business development; provided that applicable incentive goals
may be applied on a pre- or post-tax basis; and provided further
that the committee may, when the applicable incentive goals are
established, provide that the formula for such goals may include
or exclude items to measure specific objectives, such as losses
from discontinued operations, extraordinary gains or losses, the
cumulative effect of accounting changes, acquisitions or
divestitures, foreign exchange impacts and any unusual,
nonrecurring gain or loss.
Target award levels are approved by the committee and may be a
percentage of the executives base salary based on
organizational responsibilities and market-compilation bonus
levels based on industry data. In addition, to the extent
consistent with the goal of providing for deductibility under
Section 162(m) of the Code, performance goals may be based
upon a participants attainment of personal objectives with
respect to any of the foregoing performance goals: negotiating
transactions and sales, business unit/department performance,
profit margins, reduction of certain accounts receivable or
achievement of subsidiary or departmental budgets or developing
long-term business goals. Measurements of our or a
participants performance against the performance goals
established by the committee shall be objectively determinable
and, unless otherwise established by the committee when the
incentive goals are established,
18
to the extent they are expressed in standard accounting terms,
they shall be determined according to generally accepted
accounting principals (GAAP) as in existence on the
date on which the performance goals are established and without
regard to any changes in such principles after such date.
Individual incentive awards reflect a mix of our and business
unit/department performance along with individual discretionary
factors; the current actual mix for each executive will be
determined based upon his/her role and contribution to the
organization.
Determination and Payment of Incentives
The compensation amount that is payable to a participant in a
performance period will be determined in accordance with a
pre-established objective award formula based on the achievement
of performance goals. The committee has the discretion to reduce
or eliminate, but cannot increase, any amounts otherwise payable
under the Performance Plan.
Incentive payments under the Performance Plan may be payable in
cash or in an equivalent number of shares of our Common Stock
issued pursuant to and under one or more of our stockholder
approved stock incentive plans. The maximum amount of incentive
compensation payable under the Performance Plan to any
participant with respect to any fiscal year (or a portion
thereof) contained within a performance period shall be the
lesser of 500% of the participants base annual salary as
in effect as of the last day of such Performance Plan or
$4,000,000.
Certification
Prior to making payments under the Performance Plan, the
Compensation Committee must certify in writing that at least one
of the pre-established targets for that year was satisfied, and
the committee minutes must reflect this certification.
While the amounts of the quarterly or annual bonuses that may be
paid to executives in any one quarter or year cannot be
determined, the following table indicates the maximum bonus
amounts that would have been payable to each of the top 5 senior
executives in 2006 and to all the current Section 16
Insider executives as a group in 2006 under the Performance Plan.
|
|
|
|
|
|
|
Maximum Potential Payment | |
Name/Group |
|
Under Performance Plan | |
|
|
| |
Michael J. Brown, Chairman of the Board of Directors and CEO
|
|
$ |
2,000,000 |
|
Daniel R. Henry, President and Chief Operating Officer
|
|
$ |
1,600,000 |
|
Rick Weller, Chief Financial Officer
|
|
$ |
1,125,000 |
|
Jeffrey B. Newman, General Counsel
|
|
$ |
1,125,000 |
|
Miro Bergman, COO of Prepaid Division
|
|
$ |
1,125,000 |
|
All Section 16 Insiders as a Group
|
|
$ |
9,500,000 |
|
Required Votes and Board Recommendations
Approval of the Performance Plan requires the affirmative vote
of a majority of the shares of Common Stock present in person or
represented by proxy at the meeting and entitled to vote.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL 4 REGARDING
APPROVAL OF THE EXECUTIVE ANNUAL INCENTIVE PLAN.
19
PROPOSAL 5
RATIFICATION OF KPMG AS OUR INDEPENDENT REGISTERED ACCOUNTING
FIRM
FOR THE FISCAL YEAR 2006
We are requesting our stockholders to ratify the selection by
our Audit Committee of KPMG as Euronets independent
registered public accounting firm for fiscal year 2006. KPMG
will audit the consolidated financial statements of Euronet and
its subsidiaries for 2006, review certain reports we will file
with the U.S. Securities and Exchange Commission
(SEC), perform a review of managements
assessment as of December 31, 2006 of internal controls
over financial reporting, issue an attestation report on such
assessment, provide our Board and stockholders with certain
reports, and provide such other services as our Audit Committee
and its Chairperson may determine from time to time.
KPMG served as our independent registered public accounting firm
for 2005, and performed professional services for us as
described below in the Audit Matters section. Representatives of
KPMG are expected to be present at the Annual Meeting and will
have the opportunity to make a statement if they desire and to
respond to appropriate questions. Although our Audit Committee
has selected KPMG, it nonetheless may, it its discretion, retain
another independent registered public accounting firm at any
time during the year if it concludes that such change would be
in the best interests of Euronet and its stockholders.
Required Votes and Board Recommendations
Approval of the ratification of KPMG as our independent
registered accounting firm for the fiscal year 2006 requires the
affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the meeting and
entitled to vote.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR PROPOSAL 5 REGARDING
RATIFICATION OF KPMG AS OUR INDEPENDENT ACCOUNTING FIRM FOR THE
FISCAL YEAR 2006.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held four meetings during 2005. Each director attended
at least 75% of the total number of meetings held by the Board
(during the period for which he or she was a director) and at
least 75% of the total number of meetings held by all Board
committees on which he or she served (during the periods for
which he or she was a member).
The Board has established an Audit Committee, a Compensation
Committee and a Nominating & Corporate Governance
Committee.
Audit Committee
The Audit Committee of the Board, composed solely of independent
Directors, met in person four times in 2005. In addition, the
Committee held four telephonic meetings to review our quarterly
filings with the SEC and to monitor progress of our review of
internal controls and procedures under the Sarbanes-Oxley Act of
2002. The following four Directors are members of the Audit
Committee: M. Jeannine Strandjord, Chair, Thomas A. McDonnell,
Eriberto R. Scocimara and Andrew B. Schmitt. The Audit Committee
operates under a written charter adopted by the Board of
Directors in November 2003, which is published on Euronets
website at
http://www.euronetworldwide.com/investors/index.asp,
under the Corporate Governance menu.
The Board of Directors has determined that each of the Audit
Committee members is independent, as that term is defined under
the enhanced independence standards for audit committee members
in the Securities Exchange Act of 1934 and rules thereunder, as
amended and incorporated into the listing standards of the
Nasdaq National Market.
20
The Board of Directors has determined that all of the members of
the Audit Committee are audit committee financial
experts as that term is defined in the rules promulgated
by the SEC pursuant to the Sarbanes-Oxley Act of 2002.
The Audit Committee has oversight responsibilities with respect
to our financial audit and reporting process, system of internal
controls and processes for monitoring compliance with law. The
Audit Committee is responsible for retaining, evaluating, and
supervising our registered public accountant and for providing
an audit committee report for inclusion in our proxy statement.
The Audit Committee is also responsible for maintaining open
communication among the Audit Committee, management and our
outside auditors. However, the Audit Committee is not
responsible for conducting audits, preparing financial
statements, or assuring the accuracy of financial statements or
filings, all of which is the responsibility of management and/or
the outside auditors.
Compensation Committee
The Compensation Committee of the Board, met three times in 2005
to determine policies regarding the compensation of our
executives and to review and approve the grant of options,
restricted stock and cash bonuses to our executives. The purpose
of the Compensation Committee is to make determinations and
recommendations to the Board with respect to salaries and
bonuses payable to our Chief Executive Officer and senior
executive officers. Thomas A. McDonnell, Chair, M. Jeannine
Strandjord, Dr. Andrzej Olechowski, Andrew B. Schmitt and
Eriberto R. Scocimara are the current members of the
Compensation Committee. The Board of Directors has determined
that all the members of the Compensation Committee are
independent as defined under the general independence standards
of the listing rules of the Nasdaq National Market.
The Compensation Committee performs its functions and
responsibilities pursuant to a written charter adopted by
our Board in September 2002 which is published on Euronets
website at
http://www.euronetworldwide.com/investors/index.asp,
under the Corporate Governance menu.
Nominating & Corporate Governance Committee
The Nominating & Corporate Governance Committee met
twice during the year. Thomas A. McDonnell, Chair, M. Jeannine
Strandjord, Dr. Andrzej Olechowski, Eriberto R. Scocimara
and Andrew B. Schmitt are the current members of the
Nominating & Corporate Governance Committee. The Board
of Directors has determined that all members of the
Nominating & Corporate Governance Committee are
independent as defined under the general independence standards
of the listing rules of the Nasdaq National Market.
The Nominating & Corporate Governance Committee
performs the functions of a nominating committee. The
Nominating & Corporate Governance Committees
Charter describes the Committees responsibilities,
including developing corporate governance guidelines and
seeking, screening and recommending director candidates for
nomination by the Board of Directors. This charter is published
on our website at
http://www.euronetworldwide.com/investors/index.asp under
the Corporate Governance menu. Euronets Corporate
Governance Guidelines contain information regarding the
selection, qualification and criteria for director nominees and
the composition of the Board, and are published on
Euronets website at
http://www.euronetworldwide.com/investors/index.asp under
the Corporate Governance menu.
The Nominating & Corporate Governance Committee evaluates
each director in the context of the Board as a whole, with the
objective of recommending a director who can best perpetuate the
success of the business and represent stockholder interests
through the exercise of sound judgment using its diversity of
experience in these various areas. As determining the specific
qualifications or criteria against which to evaluate the fitness
or eligibility of potential director candidates is necessarily a
dynamic and an evolving process, the Board believes that it is
not always in the best interests of Euronet or its stockholders
to attempt to create an exhaustive list of such qualifications
or criteria. Appropriate flexibility is needed to evaluate all
relevant facts and circumstances in context of the needs of the
Board and Euronet at a particular point in time. Accordingly,
the Nominating & Corporate Governance Committee
reserves the
21
right to consider those factors as it deems relevant and
appropriate, including the current composition of the Board, the
balance of management and independent Directors, the need for
Audit Committee expertise and the evaluations of other potential
director candidates. In determining whether to recommend a
director for
re-election, the
Nominating & Corporate Governance Committee also
considers the directors past attendance at meetings and
participation in and contributions to the activities of the
Board.
As general guidelines, members of the Board and potential
director candidates for nomination to the Board shall be persons
with appropriate educational background and training and who:
|
|
|
|
|
have personal and professional integrity, |
|
|
|
act in a thorough and inquisitive manner, |
|
|
|
are objective, |
|
|
|
have practical wisdom and mature judgment, |
|
|
|
have demonstrated the kind of ability and judgment to work
effectively with other members of the Board to serve the
long-term interests of the stockholders, |
|
|
|
have a general understanding of management, marketing,
accounting, finance and other elements relevant to
Euronets success in todays business environment, |
|
|
|
have financial and business acumen, relevant experience, and the
ability to represent and act on behalf of all stockholders, |
|
|
|
are willing to devote sufficient time to carrying out their
duties and responsibilities effectively, including advance
review of meeting materials, and |
|
|
|
are committed to serve on the Board and its committees for an
extended period of time. |
In addition, any new directors nominated by the Board
(a) who serve as a member of Euronets Audit Committee
will not be permitted to serve on the audit committee of more
than two other boards of public companies, (b) who serve as
chief executive officers or in equivalent positions will not be
permitted to serve on more than two boards of public companies
in addition to the Board, and (c) generally are not
permitted to serve on more than four other boards of public
companies in addition to the Board. These policies were adopted
in November 2003 and the Board determined that they will not be
applied to incumbent Directors unless the Board considers that
failure to comply is impairing the quality of the
Directors services on the Board.
The Board values the contributions of a director whose years of
service have given them insight into Euronet and its operations
and believes term limits are not necessary. Directors shall not
be nominated for election to the Board after their
73rd birthday, although the full Board may nominate
director candidates over 73 under special circumstances.
Director Candidate Recommendations and Nominations By
Stockholders. The Nominating & Corporate Governance
Committees Charter provides that the Nominating &
Corporate Governance Committee will consider director candidate
recommendations by stockholders. Stockholders should submit any
such recommendations for the Nominating & Corporate
Governance Committee through the method described under
Stockholder Proposals for the 2007 Annual Meeting
below. In addition, in accordance with Euronets Bylaws,
any stockholder of record entitled to vote for the election of
Directors at the applicable meeting of stockholders may nominate
persons for election to the Board of Directors if such
stockholder complies with the notice procedures set forth in the
Bylaws and summarized in Stockholders Proposals for
the 2007 Annual Meeting below.
Communications With the Board of Directors
The Board has approved a formal policy for stockholders to send
communications to the Board or its individual members.
Stockholders can send communications to the Board and specified
individual
22
Directors by mailing a letter to the attention of the Board or a
specific director (c/o the General Counsel) at Euronet
Worldwide, Inc., 4601 College Blvd., Suite 300,
Leawood, Kansas 66211.
Upon receipt of a communication for the Board or an individual
director, the General Counsel will promptly forward any such
communication to all the members of the Board or the individual
director, as appropriate. If a communication to an individual
director deals with a matter regarding Euronet, the General
Counsel will forward the communication to the entire Board, as
well as the individual Directors. Neither the Board nor a
specific director is required to respond to stockholder
communications and when responding shall do so only in
compliance with the Corporate Governance Guidelines.
