UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from ________________ to ________________
COMMISSION FILE NUMBER: 0-27778
PREMIERE GLOBAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 59-3074176
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3399 PEACHTREE ROAD, N.E., THE LENOX BUILDING, SUITE 700, ATLANTA, GEORGIA 30326
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE): (404) 262-8400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, PAR VALUE $0.01 PER SHARE NEW YORK STOCK EXCHANGE
(TITLE OF EACH CLASS) (NAME OF EACH EXCHANGE
ON WHICH REGISTERED)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(TITLE OF CLASS)
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.
[ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (Check
one):
Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act).
Yes [ ] No [X]
The aggregate market value of voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and ask price of such common equity, on June 30,
2006 as reported by the New York Stock Exchange was approximately $493,096,525.
As of March 9, 2007, there were 70,216,077 shares of the registrant's common
stock outstanding.
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated. None.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A amends the Annual Report on Form 10-K
of Premiere Global Services, Inc. for the fiscal year ended December 31, 2006,
originally filed with the Securities and Exchange Commission on March 15, 2007
(which we refer to in this amendment as the "original filing"). We are filing
our amendment to amend Part III of our original filing to include the
information required by and not included in Part III of our original filing
because we do not intend to file our definitive proxy statement within 120 days
of the end of our fiscal year ended December 31, 2006. In connection with the
filing of this amendment and pursuant to the rules of the SEC, we are including
with this amendment new certifications by our principal executive and principal
financial officers. Accordingly, Item 15 of Part IV has also been amended to
reflect the filing of these new certifications.
Except as described above, no other changes have been made to our original
filing. It continues to speak as of the date of our original filing, and we have
not updated the disclosures contained therein to reflect any events which
occurred at a date subsequent to the original filing other than as expressly
indicated in this amendment. Defined terms used in this amendment but not
defined herein shall have the meaning specified for such terms in our original
filing.
INDEX
PAGE
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PART III
Item 10. Directors, Executive Officers and Corporate Governance 1
Item 11. Executive Compensation 5
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 24
Matters
Item 13. Certain Relationships and Related Transactions and Director Independence 28
Item 14. Principal Accountant Fees and Services 31
PART IV
Item 15. Exhibits and Financial Statement Schedules 32
SIGNATURES 42
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS
Pursuant to our bylaws, the number of our directors may not be less
than three nor more than ten, with the precise number to be determined by
resolution of our board of directors from time to time. Currently, our board of
directors comprises seven directors. Our board of directors is currently divided
into three classes, with two directors in each of Class I and II and three
directors in Class III. The directors in each class are elected by our
shareholders for a term of three years and until their successors are elected
and qualified or until such directors' death, resignation or removal. The term
of office of one of the classes of directors expires each year at our annual
meeting of shareholders, and a new class of directors is elected by our
shareholders each year at that time.
CLASS I DIRECTORS
W. Steven Jones Mr. Jones, age 55, has been a director since April
2007. He has served as Dean of Kenan-Flagler Business
School of the University of North Carolina at Chapel
Hill since August 2003. He served as Chief Executive
Officer and Managing Director of Suncorp Metway Ltd.,
an Australian banking, insurance and funds management
company in Brisbane, Queensland from December 1996 to
September 2002. Prior to that time, he served as
Chief Executive Officer and Managing Director of ANZ
Banking Group, N.Z., Ltd. Mr. Jones currently serves
as a director and member of the asset quality
committee of Bank of America Corporation and as a
director and member of the finance committee and
organization and compensation committee of Progress
Energy Inc.
J. Walker Smith, Jr. Mr. Smith, age 51, has served as a director since
June 2001. He has served as a director and President
of Yankelovich, Inc., a market services company
specializing in database marketing solutions and
consumer lifestyles consulting, since May 1999, and
previously served as Managing Partner and Head of
Yankelovich Monitor from September 1995 until May
1999, and as Senior Vice President and Managing
Partner of Yanklelovich's Atlanta, Georgia office
from 1991 until September 1995. He serves as a member
of the board of the American Marketing Association
and the board of advisors for the School of
Journalism and Mass Communications at the University
of North Carolina at Chapel Hill. Mr. Smith
previously served as a director of Cyber Dialogue
(n/k/a Fulcrum Analytics) and as a member of the
board of advisors of Screen4Me Corporation and A.C.
Nielsen Masters in Marketing Research Program.
CLASS II DIRECTORS
Wilkie S. Colyer Mr. Colyer, age 57, has served as a director since
March 2004. Mr. Colyer has served as a principal and
partner in The Breckenridge Group, Inc., an
Atlanta-based investment banking firm, since 1988.
Raymond H. Pirtle, Jr. Mr. Pirtle, age 65, has served as a director since
June 1997. He has served as Chief Manager of Claridge
Company, LLC, a privately-held financial services
firm whose primary focus is to link small
corporations with professional investors, since March
2005. Mr. Pirtle was a founder and served as Senior
Managing Director of Avondale Partners, LLC, an
independently-owned, Nashville-based financial
services firm dedicated to equity research,
investment banking activities and equity capital
markets, from June 2001 to March 2005. He served as
Managing Director and as a director of SunTrust
Equitable Securities Corporation from February 1989
to June 2001. Mr. Pirtle currently serves as a
director and a member of the audit committees of
IceWeb, Inc. and Tricell, Inc. He was previously a
director and member of the audit
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committee of eNucleus, Inc. and a director and
chairman of the compensation committee of Sirrom
Capital Corporation, which was acquired by Finova
Group.
CLASS III DIRECTORS
Boland T. Jones Mr. Jones, age 47, our founder, has served as a
director and our Chief Executive Officer since our
inception in July 1991. Since September 1993, Mr.
Jones has also served as Chairman of our board of
directors. From February 1993 until August 1998, Mr.
Jones served as our President.
Jeffrey T. Arnold Mr. Arnold, age 37, has served as a director since
April 1999. Mr. Arnold is the founder and has served
since September 2002 as the Chairman and Chief
Executive Officer of Convex Group, Inc., an
Atlanta-based media and entertainment holding company
that acquires and integrates unique content,
technology and distribution assets to create new
media enterprises. Mr. Arnold was founder of and,
from October 1996 to October 2000, served as a
director and Chief Executive Officer of WebMD
Corporation.
John R. Harris Mr. Harris, age 58, has served as a director since
November 2003. Mr. Harris has served as a director
and President and Chief Executive Officer of
eTelecare Global Solutions, Inc., a leading provider
of outsourced customer care solutions, since February
2006. He previously served as an information
technology consultant from December 2005 to February
2006. He served as Chief Executive Officer of Seven
Worldwide, Inc. (f/k/a Applied Graphics Technologies
Inc.), a digital content management company, from
December 2003 to December 2005. Prior to that time,
he served as Chief Executive Officer and President of
Delinea Corporation from July 2002 to December 2003.
He served as Chief Executive Officer and President of
Exolink from August 2001 to July 2002 and as Chairman
and Chief Executive Officer of Ztango, Inc. from 1999
to 2001. Prior to that time, Mr. Harris served in
various executive positions with Electronic Data
Systems Corporation for over 25 years. He currently
serves on the board of directors and the audit
committees of InVentiv Health, Inc. (f/k/a Ventiv
Health, Inc.) and Answerthink, Inc. He previously
served on the board of Seven Worldwide and as a
member of the board and audit committee of Genuity
Inc.
EXECUTIVE OFFICERS Boland T. Jones Please refer to the information
provided under "Directors" above.
Michael E. Havener Mr. Havener, age 39, has served as our Chief
Financial Officer since March 2004 and, from December
2002 until March 2004, he served as Chief Financial
Officer of our former Conferencing & Collaboration
business unit. From March 2002 to December 2002, Mr.
Havener was Vice President and Controller of Airgate
PCS, Inc. Mr. Havener previously served as our
Corporate Controller from August 1998 until March
2002, and he served as Controller of our former
Voicecom business unit and as our Director of
Strategic Development from August 1998 to March 2002.
Theodore P. Schrafft Mr. Schrafft, age 51, has served as our President
since July 2006. He served as President of our former
Conferencing & Collaboration business unit from
January 2000 to July 2006, and from March 1999 until
January 2000, Mr. Schrafft was Senior Vice President
and General Manager of that former business unit. He
served as President of our former Voice and Data
Messaging division from August 1998 to March 1999,
and from October 1997 until August 1998, he served as
our Vice President of Corporate Messaging. From June
1996 until October 1997, he served as President and
Chief Operating Officer of Voicecom Systems, Inc., an
integrated
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messaging and 800-based services company, which was
acquired by us in October 1997.
T. Lee Provow Mr. Provow, age 49, has served as our President,
Global Operations since July 2006. He served as
President of our former Data Communications business
unit from August 2003 to July 2006. From November
2002 to August 2003, he was Chairman of the Executive
Committee of Comdial Corporation, a converged voice
and data communications services provider, and served
as Chairman of the Board of Comdial from October 2002
to August 2003. From January 2002 to November 2002,
Mr. Provow was President and Managing Director of
Commonwealth Holdings, LLC, a private investment
fund. From January 2000 to December 2001, he was
President and Chief Executive Officer of Intelispan,
which was acquired by McLeod USA, and had served as a
director of Intelispan from August 1988 until its
acquisition. Mr. Provow also previously served as a
director of Allure Technologies, Comdial and Inksure
Technologies Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers, directors and persons who own more than ten percent of a
registered class of our equity securities to file reports of ownership and
changes in ownership of such securities with the SEC and the New York Stock
Exchange, Inc. Officers, directors and greater than ten percent beneficial
owners are required by applicable regulations to furnish us with copies of all
Section 16(a) forms they file.
We are required to describe in this amendment whether we have knowledge
that any person required to file such a report may have failed to do so in a
timely manner. In this regard, all of our directors, all officers subject to the
reporting requirements and each beneficial owner of more than ten percent of any
class of our common stock satisfied all applicable filing requirements, except
that Messrs. Jones, Allred and Havener each failed to timely file a Form 4: for
Mr. Jones, to report additional shares issued due to a clerical error in
calculating tax withholding; for Mr. Allred, to report shares gifted to charity;
and for Mr. Havener, to report shares withheld to satisfy the tax liability
applicable to the vesting of restricted stock. The reports have now been filed.
The foregoing is based upon reports furnished to us.
CODE OF CONDUCT AND ETHICS AND CORPORATE GOVERNANCE GUIDELINES
We have adopted a code of conduct and ethics that applies to all
employees, directors and officers, including our principal executive officer and
principal financial and accounting officer. We have also adopted corporate
governance guidelines that provide a framework within which our board and
management can effectively pursue our governance objectives for the benefit of
our shareholders.
Our code of conduct and ethics and corporate governance guidelines are
each posted on our Web site at PGICONNECT.COM (follow the "Investor Relations"
link to "Corporate Governance" -- "Code of Conduct and Ethics" and "-- Corporate
Governance Guidelines," respectively), and the code and guidelines are available
in print to any shareholder who requests it by writing to the Secretary at the
same address under "Shareholder Director Nominations" below.
We will post any amendments to, or waivers from, any provision of the
code of conduct and ethics with respect to our principal executive officer and
principal financial and accounting officer or any other persons performing
similar functions by disclosing the nature of such amendment or waiver at the
above-referenced location on our Web site.
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SHAREHOLDER DIRECTOR NOMINATIONS
The nominating and governance committee will consider written
recommendations from shareholders for nominees to our board of directors. A
shareholder who wishes to recommend a person to this committee for nomination to
our board must submit a written notice by mail to the nominating and governance
committee at Premiere Global Services, Inc., c/o Secretary, 3399 Peachtree Road,
N.E., The Lenox Building, Suite 700, Atlanta, Georgia 30326. Such a written
recommendation must be received not less than 120 calendar days nor more than
150 calendar days before the first anniversary of the date of our notice of
annual meeting sent to shareholders in connection with the previous year's
annual meeting. Such a recommendation to this committee should include:
o the candidate's name, age, business addresses and other contact
information,
o a complete description of the candidate's qualifications,
experience, background and affiliations, as would be required to
be disclosed in the proxy statement pursuant to Regulation 14A of
the SEC,
o a sworn or certified statement by the candidate in which he or she
consents to being named in the proxy statement as a nominee and to
serve as a director if elected, and
o the name and address of the shareholder(s) of record making such a
recommendation.
In addition to the above procedures, our bylaws provide that a
shareholder may propose a director candidate to be considered and voted on at an
annual meeting of shareholders by providing notice thereof to our Secretary not
less than 120 calendar days nor more than 150 calendar days before the first
anniversary of the date of our notice of annual meeting sent to shareholders in
connection with the previous year's annual meeting; however, information
regarding such a director candidate need not be included in our proxy statement
to shareholders for the annual meeting. This notice provided by a shareholder to
our Secretary must set forth certain information relating to the proposed
nominee as required by our bylaws.
AUDIT COMMITTEE
Our audit committee, which met eight times in 2006 and took action by
unanimous written consent one time, is responsible for:
o reviewing our financial statements, reports and other financial
information,
o appointing and overseeing our independent auditors, who report
directly to the audit committee,
o overseeing the integrity of our financial reporting processes and
the annual audit of our financial statements,
o reviewing with our auditors our internal controls and procedures
for financial reporting,
o reviewing the quality of appropriateness of our accounting
principles and underlying estimates,
o pre-approving all audit and permitted non-audit services,
o overseeing the performance of our internal audit function,
o establishing procedures for the receipt, retention and treatment
of complaints received by us regarding accounting, internal
accounting controls or auditing matters and the confidential
anonymous submission of concerns regarding questionable accounting
or auditing matters, and
o approving and reviewing on an on-going basis our related party
transactions.
