The following table shows information regarding contributions by the named executive officers, named in the Summary Compensation TableCompany’s matching contributions, aggregate earnings on contributions during 2004fiscal year 2007, and the year-end value of unexercised options held by suchaggregate balance at year end. There were no distributions from the plan to named executive officers.officers during fiscal year 2007.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Value of Unexercised | |
| | | | | | Number of Unexercised | | | In-The-Money Options | |
| | Shares | | | | | Options at Fiscal Year End | | | At Fiscal Year End(1) | |
| | Acquired on | | | Value | | | | | | | |
| | Exercise(#) | | | Realized | | | Exercisable | | | Unexercisable | | | Exercisable | | | Unexercisable | |
| | | | | | | | | | | | | | | | | | |
John H. Sykes | | | — | | | | — | | | | 1,250,000 | (2) | | | — | | | $ | — | | | $ | — | |
Charles E. Sykes | | | — | | | | — | | | | 153,500 | | | | — | | | $ | 101,500 | | | $ | — | |
W. Michael Kipphut | | | — | | | | — | | | | 235,000 | | | | — | | | $ | 145,500 | | | $ | — | |
James T. Holder | | | — | | | | — | | | | 8,334 | | | | 7,500 | | | $ | 26,293 | | | $ | 4,365 | |
William N. Rocktoff | | | — | | | | — | | | | — | | | | — | | | $ | 29,000 | | | | — | |
James Hobby | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Gerry L. Rogers | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| | Executive
| | | Company
| | | Aggregate
| | | | | | Aggregate
| |
| | Contributions
| | | Contribution
| | | Earnings
| | | Aggregate
| | | Balance at
| |
| | in Last
| | | in Last
| | | in Last
| | | Withdrawals/
| | | Last Fiscal
| |
| | Fiscal Year(1)
| | | Fiscal Year(2)
| | | Fiscal Year
| | | Distributions
| | | Year End(3)
| |
Name | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Charles E. Sykes | | $ | 24,000 | | | $ | 12,000 | | | $ | 572 | | | $ | 0 | | | $ | 96,136 | |
W. Michael Kipphut | | $ | 23,700 | | | $ | 11,850 | | | $ | 20,359 | | | $ | 0 | | | $ | 302,072 | |
Lawrence R. Zingale | | $ | 15,576 | | | $ | 7,788 | | | $ | 296 | | | $ | 0 | | | $ | 19,740 | |
James C. Hobby | | $ | 92,919 | | | $ | 12,000 | | | $ | 5,338 | | | $ | 0 | | | $ | 197,053 | |
David L. Pearson | | $ | 23,689 | | | $ | 11,845 | | | $ | 6,161 | | | $ | 0 | | | $ | 214,473 | |
| | |
(1) | Based upon the closing price of $6.95 per share of common stock on December 31, 2004, as reported | The amounts shown are included in the NASDAQ Stock Market.amounts of “salary” in column (c) of the Summary Compensation Table. |
|
(2) | These options expired unexercised on March 31, 2005. | The amounts shown are included in the amounts of “Other Compensation” in column (i) of the Summary Compensation Table. |
|
(3) | | The amounts shown include 100% of the aggregate executive and Company contributions which have all been reported in the Summary Compensation Table. |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the equity compensation plans under which the equity securities of Sykes may be issued as of December 31, 2007:
| | | | | | | | | | | | |
| | (a) | | | (b) | | | (c) | |
| | | | | | | | Number of Securities
| |
| | Number of
| | | | | | Remaining Available for
| |
| | Securities to be
| | | Weighted Average
| | | Future Issuance Under
| |
| | Issued Upon
| | | Exercise Price of
| | | Equity Compensation
| |
| | Exercise of
| | | Outstanding
| | | Plans (Excluding
| |
| | Options, Warrants
| | | Options, Warrants
| | | Securities Reflected in
| |
| | and Rights | | | and Rights | | | Column (a)) | |
|
Equity compensation plans approved by shareholders(1) | | | 510,391 | | | $ | 13.49 | (2) | | | 6,584,489 | |
Equity compensation plans not approved by shareholders | | | 53,496 | (3) | | | — | | | | N/A | (3) |
Totals | | | 563,887 | | | | — | | | | 6,584,489 | |
| | |
(1) | | Includes shares of common stock of Sykes authorized for awards under the 2001 Equity Incentive Plan as well as the 2000 Stock Option Plan, the 1996 Employee Stock Option Plan, and the 1997 Management Stock Incentive Plan, all of which are predecessor plans to the 2001 Equity Incentive Plan. Also includes shares of common stock of Sykes reserved for issuance under the 1999 Employees’ Stock Purchase Plan, the Amended and Restated 1996 Non-Employee Director Stock Option Plan, the 1996 Non-Employee Director Fee Plan, and the 2004 Non-Employee Director Fee Plan. |
|
(2) | | Represents the weighted average exercise price of stock options only. |
29
25
| | |
(3) | | Represents shares of common stock of Sykes issued as matching grants under the Executive Deferred Compensation Plan for executives described on page 28 above. There is no specific number of shares reserved for issuance under the Executive Deferred Compensation Plan. |
Shares awarded under all of the above plans may be from Sykes’ authorized and unissued shares, treasury shares or shares acquired in the open market. For a summary of the terms of Sykes’ equity compensation plans, see Note 19 of our consolidated financial statements in the Annual Report onForm 10-K incorporated herein by reference.
EMPLOYMENT AGREEMENTSPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The tables below reflect the amount of compensation to each of the named executive officers of the Company in the event of a termination of such executive’s employment. The amount of compensation payable to each named executive officer upon voluntary termination, involuntary not-for-cause termination, termination following a change of control and in the event of a disability or death of the executive is shown below. The amounts shown assume that such termination was effective as of December 31, 2007, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.
Payments Made Upon Termination
Regardless of the manner in which a named executive officer’s employment terminates, he is entitled to receive amounts earned during his term of employment. Depending upon the date of a termination, such amounts may include:
| | |
| • | non-equity incentive compensation earned during the fiscal year; |
|
| • | shares which have vested and for which the restrictions have lapsed under Long-Term Incentive compensation awards; |
|
| • | shares to be issued as a result of the vesting of SARs under Long-Term Incentive compensation awards; |
|
| • | amounts contributed to the Executive Deferred Compensation Plan; and |
|
| • | unused vacation pay. |
Payments Made Upon Termination by the Company Without Cause, or by the Executive with Good Reason
In the event Mr. Sykes’ employment is terminated by the Company prior to the expiration of any renewal period for any reason other than death, disability, or cause (as defined in his employment agreement), or if his employment agreement is terminated by Mr. Sykes prior to the expiration of the renewal period for good reason (as defined below under “Employment Agreements”), the Company is required to pay Mr. Sykes an amount equal to his weekly base salary through the end of the renewal period of the agreement or for 104 weeks, whichever is greater.
In the event Mr. Kipphut’s employment is terminated by the Company prior to the expiration of the any renewal period for any reason other than death, disability, or cause (as defined in his employment agreement), or if his employment agreement is terminated by Mr. Kipphut prior to the expiration of the renewal period for good reason (as defined below under “Employment Agreements”), the Company is required to pay Mr. Kipphut an amount equal to his weekly base salary through the end of the renewal period of the agreement or for 52 weeks, whichever is
30
greater, plus an amount equal to the maximum annual performance bonus he could earn (60% of his annual base salary), which would also be paid over the same period as the other payments.
In the event of the termination by the Company of the employment of any named executive officer other than Mr. Sykes or Mr. Kipphut for any reason other than death, disability or cause, they will be entitled to receive an amount equal to their annual base salary payable over a one year period.
Payments Made Upon Death or Disability
In the event of the death or disability of a named executive officer, in addition to the benefits listed under the heading “Payments Made Upon Termination” above, the named executive officer will receive benefits under the Company’s disability plan or payments under the Company’s life insurance plan, as appropriate. The Company pays for life insurance and accidental death and dismemberment coverage for its executive team in amounts equal to twice the executive’s base salary, up to a maximum of $500,000. The Company also pays for short term disability for its executives with a benefit of 70% of base salary, up to a maximum of $2,500 per week, and long term disability utilizing multiple plans. The base long term disability plan provides for a benefit to the executives of 70% of base salary, up to a maximum of $15,000 per month. The base long term disability plan is supplemented with two personal plans designed to provide the executives with long term disability insurance approximating 75% of covered compensation.
Payments Made Upon a Change of Control
The Company has entered into employment agreements with Mr. Sykes and Mr. Kipphut which contain change of control payment provisions. Pursuant to these provisions, if Mr. Sykes’ or Mr. Kipphut’s employment is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), or if Mr. Sykes or Mr. Kipphut terminate their employment in certain circumstances defined in their respective agreements which constitutes “good reason,” in addition to the benefits listed under the heading “Payments Made Upon Termination”:
| | |
| • | Mr. Sykes will receive: |
| | |
| • | his then current base salary for a period of three years; |
|
| • | an amount determined by multiplying the annual target bonus designated or otherwise indicated for Mr. Sykes in the year such change of control occurs by a factor of three, and paying such amount over a 156-week period; and |
|
| • | all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Sykes. |
| | |
| • | Mr. Kipphut will receive: |
| | |
| • | his then current base salary for a period of two years; |
|
| • | an amount determined by multiplying the annual target bonus designated or otherwise indicated for Mr. Kipphut in the year such change of control occurs by a factor of two, and paying such amount over a 104-week period; and |
|
| • | all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Kipphut. |
31
The named executive officers, other than Mr. Sykes and Mr. Kipphut, do not have change of control provisions in their respective employment agreements, but under various equity incentive agreements, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of the executive in the event of a change in control.