Director Attendance At Annual Meeting
Euronet has a policy encouraging its Directors to attend the
Annual Meeting of stockholders.
Compensation of Directors
During 2005, we paid each non-management director a fee of
$30,000 with the exception of Ms. Strandjord who received
an additional amount of $3,000 for being the Chairman of the
Audit Committee. Until the year 2005, in addition to any cash
compensation, we granted each non-management Director options to
purchase 10,000 shares of Euronet Common Stock (which
vest over three years) upon appointment to the Board and options
to purchase 10,000 shares of Common Stock each year of
service thereafter on the date of each annual meeting, with such
options vesting
331/3% per
year over three years, on each anniversary of the annual meeting
with respect to which they were granted. Commencing in 2005, we
granted each non-management Director 3,500 shares of
restricted Common Stock for each year of service as a Director.
The grant made as of the date of this Annual Meeting is
compensation for the year May 2005 through May 2006. Such grants
will vest, and the restriction on the shares will lapse,
331/3% per
year on each anniversary of the first Annual Meeting with
respect to which it was granted. We also reimburse Directors for
out-of-pocket expenses
incurred in connection with the Directors attendance at
all Board and committee meetings, as well as the Annual Meetings
of stockholders.
Code of Conduct
The Board has adopted a Code of Conduct that applies to all of
our employees and Directors, including the Chief Executive
Officer, the Chief Financial Officer and the Controller (the
Senior Financial Officers). The Code of Conduct is
available on Euronets website at
http://www.euronetworldwide.com/investor/index.asp, under
the Corporate Governance menu. Any amendment to or waiver of the
Code of Conduct will be disclosed on a
Form 8-K or on our
website.
23
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation awarded or paid by us to our Chief Executive
Officer and to the four other most highly compensated of our
executive officers whose total annual salary and bonus equaled
or exceeded $100,000 during the year ended December 31,
2005 (the Named Executive Officers) for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation | |
|
Long-Term Compensation Awards | |
|
|
|
|
| |
|
| |
|
|
|
|
|
|
Other | |
|
|
|
Securities | |
|
|
|
|
|
|
|
|
Annual | |
|
Restricted | |
|
Underlying | |
|
All Other | |
|
|
|
|
|
|
Compen- | |
|
Stock | |
|
Options/ | |
|
Compensa- | |
Name and Principal Position |
|
Year | |
|
Salary ($) | |
|
Bonus ($) | |
|
sation ($) | |
|
Awards ($) | |
|
SARs (#) | |
|
tion ($) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Michael J. Brown
|
|
|
2005 |
|
|
$ |
375,000 |
|
|
$ |
450,000 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
7,150 |
(2) |
|
Chairman and
|
|
|
2004 |
|
|
|
375,000 |
|
|
|
|
|
|
|
|
|
|
$ |
450,008 |
(3) |
|
|
33,750 |
|
|
|
6,798 |
(2) |
|
Chief Executive Officer
|
|
|
2003 |
|
|
|
331,250 |
|
|
|
150,000 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,324 |
(2) |
Daniel R. Henry
|
|
|
2005 |
|
|
|
290,000 |
|
|
|
348,000 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,502 |
(2) |
|
President and
|
|
|
2004 |
|
|
|
290,000 |
|
|
|
|
|
|
|
|
|
|
|
347,993 |
(5) |
|
|
33,750 |
|
|
|
6,246 |
(2) |
|
Chief Operating Officer
|
|
|
2003 |
|
|
|
261,250 |
|
|
|
150,000 |
(4) |
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
6,096 |
(2) |
Rick L. Weller
|
|
|
2005 |
|
|
|
226,100 |
|
|
|
225,000 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,150 |
(2) |
|
Executive Vice President
|
|
|
2004 |
|
|
|
225,100 |
|
|
|
|
|
|
|
|
|
|
|
180,000 |
(6) |
|
|
22,250 |
|
|
|
6,798 |
(2) |
|
and Chief Financial Officer
|
|
|
2003 |
|
|
|
196,016 |
|
|
|
100,000 |
(4) |
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
6,528 |
(2) |
Miro I. Bergman
|
|
|
2005 |
|
|
|
243,333 |
|
|
|
200,000 |
(1) |
|
$ |
42,797 |
(8) |
|
|
|
|
|
|
|
|
|
|
7,704 |
(2) |
|
Executive Vice President
|
|
|
2004 |
|
|
|
210,000 |
|
|
|
200,000 |
(7) |
|
|
100,641 |
(9) |
|
|
|
|
|
|
22,250 |
|
|
|
7,554 |
(2) |
|
and Chief Operating Officer
|
|
|
2003 |
|
|
|
210,627 |
|
|
|
81,500 |
(4) |
|
|
117,446 |
(10) |
|
|
|
|
|
|
12,000 |
|
|
|
7,404 |
(2) |
|
Prepaid Processing Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey B. Newman
|
|
|
2005 |
|
|
|
242,057 |
(11) |
|
|
180,000 |
(1) |
|
|
27,100 |
(12) |
|
|
|
|
|
|
|
|
|
|
7,704 |
(2) |
|
Executive Vice President
|
|
|
2004 |
|
|
|
247,032 |
(11) |
|
|
|
|
|
|
20,410 |
(12) |
|
|
180,000 |
(6) |
|
|
22,250 |
|
|
|
7,554 |
(2) |
|
and General Counsel
|
|
|
2003 |
|
|
|
251,472 |
(11) |
|
|
100,000 |
(4) |
|
|
15,000 |
(12) |
|
|
|
|
|
|
12,000 |
|
|
|
1,404 |
(2) |
|
|
|
|
(1) |
Bonus earned for 2005, payable in 2006. |
|
|
(2) |
Life insurance premiums and Company matching contributions under
the 401(k) savings plan. |
|
|
(3) |
$450,008 represents the value of an award of 27,473 shares
of restricted stock granted on September 15, 2004. The
shares were valued for purposes of this table using the closing
price for our shares on September 15, 2004, the grant date,
which was $16.38. Shares vested on March 15, 2005. |
|
|
(4) |
Bonus earned for 2003, paid in 2004. |
|
|
(5) |
$347,993 represents the value of an award of 21,245 shares
of restricted stock granted on September 15, 2004. The
shares were valued for purposes of this table using the closing
price for our shares on September 15, 2004, the grant date,
which was $16.38. Shares vested on March 15, 2005. |
|
|
(6) |
$180,000 represents the value of an award of 10,989 shares
of restricted stock granted on September 15, 2004. The
shares were valued for purposes of this table using the closing
price for our shares on September 15, 2004, the grant date,
which was $16.38. Shares vested on March 15, 2005. |
|
|
(7) |
Bonus earned for 2004, paid in 2005. |
|
|
(8) |
Includes $24,797 paid for reimbursement of the difference
between 2004 taxes payable on Mr. Bergmans salary in
Hungary and the amount that would have been payable if
Mr. Bergman resided in the United states and an $18,000
housing allowance. |
|
|
(9) |
Includes $82,641 paid for reimbursement of the difference
between 2003 taxes payable on Mr. Bergmans salary in
Hungary and the amount that would have been payable if
Mr. Bergman resided in the United states and an $18,000
housing allowance. |
|
|
(10) |
Includes $99,446 paid for reimbursement of the difference
between Mr. Bergmans 2002 foreign tax and the amount
that would have been payable if Mr. Bergman resided in the
United States and an $18,000 housing allowance. |
24
|
|
(11) |
Mr. Newman is resident in Europe, and his base salary is
composed of a fixed dollar component and a fixed euro component.
The amounts indicated here are the aggregate of both, with the
euro component converted into dollars using the exchange rate on
December 31, 2005. |
|
(12) |
Tuition reimbursement for Mr. Newmans children. |
Option Grants in Last Fiscal Year
No options were granted to any of our Named Executive Officers
during the fiscal year ending December 31, 2005.
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
The following table sets forth certain information concerning
options exercised or exercisable by the Named Executive Officers
during the year ended December 31, 2005 and options held by
such individuals at December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised | |
|
|
|
|
|
|
Underlying Unexercised | |
|
In-The-Money | |
|
|
|
|
|
|
Options at | |
|
Options at | |
|
|
Shares | |
|
|
|
December 31, 2005 | |
|
December 31, 2005(2) | |
|
|
Acquired | |
|
Value | |
|
| |
|
| |
Name |
|
on Exercise | |
|
Realized$(1) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Michael J. Brown
|
|
|
450,000 |
(3) |
|
$ |
12,190,020 |
(3) |
|
|
355,606 |
|
|
|
67,000 |
|
|
$ |
8,516,495 |
|
|
$ |
587,400 |
|
Daniel R. Henry
|
|
|
0 |
|
|
|
0 |
|
|
|
191,149 |
|
|
|
77,000 |
|
|
|
4,325,128 |
|
|
|
795,900 |
|
Rick L. Weller
|
|
|
0 |
|
|
|
0 |
|
|
|
119,450 |
|
|
|
97,800 |
|
|
|
2,452,901 |
|
|
|
1,718,140 |
|
Miro I. Bergman
|
|
|
76,071 |
|
|
|
1,277,437 |
|
|
|
59,250 |
|
|
|
77,000 |
|
|
|
695,098 |
|
|
|
945,272 |
|
Jeffrey B. Newman
|
|
|
67,690 |
|
|
|
1,050,918 |
|
|
|
43,540 |
|
|
|
36,120 |
|
|
|
965,820 |
|
|
|
364,225 |
|
|
|
(1) |
Market value of underlying securities on the date of exercise,
minus the exercise price. |
|
(2) |
Market value of underlying securities on December 31, 2005
($27.80), minus the exercise price of
in-the-money options. |
|
(3) |
All of the options exercised by Mr. Brown in 2005 were
options expiring in 2006 and which were granted in 1996 prior to
Euronets initial public offering. |
Employment Agreements
Messrs. Brown, Henry, Weller, Newman and Bergman are Named
Executive Officers of Euronet and have employment agreements
that have substantially the same terms except in respect to the
levels of compensation and the provision of certain expatriate
benefits to Mr. Bergman. These agreements were entered into
in October 2003. The agreements with Mr. Brown,
Mr. Henry and Mr. Newman were filed with the SEC on
March 15, 2004 as Exhibits 10.1, 10.2 and 10.3 to our
annual report for the year ended December 31, 2003 and the
agreements with Mr. Bergman and Mr. Weller were filed
with the SEC on March 16, 2005 as Exhibits 10.8 and
10.9 to our annual report for the year ended December 31,
2004. The employment agreements have indefinite terms and
provide that they may be terminated by the executives at any
time upon 60 days notice and by Euronet with or
without cause. They may be terminated by Euronet with cause (as
defined in the agreements) upon 14 days notice. Prior to a
change of control, they may be terminated by Euronet
without cause only upon payment of severance payments equal to
24 months base salary and maintenance of certain
employee benefits during a 24 month severance period,
including vesting of stock options.
In the event of a change of control, the term of the
agreements become fixed at three years from the date of the
change of control and they may be terminated without cause only
upon payment to the employee of a lump sum equal to the full
amount of base salary that would have been payable during the
remaining term of the agreement (or for two years, if the
remaining term is less than two years), discounted at a rate of
7.5% per annum. These provisions also apply if the employee
resigns for good reason following a change of
control. Good reason includes certain changes in
conditions of
25
employment, as a result of which the employee can be considered
to have been constructively terminated, including a significant
diminution in responsibilities or salary. Change of
control includes approval by the
25.1
stockholders of any merger, consolidation or sale of
substantially all of our assets, replacement of over 25% of our
Directors without the approval of at least 75% of the Directors
in office as of the effective date of the employment agreement
or of Directors so approved, or the acquisition by any person or
group of persons of 40% or more of the voting rights of our
outstanding voting securities.
Each of the agreements includes a restriction on the ability of
the executive to compete with Euronet during the severance
period following termination.
Benefit Plans
We provide insurance benefits to our executive officers and
other employees, including health, dental, life, short-term and
long-term disability insurance subject to certain deductibles,
co-payments and insurability by employees where allowed by local
law.
Equity Compensation Plan Information
The table below sets forth information with respect to shares of
Common Stock that may be issued under our equity compensation
plans as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
Remaining Available | |
|
|
Number of Securities | |
|
|
|
for Future Issuance | |
|
|
to Be Issued | |
|
Weighted Average | |
|
Under Equity | |
|
|
Upon Exercise | |
|
Exercise Price | |
|
Compensation Plans | |
|
|
of Outstanding | |
|
of Outstanding | |
|
(excluding securities | |
|
|
Options and Rights | |
|
Options and Rights | |
|
reflected in column (a)) | |
Plan Category |
|
(a) | |
|
(b) | |
|
(c) | |
|
|
| |
|
| |
|
| |
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option awards
|
|
|
3,803,261 |
|
|
$ |
11.91 |
|
|
|
|
|
|
Restricted share awards
|
|
|
541,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal-Equity compensation plans approved by security holders
|
|
|
4,344,800 |
|
|
$ |
10.40 |
|
|
|
69,461 |
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,344,800 |
|
|
$ |
10.40 |
|
|
|
69,461 |
|
|
|
|
|
|
|
|
|
|
|
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
The Compensation Committee, which currently consists of five
outside directors, administers our executive compensation
programs. The Compensation Committee is responsible for
establishing policies that govern both annual cash compensation
and equity ownership programs.