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These duties and responsibilities are set forth in our amended and restated
audit committee charter, a copy of which is available on our Web site at
PGICONNECT.COM (follow the "Investor Relations" link to "Corporate Governance"
- -- "Board Committees"), and the charter is available in print to any shareholder
who requests it by writing to the Secretary at the same address under
"Shareholder Director Nominations" above. The audit committee currently
comprises John R. Harris (Chairman), Wilkie S. Colyer and Raymond H. Pirtle, Jr.
At least quarterly in connection with a regularly scheduled audit committee
meeting, our audit committee meets separately in executive session without
management present with our independent auditors and also with our internal
auditors. Our board of directors has determined that Mr. Harris is an audit
committee financial expert under the rules of the SEC and NYSE listing
standards, and that Messrs. Harris, Colyer and Pirtle are financially literate
and "independent," as independence for audit committee members is defined in our
independence guidelines, SEC rules and NYSE listing standards.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion And Analysis
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES
We believe that the performance and contribution of our executive
officers are critical to our overall success. The goal of our executive
compensation program is the same as our goal for operating the company - to
create long-term value for our shareholders. Our objective is to have a
compensation program that will allow us to attract and retain highly-qualified
executives, motivate them to achieve our overall business objectives, reward
superior performance and align the interests of our executive officers with our
shareholders. We believe that, in order to do this effectively, our program
must:
o provide our executive officers with total compensation
opportunities at levels that are competitive for comparable
positions at companies with whom we compete for talent,
o tie a significant portion of each executive's compensation to his
individual performance and success in achieving our business
strategy, management initiatives, and financial, operational and
other goals, through variable, at-risk incentive awards,
o provide significant upside opportunities for exceptional
performance, which can result in differentiated compensation among
executive officers based on performance, and
o closely align our executive officer's interests with those of our
shareholders by making stock-based incentives a core element of
our executive compensation.
We design our compensation program with a view to attracting and
retaining executive officer leadership of a caliber and level of experience
necessary to effectively manage our complex and global business. We believe it
is important for us to retain our executive officer talent over a number of
years to provide continuity of management in a highly competitive industry. Our
named executive officers, as defined and listed in the tables in this Item under
"Executive Compensation," have contributed a combined total of nearly 50 years
of experience with us, during which time they have held different positions and
been promoted to increasing levels of responsibility.
EXECUTIVE COMPENSATION DETERMINATIONS AND ASSESSMENTS
Our compensation committee is responsible for approving the
compensation of our named executive officers.
Our determinations and assessments of executive compensation are
primarily driven by the consideration of:
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o information regarding the compensation levels, programs and
practices of certain other companies for comparable positions, and
o company and individual performance, which results in a significant
portion of the total compensation of each executive officer being
at risk based on short and long-term performance.
Our chief executive officer participates in discussions and makes
compensation recommendations to our compensation committee with respect to
executive officers other than himself. Our compensation committee considers
these recommendations based on each executive officer's individual performance
and overall contribution to the company and exercises its discretion in
approving or modifying such recommendations.
As needed and pursuant to authority under its charter, our compensation
committee may retain outside compensation consultants to advise them with
respect to executive compensation packages. For example, our compensation
committee retained ECG Advisors, LLC in late 2004 in connection with its review
of Messrs. Jones' and Allred's compensation packages and took ECG Advisors'
recommendations into consideration when approving Messrs. Jones' and Allred's
amended and restated employment agreements in 2005. ECG Advisors' analysis
indicated that Mr. Jones' total compensation approximated the average total
compensation of his counterparts in a peer group of companies comparable in size
and industry to us.
ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
Our executive compensation program consists primarily of the following
integrated components: base salary, incentive bonus awards and long-term equity
awards, which together make up an executive officer's total direct compensation
in a given year or performance period. The program is rounded out with
perquisites and other executive benefits, including retirement savings,
insurance and severance benefits. Our compensation committee has chosen these
elements of compensation in order to create flexible packages that reflect the
long-term interests of our business and can reward both the short- and long-term
performance of the company and the individual executive officer.
We have entered into employment agreements or employment letters with
each of our named executive officers, which were approved by our compensation
committee. These employment agreements or letters contain the general terms of
each executive officer's employment and establish the minimum compensation that
such officers are entitled to receive, but do not prohibit, limit or restrict
these officers' ability to receive additional compensation from us, whether in
the form of base salary, bonus, stock awards or otherwise. For a discussion of
these terms, see below "Base Salary," "Incentive Bonus Awards," "Long-Term
Equity Awards" and "Individual Employment Agreements."
BASE SALARY
Base salaries are fixed components of our executive officer's total
direct compensation, in contrast to incentive and equity compensation, which is
at risk based on performance, continued employment or both. Other elements of
our executive compensation, such as incentive bonuses, are determined as a
percentage of base salary. In setting base salary, we considered the executive
officer's experience for the position, scope of responsibility and
accountability, and his personal contribution to the financial and operational
performance of the company.
Messrs. Jones' and Havener's annual base salaries of $900,000 and
$200,000, respectively, did not increase in 2006, and Mr. Jones' salary has not
increased since 2004. Several of our other named executive officers changed
their positions with us during 2006, resulting in changes in compensation for
these individuals. Effective in July 2006, our board of directors appointed Mr.
Schrafft as President of the entire company and Mr. Provow as our President,
Global Operations. To reflect their new positions and responsibilities, we
entered into amended and restated employment agreements with Messrs. Schrafft
and Provow, which removed the automatic five percent base salary increases
provided for in their prior employment agreements and provided for an increase
in Mr. Schrafft's annual base salary of approximately 15% to $450,000 to reflect
his promotion and that Mr. Provow's annual base salary would remain flat at
$385,000.
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INCENTIVE BONUS AWARDS
We design our incentive bonus awards to reward our executive officers
for short-term performance and the achievement of strategic results on a
quarterly and annual basis. Unlike base salary, which is fixed, our executive
officer's annual bonus is at risk based on how well the company and the
executive officer perform.
All of our named executive officers were eligible for incentive cash
bonuses in 2006, with 80% of the target bonuses for our executive officers for
each calendar year allocated to the achievement of quarterly targets (20% per
quarter) and 20% allocated to the achievement of annual targets. In addition,
Messrs. Jones and Allred were also eligible to receive incentive stock bonuses
equal to their cash bonuses in the form of restricted stock in 2006. We believe
that these performance-based awards provide a material incentive to executive
officers by offering potential increased stock ownership tied directly to
performance metrics.
TARGET OPPORTUNITIES. Incentive bonus awards are designed to focus
management attention and effort on the attainment of pre-established performance
goals. Each executive officer is assigned a target award opportunity, expressed
as a percentage of base salary, as further described below. Each executive
officer's bonus depends on his performance against pre-established individual
performance objectives, which can be 0% for failure to achieve targets or as
much as either 100% or 150% of targets for exceptional individual performance.
INDIVIDUAL PERFORMANCE OBJECTIVES. Individual performance is directly
reflected in what each executive officer receives as an incentive bonus awards.
These awards reflect an assessment of an executive officer's contribution to our
achievement of individualized financial performance goals as well as the degree
of challenge in the executive officer's position. Individual performance
objectives are established each year by our compensation committee and include
primarily quantifiable objectives, such as company financial metrics, with some
subjective measures also included, such as certain strategic objectives
depending on each executive officer's role in the company. Both quarterly and
annual incentive performance objectives are established, with the 2006
objectives set forth below. We believe that this individual assessment promotes
accountability for each executive officer's performance and helps differentiate
our executive compensation based on performance.
For 2006, Messrs. Jones' and Allred's target cash bonuses were equal to
100% of their respective base salaries. They were each also eligible for stock
bonus awards payable in restricted stock having a value equal to the cash
bonuses earned and issued on the same date that cash bonuses were paid. On
January 20, 2006, our compensation committee approved the performance criteria
for incentive bonus awards for 2006 for Messrs. Jones and Allred. One-third of
the value of such awards issued to Messrs. Jones and Allred was determined with
respect to our consolidated revenues, and two-thirds of such value was
determined with respect to our adjusted EBITDA (determined as operating income,
as reported, before depreciation, amortization, restructuring costs, asset
impairments, equity based compensation and net legal settlements and related
expenses). Messrs. Jones and Allred were eligible to earn between 70% and 150%
of their target cash and stock bonus awards applicable to each performance
criteria based upon the sliding scale provided in their respective amended and
restated employment agreements.
On April 21, 2006, our compensation committee approved the initial
performance criteria for incentive bonus awards for 2006 for Messrs. Havener,
Schrafft and Provow. On September 13, 2006, our compensation committee revised
the performance criteria for the incentive bonus awards for each of Messrs.
Schrafft and Provow for the fourth quarter of 2006 and for 2006 as a whole to
reflect their respective new positions with the company, including adding
additional objectives which focused on our "One Company" initiatives.
Mr. Havener's target bonus for 2006 was equal to 50% of his base
salary. One-third of the value of the incentive bonus awards to Mr. Havener was
determined with respect to our consolidated revenues, and two-thirds of such
value was determined with respect to our adjusted EBITDA. He was eligible to
earn between 70% and 100% of his target cash bonus awards applicable to each
performance criteria based upon the sliding scale provided in his employment
letter.
Mr. Schrafft's target bonus for 2006 was 100% of his base salary, with
an additional bonus opportunity approved by our compensation committee equal to
33% of his base salary. For the first three quarters of 2006 and
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for 2006 as a whole, one-half of the value of the quarterly incentive bonus
awards to Mr. Schrafft was determined with respect to each of the global revenue
and global adjusted EBITDA of our former Conferencing & Collaboration business
segment. His additional bonus opportunity with respect to the first three
quarters of 2006 was based upon the achievement of certain performance goals
relating to our North America Alerts & Notifications solutions revenue and, for
2006 as a whole, was determined with respect to North America revenue of our
former Data Communications business unit. One-third instead of one-half of the
value of his revised fourth quarter 2006 incentive bonus award was determined
with respect to each of the global revenue and global adjusted EBITDA of our
former Conferencing & Collaboration business unit. The remaining one-third of
this revised fourth quarter value was determined with respect to North America
revenue of our former Data Communications business unit. His additional bonus
opportunity for the fourth quarter of 2006 was determined with respect to
certain cost savings criteria and upon the achievement of certain business
objectives relating to our continuing efforts to transition to a uniform,
vertically operated company. He was eligible to earn either 100%, 75% or 0% of
his target cash bonus awards applicable to each performance criteria.
Mr. Provow's target bonus for 2006 was 100% of his base salary, with an
additional bonus opportunity approved by our compensation committee equal to 10%
of his base salary for the first three quarters of 2006 and 33% for the fourth
quarter of 2006 and to 2006 as a whole. For first three quarters of 2006,
one-third of the value of the quarterly incentive bonus awards to Mr. Provow was
determined with respect to each of the global revenue, global adjusted EBITDA
and global broadcast services revenue of our former Data Communications business
unit. His additional bonus opportunity for the first three quarters of 2006 was
based upon the achievement of certain performance goals relating to the
reduction of days sales outstanding (DSO's) for our former Data Communications
business unit. He was eligible to earn either 100%, 50% or 0% of his target cash
bonus awards applicable to each of his global revenue, global broadcast services
revenue and DSO's reduction performance criteria, and either 150%, 100% or 0% of
his target cash bonus awards applicable to his global adjusted EBITDA
performance criteria. One-third of the value of his revised fourth quarter 2006
incentive bonus award was determined with respect to each of the international
revenue and international adjusted EBITDA of our former Data Communications
business unit. The remaining one-third of this revised fourth quarter value and
the additional bonus opportunity for the fourth quarter 2006 was determined with
respect to certain cost savings criteria and upon the achievement of certain
business operations objectives relating to our continuing efforts to transition
to a uniform, vertically operated company. Two-thirds of the value of the annual
incentive bonus award for 2006 as a whole was determined with respect to each of
the global revenue and global adjusted EBITDA of our former Data Communications
business unit. Mr. Provow was eligible to earn either 100%, 75% or 0% of his
target cash bonus awards applicable to each performance criteria for the fourth
quarter 2006, and either 100%, 50% or 0% of his target cash bonus awards for
2006 as a whole.
The Grants of Plan-Based Awards table shows the threshold, target and
maximum incentive bonus awards that each of our named executive officers was
eligible to receive in 2006. Their actual incentive bonus awards earned in 2006
are shown in this table under the "Non-Equity Incentive Plan Awards --Target"
column as well as in the "Non-Equity Incentive Plan Compensation" column of the
Summary Compensation Table.
LONG-TERM EQUITY AWARDS
We believe that long-term equity awards reward and assist with the
retention of company leaders. By aligning financial rewards with the economic
interests of our shareholders, leaders are encouraged to work toward achieving
our long-term strategic objectives. In order to foster this perspective, we
currently use restricted stock awards as our primary long-term equity vehicle
for our named executive officers.
Restricted stock awards provide a strong retentive complement while
keeping focus on creating shareholder value. Restricted stock awards also
encourage executive officers to manage our company from the perspective of an
owner with a continuing equity stake in our business. Award recommendations are
made on the basis of an executive officer's level of responsibility, financial
contribution to the company, value to the organization and contribution to the
overall management of the company.
In 2006, Messrs. Jones and Havener were not granted shares of
restricted stock or stock options.
In May 2006, our compensation committee granted Messrs. Schrafft and
Provow 240,000 and 180,000
8
shares of restricted stock, respectively, which vest in equal quarterly
installments of 15,000 shares and 11,250 shares, respectively, over four-year
periods. At that time, Mr. Allred was also granted 60,000 shares of restricted
stock which vested in three equal quarterly installments of 20,000 shares each.
The vesting on these grants began on June 30, 2006, provided that the executive
officer is still employed by us or any of our affiliates at each vesting date.
We believe that the vesting periods for the awards are effective in promoting
retention of our executive officers.