Charles E. Sykes
The following table shows the potential payments upon termination or a change of control of the Company for Charles E. Sykes, the Company’s President and Chief Executive Officer, as if such termination had occurred on December 31, 2007:
| | | | | | | | | | | | | | | | | | | | |
| | Company Initiated | | | Executive Initiated | |
| | Before
| | | After
| | | | | | | | | | |
| | Change in
| | | Change in
| | | | | | | | | | |
| | Control
| | | Control
| | | | | | | | | | |
| | Termination
| | | Termination
| | | | | | Voluntary
| | | | |
| | w/o Cause
| | | w/o Cause
| | | | | | Termination
| | | | |
| | or for Good
| | | or for Good
| | | Voluntary
| | | for “Good
| | | Change in
| |
| | Reason
| | | Reason
| | | Termination
| | | Reason”
| | | Control
| |
Type of Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Severance Pay | | | 1,000,000 | | | | 1,500,000 | | | | 0 | | | | 1,000,000 | | | | 1,500,000 | |
Bonus Payment | | | 0 | | | | 1,125,000 | | | | 0 | | | | 1,125,000 | | | | 1,125,000 | |
Stock Grants Vesting Acceleration | | | 0 | | | | 2,613,582 | | | | 0 | | | | 0 | | | | 2,613,582 | |
Stock Option Vesting Acceleration | | | 0 | | | | 123,598 | | | | 0 | | | | 0 | | | | 123,598 | |
Deferred Compensation Vesting Acceleration | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Payment for Taxes Resulting from Deferred Compensation Distribution | | | 0 | | | | 34,572 | | | | 0 | | | | 0 | | | | 34,572 | |
Total | | | 1,000,000 | | | | 5,396,752 | | | | 0 | | | | 2,125,000 | | | | 5,396,752 | |
32
W. Michael Kipphut
The following table shows the potential payments upon termination or a change of control of the Company for W. Michael Kipphut, the Company’s Senior Vice President and Chief Financial Officer, as if such termination had occurred on December 31, 2007:
| | | | | | | | | | | | | | | | | | | | |
| | Company Initiated | | | Executive Initiated | |
| | Before
| | | After
| | | | | | | | | | |
| | Change in
| | | Change in
| | | | | | | | | | |
| | Control
| | | Control
| | | | | | | | | | |
| | Termination
| | | Termination
| | | | | | Voluntary
| | | | |
| | w/o Cause
| | | w/o Cause
| | | | | | Termination
| | | | |
| | or for Good
| | | or for Good
| | | Voluntary
| | | for “Good
| | | Change in
| |
| | Reason
| | | Reason
| | | Termination
| | | Reason”
| | | Control
| |
Type of Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Severance Pay | | | 368,500 | | | | 737,000 | | | | 0 | | | | 368,500 | | | | 737,000 | |
Bonus Payment | | | 221,100 | | | | 442,200 | | | | 0 | | | | 221,100 | | | | 442,200 | |
Stock Grants Vesting Acceleration | | | 0 | | | | 1,222,902 | | | | 0 | | | | 0 | | | | 1,222,902 | |
Stock Option Vesting Acceleration | | | 0 | | | | 54,418 | | | | 0 | | | | 0 | | | | 54,418 | |
Deferred Compensation Vesting Acceleration | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Payment for Taxes Resulting from Deferred Compensation Distribution | | | 0 | | | | 108,631 | | | | 0 | | | | 0 | | | | 108,631 | |
Total | | | 589,600 | | | | 2,565,151 | | | | 0 | | | | 589,600 | | | | 2,565,151 | |
Lawrence R. Zingale
The following table shows the potential payments upon termination or a change of control of the Company for Lawrence R. Zingale, the Company’s Senior Vice President — Global Sales and Client Management, as if such termination had occurred on December 31, 2007:
| | | | | | | | | | | | | | | | | | | | |
| | Company Initiated | | | Executive Initiated | |
| | Before
| | | After
| | | | | | | | | | |
| | Change in
| | | Change in
| | | | | | | | | | |
| | Control
| | | Control
| | | | | | | | | | |
| | Termination
| | | Termination
| | | | | | Voluntary
| | | | |
| | w/o Cause
| | | w/o Cause
| | | | | | Termination
| | | | |
| | or for Good
| | | or for Good
| | | Voluntary
| | | for “Good
| | | Change in
| |
| | Reason
| | | Reason
| | | Termination
| | | Reason”
| | | Control
| |
Type of Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Severance Pay | | | 305,000 | | | | 305,000 | | | | 0 | | | | 0 | | | | 0 | |
Bonus Payment | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Stock Grants Vesting Acceleration | | | 0 | | | | 690,174 | | | | 0 | | | | 0 | | | | 690,174 | |
Stock Option Vesting Acceleration | | | 0 | | | | 37,204 | | | | 0 | | | | 0 | | | | 37,204 | |
Deferred Compensation Vesting Acceleration | | | 0 | | | | 7,758 | | | | 0 | | | | 0 | | | | 7,758 | |
Payment for Taxes Resulting from Deferred Compensation Distribution | | | 0 | | | | 7,099 | | | | 0 | | | | 0 | | | | 7,099 | |
Total | | | 305,000 | | | | 1,047,235 | | | | 0 | | | | 0 | | | | 742,235 | |
33
James C. Hobby
The following table shows the potential payments upon termination or a change of control of the Company for James C. Hobby, the Company’s Senior Vice President — Global Operations, as if such termination had occurred on December 31, 2007:
| | | | | | | | | | | | | | | | | | | | |
| | Company Initiated | | | Executive Initiated | |
| | Before
| | | After
| | | | | | | | | | |
| | Change in
| | | Change in
| | | | | | | | | | |
| | Control
| | | Control
| | | | | | | | | | |
| | Termination
| | | Termination
| | | | | | Voluntary
| | | | |
| | w/o Cause
| | | w/o Cause
| | | | | | Termination
| | | | |
| | or for Good
| | | or for Good
| | | Voluntary
| | | for “Good
| | | Change in
| |
| | Reason
| | | Reason
| | | Termination
| | | Reason”
| | | Control
| |
Type of Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Severance Pay | | | 305,000 | | | | 305,000 | | | | 0 | | | | 0 | | | | 0 | |
Bonus Payment | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Stock Grants Vesting Acceleration | | | 0 | | | | 796,896 | | | | 0 | | | | 0 | | | | 796,896 | |
Stock Option Vesting Acceleration | | | 0 | | | | 34,012 | | | | 0 | | | | 0 | | | | 34,012 | |
Deferred Compensation Vesting Acceleration | | | 0 | | | | 33,351 | | | | 0 | | | | 0 | | | | 33,351 | |
Payment for Taxes Resulting from Deferred Compensation Distribution | | | 0 | | | | 70,864 | | | | 0 | | | | 0 | | | | 70,864 | |
Total | | | 305,000 | | | | 1,240,123 | | | | 0 | | | | 0 | | | | 935,123 | |
David L. Pearson
The following table shows the potential payments upon termination or a change of control of the Company for David L. Pearson, the Company’s Senior Vice President and Chief Information Officer, as if such termination had occurred on December 31, 2007:
| | | | | | | | | | | | | | | | | | | | |
| | Company Initiated | | | Executive Initiated | |
| | Before
| | | After
| | | | | | | | | | |
| | Change in
| | | Change in
| | | | | | | | | | |
| | Control
| | | Control
| | | | | | | | | | |
| | Termination
| | | Termination
| | | | | | Voluntary
| | | | |
| | w/o Cause
| | | w/o Cause
| | | | | | Termination
| | | | |
| | or for Good
| | | or for Good
| | | Voluntary
| | | for “Good
| | | Change in
| |
| | Reason
| | | Reason
| | | Termination
| | | Reason”
| | | Control
| |
Type of Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Severance Pay | | | 220,000 | | | | 220,000 | | | | 0 | | | | 0 | | | | 0 | |
Bonus Payment | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Stock Grants Vesting Acceleration | | | 0 | | | | 428,346 | | | | 0 | | | | 0 | | | | 428,346 | |
Stock Option Vesting Acceleration | | | 0 | | | | 15,505 | | | | 0 | | | | 0 | | | | 15,505 | |
Deferred Compensation Vesting Acceleration | | | 0 | | | | 30,639 | | | | 0 | | | | 0 | | | | 30,639 | |
Payment for Taxes Resulting from Deferred Compensation Distribution | | | 0 | | | | 77,129 | | | | 0 | | | | 0 | | | | 77,129 | |
Total | | | 220,000 | | | | 771,619 | | | | 0 | | | | 0 | | | | 551,619 | |
34
EMPLOYMENT AGREEMENTS
Charles E. Sykes. The Company and Mr. Sykes are parties to an employment agreement, dated August 1, 2004, theas amended on July 28, 2005 to correct a scrivener’s error, and as amended on January 3, 2006 to change his compensation. The material terms and conditions of whichthe agreement as amended are summarized below. The employment agreement replaced his employment agreement dated January 1, 2004, as amended. Under the agreement, Mr. Sykes serves as President and Chief Executive Officer of the Company. The term of the agreement expiresexpired on July 31, 2007, but was automatically renewed, and will continue to be automatically be renewed, for successive one-year terms unless one of the parties provides written notice of its intent not to renew the agreement at least 180 days prior to the expiration of the initial term or any renewal term. Under the agreement, as amended, Mr. Sykes’ annual base salary will be $375,000, subject to increase at the Company’s discretion.is $500,000. Mr. Sykes also is entitled to a performance bonus of up to 60%75% of his base salary based upon the achievement of specifiedsuch goals as may be determined by the Compensation Committee, and to participate in such other bonus programs and benefit plans as are generally made available to other executive officers of the Company.
If the agreement is terminated by the Company prior to the expiration of the initial term or anya renewal period for any reason other than death, disability, or cause (as defined in the agreement), or if the agreement is terminated by Mr. Sykes prior to the expiration of the initial term or any renewal period for good reason (as defined below), the Company is required to pay Mr. Sykes an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 104 weeks, whichever is greater, and during such period Mr. Sykes is prohibited from soliciting the Company’s employees and competing with the Company in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. If the agreement is terminated by Mr. Sykes following a change in control of the Company (as defined in the agreement) prior to the expiration of the initial term or any renewal period, the Company is required to pay Mr. Sykes an amount equal to his weekly base salary for 156 weeks from the date of termination, rather than 104 weeks, and to pay him an amount determined by multiplying the annual target bonus designated or otherwise indicated for him in the year such change of control occurs by a factor of three, and paying such amount over the 156-week period. Also, in the event the agreement is terminated by Mr. Sykes following a change in control, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Sykes upon the event of termination.
“Good
“Good reason” for Mr. Sykes’ termination of the agreement is defined in the agreement as: (i) a change of control of the Company (as defined in the agreement), (ii) a good faith determination by Mr. Sykes that the Company has breached the employment agreement, (iii) a material adverse change in working conditions or status, (iv) the deletion of, or change in, any of the titles of CEO or President, (v) a significant relocation of Mr. Sykes’ principal office, (vi) a significant increase in travel requirements, or (vii) an impairment of Mr. Sykes’ health to an extent that made the continued performance of his duties under the agreement hazardous to his physical or mental health or his life.
The agreement provides that if Mr. Sykes’ employment is terminated by the Company due to his death, disability or for cause, or voluntarily by Mr. Sykes other than for good reason, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, and Mr. Sykes may not solicit any of the Company’s employees or compete directly or indirectly with the Company during the term of the agreement and for a period of one year after its termination, regardless of the reason for its termination. The agreement contains customary confidentiality provisions.
