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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
PLATO LEARNING, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required. | |
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
1) Title of each class of securities to which transaction applies: |
2) Aggregate number of securities to which transaction applies: |
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) Proposed maximum aggregate value of transaction: |
5) Total fee paid: |
o Fee paid previously with preliminary materials. |
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) Amount Previously Paid: |
2) Form, Schedule or Registration Statement No.: |
3) Filing Party: |
4) Date Filed: |
SEC 1913 (02-02) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
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1. | To elect three directors to the Board of Directors. |
2. | To approve the PLATO Learning, Inc. 2006 Stock Incentive Plan. |
3. | To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2006. |
4. | To consider and act upon any other matters that may properly come before the Annual Meeting or any adjournment thereof. |
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Amount and Nature of Beneficial Ownership (1) | |||||||||||||||||
Shares Issuable | |||||||||||||||||
Shares | Upon Exercise | Ownership | |||||||||||||||
Beneficial Owners | Owned | of Options (2) | Total | Percentage | |||||||||||||
Named Executive Officers: | |||||||||||||||||
Michael A. Morache | 5,000 | 200,000 | 205,000 | 0.9% | |||||||||||||
David W. Smith | 13,000 | 95,000 | 108,000 | 0.5% | |||||||||||||
Laurence L. Betterley | - | 92,500 | 92,500 | 0.4% | |||||||||||||
James (Brian) Blaydes | 4,546 | 89,302 | 93,848 | 0.4% | |||||||||||||
David H. LePage | 11,000 | 148,170 | 159,170 | 0.7% | |||||||||||||
Directors: | |||||||||||||||||
Joseph E. Duffy | 2,000 | 53,750 | 55,750 | 0.2% | |||||||||||||
Ruth L. Greenstein | 2,000 | 59,600 | 61,600 | 0.3% | |||||||||||||
Thomas G. Hudson | 2,000 | 64,750 | 66,750 | 0.3% | |||||||||||||
Debra A. Janssen | - | 15,000 | 15,000 | 0.1% | |||||||||||||
Susan E. Knight | - | 15,000 | 15,000 | 0.1% | |||||||||||||
M. Lee Pelton | - | 15,000 | 15,000 | 0.1% | |||||||||||||
John T. (Ted) Sanders | 4,000 | 36,500 | 40,500 | 0.2% | |||||||||||||
All Current Directors and Executive Officers as a Group (17 individuals) | 43,816 | 1,087,405 | 1,131,221 | 4.6% | |||||||||||||
5% Holders: | |||||||||||||||||
Royce & Associates, LLC (3) | 2,784,845 | - | 2,784,845 | 11.8% | |||||||||||||
Reed Conner & Birdwell LLC (4) | 2,481,771 | - | 2,481,771 | 10.5% | |||||||||||||
FMR Corp. (5) | 2,193,394 | - | 2,193,394 | 9.3% | |||||||||||||
Heartland Advisors, Inc. (6) | 1,654,800 | - | 1,654,800 | 7.0% | |||||||||||||
Bank of America Corp. (7) | 1,536,235 | - | 1,536,235 | 6.5% | |||||||||||||
Wells Fargo & Company (8) | 1,246,975 | - | 1,246,975 | 5.3% |
(1) | “Beneficial ownership” generally means any person who, directly or indirectly, has or shares voting or investment power with respect to a security or has the right to acquire such power within 60 days. Shares of common stock subject to options, warrants or rights that are currently exercisable or exercisable within 60 days of January 9, 2006 are deemed outstanding for computing the ownership percentage of the person holding such options, warrants or rights, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based upon 23,647,930 shares of our common stock outstanding as of January 9, 2006. | |
(2) | Represents shares that the Named Executive Officers, Directors and other executive officers may acquire within 60 days from January 9, 2006 pursuant to the exercise of stock options. |
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(3) | Based on information in Schedule 13G/ A, dated February 2, 2005 and filed with the Securities and Exchange Commission, indicating that Royce & Associates, LLC is the beneficial owner of, and possesses sole voting and sole dispositive powers with respect to, 2,784,845 shares. The business address of Royce & Associates, LLC is 1414 Avenue of the Americas, New York, NY 10019. | |
(4) | Based on information in Schedule 13G, dated April 13, 2005 and filed with the Securities and Exchange Commission, indicating that Reed Conner & Birdwell LLC is the beneficial owner of, and possesses sole voting and sole dispositive powers with respect to, 2,481,771 shares. The business address of Reed Conner & Birdwell LLC is 11111 Santa Monica Blvd., Suite 1700, Los Angeles, CA 90025. | |
(5) | Based on information in Schedule 13G, dated February 14, 2005 and filed with the Securities and Exchange Commission, indicating that FMR Corp. is the beneficial owner of, and possesses sole dispositive power with respect to, 2,193,394 shares. The business address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109. | |
(6) | Based on information in Schedule 13G/ A, dated January 31, 2005 and filed with the Securities and Exchange Commission, indicating that Heartland Advisors, Inc. is the beneficial owner of 1,654,800 shares, possesses shared dispositive powers with respect to 1,654,800 shares, and possesses shared voting power with respect to 1,417,700 shares. The business address of Heartland Advisors, Inc. is 789 North Water Street, Milwaukee, WI 53202. | |
(7) | Based on information in Schedule 13G, dated February 11, 2005 and filed with the Securities and Exchange Commission, indicating that Bank of America Corp. and related entities are the beneficial owners of 1,536,235 shares, possess shared dispositive powers with respect to 1,536,235 shares, and possess shared voting powers with respect to 1,514,126 shares. The business address of Bank of America Corp. is 100 N. Tryon Street, Floor 25, Bank of America Corporate Center, Charlotte, NC 28255. | |