ALLOCATION OF TOTAL DIRECT COMPENSATION
Just as our shareholders put their money at risk when they invest in
our company, we believe that a significant portion of our executive compensation
should be at risk. We strive to achieve an appropriate mix between cash and
equity awards and more heavily weigh our executive compensation toward incentive
and equity compensation. For example, in 2006, approximately 28% of Mr. Jones'
total direct compensation was fixed in the form of base salary and the remaining
percentage was at risk in the form of incentive bonus awards and long-term
equity awards. Our other current named executive officers had a slightly more
conservative weighting of fixed and at-risk compensation for 2006, with an
average of approximately 34% fixed in base salary. We believe that a mix of
service and performance-based at-risk compensation provides a reasonable balance
to promote executive officer retention and financial performance goals.
Overall, we believe that our incentive bonus awards require strong
performance in order to achieve target compensation and that our executive
officer's relative pay appears to be aligned with relative performance. In 2006,
Messrs. Jones and Allred achieved only approximately 33% of their possible
maximum incentive cash and stock bonus award payouts tied to consolidated
company financial objectives. Mr. Havener achieved approximately 49% of his
maximum incentive targets tied to consolidated company financial objectives.
Messrs. Schrafft and Provow achieved a larger percentage, approximately 75% and
54%, respectively, of their maximum incentive targets tied primarily to segment
financial objectives related to our former Conferencing & Collaboration and Data
Communications business units and achievement of strategic goals of unifying our
company under a vertical management structure.
Another way in which we seek to align the interests of our executive
officers with our shareholders is to make sure that a significant portion of
their compensation is payable in equity awards. For example, in 2006,
approximately 54% of Mr. Jones' total compensation, and an average of
approximately 42% of our other current named executive officer's total
compensation, was in the form of equity in our company.
PERQUISITES AND OTHER EXECUTIVE BENEFITS
We provide our named executive officers with various retirement
savings, health and welfare and other employee benefits generally available to
all of our employees. We maintain a broad-based qualified 401(k) defined
contribution plan in which our named executive officers are eligible to
participate, along with a substantial majority of our employees. Our 401(k) plan
encourages our employees to save for retirement and provides a financial
security component of our compensation objectives which promotes retention. In
January 2006, we matched up to 3% of our employees' contributions which vest
according to a schedule based on length of service. Executive officers
participate in our 401(k) plan on the same terms as our other employees,
including limits imposed by the internal revenue code of 1986, as amended. In
2006, we discontinued the health and wellness insurance premium reimbursement
for our executive officers and, as a result, our executive officers now also
participate in our health and welfare benefit plans on the same terms as our
other employees. We do not offer other broad-based retirement programs to our
executive officers or employees. We believe that these programs are comparable
to those offered by similar companies and, as a result, are needed to ensure
that our compensation remains competitive.
We also offer additional perquisites to our named executive officers to
ensure competitiveness at the senior leadership level and in order to minimize
distractions from, and allow our executive officers to devote additional time
to, our company initiatives. We generally provide our executive officers with
some or all of the following perquisites: car allowances, club membership dues,
life and disability insurance, reimbursement for tax and financial planning
services and certain travel-related expenses where appropriate. The additional
life and supplemental disability insurance benefits are designed to provide our
executive officers with enhanced benefits greater than the life and disability
benefits available under our broad-based health and welfare benefits that we
offer to all employees due to the benefit limitations within these programs. In
addition, each year we hold a sales incentive trip to award
9
the top achievers in our sales and service organization. If they so choose,
participants may be accompanied by their spouse or a guest. In 2006, four of our
named executive officers who made the trip were also accompanied by their spouse
or guest, the cost of whose trip we paid for. For information on the incremental
cost of these perquisites and other personal benefits to the company, see
footnote 7 to the Summary Compensation Table.
SEVERANCE PAY ARRANGEMENTS
In order to attract and retain highly-qualified executive officers,
employment agreements or employment letters with our executive officers contain
specified severance benefits under certain conditions and provisions upon a
change in control of the company. We believe that our severance arrangements,
including the conditions under which such benefits are triggered and the amount
of such benefits, are comparable to those provided by similar companies.
Termination, severance payments and benefits and change in control provisions
for our named executive officers are described in this Item under "Potential
Payments Upon Termination or Change in Control."
TAX AND ACCOUNTING CONSIDERATIONS
TAX CONSIDERATIONS
Section 162(m) of the tax code places a limit of $1.0 million on the
amount of compensation that we may deduct in any one year with respect to any
one of our named executive officers. However, qualifying performance-based
compensation will not be subject to the deduction limit if certain requirements
are met. To maintain flexibility in compensating our executive officers, the
compensation committee reserves the right to use its judgment to authorize
compensation payments that may be subject to the limit when it believes that
such payments are appropriate. Accordingly, certain components of our executive
compensation program are designed to be qualifying performance-based
compensation under Section 162(m) while others may not be.
ACCOUNTING CONSIDERATIONS
With the adoption of FAS 123(R), we do not expect accounting treatment
of differing forms of equity awards to vary significantly and, therefore,
accounting treatment is not expected to have a material effect on the selection
of forms of compensation.
EQUITY GRANT PRACTICES
We do not time the grant of equity awards to take advantage of the
release of material non-public information. During 2004, we shifted the mix of
equity awards we granted and increased the emphasis on restricted stock grants
rather than stock option grants. Our company's general practices provide that,
for our executive officers, the price of the equity award grant will be the
closing price of our common stock on the date of the approval of the award by
our compensation committee, and for our employees who are not executive
officers, equity awards are granted on the last day of each fiscal quarter using
the closing price on the grant date or on the last trading day prior to the
grant date if the grant date falls on a non-trading day. There may be occasions
where grants are made on other dates, but we are working to eliminate "off
cycle" grants to the extent possible.
Compensation Committee Interlocks And Insider Participation
During 2006, Messrs. Colyer and Harris served on the compensation
committee and neither of these directors has ever been one of our employees or
officers. None of our executive officers serves as a member of the compensation
committee of any other entity that has one or more executive officers serving as
a member of our compensation committee.
10
COMPENSATION COMMITTEE REPORT
Our compensation committee has reviewed and discussed the Compensation
Discussion and Analysis section included in this amendment with management, and
based on such review and discussions, our compensation committee recommended to
our board of directors that the Compensation Discussion and Analysis be included
in this amendment and in our proxy statement.
The foregoing report has been submitted by the following members of the
compensation committee.
Wilkie S. Colyer, Chairman
John R. Harris
THE FOREGOING REPORT OF THE COMPENSATION COMMITTEE DOES NOT CONSTITUTE
"SOLICITING MATERIAL" AND SHOULD NOT BE DEEMED TO BE "FILED" WITH THE SEC OR
INCORPORATED BY REFERENCE INTO ANY OF OUR OTHER FILINGS UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT WE
SPECIFICALLY INCORPORATE THIS REPORT BY REFERENCE IN ANY OF THOSE FILINGS.
11
Executive Compensation
The following tables set forth all plan and non-plan compensation
earned by our "named executive officers" for 2006, consisting of our chief
executive officer, chief financial officer and our two other most highly
compensated executive officers who were serving as executive officers at
December 31, 2006, as well as Jeffrey A. Allred, who served as one of our
executive officers during 2006 but no longer served as an executive officer at
year end.
SUMMARY COMPENSATION TABLE
NON-EQUITY
INCENTIVE PLAN ALL OTHER
NAME AND PRINCIPAL SALARY BONUS STOCK AWARDS OPTION AWARDS COMPENSATION COMPENSATION
POSITION YEAR ($) (1) ($) (2) ($)(3) (4) ($) (3) (5) ($) (6) ($) (7) TOTAL ($)
-------- ---- ------- ------- ---------- ----------- ------- ------- ---------
Boland T. Jones 2006 900,000 -- 1,692,017 -- 441,000 126,824 3,159,841
Chief Executive
Officer and Chairman
of the Board
Michael E. Havener 2006 200,000 14,333 166,200 49,629 49,000 -- 479,162
Chief Financial Officer
Theodore P. Schrafft 2006 420,519 50,000 357,300 142,267 428,445 32,961 1,431,492
President (8)
T. Lee Provow 2006 385,606 -- 267,975 327,037 270,498 48,364 1,299,480
President, Global
Operations (9)
Jeffrey A. Allred 2006 600,000 -- 753,733 -- 294,000 653,910 2,301,643
Former Chief
Investment Officer (10)
- ---------------------------
(1) Reflects salary amounts paid in 2006 pursuant to each named executive
officer's employment agreement or employment letter with us. For Mr.
Schrafft, salary consists of $218,019 while President of our former
Conferencing & Collaboration business unit from January 1, 2006 through
July 19, 2006, and $202,500 as our President from July 20, 2006 through
December 31, 2006. For Mr. Provow, salary consists of $212,231 while
President of our former Data Communications business unit from January 1,
2006 through July 19, 2006, and $173,250 as our President, Global
Operations from July 20, 3006 through December 31, 2006.
(2) Amounts reflect discretionary bonuses approved by our compensation
committee for Mr. Havener in recognition of the completion of a special
project and for Mr. Schrafft in recognition of his promotion to President
of the entire company.
(3) Amounts shown reflect the dollar amount expensed for financial statement
reporting purposes for the year ended December 31, 2006 in accordance
with FAS 123(R). Assumptions used in the calculation of these amounts are
included in footnote 9 to our audited financial statements included in
our annual report on Form 10-K for the year ended December 31, 2006.
12
(4) Includes time-vested restricted stock awards for all named executive
officers granted in 2006 or in prior years and quarterly and annual
incentive restricted stock bonus awards for Messrs. Jones and Allred
issued during 2006. For Messrs. Jones and Allred, includes the 2006
fourth quarter and annual incentive restricted stock bonus awards which
were expensed in 2006 but granted the first quarter of 2007 on the same
date that cash bonuses were paid by us to all of our eligible employees.
The 2006 incentive bonus criteria under which the restricted stock awards
were made are described in this Item under "Compensation Discussion and
Analysis --Elements of Our Executive Compensation Program --Incentive
Bonus Awards."
(5) Stock options for Messrs. Havener, Schrafft and Provow were granted prior
to 2006.
(6) Includes quarterly and annual incentive cash bonus awards earned and paid
in 2006, except the 2006 fourth quarter and annual incentive cash bonus
awards which were earned in 2006 but paid in the first quarter of 2007.
Messrs. Schrafft and Provow's fourth quarter and annual incentive cash
bonus awards were revised by our compensation committee in September 2006
to reflect their new positions. For Messrs. Jones and Allred, certain de
minimis amounts (less than $20) were paid in cash in lieu of fractional
shares from the restricted stock bonus awards earned in 2006. The 2006
incentive bonus criteria under which the incentive cash bonus awards were
made are described in this Item under "Compensation Discussion and
Analysis --Elements of Our Executive Compensation Program --Incentive
Bonus Awards."
(7) "All Other Compensation" for the named executive officers includes the
following:
o For Mr. Jones, various perquisites and benefits included an auto
allowance, club membership dues, supplemental disability premiums,
$52,935 for professional fees for tax and estate planning, spouse
or guest travel for our annual sales incentive trip, company
matching contributions to our 401(k) plan and $30,000 in life
insurance premiums.
o For Mr. Havener, the aggregate incremental cost of his perquisites
was less than $10,000.
o For Mr. Schrafft, various perquisites and benefits included an
auto allowance, supplemental disability premiums, spouse or guest
travel for our annual sales incentive trip and company matching
contributions to our 401(k) plan.
o For Mr. Provow, various perquisites and benefits included an auto
allowance, club membership dues, life and supplemental disability
insurance premiums, spouse or guest travel for our annual sales
incentive trip and company matching contributions to our 401(k)
plan.
o For Mr. Allred, various perquisites and benefits included an auto
allowance, club membership dues, life and supplemental disability
insurance premiums, spouse or guest travel for our annual sales
incentive trip and company matching contributions to our 401(k)
plan. Also included is separation compensation consisting of a
grant of restricted stock having a fair market value of $600,000,
which is subject to a one-year holding period restriction, and
costs associated with Mr. Allred's retention of his laptop
computer and cell phone.
Perquisites are valued at the aggregate incremental cost of providing
such benefits to the named executive officers.
(8) Mr. Schrafft became President of the entire company on July 20, 2006.
(9) Mr. Provow became President, Global Operations on July 20, 2006.
(10) Mr. Allred served as one of our executive officers, as our former
President and Chief Operating Officer, until July 20, 2006, and continued
to be employed by us in a non-named executive officer position through
the end of 2006. He resigned from the company on January 1, 2007.
13
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2006
The following table provides additional detail regarding restricted
stock and any other equity awards granted to the named executive officers during
the 2006 fiscal year and amounts payable to the named executive officers under
other compensation plans.