Overview and Philosophy
Our executive compensation policies have the following
objectives:
|
|
|
|
|
to provide competitive compensation that will help attract,
retain and reward highly qualified executives who contribute to
our long-term success; and |
|
|
|
to align the interests of executive management and stockholders
by making individual compensation dependent upon achievement of
financial goals and by providing long-term incentives through
our stock option plans. |
The overall compensation program is also designed to reward a
combination of strong individual performance, strong performance
by the Company in meeting is long-term strategic goals and stock
price appreciation.
26
Our compensation package for executives consists of a base
salary, certain employee benefits, annual bonuses based on a
combination of corporate and individual performance and stock
options or grants of restricted stock, which vest over a period
of years. The base salary and benefit components are intended to
compensate executive officers for day to day activity in
accordance with the executives employment arrangement with
the Company. The annual bonus component is intended to reward
executive officers for strong performance. The stock option and
restricted grant awards are intended to help align executive
officers interests with those stockholders.
Determination of Compensation Levels in 2005
In determining levels of compensation of our CEO and other
executives for 2005, the Compensation Committee maintained in
place overall policies and targets set in 2003 based upon the
recommendations of report by an independent outside consultant
(the Consultant) that were reviewed and accepted by
the Compensation Committee in May 2003. There were no
significant changes made during 2005 as compared with 2004 in
the Compensation Committees overall approach to
compensation of our executives.
The Consultant performed a survey of the compensation levels of
executives in similar job categories and levels of
responsibility in an industry peer group of companies and
published surveys of executive compensation. Our CEO and other
executives were grouped into four tiers of responsibility and
the Consultant determined a compensation range for each tier of
responsibility as well as the specific amount of compensation
for each executive. As a general matter, the Consultant
recommended that compensation levels for Euronet executives
should be set at approximately the midpoint of the range of
compensation found within the peer group companies for each tier
of responsibility.
The Compensation Committee also considered the actual
performance of the Company as compared to anticipated
performance, taking into consideration the Companys
strategic plans. Considering the recommendations of the
Consultant and considering the performance of the Company, the
Committee fixed the various components of compensation for our
executives for 2005 as described below.
Base Salary
During the year 2005, there were no changes made in the base
salaries of our CEO or any of our Named Executive Officers,
except that the salary of Miro Berman, our COO for the Prepaid
Division was increased from $210,000 to $250,000 based on
individual performance. The base salaries of our CEO and the
other principal executive officers had been increased
substantially in mid-2003, and the Committee, based on the
conclusions of the Consultant, determined that these revised
base salaries were competitive with Euronets peer group of
companies. Mr. Browns base salary for 2005 was
$375,000 and Mr. Henrys was $290,000. For
Mr. Brown, this salary is the midpoint of the base salary
range recommended by the Consultant and is in the median of
competitive practice within Euronets peer group of
companies. Mr. Henrys salary is slightly higher than
the midpoint range recommended by the Consultant, reflecting his
particularly significant contribution over time to the creation
and development of Euronet.
Annual Bonus
In setting annual bonuses, the Committee considers overall
company performance and individual performance of the executive
concerned. In measuring individual performance, the Compensation
Committee measures the level of responsibility of an executive
against his base salary and other elements of compensation in
order to determine whether overall compensation is sufficient to
retain highly qualified individuals.
The Consultant provided recommended ranges of annual bonus that
should be paid to Euronet executives based on practices in the
peer group of companies. The ranges were expressed as a
percentage of base salary, and the actual level of payout in
each case is determined based upon achievement of defined
personal and overall corporate performance goals. Euronet
achieved increases of over 50% in operating income and 61% in
earnings per share (excluding discontinued operations, foreign
exchange, the gain on the sale of our U.K. ATM network and
gain/loss on early debt retirement) for the full year 2005
27
as compared to the full year 2004, and the Compensation
Committee therefore determined that bonuses should be at the top
of the ranges suggested by the Consultant. Mr. Brown and
Mr. Henry were granted bonuses of 120% of their base
salaries. The bonuses paid to Mr. Weller and
Mr. Newman were set at $180,000, representing 80% and 75%
of their base salaries, respectively. Mr. Bergman was
granted a bonus equal to 80% of base salary. These bonuses were
paid in cash.
Stock Incentive Programs
Our stock incentive plans are designed to promote a convergence
of long-term interests between our employees and our
stockholders and to assist in the retention of employees.
The initial grant of options to an executive is designed to be
competitive with those of comparable companies for the level of
job the executive holds and to motivate the executive to
contribute to an increase in our stock price over time. We make
additional grants periodically to reflect an executives
ongoing contributions to our success, to create an incentive to
remain with us and to provide a long-term incentive to achieve
or exceed our financial goals.
Executives realize gains only if the stock price increases over
the exercise price of their options and they exercise their
options. Under the general terms of our stock option plans,
options are to be granted at an option price equal to the fair
market value of our Common Stock on the date of grant. The stock
options granted to key executives generally vest over a
five-year period in order to encourage such individuals to
remain with Euronet.
No options granted to the Named Executive Officers during 2005.
This was principally because the Committee determined that the
level of potential equity ownership of our executives under
earlier grants, plus the grants of restricted stock in lieu of
bonus that were made in September 2004 and vested in March 2005,
provided sufficient equity incentive for our executives.
Benefits
Our employees are entitled to receive medical insurance benefits
and may participate in our 401(k) plan. For 401(k) participants,
we match 50% of participant deferrals on the first 6% of
participants deferrals, provided the participants
deferral is at least 4% of salary.
All of our employees are entitled to participate in an Employee
Stock Purchase Plans (the ESPPs) adopted in 2001 and
2003. These plans, which have been established in accordance
with certain federal income tax rules set forth in
Section 423 of the Internal Revenue Code, permit employees
to purchase stock from us at a price that is equal to 85% of the
lower of the trading price on the opening or closing of certain
three-month offering periods.
The amount of perquisites, as determined in accordance with the
rules of the SEC relating to executive compensation, did not
exceed 10% of salary and bonus for 2003, 2004 or 2005 for any of
the Named Executive Officers, except as described in the
Executive Compensation table for Mr. Bergman.
Mr. Bergmans perquisites were higher because they
include a $24,797 tax equalization payment made in
2005 intended to compensate him for the excess of 2004 Hungarian
tax over the U.S. tax Mr. Bergman would have paid if
he were resident in the U.S.
28
Conclusion
Through our programs, a significant portion of our executive
compensation is linked directly to individual and company
performance in furtherance of strategic goals, as well as stock
price appreciation. The Compensation Committee intends to
continue the policy of linking executive compensation to company
performance and stockholder return.
|
|
|
Compensation Committee |
|
|
Thomas A. McDonnell, Chair |
|
Eriberto R. Scocimara |
|
M. Jeannine Strandjord |
|
Andrew B. Schmitt |
|
Dr. Andrzej Olechowski |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The members of the Compensation Committee are set forth in the
preceding section. During the most recent fiscal year, no
Euronet executive officer served on the compensation committee
(or equivalent), or the board of directors, of another entity
whose executive officer(s) served on our Compensation Committee.
29
STOCK PERFORMANCE GRAPH
Set forth on the next page is a line graph comparing the total
cumulative return on the Common Stock from December 31,
2000 through December 31, 2005 with the Center for Research
in Security Prices (CRSP) Total Returns Index for
U.S. companies traded on the Nasdaq Stock Market (the
Market Group) and an index group of peer companies,
the CRSP Total Returns Index for U.S. Nasdaq Financial
Stocks (the Peer Group). The companies in each of
the Market Group and the Peer Group were weighted by market
capitalization. Returns are based on monthly changes in price
and assume reinvested dividends. These calculations assume the
value of an investment in the Common Stock, the Market Group and
the Peer Group was $100 on December 1, 2000. Our Common
Stock is traded on the Nasdaq National Market under the symbol
EEFT.
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Euronet Worldwide, Inc.
Produced on 03/16/2006 including data to 12/30/2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
2000 |
|
|
2001 |
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
Euronet Worldwide, Inc.
|
|
|
|
100.0 |
|
|
|
|
366.6 |
|
|
|
|
152.1 |
|
|
|
|
365.3 |
|
|
|
|
527.0 |
|
|
|
|
563.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nasdaq Stock Market
|
|
|
|
100.0 |
|
|
|
|
79.3 |
|
|
|
|
54.8 |
|
|
|
|
82.0 |
|
|
|
|
89.2 |
|
|
|
|
91.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nasdaq Financial Stocks
|
|
|
|
100.0 |
|
|
|
|
109.8 |
|
|
|
|
113.1 |
|
|
|
|
153.0 |
|
|
|
|
178.6 |
|
|
|
|
182.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
A. |
|
The lines represent monthly index levels derived from compounded
daily returns that include all dividends. |
|
B. |
|
The indexes are reweighted daily, using the market,
capitalization on the previous trading day. |
|
C. |
|
If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used. |
|
D. |
|
The index level for all series was set to $100.0 on 12/29/2000. |
30
AUDIT MATTERS
Report of the Audit Committee
In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed the audited financial
statements for fiscal year 2005 with management and the
independent auditor and discussed the quality of the accounting
principles, the reasonableness of judgments and the clarity of
disclosures in the financial statements. In addition, the Audit
Committee discussed with the independent accountants the matters
required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees.
The Audit Committee has received from the independent
accountants written disclosures and a letter concerning their
independence from Euronet, as required by Independence Standards
Board Standard No. 1, Independence Discussions with
Audit Committees. These disclosures have been reviewed by
the Audit Committee and discussed with the independent
accountants. The Audit Committee has considered whether
audit-related and non-audit related services provided by the
independent auditors to Euronet are compatible with maintaining
the auditors independence and has discussed with the
auditors their independence.
Based on these reviews and discussions, the Audit Committee has
recommended to the Board that the audited financial statements
be included in the Annual Report on
Form 10-K for the
year ended December 31, 2005 for filing with the
U.S. Securities and Exchange Commission.
|
|
|
M. Jeannine Strandjord, Chair |
|
Thomas A. McDonnell |
|
Andrew B. Schmitt |
|
Eriberto R. Scocimara |
Fees Paid To KPMG LLP
KPMG LLP served as Euronets independent registered public
accounting firm as of and for the year ended December 31,
2005. As such, KPMG LLP (a) performed professional services
in connection with the audit of the consolidated financial
statements of Euronet and the review of reports filed with the
SEC, and (b) performed a review of managements
assessment of the effectiveness as of December 31, 2005 of
our internal controls over financial reporting.
Audit Fees. Audit Fees for financial statement
audits were $1,031,400 during 2005 and $1,237,072 during 2004.
Audit Fees include fees for services performed to comply with
the standards of the Public Company Accounting Oversight Board
(United States) and Generally Accepted Auditing Standards,
including the recurring audit of Euronets consolidated
financial statements and fees related to the evaluation of
internal controls as required by the Sarbanes-Oxley Act of 2002.
This category also includes fees for audits provided in
connection with statutory filings or procedures related to audit
of income tax provisions and related reserves, consents and
assistance with and review of documents filed with the SEC.
Non-Audit Fees. Non Audit Fees were $96,423 during
2005 and $85,330 during 2004. This category includes fees
related to assistance in financial due diligence related to
mergers and acquisitions, consultations regarding Generally
Accepted Accounting Principles, reviews and evaluations of the
impact of new regulatory pronouncements, general assistance with
implementation of the new SEC guidance, audit services not
required by statute or regulation, audits of pension and other
employee benefit plans and the review of information systems and
general internal controls unrelated to the audit of the
financial statements.
Tax Fees. Tax Fees were $53,022 during 2005 and
$215,563 during 2004. This category includes fees associated
with tax audits, tax compliance, tax consulting, both domestic
and international tax planning, tax planning on mergers and
acquisitions, restructurings, as well as other services related
to tax disclosure and filing requirements.
31
There were no fees paid the KPMG LLP other than those described
above.
The Audit Committee has concluded that the provision by KPMG LLP
of the services described under the captions Non-Audit
Fees and Tax Fees above is compatible with
maintaining the auditors independence.
The Audit Committee has adopted policies that prohibit Euronet
from engaging our independent auditor to perform any service
that the independent auditor is prohibited by the securities
laws from providing. Such procedures require the Audit Committee
to pre-approve or reject any audit or non-audit services. The
Chairperson, with the assistance of Euronets Chief
Financial Officer, presents and describes at regularly scheduled
Audit Committee meetings all services that are subject to
pre-approval. The Audit Committee regularly examines whether the
fees for auditor services exceed estimates.
The Audit Committee pre-approved all services that KPMG LLC
rendered to Euronet for 2005.