(8) | Based on information in Schedule 13G, dated January 21, 2005 and filed with the Securities and Exchange Commission, indicating that Wells Fargo & Company and related entities are the beneficial owners of 1,246,975 shares, possess shared dispositive powers with respect to 1,186,975 shares, and possess shared voting power with respect to 1,206,100 shares. The business address of Wells Fargo & Company is 420 Montgomery Street, San Francisco, CA 94104. |
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Debra A. Janssen | ||
Age: | 49 | |
Director Since: | 2005 | |
Principal Occupation: | President, Debit Services Group, First Data Corporation | |
Recent Business Experience: | Ms. Janssen is currently President of First Data Corporation’s Debit Services Group in Wilmington, Delaware. Prior to joining First Data Corporation in 2004, Ms. Janssen was Chief Executive Officer of Surepayroll, Inc., Chief Executive Officer of Hallmark Cards, Inc./EBIZMIX.com, and Chief Executive Officer of eFunds Corporation. Prior to that she held a number of senior management positions at both Deluxe Corporation and Metavante Corporation (formerly M&I Data Services, Inc.). | |
M. Lee Pelton | ||
Age: | 55 | |
Director Since: | 2005 | |
Principal Occupation: | President, Willamette University | |
Recent Business Experience: | Dr. Pelton has served as President of Willamette University since July 1999. Prior to that, Dr. Pelton served as Dean at Dartmouth College from 1991 to 1998 and at Colgate University from 1988 to 1991. He currently serves as a member of several national education boards and committees, including the American Council on Education and the Harvard University Board of Overseers. |
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John T. (Ted) Sanders | ||
Age: | 64 | |
Director Since: | 2003 | |
Principal Occupation: | Executive Chairman, The Cardean Learning Group | |
Recent Business Experience: | Dr. Sanders has served as Executive Chairman of The Cardean Learning Group since February 2005. Previously, he served as President of the Education Commission of the States (“ECS”), an organization of states working on education policy, from February 2000 to January 2005. Prior to joining ECS, Dr. Sanders was President of Southern Illinois University from July 1995 to February 2000. His experience as an educator includes time as a classroom teacher, chief state school officer of Ohio, Illinois and Nevada, and acting U.S. Secretary of Education from 1990-1991. |
Ruth L. Greenstein | ||
Age: | 59 | |
Director Since: | 2002 | |
Principal Occupation: | Vice President, Finance and Administration, Institute for Defense Analyses | |
Recent Business Experience: | Since June 1990, Ms. Greenstein has served as Vice President, Finance and Administration at the Institute for Defense Analyses, a research and development corporation. From February 1984 to May 1990, she was employed at Genex Corporation, a biotechnology company, and served as Vice President, Treasurer and Chief Financial Officer from 1985 to 1987 and from 1989 to 1990, and as General Counsel and Secretary from 1987 to 1990. | |
Susan E. Knight | ||
Age: | 51 | |
Director Since: | 2005 | |
Principal Occupation: | Vice President and Chief Financial Officer, MTS Systems Corporation | |
Recent Business Experience: | Ms. Knight has served as Vice President and Chief Financial Officer of MTS Systems Corporation since October 2001. Prior to that, Ms. Knight spent 24 years with Honeywell International in a variety of positions from general accounting manager to chief financial officer of the global Home and Building Controls division. |
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David W. Smith | ||
Age: | 61 | |
Director Since: | 2004 | |
Principal Occupation: | Executive Chairman of the Board, PLATO Learning, Inc. | |
Recent Business Experience: | Mr. Smith has served as Executive Chairman of the Board of PLATO Learning, Inc. since March 2005. Previously, he was interim President and Chief Executive Officer of PLATO Learning, Inc. from November 2004 to February 2005. Prior to that he served as a Business Consultant. From September 2000 to December 2002, Mr. Smith was Chief Executive Officer of NCS Pearson, a provider of products, services, and technologies to customers in education, government, and business. He also served as President of the NCS Assessment and Testing Services from April 1988 to September 2000. Prior to NCS, Mr. Smith was a publisher of professional, technical, and scholarly books and materials as a senior executive with McGraw Hill Corporation’s Training Systems and College Divisions from 1984 to 1988. | |
Other Directorships: | Scientific Learning Corporation |
Joseph E. Duffy | ||
Age: | 49 | |
Director Since: | 2002 | |
Principal Occupation: | Vice President, SAP Public Services, Inc. | |
Recent Business Experience: | Mr. Duffy joined SAP Public Services, Inc., a provider of collaborative business solutions for all types of industries and major markets, in June 2004. From June 1987 to March 2004, Mr. Duffy was employed by Oracle Corporation, an e-business and database solutions company. At Oracle Corporation, he served as Senior Vice President, Health Industries from June 2002 to March 2004, as Senior Vice President, Healthcare and Higher Education Sales from June 2000 to June 2002, as Group Vice President for Oracle Service Industries and Group Vice President of Government Sales from January 1997 to June 2000. Previously, Mr. Duffy served as Vice President of DoD Sales, from June 1991 to January 1997, and Director of National Accounts for the U.S. Navy from June 1987 to June 1991. | |
Thomas G. Hudson | ||
Age: | 59 | |
Director Since: | 2002 | |
Principal Occupation: | Chairman of the Board and Chief Executive Officer, 2020 Technologies | |
Recent Business Experience: | Mr. Hudson is employed by 2020 Technologies, a virtual network operator, and has served as Chairman of the Board and Chief Executive Officer since June 2005. Previously, Mr. Hudson was President and Chief Executive Officer of Computer Network Technology Corporation (“CNT”) from July 1996 to June 2005. He also served as Chairman of the Board of CNT from May 1999 to June 2005. From 1993 to 1996, Mr. Hudson served as Senior Vice President of Corporate Development at McGraw-Hill Companies, and also served as General Manager of the company’s F.W. Dodge division. From 1968 to 1993, he served in various management positions, including Vice President of the Services Sector division at IBM Corporation. | |