ESTIMATED POSSIBLE PAYOUTS ESTIMATED POSSIBLE PAYOUTS ALL OTHER GRANT
GRANT UNDER NON-EQUITY INCENTIVE UNDER EQUITY INCENTIVE STOCK DATE FAIR
NAME DATE (1) PLAN AWARDS (2) PLAN AWARDS (2) (3) AWARDS: VALUE OF
---- -------- -------------------------------- ---------------------------------- NUMBER OF STOCK AND
SHARES OF OPTION
THRESHOLD TARGET MAXIMUM THRESHOLD TARGET MAXIMUM STOCK OR AWARDS
($) ($) ($) (#) (#) (#) UNITS(#) ($) (4)
--- --- --- --- --- --- -------- -------
Boland T. 1/20/06 0 51,000 270,000 0 6,423 (5) 34,005 -- 51,000
Jones
1/20/06 0 135,000 270,000 0 17,952 (5) 35,904 -- 135,000
1/20/06 0 135,000 270,000 0 16,383 (5) 32,766 -- 135,000
1/20/06 0 120,000 540,000 0 11,764 (5) 52,940 -- 120,000
Michael E. 0 5,667 20,000 -- -- -- -- --
Havener
0 15,000 20,000 -- -- -- -- --
0 15,000 20,000 -- -- -- -- --
0 13,334 40,000 -- -- -- -- --
Theodore P. 0 77,175 102,900 -- -- -- -- --
Schrafft
0 77,175 108,045 -- -- -- -- --
0 77,175 120,000 -- -- -- -- --
0 196,920 240,000 -- -- -- -- --
5/5/06 240,000 (6) 1,905,600
T. Lee 0 77,175 97,555 -- -- -- -- --
Provow
0 90,038 97,555 -- -- -- -- --
0 25,725 97,533 -- -- -- -- --
0 77,561 205,800 -- -- -- -- --
5/5/06 180,000 (6) 1,429,200
Jeffrey A. 1/20/06 0 34,000 180,000 0 4,282 (5) 22,670 -- 34,000
Allred
1/20/06 0 90,000 180,000 0 11,968 (5) 23,936 -- 90,000
1/20/06 0 90,000 180,000 0 10,922 (5) 21,844 -- 90,000
1/20/06 0 80,000 360,000 0 7,843 (5) 35,294 -- 80,000
5/5/06 60,000 (7) 476,400
12/30/06 63,559 (8) 600,000
- ---------------------------
(1) Our compensation committee approved the 2006 incentive bonus criteria
subject to achievement of performance targets as described in this Item
under "Compensation Discussion and Analysis --Elements of Our Executive
Compensation Program --Incentive Bonus Awards" for quarterly and annual
performance periods for Messrs. Jones and Allred on January 20, 2006, and
for quarterly and annual incentive cash bonus
14
awards on April 21, 2006 for Messrs. Havener, Schrafft and Provow (as
such criteria was revised for the fourth quarter and 2006 as a whole for
Messrs. Schrafft and Provow on September 13, 2006). If earned, the cash
amounts were paid and the restricted stock was issued on the date of the
first payroll following each of our earnings releases (which are the same
dates that cash bonuses were paid by us to all eligible employees), with
the restricted stock vesting the next business day, subject to 18-month
holding period restrictions. Messrs. Havener, Schrafft and Provow were
not eligible for incentive stock bonus awards during 2006.
(2) For all amounts shown, the 2006 incentive bonus criteria were set and
incentive bonuses were earned during 2006, even though the fourth quarter
and annual incentive cash bonuses were paid, and the incentive stock
bonuses were issued, in the case of Messrs. Jones and Allred, in the
first quarter of 2007. Because these awards are quarterly or annual and
are all earned in 2006, the incentive cash bonus amounts are also
reported in the "Non-Equity Incentive Plan Compensation" column of the
Summary Compensation Table, and the incentive stock bonus amounts for
Messrs. Jones and Allred are also reported under the "Stock Awards"
column of the Summary Compensation Table and under the "Number of Shares
Acquired on Vest" column of the Options Exercised and Stock Vested in
Fiscal Year 2006 table. Information regarding the incentive bonus
criteria and a general description of the formula used to calculate these
incentive awards is described in this Item under "Compensation Discussion
and Analysis --Elements of Our Executive Compensation Program --Incentive
Bonus Awards."
(3) For Messrs. Jones and Allred, shares issued as incentive stock bonuses
were granted under our 2004 long-term incentive plan. The number of
shares issued was determined by dividing the dollar amount of the
relevant cash bonus by the per share closing price of our common stock on
the date of issuance, with fractional shares paid in cash. These shares
vest on the next business day after issuance and are subject to an
18-month holding period restriction.
(4) Grant date fair values of restricted stock awards are according to FAS
123(R). Certain de minimis amounts (less than $20) were paid in cash in
lieu of fractional shares.
(5) Holding period restrictions expire November 5, 2007, January 8, 2008, May
3, 2008 and August 23, 2008 for each of Mr. Jones' respective restricted
stock awards which were issued on May 5, July 28, November 2, 2006 and
February 23, 2007, respectively. Mr. Allred's holding period restrictions
were removed as of January 1, 2007 pursuant to his separation agreement.
Information on Mr. Allred's separation agreement is described in this
Item under "Individual Employment Agreements.
(6) On May 5, 2006, Messrs. Schrafft and Provow were granted restricted stock
awards of 240,000 and 180,000 shares, respectively, under our 1995 stock
plan, which vests in 16 quarterly installments of 15,000 and 11,250
shares, respectively, on the last day of each calendar quarter beginning
June 30, 2006. These awards are also reported under the "Stock Awards"
column of the Summary Compensation Table and under the "Number of Shares
Acquired on Vest" column of the Options Exercised and Stock Vested in
Fiscal Year 2006 table. The unvested shares are also reported under the
Outstanding Equity Awards at 2006 Fiscal Year table.
(7) On May 5, 2006, Mr. Allred was granted a restricted stock award of 60,000
shares under our 1995 stock plan, which vested 20,000 per quarter through
December 31, 2006. This award is also reported under the "Stock Awards"
column of the Summary Compensation Table and under the "Number of Shares
Acquired on Vest" column of the Options Exercised and Stock Vested in
Fiscal Year 2006 table. The unvested shares are also reported under the
Outstanding Equity Awards at 2006 Fiscal Year table.
(8) On December 30, 2006, pursuant to Mr. Allred's separation agreement, he
was granted a restricted stock award under our 1995 stock plan having a
fair market value of $600,000, or 63,559 shares using the closing price
of our common stock on the grant date. Shares vested on December 31,
2006, subject to a one-year holding period restriction. This award is
also reported under the "All Other Compensation" column of the Summary
Compensation Table and under the Option Exercises and Stock Vested in
Fiscal Year 2006 table.
15
OUTSTANDING EQUITY AWARDS AT 2006 FISCAL YEAR-END
The following table presents information on outstanding equity awards
held by named executive officers at December 31, 2006, including the number of
securities underlying both exercisable and unexercisable portions of unexercised
stock options as well as the exercise price and expiration date of each
outstanding option grant. In addition, this table provides information about
stock awards including the aggregate number and market value of shares that have
not vested pursuant to such awards.
OPTION AWARDS STOCK AWARDS
--------------------------------------------------- ---------------------------------------
NUMBER OF
SECURITIES
UNDERLYING NUMBER OF SHARES MARKET VALUE OF
UNEXERCISED OPTION OPTION OR UNITS OF STOCK SHARES OR UNITS OF
OPTIONS (#) EXERCISE EXPIRATION THAT HAVE NOT STOCK THAT HAVE
NAME EXERCISABLE PRICE($) DATE VESTED(#) NOT VESTED($)
- ---- ----------- -------- ---- --------- -------------
Boland T. Jones -- -- -- 540,007 (1) 5,097,666
Michael E. Havener 30,000 (2) 8.81 12/31/11 45,000 (3) 424,800
Theodore P. Schrafft 233,334 (4) 5.04 5/30/11 195,000 (5) 1,840,800
T. Lee Provow 385,000 (6) 6.13 8/1/11 146,250 (7) 1,380,600
Jeffrey A. Allred -- -- -- -- --
- ---------------------------
(1) Shares of restricted stock vest in quarterly installments of 44,999 shares
on the last day of each calendar quarter over 12 remaining quarters.
(2) Options were fully vested on December 31, 2006.
(3) Shares of restricted stock vest in three equal annual installments of
15,000 shares on each of July 28, 2007, 2008 and 2009.
(4) Options were fully vested on May 30, 2006.
(5) Shares of restricted stock vest in quarterly installments of 15,000 shares
on the last day of each calendar quarter over 13 remaining quarters.
(6) Options were fully vested on August 1, 2006.
(7) Shares of restricted stock vest in quarterly installments of 11,250 shares
on the last day of each calendar quarter over 13 remaining quarters.
16
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2006
The following table shows amounts realized by named executive officers
on each option that was exercised and each stock award that vested during the
2006 fiscal year.
OPTION AWARDS STOCK AWARDS
----------------------------------------- ----------------------------------------------
NUMBER OF SHARES
ACQUIRED ON VALUE REALIZED ON NUMBER OF SHARES VALUE REALIZED ON
NAME EXERCISE (#) EXERCISE ($) ACQUIRED ON VESTING (#) VESTING ($)
---- ------------ ------------ ----------------------- -----------
Boland T. Jones -- -- 82,863 (1) (2) 676,208
179,996 (3) 1,517,366
Michael E. Havener 10,000 43,768 (4) 15,000 (5) 112,800
Theodore P. Schrafft -- -- 45,000 (1) (6) 385,050
T. Lee Provow -- -- 33,750 (1) (7) 288,788
Jeffrey A. Allred -- -- 55,242 (1) (8) 450,805
60,000 (1) (9) 513,400
63,559 (1) (10) 600,000
- ---------------------------
(1) Shares are also reported under the Grants of Plan-Based Awards table,
except for fourth quarter and annual stock bonus awards for Messrs. Jones
and Allred which are earned in the fourth quarter of each year but are
not issued until the first quarter of the following year.
(2) Represents the aggregate incentive restricted stock bonus awards for the
fourth quarter and annual 2005 grant, which were issued in the first
quarter of 2006 and the first three quarterly issuances in 2006. An
aggregate of 32,628 shares were withheld to pay the tax liability upon
vesting. An aggregate of 50,235 net shares were issued, which had a net
realized value of $409,330. Shares vested the next business day after
date of issuance and are subject to 18-month holding period restrictions
from date of issuance.
(3) Represents time-vested restricted stock awards which were granted prior
to 2006 and vested on the last day of each calendar quarter in 2006. An
aggregate of 68,158 shares were withheld to pay the tax liability upon
vesting. An aggregate of 111,838 net shares were issued, which had a net
realized value of $943,765.
(4) Value realized on exercise represents the difference between the exercise
price of the option and the market price of the shares on the date the
option was exercised. The value realized was determined without
consideration of any taxes that may have been owed.
(5) Represents a time-vested restricted stock award which was granted prior
to 2006 and vested on July 28, 2006. An aggregate of 6,367 shares were
withheld to pay the tax liability upon vesting. An aggregate of 8,633 net
shares were issued, which had a net realized value of $64,920.
(6) Represents a time-vested restricted stock award that vested on the last
day of each calendar quarter in 2006. An aggregate of 19,101 shares were
withheld to pay the tax liability upon vesting. An aggregate of 25,899
net shares were issued, which had a net realized value of $221,609.
(7) Represents a time-vested restricted stock award that vested on the last
day of each calendar quarter in 2006. An aggregate of 14,325 shares were
withheld to pay the tax liability upon vesting. An aggregate of 19,425
net shares were issued, which had a net realized value of $166,213.
17
(8) Represents the aggregate incentive restricted stock bonus awards for the
fourth quarter and annual 2005 grant which were issued in the first
quarter of 2006 and the first three quarterly issuances in 2006. An
aggregate of 22,175 shares were withheld to pay the tax liability upon
vesting. An aggregate of 33,067 net shares were issued, which had a net
realized value of $270,001. Shares vested the next business day after
date of issuance and all 18-month holding period restrictions were
subsequently released January 1, 2007 pursuant to Mr. Allred's separation
agreement.
(9) Represents a time-vested restricted stock award that vested on the last
day of each calendar quarter in 2006. 25,470 shares were withheld to pay
the tax liability upon vesting. 34,530 net shares net were issued, which
had a net realized value of $295,462.
(10) Represents restricted stock granted under Mr. Allred's separation
agreement. 26,131 shares were withheld to pay the tax liability upon
vesting. 37,428 net shares were issued, which had a net realized value of
$353,320. Shares vested one business day after date of grant and are
subject to a one-year holding period restriction from the date of
issuance.
Potential Payments Upon Termination Or Change In Control
We have entered into employment agreements or letters with each of our
named executive officers that provide for severance payments or benefits upon
termination of employment and change of control.
VOLUNTARY TERMINATION
A named executive officer is not entitled to receive any severance
payment or benefits upon his voluntary decision to terminate employment with us.
The executive officer would be entitled to receive a pro-rata portion of his
base salary for the year in which termination occurs and any earned and accrued
bonus compensation, as applicable.
TERMINATION WITH OR WITHOUT CAUSE
A named executive officer is not entitled to receive any severance
payment or benefits upon termination for cause. The executive officer would be
entitled to receive a pro rata portion of his base salary for the year in which
termination occurs and any earned and accrued bonus compensation, as applicable.
A named executive officer is entitled to receive severance payments and certain
benefits upon termination by the company without cause before and after a change
in control, per each executive officer's employment agreement or letter.
Termination for cause generally includes:
o the willful and continued failure of an executive to substantially
perform his duties, or
o the willful engaging by an executive in illegal conduct or gross
misconduct, which has, or reasonably may be expected to have, a
substantial, adverse effect upon us.
TERMINATION FOR GOOD REASON
Some of our named executive officers are entitled to receive severance
payments and certain benefits upon termination for good reason by the executive
officer before or after a change in control, per each executive officer's
employment agreement. Severance for termination for good reason before a change
in control is provided only for Mr. Jones under his employment agreement. Mr.
Havener's employment letter does not provide for severance benefits upon
termination for good reason. Messrs. Schrafft's and Provow's employment
agreements provide for severance benefits upon termination for good reason only
within 24 months after a change in control. Termination
18
for good reason requires prior written notice by an executive officer.
Termination for good reason generally includes:
o the assignment to the executive of any duties inconsistent with
the executive's position, authority, duties or responsibilities
with us or any other action by us that results in a diminution in
such position, authority, duties or responsibilities,
o a material reduction in the executives' base salary or bonus
opportunity,
o a material breach by us of any of the provisions in an executive's
employment agreement, or
o requiring the executive to be based at any office or location
other than at specified company office locations.
CHANGE IN CONTROL
The employment agreements and employment letters with each of our named
executive officers contain change in control provisions whereby certain
severance payments and benefits would be triggered upon the occurrence of a
change in control of the company. The purpose of these benefits are to provide
our named executive officers with a level of financial protection upon a loss of
employment, and to avoid their loss of previously granted stock options and
restricted stock awards, in connection with a change in control of the company.