W. Michael Kipphut. The Company and Mr. Kipphut are parties to an employment agreement, dated March 6, 2005, the material terms and conditions of which are summarized below. The employment
26
agreement replaced his employment agreement dated March 6, 2004. The employment agreement provides that Mr. Kipphut will serve as an executive of the Company. Mr. Kipphut serves as Group Executive, Senior Vice President — Finance.Finance and Chief Financial Officer. The initial term of the agreement expiresexpired on March 5,
35
2007, but was automatically renewed, and will continue to be automatically be renewed, for successive one-year terms unless one of the parties provides the other with written notice of its intent not to renew the agreement at least 30 days prior to the expiration of the initial term or anya renewal term. Under the agreement, Mr. Kipphut’s annual base salary is $368,500, subject to increase at the Company’s discretion. Mr. Kipphut also is entitled to a performance bonus up to 60% of his base salary based upon the achievement of specified goals as determined by the Compensation Committee, and to participate in such other bonus programs and benefit plans as are generally made available to other executive officers of the Company.
If the agreement is terminated by the Company prior to the expiration of the initial term or anya renewal period for any reason other than death, disability, or cause (as defined in the agreement), or if the agreement is terminated by Mr. Kipphut prior to the expiration of the initial term or any renewal period for good reason (as defined below), the Company is required to pay Mr. Kipphut an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 52 weeks, whichever is greater, plus an amount equal to the maximum annual performance bonus he could earn (60% of his annual base salary), which would also be paid over the same period as the other payments. If the agreement is terminated by Mr. Kipphut following a change in control of the Company (as defined in the agreement) prior to the expiration of the initial term or any renewal period, the Company is required to pay Mr. Kipphut an amount equal to his weekly base salary for 104 weeks from the date of termination, rather than 52 weeks, plus an amount equal to twice the maximum annual performance bonus he could earn, which would also be paid over the 104-week period. Also, in the event the agreement is terminated by Mr. Kipphut following a change in control, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Kipphut upon the event of termination.
“Good
“Good reason” for Mr. Kipphut’s termination of the agreement is defined in the agreement as: (i) a change of control of the Company (as defined in the agreement), (ii) a good faith determination by Mr. Kipphut that the Company has breached the employment agreement, (iii) a material adverse change in working conditions or status, (iv) the deletion of, or change in, any of the titles of Senior Vice President and Chief Financial Officer, (v) a significant relocation of Mr. Kipphut’s principal office, (vi) a change in reporting such that Mr. Kipphut is required to report to someone other than the CEO, or (vii) a significant increase in travel requirements.
The agreement provides that if Mr. Kipphut’s employment is terminated by the Company due to his death, disability or for cause, or voluntarily by Mr. Kipphut other than for good reason, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination.
The agreement provides that Mr. Kipphut may not solicit any of the Company’s employees or compete directly or indirectly with the Company during the term of the agreement and for one year after its expiration in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. If the agreement is terminated by the Company or Mr. Kipphut prior to the end of its term, regardless of the reason for its termination the non-solicitation and non-competition provisions will remain in effect through the end of the initial term or renewal period or for 52 weeks after termination, whichever is greater. The agreement contains customary confidentiality provisions.
27
Gerry L. Rogers. The Company and Mr. Rogers were parties to an employment agreement, dated March 5, 2004, the material terms and conditions of which are summarized below. The Company and Mr. Rogers terminated the agreement on July 30, 2004, in connection with Mr. Rogers’ voluntary retirement, and entered into a consulting agreement signed on July 27, 2004, which agreement was amended effective February 1, 2005. The material terms and conditions of the consulting agreement are summarized below.
Consulting Agreement. The consulting agreement has an effective date of August 2, 2004, and a term of one year. Either party may terminate the agreement at any time on 60 days prior notice, and the Company may terminate the agreement immediately following a breach by Mr. Rogers. The agreement provides that Mr. Rogers will provide services to the Company as an independent contractor on a project-by-project basis, as assigned by the President. He is to be paid a retained fee of $20,000 per month for which he is to perform 180 hours of work per month, as mutually agreed between the parties. Any hours of work above 180 hours per month will be billed by at the rate of $110.00 per hour worked. During the term of the Agreement and through March 5, 2006, Mr. Rogers is prohibited from soliciting the Company’s employees and competing with the Company anywhere in the world. The agreement contains customary confidentiality provisions.
Employment Agreement. The employment agreement had an initial term of two years, and provided that Mr. Rogers would serve as an executive of the Company. Mr. Rogers served as Group Executive, Senior Vice President and Chief Information Officer. The agreement provided that it would automatically renew for successive one-year terms unless one of the parties provided written notice of its intent not to renew at least 180 days prior to the expiration of the initial term or any renewal term. Under the agreement, Mr. Rogers’ annual base salary was set at not less than $233,991, and he was entitled to a performance bonus of up to 75% of his base salary in accordance with the Company’s standard policy for the payment of performance bonuses, and to standard executive fringe benefits.
The agreement provided that if it was terminated by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company would be required to pay Mr. Rogers an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 52 weeks after the termination of the agreement, whichever is greater, and Mr. Rogers would be prohibited from competing with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. After the end of the initial term or renewal period of the agreement, the Company could discontinue making such payments if it released Mr. Rogers from the restrictions in the noncompetition provision. The agreement provided that if Mr. Rogers’ employment was terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Rogers, then the Company would have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, and Mr. Rogers may not compete with the Company for a period through the end of the initial term or renewal period of the agreement or for 52 weeks following the termination of his employment, whichever is greater. The agreement also provides that, after termination of his employment for any reason, whether by the Company or Mr. Rogers, Mr. Rogers may not solicit the Company’s employees for the longer of (i) the remaining term of the agreement or (ii) a period of one year after termination of his employment. The agreement contained customary confidentiality provisions.
James T. Holder. The Company and Mr. Holder are parties to an employment agreement, dated April 1, 2003, the material terms and conditions of which are summarized below. The employment agreement provides that Mr. Holder will serve as an executive of the Company. Mr. Holder serves as Vice President, General Counsel and Corporate Secretary. The agreement has an initial term expiring September 30, 2005, and automatically renews for successive one-year terms unless one of the parties provides written notice of its
28
intent not to renew at least 180 days prior to the expiration of the initial term or any renewal term. Under the agreement, Mr. Holder’s annual base salary was to be not less than $190,000 through September 30, 2003, and not less than $205,000 from October 1, 2003 through the end of the term of the agreement, and he is entitled to participate in a performance based bonus program ranging from 0% to 25% of his base salary, and to standard executive fringe benefits.
If the agreement is terminated by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Holder an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 52 weeks after the termination of the agreement, whichever is greater, and Mr. Holder may not compete with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. After the end of the initial term or renewal period of the agreement, the Company may discontinue making such payments if it releases Mr. Holder from the restrictions in the noncompetition provision. The agreement also provides that if Mr. Holder’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Holder, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, and Mr. Holder may not compete with the Company for a period through the end of the initial term or renewal period of the agreement or for 52 weeks following the termination of his employment, whichever is greater. The agreement provides that, after termination of his employment for any reason, whether by the Company or Mr. Holder, Mr. Holder may not solicit the Company’s employees for the longer of (i) the remaining term of the agreement or (ii) a period of one year after termination of his employment. The agreement contains customary confidentiality provisions.
James Hobby, Jr.C. Hobby. The Company and Mr. Hobby are parties to an employment agreement, dated January 3, 2005,2, 2007, the material terms and conditions of which are summarized below. The employment agreement provides that Mr. Hobby will serve as an executive of the Company. Mr. Hobby serves as Senior Vice President, Global Operations. The agreement has an initial term expiring January 2, 2007, but will automatically be renewed for successive one-year periods unlesscontinue until terminated by one of the parties provides written notice of its intent not to renew the agreement at least 180 days prior to the expiration of the initial term or any renewal term.parties. Under the agreement, Mr. Hobby’s annual base salary willis to be not be less than $275,000,$305,000, and he is entitled to participate in a performanceperformance-based bonus of upprogram ranging from 0% to 50% of his base salary in accordance with the Company’s standard policy for the payment of performance bonuses, and to standard executive fringe benefits.
36
If the agreement is terminated by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Hobby an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 52 weeks after the termination of the agreement, whichever is greater, and Mr. Hobby may not compete with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. After the end of the initial term or renewal period of the agreement, the Company may discontinue making such payments if it releases Mr. Hobby from the restrictions in the noncompetition provision. The agreement provides that ifIf Mr. Hobby’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Hobby, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination. In any event, Mr. Hobby may not compete with the Company in any area in which the Company’s clients were conducting business during the term of the agreement, or solicit the Company’s employees, for a period of one year after termination of his employment. The agreement also contains customary confidentiality provisions.
Lawrence R. Zingale. The Company and Mr. Zingale are parties to an employment agreement, dated April 10, 2008, the material terms and conditions of which are summarized below. The employment agreement provides that Mr. Zingale will serve as an executive of the Company. Mr. Zingale serves as Senior Vice President, Global Sales and Client Management. The agreement continues until terminated by one of the parties. Under the agreement, Mr. Zingale’s annual base salary is to be not less than $322,000 through the end of the term of the agreement, and he is entitled to participate in a performance based bonus program ranging from 0% to 50% of his base salary, and to standard executive fringe benefits.
If the agreement is terminated by the Company for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Zingale an amount equal to his weekly base salary for 52 weeks after the termination of the agreement. If Mr. Zingale’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Zingale, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination. In any event, Mr. Zingale may not compete with the Company in any area in which the Company’s clients were conducting business during the term of the agreement, or solicit the Company’s employees, for a period of one year after termination of his employment. The agreement also contains customary confidentiality provisions.
David L. Pearson. The Company and Mr. Pearson are parties to an employment agreement, dated September 20, 2005, as amended on October 1, 2007 and January 3, 2008 to change his compensation, the material terms and conditions of which are summarized below The employment agreement provides that Mr. Pearson will serve as an executive of the Company. Mr. Pearson serves as Senior Vice President, Information Technology. The agreement had an initial term which expired on September 19, 2006, but was automatically renewed, and will continue to automatically renew, for successive one-year terms unless one of the parties provides written notice of its intent not to renew at least 180 days prior to the expiration of a renewal term. Under the agreement, Mr. Pearson’s annual base salary is to be not less than $231,000 through the end of the term of the agreement, and he is entitled to participate in a performance based bonus program ranging from 0% to 50% of his base salary, and to standard executive fringe benefits.