OTHER MATTERS
The Board knows of no other business which may come before the
Annual Meeting. If, however, any other matters are properly
presented to the Annual Meeting, it is the intention of the
persons named in the accompanying proxy to vote, or otherwise
act, in accordance with their judgment on such matters.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors and any person or
entity who owns more than ten percent of a registered class of
our common stock or other equity securities to file with the SEC
certain reports of ownership and changes in ownership of our
securities. We prepare Section 16(a) forms on behalf of our
executive officers and directors based on the information
provided by them. Based solely on a review of copies of reports
available to us, during 2005, our Directors, officers and
beneficial owners of greater than 10% of our Common Stock
complied with all applicable Section 16(a) filing
requirements during the year 2005, except that (i) a
form 4 relating to a transaction by our former Executive
Vice President, Jim Jerome, that occurred on April 27, 2005
was filed on May 3, 2005, and (ii) a form 4 filed
relating to a transaction by our Executive Vice President,
Jeffrey Newman, that occurred on March 18, 2005, was filed
on March 24, 2005.
Stockholder proposals for the 2007 annual meeting
Proposals of stockholders intended to be presented at the 2007
Annual Meeting scheduled to be held on May 17, 2007, must
be received by the Secretary of Euronet at 4601 College
Boulevard, Suite 300, Leawood, Kansas 66211 by
December 10, 2006 for inclusion in Euronets proxy
statement and proxy relating to that meeting. Upon receipt of
any such proposal, Euronet will determine whether or not to
include such proposal in the proxy statement and proxy in
accordance with regulations governing the solicitation of
proxies.
In order for a stockholder to propose a candidate for director,
notice of the nomination must be received by the Secretary of
Euronet by December 10, 2006. To be considered, the
proposal must include the following information: (a) as to
each nominee whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of the nominee,
(ii) the principal occupation or employment of the nominee,
(iii) the class and number of shares of our Common Stock
that are beneficially owned by the nominee, and (iv) any
other information concerning the nominee that would be required,
under the rules of the SEC, in a proxy statement soliciting
proxies for the election of such nominee; (b) as to the
stockholder giving the notice, (i) the name and address of
the stockholder, and (ii) the class and number of shares of
our Common Stock that are beneficially owned by
32
the stockholder and the name and address of record under which
such stock is held; and (c) the signed consent of the
nominee to serve as a director if elected.
In order for a stockholder to bring other business before a
stockholder meeting, notice must be received by Euronet by
December 10, 2006. Such notice must include:
|
|
|
|
|
the name and address of such stockholder, as they appear on
Euronets stock transfer books; |
|
|
|
a representation that such stockholder is a stockholder of
record and intends to appear in person or by proxy at such
meeting to nominate the person or persons specified in the
notice; |
|
|
|
the class and number of shares of stock of Euronet beneficially
owned by such stockholder; |
|
|
|
a brief description of the business desired to be brought before
the annual meeting, including the complete text of any
resolutions to be presented at the annual meeting, and the
reasons for conducting such business at the annual
meeting; and |
|
|
|
any material interest of such stockholder in such business. |
In each of the three cases listed above under Stockholder
Proposals, Stockholder Nominees, and
Other Matters, the notice must be given by personal
delivery or by United States certified mail, postage prepaid, to
the Secretary of Euronet, whose address is 4601 College
Boulevard, Suite 300, Leawood, Kansas 66211. Any
stockholder desiring a copy of Euronets Bylaws will be
furnished one without charge upon written request to the
Secretary. A copy of the Bylaws and all amendments were filed as
Exhibit 3.2 to our registration statement on
Form S-1 filed on
December 18, 1996 (Registration
No. 333-18121), as
Exhibit 3(ii) to our quarterly report on
Form 10-Q for the
fiscal period ended March 31, 1997 (Amendment No. 1)
and as Exhibit 3.1 to our report on
Form 8-K filed on
March 24, 2003 (Amendment No. 2) and are available on
the SECs website (www.sec.gov).
|
|
|
By Order of the Board, |
|
|
|
|
|
Jeffrey B. Newman |
|
Executive Vice President, |
|
General Counsel and Secretary |
April 10, 2006
33
APPENDIX 1
EURONET WORLDWIDE, INC.
2006 STOCK INCENTIVE PLAN
1.01 Establishment. Euronet Worldwide, Inc., a
corporation organized and existing under the laws of the state
of Delaware (the Company), hereby establishes the
Euronet Worldwide, Inc. 2006 Stock Incentive Plan (the
Plan) for certain current or prospective directors,
officers, key employees or outside consultants of the Company
and its affiliates.
1.02 Purpose. The purpose of this Plan is to encourage
Participants to acquire a proprietary and vested interest in the
growth and performance of the Company. The Plan is also designed
to assist the Company in attracting and retaining employees,
non-employee directors and other Participants by providing them
with the opportunity to participate in the success and
profitability of the Company.
1.03 Duration. The Plan shall commence on the Effective
Date and shall remain in effect, subject to the right of the
Board to amend or terminate the Plan at any time pursuant to
Section 15 hereof, until all Shares subject to it shall
have been issued, purchased or acquired according to the
Plans provisions. Unless the Plan shall be reapproved by
the stockholders of the Company and the Board renews the
continuation of the Plan, no Awards shall be issued pursuant to
the Plan after the tenth (10th) anniversary of the Plans
Effective Date.
2.01 The following terms shall have
the meanings set forth below.
|
|
|
(a) 1933 Act means the Securities
Act of 1933, as amended. Reference to a specific section of the
1933 Act or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future
legislation or regulation amending, supplementing, or
superseding such section or regulation. |
|
|
(b) 1934 Act means the Securities
Exchange Act of 1934, as amended. Reference to a specific
section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing, or
superseding such section or regulation. |
|
|
(c) Affiliate of the Company means any
person, corporation, partnership, association or other business
or professional entity that directly, or indirectly through one
or more intermediaries, Controls or is Controlled by, or is
under common Control with the Company. |
|
|
(d) Award means a grant made under this
Plan in any form which may include but is not limited to Stock
Options, Restricted Stock, Restricted Stock Units, Performance
Shares, Bonus Shares, Stock Appreciation Rights and Performance
Units. |
|
|
(e) Award Agreement means a written
agreement or instrument between the Company and a Holder
evidencing an Award. |
|
|
(f) Beneficiary means the person,
persons, trust or trusts which have been designated by a Holder
in his or her most recent written beneficiary designation filed
with the Company to receive the benefits specified under this
Plan upon the death of the Holder, or, if there is no designated
Beneficiary or surviving designated Beneficiary, then the
person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits. |
|
|
(g) Board means the Board of Directors
of the Company. |
34
|
|
|
(h) Bonus Shares means the Shares
granted to a Participant in accordance with Section 10. |
|
|
(i) Cause means, unless otherwise
defined in an Award Agreement, |
|
|
|
(i) Participants conviction of, plea of guilty to, or
plea of nolo contendere to a felony or other crime that involves
fraud or dishonesty, |
|
|
(ii) any willful action or omission by a Participant which
would constitute grounds for immediate dismissal under the
employment policies of the Company by which Participant is
employed, including but not limited to intoxication with alcohol
or illegal drugs while on the premises of the Company, or
violation of sexual harassment laws or the internal sexual
harassment policy of the Company by which Participant is
employed, |
|
|
(iii) Participants habitual neglect of duties,
including but not limited to repeated absences from work without
reasonable excuse, or |
|
|
(iv) Participants willful and intentional material
misconduct in the performance of his duties that results in
financial detriment to the Company; |
|
|
|
provided, however, that for purposes of clauses (ii),
(iii) and (iv), Cause shall not include any one or more of
the following: bad judgment, negligence or any act or omission
believed by the Participant in good faith to have been in or not
opposed to the interest of the Company (without intent of the
Participant to gain, directly or indirectly, a profit to which
the Participant was not legally entitled). A Participant who
agrees to resign from his affiliation with the Company in lieu
of being terminated for Cause may be deemed to have been
terminated for Cause for purposes of this Plan. |
|
|
|
(j) Change in Control means the first to
occur of the following events: |
|
|
|
(i) Any Person is or becomes the Beneficial Owner (within
the meaning set forth in
Rule 13d-3 under
the 1934 Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or
its Affiliates) representing 50% or more of the combined voting
power of the Companys then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in
clause (x) of paragraph (iii) of this
Section 2.1(j); or |
|
|
(ii) The following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the Effective Date, constitute the Board and
any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the Companys stockholders was approved by a vote of at
least two-thirds of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved
or recommended; or |
|
|
(iii) There is consummated a merger or consolidation of the
Company with any other corporation, OTHER THAN (x) a merger
or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company at least 50% of
the combined voting power of the securities of the Company or
such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (y) a
merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates other than in
connection with the |
35
|
|
|
acquisition by the Company or its Affiliates of a business)
representing 50% or more of the combined voting power of the
Companys then outstanding securities; or |
|
|
(iv) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Companys
assets, other than a sale or disposition by the Company of all
or substantially all of the Companys assets to an entity,
at least 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale. |
|
|
|
Notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the record holders of
the Companys common stock immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity
which owns all or substantially all of the Companys assets
immediately following such transaction or series of transactions. |
|
|
|
(k) Code means the Internal Revenue Code
of 1986, as it may be amended from time to time, and the rules
and regulations promulgated thereunder. |
|
|
(l) Committee means (i) the Board,
or (ii) one or more committees of the Board to whom the
Board has delegated all or part of its authority under this Plan. |
|
|
(m) Company means Euronet Worldwide,
Inc., a Delaware corporation, and any successor thereto. |
|
|
(n) Continuing Director means any person
who was a member of the Board as of the Effective Date, and any
person who subsequently becomes a member of such Board if such
persons appointment, election or nomination for election
to such Board is recommended or approved by a majority of the
then Continuing Directors, unless the Continuing Directors
designate such person as not a Continuing Director. |
|
|
(o) Control means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or
otherwise. |
|
|
(p) Covered Employee means an Employee
that meets the definition of covered employee under
section 162(m)(3) of the Code, or any successor provision
thereto. |
|
|
(q) Date of Grant or
Grant Date means, with respect to any Award,
the date as of which such Award is granted under the Plan. |
|
|
(r) Disabled or
Disability means an individual (i) is
unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve
(12) months or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than three
(3) months under a Company-sponsored accident and health
plan. Notwithstanding the above, with respect to an Incentive
Stock Option and the period after time following a separation
from service a Holder has to exercise such Incentive Stock
Option, disabled shall have the same meaning as
defined in Code section 22(e)(3). |
|
|
(s) Effective Date means May 18,
2006, such date being the date this Plan was approved by the
Companys stockholders. |
36
|
|
|
(t) Eligible Employees means key
employees (including, without limitations, officers and
directors who are also employees) of the Company or an Affiliate
upon whose judgment, initiative and efforts the Company is, or
will be, important to the successful conduct of its business. |
|
|
(u) Executive Officer means (i) the
president of the Company, any vice president of the Company in
charge of a principal business unit, division or function (such
as sales, administration, or finance), any other officer who
performs a policy making function or any other person who
performs similar policy making functions for the Company and
(ii) Executive Officers (as defined in part (i) of
this definition) of subsidiaries of the Company who perform
policy making functions for the Company. |
|
|
(v) Fair Market Value means, as of any
date, the value of the Stock determined in good faith, from time
to time, by the Committee in its sole discretion and the
Committee may adopt such formulas as in its opinion shall
reflect the true fair market value of such stock from time to
time and may rely on such independent advice with respect to
such fair market value as the Committee shall deem appropriate.