Severance amounts are payable over time, except in connection with a change in
control, in which event the named executive officer will receive a lump sum
payment. Mr. Jones is also entitled to additional gross-up payments for any
excise tax that may be imposed in connection with a change in control.
The change in control severance provisions in our named executive
officers employment agreements or letters require a "double trigger," that is,
for any severance payment to occur, a change in control must be followed by an
involuntary loss of employment by the company without cause or by the employee
for good reason, either within or more than 12 or 24 months after a change in
control (depending upon the named executive officer). If Messrs. Jones',
Schrafft's or Provow's employment agreements are not renewed either in
contemplation of, or within 24 months after, a change in control, certain
severance payments would be triggered. In addition, all named executive officers
unvested stock options and restricted stock will fully vest upon a change in
control.
A change in control of the company generally includes the occurrence of
any of the following events:
o the acquisition of 50% or more of our voting securities,
o the members of our board of directors ceasing to constitute at
least 60% of our board,
o a merger, consolidation or reorganization involving the company,
o a complete liquidation or dissolution of the company, or
o the sale or other disposition of all or substantially all of our
assets.
The following table describes the potential payments and benefits to
which each of our named executive officers would be entitled if termination of
employment occurred before or after a change in control or was due to death or
disability. The values assume termination of employment was effective as of
December 31, 2006. A discussion of termination of employment and change of
control provisions contained in employment agreements or letters with each of
our named executive officers is set forth below under "Individual Employment
Agreements."
19
TERMINATION
WITHOUT CAUSE OR
TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
FOR GOOD REASON BEFORE A AFTER A DEATH OR
NAME BENEFIT CHANGE IN CONTROL CHANGE IN CONTROL DISABILITY
- ---- ------- ----------------- ----------------- ----------
Boland T. Jones Salary $ 2,725,774 $ 2,725,774 $1,350,000 (3)
Bonus 7,541,366 7,541,366 --
Acceleration of equity awards (1) 5,097,666 5,097,666 5,097,666
Health and welfare benefits 131,485 131,485 5,000 (3)
continuation (2)
Life insurance 90,000 90,000 --
Excise tax gross-up -- -- -- (4)
----------- ----------- ----------
Total $15,586,291 $15,586,291 $6,452,666
TERMINATION
WITHOUT CAUSE OR
TERMINATION WITHOUT CAUSE FOR GOOD REASON
BEFORE A AFTER A DEATH OR
NAME BENEFIT CHANGE IN CONTROL CHANGE IN CONTROL (5) DISABILITY
- ---- ------- ----------------- --------------------- ----------
Michael E. Havener Salary $100,000 $200,000 --
Bonus -- -- --
Acceleration of equity awards (1) 141,600 424,800 $424,800
-- -- --
-------- -------- --------
Total $241,600 $624,800 $424,800
Theodore P. Schrafft Salary $ 900,000 $ 900,000 --
Bonus -- -- --
Acceleration of equity awards (1) 141,600 1,840,800 $1,840,800
Health and welfare benefits 29,812 29,812 --
continuation (2) ---------- ---------- ----------
Total $1,071,412 $2,770,612 $1,840,800
T. Lee Provow Salary $770,000 $ 770,000 --
Bonus -- -- --
Acceleration of equity awards (1) 106,200 1,380,600 $1,380,600
Health and welfare benefits 29,812 29,812 --
continuation (2) -------- ---------- ----------
Total $906,012 $2,180,412 $1,380,600
- ---------------------------
(1) All named executive officers' equity awards fully vest upon a change in
control of the company and upon death or disability. All of Mr. Jones'
equity awards also vest upon a termination without cause or for good
reason prior to a change in control. The next tranche of equity awards
vest upon a termination without cause for Messrs. Havener, Schrafft and
Provow.
(2) Heath and welfare benefits continuation amounts are based upon the type
of insurance we carried on each applicable named executive officer, and
are valued at the premium in effect, on January 1, 2007.
20
(3) Mr. Jones' disability benefit equals 100% of his base salary payable for
the first year, then 50% of his base salary for the next six months. Mr.
Jones' employment agreement also provides for a $5,000 death benefit.
(4) Based on certain assumptions, including assumptions regarding the stock
price of our common stock and adjusted federal rates, we do not believe
that an excise tax would be imposed on severance payments to Mr. Jones
using a December 31, 2006 termination date.
(5) Not applicable to Mr. Havener in the event of termination for good
reason.
INDIVIDUAL EMPLOYMENT AGREEMENTS
BOLAND T. JONES
The initial term of Mr. Jones' employment agreement expires on January
1, 2010. Thereafter, it renews automatically for successive one-year periods
unless either party elects not to renew at least 30 days prior to expiration of
the term. If we terminate his employment for any reason other than cause, death,
disability or if he resigns for good reason, Mr. Jones will be entitled to
severance compensation equal to 2.99 times the greater of the sum of his annual
base salary in effect at the date of his termination plus 200% of his target
cash bonus for the year in which his termination occurs or the sum of the
highest annual base salary plus 200% of the highest cash bonus paid to him for
any of the three calendar years prior to the date of termination. This severance
amount will be payable in cash in equal installments over a 12-month period,
unless the termination occurs during a 24-month period following a change of
control, in which case the severance amount will be payable in a lump sum upon
the effective date of his termination. If, during the 24-month period following
a change in control, Mr. Jones is terminated by us or the company's successor
for failure to renew his agreement, he will be entitled to severance
compensation as if his employment was terminated without cause and his severance
amount will be payable in a lump sum within five business days of the date of
termination. In addition, upon termination of Mr. Jones' employment without
cause or for good reason, or in the event that we fail to renew the term of his
employment agreement, he will continue to participate in any of our dental,
disability, life or similar programs in which he participated immediately prior
to termination for the remaining term of his agreement as if such termination
had not occurred. This benefit would include the continuation of $3.0 million
life insurance policy on Mr. Jones. Mr. Jones also will continue to participate
in any of our medical or health plans and programs in which he participated
immediately prior to such termination for a period of 60 months after the date
of termination without cause or for good reason, or for a period of 24 months
following the termination of his employment agreement due to our failure to
renew its term. In addition, Mr. Jones is entitled to receive a gross-up payment
in the event any payments or benefits to which he may be entitled are treated as
"excess parachute payments" and are subject to excise taxes under Section 4999
of the tax code.
Mr. Jones' employment agreement provides that he will not compete with
the company, solicit any of our employees or customers or disclose confidential
information during the term of his employment and for one year thereafter.
MICHAEL E. HAVENER
We may terminate Mr. Havener's employment at any time. If his
employment is terminated without cause either before a change in control or more
than 12 months after a change in control, Mr. Havener will be entitled to
severance compensation equal to 50% of his base annual salary in effect on the
date of termination. In addition, if, during the 12-month period following a
change in control, if Mr. Havener's employment is terminated without cause, then
Mr. Havener is entitled to severance compensation equal to 100% of his base
annual salary in effect on the date of termination. These severance amounts will
be payable in accordance with our standard payroll practices over the six-month
period following the termination date unless his termination occurs during the
12-month following a change in control, in which case the severance amounts will
be payable in a lump sum payment within five business days of the date of
termination.
21
THEODORE P. SCHRAFFT
The term of Mr. Schrafft's employment agreement expires on December 31,
2007. Thereafter, it renews automatically for successive one-year periods unless
either party elects not to renew at least 90 days prior to expiration of the
term. If we terminate his employment without cause either before or after a
change in control, or, if, during the 24-month period following a change in
control, he terminates his employment for good reason or his employment is
terminated by the company or its successor, Mr. Schrafft will be entitled to
severance compensation equal to 200% of his base annual salary in effect on the
date of termination. These severance amounts will be payable in accordance with
our standard payroll practices over the 24-month period following the
termination date, unless his termination occurs during the 24-month period
following a change in control, in which case these severance amounts will be
payable in a lump sum within five business days of the date of termination. In
addition to these severance amounts, Mr. Schrafft will receive the cost of COBRA
coverage for 18 months following the date of termination.
Mr. Schrafft's employment agreement provides that he will not compete
with the company, solicit any of our employees or customers or disclose
confidential business information during the term of his employment and for one
year thereafter.
T. LEE PROVOW
The term of Mr. Provow's employment agreement expires on December 31,
2007. If we terminate his employment without cause either before a change in
control or, if during the 24-month period following a change in control, Mr.
Provow's employment is terminated by him for good reason or by the company or
its successor for failure to renew his agreement, Mr. Provow will be entitled to
severance compensation equal to 200% of his base annual salary in effect on the
date of termination. These severance amounts will be payable in accordance with
our standard payroll practices over the 24-month period following the
termination date, unless termination occurs during the 24-month period following
a change in control, in which case these severance amounts will be payable in a
lump sum within five business days of the date of termination. In addition, Mr.
Provow will be entitled to an amount equal to the cost of obtaining COBRA
coverage for 18 months following the date of termination.
Mr. Provow's employment agreement provides that he will not compete
with the company, solicit any of our employees or customers or disclose
confidential business information during the term of his employment and for one
year thereafter.
JEFFREY A. ALLRED
Mr. Allred served as our President and Chief Operating Officer until
July 2006, when he became our Chief Investment Officer, a position he held until
his resignation upon the expiration date of the term of his employment agreement
on January 1, 2007. In connection with his resignation, we entered into a
separation agreement and restricted stock agreement with Mr. Allred, providing
for, among other things, the payment of $1.2 million in cash severance, the
issuance of restricted stock having a fair market value of $600,000 (subject to
a one-year holding period restriction) and the continuation of certain benefits
for a two-year period. In February 2007, we entered into to a Consulting
Agreement with Griffeon Group, LLC, of which Mr. Allred serves as President and
Chief Executive Officer, pursuant to which in exchange for consulting services
we have agreed to pay Griffeon Group an aggregate of $225,000 over the term of
the agreement ending July 15, 2007.
Director Compensation
Our compensation committee reviews and evaluates the cash and equity
compensation of our directors and recommends changes in director compensation to
our board of directors. Our executive officers who also serve as directors do
not receive compensation for their service as a director.
In 2005, our compensation committee retained James F. Reda &
Associates, LLC as an outside compensation consultant in connection with an
evaluation of our non-employee director compensation arrangements. James F. Reda
& Associates provided an analysis of relevant market data based on non-employee
22
director compensation derived from a peer group of comparable companies and from
survey data and recommended changes consistent with market practices for
similarly situated directors. Based on this analysis and other factors, such as
recognition of the increased time demands placed on non-employee directors, in
November 2005, our compensation committee recommended, and our board approved,
changes to our non-employee director compensation effective for the 2005 - 2006
board year (with board years running from annual shareholders' meetings to
annual shareholders' meetings).
CASH RETAINERS. Non-employee directors receive a base cash retainer of
$30,000 per board year and are eligible for an additional $10,000 per board year
if they attend all quarterly, regularly scheduled board meetings during such
board year. An additional $1,000 is payable for each special board meeting
attended during a board year, and an allowance of $1,250 per day is payable for
special projects and director training attended by a director and as authorized
by us. The chairmen of our audit committee and our compensation committee
receive an additional cash retainer of $10,000 per board year, and each member
of the audit and compensation committees receive an additional cash retainer of
$5,000 per board year. The chairman of our nominating and governance committee
receives an additional cash retainer of $5,000 per board year, and each member
of our nominating and governance committee receives an additional cash retainer
of $2,500 per board year.
EQUITY COMPENSATION. An annual equity award of $80,000 in fair market
value of restricted stock is granted to each non-employee director in arrears on
the last day of each board year in recognition of service for the prior board
year, provided that the director remains a board member on such date. The grant
date for the 2005 - 2006 board year was the date of our 2006 annual
shareholders' meeting on May 3, 2006. The grant date for the 2006 - 2007 board
year will be the date of our 2007 annual shareholders' meeting. The chairmen of
our audit committee and compensation committee receive an additional equity
award of $10,000 in fair market value of shares of restricted stock per board
year, and each member of our audit and compensation committees receive an
additional equity award of $5,000 in fair market value of shares of restricted
stock per board year; provided that the director remains chairman or a committee
member on such date. The shares of restricted stock vest immediately in
recognition of service during the prior board year, and the number of shares to
be granted will be determined by dividing the dollar amount of the applicable
annual award by the fair market value per share of our common stock on the grant
date, with any partial shares to be paid in cash.
In July 2006, our compensation committee recommended, and our board of
directors approved, changes to the equity component of our outside director
compensation arrangements, effective for the 2006 - 2007 board year, which
provided for the grant of annual equity awards on the earlier of the last day of
each board year for recognition of service for the prior board year, or upon a
change in control of the company, as generally defined in this Item under
"Potential Payments Upon Termination or Change in Control." We no longer grant
stock options to a director upon joining our board. Directors joining the board
during a board year receive pro-rated cash retainers and equity awards.
DIRECTOR COMPENSATION FOR THE 2006 FISCAL YEAR
FEES EARNED STOCK
OR PAID IN AWARDS OPTION AWARDS
NAME (1) CASH ($) (2) ($) (3) (4) ($) (3) (5) TOTAL ($) (6)
-------- ------------ ----------- ----------- -------------
Jeffrey T. Arnold 49,334 80,000 129,334
Wilkie S. Colyer 63,251 95,000 157,137 315,388
John R. Harris 60,750 95,000 75,626 231,376
Raymond H. Pirtle, Jr. 49,500 85,000 134,500
J. Walker Smith, Jr. 47,625 80,000 127,625
- ---------------------------
(1) Boland T. Jones and Jeffrey A. Allred did not receive compensation in any
form for their service on the board of directors. Each of Messrs. Jones
and Allred is a named executive officer for purposes of this amendment,
23
and their compensation as such is described in this Item under
"Compensation Discussion and Analysis --Elements of Our Executive
Compensation Program" and in the Summary Compensation Table. Mr. Allred
resigned as a director on January 1, 2007.