Other Directorships: | McDATA Corporation, Lawson Software, and Incentra Solutions |
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Michael A. Morache | ||
Age: | 55 | |
Director Since: | 2005 | |
Principal Occupation: | President and Chief Executive Officer, PLATO Learning, Inc. | |
Recent Business Experience: | Mr. Morache was appointed President and Chief Executive Officer of PLATO Learning, Inc. in February 2005. Mr. Morache has more than 30 years experience developing, leading, and growing information technology businesses. Prior to joining PLATO Learning, Inc., he served as President of Pearson Education Technologies (now Pearson Digital Learning) from 2000 to 2002. Mr. Morache served from 1996 to 2000 as President of NCS Services, which was acquired by Pearson plc in 2000. Prior to that he was a Vice President of Unisys Corporation from September 1995 to May 1996. Previously, he was a Senior Vice President with ALLTEL Information Services, Inc. for more than five years. He also has held significant sales, sales management, marketing, and product management positions at IBM and Fujitsu. |
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THE COMPENSATION COMMITTEE OF | |
THE BOARD OF DIRECTORS | |
Dr. John T. (Ted) Sanders (Chair) | |
Mr. Joseph E. Duffy | |
Mr. Thomas G. Hudson | |
Dr. M. Lee Pelton |
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Long-Term | |||||||||||||||||||||
Compensation | |||||||||||||||||||||
Annual Compensation | Awards | ||||||||||||||||||||
Securities | |||||||||||||||||||||
Name and Principal Position at | Underlying | All Other | |||||||||||||||||||
10/31/2005 | Year | Salary | Bonus | Options (1) | Compensation | ||||||||||||||||
Michael A. Morache | 2005 | $ | 269,231 | $ | 50,000 | 200,000 | $ | 5,000 | |||||||||||||
President and | 2004 | - | - | - | �� | - | |||||||||||||||
Chief Executive Officer (2) | 2003 | - | - | - | - | ||||||||||||||||
John Murray | 2005 | 350,979 | - | - | $ | 1,062,637 | |||||||||||||||
Former President | 2004 | 350,000 | 43,759 | 86,000 | - | ||||||||||||||||
and Chief Executive Officer (3) | 2003 | 271,039 | 114,257 | 121,667 | - | ||||||||||||||||
David W. Smith | 2005 | 306,731 | 37,500 | 120,000 | - | ||||||||||||||||
Executive Chairman of the Board (4) | 2004 | - | - | - | - | ||||||||||||||||
2003 | - | - | - | - | |||||||||||||||||
Laurence L. Betterley | 2005 | 212,615 | 27,500 | 80,000 | - | ||||||||||||||||
Senior Vice President and | 2004 | 58,192 | - | 12,500 | - | ||||||||||||||||
Chief Financial Officer (5) | 2003 | - | - | - | - | ||||||||||||||||
James (Brian) Blaydes | 2005 | 178,852 | 72,101 | 57,500 | 56,383 | ||||||||||||||||
Vice President, K-12 Sales (6) | 2004 | - | - | - | - | ||||||||||||||||
2003 | - | - | - | ||||||||||||||||||
David H. LePage | 2005 | 206,539 | 38,375 | - | - | ||||||||||||||||
Senior Vice President, Operations | 2004 | 190,000 | 11,086 | 15,000 | - | ||||||||||||||||
2003 | 160,615 | 35,000 | 15,000 | - | |||||||||||||||||
(1) | None of the Named Executive Officers has been granted stock appreciation rights (“SARs”) or holds shares of restricted stock that are subject to performance-based conditions on vesting. |
(2) | Mr. Morache was appointed President and Chief Executive Officer effective February 28, 2005 at an annual salary of $400,000. Other compensation for 2005 consisted of moving and relocation expenses. |
(3) | Mr. Murray resigned as Chairman of the Board, President and Chief Executive Officer of the Company on November 17, 2004. Other compensation for 2005 consisted primarily of a $1,000,000 payment in lieu of stock options and payment of accrued vacation. See further discussion of payments made to Mr. Murray after his resignation under the section captioned “Other Compensation Arrangements.” |
(4) | Mr. Smith served as interim President and Chief Executive Officer from November 17, 2004 to February 28, 2005. In March 2005, he was appointed Executive Chairman of the Board. |
(5) | Mr. Betterley joined the Company in June 2004 as Vice President, Finance and Chief Accounting Officer. He was appointed Chief Financial Officer in November 2004. |
(6) | Mr. Blaydes was appointed Vice President,K-12 Sales in June 2005. He was not an executive officer of the Company prior to that time. He was paid compensation for sales (based on a percentage of sales) of $72,101 in 2005. Other compensation for 2005 consisted of moving and relocation expenses. |
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Potential Realizable Value | ||||||||||||||||||||||||
at Assumed Annual Rates | ||||||||||||||||||||||||
Number of | of Stock Price | |||||||||||||||||||||||
Securities | Percent of | Appreciation for Option | ||||||||||||||||||||||
Underlying | Total Options | Exercise | Term (3) | |||||||||||||||||||||
Options | Granted to | Price per | Expiration | |||||||||||||||||||||
Name (1) | Granted (2) | Employees in 2005 | Share | Date | 5% | 10% | ||||||||||||||||||
Michael A. Morache | 200,000 | 17.4% | $ | 7.70 | 2/28/2013 | $ | 2,275,282 | $ | 3,301,126 | |||||||||||||||
David W. Smith | 80,000 | 7.0% | 7.08 | 12/2/2012 | 836,831 | 1,214,128 | ||||||||||||||||||
David W. Smith | 40,000 | 3.5% | 7.50 | 2/17/2013 | 443,237 | 643,077 | ||||||||||||||||||
Laurence L. Betterley | 80,000 | 7.0% | 7.76 | 3/3/2013 | 917,205 | 1,330,742 | ||||||||||||||||||
James (Brian) Blaydes | 7,500 | 0.7% | 7.08 | 12/2/2012 | 78,454 | 113,825 | ||||||||||||||||||
James (Brian) Blaydes | 50,000 | 4.3% | 7.38 | 6/27/2013 | 545,181 | 790,985 | ||||||||||||||||||
(1) | Named Executive Officers not listed above received no option grants in 2005. |