In the event that the Shares of the Company are traded on a
national securities exchange, the Committee may determine that
the Fair Market Value of the Stock shall be based upon the last
sale before or the first sale after the Grant Date, the closing
price on the trading day before or the trading day of the grant,
or any other reasonable basis using actual transactions in such
Stock as reported in The Wall Street Journal and consistently
applied. The determination of Fair Market Value also may be
based upon an average selling price during a specified period
that is within 30 days before or 30 days after the
Grant Date, provided that the commitment to grant the stock
right based on such valuation method must be irrevocable before
the beginning of the specified period, and such valuation method
must be used consistently for grants of stock rights under the
same and substantially similar programs. |
|
|
(w) Freestanding SAR means any SAR that
is granted independently of any Option. |
|
|
(x) Good Reason shall mean any of the
following events, which has not been either consented to in
advance by the Participant in writing or cured by the Company
within a reasonable period of time not to exceed 20 days
after the Participant provides written notice thereof:
(i) the requirement that the Participants principal
service for the Company be performed more than 30 miles
from the Participants primary office as of the effective
date of a Change in Control, (ii) other than as part of an
across-the-board
reduction affecting all similarly-situated employees, a material
reduction in the Participants base compensation in effect
immediately before the Change in Control; (iii) other than
as part of an
across-the-board
reduction affecting all similarly-situated employees, the
failure by the Company to continue to provide the Participant
with the same level of overall compensation and benefits
provided immediately before the Change in Control, or the taking
of any action by the Company which would directly or indirectly
reduce any of such benefits or deprive the Participant of any
material fringe benefit; (iv) the assignment to the
Participant of duties and responsibilities materially different
from those associated with his position immediately before the
Change in Control; or (v) a material diminution or
reduction, on or after a Change in Control, in the
Participants responsibilities or authority, including
reporting responsibilities in connection with the
Participants service with the Company. |
|
|
(y) Holder means a Participant,
Beneficiary or Permitted Transferee who is in possession of an
Award Agreement representing an Award that (i) in the case
of a Participant has been granted to such individual,
(ii) in the case of a Beneficiary has transferred to such
person under the laws of descent and distribution or
(iii) in the case of a Permitted Transferee, has been
transferred to such person as permitted by the Committee, and
such Award Agreement has not expired, been canceled or
terminated. |
|
|
(z) Incentive Stock Option means any
Option designated as such and granted in accordance with the
requirements of section 422 of the Code or any successor
provisions thereto. |
37
|
|
|
(aa) Nonqualified Stock Option means any
Option to purchase Shares that is not an Incentive Stock Option. |
|
|
(bb) Option means a right to purchase
Stock at a stated price for a specified period of time. Such
definition includes both Nonqualified Stock Options and
Incentive Stock Options. |
|
|
(cc) Option Agreement or Option
Award Agreement means a written agreement or
instrument between the Company and a Holder evidencing an Option. |
|
|
(dd) Option Exercise Price means the
price at which Shares subject to an Option may be purchased,
determined in accordance with Section 6.2(b). |
|
|
(ee) Option Holder shall have the
meaning as set forth in Section 6.2. For the avoidance of
any doubt, in situations where the Option has been transferred
to a Permitted Transferee or passed to a Beneficiary in
accordance with the laws of descent and distribution, the Option
Holder will not be the same person as the Holder of the Option. |
|
|
(ff) Participant means a Service
Provider of the Company designated by the Committee from time to
time during the term of the Plan to receive one or more Awards
under the Plan. |
|
|
(gg) Performance Period means the period
of time as specified by the Committee over which Performance
Units are to be earned. |
|
|
(hh) Performance Shares means an Award
made pursuant to Section 9 which entitles a Holder to
receive Shares, their cash equivalent, or a combination thereof
based on the achievement of performance targets during a
Performance Period. |
|
|
(ii) Performance Units means an Award
made pursuant to Section 9 which entitles a Holder to
receive cash, Stock or a combination thereof based on the
achievement of performance targets during a Performance Period. |
|
|
(jj) Person shall have the meaning
ascribed to such term in Section 3(a)(9) of the
1934 Act and used in Sections 13(d) and 14(d) thereof,
including group as defined in Section 13(d)
thereof. |
|
|
(kk) Plan means the Euronet Worldwide,
Inc. 2006 Stock Incentive Plan, as set forth in this instrument
and as hereafter amended from time to time. |
|
|
(ll) Plan Year means each
12-month period
beginning January 1 and ending the following December 31,
except that for the first year of the Plan it shall begin on the
Effective Date and extend to December 31 of that year. |
|
|
(mm) Restricted Stock means Stock
granted under Section 8 that is subject those restrictions
set forth therein and the Award Agreement. |
|
|
(nn) Restricted Stock Unit means an
Award granted under Section 8 evidencing the Holders
right to receive a Share (or cash payment equal to the Fair
Market Value of a Share) at some future date. |
|
|
(oo) Rule 16b-3
means Rule 16b-3
promulgated under the 1934 Act, and any future regulation
amending, supplementing, or superseding such regulation. |
|
|
(pp) SAR or Stock Appreciation
Right means an Award, granted either alone or in
connection with an Option that is designated as a SAR pursuant
to Section 7. |
|
|
(qq) SAR Holder shall have the meaning
as set forth in Section 7.2. |
|
|
(rr) Section 16 Person means a
Person who is subject to obligations under Section 16 of
the 1934 Act with respect to transactions involving equity
securities of the Company. |
|
|
(ss) Service Provider means an Eligible
Employee, non-employee director, officer, or outside consultant
of the Company or any Subsidiary, as well as to any prospective
director, officer, employee, or outside consultant of the
Company or any Subsidiary. |
38
|
|
|
(tt) Share means a share of Stock. |
|
|
(uu) Stock means authorized and issued
or unissued common stock of the Company, at such par value as
may be established from time to time. |
|
|
(vv) Subsidiary means (i) in the
case of an Incentive Stock Option a subsidiary
corporation, whether now or hereafter existing, as defined
in section 424(f) of the Code, and (ii) in the case of
any other type of Award, in addition to a subsidiary corporation
as defined in (i), a limited liability company, partnership or
other entity in which the Company controls fifty percent (50%)
or more of the voting power or equity interests. |
|
|
(ww) Tandem SAR means a SAR which is
granted in connection with, or related to, an Option, and which
requires forfeiture of the right to purchase an equal number of
Shares under the related Option upon the exercise of such SAR;
or alternatively, which requires the cancellation of an equal
amount of SARs upon the purchase of the Shares subject to the
Option. |
|
|
(xx) Vested Option means any Option, or
portion thereof, which is fully exercisable by the Holder.
Vested Options remain exercisable only for that period of time
as provided for under this Plan and any applicable Option Award
Agreement. Once a Vested Option is no longer exercisable after
otherwise having been exercisable, the Option shall become null
and void. |
2.02 Gender and Number. Except when otherwise
indicated by the context, the masculine gender shall also
include the feminine gender, and the definition of any term
herein in the singular shall also include the plural.
3.01 Composition of Committee. The Plan shall be
administered by the Committee. To the extent the Board considers
it desirable for transactions relating to Awards to be eligible
to qualify for an exemption under
Rule 16b-3, the
Committee shall consist of two or more directors of the Company,
all of whom qualify as non-employee directors within
the meaning of
Rule 16b-3. To the
extent the Board considers it desirable for compensation
delivered pursuant to Awards to be eligible to qualify for an
exemption from the limit on tax deductibility of compensation
under section 162(m) of the Code, the Committee shall
consist of two or more directors of the Company, all of whom
shall qualify as outside directors within the
meaning of Code section 162(m).
3.02 Authority of Committee. Subject to the terms of
the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to:
|
|
|
(a) select the Service Providers to whom Awards may from
time to time be granted hereunder; |
|
|
(b) determine the type or types of Awards to be granted to
eligible Service Providers; |
|
|
(c) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to
be calculated in connection with, Awards; |
|
|
(d) determine the terms and conditions of any Award; |
|
|
(e) determine whether, and to what extent, and under what
circumstances Awards may be settled or exercised in cash,
Shares, other securities, other Awards or other property; |
|
|
(f) determine whether, and to what extent, and under what
circumstance Awards may be canceled, forfeited, or suspended and
the method or methods by which Awards may be settled, exercised,
canceled, forfeited, or suspended; |
|
|
(g) correct any defect, supply an omission, reconcile any
inconsistency and otherwise interpret and administer the Plan
and any instrument or Award Agreement relating to the Plan or
any Award hereunder; |
39
|
|
|
(h) accelerate the exercisability of any Option, the
vesting of any Restricted Shares or otherwise remove any
restriction on any Award such that the Award becomes fully
payable; |
|
|
(i) modify and amend the Plan, establish, amend, suspend,
or waive such rules, regulations and procedures of the Plan, and
appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and |
|
|
(j) make any other determination and take any other action
that the Committee deems necessary or desirable for the
administration of the Plan. |
3.03 Committee Delegation. The Committee may
delegate to any member of the Board or committee of Board
members such of its powers as it deems appropriate, including
the power to sub-delegate, except that only a member of the
Board (or a committee thereof) may grant Awards from time to
time to specified categories of Service Providers in amounts and
on terms to be specified by the Board; provided that no such
grants shall be made other than by the Board or the Committee to
individuals who are then Section 16 Persons or other than
by the Committee to individuals who are then or are deemed
likely to become a covered employee within the
meaning of Code section 162(m). A majority of the members
of the Committee may determine its actions and fix the time and
place of its meetings.
3.04 Determination Under the Plan. Unless otherwise
expressly provided in the Plan, all designations,
determinations, adjustments, interpretations, and other
decisions under or with respect to the Plan, any Award or Award
Agreement shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive, and
binding upon all persons, including the Company, any
Participant, any Holder, and any stockholder. No member of the
Committee shall be liable for any action, determination or
interpretation made in good faith, and all members of the
Committee shall, in addition to their rights as directors, be
fully protected by the Company with respect to any such action,
determination or interpretation.
|
|
IV. |
STOCK SUBJECT TO THE PLAN |
4.01 Number of Shares. Subject to adjustment as
provided in Section 4.3 and subject to the maximum amount
of Shares that may be granted to an individual in a calendar
year as set forth in Section 5.5, no more than a total of
Four Million (4,000,000) Shares are authorized for issuance
under the Plan in accordance with the provisions of the Plan and
subject to such restrictions or other provisions as the
Committee may from time to time deem necessary. Any Shares
issued hereunder may consist, in whole or in part, of authorized
and unissued shares or treasury shares. The Shares may be
divided among the various Plan components as the Committee shall
determine. Shares that are subject to an underlying Award and
Shares that are issued pursuant to the exercise of an Award
shall be applied to reduce the maximum number of Shares
remaining available for use under the Plan. The Company shall at
all times during the term of the Plan and while any Awards are
outstanding retain as authorized and unissued Stock, or as
treasury Stock, at least the number of Shares from time to time
required under the provisions of the Plan, or otherwise assure
itself of its ability to perform its obligations hereunder.
4.02 Unused and Forfeited Stock. Any Shares that are
subject to an Award under this Plan that are not used because
the terms and conditions of the Award are not met, including any
Shares that are subject to an Award that expires or is
terminated for any reason, any Shares that are used for full or
partial payment of the purchase price of Shares with respect to
which an Option is exercised and any Shares retained by the
Company pursuant to Section 16.2 shall automatically become
available for use under the Plan. Notwithstanding the foregoing,
any Shares used for full or partial payment of the purchase
price of the Shares with respect to which an Option is exercised
and any Shares retained by the Company pursuant to
Section 16.2 that were originally Incentive Stock Option
Shares must still be considered as having been granted for
purposes of determining whether the Share limitation provided
for in Section 4.1 has been reached for purposes of
Incentive Stock Option grants.
4.03 Adjustments in Authorized Shares. If, without
the receipt of consideration therefore by the Company, the
Company shall at any time increase or decrease the number of its
outstanding Shares or
40
change in any way the rights and privileges of such Shares such
as, but not limited to, the payment of a stock dividend or any
other distribution upon such Shares payable in Stock, or through
a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, such
that any adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan then in relation to the Stock that is affected by
one or more of the above events, the numbers, rights and
privileges of (i) the Shares as to which Awards may be
granted under the Plan, and (ii) the Shares then included
in each outstanding Award granted hereunder, shall be increased,
decreased or changed in like manner as if they had been issued
and outstanding, fully paid and non assessable at the time of
such occurrence.
4.04 General Adjustment Rules.
|
|
|
(a) If any adjustment or substitution provided for in this
Section 4 shall result in the creation of a fractional
Share under any Award, such fractional Share shall be rounded to
the nearest whole Share and fractional Shares shall not be
issued. |
|
|
(b) In the case of any such substitution or adjustment
affecting an Option or a SAR (including a Nonqualified Stock
Option) such substitution or adjustments shall be made in a
manner that is in accordance with the substitution and
assumption rules set forth in Treasury Regulations 1.424-1 and
the applicable guidance relating to Code section 409A. |
5.01 Basis of Grant. Participants in the Plan shall
be those Service Providers, who, in the judgment of the
Committee, are performing, or during the term of their incentive
arrangement will perform, important services in the management,
operation and development of the Company, and significantly
contribute, or are expected to significantly contribute, to the
achievement of long-term corporate economic objectives.
Participants may also include Service Providers who, in the
Committees discretion, are entitled to receive Awards as
an inducement to perform services for the Company or any
Subsidiary; provided that an Award Agreement may contain terms
and conditions providing for the termination of such inducement
Award in the event that such Service Provider is not retained to
perform services for the Company with the period specified
therein.
5.02 Types of Grants; Limits. Participants may be
granted from time to time one or more Awards; provided, however,
that the grant of each such Award shall be separately approved
by the Committee or its designee, and receipt of one such Award
shall not result in the automatic receipt of any other Award.
Written notice shall be given to such Person, specifying the
terms, conditions, right and duties related to such Award. Under
no circumstance shall Incentive Stock Options be granted to
(i) non-employee directors, (ii) Consultants,
(iii) any prospective non-employee director, employee or
consultant, or (iv) any person not permitted to receive
Incentive Stock Options under the Code.
5.03 Award Agreements. Each Participant shall enter
into an Award Agreement(s) with the Company, in such form as the
Committee shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions,
rights and duties. Unless otherwise explicitly stated in the
Award Agreement, Awards shall be deemed to be granted as of the
date specified in the grant resolution of the Committee, which
date shall be the date of any related agreement(s) with the
Participant. Unless explicitly provided for in a particular
Award Agreement that the terms of the Plan are being superseded,
in the event of any inconsistency between the provisions of the
Plan and any such Award Agreement(s) entered into hereunder, the
provisions of the Plan shall govern.
5.04 Restrictive Covenants. The Committee may, in
its sole and absolute discretion, place certain restrictive
covenants in an Award Agreement requiring the Participant to
agree to refrain from certain actions. Such Restrictive
Covenants, if contained in the Award Agreement, will be binding
on the Participant.