If the agreement is terminated by the Company prior to the expiration of the renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Pearson an amount equal to his weekly base salary for 52 weeks after the termination of the agreement, and Mr. Pearson may not compete with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. The agreement also provides that if Mr. Pearson’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Pearson, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, and Mr. HobbyPearson may not compete with the Company for a period through the end of the initial term or renewal period of the agreement or for 52 weeks following the termination of his employment, whichever is greater. The agreement provides that, after termination of his employment for any reason, whether by the Company or Mr. Hobby,Pearson, Mr. HobbyPearson may not solicit the
29
Company’s employees for the
37
longer of (i) the full statedremaining term or renewal period of the agreement or (ii) a period of 52 weeksone year after termination of his employment. The agreement contains customary confidentiality provisions.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation for service as members of either the Board of Directors or any committees of the Board.
2004 Non-Employee Director Fee Plan
In May 2005, the shareholders of the Company approved the 2004 Non-Employee Director Fee Plan (the “2004 Fee Plan”). The Company and Mr. Rocktoff are parties to2004 Fee Plan provides that all new non-employee directors joining the Board will receive an employment agreement, dated April 1, 2003,initial grant of common stock units (“CSUs”) on the material terms and conditionsdate the new director is appointed or elected, the number of which are summarized below. The employment agreement provides that Mr. Rocktoff will serve as an executive of the Company. Mr. Rocktoff serves as Vice President and Corporate Controller. The agreement has an initial term expiring September 30, 2005, but will automatically be renewed for successive one-year periods unless one of the parties provides written notice of its intent notdetermined by dividing a dollar amount to renew the agreement at least 180 days priorbe determined from time to the expiration of the initial term or any renewal term. Under the agreement, Mr. Rocktoff’s annual base salary will not be less than $150,000, and he is entitled to a performance bonus of up to 30% of his base salary in accordance with the Company’s standard policy for the payment of performance bonuses, and to standard executive fringe benefits. Mr. Rocktoff’s annual base salary was increased to $182,000 effective as of April 20, 2004.
If the agreement is terminatedtime by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. RocktoffBoard (initially set at $30,000) by an amount equal to his weekly base salary through110% of the closing price of the Company’s common stock on the date the new director is appointed or elected. The initial grant of CSUs will vest in three equal installments, one-third on the date of each of the following three annual shareholders’ meetings. A CSU is a bookkeeping entry on the Company’s books that records the equivalent of one share of common stock. On the date each CSU vests, the director will become entitled to receive a share of the Company’s common stock and the CSU will be canceled.
Additionally, the 2004 Fee Plan provides that each non-employee director will receive, on the day after the annual meeting, an annual retainer for service as a non-employee director, the amount of which shall be determined from time to time by the Board. Under the 2004 Fee Plan, the annual retainer will be paid 75% in CSUs and 25% in cash. The number of CSUs to be granted under the 2004 Fee Plan will be determined by dividing the amount of the annual retainer by an amount equal to 105% of the closing price for the Company’s common stock on the award date (the day after the annual meeting). The annual grant of CSUs will vest in two equal installments, one-half on the date of each of the following two annual shareholders’ meetings. All CSUs will automatically vest upon the termination of a director’s service as a director, whether by reason of death, retirement, resignation, removal or failure to be reelected at the end of his or her term. Until a CSU vests, the director has none of the rights of a shareholder with respect to the CSU or the common stock underlying the CSU. CSUs are not transferable.
The Compensation and Human Resource Development Committee reviews Board compensation on an annual basis and makes recommendations to the full Board which is responsible for the final determination as to Board compensation. For 2006 and 2007, the Compensation Committee and the Board have established the annual retainer fee for non-employee directors at $50,000. Any non-employee Chairman of the Board receives additional annual cash compensation in the amount of $100,000. The Chairperson of the Audit Committee receives additional annual cash compensation in the amount of $10,000, and the Chairpersons of the Compensation and Human Resource Development Committee and the Nominating and Corporate Governance Committee each receive additional annual cash compensation in the amount of $5,000. The Chairperson of any Special Committee appointed by the Chairman of the Board will receive an additional cash payment of $2,000 at the formation of the Special Committee.
In addition to the initial termgrant of CSUs and the annual retainer, each non-employee director receives a cash payment of $1,250 for each dayhe/she attends committeeand/or board meetings, and a cash payment of $500 for each Board or renewal periodCommittee teleconference that lasts longer than one hour.
In March, 2008, the Compensation and Human Resource Committee recommended to the Board, and the Board adopted, amendments to the 2004 Fee Plan which provided that the initial grant of CSUs to directors joining the Board, as well as annual retainer grants of cash and CSUs, will vest and be earned in equal quarterly installments
38
over the term of the agreement orgrant (three years for 52 weeks afterthe initial grant, and two years for annual grants) instead of being earned at the time of grant. Accordingly, beginning with grants in 2008, unvested and unearned CSUs will not automatically vest upon the termination of the agreement, whichever is greater, and Mr. Rocktoff may not compete with the Company during such period in any area in which the Company’s clients were conducting business during the initial terma director’s service as a director, whether by reason of death, retirement, resignation, removal or any renewal term of the agreement. Afterfailure to be reelected at the end of his or her term.
The following table contains information regarding compensation paid to the initial term or renewal periodnon-employee directors during fiscal year ending December 31, 2007, including cash and restricted stock units.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | |
| | | | | | | | | | | | | | Change in
| | | | | | | |
| | | | | | | | | | | | | | Pension
| | | | | | | |
| | | | | | | | | | | | | | Value and
| | | | | | | |
| | | | | | | | | | | | | | Nonqualified
| | | | | | | |
| | Fees Earned
| | | | | | | | | Non-Equity
| | | Deferred
| | | | | | | |
| | or Paid in
| | | Stock
| | | Option
| | | Incentive Plan
| | | Compensation
| | | All Other
| | | | |
| | Cash
| | | Awards
| | | Awards
| | | Compensation
| | | Earnings
| | | Compensation
| | | Total
| |
Name | | ($)(1) | | | ($)(2) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
Furman P. Bodenheimer, Jr. | | | 24,750 | | | | 92,293 | | | | — | | | | — | | | | — | | | | — | | | | 117,043 | |
Mark C. Bozek | | | 32,500 | | | | 68,256 | | | | — | | | | — | | | | — | | | | — | | | | 100,756 | |
Lt. Gen. Michael DeLong (Ret) | | | 24,750 | | | | 68,256 | | | | — | | | | — | | | | — | | | | — | | | | 93,006 | |
H. Parks Helms | | | 32,750 | | | | 80,274 | | | | — | | | | — | | | | — | | | | — | | | | 113,024 | |
Iain Macdonald | | | 26,500 | | | | 72,677 | | | | — | | | | — | | | | — | | | | — | | | | 99,177 | |
James S. MacLeod | | | 25,000 | | | | 80,443 | | | | — | | | | — | | | | — | | | | — | | | | 105,443 | |
Linda McClintock-Greco, M.D. | | | 23,750 | | | | 68,256 | | | | — | | | | — | | | | — | | | | — | | | | 92,006 | |
William J. Meurer | | | 40,250 | | | | 68,256 | | | | — | | | | — | | | | — | | | | — | | | | 108,506 | |
James K. Murray, Jr. | | | 25,250 | | | | 80,443 | | | | — | | | | — | | | | — | | | | — | | | | 105,693 | |
Paul L. Whiting | | | 127,250 | | | | 68,256 | | | | — | | | | — | | | | — | | | | — | | | | 195,506 | |
| | |
(1) | | Amounts shown include the cash portion ($12,500) of the annual retainer paid to each non-employee director in 2007, as well as all meeting fees paid. The fees earned by Mr. Whiting include $100,000 for service as Chairman of the Board. The fees earned by Mr. Meurer, Mr. Bozek and Mr. Helms include $10,000, $5,000 and $5,000 respectively, for service as a Committee Chair. |
|
(2) | | As required by relevant SEC rules, the amounts shown are the compensation costs recognized by the Company for financial reporting purposes in 2007 for restricted stock unit awards as determined pursuant toShare-Based Payment,SFAS No. 123(R). These compensation costs reflect restricted stock unit awards granted in 2005, 2006 and 2007. See Notes 1 and 23 of the Notes to our Consolidated Financial Statements included in our Annual Report onForm 10-K for the year ended December 31, 2007 for a discussion of the relevant assumptions used in calculating this amount. Each of our non-employee directors received 1,851 restricted stock units as the stock portion of their annual retainer in 2007, with an individual grant date fair value of $35,521. As of December 31, 2007, our non-employee directors held the following number of options and restricted stock units: Furman P. Bodenheimer, Jr. 47,953, Mark C. Bozek 12,953, Lt. Gen. Michael DeLong (Ret) 11,286, H. Parks Helms 20,453, Iain Macdonald 2,953, James S. MacLeod 2,953, Dr. Linda McClintock-Greco 20,453, William J. Meurer 30,453, James K. Murray, Jr. 2,953 and Paul L. Whiting 27,953. |
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SECURITY OWNERSHIP
Security Ownership of Directors and Executive Officers
The following table sets forth the beneficial ownership of the agreement,Company’s common stock as of April 11, 2008, for each director, each executive officer named in the Summary Compensation Table herein, and by all directors and executive officers of the Company may discontinue making such payments if it releases Mr. Rocktoffas a group.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Stock Settled
| | | | | | | |
| | | | | | | | | | | Stock
| | | | | | | |
| | | | | | | | | | | Appreciation
| | | | | | | |
| | | | | | | | Options
| | | Rights
| | | | | | | |
| | | | | | | | Currently
| | | Vested and
| | | Total Stock
| | | Percent of
| |
| | | | | | | | Exercisable or
| | | Vesting
| | | and Stock
| | | Total
| |
| | Common
| | | Common
| | | Exercisable
| | | Within 60
| | | Based
| | | Outstanding
| |
Name | | Stock | | | Stock Units(1) | | | Within 60 Days | | | Days(2) | | | Holdings | | | Stock | |
|
Furman P. Bodenheimer, Jr. | | | 75,336 | | | | 2,027 | | | | 45,000 | | | | 0 | | | | 122,363 | | | | * | |
Mark C. Bozek | | | 6,200 | | | | 2,027 | | | | 10,000 | | | | 0 | | | | 18,227 | | | | * | |
Lt. Gen. Michael DeLong (Ret) | | | 10,200 | | | | 2,027 | | | | 8,333 | | | | 0 | | | | 20,560 | | | | * | |
H. Parks Helms(3) | | | 18,224 | | | | 2,027 | | | | 17,500 | | | | 0 | | | | 37,751 | | | | * | |
Iain Macdonald | | | 11,777 | | | | 2,027 | | | | 0 | | | | 0 | | | | 13,804 | | | | * | |
James S. MacLeod | | | 9,846 | | | | 3,070 | | | | 0 | | | | 0 | | | | 12,916 | | | | * | |
Linda McClintock-Greco, M.D. | | | 18,421 | | | | 2,027 | | | | 17,500 | | | | 0 | | | | 37,948 | | | | * | |
William J. Meurer | | | 44,291 | | | | 2,027 | | | | 27,500 | | | | 0 | | | | 73,818 | | | | * | |
James K. Murray, Jr.(4) | | | 15,346 | | | | 3,070 | | | | 0 | | | | 0 | | | | 18,416 | | | | * | |