(2) | All options granted in 2005 were granted at 100% of the fair market value of our common stock on the date of grant. Options vest ratably over a two or three-year period beginning one year from the date of grant and expire eight years following the date of grant. |
(3) | Assumes appreciation in value from the date of grant to the end of the option term at the indicated rate. The dollar amounts under these columns are the result of calculations at the 5% and 10% rates set by the Securities and Exchange Commission and therefore are not intended to forecast possible future appreciation, if any, of our stock price. |
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Options Held at | In-the-Money Options at | |||||||||||||||||||||||
Shares | October 31, 2005 | October 31, 2005 (1) | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise | Realized | Exerciseable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Michael A. Morache | - | $ | - | 200,000 | - | $ | - | $ | - | |||||||||||||||
John Murray | 199,888 | 330,525 | - | - | - | - | ||||||||||||||||||
David W. Smith | - | - | 55,000 | 80,000 | - | 800 | ||||||||||||||||||
Laurence L. Betterley | - | - | 92,500 | - | - | - | ||||||||||||||||||
James (Brian) Blaydes | - | - | 85,468 | 8,834 | 3,428 | 75 | ||||||||||||||||||
David H. LePage | 10,667 | 13,168 | 148,170 | - | 103,009 | - |
(1) | Values were calculated using a price of $7.09, the closing price of our common stock as reported on NASDAQ on October 31, 2005. |
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950134-06-000907/c01647dc0164703.gif)
10/31/2000 | 10/31/2001 | 10/31/2002 | 10/31/2003 | 10/31/2004 | 10/31/2005 | |||||||||||||||||||
PLATO Learning | $ | 100.0 | 77.3 | 37.5 | 58.4 | 53.3 | 38.6 | |||||||||||||||||
Current Peer Group | 100.0 | 83.0 | 94.6 | 143.4 | 150.9 | 146.1 | ||||||||||||||||||
NASDAQ | 100.0 | 50.2 | 39.5 | 57.3 | 58.6 | 62.9 |
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THE AUDIT COMMITTEE OF | |
THE BOARD OF DIRECTORS | |
Ms. Ruth L. Greenstein (Chair) | |
Mr. Joseph E. Duffy | |
Ms. Debra A. Janssen | |
Ms. Susan E. Knight |
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Number of Securities | ||||||||||||
to be Issued Upon | Weighted-Average | Number of Securities | ||||||||||
Exercise of | Exercise Price of | Remaining Available | ||||||||||
Plan Category | Outstanding Options | Outstanding Options | for Future Issuance | |||||||||
Equity compensation plans approved by security holders | 2,651,742 | $ | 9.51 | 2,273,000 | ||||||||
Equity compensation plans not approved by security holders | - | - | - | |||||||||
Total | 2,651,742 | $ | 9.51 | 2,273,000 | ||||||||
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1. | In the case of an exercise of a non-qualified option or SAR, the participant will recognize ordinary income in an amount equal to the difference between the option exercise price (or SAR grant price) and the Fair Market Value of the Company’s Common Stock on the exercise date. Likewise, in the case of a common law employer-employee relationship, any amount recognized as ordinary income for income tax purposes will be also recognized as wages for FICA and FUTA purposes. This which will require reporting and payment of Old Age Survivors and Disability Insurance (“OASDI”), assuming the FICA-OASDI Taxable Wage Base has not been exceeded for the year of exercise, and Hospital Insurance (“HI”). | |
2. | In the case of an ISO, there is no tax liability at the time of exercise. However, the excess of the Fair Market Value of the Company’s Common Stock on the exercise date over the option price is included in the participant’s income for purposes of the alternative minimum tax. If no disposition of the ISO stock is made before the later of one year from the date of exercise or two years from the date the ISO is granted, the participant will realize a long-term capital gain or loss upon a sale of the stock equal to the difference between the option price and the sale price. If the stock is not held for the required period, it is considered to be a “disqualifying disposition,” and ordinary income tax treatment will generally apply to the amount of any gain at sale or exercise, whichever is less, and the balance of any gain or loss will be treated as capital gain or loss (long- term or short-term, depending on whether the shares have been held for more than one year). In an employer-employee relationship, if the stock received through the exercise of an ISO is held for the required period, and there is no disqualifying disposition, FICA and FUTA taxes will not apply. | |
3. | In the case of an award of restricted stock, the immediate federal income tax effect for the recipient will depend on the nature of the restrictions. Generally, the value of the Company’s Common Stock |
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will not be taxable to the recipient as ordinary income until the year in which his or her interest in the stock is freely transferable or is no longer subject to a substantial risk of forfeiture. However, the recipient may elect to recognize income when the stock is received, rather than when his or her interest in the stock is freely transferable or is no longer subject to a substantial risk of forfeiture. If the recipient makes this election, the amount taxed to the recipient as ordinary income is determined as of the date of receipt of the restricted stock. |
4. | In the case of all other awards, the participant generally will recognize ordinary income equal to value of the Common Stock received by the participant at the time of distribution, or if later, when such shares are no longer subject to a substantial risk of forfeiture. To the extent that such an award is considered as an award of deferred compensation, it will be likely, under application of the “special timing rule,” that its present value will be treated for employment tax purposes as wages and FICA and FUTA will be assessed at the later of the date of the performance of services or the elimination of a substantial risk of forfeiture for entitlement to the benefit. | |