(2) Each non-employee receives cash retainers and fees per board year paid in
quarterly installments. Amounts paid in 2006 reflect additional pro-rated
payments as a result of revisions to our director compensation in
November 2005, effective for the 2005 - 2006 board year, and for changes
in committee membership. Payments in 2006 for each non-employee director
included an annual retainer of $30,000, $10,000 for attendance at all
quarterly, regularly scheduled board meetings, $1,000 for attendance at
each of two special meetings, with Mr. Arnold unable to attend one such
special meeting. Certain de minimis amounts (less than $20) were paid in
cash in lieu of fractional shares.
(3) Stock and option awards were granted under our 2000 directors stock plan.
Stock awards represent shares of restricted stock granted during 2006,
and option awards include stock options granted prior to 2006 which
became fully vested in 2006. Our director compensation no longer includes
the granting of stock options. Amounts shown reflect the dollar amount
expensed for financial statement reporting purposes for the year ended
December 31, 2006 in accordance with FAS 123(R). Assumptions used in the
calculation of these amounts are included in footnote 9 to our audited
financial statements included in our annual report on Form 10-K for the
year ended December 31, 2006.
(4) On May 3, 2006, the date of last years' annual shareholders' meeting,
each non-employee director then serving was granted 10,403 shares of
restricted stock for their service during the 2005 - 2006 board year.
Messrs. Colyer and Harris each received an additional grant of 1,300
shares of restricted stock, as chairmen of our compensation and audit
committees, respectively, and an additional grant of 650 shares of
restricted stock as members of our audit and compensation committees,
respectively. Mr. Pirtle received an additional grant of 650 shares as a
member of our audit committee. The chairman and member of our nominating
and governance committee are not eligible for additional equity
compensation. These shares vested immediately upon grant in recognition
of service for the 2005 - 2006 board year. Amounts shown reflect the
grant date fair market value of the restricted shares granted to each
director during 2006. As of the year ended December 31, 2006, the
aggregate number of shares of restricted stock outstanding for each
director is as follows: Mr. Arnold, 10,403 shares; Mr. Colyer, 12,353
shares; Mr. Harris, 12,353 shares; Mr. Pirtle, 2,193 shares; and Mr.
Smith, 10,403 shares.
(5) As of the year ended December 31, 2006, the aggregate number of stock
options outstanding and fully vested for each of Messrs. Arnold, Colyer,
Harris and Smith were 100,000 shares.
(6) The aggregate incremental costs of perquisites for each of our
non-employee directors was less than $10,000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
OFFICERS AND DIRECTORS
The following table sets forth to the best of our knowledge certain
information as of April 19, 2007 regarding the beneficial ownership of our
voting stock by:
o each of our current directors and each nominee for director,
o each of our named executive officers (as defined in Item 11. under
"Executive Compensation"), and
o all of our current executive officers, directors and each person
nominated to become a director as a group.
As of April 19, 2007, there were 70,362,492 shares of our common stock
issued and outstanding.
24
SHARES OF
COMMON STOCK PERCENT
BENEFICIALLY OF COMMON
NAME OF BENEFICIAL OWNER OWNED (1) STOCK OWNED
- ------------------------ --------- -----------
Boland T. Jones 4,152,056 (2) 5.9
Michael E. Havener 83,633 (3) *
Jeffrey T. Arnold 151,403 (4) *
Wilkie S. Colyer 122,353 (5) *
John R. Harris 112,353 (6) *
W. Steven Jones -- *
Raymond H. Pirtle, Jr. 2,193 (7) *
J. Walker Smith, Jr. 111,403 (8) *
Theodore P. Schrafft 453,265 (9) *
T. Lee Provow 567,824 (10) *
Jeffrey A. Allred 806,643 (11) 1.2
All current executive officers and directors as a group (11 persons) 6,563,126 (12) 9.3
- ---------------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC that deem shares to be beneficially owned by any person who has
shares voting or investment power with respect to such shares. Shares of
our common stock subject to warrants or options that are currently
exercisable or exercisable within 60 days of April 19, 2007 are deemed to
be outstanding and to be beneficially owned by the person holding such
warrants or options for the purpose of computing the percentage ownership
of such person, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.
(2) Includes 2,161,492 shares held of record by Mr. Jones, 495,008 restricted
shares held of record by Mr. Jones, 4,966 shares held in our 401(k) plan
for the benefit of Mr. Jones, 590 shares held of record by Mr. Jones'
wife for which Mr. Jones holds the right to vote pursuant to an
irrevocable proxy granted by Mrs. Jones to Mr. Jones, 50,000 shares held
in a family trust, and 1,440,000 shares held by Seven Gables Partnership,
L.P., a limited partnership whose general partner is Seven Gables
Management Company, LLC, a limited liability company whose sole members
are Mr. and Mrs. Jones. Does not include 450 shares held of record by Mr.
Jones' wife, as custodian for the benefit of two unrelated minor children
under the Uniform Gifts to Minors Act, or 55,427 shares held in a trust
as to which shares Mr. Jones disclaims beneficial ownership. There are
1,694,377 shares held by Mr. Jones and Seven Gables Partnership, L.P.
which are pledged as security for loans made by us to Mr. Jones. The
address of Mr. Jones is 3399 Peachtree Road, N.E., The Lenox Building,
Suite 700, Atlanta, Georgia 30326.
(3) Includes 8,633 shares held of record by Mr. Havener, 45,000 restricted
shares held of record by Mr. Havener and 30,000 shares subject to options
currently exercisable or exercisable within 60 days.
(4) Includes 51,403 shares held of record by Mr. Arnold and 100,000 shares
subject to options currently exercisable or exercisable within 60 days.
(5) Includes 22,353 shares held of record by Mr. Colyer and 100,000 shares
subject to options currently exercisable or exercisable within 60 days.
(6) Includes 12,353 restricted shares held of record by Mr. Harris and
100,000 shares subject to options currently exercisable or exercisable
within 60 days.
(7) Includes 2,193 shares held of record by Mr. Pirtle.
25
(8) Includes 1,000 shares held of record jointly by Mr. Smith and his spouse,
10,403 shares held of record by Mr. Smith and 100,000 shares subject to
options currently exercisable or exercisable within 60 days.
(9) Includes 34,532 shares held of record by Mr. Schrafft, 180,000 restricted
shares held of record by Mr. Schrafft, 5,399 shares held in our 401(k)
plan for the benefit of Mr. Schrafft and 233,334 shares subject to
options currently exercisable or exercisable within 60 days.
(10) Includes 25,900 shares held of record by Mr. Provow, 156,924 restricted
shares held of record by Mr. Provow and 385,000 shares subject to options
currently exercisable or exercisable within 60 days.
(11) Includes 691,269 shares held of record by Mr. Allred, 35,428 restricted
shares held of record by Mr. Allred, 75,000 shares held in an individual
retirement account for the benefit of Mr. Allred and 4,946 shares held in
our 401(k) plan for the benefit of Mr. Allred.
(12) Includes 1,048,334 shares subject to options currently exercisable or
exercisable within 60 days.
PRINCIPAL SHAREHOLDERS
The following table sets forth to the best of our knowledge each person
who is known by us to be the beneficial owner of more than five percent of any
class of our voting securities as of April 19, 2007 based on filings made under
Section 13(d) and Section 13(g) of the Exchange Act.
SHARES OF
COMMON STOCK PERCENT
BENEFICIALLY OF COMMON
NAME OF BENEFICIAL OWNER OWNED (1) STOCK OWNED
- ------------------------ --------- -----------
T. Rowe Price Associates, Inc. 5,137,040 (1) 7.3
Barclays Global Investors, NA et. al. 3,512,254 (2) 5.0
- ---------------------------
(1) On February 14, 2007, a Schedule 13G/A was filed with the SEC by T. Rowe
Price Associates, Inc. (100 E. Pratt Street, Baltimore, MD 21202) (which
we refer to in this amendment as "Price Associates"), which states that
Price Associates is a registered investment advisor for various
individuals and institutional clients with sole voting power over
1,687,700 shares of our common stock and sole dispositive power over
5,137,040 shares. According to the Schedule 13G/A, none of Price
Associates' clients individually owns five percent or more of our common
stock, and Price Associates expressly disclaims beneficial ownership of
these shares.
(1) On January 23, 2007, a joint Schedule 13G was filed with the SEC by
Barclays Global Investors, NA (45 Fremont Street, San Francisco, CA
94105); Barclays Global Fund Advisors (45 Fremont Street, San Francisco,
CA 94105); Barclays Global Investors, Ltd. (Murray House, 1 Royal Mint
Court, London, EC3N 4HH); and Barclays Global Investors Japan Trust and
Banking Company Limited (Ebisu Prime Square Tower, 8th Floor, 1-1-39
Hiroo Shibuya-Ku, Tokyo 150-0012, Japan); and Barclays Global Investors
Japan Limited (Ebisu Prime Square Tower, 8th Floor, 1-1-39 Hiroo
Shibuya-Ku, Tokyo 150-0012, Japan) (which we refer to in this amendment
as the "Barclays entities"). According to the Schedule 13G, the Barclays
entities in the aggregate beneficially own 3,512,254 shares of our common
stock, with sole voting power over 3,336,418 shares and sole dispositive
power over 3,512,254 shares. According to the Schedule 13G, none of the
other Barclays entities individually owns five percent or more of our
common stock.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information as of December 31, 2006 about our
common stock that may be issued under all of our existing equity compensation
plans. The table does not include information with respect to
26
shares subject to outstanding options granted under equity compensation plans
assumed by us in connection with mergers and acquisitions of the companies that
originally granted those options. Note 3 to the table sets forth the total
number of shares of our common stock issuable upon the exercise of those assumed
options as of December 31, 2006 and the weighted average exercise price of those
options. No additional options may be granted under those assumed plans.
(c)
(a) NUMBER OF SECURITIES
NUMBER OF SECURITIES (b) REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
- ------------- ------------------- ------------------- ------------------------
Equity Compensation Plans
approved by shareholders (1) 1,719,492 $7.37 3,290,953
Equity Compensation Plans not
approved by shareholders (2) 927,111 $7.04 --
--------- ----- ---------
Total 2,646,603 $7.25 3,290,953
- ----------------
(1) Includes options issued and available for exercise and shares available
for issuance under our 1995 stock plan, 2000 directors stock plan and
2004 long-term incentive plan.
(2) Includes options issued and available for exercise under our 1998 stock
plan. Following the adoption of our 2004 long-term incentive plan in June
2004, the 1998 stock plan was frozen and no additional awards will be
issued.
(3) This table does not include information for an equity compensation plan
assumed by us in connection with an acquisition of the company that
originally established the Intellivoice Communications, Inc. 1995
incentive stock option plan. As of December 31, 2006, a total of 4,870
shares of our common stock were issuable upon exercise of outstanding
options under the assumed plan. The weighted average exercise price of
the outstanding options is $4.58 per share. No additional options may be
granted under this assumed plan.
27
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS
Our board of directors has adopted the statement of policy with respect
to related person transactions, which sets forth in writing the policies and
procedures for the review, approval or ratification of any transaction (or any
series of similar transactions) in which we, including any of our subsidiaries,
were, are or will be a participant and the amount involved exceeds $5,000, and
in which any related person had, has or will have a direct or indirect material
interest. For purposes of the policy, a "related person" is:
o any person who is, or at any time since the beginning of our last
fiscal year was, our executive officer or director or a nominee to
become one of our directors,
o any shareholder owning in excess of five percent of our company,
o any immediate family member of any of the foregoing persons, or
o any firm, corporation or other entity in which any of the
foregoing persons is employed or is a partner or principal or in a
similar position or in which such person has a five percent or
greater beneficial ownership interest.
Other than a transaction involving compensation that is approved by our
compensation committee, we will only consummate or continue a related person
transaction if it has been approved or ratified by our audit committee in
accordance with the guidelines set forth in the policy and the transaction is on
terms comparable to those that could be obtained in arm's length dealings with
unrelated third parties.
Our board of directors has determined that the audit committee is best
suited to review and approve related person transactions. Prior to the
consummation of or material amendment to a related person transaction, our audit
committee reviews the transaction and considers all relevant facts and
circumstances, including, but not limited to:
o the benefits to us from the transaction,
o the impact on a director's independence, if applicable,
o the availability of other sources for comparable products or
services,
o the terms of the transaction, and
o the terms available to unrelated third parties or employees
generally.
Our audit committee approves only those related person transactions
that are in, or are not inconsistent with, the best interests of our company and
our shareholders. If a related person transaction is ongoing or completed and
was not previously approved, it is promptly submitted to our audit committee for
review and consideration. Based on the conclusions reached, our audit committee
evaluates all options, including but not limited to, ratification, amendment,
rescission or termination of the related person transaction.
RELATED PARTY TRANSACTIONS
We have made loans to Boland T. Jones, our Chairman of the Board and
Chief Executive Officer, which loans are secured by our common stock held
directly by Mr. Jones and by Seven Gables Partnership, L.P., a limited
partnership whose general partner is Seven Gables Management Company, LLC and
whose limited partner is a trust of which Mr. Jones was the grantor and his wife
the trustee. Seven Gables Management Company is a limited liability company of
which Mr. Jones and his wife are the sole members. The loans were made pursuant
to Mr.
28
Jones' then current employment agreement for the exercise price of certain stock
options and the taxes related thereto. We had a legal commitment to make these
loans prior to July 30, 2002, without having any discretion or termination right
with respect to these existing obligations, which have not been modified or
extended in any way. Each loan is evidenced by a recourse promissory note
bearing interest at the applicable federal rate and is secured by the common
stock purchased. These loans mature between 2007 and 2010. No payments are due
prior to the due date of each loan. The highest aggregate principal amount of
the loans, including accrued interest, outstanding during 2006 was $2,004,398,
and the terms of these loans are as follows:
INTEREST SHARES VALUE OF COLLATERAL
NAME AMOUNT OF LOAN RATE DUE DATE PLEDGED AS OF 12/31/05
---- -------------- ---- -------- ------- --------------
Boland T. Jones $1,431,327 5.96% 10/31/10 1,330,753* $12,562,308*
396,856 4.94% 12/29/07 100,000 944,000
24,323 4.94% 12/15/09 24,000 226,560
95,191 5.43% 10/31/10 1,330,753* 12,562,308*
56,701 5.43% 10/31/10 239,624 2,262,051
---------- -----------
$2,004,398 $15,994,919*
- ---------------------------
* Separate loans are secured by the same shares of our common stock. The
value of such shares is only included once to determine the total value of
collateral.