Charles E. Sykes(5) | | | 199,210 | | | | 0 | | | | 0 | | | | 4,898 | | | | 204,108 | | | | * | |
Paul L. Whiting(6) | | | 113,096 | | | | 2,027 | | | | 25,000 | | | | 0 | | | | 140,123 | | | | * | |
W. Michael Kipphut(7) | | | 94,684 | | | | 0 | | | | 110,000 | | | | 2,155 | | | | 206,839 | | | | * | |
Lawrence R. Zingale(8) | | | 55,411 | | | | 0 | | | | 0 | | | | 1,472 | | | | 56,883 | | | | * | |
James C. Hobby(9) | | | 53,340 | | | | 0 | | | | 0 | | | | 1,327 | | | | 54,667 | | | | * | |
David L. Pearson(10) | | | 31,553 | | | | 0 | | | | 20,300 | | | | 614 | | | | 52,467 | | | | * | |
All directors and executive officers as a group — 18 persons | | | 805,013 | | | | 22,356 | | | | 309,633 | | | | 9,862 | | | | 1,146,864 | | | | 2.77 | % |
| | |
* | | Less than 1.0% |
|
(1) | | Represents stock settled Common Stock Units granted pursuant to the 2004 Non-Employee Director Fee Plan that will vest within 60 days of the date of this proxy statement. |
|
(2) | | Shares of common stock which may be acquired within sixty days upon the exercise of stock appreciation rights (“SARs”), assuming that the fair market value of a share of the Company’s stock (as defined in the 2001 Equity Incentive Plan) is $17.25 on the date of exercise. The SARs represent the right to receive that number of shares of common stock determined by dividing (i) the total number of shares of stock subject to the SARs being exercised, multiplied by the amount by which the fair market value (as defined in the Plan) of a share of |
40
| | |
| | stock on the day the right is exercised exceeds the fair market value of a share of stock on the date of grant of the SAR, by (ii) the fair market value of a share of stock on the exercise date. |
|
(3) | | Excludes 600 shares held by Mr. Helms’ spouse over which Mr. Helms disclaims beneficial ownership. |
|
(4) | | Excludes 1,000 shares held by a family member in which Mr. Murray disclaims beneficial ownership. |
|
(5) | | Includes 181,159 shares of restricted stock issued as part of the various equity-based, long-term incentive awards and 18,333 shares owned by a trust of which Mr. Sykes is a beneficiary. |
|
(6) | | Includes 113,096 shares owned jointly by Mr. Whiting and other family members. Excludes 300 shares of common stock held by Mr. Whiting’s wife in which Mr. Whiting disclaims beneficial ownership. |
|
(7) | | Includes 92,684 shares of restricted stock issued as part of the various equity-based, long-term incentive awards. |
|
(8) | | Includes 55,411 shares of restricted stock issued as part of the various equity-based, long-term incentive awards. |
|
(9) | | Includes 53,340 shares of restricted stock issued as part of the various equity-based, long-term incentive awards. |
|
(10) | | Includes 31,553 shares of restricted stock issued as part of the various equity-based, long-term incentive awards. |
Security Ownership of Certain Beneficial Owners
As of April 11, 2008, the Company’s records and other information available from outside sources indicated that the restrictionsfollowing shareholders were beneficial owners of more than five percent of the outstanding shares of the Company’s common stock. The information below is as reported in their filings with the noncompetition provision.Securities and Exchange Commission. The agreement provides that if Mr. Rocktoff’s employmentCompany is terminated bynot aware of any other beneficial owner or more than 5% of the Company dueCompany’s common stock.
| | | | | | | | |
| | Amount and Nature of Beneficial Ownership Common Stock |
Name | | Shares | | Percent |
|
John H. Sykes(1) | | | 7,289,924 | | | | 17.73 | |
Wells Fargo & Company(2) | | | 3,583,560 | | | | 8.72 | |
420 Montgomery Street San Francisco, CA 94163 | | | | | | | | |
BlackRock, Inc.(3) | | | 2,887,348 | | | | 7.02 | |
40 East 52nd Street New York, New York, 10022 | | | | | | | | |
| | |
(1) | | Represents shares owned by Mr. John Sykes through Jopar Investments Limited Partnership, a North Carolina limited partnership in which Mr. Sykes is the sole limited partner and the sole shareholder of the limited partnership’s sole general partner. Excludes 7,950 shares owned by Mr. Sykes’ wife, as to which Mr. Sykes disclaims beneficial ownership. Mr. Sykes’ business address is P.O. Box 2044, Tampa, Florida33601-2044. |
|
(2) | | All information is based upon the Schedule 13G filed with the Security and Exchange Commission by Wells Fargo & Company (“Wells Fargo”) on February 4, 2008. Wells Fargo is a parent holding company registered under Section 240 of the Investment Advisors Act of 1940. Wells Fargo filed the Schedule 13G on its own behalf and on behalf of three subsidiaries which are classified as investment advisors, and one subsidiary that is |
41
| | |
| | classified as a bank. Aggregate beneficial ownership reported by Wells Fargo & Company is on a consolidated basis and includes any beneficial ownership separately reported therein by a subsidiary. |
|
(3) | | All information is based upon the Schedule 13G filed with the Security and Exchange Commission by BlackRock, Inc. (“BlackRock”) on February 8, 2008. BlackRock is a parent holding company and a registered investment advisor under Section 240 of the Investment Advisors Act of 1940. BlackRock filed the Schedule 13G on its own behalf, and on behalf of five investment management subsidiaries, all of which are classified as investment advisors. Aggregate beneficial ownership reported by BlackRock is on a consolidated basis and includes any beneficial ownership separately reported therein by a subsidiary. |
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee engaged Deloitte & Touche LLP as the Company’s independent auditors to his death, disability or cause, or voluntarily by Mr. Rocktoff, thenaudit the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date2008 consolidated financial statements of termination, and Mr. Rocktoff may not compete with the Company for a period through the endyear ended December 31, 2008 and the effectiveness of the initial term or renewal periodCompany’s internal control over financial reporting as of December 31, 2008 and express an opinion thereon, and issue an attestation report on management’s assessment of the agreement or for 52 weeks followingeffectiveness of the terminationCompany’s internal control over financial reporting as of his employment, whichever is greater. The agreement provides that, after termination of his employment for any reason, whether byDecember 31, 2008. Although the Company or Mr. Rocktoff, Mr. Rocktoff mayis not solicitrequired to seek shareholder ratification of this appointment, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Audit Committee will reconsider the appointment, but will not be required to engage a different auditing firm.
Representatives of Deloitte & Touche are expected to be present at the Annual Meeting. Those representatives will have the opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote “FOR” this proposal and urges each shareholder to vote “FOR” ratification of the appointment of Deloitte & Touche LLP as the Company’s employees forindependent auditors. Executed and unmarked proxies in the longeraccompanying form will be voted at the Annual Meeting in favor of (i) the full stated term or renewal periodratification.
AUDIT COMMITTEE DISCLOSURE
The Audit Committee is comprised solely of the agreement or (ii) a period of 52 weeks after termination of his employment. The agreement contains customary confidentiality provisions.independent directors and, among other things, is responsible for:
John H. Sykes. On August 2, 2004, John H. Sykes publicly announced his resignation and retirement as Chairman and Chief Executive Officer of the Company. Mr. Sykes founded the Company in September 1977 and served the Company in an executive officer position for 27 years. Mr. Sykes was employed at such time by the Company pursuant to the Amended and Restated Executive Employment Agreement, dated as of October 1, 2001, described below. The employment agreement had an initial term of five years, expiring on October 1, 2006.
As a result of Mr. Sykes’ resignation prior to the end of the initial term of the employment agreement, the Company and Mr. Sykes terminated the employment agreement and entered into a Retirement and Consulting Agreement, dated December 10, 2004, the material terms and conditions of which are summarized below:
| | |
| • | Mr. Sykes’ resignationServing as an employee ofindependent and objective party to monitor the Company was to be effective as of December 31, 2004.Company’s financial reporting process and internal control system. |
|
| • | The Company agreed to allappointment, compensation, and benefits due under his employment agreement through December 31, 2004. |
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| | |
| • | Theoversight of the work of the registered public accounting firm employed by the Company agreed that on(including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or promptly after December 31, 2004, it would pay to Mr. Sykes a lump sum of $1,352,695.51 in base severance pay, which amount is equalissuing an audit report or related work, and each such registered public accounting firm reports directly to the annual base salary payable under his employment agreement for the period from the December 31, 2004, through the termination date of the employment agreement, September 30, 2006.Audit Committee. |
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| • | Because Mr. Sykes relinquished any rights he may have had under the employment agreement to an officeReviewing and secretary for the rest of his life, and the right to continue to be covered as an employee underappraising the Company’s group health insurance policy, as well as other possible benefits associated with continued employment, the Company agreed to pay on or promptly after December 31, 2004, a lump sum of $300,000 to Mr. Sykes.internal auditing function. |
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| • | The Company agreed to pay on or promptly after December 31, 2004, $68,750 for his unused vacation benefits earned through December 31, 2004. |
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| • | Mr. Sykes may exercise his existing stock options in accordance with the terms and conditionsProviding an open avenue of his stock option agreements andcommunication among the Company’s existing stock option plan. |
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| • | Mr. Sykesregistered public accounting firm, financial and his qualified dependents, as determined by the Company, may participatesenior management, those involved in the Company’s health insurance plan at their own expense. |
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| • | The Company will provide Mr. Sykes with a secretaryinternal auditing function, and an office at the Company’s headquarters in Tampa, Florida, to facilitate a reasonable management transition.Board of Directors. |
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During the period from December 31, 2004, through October 1, 2006, the Company will pay Hyde Park Equity, LLC, a limited liability company owned by Mr. Sykes, fees
Policy on Audit Committee Pre-Approval of $150,000, in seven equal quarterly installmentsAudit and Permissible Non-Audit Services of $21,428, for consultingIndependent Auditors
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services to be provided by Mr. Sykes through Hyde Park Equity. In the eventindependent auditors which exceed $50,000. These services may include audit services, audit-related services, tax services and other services. The Chairman of Mr. Sykes’ death priorthe Audit Committee has been given the authority to October 1, 2006,grant pre-approvals, and each such pre-approval is then submitted to the Company shall pay onlyfull Committee at the next meeting for consideration and approval. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a pro rata amountspecific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the quarter in which Mr. Sykes dies, and nothing further shall be owedservices performed to date.