5. | The Company will generally be allowed an income tax deduction simultaneous with, and equal to, the ordinary income recognized by the participant. The Company does not receive an income tax deduction as a result of the exercise of an ISO, provided that the ISO stock is held for the required period as described above. | |
6. | The Company may not deduct compensation of more that $1,000,000 that is paid in a taxable year to certain “covered employees” as defined in Section 162(m) of the Code. The deduction limit, however, does not apply to certain types of compensation, including qualified performance-based compensation. The Company believes that compensation attributable to stock options granted under the 2006 Plan is qualified performance-based compensation and therefore not subject to the deduction limit. This conclusion is based, in part, on the provision that imposes a limit of 250,000 options that may be granted to any person in one year. |
New Plan Benefits |
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![-s- STEVEN R. SCHUSTER](https://capedge.com/proxy/DEF 14A/0000950134-06-000907/c01647dc0164702.gif)
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(a) | willful neglect of or continued failure to substantially perform his or her duties with or obligations for the Company or an Affiliate in any material respect (other than any such failure resulting from his or her incapacity due to physical or mental illness); |
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(b) | commission of a willful or grossly negligent act or the willful or grossly negligent omission to act that causes or is reasonably likely to cause material harm to the Company or an Affiliate; or | |
(c) | commission or conviction of, or plea ofnolo contendereto, any felony or any crime materially injurious to the Company or an Affiliate. |
(a) | Any person or persons acting as a group acquires (or has acquired during the12-month period ending on the date of the most recent acquisition by such person or persons) ownership of securities of the Company representing fifty percent (50%) or more of the voting power of the Company’s then outstanding stock; provided, however, that a Change in Control shall not be deemed to occur by virtue of any of the following acquisitions: (i) by the Company or any Affiliate, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate, or (iii) by any underwriter temporarily holding securities pursuant to an offering of such securities; | |
(b) | Any person or persons acting as a group acquires beneficial ownership of stock that, together with stock held by such person or group, constitutes more than fifty (50%) of the total fair market value or voting power of the Company’s then outstanding stock. The acquisition of Company stock by the Company in exchange for property, which reduces the number of outstanding Stock and increases the percentage ownership by any person to more than 50% of Company stock will be treated as a Change in Control; | |
(c) | Individuals who constitute the Board immediately after the Effective Date (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board during any12-month period, provided that any person becoming a Director subsequent thereto whose election or nomination for election was approved by a vote of a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director, without written objection to such nomination) shall be an Incumbent Director, provided, however, that no individual initially elected or nominated as a Director of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; | |
(d) | Any person or persons acting as a group acquires (or has acquired during the12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value of at least forty percent (40%) of the total gross fair market value of all the assets of the Company immediately prior to such acquisition. For purposes of this section, gross fair market value means the value of the assets of the Company, or the value of the assets being disposes of, without regard to any liabilities associated with such assets. The event described in this paragraph (d) shall not be deemed to be a Change in Control if the assets are transferred to (i) any owner of Company stock in exchange for or with respect to the Company’s stock, (ii) an entity in which the Company owns, directly or indirectly, at least fifty percent (50%) of the entity’s total value or total voting power, (iii) any person that owns, directly or indirectly, fifty percent (50%) of the Company stock, (iv) an entity in which a person described in (d)(3) above owns at least fifty percent (50%) of the total value or voting power. For purposes of this section, and except as otherwise provided, a person’s status is determined immediately after the transfer of the assets; or | |
(e) | Upon the happening of any other event(s) designated in the Code, or regulations or guidance thereunder, as a Change in Control for purposes of Section 409A of the Code. |
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(a) | A physical or mental condition that would qualify a Participant for a disability benefit under the long-term disability plan of the Company applicable to him or her; | |
(b) | If the Participant is not covered by such a long-term disability plan, disability as defined for purposes of eligibility for a disability award under the Social Security Act; | |
(c) | When used in connection with the exercise of an Incentive Stock Option following termination of employment, disability within the meaning of Code Section 22(e)(3); or | |
(d) | Such other condition as may be determined by the Committee to constitute “disability” under Code Section 409A. |
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(a) | If the Share is listed for trading on the National Association of Securities Dealers, Inc. (NASDAQ) National Market System or one or more national securities exchanges, the last reported sales price on the NASDAQ or such principal exchange on the date in question, or if such Share shall not have been traded on such principal exchange on such date, the last reported sales price on the NASDAQ or such principal exchange on the first day prior thereto on which such Share was so traded; | |