As of April 13, 2007, the aggregate outstanding loan amount for Mr.
Jones was $2,036,865.
In October 2005, our audit committee approved, and in November 2005 we
entered into, an agreement with HowStuffWorks. The agreement provides for our
purchase of up to $30,000 of online advertisements on howstuffworks.com each
calendar month during the term. We made aggregate payments of approximately
$283,120 during the initial term and agreed to extend the agreement for an
additional one-year period expiring September 20, 2007. Jeffrey T. Arnold is an
executive officer of Convex Group, which controls HowStuffWorks, and Boland T.
Jones is a director of Convex Group.
INDEPENDENT DIRECTORS
The independent members of our board of directors, as defined by the
NYSE listing standards, meet in executive session at least twice a year in
conjunction with regularly scheduled board meetings. In 2006, the independent
members of our board met four times in executive session without management
present. Our board of directors has affirmatively determined that a
supermajority of our board members (Jeffrey T. Arnold, Wilkie S. Colyer, John R.
Harris, W. Steven Jones, Raymond H. Pirtle, Jr. and J. Walker Smith, Jr.) are
independent members of our board under the NYSE listing standards. Any
independent director may call an executive session of independent directors at
any time upon not less than five days' prior notice duly given, which notice
shall include the purposes, location and time of the meeting. Our independent
directors appointed Mr. Colyer to serve as our presiding independent director to
preside over executive sessions of non-management directors in February 2007.
Mr. Arnold served as our independent presiding director during 2006.
Our board has established guidelines to assist it in determining
director independence (which we refer to in this amendment as "independence
guidelines"), which are more exacting than the independence requirements under
the NYSE rules. Under these independence guidelines, a director will not be
independent if:
o the director is, or has been within the last three years, employed
by us, or an immediate family member is, or has served within the
last three years, as one of our executive officers,
o the director has received during any 12-month period within the
last three years any direct compensation from us in excess of
$100,000, other than director and committee fees and pension or
other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service),
29
o an immediate family member has received during any 12-month period
within the last three years more than $100,000 in direct
compensation from us,
o (1) the director or an immediate family member is a current
partner of a firm that is our internal or external auditor; (2)
the director is a current employee of such a firm; (3) an
immediate family member is a current employee of such a firm and
participates in the firm's audit, assurance or tax compliance (but
not tax planning) practice; or (4) the director or an immediate
family member was within the last three years (but is no longer) a
partner or employee of such firm and personally worked on our
audit within that time,
o the director or an immediate family member is, or has been within
the last three years, employed as an executive officer of another
company where any of our current executive officers serves or
served on that company's compensation committee,
o the director is a current employee or executive officer, or an
immediate family member is a current executive officer, of a
company that has made payments to, or received payment from, us
for property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million or two
percent of such other company's consolidated gross revenues,
o at the time of the independence determination, the director is an
employee or executive officer, or an immediate family member is an
executive officer, of another company which is indebted to us, or
to which we are indebted, and the total amount of either company's
indebtedness to the other at the end of the last completed fiscal
year is more than one percent of the other company's total
consolidated assets, or
o the director serves as an officer, director or trustee of a
charitable, tax exempt organization and, within the preceding
three years, our discretionary charitable contributions to that
organization in any single fiscal year are greater than $1 million
or two percent of that organization's total annual charitable
receipts.
These independence guidelines are part of our corporate governance guidelines
which are available on our Web site at PGICONNECT.COM (follow the "Investor
Relations" link to "Corporate Governance" - "Corporate Governance Guidelines").
In addition to applying these independence guidelines, our board shall consider
all relevant facts and circumstances when making a determination of
independence, including commercial, industrial, banking, consulting, legal,
accounting, charitable and familial relationships. Our board shall consider the
issue not merely from the standpoint of a director, but also from that of
persons or organizations with which the director has a significant affiliation.
An independent director should be free of any relationship with us or our
management that is reasonably likely to impair the director's ability to make
independent judgments. If our board determines that a director who satisfies the
NYSE rules is independent even though they do not satisfy all of our
independence guidelines, this determination will be disclosed and explained in
our proxy statement.
After the review and recommendation of the nominating and governance
committee, the board of directors has affirmatively determined that Jeffrey T.
Arnold, Wilkie S. Colyer, John R. Harris, W. Steven Jones, Raymond H. Pirtle,
Jr. and J. Walker Smith, Jr. are independent members of our board under the NYSE
listing standards and our independence guidelines. In reaching this
determination, our board of directors considered the existing advertising
contract we have with HowStuffWorks, Inc. that the audit committee pre-approved
in 2005 according to its charter and which is disclosed in this amendment under
"Related Party Transactions" above. Our board also considered the approximately
two percent ownership interest of our Chairman of the Board in Convex Group (the
parent of HowStuffWorks), of which Mr. Arnold is an executive officer and which
is not otherwise disclosed in this amendment under "Related Party Transactions"
above. In addition, the board considered that Mr. Jones also serves on the board
of Bank of America, which serves as administrative agent under our credit
facility and that provides us with commercial banking services in the ordinary
course of business. Our board has determined that none of these relationships
violated our independence guidelines.
30
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche served as our independent registered public
accounting firm for the year ended December 31, 2006. The audit committee has
not yet selected our independent registered public accounting firm for our 2007
audit, but intends to do so by May 31, 2007 after completion of its standard
review process.
AUDIT MATTERS
The following table shows the aggregate fees billed to us by Deloitte &
Touche for audit and permitted non-audit services for the years ended December
31, 2006 and 2005:
2006 2005
---- ----
Audit fees 1,374,701 $1,393,698
Tax fees 189,247 320,252
All other fees 163,051 107,863
--------- ----------
Total fees 1,726,999 $1,821,813
========= ==========
"Audit fees" include fees for the audit of our consolidated financial
statements, review of our quarterly financial statements, compliance with the
Sarbanes-Oxley Act of 2002 Section 404 requirements and statutory audits of
certain of our foreign subsidiaries' financial statements.
"Tax fees" include fees for domestic and international tax compliance,
planning and advice.
"All other fees" for 2006 and 2005 consist of fees for an American
Institute of Public Accountants' Statement on Auditing Standards No. 70 Type II
audit of controls related to the processing of automated data management and
delivery solutions and related computer controls at certain of our U.S. and
international processing locations.
The audit committee pre-approved all audit and permitted non-audit
services provided by Deloitte & Touche in 2006 and 2005 and has considered
whether the provision of such permitted non-audit services is compatible with
maintaining Deloitte & Touche's independence.
31
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. FINANCIAL STATEMENTS
The financial statements of Premiere Global Services, Inc. are included in the
original filing.
2. FINANCIAL STATEMENT SCHEDULES
There are no financial statement schedules included in this report.
3. EXHIBITS
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
2.1 Agreement and Plan of Merger, together with exhibits, dated November
13, 1997, by and among the Registrant, Nets Acquisition Corp. and
Xpedite Systems, Inc. (incorporated by reference to Exhibit 99.2 to the
Registrant's Current Report on Form 8-K dated November 13, 1997 and
filed December 5, 1997, as amended by Form 8-K/A and filed on December
23, 1997).
2.2 Agreement and Plan of Merger, dated April 22, 1998, by and among the
Registrant, American Teleconferencing Services, Ltd. ("ATS"), PTEK
Missouri Acquisition Corp. and the shareholders of ATS (incorporated by
reference to Exhibit 99.1 of the Company's Current Report on Form 8-K
dated April 23, 1998 and filed on April 28, 1998).
2.3 Asset Purchase Agreement, dated September 15, 2003, by and among
Captaris, Inc., MediaTel Corporation (Delaware) and Xpedite Systems,
Inc. (incorporated by reference to Exhibit 2.1 of the Current Report on
Form 8-K of Captaris, Inc. filed on September 17, 2003).
2.4 Asset Purchase Agreement, dated February 16, 2005, by and among
Clarinet, Inc., the Registrant, American Teleconferencing Services,
Ltd., Conference-Call USA, Inc. and Citizens Communications Company
(incorporated by reference to Exhibit 2.7 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 2004 and
filed on March 15, 2005).
3.1 Amended and Restated Articles of Incorporation of the Registrant dated
March 15, 2006 (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
2005 and filed on March 16, 2006).
3.2 Second Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2005 and filed on March 16, 2006).
4.1 See Exhibits 3.1-2. for provisions of the Articles of Incorporation and
Bylaws defining the rights of the holders of common stock of the
Registrant.
4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to
the Registrant for the year ended December 31, 2005 and filed on March
16, 2006).
32
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.1 Agreement of Lease between Corporate Property Investors and Premiere
Communications, Inc., dated March 3, 1997, as amended by Modification
of Lease dated August 4, 1997, as amended by Second Modification of
Lease dated October 30, 1997 (incorporated by reference to Exhibit
10.19 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
10.2 Amended and Restated 1998 Stock Plan of the Registrant (incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1999). +
10.3 Amendment No. 1 to the Amended and Restated 1998 Stock Plan of the
Registrant (incorporated by reference to Exhibit 10.45 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1999). +
10.4 Intellivoice Communications, Inc. 1995 Incentive Stock Plan (assumed by
the Registrant) (incorporated by reference to Exhibit 10.52 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1999).
10.5 2000 Directors Stock Plan, as amended, of the Registrant (incorporated
by reference to Appendix C to the Registrant's Definitive Proxy
Statement distributed in connection with the Registrant's June 5, 2002
Annual Meeting of Shareholders, filed on April 30, 2002). +
10.6 1995 Stock Plan of the Registrant (incorporated by reference to
Appendix C to the Registrant's Definitive Proxy Statement distributed
in connection with the Registrant's June 5, 2002 Annual Meeting of
Shareholders, filed on April 30, 2002). +
10.7 Third Modification of Lease, dated July 15, 1998, by and between The
Retail Property Trust and Premiere Communications, Inc. to the
Agreement of Lease between Corporate Property Investors and Premiere
Communications, Inc. dated October 30, 1997, as amended by Fourth
Modification of Lease dated August 27, 1998, as amended by Fifth
Modification of Lease dated April 1, 1999, as amended by Sixth
Modification of Lease dated 1999 (incorporated by reference to Exhibit
10.51 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 2002 and filed on March 31, 2003).
10.8 Seventh Amendment to Lease, dated February 28, 2001, by and between
Property Georgia OBJLW Two Corporation and Premiere Communications,
Inc. to the Agreement of Lease between Corporate Property Investors and
Premiere Communications, Inc. dated October 30, 1997, as amended by
Eighth Amendment to Lease dated June 24, 2001 (incorporated by
reference to Exhibit 10.52 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 2002 and filed on March 31, 2003).
10.9 Standard Office Lease, dated May 23, 1996, by and between 2221 Bijou,
LLC and American Teleconferencing Services, Ltd., as amended by First
Amendment to Standard Office Lease dated May 4, 1999, as amended by
Second Amendment to Standard Office Lease dated May 1998, as amended by
Third Amendment to Standard Office Lease dated September 1999
(incorporated by reference to Exhibit 10.53 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2002 and filed on
March 31, 2003).
10.10 Lease Agreement from Townsend XPD, LLC to Xpedite Systems, Inc., dated
June 15, 2000, (incorporated by reference to Exhibit 10.68 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
2002 and filed on March 31, 2003).
10.11 Pine Ridge Business Park Standard Office Lease, dated January 29, 1999,
by and between Perg Buildings, LLC and American Teleconferencing
Services, Ltd., as amended by First Amendment to Lease dated May 4,
1999 (incorporated by reference to Exhibit 10.69 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 2002 and
filed on March 31, 2003).
33
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.12 Stock Pledge Agreement, dated December 29, 1997, by and between Boland
T. Jones and the Registrant (incorporated by reference to Exhibit 10.71
to Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.13 Stock Pledge Agreement, dated December 15, 1999, by and between Boland
T. Jones and the Registrant (incorporated by reference to Exhibit 10.73
to Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.14 Agreement for Assignment of Stock Options, dated February 5, 1999, by
and among Boland T. Jones, Seven Gables Management Company, LLC, Seven
Gables Partnership, L.P. and the Registrant (incorporated by reference
to Exhibit 10.74 to Amendment No. 1 to the Registrant's Annual Report
on Form 10-K/A for the year ended December 31, 2002 and filed on
December 23, 2003). +
10.15 Promissory Note, dated October 31, 2000, payable to the Registrant by
Boland T. Jones (incorporated by reference to Exhibit 10.75 to
Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.16 Stock Pledge Agreement, dated October 31, 2000, by and between Seven
Gables Partnership, L.P. and the Registrant (incorporated by reference
to Exhibit 10.76 to Amendment No. 1 to the Registrant's Annual Report
on Form 10-K/A for the year ended December 31, 2002 and filed on
December 23, 2003). +
10.17 Stock Pledge Agreement, dated October 31, 2000, by and between Boland
T. Jones and the Registrant (incorporated by reference to Exhibit 10.78
to Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.18 Promissory Note, dated April 17, 2001, payable to the Registrant by
Boland T. Jones (incorporated by reference to Exhibit 10.79 to
Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.19 Promissory Note, dated April 17, 2001, payable to the Registrant by
Boland T. Jones (incorporated by reference to Exhibit 10.80 to
Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.20 Promissory Note, dated April 17, 2001, payable to the Registrant by
Boland T. Jones (incorporated by reference to Exhibit 10.81 to
Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.21 Promissory Note, dated April 17, 2001, payable to the Registrant by
Boland T. Jones (incorporated by reference to Exhibit 10.82 to
Amendment No. 1 to the Registrant's Annual Report on Form 10-K/A for
the year ended December 31, 2002 and filed on December 23, 2003). +
10.22 Warrant to Purchase 250,000 shares of common stock of the Registrant
issued to AT&T Corp. dated October 20, 2003 (incorporated by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2003 and filed on November 14, 2003).