41
5.05 Maximum Annual Award. The maximum number of
Shares with respect to which an Award or Awards may be granted
to any Participant in any one taxable year of the Company (the
Maximum Annual Participant Award) shall not exceed
Four Hundred Thousand (400,000) Shares (increased,
proportionately, in the event of any stock split or stock
dividend with respect to the Shares). The Maximum Annual
Participant Award shall include any Bonus Shares that are paid
to a Participant in a taxable year pursuant to the achievement
of one or more established and objective performance goals under
the Companys Executive Annual Incentive Plan or pursuant
to any other Company-sponsored compensation plan or program. If
an Option is in tandem with a SAR, such that the exercise of the
Option or SAR with respect to a Share cancels the tandem SAR or
Option right, respectively, with respect to each Share, the
tandem Option and SAR rights with respect to each Share shall be
counted as covering but one Share for purposes of the Maximum
Annual Participant Award.
6.01 Grant of Options. A Participant may be granted
one or more Options. The Committee in its sole discretion shall
designate whether an Option is an Incentive Stock Option or a
Nonqualified Stock Option. The Committee may grant both an
Incentive Stock Option and a Nonqualified Stock Option to the
same Participant at the same time or at different times.
Incentive Stock Options and Nonqualified Stock Options, whether
granted at the same or different times, shall be deemed to have
been awarded in separate grants, shall be clearly identified,
and in no event shall the exercise of one Option affect the
right to exercise any other Option or affect the number of
Shares for which any other Option may be exercised.
6.02 Option Agreements. Each Option granted under
the Plan shall be evidenced by a written Option Award Agreement
which shall be entered into by the Company and the Participant
to whom the Option is granted (the Option Holder),
and which shall contain the following terms and conditions, as
well as such other terms and conditions not inconsistent
therewith, as the Committee may consider appropriate in each
case.
|
|
|
(a) Number of Shares. Each Option Award Agreement
shall state that it covers a specified number of Shares, as
determined by the Committee. To the extent that the aggregate
Fair Market Value of Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the
first time by any Option Holder during any calendar year exceeds
$100,000 or, if different, the maximum limitation in effect at
the time of grant under section 422(d) of the Code, or any
successor provision, such Options in excess of such limit shall
be treated as Nonqualified Stock Options. The foregoing shall be
applied by taking Options into account in the order in which
they were granted. For the purposes of the foregoing, the Fair
Market Value of any Share shall be determined as of the time the
Option with respect to such Share is granted. In the event the
foregoing results in a portion of an Option designated as an
Incentive Stock Option exceeding the $100,000 limitation, only
such excess shall be treated as a Nonqualified Stock Option. |
|
|
(b) Price. Each Option Award Agreement shall state
the Option Exercise Price at which each Share covered by an
Option may be purchased. Such Option Exercise Price shall be
determined in each case by the Committee; provided, however,
that the Option Exercise Price for each Share covered by an
Incentive Stock Option shall not be less than the Fair Market
Value of the Stock on the Options Grant Date and, provided
further, that the incentive stock option granted to an Eligible
Employee who then owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the
Company or any parent or Subsidiary corporation of the Company
must be at least 110% of the Fair Market Value of the Stock
subject to the Incentive Stock Option on the Options Grant
Date. |
|
|
(c) Duration of Options. Each Option Award Agreement
shall state the period of time, determined by the Committee,
within which the Option may be exercised by the Option Holder
(the Option Period). The Option Period must expire,
in all cases, not more than ten years from the Options
Grant Date; provided, however, that the Option Period of an
Incentive Stock Option granted to an Eligible Employee who then
owns Stock possessing more than 10% of the total combined voting |
42
|
|
|
power of all classes of Stock of the Company must expire not
more than five years from the Options Grant Date. Each
Option Award Agreement shall also state the periods of time, if
any, as determined by the Committee, when incremental portions
of each Option shall become exercisable. If any Option or
portion thereof is not exercised during its Option Period, such
unexercised portion shall be deemed to have been forfeited and
have no further force or effect. Due to Code
section 409As treatment of an extension or renewal of
an Option as the granting of a new Option, the Committee shall
not extend or renew the term of an Option without the consent of
the Holder. |
|
|
(d) Termination of Service, Death, Disability, etc.
Each Option Agreement shall state the period of time, if any,
determined by the Committee, within which the Vested Option may
be exercised after an Option Holder ceases to be a Service
Provider on account of the Participants death, Disability,
voluntary resignation, removal from the Board or the Company
having terminated such Option Holders employment with or
without Cause. |
|
|
(e) Transferability. Except as otherwise determined
by the Committee, Options shall not be transferable by the
Option Holder except by will or pursuant to the laws of descent
and distribution. Each Vested Option shall be exercisable during
the Option Holders lifetime only by him or her, or in the
event of Disability or incapacity, by his or her guardian or
legal representative. Shares issuable pursuant to any Option
shall be delivered only to or for the account of the Option
Holder, or in the event of Disability or incapacity, to his or
her guardian or legal representative. |
|
|
(f) Exercise, Payments, etc. |
|
|
|
(i) Unless otherwise provided in the Option Award
Agreement, each Vested Option may be exercised by delivery to
the Corporate Secretary of the Company a written notice
specifying the number of Shares with respect to which such
Option is exercised and payment of the Option Exercise Price.
Such notice shall be in a form satisfactory to the Committee or
its designee and shall specify the particular Vested Option that
is being exercised and the number of Shares with respect to
which the Vested Option is being exercised. The exercise of the
Vested Option shall be deemed effective upon receipt of such
notice by the Corporate Secretary and payment to the Company.
The purchase of such Stock shall take place at the principal
offices of the Company upon delivery of such notice, at which
time the purchase price of the Stock shall be paid in full by
any of the methods or any combination of the methods set forth
in (ii) below. |
|
|
(ii) The Option Exercise Price shall be paid by any of the
following methods: |
|
|
|
1) Cash or Certified bank check; |
|
|
2) By delivery to the Company of certificates representing the
number of Shares then owned by the Holder, the Fair Market Value
of which equals the purchase price of the Stock purchased
pursuant to the Vested Option, properly endorsed for transfer to
the Company; provided, however, that Shares used for this
purpose must have been held by the Holder for such minimum
period of time as may be established from time to time by the
Committee; and provided further that the Fair Market Value of
any Shares delivered in payment of the purchase price upon
exercise of the Options shall be the Fair Market Value as of the
exercise date, which shall be the date of delivery of the
certificates for the Stock used as payment of the Option
Exercise Price. |
|
|
|
In lieu of actually surrendering to the Company the stock
certificates representing the number of Shares then owned by the
Holder, the Committee may, in its discretion permit the Holder
to submit to the Company a statement affirming ownership by the
Holder of such number of Shares and request that such Shares,
although not actually surrendered, be deemed to have been
surrendered by the Holder as payment of the exercise price. |
43
|
|
|
3) For any Holder other than an Executive Officer or except as
otherwise prohibited by the Committee, by payment through a
broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board. |
|
|
4) Any combination of the consideration provided in the
foregoing subsections (1), (2) and (3). |
|
|
|
(iii) The Company shall not guaranty a third-party loan
obtained by a Holder to pay part or the entire Option Exercise
Price of the Shares. |
|
|
|
(g) Date of Grant. Unless otherwise specifically
specified in the Option Award Agreement, an option shall be
considered as having been granted on the date specified in the
grant resolution of the Committee. |
|
|
(h) Withholding. |
|
|
|
a) Nonqualified Stock Options. Each Option Award
Agreement covering Nonqualified Stock Options shall provide
that, upon exercise of the Option, the Option Holder shall make
appropriate arrangements with the Company to provide for the
minimum amount of additional withholding required by applicable
federal and state income tax and payroll laws, including payment
of such taxes through delivery of Stock or by withholding Stock
to be issued under the Option, as provided in Section 16. |
|
|
b) Incentive Stock Options. In the event that an
Option Holder makes a disposition (as defined in
section 424(c) of the Code) of any Stock acquired pursuant
to the exercise of an Incentive Stock Option prior to the later
of (i) the expiration of two years from the date on which
the Incentive Stock Option was granted or (ii) the
expiration of one year from the date on which the Option was
exercised, the Participant shall send written notice to the
Company at its principal office (Attention: Corporate Secretary)
of the date of such disposition, the number of shares disposed
of, the amount of proceeds received from such disposition, and
any other information relating to such disposition as the
Company may reasonably request. The Option Holder shall, in the
event of such a disposition, make appropriate arrangements with
the Company to provide for the amount of additional withholding,
if any, required by applicable Federal and state income tax laws. |
|
|
|
(i) Adjustment of Options. Subject to the
limitations set forth below and those contained in
Sections 6 and 14, the Committee may make any
adjustment in the Option Exercise Price, the number of Shares
subject to, or the terms of, an outstanding Option and a
subsequent granting of an Option by amendment or by substitution
of an outstanding Option. Such amendment, substitution, or
re-grant may result in terms and conditions (including Option
Exercise Price, number of Shares covered, vesting schedule or
exercise period) that differ from the terms and conditions of
the original Option. The Committee may not, however, adversely
affect the rights of any Option Holder to previously granted
Options without the consent of such Option Holder. If such
action is affected by the amendment, the effective date of such
amendment shall be the date of the original grant. Any
adjustment, modification, extension or renewal of an Option
shall be effected such that the Option is either exempt from, or
is compliant with, Code section 409A. |
6.03 Stockholder Privileges. No Holder shall have
any rights as a stockholder with respect to any Shares covered
by an Option until the Holder becomes the holder of record of
such Stock, and no adjustments shall be made for dividends or
other distributions or other rights as to which there is a
record date preceding the date such Holder becomes the holder of
record of such Stock, except as provided in Section 4.
44
|
|
VII. |
STOCK APPRECIATION RIGHTS |
7.01 Grant of SARs. Subject to the terms and
conditions of this Plan, a SAR may be granted to a Participant
at any time and from time to time as shall be determined by the
Committee in its sole discretion. The Committee may grant
Freestanding SARs or Tandem SARs, or any combination thereof.
|
|
|
(a) Number of Shares. The Committee shall have
complete discretion to determine the number of SARs granted to
any Participant, subject to the limitations imposed in this Plan
and by applicable law. |
|
|
(b) Exercise Price and Other Terms. The Committee,
subject to the provisions of this Plan, shall have complete
discretion to determine the terms and conditions of SARs granted
under this Plan. The exercise price per Share of Tandem SARs
shall equal the exercise price per Share of the related Option.
In no event shall a SAR granted to a Section 16 Person
become exercisable until at least six (6) months after the
Date of Grant or such shorter period as may be permissible while
maintaining compliance with
Rule 16b-3. |
7.02 SAR Award Agreement. Each SAR granted under the
Plan shall be evidenced by a written SAR Award Agreement which
shall be entered into by the Company and the Participant to whom
the SAR is granted (the SAR Holder), and which shall
specify the exercise price per share, the terms of the SAR, the
conditions of exercise, and such other terms and conditions as
the Committee in its sole discretion shall determine.
7.03 Exercise of Tandem SARs. Tandem SARs may be
exercised for all or part of the Shares subject to the related
Option upon the surrender of the right to exercise the
equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related
Option is then exercisable. With respect to a Tandem SAR granted
in connection with an Incentive Stock Option: (a) the
Tandem SAR shall expire no later than the expiration of the
underlying Incentive Stock Option; (b) the value of the
payout with respect to the Tandem SAR shall be for no more than
one hundred percent (100%) of the difference between the
Exercise Price per Share of the underlying Incentive Stock
Option and the Fair Market Value per Share of the Shares subject
to the underlying Incentive Stock Option at the time the Tandem
SAR is exercised; and (c) the Tandem SAR shall be
exercisable only when the Fair Market Value per Share of the
Shares subject to the Incentive Stock Option exceeds the per
share Option Price per Share of the Incentive Stock Option.
7.04 Exercise of Freestanding SARs. Freestanding
SARs shall be exercisable on such terms and conditions as the
Committee in its sole discretion shall determine; provided,
however, that no Freestanding SAR granted to a Section 16
Person shall be exercisable until at least six (6) months
after the Date of Grant or such shorter period as may be
permissible while maintaining compliance with
Rule 16b-3.
7.05 Expiration of SARs. A SAR granted under this
Plan shall expire on the date set forth in the SAR Award
Agreement, which date shall be determined by the Committee in
its sole discretion. Unless otherwise specifically provided for
in the SAR Award Agreement, a Freestanding SAR granted under
this Plan shall terminate according to the same rules under
which a Nonqualified Stock Option would terminate in the event
of a SAR Holders termination of employment, death or
Disability as provided for in the SAR Award Agreement. Unless
otherwise specifically provided for in the SAR Award agreement,
a Tandem SAR granted under this Plan shall be exercisable at
such time or times and only to the extent that the related
Option is exercisable. The Tandem SAR shall terminate and no
longer be exercisable upon the termination or exercise of the
related Options, except that Tandem SARs granted with respect to
less than the full number of shares covered by a related Option
shall not be reduced until the exercise or termination of the
related Option exceeds the number of Shares not covered by the
SARs.