(b) | If the Share is not listed for trading, by any means determined fair and reasonable by the Committee, which determination shall be final and binding on all parties; or | |
(c) | Where the Participant pays the Exercise Price and/or any related withholding taxes to the Company by tendering Shares issuable to the Participant upon exercise of an Option, the actual sale price of the Shares. |
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(a) | Subject to adjustment as provided below and in Sections 4.2 and 4.3, the maximum number of Shares that may be issued or transferred to Participants under the Plan will be 1,750,000 Shares, which represents the number of Shares available for the grant of future awards under the Company’s Prior Plans as of the Effective Date. No additional awards will be made under any Prior Plan on or after the Effective Date. Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock. Notwithstanding anything to the contrary contained herein: (i) all Shares covered by a SAR or Option shall be considered issued or transferred pursuant to the Plan to the extent it is exercised and without regard to whether Shares are actually issued to the Participant upon such exercise; and (ii) the aggregate plan limit above shall not be increased by Shares tendered in payment of an Option Exercise Price, Shares withheld by the company to satisfy a tax withholding obligation, or Shares repurchased by the Company with Exercise Price proceeds from the Participant. | |
(b) | The total number of Shares that may be issued or transferred in connection with the Awards of Restricted Stock, Restricted Stock Units, Performance Shares or other full value Stock Awards shall not exceed 750,000. The maximum number of Shares that may be issued or transferred to Participants as Incentive Stock Options is 100,000. The maximum number of Shares and Share equivalent units that may be granted during any calendar year to any one Participant under all types of Awards available under the Plan is 250,000 (on an aggregate basis);provided, however, that (i) the foregoing limit will apply whether the Awards are paid in Shares or in cash; and (ii) the Participant in connection with his or her first year of Service may be granted an additional Award covering not more than an additional 200,000 Shares, which shall not count against the limits set forth initially in this sentence. All limits described in this Section 4.1(b) are subject to adjustment as provided in Section 4.3. |
(a) | In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, split-up, share combination, or other such change in the corporate structure of the Company affecting the Shares, such adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number and class of and/or price of Shares subject to |
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outstanding Awards granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights and provided that the number of Shares subject to any Award shall always be a whole number. | ||
(b) | Fractional Shares resulting from any adjustment in Awards pursuant to this section may be settled in cash or otherwise as the Committee determines. The Company will give notice of any adjustment to each Participant who holds an Award that has been adjusted and the adjustment (whether or not that notice is given) will be effective and binding for all Plan purposes. |
(a) | Notwithstanding anything in the Plan to the contrary, the Committee, in its sole discretion, reserves the right to designate a Participant’s leave of absence as “Personal Leave.” No Options shall be granted to a Participant during Personal Leave. A Participant’s Unvested Options shall remain Unvested during such Personal Leave and the time spent on such Personal Leave shall not count towards the Vesting of such Options. A Participant’s Vested Options that may be exercised pursuant to Section 6.6 hereof shall remain exercisable upon commencement of Personal Leave until the earlier of (i) a period of one year from the date of commencement of such Personal Leave; or (ii) the remaining exercise period of such Options. Notwithstanding the foregoing, if a Participant returns to the Company from a Personal Leave of less than one year and the Participant’s Options have not lapsed, the Options shall remain exercisable for the remaining exercise period as provided at the time of grant and subject to the conditions contained herein. | |
(b) | The Committee, in its sole discretion, may waive or alter the provisions of this Section 5.3 with respect to any Participant. The waiver or alteration of such provisions with respect to any Participant shall have no effect on any other Participant. |
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(a) | The Committee may award Incentive Stock Options only to Employees. | |
(b) | An Option will not constitute an Incentive Stock Option under this Plan to the extent it would cause the aggregate Fair Market Value of Shares with respect to which Incentive Stock Options are exercisable by the Participant for the first time during a calendar year (under all plans of the Company and its Affiliates) to exceed $100,000. Such Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted. | |
(c) | If the Employee to whom the Incentive Stock Option is granted owns stock possessing more than ten (10%) percent of the total combined voting power of all classes of the Company or any Affiliate, then: (i) the exercise Price for each Share subject to an Option will be at least one hundred ten percent (110%) of the Fair Market Value of the Share on the Effective Date of the Award; and (ii) the Option will expire upon the earlier of (A) the time specified by the Committee in the Award Agreement, or (B) the fifth anniversary of the date of grant. | |