Service Fees Paid to the Independent Registered Public Accounting Firm
The fees charged by Deloitte & Touche LLP for consulting services. For such amount, Hyde Park Equity will cause Mr. Sykes to provide up to 37.5 days of consultingprofessional services per year at the request of the Board of Directors or its Chairman. Such services will include advice dealing with significant business issues and an orderly management transition. Additional days of service will be billed at $2,000 per day. The Company will also reimburse Hyde Park Equity for out of pocket business expenses incurredrendered in connection with providing services toall audit and non-audit related matters for the Company.
Under the retirement and consulting agreement, Mr. Sykes agreed not to compete with the Company for a period fromyears ended December 31, 2004, through October 1, 2006 within the geographic areas where the Company markets its services2007 and products, including but not limited to the continental United States, with certain limited exceptions including a temporary personnel staffing business.
Employment Agreement. The Company and Mr. Sykes were parties to an amended and restated employment agreement, dated October 1, 2001, the material terms and conditions of which are summarized below. The employment agreement provided for an initial term of five years and automatic renewals for successive one-year terms, unless terminated by either party with 180 day’s prior notice. Under the agreement, Mr. Sykes’ initial base salary was set at $550,000 until December 31, 2002, with the base salary increasing2006 were as determined by the Board of Directors. The employment agreement provided that the annual base salary would be increased at least 30% on October 1, 2003, increased by at least another 15% on the fourth anniversary of the agreement (October 1, 2005), and increased by at least another 15% on each bi-annual (i.e. two year) anniversary thereafter. Mr. Sykes was also entitled to performance bonuses as determined by the Compensation Committee and to participate in such bonus programs and other benefit plans as are generally made available to other executive officers of the Company. Additionally, at the end of each fiscal year, the Board of
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Directors, in their discretion, could award Mr. Sykes a bonus based upon his performance during such fiscal year.follows:
Due to the enactment of the Sarbanes-Oxley Act of 2002 in June 2002 and changes in the law related to split dollar life insurance premiums and benefits, the Compensation and Human Resource Development Committee determined in 2002 that it was in the best interest of the Company and Mr. John Sykes for the Company to cease making premium payments on the split dollar insurance policies on Mr. John Sykes’ life, and instead to increase Mr. Sykes’ compensation by an amount equal to those premium payments, grossed up for tax effect. Accordingly, effective January 1, 2003, Mr. Sykes’ base compensation was increased from $550,000 to $792,478, and he was responsible for making all future premium payments on those split dollar life insurance policies. The Company is entitled to recover out of the death benefits payable under the policies an amount equal to the premiums previously paid by the Company.
| | | | | | | | |
| | 2007 | | | 2006 | |
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Audit Fees(1) | | $ | 2,984,332 | | | $ | 3,032,776 | |
Audit-Related Fees(2) | | $ | -0- | | | $ | 34,678 | |
Tax Fees | | $ | -0- | | | $ | -0- | |
All Other Fees(3) | | $ | 101,000 | | | $ | -0- | |
The employment agreement provided that if the agreement was terminated by the Company for any reason other than for cause (as defined therein), death or disability, the Company would continue to pay the full amount of Mr. Sykes’ annual base salary throughout the initial term or any successor term. Mr. Sykes was also to continue to receive the full amount of his annual base salary throughout the initial term or any successor term in the event there is: (i) a change of control, (ii) a good faith determination by Mr. Sykes that the Company had breached the employment agreement, (iii) a material adverse change in working conditions or status, (iv) the deletion of, or change in, any of the titles of Chairman of the Board, CEO or President, (v) a significant relocation of Mr. Sykes’ principal office, (vi) a significant increase in travel requirements, or (vii) an impairment of Mr. Sykes’ health to an extent that made the continued performance of his duties under the agreement hazardous to his physical or mental health or his life. During the term of his employment with the Company, Mr. Sykes was prohibited from competing with the Company in any area in which the Company’s business was then conducted. The agreement contained customary confidentiality provisions.
The employment agreement also provided that upon its termination for any reason, including cause, benefits would continue during the lifetime of Mr. Sykes and the lifetime of his spouse if he was married at the time of his death. Benefits include all employee benefit plans and programs in which Mr. Sykes was entitled to participate immediately before termination. Further, if the Company determined that resources were then reasonably available, the Company would also provide Mr. Sykes with an office and a secretary at the Company’s headquarters.
Upon Mr. John Sykes’ retirement, the Company’s Board of Directors recognized his contribution to the Company as its founder and Chairman of the Board for over twenty six years, by naming Mr. John Sykes as honorary “Chairman Emeritus.” In this capacity, Mr. Sykes may be invited to Board meetings, but will not have a vote on matters before the Board.
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EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the equity compensation plans under which the equity securities of Sykes may be issued as of December 31, 2004:
| | | | | | | | | | | | |
| | (a) | | | (b) | | | (c) | |
| | | | | | | | | |
| | | | | | Number of Securities | |
| | Number of | | | | | Remaining Available for | |
| | Securities to be | | | Weighted | | | Future Issuance Under | |
| | Issued Upon | | | Average Exercise | | | Equity Compensation | |
| | Exercise of | | | Price of Outstanding | | | Plans (Excluding | |
| | Options, Warrants | | | Options, Warrants | | | Securities Reflected | |
| | and Rights | | | and Rights | | | in Column (a)) | |
| | | | | | | | | |
Equity compensation plans approved by shareholders(1) | | | 2,777,013 | | | $ | 10.12 | (2) | | | 5,231,300 | |
Equity compensation plans not approved by shareholders | | | 55,884 | (3) | | | | | | | N/A | (3) |
| | | | | | | | | |
Totals | | | 2,832,897 | | | | | | | | 5,231,300 | |
| | | | | | | | | |
| | |
(1) | Includes shares | Fees for audit services in 2007 and 2006 consisted of common stock of Sykes authorized for awards under the 2001 Equity Incentive Plan as well as the 2000 Stock Option Plan, the 1996 Employee Stock Option Plan, and the 1997 Management Stock Incentive Plan, all of which are predecessor plans to the 2001 Equity Incentive Plan. Also includes shares of common stock of Sykes reserved for issuance under the 1999 Employees’ Stock Purchase Plan, the Amended and Restated 1996 Non-Employee Director Stock Option Plan, the 1996 Non-Employee Director Fee Plan, and the 2004 Non-Employee Director Stock Option Plan. Implementation(a) audits of the 2004 Non-Employee Director Stock Option Plan was suspended byCompany’s annual consolidated financial statements and internal controls over financial reporting, (b) reviews of the Board of Directors when it approved the 2004 Non-Employee Director Fee Plan in May 2004. The 2004 Non-Employee Director Stock Option Plan will be terminated if the 2004 Non-Employee Director Fee Plan is approved by the shareholders at the Annual Meeting. See “Directors’ Compensation” above.Company’s quarterly condensed consolidated financial statements, and (c) annual stand alone statutory audits. |
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(2) | Represents the weighted average exercise price | Fees for audit related services in 2006 consisted of stock options only.(a) audit of employee benefit plans and (b) agreed upon procedures engagements. |
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(3) | Represents shares of common stock of Sykes issued as matching grants under the Deferred Compensation Plan for executives described below. There is no specific number of shares reserved for issuance under the Deferred Compensation Plan | All Other Fees in 2007 principally included assistance with responding to SEC comment letters. |
Shares awarded under all
Report of the above compensation plans mayAudit Committee
In connection with the financial statements for the fiscal year ended December 31, 2007, the Audit Committee has:
(1) reviewed and discussed the audited financial statements with management,
(2) discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm (the “Auditors”), the matters required to be discussed by the statement on Auditing Standards No. 61, as amended, and
(3) received the written disclosure and letter from Sykes’ authorizedthe Auditors required by Independence Standards Board Standard No. 1 and un-issued shares or treasury shares. For a summaryhas discussed with the Auditors the Auditors’ independence.
Based upon these reviews and discussions, the Audit Committee recommended to the Board at the March 26, 2008 meeting of the terms of Sykes’ stock option plans, see Note 19 of our consolidatedBoard that the Company’s audited financial statements be included in the Annual Report onForm 10-K and incorporated herein by reference.
Executive Deferred Compensation Plan
The Company adopted the Deferred Compensation Plan effective December 17, 1998, as an unfunded deferred compensation arrangement for a select group of management or highly compensated personnel. Compensation deferred by a participant while he is a participant in the Plan is deferred until such participant’s retirement, termination, disability or death, or a change in control of the Company, as defined in the Plan, and in such event is paid out to the participant or his beneficiary.
Participants in the Plan may elect to defer any amount of base compensation and bonus. The Company matches a portion of amounts deferred by a participant on a quarterly basis as follows: 50% match on salary deferred, up to a total match of $12,000.00 per year for senior vice presidents and $7,500.00 per year for vice
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presidents and other participants. The total amount of the matching contribution made to the Plan is made in the form of Sykes common stock.
With respect to the distribution of the participant’s matching contribution, a participant may elect a distribution of the Sykes common stock in the participant’s deferred compensation account, or a distribution of the cash value of the common stock in the participant’s account. The distribution of any matching contribution made by the Company and earnings attributable thereto will be paid as soon as administratively feasible twelve months after retirement or termination of employment. Alternatively, a participant may, at the time of initial participation in the Plan, elect to receive benefits under the Plan in the event of retirement or disability in 120 monthly installments of an amount equal to the fair market value of the assets in the participant’s deferred compensation account as of the effective date of his retirement or termination of employment due to disability.
In the event the participant terminates employment (for reasons other than death, disability or retirement) without participating in the plan for three years, the matching contributions and earnings attributable thereto are forfeited. In the event that a participant terminates employment after three years, but less than six years of participation in the Plan, the participant forfeits 75% of the matching contribution and earnings. In the event a participant terminates employment after six years but less than ten years of participation in the Plan, the participant forfeits 50% of the matching contribution and earnings.
In the event of a distribution of benefits as a result of a change in control, the Company will increase the benefit by an amount sufficient to offset the income tax obligations created by the distribution of benefits.
Participants forfeit undistributed matching contributions if the participant is terminated for “cause” as defined in the Plan or the participant enters into a business or employment which the CEO determines to be in violation of any non-compete agreement between the participant and the Company.
COMPENSATION AND HUMAN RESOURCE DEVELOPMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Introduction
Under rules of the Commission, the Company is required to provide certain information concerning compensation provided to the Company’s Chief Executive Officer and its other executive officers. The disclosure requirements for the executive officers include the use of tables and a report of the Committee responsible for compensation decisions for the named executive officers explaining the rationale and considerations that led to those compensation decisions. Therefore, the Compensation and Human Resource Development Committee of the Board of Directors has prepared the following report for inclusion in this Proxy Statement.