7.06 Payment of SAR Amount. Upon exercise of a SAR,
a Holder shall be entitled to receive payment from the Company
in an amount determined by multiplying (i) the positive
difference between the Fair Market Value of a Share on the date
of exercise over the exercise price per Share by (ii) the
number of Shares with respect to which the SAR is exercised. The
payment upon a SAR exercise may be
45
in whole Shares of equivalent value, cash, or a combination of
whole Shares and cash. Fractional Shares shall be rounded down
to the nearest whole Share.
|
|
VIII. |
AWARDS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS |
8.01 Restricted Stock Awards Granted by Committee.
Coincident with or following designation for participation in
the Plan and subject to the terms and provisions of the Plan,
the Committee, at any time and from time to time, may grant
Restricted Stock to any Service Provider in such amounts as the
Committee shall determine.
8.02 Restricted Stock Unit Awards Granted by
Committee. Coincident with or following designation for
participation in the Plan and subject to the terms and
provisions of the Plan, The Committee may grant a Service
Provider Restricted Stock Units, in connection with or separate
from a grant of Restricted Stock. Upon the vesting of Restricted
Stock Units, the Holder shall be entitled to receive the full
value of the Restricted Stock Units payable in either Shares or
cash.
8.03 Restrictions. A Holders right to retain
Shares of Restricted Stock or be paid with respect to Restricted
Stock Units shall be subject to such restrictions, including but
not limited to, him or her continuing to perform as a Service
Provider for a restriction period specified by the Committee, or
the attainment of specified performance goals and objectives, as
may be established by the Committee with respect to such Award.
The Committee may in its sole discretion require different
periods of service or different performance goals and objectives
with respect to (i) different Holders, (ii) different
Restricted Stock or Restricted Stock Unit Awards, or
(iii) separate, designated portions of the Shares
constituting a Restricted Stock Award. Any grant of Restricted
Stock or Restricted Stock Units shall contain terms such that
the Award is either exempt from Code section 409A or
complies with such section.
8.04 Privileges of a Stockholder, Transferability. Unless
otherwise provided in the Award Agreement, a Participant shall
have all voting, dividend, liquidation and other rights with
respect to Shares of Restricted Stock, provided however that any
dividends paid on Shares of Restricted Stock prior to such
Shares becoming vested shall be held in escrow by the Company
and subject to the same restrictions on transferability and
forfeitability as the underlying Shares of Restricted Stock. Any
voting, dividend, liquidation or other rights shall accrue to
the benefit of a Holder only with respect to Shares of
Restricted Stock held by, or for the benefit of, the Holder on
the record date of any such dividend or voting date. A
Participants right to sell, encumber or otherwise transfer
such Restricted Stock shall, in addition to the restrictions
otherwise provided for in the Award Agreement, be subject to the
limitations of Section 12.2 hereof. The Committee may
determine that a Holder of Restricted Stock Units is entitled to
receive dividend equivalent payments on such units. If the
Committee determines that Restricted Stock Units shall receive
dividend equivalent payments, such feature will be specified in
the applicable Award Agreement. Restricted Stock Units shall not
have any voting rights.
8.05 Enforcement of Restrictions. The Committee may in
its sole discretion require one or more of the following methods
of enforcing the restrictions referred to in Section 8.2
and 8.3:
|
|
|
(a) placing a legend on the stock certificates, or the
Restricted Stock Unit Award Agreement, as applicable, referring
to restrictions; |
|
|
(b) requiring the Holder to keep the stock certificates,
duly endorsed, in the custody of the Company while the
restrictions remain in effect; |
|
|
(c) requiring that the stock certificates, duly endorsed,
be held in the custody of a third party nominee selected by the
Company who will hold such Shares of Restricted Stock on behalf
of the Holder while the restrictions remain in effect; or |
|
|
(d) inserting a provision into the Restricted Stock Award
Agreement prohibiting assignment of such Award Agreement until
the terms and conditions or restrictions contained therein have
been satisfied or released, as applicable. |
46
8.06 Termination of Service, Death, Disability, etc. In
the event of the death or Disability of a Participant, all
service period and other restrictions applicable to Restricted
Stock Awards then held by him or her shall lapse, and such
Awards shall become fully nonforfeitable. Subject to
Section 11, in the event a Participant ceases to be a
Service Provider for any other reason, any Restricted Stock
Awards as to which the service period or other vesting
conditions for have not been satisfied shall be forfeited.
|
|
IX. |
PERFORMANCE SHARES AND PERFORMANCE UNITS |
9.01 Awards Granted by Committee. Coincident with or
following designation for participation in the Plan, a
Participant may be granted Performance Shares or Performance
Units.
9.02 Amount of Award. The Committee shall establish a
maximum amount of a Holders Award, which amount shall be
denominated in Shares in the case of Performance Shares or in
dollars in the case of Performance Units.
9.03 Communication of Award. Written notice of the
maximum amount of a Holders Award and the Performance
Period determined by Committee shall be given to a Participant
as soon as practicable after approval of the Award by the
Committee.
9.04 Amount of Award Payable. The Committee shall
establish maximum and minimum performance targets to be achieved
during the applicable Performance Period. Performance targets
established by the Committee shall relate to corporate, group,
unit or individual performance and may be established in terms
of (i) specified levels of earnings per share from
continuing operations, (ii) operating income,
(iii) revenues, (iv) gross margin, (v) return on
operating assets (whether all assets or designated assets),
(vi) return on equity, (vii) economic value added,
(viii) stock price appreciation, (ix) total
stockholder return (measured in terms of stock price
appreciation and dividend growth), (x) net income,
(xi) debt reduction, (xii) cost control, or
(xiii) such other measures or standards determined by the
Committee. Multiple performance targets may be used and the
components of multiple performance targets may be given the same
or different weighting in determining the amount of an Award
earned, and may relate to absolute performance or relative
performance measured against other groups, units, individual or
entities. Achievement of the maximum performance target shall
entitle the Holder to payment (subject to Section 9.6) at
the full or maximum amount specified with respect to the Award:
provided, however, that notwithstanding any other provisions of
this Plan, in the case of an Award of Performance Shares the
Committee in its discretion may establish an upper limit on the
amount payable (whether in cash or Stock) as a result of the
achievement of the maximum performance target. The Committee may
also establish that a portion of a full or maximum amount of a
Holders Award will be paid (subject to Section 9.6)
for performance which exceeds the minimum performance target but
falls below the maximum performance target applicable to such
Award.
9.05 Adjustments. At any time prior to payment of a
Performance Share or Performance Unit Award, the Committee may
adjust previously established performance targets or other terms
and conditions to reflect events such as changes in law,
regulations, or accounting practice, or mergers acquisitions or
divestitures.
9.06 Payment of Awards. Following the conclusion of each
Performance Period, the Committee shall determine the extent to
which performance targets have been attained, and the
satisfaction of any other terms and conditions with respect to
an Award relating to such Performance Period. The Committee
shall determine what, if any, payment is due with respect to an
Award and whether such payment shall be made in cash, Stock or
some combination. Payment shall be made in a lump sum, as
determined by the Committee, commencing as promptly as
practicable following the end of the applicable Performance
Period, subject to such terms and conditions and in such forms
as may be prescribed by the Committee. All Awards shall be paid
no later than March 15th of the Plan Year following
the Plan Year in which the Committee determines that a
Participant is entitled to receive the performance award.
9.07 Termination of Employment. If a Participant ceases
to be a Service Provider for any reason other than having been
terminated for Cause after the end of a Performance Period yet
before receiving
47
payment as provided for in Section 9.6, the Holder (or the
Holders Beneficiaries) shall be entitled to receive the
full amount payable as soon as practicable after such amount has
been determined by the Committee. If a Holder ceases to be a
Service Provider before the end of a Performance Period by
reason of his or her death or Disability, the Performance Period
for such Holder for the purpose of determining the amount of the
Award payable shall end at the end of the calendar quarter
immediately preceding the date on which such Holder ceased to be
a Service Provider. The amount of an Award payable to a Holder
to whom the preceding sentence is applicable shall be paid at
the end of the Performance Period and shall be that fraction of
the Award computed pursuant to the preceding sentence the
numerator of which is the number of calendar quarters during the
Performance Period during all of which said Holder was a Service
Provider and the denominator of which is the number of full
calendar quarters in the Performance Period. In the event a
Holder is terminated as a Service Provider for Cause, either
before the end of the Performance Period or after the end of the
Performance Period but prior to the amount of the Award having
been paid, the Holders participation in the Plan shall
cease, all outstanding Awards of Performance Shares or
Performance Units to such Participant and any right to receive
the payment for any Awards (whether or not any Performance
Period has been completed) shall be canceled.
Subject to the terms of the Plan, the Committee may grant Bonus
Shares to any Participant in such amount and upon such terms and
at any time and from time to time as shall be determined by the
Committee. The Committee may grant such Bonus Shares in
connection with or pursuant to another Company-sponsored
compensation plan or program.
|
|
XI. |
REORGANIZATION, CHANGE IN CONTROL OR LIQUIDATION |
Except as otherwise provided in an Award Agreement or other
agreement approved by the Committee to which any Participant is
a party, in the event that (i) the Company undergoes a
Change in Control and (ii) a Participant resigns for Good
Reason or the Company terminates the Participants
employment other than for cause, each Option, share of
Restricted Stock and/or other Award shall without regard to any
vesting schedule, restriction or performance target,
automatically become fully exercisable, fully vested or fully
payable, as the case may be, as of the date of such termination
of employment; provided, however, to the extent required by Code
section 409A, if the Participant was a specified
employee as defined under Code section 409A as of the
time of such Participants separation from service, no
share of Restricted Stock or other Award shall become payable
until six months and one day from the effective date of such
Participants separation from service. In addition to the
foregoing, in the event the Company undergoes a Change in
Control or in the event of a corporate merger, consolidation,
major acquisition of property (or stock), separation,
reorganization or liquidation in which the Company is a party
and in which a Change in Control does not occur, the Committee,
or the board of directors of any corporation assuming the
obligations of the Company, shall have the full power and
discretion to prescribe and amend the terms and conditions for
the exercise, or modification, of any outstanding Awards granted
hereunder. The Committee may remove restrictions on Restricted
Stock and Restricted Stock Units and may modify the performance
requirements for any other Awards. The Committee may provide
that Options or other Awards granted hereunder must be exercised
in connection with the closing of such transactions, and that if
not so exercised such Awards will expire. Any such
determinations by the Committee may be made generally with
respect to all Participants, or may be made on a case-by-case
basis with respect to particular Participants. Notwithstanding
the foregoing, any transaction undertaken for the purpose of
reincorporating the Company under the laws of another
jurisdiction, if such transaction does not materially affect the
beneficial ownership of the Companys capital stock, such
transaction shall not constitute a merger, consolidation, major
acquisition of property for stock, separation, reorganization,
liquidation, or Change in Control.
48
|
|
XII. |
RIGHTS OF EMPLOYEES; PARTICIPANTS |
12.01 Employment. Nothing contained in the Plan or in any
Award granted under the Plan shall confer upon any Participant
any right with respect to the continuation of his or her
services as a Service Provider or interfere in any way with the
right of the Company, subject to the terms of any separate
employment or consulting agreement to the contrary, at any time
to terminate such services or to increase or decrease the
compensation of the Participant from the rate in existence at
the time of the grant of an Award. Whether an authorized leave
of absence, or absence in military or government service, shall
constitute a termination of Participants services as a
Service Provider shall be determined by the Committee at the
time.
12.02 Nontransferability. Except as provided in
Section 12.3, no right or interest of any Holder in an
Award granted pursuant to the Plan shall be assignable or
transferable during the lifetime of the Participant, either
voluntarily or involuntarily, or be subjected to any lien,
directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event of a Participants death, a
Holders rights and interests in all Awards shall, to the
extent not otherwise prohibited hereunder, be transferable by
testamentary will or the laws of descent and distribution, and
payment of any amounts due under the Plan shall be made to, and
exercise of any Options or SARs may be made by, the
Holders legal representatives, heirs or legatees. If, in
the opinion of the Committee, a person entitled to payments or
to exercise rights with respect to the Plan is disabled from
caring for his or her affairs because of a mental condition,
physical condition or age, payment due such person may be made
to, and such rights shall be exercised by, such persons
guardian, conservator, or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the
Committee of such status. Transfers shall not be
deemed to include transfers to the Company or cashless
exercise procedures with third parties who provide
financing for the purpose of (or who otherwise facilitate) the
exercise of Awards consistent with applicable laws and the
authorization of the Committee.
12.03 Permitted Transfers. Pursuant to conditions and
procedures established by the Committee from time to time, the
Committee may permit Awards to be transferred to, exercised by
and paid to certain persons or entities related to a
Participant, including but not limited to members of the
Participants immediate family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial
owners are members of the Participants immediate family
and/or charitable institutions (a Permitted
Transferee). In the case of initial Awards, at the request
of the Participant, the Committee may permit the naming of the
related person or entity as the Award recipient. Any permitted
transfer shall be subject to the condition that the Committee
receive evidence satisfactory to it that the transfer is being
made for estate and/or tax planning purposes on a gratuitous or
donative basis and without consideration (other than nominal
consideration). Notwithstanding the foregoing, Incentive Stock
Options shall only be transferable to the extent permitted in
section 422 of the Code, or such successor provision
thereto, and the treasury regulations thereunder.
|
|
XIII. |
GENERAL RESTRICTIONS |
13.01 Investment Representations. The Company may require
any person to whom an Option or other Award is granted, as a
condition of exercising such Option or receiving Stock under the
Award, to give written assurances in substance and form
satisfactory to the Company and its counsel to the effect that
such person is acquiring the Stock subject to the Option or the
Award for his own account for investment and not with any
present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or
appropriate in order to comply with federal and applicable state
securities laws. Legends evidencing such restrictions may be
placed on the certificates evidencing the Stock.
13.02 Compliance with Securities Laws.
|
|
|
(a) Each Award shall be subject to the requirement that, if
at any time counsel to the Company shall determine that the
listing, registration or qualification of the Shares subject to
such Award upon |
49
|
|
|
any securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body,
is necessary as a condition of, or in connection with, the
issuance or purchase of Shares thereunder, such Award may not be
accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Company to apply
for or to obtain such listing, registration or qualification. |
|
|
(b) Each Holder who is a director or an Executive Officer
is restricted from taking any action with respect to any Award
if such action would result in a (i) violation of
Section 306 of the Sarbanes-Oxley Act of 2002, and the
regulations promulgated thereunder, whether or not such law and
regulations are applicable to the Company, or (ii) any
policies adopted by the Company restricting transactions in the
Stock. |
13.03 Stock Restriction Agreement. The Committee may
provide that Shares issuable upon the exercise of an Option
shall, under certain conditions, be subject to restrictions
whereby the Company has (i) a right of first refusal with
respect to such shares, (ii) specific rights or limitations
with respect to the Participants ability to vote such
shares, or (iii) a right or obligation to repurchase all or
a portion of such shares, which restrictions may survive a
Participants cessation or termination as a Service
Provider.
|
|
XIV. |
OTHER EMPLOYEE BENEFITS |
The amount of any compensation deemed to be received by a
Participant as a result of the exercise of an Option or the
grant, payment or vesting of any other Award shall not
constitute earnings with respect to which any other
benefits of such Participant are determined, including without
limitation benefits under (a) any pension, profit sharing,
life insurance or salary continuation plan or other employee
benefit plan of the Company or (b) any agreement between
the Company and the Participant, except as such plan or
agreement shall otherwise expressly provide.
|
|
XV. |
PLAN AMENDMENT, MODIFICATION AND TERMINATION |
15.01 Amendment, Modification, and Termination. The Board
may at any time terminate, and from time to time may amend or
modify, the Plan; provided, however, that no amendment or
modification may become effective without approval of the
amendment or modification by the stockholders if stockholder
approval is required to enable the Plan to satisfy any
applicable statutory or regulatory requirements, to comply with
the requirements for listing on any exchange where the Shares
are listed, or if the Company, on the advice of counsel,
determines that stockholder approval is otherwise necessary or
desirable.
15.02 Adjustment Upon Certain Unusual or Nonrecurring
Events. The Board may make adjustments in the terms and
conditions of Awards in recognition of unusual or nonrecurring
events (including the events described in Section 4.3)
affecting the Company or the financial statements of the Company
or of changes in applicable laws, regulations, or accounting
principles, whenever the Board determines that such adjustments
are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available
under the Plan.
15.03 Awards Previously Granted. Notwithstanding any
other provision of the Plan to the contrary (but subject to
Section 2.1(i) and Section 15.2), no termination,
amendment or modification of the Plan shall adversely affect in
any material way any Award previously granted under the Plan,
without the written consent of the Holder of such Award.
16.01 Withholding Requirement. The Companys
obligations to deliver Shares upon the exercise of an Option, or
upon the vesting of any other Award, shall be subject to the
Holders satisfaction of all applicable federal, state and
local income and other tax withholding requirements.
16.02 Withholding with Stock. At the time the Committee
grants an Award, it may, in its sole discretion, grant the
Holder an election to pay all minimum required amounts of tax
withholding, or any
50
part thereof, by electing to transfer to the Company, or to have
the Company withhold from Shares otherwise issuable to the
Holder, Shares (which have been held by the Participant for more
than six (6) months in the case of a transfer of currently
owned shares) having a value equal to the minimum amount
required to be withheld under federal, state or local law or
such lesser amount as may be elected by the Holder. All
elections shall be subject to the approval or disapproval of the
Committee. The value of Shares to be withheld shall be based on
the Fair Market Value of the Stock on the date that the amount
of tax to be withheld is to be determined (the Tax
Date), as determined by the Committee. Any such elections
by Holder to have Shares withheld for this purpose will be
subject to the following restrictions:
|
|
|
(a) All elections must be made prior to the Tax Date; |
|
|
(b) All elections shall be irrevocable; and |
|
|
(c) If the Holder is an officer or director of the Company
within the meaning of Section 16 of the 1934 Act
(Section 16), the Holder must satisfy the
requirements of such Section 16 and any applicable rules
thereunder with respect to the use of Stock to satisfy such tax
withholding obligation. |
|
|
XVII. |
SECTION 162(m) PROVISIONS |
17.01 Limitations. Notwithstanding any other provision of
this Plan, if the Committee determines at the time any Award is
granted to a Participant that such Participant is, or is likely
to be at the time he or she recognizes income for federal income
tax purposes in connection with such Award, a Covered Employee,
then the Committee may provide that this Section 17 is
applicable to such Award.
17.02 Performance Goals. If an Award is subject to this
Section 17, then the lapsing of restrictions thereon and
the distribution of cash, Shares or other property pursuant
thereto, as applicable, shall be subject to the achievement of
one or more objective performance goals established by the
Committee, which shall be based on the attainment of one or any
combination of the following:
|
|
|
(a) Earnings (either in the aggregate or on a per-Share
basis); |
|
|
(b) Growth or rate of growth in earnings (either in the
aggregate or on a per-Share basis); |
|
|
(c) Net income or loss (either in the aggregate or on a
per-Share basis); |
|
|
(d) Cash flow provided by operations, either in the
aggregate or on a per-Share basis; |
|
|
(e) Growth or rate of growth in cash flow (either in the
aggregate or on a per-Share basis); |
|
|
(f) Free cash flow (either in the aggregate on a per-Share
basis); |
|
|
(g) Reductions in expense levels, determined either on a
Corporation-wide basis or in respect of any one or more business
units; |
|
|
(h) Operating and maintenance cost management and employee
productivity; |
|
|
(i) Stockholder returns (including return on assets,
investments, equity, or gross sales); |
|
|
(j) Return measures (including return on assets, equity, or
sales); |
|
|
(k) Growth or rate of growth in return measures (including
return on assets, equity, or sales); |
|
|
(l) Share price (including attainment of a specified
per-Share price during the Incentive Period; growth measures and
total stockholder return or attainment by the Shares of a
specified price for a specified period of time); |
|
|
(m) Strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market share,
market penetration, geographic business expansion goals,
objectively identified project milestones, production volume
levels, cost targets, and goals relating to acquisitions or
divestitures; and/or |
51
|
|
|
(n) Achievement of business or operational goals such as
market share and/or business development; |
|
|
|
provided that applicable incentive goals may be applied on a
pre-or post-tax basis; and provided further that the Committee
may, when the applicable incentive goals are established,
provide that the formula for such goals may include or exclude
items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the
cumulative effect of accounting changes, acquisitions or
divestitures, foreign exchange impacts and any unusual,
nonrecurring gain or loss. In addition to the foregoing
performance goals, the performance goals shall also include any
performance goals which are set forth in the Companys
Executive Annual Incentive Plan, if any, which has been approved
by the Companys stockholders, which are incorporated
herein by reference. Such performance goals shall be set by the
Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, section 162(m)
of the Code and the regulations thereunder. |
17.03 Adjustments. Notwithstanding any provision of the
Plan other than Section 4.3 or Section 11, with
respect to any Award that is subject to Section 17, the
Committee may not adjust upwards the amount payable pursuant to
such Award, nor may it waive the achievement of the applicable
performance goals except in the case of the death or disability
of the Participant.
17.04 Other Restrictions. The Committee shall have the
power to impose such other restrictions on Awards subject to
this Section 17 as it may deem necessary or appropriate to
insure that such Awards satisfy all requirements for
performance-based compensation within the meaning of
section 162(m)(4)(B) of the Code or any successor thereto.
XVIII. NONEXCLUSIVITY OF THE
PLAN
18.01 Neither the adoption of the Plan by the Board nor the
submission of the Plan to stockholders of the Company for
approval shall be construed as creating any limitations on the
power or authority of the Board to continue to maintain or adopt
such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary
or desirable or preclude or limit the continuation of any other
plan, practice or arrangement for the payment of compensation or
fringe benefits to employees, or non-employee directors
generally, or to any class or group of employees, or
non-employee directors, which the Company now has lawfully put
into effect, including, without limitation, any retirement,
pension, savings and stock purchase plan, insurance, death and
disability benefits and executive short-term incentive plans.
XIX. REQUIREMENTS OF LAW
19.01 Requirements of Law. The issuance of Stock and the
payment of cash pursuant to the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by
any governmental agencies or stock exchanges as may be required.
Notwithstanding any provision of the Plan or any Award, Holders
shall not be entitled to exercise, or receive benefits under any
Award, and the Company shall not be obligated to deliver any
Shares or other benefits to a Holder, if such exercise or
delivery would constitute a violation by the Holder or the
Company of any applicable law or regulation.
19.02 Code Section 409A. In the event that any
provision of this Plan shall be determined to contravene Code
section 409A, the regulations promulgated thereunder,
regulatory interpretations or announcements with respect to
section 409A or applicable judicial decisions construing
section 409A, any such provision shall be void and have no
effect. Moreover, this Plan shall be interpreted at all times in
such a manner that the terms and provisions of the Plan comply
with Code section 409A, the regulations promulgated
thereunder, regulatory interpretations or announcements with
respect to section 409A and applicable judicial decisions
construing section 409A.
19.03
Rule 16b-3.
Transactions under the Plan and to the extent even applicable,
within the scope of
Rule 16b-3 are
intended to comply with all applicable conditions of
Rule 16b-3. To the
extent any
52
provision of the Plan or any action by the Committee under the
Plan fails to so comply, such provision or action shall, without
further action by any person, be deemed to be automatically
amended to the extent necessary to effect compliance with
Rule 16b-3;
provided, however, that if such provision or action cannot be
amended to effect such compliance, such provision or action
shall be deemed null and void to the extent permitted by law and
deemed advisable by the Committee.
19.04 Governing Law. The Plan and all agreements
hereunder shall be construed in accordance with and governed by
the laws of the State of Delaware without giving effect to the
principles of the conflict of laws to the contrary.
53
|
|
|
|
|
|
|
|
|
+ |
Euronet Worldwide, Inc.
|
|
|
|
|
|
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
|
000004
Least Address Line |
|
|
|
|
|
|
|
|
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
C 1234567890 J N T
|
|
|
o |
|
Mark this box with an X if you have
made changes to your name or address details
above. |
Annual Meeting Proxy Card
1. The Board of Directors recommends a vote FOR the listed nominees as Class III directors.
|
|
|
|
|
|
|
For
|
|
Withhold
|
01
Thomas A. McDonnell |
|
o
|
|
o
|
02
Paul S. Althasen |
|
o
|
|
o
|
03
Daniel R. Henry |
|
o
|
|
o
|
The Board of Directors recommends a vote FOR the following proposals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
2.
|
To
approve an amendment to the Companys Certificate of Incorporation increasing the total
number of authorized shares of common stock of the Company, par
value $0.02, from 60,000,000 to 90,000,000 shares.
|
|
o
|
|
o
|
|
o
|
|
5.
|
To ratify the appointment of KPMG as independent auditors of the
Company for the year ending December 31, 2006.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
3.
|
To
adopt the Companys 2006 Stock Incentive Plan.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
4.
|
To
adopt the Companys Executive Annual Incentive Plan.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark here if you plan to attend the Annual Meeting. |
|
o
|
D |
Authorized signatures Sign Here This section must be completed for your instructions to be executed. |
Please sign exactly as your name(s) appear(s) on the books of the Company. When
shares of Common Stock are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
Signature 1 Please keep signature
within the box
Signature 2 Please keep signature
within the box
|
|
|
|
|
|
|
n
|
0 0 8 6 0 9 1 |
1 U P X
|
|
C O Y
|
|
+ |
Proxy Euronet Worldwide, Inc.
FOR USE
AT THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EURONET WORLDWIDE, INC. The
undersigned holder of shares of Common Stock of the Company hereby appoints Michael J. Brown,
Chairman of the Board and Chief Executive Officer, or failing him, Jeffrey B. Newman, Executive
Vice President and General Counsel, as proxy for the undersigned to attend, vote, and act for and
on behalf of the undersigned at the annual meeting of stockholders of the Company to be held on
Thursday, May 18, 2006 at 2:00 p.m. (Central time), at Hilton Garden Inn Overland Park, 5800
College Boulevard, Overland Park, Kansas 66211, USA, and at any adjournments thereof (the
Meeting), and hereby revokes any proxy previously given by the undersigned. If the proxy is not
dated, it shall be deemed to be dated on the date on which this proxy was mailed to the Company.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)