(d) | No Option that is intended to be an Incentive Stock Option may be granted under the Plan until the Company’s shareholders approve the Plan. If such shareholder approval is not obtained within 12 months after the Board’s adoption of the Plan, then no Options may be granted under the Plan that are intended to be Incentive Stock Options. No Option that is intended to be an Incentive Stock Option may be granted under the Plan after the tenth anniversary of the date the Company adopted the Plan or the Company’s shareholders approved the Plan, whichever is earlier. | |
(e) | An Incentive Stock Option must be exercised, if at all, by the earliest of (i) the time specified in the Award Agreement, (ii) three months after the Participant’s termination of Service for a reason other than death or Disability, or (iii) twelve months after the Participant’s termination of Service for death or Disability. |
(f) | An Option that is intended but fails to be an ISO shall be treated as an NQSO for purposes of the Plan. |
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(a) | If a Participant’s Service with the Company and any Affiliate terminates by reason of death, any Option may thereafter be exercised, to the extent then exercisable, by the legal representative of the estate or by the legatee of the Participant under the will of the Participant, but may not be exercised after twelve months from the date of such death or the expiration of the stated term of the Option, whichever period is shorter. In the event of termination of Service by reason of death, if, pursuant to its terms, any Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Code Section 422, the Option will thereafter be treated as a Nonstatutory Stock Option. Options that are not exercisable at the time of Participant’s death shall expire at the close of business on the date of death. | |
(b) | If a Participant’s Service with the Company and any Affiliate terminates by reason of Disability, any Option held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability, but may not be exercised after twelve months from the date of such termination of Service or the expiration of the stated term of the Option, whichever period is the shorter. In the event of termination of Service by reason of Disability, if, pursuant to its terms, any Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Code Section 422, the Option will thereafter be treated as a Nonstatutory Stock Option. Options that are not exercisable at the time of such termination of Service shall expire at the close of business on the date of such termination. | |
(c) | If a Participant’s Service with the Company and any Affiliate terminates by reason of Retirement, any Option held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of termination due to Retirement, but may not be exercised after thirty-six months from the date of such termination of Service or the expiration of the stated term of the Option, whichever period is the shorter. In the event of termination of Service by reason of Retirement, if, pursuant to its terms, any Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Code Section 422, the Option will thereafter be treated as a Nonstatutory Stock Option. Options that are not exercisable at the time of such termination of Service by reason of Retirement shall expire at the close of business on the date of such termination. | |
(d) | If a Participant’s Service terminates for any reason other than Death, Disability or Retirement, any Option held by such Participant may thereafter be exercised to the extent it was exercisable at the time of such termination, but may not be exercised after 90 days after such termination, or the expiration of the stated term of the Option, whichever period is the shorter. In the event of termination of Service by reason other than Death, Disability or Retirement and if pursuant to its terms any Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Code Section 422, the Option will thereafter be treated as a Nonstatutory Stock Option. Options that are not exercisable at the time of such termination of Service shall expire at the close of business on the date of such termination. In the event a Participant’s Service with the Company is terminated for Cause, all unexercised Options granted to such Participant shall immediately terminate. |
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(a) | A Participant may make a deferral election with respect to an Award (or compensation giving rise thereto) at any time in any calendar year preceding the year in which services giving rise to such compensation or Award are rendered. | |
(b) | In the case of the first year in which a Participant becomes eligible to receive an Award or defer compensation under the Plan (aggregating other plans of its type as defined in Section 1.409A-1(c) of the applicable regulations), the Participant may make a deferral election within 30 days after the date the Participant becomes eligible to participate in the Plan; provided, that such election may apply only with respect to the portion of the Award or compensation attributable to services to be performed subsequent to the election. | |
(c) | Where the grant of an Award or payment of compensation, or their vesting is conditioned upon the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months in which the Participant performs Service, a Participant may make a deferral election no later 6 months prior to the end of the applicable performance period. |
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(d) | Where the vesting of an Award is contingent upon the Participant’s continued Service for a period of no less than 13 months, the Participant may make a deferral election within 30 days of receiving an Award. | |
(e) | A Participant may make a deferral election in other circumstances and at such times as may be permitted under Code Section 409A and any regulations or guidance thereunder. |
(a) | A fixed date as set forth in the Award Agreement or pursuant to a Participant’s election; | |