Compensation and Human Resource Development Committee Role
The Compensation and Human Resource Development Committee of the Board of Directors has the responsibility to review annually and recommend to the full Board, the compensation for the Chief Executive Officer as well as the other executive officers. The forms of compensation considered by the Committee include base salary, annual and performance based cash bonuses and fringe benefits. The Company’s Stock Option Committee, a subcommittee of the Compensation and Human Resource Development Committee, is responsible for reviewing the equity incentive component of the Company’s compensation program for its
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employees generally, and specifically its executive officers, including the named executive officers. The Stock Option Committee is responsible for making stock option grants under the Company’s 2001 Equity Incentive Plan to executive officers of the Company. The Committee and the Stock Option Committee are comprised of members of the Board who are not employees of the Company. Although these committees consider different components of the executive employees’ compensation, they are currently comprised of the same non-employee Board members.
Compensation Philosophy
The Committee’s philosophy on executive compensation is based upon several fundamental concepts. First, the Committee believes that the level of individual compensation should be competitive with selected survey groups. Second, compensation generally, and bonus compensation specifically, should be designed to provide significant incentives for superior personal and corporate performance. Third, the executive’s compensation package should be designed to align the interests of the executive with that of the Company’s shareholders. The Committee believes that executive compensation, if determined in accordance with this philosophy, will enable the Company to attract and retain the services of highly qualified and motivated executives. These goals are achieved by designing executive compensation packages that include a base salary, discretionary and performance based cash bonuses and periodic grants of stock options. The Company’s policies with respect to these elements, including the basis for the compensation awarded the Company’s chief executive officer, are discussed below.
The Committee oversees the operation of the Company’s executive compensation policies. The Company occasionally retains independent compensation consultants, and regularly utilizes published surveys with industry, geographical and position specific data to compare the Company’s compensation programs with various other companies with similar characteristics. While the elements of compensation described below are considered separately, the Committee takes into account the full compensation package offered by the Company to the individual, including health care and other insurance benefits and contributions made by the Company under the Company’s 401(k) Plan, Employee Stock Purchase Plan and Deferred Compensation Plan.
Base Salaries. The Company has established competitive annual base salaries for all executive officers, including the named executive officers. The annual base salaries for each of the Company’s executive officers, including the Company’s chief executive officer, reflect the subjective judgment of the Committee based on their consideration of the executive officer’s position with the Company, the executive officer’s tenure, the Company’s needs, a comparative analysis of published compensation data as described above, and the executive officer’s individual performance, achievements, and contributions to the growth of the Company.
Mr. John H. Sykes’ annual base salary for 2004, as the Company’s Chief Executive Officer, was $957,478. This amount reflects the original base salary of $550,000, increased by 30% on October 1, 2003, all as set forth in Mr. Sykes’ employment agreement, and adjusted by $242,478 effective January 1, 2003 to provide for the payment of premiums on split dollar life insurance policies as described above in the section entitled “Employment Agreements.”
Mr. Charles Sykes’ annual base salary for 2004 as the Company’s Chief Executive Officer, was $375,000. Mr. Charles Sykes’ annual salary as of January 1, 2004 was $300,000. His annual salary was raised to $350,000 on May 7, 2004 upon appointment as the President and Chief Operating Officer, and then was raised again to its current level of $375,000 on August 1, 2004 upon his appointment as Chief Executive Officer.
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Annual Bonus. The Company’s executive officers are eligible for an annual cash bonus under the Company’s Bonus Program. The Bonus Program provides for the discretionary payment of annual incentive awards to key employees, including executive officers of the Company, pursuant to individually developed formulas related to the Company’s operating goals and personal performance goals. Payments under the Bonus Program are discretionary and are subject to certain limitations. Mr. John H. Sykes did not receive any cash bonuses during the year ended December 31, 2004. Mr. Charles Sykes received a cash bonus of $52,713 during the year ended December 31, 2004.
Stock Options. Under the Company’s 2001 Equity Incentive Plan (the “2001 Plan”), stock options may be granted to all employees. The 2001 Plan is administered by the Compensation and Human Resource Development Committee in accordance2007 filed with Rule 16b-3 of the Securities and Exchange Act of 1934, as amended.Commission. The Compensation and Human Resource Development Committee recommended that no stock options under the 2001 Plan be made available for issuance during the year ended December 31, 2004. Accordingly, no stock options were awarded to executive officers in 2004.Board has approved this inclusion.
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Section 162(m) LimitationsAUDIT COMMITTEE
Under Section 162(m) of the Internal Revenue Code, a tax deduction by corporate taxpayers, such as the Company, is limited with respect to the compensation of certain executive officers, unless such compensation is based upon performance objectives meeting certain regulatory criteria or is otherwise excluded from the limitation. Based upon the Committee’s commitment to link compensation with performance as described in this report, the Committee currently intends to qualify compensation paid to the Company’s executive officers for deductibility by the Company under Section 162(m).
COMPENSATION AND HUMAN RESOURCE DEVELOPMENT COMMITTEEWilliam J. Meurer, Chairman
Ernest J. MilaniIain A. Macdonald
Mark C. Bozek
Dr. Linda F. McClintock-Greco
April 4, 2005Paul L. Whiting
March 26, 2008
The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
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STOCK PRICE PERFORMANCE GRAPHSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following graph presents a comparison
During the year ended December 31, 2007, the executive officers and directors of the cumulative total shareholder returnCompany filed with the Securities and Exchange Commission (the “Commission”) on a timely basis, all required reports relating to transactions involving equity securities of the Company beneficially owned by them. The Company has relied solely on the common stockwritten representation of its executive officers and directors and copies of the reports they have filed with the cumulative total return on the Nasdaq Stock Market (U.S.) Index, the Nasdaq Computer and Data Processing Services Index, the Nasdaq Telecommunications Index, the Russell 2000 Index and the Sykes Peer Group (as defined below**). The Company intends to remove the Nasdaq Stock Market (U.S.) Index from it’s comparison next year due to the fact that it contains small, medium and large capitalization (“cap”) stocks which compromises its use as a comparison to the Company’s stock, which is a small cap stock. The Company is addingCommission in providing this year the Russell 2000 Index, of which the Company is a member. The Russell 2000 Index measures the performance of the 2,000 smallest cap companies in the Russell 3000 Index. The Company is also adding a Peer Group comprised of publicly traded companies that derive a substantial portion of their revenues from the call center, customer care business, have similar business models to the Company, and are those most commonly compared to the Company by industry analysts following the Company. This graph assumes that $100 was invested on December 31, 1999 in the Company’s common stock, the Nasdaq Stock Market (U.S.) Index, the Nasdaq Computer and Data Processing Services Index, the Nasdaq Telecommunications Index, the Russell 2000 Index and Sykes Peer Group.information.
COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN*
AMONG SYKES ENTERPRISES, INCORPORATED,
THE NASDAQ STOCK MARKET (U.S.) INDEX,
THE NASDAQ COMPUTER & DATA PROCESSING SERVICES INDEX,
THE NASDAQ TELECOMMUNICATIONS INDEX,
THE RUSSELL 2000 INDEX,
AND THE SYKES PEER GROUP
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | 1999 | | | 2000 | | | 2001 | | | 2002 | | | 2003 | | | 2004 | |
| |
Sykes | | | 100 | | | | 10.11 | | | | 21.29 | | | | 7.48 | | | | 19.58 | | | | 15.84 | |
Nasdaq Stock Market (U.S.) Index | | | 100 | | | | 60.71 | | | | 47.93 | | | | 32.82 | | | | 49.23 | | | | 53.46 | |
Nasdaq Computer & Data Processing Services Index | | | 100 | | | | 55.69 | | | | 42.16 | | | | 26.77 | | | | 40.20 | | | | 41.51 | |
Nasdaq Telecommunications Index | | | 100 | | | | 45.64 | | | | 23.30 | | | | 10.71 | | | | 18.08 | | | | 19.52 | |
Russell 2000® Index | | | 100 | | | | 95.68 | | | | 96.66 | | | | 75.80 | | | | 110.19 | | | | 128.92 | |
Sykes Peer Group | | | 100 | | | | 78.53 | | | | 75.74 | | | | 51.13 | | | | 68.76 | | | | 64.11 | |
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| |
* | $100 invested on December 31, 1999 in stock or index including reinvestment of dividends. Fiscal year ending December 31. |
**SYKES PEER GROUP
| | | | | | | | | | | | | | |
|
| | APAC Customer | | | | TeleTech | | | | Convergys |
Name | | Service, Inc. | | Sitel Corp. | | Holdings, Inc. | | West Corp. | | Startek, Inc. | | ICT Group, Inc. | | Corp. |
|
Ticker Symbol
| | APAC | | SWW | | TTEC | | WSTC | | SRT | | ICTG | | CVG |
There can be no assurance that the Company’s stock performance will continue into the future with the same or similar trends depicted in the graph above. The Company does not make or endorse any predictions as to the future stock performance.
The information contained in the Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant toRule 14a-8 under the Securities Exchange Act of 1934, as amended, (“Rule 14a-8”), for inclusion in the Company’s proxy statement for its 20062009 Annual Meeting of Shareholders is December 21, 2005.2008. Pursuant to the Company’s Bylaws, only shareholder proposals submitted on or prior to such date may be brought before the meeting.
OTHER MATTERS
Management knows of no matter to be brought before the Annual Meeting which is not referred to in the Notice of Annual Meeting. If any other matters properly come before the Annual Meeting, it is intended that the shares represented by Proxy will be voted with respect thereto in accordance with the judgment of the persons voting them.