10.23 Form of Director Indemnification Agreement between the Registrant and
Non-employee Directors (incorporated by reference to Exhibit 10.67 to
the Registrant's Annual Report of Form 10-K for the year ended December
31, 2003 and filed on March 14, 2004). +
10.24 Form of Officer Indemnification Agreement between the Registrant and
each of the executive officers (incorporated by reference to Exhibit
10.68 to the Registrant's Annual Report of Form 10-K for the year ended
December 31, 2003 and filed on March 14, 2004). +
34
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.25 Credit Agreement, dated June 30, 2004, among the Registrant, as
Borrower, Certain Subsidiaries and Affiliates of the Borrower, as
Guarantors, the Lenders Party thereto, Bank of America, N.A., as
Administrative Agent and Collateral Agent, and LaSalle Bank National
Association, as Syndication Agent and Co-Lead Arranger (incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2004 and filed on August 9, 2004).
10.26 Security Agreement, dated June 30, 2004, among the Registrant, American
Teleconferencing Services, Ltd., Premiere Conferencing Network
Services, Inc., PTEK Services, Inc., Xpedite Network Services, Inc.,
Xpedite Systems, Inc., Xpedite Systems Worldwide, Inc. and Bank of
America, N.A., as Collateral Agent (incorporated by reference to
Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2004 and filed on August 9, 2004).
10.27 Pledge Agreement, dated June 30, 2004, among the Registrant, American
Teleconferencing Services, Ltd., Premiere Conferencing Networks, Inc.,
PTEK Services, Inc., Xpedite Network Services, Inc., Xpedite Systems,
Inc., Xpedite Systems Worldwide, Inc. and Bank of America, N.A., as
Collateral Agent (incorporated by reference to Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 2004 and filed on August 9, 2004).
10.28 Employment Letter, dated September 30, 2004, by and between the
Registrant and Michael E. Havener (incorporated by reference to Exhibit
99.1 to the Registrant's Current Report on From 8-K dated September 30,
2004 and filed October 1, 2004). +
10.29 Amendment No. 1 to Credit Agreement, dated February 2, 2005, by and
among the Registrant, as Borrower, Bank of America, N.A., as
Administrative Agent, and the Guarantors and the Lenders that are
parties thereto (incorporated by reference Exhibit 10.1 to the
Registrant's Current Report on Form 8-K dated February 5, 2004 and
filed on February 3, 2004).
10.30 2004 Long-Term Incentive Plan, as amended, of the Registrant
(incorporated by reference to Appendix B to the Registrant's Definitive
Proxy Statement distributed in connection with the Registrant's June 3,
2004 Annual Meeting of Shareholders, filed on April 28, 2004). +
10.31 Fourth Amendment to Standard Office Lease, effective March 1, 2005, by
and between 2221 Bijou, LLC and American Teleconferencing Services,
Ltd. to the Standard Office Lease dated May 23, 1996, as amended
(incorporated by reference to Exhibit 10.57 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2004 and filed on
March 15, 2005).
10.32 Partial Termination of Lease and Mutual Release, dated April 16, 2004,
between Property Georgia OBJWL Two Corporation and Premiere
Technologies, Inc. to the Agreement of Lease between Corporate Property
Investors and Premiere Communications, Inc. dated October 30, 1997, as
amended (incorporated by reference to Exhibit 10.58 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 2004 and
filed on March 15, 2005).
10.33 Fourth Amended and Restated Executive Employment Agreement between
Boland T. Jones and the Registrant, effective January 1, 2005
(incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K dated April 20, 2005 and filed on April 20, 2005). +
10.34 Fourth Amended and Restated Executive Employment Agreement between
Jeffrey A. Allred and the Registrant, effective January 1, 2005
(incorporated by reference to Exhibit 10.2 to the Registrant's Current
Report on Form 8-K dated and filed on April 20, 2005). +
35
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.35 Form of Restricted Stock Agreement to be issued to Boland T. Jones and
Jeffrey A. Allred as Stock Bonuses pursuant to the terms of their
Fourth Amended and Restated Executive Employment Agreements with the
Registrant (incorporated by reference to Exhibit 10.3 to the
Registrant's Current Report on Form 8-K dated and filed on April 20,
2005). +
10.36 Restricted Stock Agreement between Boland T. Jones and the Registrant,
effective April 18, 2005, under the Registrant's 2004 Long-Term
Incentive Plan (incorporated by reference to Exhibit 10.4 to the
Registrant's Current Report on Form 8-K dated and filed on April 20,
2005). +
10.37 Restricted Stock Agreement between Boland T. Jones and the Registrant,
effective April 18, 2005, under the Registrant's 1995 Stock Plan
(incorporated by reference to Exhibit 10.5 to the Registrant's Current
Report on Form 8-K dated and filed on April 20, 2005). +
10.38 Amendment to Employment Letter between the Registrant and Michael E.
Havener, dated April 22, 2005 (incorporated by reference to Exhibit
10.3 to the Registrant's Current Report on From 8-K dated and filed
April 28, 2005). +
10.39 Form of NonStatutory Stock Option Agreement under the Registrant's 2004
Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to
the Registrant's Quarterly Report on Form 10-Q for the quarter end
March 31, 2005 and filed on May 6, 2005).
10.40 Form of Restricted Stock Agreement under the Registrant's 2004
Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2005 and filed on May 6, 2005).
10.41 Form of NonStatutory Stock Option Agreement under the Registrant's 1995
Stock Plan (incorporated by reference to Exhibit 10.6 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 2005 and filed on May 6, 2005).
10.42 Form of Restricted Stock Award Agreement under the Registrant's 1995
Stock Plan (incorporated by reference to Exhibit 10.7 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 2005 and filed on May 6, 2005).
10.43 Summary of the Registrant's Non-Employee Director Compensation
(incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K dated and filed on December 22, 2005).
10.44 Lease Agreement, dated October 28, 2005, between Xpedite Systems, LLC
and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.1 to
the Registrant's Current Report on Form 8-K dated and filed on February
1, 2006).
10.45 Guaranty to the Lease Agreement between Xpedite Systems, LLC and 3280
Peachtree I LLC, dated October 28, 2005, by the Registrant
(incorporated by reference to Exhibit 10.2 to the Registrant's Current
Report on Form 8-K dated and filed on February 1, 2006).
10.46 Lease Agreement, dated October 28, 2005, between American
Teleconferencing Services, Ltd. and 3280 Peachtree I LLC (incorporated
by reference to Exhibit 10.3 to the Registrant's Current Report on Form
8-K dated and filed on February 1, 2006).
10.47 Guaranty to the Lease Agreement between American Teleconferencing
Services, Ltd. and 3280 Peachtree I LLC, by the Registrant
(incorporated by reference to Exhibit 10.4 to the Registrant's Current
Report on Form 8-K dated and filed on February 1, 2006).
36
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.48 Fifth Amendment to Standard Office Lease, dated February 9, 2006, by
and between 2221 Bijou, LLC and American Teleconferencing Services,
Ltd., to the Standard Office Lease, dated May 23, 1996, as amended
(incorporated by reference to Exhibit 10.62 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2005 and filed on
March 16, 2006).
10.49 Amendment No. 2 and Waiver to Credit Agreement, dated August 3, 2005,
by and among the Registrant, as Borrower, Bank of America, N.A., as
Administrative Agent, and the Guarantors and the Lenders that are
parties thereto (incorporated by reference to Exhibit 10.65 of the
Registrant's Annual Report on Form 10-K for the year ended December 31,
2005 and filed on March 16, 2006).
10.50 Amendment No. 3 to Credit Agreement, dated April 24, 2006, by and among
the Registrant as Borrower, Bank of America, N.A. as Administrative
Agent, and the Guarantors and the Lenders that are parties thereto
(incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K dated and filed April 25, 2006).
10.51 Restricted Stock Agreement by and between Jeffrey A. Allred and the
Registrant, dated May 5, 2006, under the Registrant's 1995 Stock Plan
(incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K dated May 10, 2006 and filed on May 11, 2006). +
10.52 Amendment to Fifth Amendment to Standard Office Lease, effective March
13, 2006, by and between 2221 Bijou, LLC and American Teleconferencing
Services, Ltd. to the Standard Office Lease, dated May 23, 1996, as
amended (incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and
filed on May 9, 2006).
10.53 Restricted Stock Agreement by and between Theodore P. Schrafft and the
Registrant, dated May 5, 2006, under the Registrant's 1995 Stock Plan
(incorporated by reference to Exhibit 10.2 to the Registrant's Current
Report on Form 8-K dated May 10, 2006 and filed on May 11, 2006). +
10.54 Restricted Stock Agreement by and between T. Lee Provow and the
Registrant, dated May 5, 2006, under the Registrant's 1995 Stock Plan
(incorporated by reference to Exhibit 10.3 to the Registrant's Current
Report on Form 8-K dated May 10, 2006 and filed on May 11, 2006). +
10.55 Form of Restriction Agreement for non-employee directors under the 2000
Directors Stock Plan (incorporated by reference to Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 2006 and filed on May 9, 2006).
10.56 Revised Summary of the Equity Compensation Component to the
Registrant's Non-Employee Director Compensation (incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report on Form
8-K dated and filed on July 26, 2006).
10.57 Amended and Restated Employment Agreement between Theodore P. Schrafft
and the Registrant, dated September 15, 2006 (incorporated by reference
to Exhibit 10.1 to the Registrant's Current Report on From 8-K dated
and filed September 19, 2006). +
10.58 Amended and Restated Employment Agreement between T. Lee Provow and the
Registrant, dated September 15, 2006 (incorporated by reference to
Exhibit 10.2 to the Registrant's Current Report on From 8-K dated and
filed September 19, 2006). +
10.59 First Amendment to Fourth Amended and Restated Executive Employment
Agreement between Boland T. Jones and the Registrant, dated September
15, 2006 (incorporated by reference to Exhibit 10.3 to the Registrant's
Current Report on Form 8-K dated and filed on September 19, 2006). +
37
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.60 First Amendment to Fourth Amended and Restated Executive Employment
Agreement between Jeffrey A. Allred and the Registrant, dated September
15, 2006 (incorporated by reference to Exhibit 10.4 to the Registrant's
Current Report on Form 8-K dated and filed on September 19, 2006). +
10.61 Amendment to Employment Letter between Michael E. Havener and the
Registrant, dated September 15, 2006 (incorporated by reference to
Exhibit 10.5 to the Registrant's Current Report on Form 8-K dated and
filed on September 19, 2006). +
10.62 Second Amendment to Fifth Amendment to the Standard Office Lease, dated
September 11, 2006, by and between 2221 Bijou, LLC and American
Teleconferencing Services, Ltd., to the Standard Office Lease, dated
May 23, 1996, as amended (incorporated by reference to Exhibit 10.9 of
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2006 and filed on November 9, 2006).
10.63 Amendment to the Registrant's 2004 Long-Term Incentive Plan, dated
September 29, 2006 (incorporated by reference to Exhibit 10.7 to the
Registrant's Quarterly Report on Form 10-Q dated November 9, 2006 and
filed on November 11, 2006). +
10.64 Amendment No. 4 and Waiver to Credit Agreement, dated October 3, 2006,
by and among the Registrant as Borrower, Bank of America, N.A. as
Administrative Agent, and the Guarantors and the Lenders that are
parties thereto (incorporated by reference to Exhibit 10.8 to the
Registrant's Quarterly Report on Form 10-Q for quarter ended September
30, 2006 and filed on November 9, 2006).
10.65 Amendment and Restatement of the Registrant's 401(k) Plan, dated
December 20, 2006 and effective January 1, 2006 (incorporated by
reference to Exhibit 10.65 to the Registrant's Annual Report on Form
10-K for year ended December 31, 2006 and filed on March 15, 2007).
10.66 Separation Agreement between Jeffrey A. Allred and the Registrant,
dated December 20, 2006 and effective January 1, 2007 (incorporated by
reference to Exhibit 10.66 to the Registrant's Annual Report on Form
10-K for year ended December 31, 2006 and filed on March 15, 2007).
10.67 Restricted Stock Agreement between Jeffrey A. Allred and the
Registrant, effective December 30, 2006, under the Registrant's 1995
Stock Plan (incorporated by reference to Exhibit 10.67 to the
Registrant's Annual Report on Form 10-K for year ended December 31,
2006 and filed on March 15, 2007).
10.68 First Amendment to Amended and Restated Employment Agreement between T.
Lee Provow and the Registrant, dated January 23, 2007 (incorporated by
reference to Exhibit 10.68 to the Registrant's Annual Report on Form
10-K for year ended December 31, 2006 and filed on March 15, 2007).
10.69 Restricted Stock Agreement between T. Lee Provow and the Registrant,
dated January 22, 2007, under the Registrant's 1995 Stock Plan
(incorporated by reference to Exhibit 10.69 to the Registrant's Annual
Report on Form 10-K for year ended December 31, 2006 and filed on March
15, 2007).
21.1 Subsidiaries of the Registrant (incorporated by reference to Exhibit
21.1 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 2006 and filed on March 15, 2007).
23.1 Consent of Deloitte & Touche LLP (incorporated by reference to Exhibit
23.1 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 2006 and filed on March 15, 2007).
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
38
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
32.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350.
32.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350.
+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 15(b) of this report.
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PREMIERE GLOBAL SERVICES, INC.
By: /s/ Boland T. Jones
--------------------------------------
Boland T. Jones, Chairman of the Board
and Chief Executive Officer
Date: April 30, 2007
40