(b) | the Participant’s death; | |
(c) | the Participant’s Disability; | |
(d) | a Change in Control; | |
(e) | an Unforeseeable Emergency, as defined in Section 409A and implemented by the Committee; |
(f) | a Participant’s termination of Service, or in the case of a Key Employee (as defined in Code Section 409A) six months following the Participant’s termination of Service; or |
(g) | such other events as permitted under Code Section 409A and the regulations and guidance thereunder. |
(a) | the arrangement may be terminated within the 30 days preceding, or 12 months following, a Change in Control provided that all payments under such arrangement are distributed in full within 12 months after termination; | |
(b) | the arrangement may be terminated in the Company’s discretion at any time provided that (i) all deferred compensation arrangements of similar type maintained by the Company are terminated, (ii) all payments are made at least 12 months and no more than 24 months after the termination, and (iii) the Company does not adopt a new arrangement of similar type for a period of five years following the termination of the arrangement; | |
(c) | the arrangement may be terminated within 12 months of a corporate dissolution taxed under Code Section 331 or with the approval of a bankruptcy court pursuant to 11 U.S.C. 503(b)(1)(A) provided that the payments under the arrangement are distributed by the latest of the (i) the end of the calendar year of the termination, (ii) the calendar year in which such payments are fully vested, or (iii) the first calendar year in which such payment is administratively practicable. |
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(a) | Notwithstanding the foregoing, with respect to any Nonstatutory Stock Options, each Participant shall be permitted at all times to transfer any or all of the Options, or, in the event the Options have not yet been issued to the Participant, the Company shall be permitted to issue any or all of the Options, to certain trusts designated by the Participant as long as such transfer or issuance is made as a gift (i.e., a transfer for no consideration, with donative intent), whether during lifetime or to take effect upon (or as a consequence of) his or her death, to his or her spouse or children. Gifts in trust shall be deemed gifts to every beneficiary and contingent beneficiary, and so shall not be permitted under this paragraph (a) if the beneficiaries or contingent beneficiaries shall include anyone other than such spouse or children. Transfers to a spouse or child for consideration, regardless of the amount, shall not be permitted under this Section. | |
(b) | Any Options issued or transferred under this Article 16 shall be subject to all terms and conditions contained in the Plan and the applicable Award Agreement. If the Committee makes an Option transferable, such Option shall contain such additional terms and conditions, as the Committee deems appropriate. |
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(a) | any and all Awards granted or transferred to him or her under the Plan, including Awards that have become Vested; and | |
(b) | the profit the Participant has realized on the exercise of any Options, which is the difference between the Exercise Price of the Options and the applicable Fair Market Value of the Shares (the Participant may be required to repay such difference to the Company). |
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PLATO LEARNING, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, March 2, 2006
2:30 p.m.
Sofitel Minneapolis
5601 West 78th Street
Bloomington, MN 55439-3145
![]() | PLATO Learning, Inc. 10801 Nesbitt Avenue South, Bloomington, MN 55437 | proxy | ||
This proxy is solicited by the Board of Directors for use at the Annual Meeting on March 2, 2006.
The shares of stock you own in your account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted “FOR” Items 1, 2 and 3.
By signing the proxy, you revoke all prior proxies and appoint Michael A. Morache, and/or Laurence L. Betterley, and each of them, with full power of substitution, to vote your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments thereof.
See reverse for voting instructions.
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COMPANY #
There are two ways to vote your Proxy
Your telephone vote authorizes the Named Proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE — TOLL FREE — 1-800-560-1965
• | Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on March 1, 2006. |
• | Please have your proxy card and the last four digits of your Social Security Number or taxpayer identification number available. Follow the simple instructions the voice provides you. |
VOTE BY MAIL
• | Mark, sign and date your proxy card and return it in the postage-paid envelope we’ve provided or return it to PLATO Learning, Inc., c/o Shareowner ServicesSM, P.O. Box 64873, St. Paul, MN 55164-0873. |
If you vote by telephone, please do not mail your Proxy Card
òPlease detach hereò
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1. | Election of Class I Directors: | 01 Debra A. Janssen | o | Vote FOR | o | Vote WITHHELD | ||||||||||
02 M. Lee Pelton | all nominees | from all nominees | ||||||||||||||
03 John T. (Ted) Sanders | (except as marked) | |||||||||||||||
(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.) | ||||||||||||||||
2. | To approve the PLATO Learning, Inc. 2006 Stock Incentive Plan. | o | For | o | Against | o | Abstain | |||||||||
3. | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2006. | o | For | o | Against | o | Abstain |
In their discretion upon such other matters as may properly come before the Annual Meeting and any adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR EACH PROPOSAL.
Address Change? Mark Box o Indicate changes below:
Date
Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy. If held in joint tenancy, all persons must sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.