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| By Order of the Board of Directors, |
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| ![-s- JAMES T. HOLDER](https://capedge.com/proxy/DEF 14A/0000950144-05-004298/g94608dg9460808.gif) |
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| James T. Holder |
| Secretary |
By Order of the Board of Directors,
James T. Holder
Secretary
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APPENDIX A
SYKES ENTERPRISES, INCORPORATED
2004 NONEMPLOYEE DIRECTOR FEE PLAN
ARTICLE I. DEFINITIONS
1.1 Definitions. Whenever the following terms are used in this Plan they shall have the meanings specified below unless the context clearly indicates to the contrary:
NNNNNNNNNNNNNNN C123456789 |
(a) “Board”:000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext |
MR A SAMPLE DESIGNATION (IF ANY) 000000000.000000 ext 000000000.000000 ext |
ADD 1Electronic Voting Instructions ADD 2 ADD 3You can vote by Internet or telephone!ADD 4Available 24 hours a day, 7 days a week! ADD 5 Instead of mailing your proxy, you may choose one of the two voting ADD 6 methods outlined below to vote your proxy. NNNNNNNNN VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on May 21, 2008. Vote by Internet · Log on to the Internet and go towww.investorvote.com/SYKE · Follow the steps outlined on the secured website. |
· Call toll free 1-800-652-VOTE (8683) within the United States, Canada & Puerto Rico any time on a touch tone telephone. There isNO CHARGEto you for the call. |
Using ablack inkpen, mark your votes with anXas shown in X• Follow the instructions provided by the recorded message. this example. Please do not write outside the designated areas. |
Annual Meeting Proxy Card 123456 C0123456789 12345 |
3IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.3 |
A Proposals — The Board of Directors ofrecommends a vote FOR all the Company. |
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| (b) “Common Stock”: The Company’s Common Stock, par value $.01 per share. |
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| (c) “Common Stock Unit”: A bookkeeping entry that records the equivalent of one Share. |
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| (d) “Company”: Sykes Enterprises, Incorporated or any successor or successors thereto. |
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| (e) “Nonemployee Director”: An individual duly elected or chosen as a Director of the Company who is not also an employee of the Company or its subsidiaries. |
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| (f) “Plan”: The Plan set forth in this instrument as it may, from time to time, be amended. |
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| (g) “Share”: A fully paid, non-assessable share of Common Stock.nominees listed and FOR Proposal 2. |
ARTICLE II. PURPOSE
The purpose of this Plan is to secure for the Company and its shareholders the benefits of the incentive inherent in increased ownership of Common Stock of the Company by members of the Board of Directors of the Company who are not employees of the Company or any of its Subsidiaries, by providing for the payment of a portion of each Nonemployee Director’s compensation in Common Stock. It is expected that such ownership will further align the interests of such Nonemployee Directors with the shareholders of the Company, thereby promoting the long-term profits and growth of the Company, and will encourage such Nonemployee Directors to remain directors of the Company and provide them with the benefits of deferring the receipt of some of such compensation. It is also expected that the Plan will encourage qualified persons to become directors of the Company.
ARTICLE III. INITIAL GRANT OF COMMON STOCK UNITS
In consideration of joining the Board, upon the initial election of a Nonemployee Director to the Board, such Nonemployee Director shall receive an award of Common Stock Units. The number of Common Stock Units shall be determined by dividing a dollar amount to be determined from time to time by the Board (initially set at $30,000) by an amount equal to 110% of the average closing prices of the Company’s common stock for the five trading days prior to the date the Nonemployee Director is elected, rounded to the nearest whole number of Common Stock Units. The initial grant of Common Stock Units will vest in three equal installments, one-third on the date of each of the following three annual shareholders’ meetings.
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ARTICLE IV. ANNUAL RETAINER FEE
In consideration of their services as members of the Board, each Nonemployee Director shall be entitled to receive an annual retainer fee in such amount as shall be determined from time to time by the Board (initially set at $50,000). The annual retainer fee shall be payable in advance on the day after the annual shareholders’ meeting in such year and shall be paid 25% in cash and 75% in Common Stock Units. The number of Common Stock Units shall be determined by dividing 75% of the amount of the annual retainer fee by an amount equal to 105% of the average of the closing prices for the Company’s common stock on the five trading days preceding the award date (the day after the annual meeting), rounded to the nearest whole number of Common Stock Units. The annual grant of Common Stock Units will vest in two equal installments, one-half on the date of each of the following two annual shareholders’ meetings. The provision in this Article IV for the payment of an annual retainer fee to Nonemployee Directors shall not limit the ability of the Board to provide for additional compensation payable to Nonemployee Directors for services on behalf of the Board over and above those typically expected of Directors, including serving as Chair of a Board committee.
ARTICLE V. ACCELERATION OF VESTING OF COMMON STOCK UNITS
Notwithstanding any provision hereof to the contrary, all Common Stock Units shall automatically vest upon the termination of a Director’s service as a Director, whether by reason of death, retirement, resignation, removal or failure to be reelected at the end of his or her term.
ARTICLE VI. ISSUANCE OF SHARES OF COMMON STOCK
FOR COMMON STOCK UNITS
Upon the vesting of Common Stock Units, the Nonemployee Director shall be entitled to receive for each vested Common Stock Unit one Share, and the vested Common Stock Units shall be canceled. The Company shall cause a certificate representing such Shares to be issued to the Nonemployee Director promptly following the vesting of the Common Stock Units.
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION
7.1 Administration. The Plan shall be administered by the Board. The Board shall have such powers as may be necessary to discharge its duties hereunder. The Board may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who may be counsel to the Company. All decisions and determinations by the Board shall be final and binding on all parties.
7.2 Amendment and Termination. The Board may alter or amend this Plan from time to time or may terminate it in its entirety; provided, however, that no such action shall, without the consent of a Nonemployee Director, affect the rights in any Common Stock Units issued to such Nonemployee Director; and further provided, that, any amendment which must be approved by the shareholders of the Company in order to comply with applicable law or the rules of any national securities exchange or securities listing service upon which the Shares are traded or quoted shall not be effective unless and until such approval is obtained. Presentation of the Plan or any amendment thereof for shareholder approval shall not be construed to limit the Company’s authority to offer similar or dissimilar benefits in plans that do not require shareholder approval.
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7.3 Adjustments. In the event of any change in the outstanding Common Stock by reason of (a) any stock dividend, stock split, combination of shares, recapitalization or any other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing, the number or kind of Shares that may be issued under the Plan and the number of Common Stock Units credited to a Nonemployee Director automatically shall be adjusted so that the proportionate interest of the Nonemployee Directors shall be maintained as before the occurrence of such event. Such adjustment shall be conclusive and binding for all purposes with respect to the Plan.
7.4 Successors. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and to agree to perform this Plan in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Plan shall be binding upon and inure to the benefit of the Company and any successor of or to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by sale, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purpose of this Plan), and the heirs, beneficiaries, executors and administrators of each Nonemployee Director.
ARTICLE VIII. SHARES SUBJECT TO PLAN
Subject to adjustment as provided in this Plan, the total number of Shares of Common Stock which may be issued under this Plan shall be Four Hundred Fifty Thousand (450,000). Shares may be shares of original issuance or treasury shares or a combination of the foregoing.
ARTICLE IX. EFFECTIVE DATE; APPROVAL BY SHAREHOLDERS
The Plan shall be effective as of May 6, 2004, and shall be submitted for approval by the shareholders of the Company at the 2005 annual shareholders’ meeting. If such approval is not obtained at such meeting, this Plan shall be nullified and all Common Stock Units issued prior to such annual meeting shall be canceled automatically.
ARTICLE X. GENERAL PROVISIONS
10.1 No Continuing Right to Serve as a Director. Neither the adoption or of this Plan, nor any document describing or referring to this Plan, or any part thereof, shall confer upon any Nonemployee Director any right to continue as a director of the Company or any subsidiary of the Company.
10.2 Rights as a Shareholder. Until the vesting of a Common Stock Unit, a Nonemployee Director shall have none of the rights of a shareholder with respect to his or her Common Stock Units. Upon the vesting of a Common Stock Unit, the Nonemployee Director shall have the right to receive a Share for such Common Stock Unit, shall be deemed to be the owner of such Share which shall be deemed to be issued and outstanding, and shall have all of the rights of a shareholder with respect to such Share.
10.3 Governing Law. The provisions of this Plan shall be governed by construed in accordance with the laws of the State of Florida.
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10.4 Withholding Taxes. To the extent that the Company is required to withhold Federal, state or local taxes in connection with any component of a Nonemployee Director’s compensation in cash or Shares, and the amounts available to Company for such withholding are insufficient, it shall be a condition the receipt of any Shares that the Nonemployee Director make arrangements satisfactory to the Company for the payment of the balance of such taxes required to be withheld, which arrangement may include relinquishment of the Shares. The Company and a Nonemployee Director may also make similar arrangements with respect to payment of any other taxes derived from or related to the payment of Shares with respect to which withholding is not required.
10.5 Miscellaneous. Headings are given to the sections of this Plan as a convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any case be deemed in any way material or relevant to the construction of this Plan or any provisions thereof. The use of the singular shall also include within its meaning the plural, and vice versa.
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SYKES ENTERPRISES, INCORPORATED
Annual Meeting of Shareholders, May 24, 2005
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Sykes Enterprises, Incorporated (the “Company”) hereby appoints Charles E. Sykes, W. Michael Kipphut and James T. Holder as Proxies, each with the power to appoint a substitute, and hereby authorizes them to vote all such shares of the Company as to which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company and at all adjournments thereof, to be held at the Tampa Marriott Waterside, 700 South Florida Avenue, Tampa, Florida, on Tuesday, May 24, 2005, at 9:00 a.m., Eastern Daylight Savings Time, in accordance with the following instructions:
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1.
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1. | TO ELECT FIVE DIRECTORS. To elect four Directors: |
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(to serve for a term of three years)
(to serve for a term of one year) +For Withhold For Withhold For Withhold |
| 1.01 — H. Parks Helms
3. 02 — Linda McClintock-Greco, M.D.
5. Charles E. Sykes | | 2. 03 — James S. MacLeod
4. |
04 — James K. (Jack) Murray, Jr. |
o | | FORall nominees listed to2. To ratify the left (exceptappointment of Deloitte & Touche LLP as specified below) | | o | | WITHHOLD AUTHORITYto vote for all nominees listed to the left. |
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(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box
provided to the right.) | | | | |
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2. | To approve the 2004 Non-Employee Director Fee Plan. oFORoAGAINSToABSTAIN |
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3. | To approve the acceleration of the vesting of stock options held by certain Non-Employee Directors. |
oFORoAGAINSToABSTAIN
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4. | In their discretion, the proxies are authorized to vote upon such other independent auditors of the Company. business as may properly come before this meeting or any adjournments or postponements thereof. |
Check appropriateChange of Address— Please print new address below.Meeting Attendance |
Mark box to indicate any changesthe right if you plan to name or address below:
Address Change? o Name Change? oattend the Annual Meeting. |
| C Authorized Signatures — This section must be completed for your vote to be counted. — Date NO. OF SHARES and Sign Below |
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Signature(s) in Box Please sign Proxy exactly as your name appears in this Proxy. When shares are held by joint tenants, both should sign.on your stock certificate(s). JOINT OWNERS SHOULD EACH SIGN PERSONALLY. When signing as attorney, executor, administrator, trustee, guardian, partner or partner,corporate officer, please give your full title as such. If |
Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. |
C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE |
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND |
NNNNNNN1 U P X 0 1 7 8 8 6 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + |