SPOK HOLDINGS, INC
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
| o | Preliminary Proxy Statement | |
| o | Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) | |
| þ | Definitive Proxy Statement | |
| o | Definitive Additional Materials | |
| o | Soliciting Material Pursuant to §240.14a-12 |
USA MOBILITY, INC.
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: |
| o | Fee paid previously with preliminary materials. | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing Party: | ||
| (4) | Date Filed: | ||
TABLE OF CONTENTS
6677 Richmond Highway
Alexandria, Virginia 22306
(800) 611-8488
Alexandria, Virginia 22306
(800) 611-8488
To the stockholders of USA Mobility, Inc.:
The 2010 Annual Meeting of Stockholders (the “Annual
Meeting”) of USA Mobility, Inc., a Delaware corporation
(the “Company”), will be held on Wednesday,
May 12, 2010, at 9:00 a.m., local time, at The Westin
Alexandria, 400 Courthouse Square, Whitney Room, Alexandria,
Virginia, 22314, for the following purposes:
| 1. | To elect seven directors to hold office until the next Annual Meeting of Stockholders and until their respective successors have been elected or appointed; | |
| 2. | To ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2010; and | |
| 3. | To transact such other business as may properly come before the Annual Meeting and at any adjournment or postponement thereof. |
The foregoing matters are described in more detail in the
enclosed Proxy Statement.
Your Board of Directors has fixed March 17, 2010 as the
record date for determining stockholders entitled to vote at the
Annual Meeting. Consequently, only holders of the Company’s
common stock of record on the transfer books of the Company at
the close of trading of the Company’s common stock on the
NASDAQ National Market
System®
on March 17, 2010 will be entitled to notice of and to vote
at the Annual Meeting.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 2010
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 2010
The Company’s Proxy Statement and Annual Report to
Stockholders for the year ended December 31, 2009
(“Annual Report”) will be available at
http://www.edocumentview.com/usmo
on or before April 2, 2010 or upon request. Financial and
other information about the Company is contained in the Annual
Report.
You are cordially invited to attend the Annual Meeting in
person. Your participation in these matters is important,
regardless of the number of shares you own. Whether or not you
expect to attend in person, we urge you to submit your proxy or
voting instructions by telephone or over the Internet. If you
choose to attend the Annual Meeting, you may then vote in person
if you so desire, even though you may have executed the proxy.
Any stockholder who executes such a proxy may revoke it at any
time before it is exercised.
By Order of the Board of Directors,
Royce Yudkoff
Chair of the Board
March 23, 2010
Alexandria, Virginia
6677 Richmond Highway
Alexandria, Virginia 22306
(800) 611-8488
Alexandria, Virginia 22306
(800) 611-8488
PROXY
STATEMENT
The Board of Directors (the “Board”) of USA Mobility,
Inc., a Delaware corporation (“USA Mobility” or the
“Company”), is soliciting your proxy. Your proxy will
be voted at the 2010 Annual Meeting of Stockholders (the
“Annual Meeting”) to be held on May 12, 2010, at
9:00 a.m., local time, at The Westin Alexandria, 400
Courthouse Square, Whitney Room, Alexandria, Virginia, 22314,
and at any adjournment or postponement thereof. The Proxy
Statement, proxy card and the Company’s Annual Report to
Stockholders for the year ended December 31, 2009 will be
available on or before April 2, 2010, upon request, to
holders of record of the Company’s common stock, par value
$0.0001 per share (the “common stock”), as of
March 17, 2010.
VOTING
SECURITIES
Voting
Rights and Outstanding Shares
Only stockholders of record on the books of the Company at the
close of trading of the Company’s common stock on the
NASDAQ National Market
System®
on March 17, 2010 (the “Record Date”), will be
entitled to vote at the Annual Meeting. At the close of business
on March 17, 2010, the outstanding voting securities of the
Company consisted of 22,333,006 shares of common stock.
Holders of the Company’s common stock are entitled to one
vote for each share held of record on all matters submitted to a
vote of the stockholders.
Methods
of Voting
You may:
| • | Vote by marking, signing, dating, and returning a proxy card; | |
| • | Vote via the Internet by following the voting instructions on the proxy card or the voting instructions provided by your broker, bank, or other holder of record. Internet voting procedures are designed to authenticate your identity, allow you to vote your shares, and confirm that your instructions have been properly recorded. If you submit your vote by Internet, you may incur costs associated with electronic access, such as usage charges from Internet access providers and telephone companies; | |
| • | Vote by telephone by following the voting instructions on the proxy card or the voting instructions provided by your broker, bank, or holder of record; or | |
| • | Vote in person by attending the Annual Meeting. We will distribute written ballots to any stockholder who wishes to vote in person at the Annual Meeting. |
If your shares are held in street name, your broker, bank, or
other holder of record will include a voting instruction form
with this Proxy Statement. We strongly encourage you to vote
your shares by following the instructions provided on the voting
instruction form. Please return your voting instruction form to
your broker, bank, or other holder of record to ensure that a
proxy card is voted on your behalf.
Quorum
and Vote Required
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Company’s transfer agent who is also
serving as Inspector of Election (“Inspector”). The
Inspector will also determine whether or not a quorum is
present. If a quorum is not present at the Annual Meeting, we
expect that the Annual Meeting will be adjourned or postponed to
solicit additional proxies. Except with respect to the election
of directors and in certain other specific circumstances, the
affirmative vote of a majority of the shares having voting power
present in person or represented by proxy at a duly held meeting
at which a quorum is present is required under the
Company’s Bylaws for approval of proposals presented to
stockholders. In general, the Company’s Bylaws also provide
that a quorum consists of a majority of the shares issued and
outstanding and entitled to vote, the holders of which are
present in person or represented by proxy. The Inspector will
treat abstentions as shares that are present and entitled to
vote for purposes of determining the presence of a quorum and
therefore, abstentions will have the effect of a negative vote
for purposes of determining the approval of any matter submitted
to the stockholders for a vote, other than the election of
directors.
PROXIES
AND REVOCATION
The shares represented by the proxies received, properly dated
and executed and not revoked will be voted at the Annual
Meeting, and at any adjournments, continuations or postponements
thereof, in accordance with the instructions of the
stockholders. A proxy may be revoked at any time before it is
exercised by:
| • | Delivering written notice of revocation to the Company, Attention: Sharon Woods Keisling, Secretary and Treasurer (“Secretary”); | |
| • | Delivering a duly executed proxy bearing a later date to the Company; or | |
| • | Attending the Annual Meeting and voting in person. |
Any proxy which is returned using the form of proxy and which is
not marked as to a particular item will be voted “FOR”
the election of directors, ratification of the appointment of
the independent registered public accounting firm and as the
proxy holder deems advisable on other matters that may come
before the Annual Meeting, as the case may be, with respect to
the item not marked. The Company does not expect that any matter
other than the proposals presented in this Proxy Statement will
be brought before the Annual Meeting. If a broker indicates on
the proxy or its substitute that it does not have discretionary
authority as to certain shares to vote on a particular matter,
those shares will not be considered as present with respect to
that matter. The Company believes that the tabulation procedures
to be followed by the Inspector are consistent with the general
statutory requirements in the State of Delaware concerning
voting of shares and determination of a quorum.
PROXY
SOLICITATION
The entire cost of soliciting proxies from the Company’s
stockholders will be borne by the Company. In addition, the
Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by certain of the Company’s
directors, executives and regular employees, without additional
compensation, personally or by telephone. The Company has
retained Georgeson Inc. (a subsidiary of Computershare Limited)
to solicit proxies from brokerage firms, banks and institutional
holders. Total fees relating to services provided for the proxy
solicitation will be approximately $18,000.
ADJOURNMENTS
If a quorum is not present at the Annual Meeting, it may be
adjourned from time to time upon the approval of the holders of
shares representing a majority of the votes present in person or
by proxy at the Annual Meeting until a quorum shall be present.
Any business may be transacted at the adjourned meeting, which
might have been transacted at the Annual Meeting originally
noticed. If the adjournment is for more than 30 days, or,
if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be
given
2
to each stockholder of record entitled to vote at the adjourned
meeting. The Company does not currently intend to seek an
adjournment of the Annual Meeting.
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
Seven directors are to be elected at the Annual Meeting to serve
until their respective successors are elected or appointed and
qualified. Nominees for election to the Board shall be approved
by a plurality of the votes properly cast by holders of the
common stock present in person or by proxy at the Annual
Meeting, each share being entitled to one vote.
Abstentions from voting on the election of directors, including
broker non-votes, will have no effect on the outcome of the
election of directors. In the event any nominee is unable or
unwilling to serve as a nominee, the proxies may be voted for
the balance of those nominees named and for any substitute
nominee designated by the present Board or the proxy holders to
fill such vacancy, or for the balance of those nominees named
without nomination of a substitute, or the Board may be reduced
in accordance with the Bylaws of the Company. The Board has no
reason to believe that any of the persons named will be unable
or unwilling to serve as a nominee or as a director if elected.
Set forth below is certain information, as of March 17,
2010, for each person nominated to the Board:
Royce Yudkoff, age 54, became a director and the
Chair of the Board in November 2004. He is also a member of the
Compensation Committee. Prior to the merger of Metrocall
Holdings, Inc. (“Metrocall”) and Arch Wireless, Inc.
(“Arch”) in November 2004, Mr. Yudkoff had been a
director of Metrocall since April 1997, and had served as its
Chair since February 2003. Since 1989, Mr. Yudkoff has been
a Managing Partner of ABRY Partners, LLC, a private equity
investment firm, which focuses exclusively on the media and
communications sector. Mr. Yudkoff currently serves on the
Board of ABRY Partners, LLC, Talent Partners, Nexstar
Broadcasting Group, Inc., and Cast and Crew Entertainment
Services, LLC. Mr. Yudkoff served on the Board of Muzak
Holdings LLC from 2002 to 2009. Mr. Yudkoff has been
involved with the paging industry as a director since 1997 and a
director of the Company since November 2004. During that time
Mr. Yudkoff has maintained his understanding of the
Company’s operations, strategies, financial outlook and
ongoing challenges. In addition, Mr. Yudkoff has experience
in the media and communication sectors that can be applied to
the Company’s operations. Mr. Yudkoff has the
requisite qualifications to continue as a director.
Nicholas A. Gallopo, age 77, became a director of
the Company in November 2004. He is the Chair of the Audit
Committee. Prior to the merger of Metrocall and Arch,
Mr. Gallopo had been a director of Metrocall since October
2002. Mr. Gallopo is a consultant and Certified Public
Accountant. He retired as a partner of Arthur Anderson LLP in
1995 after 31 years with the firm. He had also served as a
director of Newman Drug Company from 1995 to 1998, a director of
Wyant Corporation, formerly Hosposable Products, Inc., from 1995
to 2001 where he also served as Chair of the Audit Committee,
and a director of Bridge Information Systems, Inc. from 2000 to
2002. Mr. Gallopo has been involved with the paging
industry as a director since 2002 and a director of the Company
since November 2004. During that time Mr. Gallopo has
maintained his understanding of the Company’s operations,
strategies, financial outlook and ongoing challenges. In
addition, Mr. Gallopo is a retired partner of Arthur
Andersen LLP and has experience in financial accounting and
auditing matters. Mr. Gallopo has the requisite
qualifications to continue as a director.
Vincent D. Kelly, age 50, became a director,
President and Chief Executive Officer (“CEO”) of the
Company in November 2004 when USA Mobility was formed through
the merger of Metrocall and Arch. Prior to the merger of
Metrocall and Arch, Mr. Kelly was President and CEO of
Metrocall since February 2003. Prior to this appointment, he had
also served at various times as the Chief Operating Officer,
Chief Financial Officer, and Executive Vice President of
Metrocall. He served as the Treasurer of Metrocall from August
1995 to February 2003, and served as a director of Metrocall
from 1990 to 1996 and from May 2003 to November 2004.
Mr. Kelly was an executive officer of Metrocall at the time
of its filing of a petition under Chapter 11 of the
Bankruptcy Code in 2002. Mr. Kelly also serves as the
President, CEO and director for all of the Company’s
subsidiaries, except for GTES, LLC, an indirect wholly-owned
subsidiary, for which Mr. Kelly is only a director.
Mr. Kelly has been involved with the paging
3
industry for over 20 years and a director and CEO of the
Company since November 2004. Mr. Kelly has the requisite
qualifications to continue as a director.
Brian O’Reilly, age 50, became a director of
the Company in November 2004. He is a member of the Nominating
and Governance Committee and is the Chair of the Compensation
Committee. Prior to the merger of Metrocall and Arch,
Mr. O’Reilly had been a director of Metrocall since
October 2002. He was with Toronto-Dominion Bank for
16 years, from 1986 to 2002. From 1986 to 1996,
Mr. O’Reilly served as the Managing Director of
Toronto-Dominion Bank’s Loan Syndication Group, focused on
the underwriting of media and telecommunications loans. From
1996 to 2002, he served as the Managing Director of
Toronto-Dominion Bank’s Media, Telecom and Technology Group
with primary responsibility for investment banking in the
wireless and emerging telecommunications sectors.
Mr. O’Reilly has been involved with the paging
industry as a director since 2002 and a director of the Company
since November 2004. During that time Mr. O’Reilly has
maintained his understanding of the Company’s operations,
strategies, financial outlook and ongoing challenges. In
addition Mr. O’Reilly has past experience in the
underwriting of media and communication financing that can be
applied to the Company’s operations. Mr. O’Reilly
has the requisite qualifications to continue as a director.
Matthew Oristano, age 53, became a director of the
Company in November 2004. He is a member of the Audit Committee
and is Chair of the Nominating and Governance Committee. Prior
to the merger of Metrocall and Arch, Mr. Oristano had been
a director of Arch since 2002. Mr. Oristano has been the
President, CEO and member of the Board of Alda Inc., an
investment management company, since 1995. He has served as
Chair of the Board and CEO of Reaction Biology Corporation, a
contract biomedical research firm since March 2004. He has also
been the Vice President, Treasurer and member of the Board of
The Oristano Foundation since 1995, and has been a member of the
Board of Crystalplex Corporation since 2004. Mr. Oristano
has been involved with the paging industry as a director since
2002 and a director of the Company since November 2004. During
that time Mr. Oristano has maintained his understanding of
the Company’s operations, strategies, financial outlook and
ongoing challenges. In addition, Mr. Oristano has past
experience in investment management and telecommunications
company operations. Mr. Oristano has the requisite
qualifications to continue as a director.
Thomas L. Schilling, age 46, became a director of
the Company in May 2008. He was appointed Chief Financial
Officer (“CFO”) of the Company in January 2005 and has
served as the Chief Operating Officer and Chief Financial
Officer (“COO/CFO”) since October 2007. In addition to
his existing financial management duties, Mr. Schilling is
responsible for technical operations (network), information
technology, supply chain management and customer operations and
service. Prior to joining the Company, Mr. Schilling was
the CFO of Cincinnati Bell, Inc. from 2002 to August 2003. He
had previously served as the CFO of Cincinnati Bell, Inc.’s
(formerly Broadwing Inc.) Broadwing Communications subsidiary
and oversaw its IT consulting services business unit from 1999
to 2002. Mr. Schilling has more than 20 years of
financial and operational management experience in the
communications industry, including positions with MCI, Inc. from
1993 through 1998, and four years with Sprint Communications Co.
LP. He had also served as CFO of Autotrader.com from 1998
through 1999. Mr. Schilling served on the Audit Committee
of Sorrento Network, Inc. from October 2003 to August 2004.
Mr. Schilling currently serves on the Board of Pagenet
Canada, Inc. Mr. Schilling also serves as the COO/CFO and
director for all of the Company’s subsidiaries.
Mr. Schilling has been involved with the paging industry
since 2005 when he joined the Company as CFO. Mr. Schilling
has the requisite qualifications to continue as a director.
Samme L. Thompson, age 64, became a director of the
Company in November 2004. He is a member of the Compensation
Committee and the Audit Committee. Prior to the merger of
Metrocall and Arch, Mr. Thompson had been a director of
Arch since 2002. Mr. Thompson currently serves on the Board
for the Illinois Institute of Technology’s Knapp
Entrepreneurial Center, Sheriff Meadow Conservation Trust, and
the Partnership for Connected Illinois, Inc. (all non-profit
organizations). Mr. Thompson is the owner and president of
Telit Associates, Inc., a financial and strategic consulting
firm. He joined Motorola, Inc. as Vice President of Corporate
Strategy in July 1999 and retired from Motorola, Inc. as Senior
Vice President of Global Corporate Strategy and Corporate
Business Development in March 2002. From June 2004 until August
2005, Mr. Thompson was a member of the Board of
SpectraSite, Inc., which was the landlord of a small percentage
of transmission tower sites used by the Company. Since August
2005, he has been a member of the Board of American Tower
Corporation (“ATC”) (which merged with SpectraSite,
Inc.), a landlord of a substantial percentage of transmission
tower sites used by the Company. Due to his relationships with
SpectraSite, Inc. and ATC, Mr. Thompson has recused himself
from any
4
decision by the Board on matters relating to SpectraSite, Inc.,
and has and will continue to recuse himself from any decision by
the Board on matters relating to ATC (since the merger with
SpectraSite, Inc.). Mr. Thompson has been involved with the
paging industry as a director since 2002 and a director of the
Company since November 2004. During that time Mr. Thompson
has maintained his understanding of the Company’s
operations, strategies, financial outlook and ongoing
challenges. In addition, Mr. Thompson has past experience
in corporate strategic and business development that can be
applied to the Company’s current operations.
Mr. Thompson has the requisite qualifications to continue
as a director.
Unless marked otherwise, proxies received will be voted
“FOR” the election of each of the nominees named above.
Recommendation
of the Board:
The Board recommends a vote “FOR” the election of all
nominees named above.
PROPOSAL NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has appointed Grant Thornton LLP
(“Grant Thornton”) as the Company’s independent
registered public accounting firm to audit the Company’s
consolidated financial statements for the year ending
December 31, 2010. Although ratification by stockholders is
not required by law, the Board has determined that it is
desirable to request approval of this selection by the
stockholders in order to give the stockholders a voice in the
designation of auditors. Notwithstanding the ratification of
Grant Thornton by the stockholders, the Audit Committee, in its
discretion, may appoint a new independent registered public
accounting firm at any time during the year if the Audit
Committee believes that such a change would be in the best
interests of the Company and its stockholders.
If the stockholders do not ratify the appointment of Grant
Thornton as the Company’s independent registered public
accounting firm, the Audit Committee will consider the selection
of another independent registered public accounting firm for
2011 and future years. A representative of Grant Thornton will
be present at the Annual Meeting and will be available to
respond to appropriate questions from stockholders and to make a
statement if the representative desires to do so.
Unless marked otherwise, proxies received will be voted
“FOR” the ratification of the appointment of Grant
Thornton as the Company’s independent registered public
accounting firm for the year ending December 31, 2010.
Recommendation
of the Audit Committee and Board:
The Audit Committee and the Board recommend a vote
“FOR” the ratification of Grant Thornton as the
Company’s independent registered public accounting firm for
the year ending December 31, 2010.
THE BOARD
OF DIRECTORS AND COMMITTEES
The Board met seven times during 2009. All directors attended
100 percent of the total number of meetings held by the
Board as well as any standing committees of the Board on which
they serve. While the Company encourages all members of the
Board to attend the Annual Meeting, there is no formal policy as
to their attendance at the Annual Meeting. All directors
attended the 2009 Annual Meeting held in May 2009.
Stockholders’
Communications
The Company has not developed a formal process by which
stockholders may communicate directly to the Board. The Company
believes that an informal process, in which stockholder
communications (or summaries thereof) are received by the
Secretary for the Board’s attention and provided to the
Board, has served the Board’s and the stockholders’
needs. In view of recently adopted U.S. Securities and
Exchange Commission (“SEC”)
5
disclosure requirements relating to this issue, the Board may
consider developing more specific procedures. Until other
procedures are developed, any communications to the Board should
be addressed to the Board and sent in care of the Secretary of
the Company.
Director
Independence
The NASDAQ corporate governance rules require that a majority of
the Board be independent. No director qualifies as independent
unless the Board determines that the director has no direct or
indirect material relationship with the Company. In assessing
the independence of its members, the Board examined the
commercial, industrial, banking, consulting, legal, accounting,
charitable and familial relationships of each member. The
Board’s inquiry extended to both direct and indirect
relationships with the Company. Based upon both detailed written
submissions by its members and discussions regarding the facts
and circumstances pertaining to each member, considered in the
context of applicable NASDAQ corporate governance rules, the
Board has determined for the year ended December 31, 2009
that Mr. Samme L. Thompson has relationships with companies
that do business with USA Mobility.
Mr. Thompson was a member of the Board of SpectraSite, Inc.
from June 2004 to August 2005, the landlord of a small
percentage of transmission tower sites used by the Company.
Since August 2005, he has been a member of the Board of ATC
(which merged with SpectraSite, Inc.), a landlord of a
substantial percentage of transmission tower sites used by the
Company. Due to his relationships with SpectraSite, Inc. and
ATC, Mr. Thompson has recused himself from any decision by
the Board on matters relating to SpectraSite, Inc., and has and
will continue to recuse himself from any decision by the Board
on matters relating to ATC (since the merger with SpectraSite,
Inc.).
For the year ended December 31, 2009 all directors are
determined to be independent, with the exception of
Mr. Kelly who is the Company’s CEO and
Mr. Schilling who is the Company’s COO/CFO. Both are
also directors of the Board.
Leadership
Structure
The Board has segregated the positions of Chair of the Board and
CEO since the Company’s inception in 2004. The position of
Chair of the Board has been filled by an independent director.
(The evaluation of director independence has been described
above.) The Board believes that segregation of these positions
has allowed the CEO to focus on managing the
day-to-day
activities of the Company within the parameters established by
the Board. The position of Chair of the Board provides
leadership to the Board in establishing the overall strategic
direction of the Company consistent with the input of other
directors of the Board and management. The Board believes this
structure has served the stockholders ensuring the development
and implementation of the Company’s strategies in the
wireless telecommunications industry. The Board does not
contemplate any changes to the leadership structure of the Board
in 2010.
Risk
Oversight
The Company’s primary risk consists of managing the
Company’s operations profitably within the environment of
declining revenues and subscribers. In general the Board, as a
whole and also at the committee level, oversees the
Company’s risk management activities. The Board annually
reviews management’s long-term strategic plan and the
resulting annual budget that results from that strategic
planning process. Using that information the Compensation
Committee establishes both the short-term and long-term
compensation programs that include all executives of the Company
(including the Named Executive Officers (“NEOs”).
These compensation programs are ratified by the Board, as a
whole. The compensation programs are designed to focus
management on the performance metrics underlying the profitable
operations of the Company. The Board receives periodic updates
from management on the status of the Company’s operations
and performance (including updates outside of the normal Board
meetings). Finally, as noted below, the Board is assisted by the
Audit Committee in fulfilling its responsibility for oversight
of the quality and integrity of the Company’s accounting,
auditing and financial reporting practices. Thus, in performing
its risk oversight the Board establishes the performance
metrics, monitors on a timely basis the achievement of those
performance metrics, and oversees the mechanisms that report
those performance metrics.
6
Committees
During 2009 the Board had a standing Nominating and Governance
Committee, Compensation Committee and Audit Committee as
represented in the following table:
|
Nominating and |
|||||||||||||||
|
Governance |
Compensation |
||||||||||||||
| Board of Directors | Committee | Committee | Audit Committee | ||||||||||||
|
Royce Yudkoff (Chair)
|
M | M | |||||||||||||
|
Vincent D. Kelly
|
|||||||||||||||
|
Nicholas A. Gallopo
|
C | ||||||||||||||
|
Brian O’Reilly
|
M | C | |||||||||||||
|
Matthew Oristano
|
C | M | |||||||||||||
|
Thomas L. Schilling
|
|||||||||||||||
|
Samme L. Thompson
|
M | M | |||||||||||||
C = Chair
M = Member
Nominating
and Governance Committee
As of December 31, 2009 the members of the Nominating and
Governance Committee consisted of Messrs. Oristano,
O’Reilly and Yudkoff, each of whom was an independent
director as the term is defined in Rule 4200(a)(15) of the
NASDAQ marketplace rules. Mr. Oristano served as the Chair
of the Nominating and Governance Committee. The Nominating and
Governance Committee met one time in 2009 and took no action by
unanimous written consent in lieu of a meeting. The Board has
adopted a charter governing the activities of the Nominating and
Governance Committee, which may be viewed online on the
Company’s website at
http://www.usamobility.com/about_us/investor_relations/.
Pursuant to its charter, the Nominating and Governance
Committee’s tasks include identifying individuals qualified
to become Board members, recommending to the Board director
nominees to fill vacancies in the membership of the Board as
they occur and, prior to each Annual Meeting of Stockholders,
recommending director nominees for election at such meeting,
making recommendations to the Board concerning the size and
composition of the Board, conducting succession planning
regarding the CEO and other senior executive positions of the
Company and leading the Board in its annual review of Board
performance. The Nominating and Governance Committee may also
develop and recommend to the Board corporate governance
principles applicable to the Company. The Nominating and
Governance Committee recommended to the Board that starting in
2008 the number of directors on the Board be reduced from eight
members to seven members. The Board concurred with this
recommendation at its quarterly Board meeting in February 2008.
The Nominating and Governance Committee considers Board
candidates based upon various criteria, such as skills,
knowledge, perspective, broad business judgment and leadership,
relevant specific industry or regulatory affairs knowledge,
business creativity and vision, experience, and any other
factors appropriate in the context of an assessment of the
Nominating and Governance Committee’s understood needs of
the Board at that time. In addition, the Nominating and
Governance Committee considers whether the individual satisfies
criteria for independence, as may be required by applicable
regulations, and personal integrity and judgment. Accordingly,
the Board seeks to attract and retain highly qualified directors
who have sufficient time to attend to their substantial duties
and responsibilities to the Company.
The Nominating and Governance Committee does not have a formal
policy with respect to diversity, but as part of its review of
Board candidates considers diversity in the context of age,
business experience, knowledge and perspective from other
industries or business disciplines such as investment banking,
manufacturing, professional services or consulting among others.
This consideration is included as part of the overall decision
on the candidates for the Board.
The Nominating and Governance Committee has the sole authority
to retain, compensate, and terminate any search firm or firms to
be used in connection with the identification, assessment,
and/or
engagement of directors and director candidates. No such firm
has been retained by the Nominating and Governance Committee.
7
The Nominating and Governance Committee considers proposed
nominees whose names are submitted to it by stockholders;
however, it does not have a formal process for that
consideration. The Company has not adopted a formal process
because it believes that an informal consideration process has
been adequate to date. The Nominating and Governance Committee
intends to review periodically whether a more formal policy
should be adopted. If a stockholder wishes to suggest a proposed
name for the Nominating and Governance Committee’s
consideration, the name of that nominee and related personal
information should be forwarded to the Nominating and Governance
Committee, in care of the Secretary of the Company, at least six
months before the next Annual Meeting to assure time for
meaningful consideration by the Nominating and Governance
Committee. See also “Stockholder Proposals” for Bylaw
requirements for nominations.
All of the nominees for directors being voted upon at the Annual
Meeting are directors standing for re-election.
Compensation
Committee
As of December 31, 2009 the members of the Compensation
Committee consisted of Messrs. O’Reilly, Thompson and
Yudkoff, each of whom was an independent director as the term is
defined in Rule 4200(a)(15) of the NASDAQ marketplace
rules. Mr. O’Reilly served as the Chair of the
Compensation Committee. The Compensation Committee shall ensure
that the Company’s compensation programs are designed to
encourage high performance, promote accountability and assure
that employee interests are aligned with the interests of the
Company’s stockholders. The Compensation Committee met
three times during 2009 and took no action by unanimous written
consent in lieu of a meeting.
The Board has adopted a charter setting forth the structure,
authority and responsibilities of the Compensation Committee,
which may be viewed online on the Company’s website at
http://www.usamobility.com/about_us/investor_relations/.
Under its charter, the responsibilities of the Compensation
Committee include, at least annually, reviewing the compensation
philosophy of the Company and administering the USA Mobility,
Inc. Equity Incentive Plan (“Equity Plan”); approving
all compensation for executives with a base salary greater than
or equal to $250,000 and making recommendations for Board
approval of proposed employment agreements
and/or
severance arrangements for such executives as recommended by the
CEO; evaluating and approving all executive compensation
programs, including adoption or amendment to incentive
compensation and equity-based awards; and evaluating the
performance of the CEO and recommending for Board approval the
compensation based on such evaluation consistent with the
CEO’s existing employment agreement. The Compensation
Committee also recommends for Board approval the total
compensation for non-executive directors. The Compensation
Committee cannot delegate responsibilities relating to executive
compensation. The Compensation Committee has the sole authority
to retain,
and/or
replace, as needed, any independent counsel, compensation and
benefits consultants and other outside experts as the
Compensation Committee believes to be necessary. In 2009, the
Compensation Committee did not retain services from any
compensation consultants.
Audit
Committee
As of December 31, 2009 the Audit Committee, established in
accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
consisted of Messrs. Gallopo, Oristano, and Thompson, each
of whom was an independent director as the term is defined in
Rule 4200(a)(15) of the NASDAQ marketplace rules. The Board
has determined that Mr. Gallopo, who is the Audit Committee
Chair, is an “audit committee financial expert,” as
that term is defined in the Exchange Act. The Audit Committee
met four times during 2009 and took no action by unanimous
written consent in lieu of a meeting. The Board has adopted a
charter setting forth the structure, powers and responsibilities
of the Audit Committee, which may be viewed online on the
Company’s website at
http://www.usamobility.com/about_us/investor_relations/.
Under its charter, the responsibilities of the Audit Committee
include approving the appointment, compensation, retention and
oversight of the Company’s independent registered public
accounting firm; reviewing the plans and results of the audit
engagement with the independent registered public accounting
firm; reviewing the Company’s critical accounting policies,
the Annual and Quarterly reports on
Forms 10-K
and 10-Q,
respectively, and the earnings releases; reviewing the adequacy
of the Company’s internal accounting controls; overseeing
the Company’s ethics program; and reviewing the policies
and procedures regarding executives’ expense accounts.
8
As described under the heading
“Proposal No. 2 — Ratification of
Appointment of Independent Registered Public Accounting
Firm,” the Audit Committee has appointed Grant Thornton as
the Company’s independent registered public accounting firm
for the year ending December 31, 2010 and is seeking
ratification of the appointment at the Annual Meeting.
FEES AND
SERVICES
Fees Paid
to the Independent Registered Public Accounting Firm
The following table summarizes fees billed through
March 17, 2010 to the Company by Grant Thornton relating to
services provided for the periods stated.
| For the Year Ended December 31, | ||||||||
|
Grant Thorton
LLP
|
2009 | 2008 | ||||||
|
Audit Fees(a)
|
$ | 1,587,173 | $ | 1,826,368 | ||||
|
Tax Fees(b)
|
— | — | ||||||
|
Audit Related and Other Fees(c)
|
— | — | ||||||
|
Total
|
$ | 1,587,173 | $ | 1,826,368 | ||||
| (a) | The audit fees (including out-of-pocket expenses) for the years ended December 31, 2009 and 2008 were for professional services rendered during the audits of the Company’s consolidated financial statements and its internal control over financial reporting, for reviews of the Company’s consolidated financial statements included in the Company’s quarterly reports on Form 10-Q and for reviews of other filings made by the Company with the SEC. | |
| (b) | Tax fees consist of tax compliance, tax advice and tax planning services. No tax fees were paid to the Company’s independent registered public accounting firm in 2009 or 2008. | |
| (c) | No audit related or other fees were paid to the Company’s independent registered public accounting firm in 2009 or 2008. |
Pre-Approval
Policies and Procedures
The Audit Committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by the Company’s independent registered public
accounting firm. This policy generally provides that the Company
will not engage the Company’s independent registered public
accounting firm to render audit or non-audit services unless the
service is specifically approved in advance by the Audit
Committee or the engagement is entered into pursuant to one of
the pre-approval procedures described below.
From time to time, the Audit Committee may pre-approve specified
types of services that are expected to be provided to the
Company by the Company’s independent registered public
accounting firm during the next 12 months. Any such
pre-approval is detailed as to the particular service or types
of services to be provided and is also generally subject to a
maximum dollar amount.
The Audit Committee may also delegate to one or more of its
members the authority to approve any audit or non-audit services
to be provided by the independent registered public accounting
firm. Any approval of services by a member of the Audit
Committee pursuant to this delegated authority is reported at
the next Audit Committee meeting.
All audit fees in 2009 and 2008 were approved by the Audit
Committee pursuant to the Company’s pre-approval policy.
9
AUDIT
COMMITTEE REPORT
In accordance with its written charter adopted by the Board, the
Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the
Company’s accounting, auditing and financial reporting
practices. The Audit Committee oversees the Company’s
financial reporting process on behalf of the Board. Management
is responsible for the preparation of the Company’s
financial statements and the financial reporting process,
including the system of internal controls. Grant Thornton (the
“auditor”) is responsible for expressing an opinion on
the conformity of those audited financial statements with
generally accepted accounting principles and on the
effectiveness of the Company’s internal control over
financial reporting.
In discharging its oversight responsibility, the Audit Committee
reviewed and discussed with management and the auditor the
audited financial statements that were included in the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2009 (the “2009
Form 10-K”).
The Audit Committee discussed with the auditor the matters
required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as
amended and as adopted by the Public Company Accounting
Oversight Board (“PCAOB”). In addition, the Audit
Committee discussed with the auditor the auditor’s
independence from the Company and its management including the
matters in the written disclosures provided to the Audit
Committee as required by the applicable requirements of the
PCAOB.
Based on the foregoing, the Audit Committee recommended to the
Board and the Board approved the inclusion of the Company’s
audited financial statements in the 2009
Form 10-K
for filing with SEC.
Audit Committee:
Nicholas A. Gallopo
Matthew Oristano
Samme L. Thompson
Nicholas A. Gallopo
Matthew Oristano
Samme L. Thompson
The foregoing report shall not be deemed incorporated by
reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933, as amended, or the Exchange Act (together, the
“Acts”), except to the extent that the Company
specifically incorporates this information by reference, and
shall not otherwise be deemed filed under the Acts.
DIRECTOR
COMPENSATION
On August 1, 2007, for periods of service beginning on
July 1, 2007, the Board approved that, in lieu of
restricted stock units (“RSUs”), each non-executive
director will be granted in arrears on the first business day
following the quarter of service, shares of restricted common
stock (“restricted stock”) under the Equity Plan for
their service on the Board and committees thereof. The
restricted stock would be granted quarterly based upon the
closing price per share of the Company’s common stock at
the end of each quarter, such that each non-executive director
would receive $40,000 per year of restricted stock ($50,000 for
the Chair of the Audit Committee). The restricted stock will
vest on the earlier of a change in control of the Company (as
defined in the Equity Plan) or one year from the date of grant,
provided, in each case, that the non-executive director
maintains continuous service on the Board. Future cash
distributions related to the restricted stock will be set aside
and paid in cash to each non-executive director on the date the
restricted stock vests. In addition to the quarterly restricted
stock grants, the non-executive directors would be entitled to
cash compensation of $40,000 per year ($50,000 for the Chair of
the Audit Committee), also payable quarterly. These sums are
payable, at the election of the director, in the form of cash,
shares of common stock, or any combination thereof.
10
The following table details information on the restricted stock
awarded to the Company’s non-executive directors in or for
service in 2009. The shares of restricted stock vested one year
from the date of grant and the related cash distributions on the
vested restricted stock were paid to the Company’s
non-executive directors.
|
Restricted |
||||||||||||||||||||||||
|
Stock |
Cash |
|||||||||||||||||||||||
|
Price Per |
Restricted |
Restricted |
Awarded |
Distribution |
||||||||||||||||||||
|
For the Three |
Share |
Stock |
Stock |
Vesting |
and |
Paid |
||||||||||||||||||
|
Months Ended
|
Grant Date | ($)(a) | Awarded (#) | Vested (#) | Date | Outstanding (#) | ($)(b) | |||||||||||||||||
|
December 31, 2008
|
January 2, 2009 | 11.57 | 4,536 | (4,536) | January 2, 2010 | — | 9,072 | |||||||||||||||||
|
March 31, 2009
|
April 1, 2009 | 9.21 | 5,701 | — | April 1, 2010 | 5,701 | — | |||||||||||||||||
|
June 30, 2009
|
July 1, 2009 | 12.76 | 4,116 | — | July 1, 2010 | 4,116 | — | |||||||||||||||||
|
September 30, 2009
|
October 1, 2009 | 12.88 | 4,079 | — | October 1, 2010 | 4,079 | — | |||||||||||||||||
|
December 31, 2009
|
January 2, 2010 | 11.01 | 4,767 | — | January 2, 2011 | 4,767 | — | |||||||||||||||||
|
Total
|
23,199 | (4,536) | 18,663 | 9,072 | ||||||||||||||||||||
| (a) | The quarterly restricted stock awarded is based on the price per share of the Company’s common stock on the last trading day prior to the quarterly award date. | |
| (b) | Amount excludes interest earned and paid upon vesting of shares of restricted stock. |
These grants of shares of restricted stock will reduce the
number of shares eligible for future issuance under the Equity
Plan.
The following table details information on the cash
distributions relating to the restricted stock issued to the
Company’s non-executive directors for the year ended
December 31, 2009:
|
Per Share Amount |
Total Amount |
|||||||||||
|
Declaration Date
|
Record Date | Payment Date | ($) | ($) | ||||||||
|
March 3, 2009
|
March 17, 2009 | March 31, 2009 | 1.25 | 29,524 | ||||||||
|
April 29, 2009
|
May 20, 2009 | June 18, 2009 | 0.25 | 5,491 | ||||||||
|
July 29, 2009
|
August 14, 2009 | September 10, 2009 | 0.25 | 4,781 | ||||||||
|
October 28, 2009
|
November 17, 2009 | December 10, 2009 | 0.25 | 4,608 | ||||||||
|
Total
|
2.00 | 44,404 | ||||||||||
Effective August 31, 2005, all directors are required to
own and hold a minimum of 1,500 shares of the
Company’s common stock for a period of 18 months.
These shares could be shares that were already owned, shares
that were acquired by the director, or restricted stock that
were paid to the director for service on the Board and
committees thereof. At March 17, 2010 all directors met the
minimum ownership requirement.
The non-executive directors are reimbursed for any reasonable
out-of-pocket
Board related expenses incurred. There are no other annual fees
paid to these non-executive directors. Directors that are
employed as executives of the Company are not separately
compensated for service as a director.
No change in director compensation has been planned for 2010.
The Company used the fair-value based method of accounting for
the equity awards. The restricted stock will vest on the earlier
of a change in control or one year from the date of grant and
the fair value is amortized as compensation expense over a
one-year period. The amounts shown below for restricted stock
reflect the grant date fair value of the restricted stock issued
quarterly to the non-executive directors based on the price per
share of the
11
Company’s common stock on the last trading day prior to the
quarterly award date. The following table sets forth the
compensation earned by the non-executive directors for the year
ended December 31, 2009:
2009 Director
Compensation Table
|
Fees Earned or Paid |
All Other |
|||||||||||||||||||
| Name | in Cash ($) | Stock Awards ($) | Compensation ($) | Total ($) | ||||||||||||||||
|
Royce Yudkoff(a)
|
40,000 | 40,000 | 8,265 | 88,265 | ||||||||||||||||
|
Nicholas A. Gallopo(b)
|
50,000 | 50,000 | 10,328 | 110,328 | ||||||||||||||||
|
Brian O’Reilly(a)
|
40,000 | 40,000 | 8,265 | 88,265 | ||||||||||||||||
|
Matthew Oristano(a)
|
40,000 | 40,000 | 8,265 | 88,265 | ||||||||||||||||
|
Samme L. Thompson(a)
|
40,000 | 40,000 | 8,265 | 88,265 | ||||||||||||||||
| (a) | Included in the column “All Other Compensation” for each of the non-executive directors is $8,265 of cash distributions and interest paid to the non-executive directors in 2009 on the vested restricted stock. On January 2, 2009, April 1, 2009, July 1, 2009 and October 1, 2009, 4,334 shares of restricted stock vested for each of the non-executive directors from the quarterly grants issued to each of the non-executive directors in 2008. As of December 31, 2009, Messrs. Yudkoff, O’Reilly, Oristano and Thompson each have 3,511 shares of restricted stock outstanding with a fair market value of $38,656 based on the closing price per share of the Company’s common stock on December 31, 2009 of $11.01. On January 2, 2010 the Company awarded Messrs. Yudkoff, O’Reilly, Oristano and Thompson each 908 shares of restricted stock for services performed during the fourth quarter of 2009 based on the closing price of the Company’s common stock on December 31, 2009 of $11.01. The restricted stock will vest on the earlier of a change in control or one year from the date of issuance and the fair value is amortized as compensation expense over a one-year period. Also on January 2, 2010, 864 shares of restricted stock vested for each of the non-executive directors from the grant issued on January 2, 2009 and the related cash distributions and interest of $1,729 on the vested restricted stock were paid to each of the non-executive directors. | |
| (b) | Included in the column “All Other Compensation” for Mr. Gallopo, the Audit Committee Chair, is $10,328 of cash distributions and interest paid in 2009 on the vested restricted stock. On January 2, 2009, April 1, 2009, July 1, 2009 and October 1, 2009, 5,417 shares of restricted stock vested from the quarterly grants issued to Mr. Gallopo in 2008. As of December 31, 2009, Mr. Gallopo has 4,388 shares of restricted stock outstanding with a fair market value of $48,312 based on the closing price per share of the Company’s common stock on December 31, 2009 of $11.01. On January 2, 2010, the Company awarded Mr. Gallopo 1,135 shares of restricted stock for services performed during the fourth quarter of 2009 based on the closing price of the Company’s common stock on December 31, 2009 of $11.01. The restricted stock will vest on the earlier of a change in control or one year from the date of issuance and the fair value is amortized as compensation expense over a one-year period. Also on January 2, 2010, 1,080 shares of restricted stock vested from the grant issued to Mr. Gallopo on January 2, 2009 and the related cash distributions and interest of $2,162 on the vested restricted stock were paid to Mr. Gallopo. |
EXECUTIVE
OFFICERS
Executive officers of the Company serve at the pleasure of the
Board, subject in certain cases to the provisions of their
employment agreements, if applicable. Set forth below is
biographical information for each executive officer of the
Company who is not also a director as of March 17, 2010
(Messrs. Kelly and Schilling are directors of the Company).
James H. Boso. Mr. Boso, 62, was
appointed Executive Vice President (“EVP”) of Sales of
the Company in October 2005 and subsequently promoted to EVP of
Sales and Marketing (“EVP, Sales &
Marketing”) in July 2007. Prior to his current position,
Mr. Boso was named Division President of the Western
Sales Division in November 2004 with the merger of Arch and
Metrocall. He was Regional Vice President for the Central Sales
Region of Metrocall from July 1996 until November 2004.
Mr. Boso has over 10 years in the wireless messaging
industry and over 24 years in the telecommunications,
broadcast and entertainment industries including serving as Vice
12
President, Broadcast Division of Bass Brothers, Senior Vice
President with Storer Communications, Inc. and the CEO of
Spectravision, Inc.
Bonnie K. Culp-Fingerhut
(“Ms. Culp”). Ms. Culp, 58,
was appointed EVP of Human Resources and Administration
(“EVP, HR & Administration”) in October
2007. Ms. Culp was named Senior Vice President of Human
Resources and Administration in November 2004 with the merger of
Arch and Metrocall. She was Senior Vice President of Human
Resources and Administration of Metrocall from November 1998
until November 2004. Ms. Culp has more than 25 years
in the human resources field with over 10 years in the
wireless messaging industry.
Thomas G. Saine. Mr. Saine, 47, was
promoted to Chief Information Officer (“CIO”) in July
2008, effective August 2008. Prior to his current position,
Mr. Saine was the Chief Technology Officer
(“CTO”) since October 2007. In addition, since January
2008 Mr. Saine currently serves as the President of GTES,
LLC, an indirect wholly-owned subsidiary of USA Mobility.
Mr. Saine rejoined the Company in August 2007 as Vice
President of Corporate Technical Operations. Previously,
Mr. Saine had served the Company as Vice President,
Technology and Integration from November 2003 through June 2005.
Mr. Saine was an independent consultant from July 2005
through November 2005 and was a Program Manager and Director of
Programs with Northrop Grumman Corporation from December 2005
through August 2007. Prior to Mr. Saine’s employment
with the Company in 2003, Mr. Saine had served as Vice
President, Network Services and CTO of Weblink Wireless, Inc.
from 2001 through 2003. Mr. Saine has over 20 years of
operations, engineering and technology management experience.
Mr. Saine currently serves on the Board of GTES, Inc.
The NEOs of the Company as of December 31, 2009 consisted
of Mr. Kelly, the CEO, Mr. Schilling, the COO/CFO, and
the other three most highly compensated executive officers of
the Company, whose annual compensation equaled or exceeded
$100,000 and who served as executive officers at
December 31, 2009. The other three most highly compensated
executive officers of the Company are identified as
Mr. Boso, Ms. Culp and Mr. Saine. Their titles
are as follows: EVP, Sales & Marketing, EVP,
HR & Administration and CIO, respectively.
COMPENSATION
DISCUSSION AND ANALYSIS (“CD&A”)
Compensation
Objectives
For all executives of the Company, which includes the NEOs,
compensation is intended to be based on the performance of the
Company as determined by the Compensation Committee and ratified
by the Board. The Compensation Committee believes that
compensation paid to executives should be closely aligned with
the short-term and long-term performance of the Company; linked
to specific, measurable results that create value for
stockholders; and assist the Company in attracting and retaining
key executives critical to long-term success.
In establishing compensation for executives, the Compensation
Committee has the following objectives:
| • | Attract and retain individuals of superior ability and managerial talent; | |
| • | Ensure compensation is aligned with the Company’s corporate strategies, business objectives and the long-term interests of the Company’s stockholders; | |
| • | Achieve key strategic and financial performance measures by linking incentive award opportunities to attainment of performance goals in these areas; and | |
| • | Focus executive performance on increasing the Company’s stock price and maximizing stockholder value, as well as promoting retention of key staff, by providing a portion of total compensation opportunities in the form of direct ownership in the Company through RSUs that are payable in common stock of the Company. |
To meet these objectives the Compensation Committee also
considers the strategic position of the Company in the wireless
telecommunications industry. While the Company is the largest
provider in the paging segment of this industry, the Company has
experienced significant attrition in its subscriber base and
revenues as its customers have migrated to other wireless
services. These changes require a continual focus on operational
efficiency and cost reductions to maximize operating cash flow
and profitability. The impact of subscriber and revenue
attrition has negatively impacted the price performance of the
Company’s common stock since the formation of the Company
in
13
November 2004. The Company’s strategic position, the
requirement for continuing cost control in order to maintain
profitability and the limited number of experienced and
knowledgeable paging industry executives are considered as the
Compensation Committee evaluates the Company’s
performance-based compensation program.
In order to implement the performance-based compensation
philosophy, the Company’s compensation program for
executives consists of the following elements:
|
Non-Equity |
||||||||
|
Elements of Compensation
|
(Cash Based) | Equity | ||||||
|
Base Salary
|
100 | % | — | |||||
|
All Other Compensation
|
100 | % | — | |||||
|
Short-Term Incentive Plan (“STIP”) Compensation(a)
|
100 | % | — | |||||
|
Long-Term Incentive Plan (“LTIP”) Compensation
|
50 | % | 50 | % | ||||
| (a) | The CEO’s amended and restated employment agreement dated October 30, 2008 specifies that his STIP compensation will be paid 50 percent in cash and 50 percent in common stock of the Company. |
Both the STIP and LTIP compensation are based on the measurable
financial performance of the Company as determined by the
Compensation Committee and ratified by the Board. In designing
the STIP and LTIP compensation the Compensation Committee has
considered the strategic position of the Company as the largest
provider in the declining paging segment of the wireless
telecommunications industry. This consideration has resulted in
the STIP compensation being exclusively cash based (except for
the CEO as noted above). With respect to the LTIP compensation
the Company has designed this element to include both cash and
equity components. The balance between cash and equity
compensation is evaluated annually as discussed below. To
further tie compensation to performance, the LTIP compensation
does not automatically award any amount of compensation unless
the pre-established financial targets are achieved.
Compensation
Policies and Practices that Present Material Risks
As noted above, the Board through the Compensation Committee
applies the same compensation policies and practices to all
executives of the Company including the NEOs. Executives of the
Company are defined as employees of the Company with positions
of vice-president or higher. Currently, there are
14 employees considered to be executives. There are no
materially significant incentive compensation policies or
practices applicable to all other employees of the Company.
A key element of the Company’s compensation policies and
practices is the STIP. The STIP performance criteria of
operating cash flow (as defined), healthcare revenue, direct
subscriber units in service (“UIS”) and average
revenue per unit (“ARPU) have been established to maximize
the Company’s cash flow without unnecessarily reducing the
number of subscribers that ultimately drive revenues. While the
criteria upon which the STIP is based could incent the
Company’s executives to reduce operating expenses adversely
impacting customer retention, the other elements of the STIP
incent customer retention and revenue growth. These STIP
criteria are consistent with the criteria used in prior years
(2008 and 2007) and have not resulted in a material adverse
effect on the Company. The Company believes that its
compensation policies and practices are not likely to have a
material adverse impact on the Company.
Adjustments
and/or Recovery of Award Payments
The Company does not have a policy regarding the adjustment
and/or
recovery of STIP and LTIP payments due to restatements of
previously issued financial statements.
Determination
of Compensation
The Compensation Committee determines and recommends the
compensation awards available to the Company’s CEO
consistent with the terms of the CEO’s employment
agreement. It also evaluates and approves the CEO’s
recommendations on all compensation levels for all other NEOs.
14
To determine the appropriate range for the key elements of the
compensation program, the Compensation Committee reviews
management’s recommendations and has, from time to time,
reviewed recent historical compensation survey data such as the
Mercer Telecommunications Survey. The Compensation Committee
reviews the structure of the Company’s various executive
compensation elements and the appropriateness of the levels of
base salary, STIP compensation and LTIP compensation. Consistent
with the results of the recent historical information, the
Company’s executive compensation program includes a fixed
base salary and variable STIP and LTIP compensation, with a
significant portion weighted towards the variable components.
This ensures that total compensation reflects the overall
success or failure of the Company and motivates executives to
meet appropriate performance measures, thereby maximizing total
return to stockholders.
The CEO provides recommendations annually to the Compensation
Committee regarding the compensation of all executives,
excluding himself. The performance of all NEOs, including the
CEO, is reviewed annually by the Compensation Committee. The
Compensation Committee then evaluates and approves the
CEO’s recommendations on compensation levels for all other
NEOs. Annually, the Compensation Committee, without the presence
of the CEO, recommends for Board approval the CEO’s
incentive compensation consistent with terms of the CEO’s
employment agreement. Also, consistent with the CEO’s
current employment agreement discussed below, the Board may
increase, but not decrease, the amounts of the CEO’s base
salary.
In 2009 the Company did not benchmark its compensation levels
for its executives. The Compensation Committee believed that
recent historical information used in the prior years was
sufficient to analyze the 2009 compensation levels for its
executives. The elements of compensation for 2009 did not change
from the prior year’s elements of compensation.
Within its performance-based compensation program, the Company
aims to compensate the NEOs in a manner that is tax effective
for the Company. In practice, all of the annual compensation
paid by the Company is tax-qualified under Section 162(m)
of the Internal Revenue Code, as amended (the “Code”),
with the exception of the portion of the CEO’s STIP and
LTIP compensation in excess of $1 million.
In 2008, the Compensation Committee engaged the Hay Group to
establish a peer group, consisting of twelve companies in a
similar industry and with comparable
revenue1,
and to develop a recommendation for severance and change in
control agreements for the NEOs (excluding the CEO). The Hay
Group gathered information for the NEOs from the most recent
proxy statement available at that time for these companies and
recommended changes to the severance and change in control
agreements for the NEOs (excluding the CEO). The Compensation
Committee accepted the consultant’s recommendation and
directed the Company to execute amended severance and change in
control agreements with the NEOs effective October 2008
(excluding the CEO) (see exhibit 10.23 in the
Company’s 2008 third quarter
Form 10-Q).
No such service was retained in 2009.
Given the Company’s strategic position it is very important
to retain the best talent in the senior executive management
team. Actual compensation for each executive (including the
NEOs) is ultimately driven by the performance of the executive
over time, as well as the annual performance of the Company
based on criteria established by the Compensation Committee.
Each year, the Company may establish LTIP compensation for
certain eligible employees, including the NEOs, based upon a
multiple of the participant’s annual STIP compensation. The
annual STIP compensation is based on an STIP target set for the
participant’s job level, and, from time to time, follows a
review of market survey data.
Policies
with Respect to Equity Compensation Awards
The Company evaluates the allocation of equity awards among
stock option grants, restricted stock grants, stock appreciation
rights and participation units available for grant under the
Company’s Equity Plan. However, the Company has not
historically granted stock options or stock appreciation rights.
The Company grants and records all equity incentive awards under
the fair-value method at the date of grant.
1 The
peer group was comprised of American Tower Corporation, Crown
Castle International Corporation, Virgin Mobile USA, Inc.,
Centennial Communications Corp, Rural Cellular Corporation,
iPCS, Inc., SBA Communications Corporation, Syniverse Holdings
Inc., InPhonic, Inc., Kratos Defense & Security
Solutions, Inc., Clearwire Corporation, and LLC International,
Inc.
15
Under the Equity Plan, the Company has the ability to issue up
to a maximum 1,878,976 shares of its common stock to
eligible employees and non-executive members of its Board in the
form of stock options, restricted stock, stock grants or units.
At December 31, 2009 1,240,834 shares of common stock
were available for future grant. RSUs issued under the Equity
Plan do not entitle the holder to any rights of common stock
ownership. RSUs are generally convertible into shares of common
stock pursuant to the Restricted Stock Unit Agreement when the
appropriate vesting conditions have been satisfied. Restricted
stock awarded under the plan entitles the stockholder to all
rights of common stock ownership except that the restricted
stock may not be sold, transferred, exchanged, or otherwise
disposed of during the restriction period, which will be
determined by the Compensation Committee.
No stock options were granted in 2009 and there are no stock
options outstanding.
Relationships
With Compensation Consultants
The Company and the Board did not require support from any
compensation consultants in 2009.
Elements
of Compensation
Base
Salary
As discussed above, the Company provides its NEOs with a base
salary. Each year the Company determines base salary increases
based upon the performance of the NEOs as assessed by the
Compensation Committee. No formulaic base salary increases are
provided to the NEOs, such as cost of living or contractual
adjustments. The Compensation Committee authorized a
5 percent salary increase effective for January 1,
2009 for the NEOs (not including the CIO and CEO). No salary
increases were provided to the NEOs for 2010.
All
Other Compensation
Perquisites. The Company provides car
allowances to the CEO pursuant to his employment agreement and
to the EVP, Sales & Marketing, which is a customary
practice for sales and marketing executives.
Company Contribution to Defined Contribution
Plans. The Company has a Section 401(k)
Savings & Retirement Plan (the “401(k)
Plan”) for eligible employees of the Company and any
designated affiliate. The 401(k) Plan permits eligible employees
of the Company to defer up to 100 percent of their annual
compensation, subject to certain limitations imposed by the
Code. An employee’s elective deferrals are vested
immediately and non-forfeitable upon contribution to the 401(k)
Plan. The Company currently makes matching contributions to the
401(k) Plan in an amount equal to 50 cents for each dollar of
participant contributions, up to a maximum of 4 percent of
the participant’s salary deferral amount and subject to
certain other limits to include catch up contributions. Plan
participants vest over three years in the amounts contributed by
the Company. Employees of the Company are eligible to
participate in the 401(k) Plan on the first of the month after
30 days of credited service with the Company. In 2009, 2008
and 2007, the Company incurred $24,448, $22,506 and $16,224,
respectively, in matching contributions for the NEOs
participating in the 401(k) Plan.
Other Employee Benefits. The Company maintains
broad-based benefits for all employees, including health and
dental insurance, life and disability insurance, paid time off
and paid holidays. Executives (including NEOs) are eligible to
participate in all of the employee benefit plans on the same
basis as other employees with the exception of accelerated
vacation accrual and eligibility for payout at time of
termination.
Severance Payments / Accruals. The
Company did not pay or accrue any payments relating to
termination and change in control for the NEOs for the year
ended December 31, 2009.
Short-Term
Incentive Plan (STIP) Compensation
As discussed above, the Company structures its compensation
program to reward executives based on the Company’s
performance and the individual executive’s contribution to
that performance. This allows executives to receive STIP
compensation in the event certain specified corporate
performance measures are achieved. The Compensation Committee
believes that the payment of the annual STIP compensation
provides incentives necessary to retain executives and reward
them for short-term Company performance based on the
Company’s strategic position.
16
Straight-line interpolation is used to determine payouts for
STIP awards when 1) the actual performance is between the
threshold performance target and target performance level and
2) the actual performance is between the target performance
level and the maximum performance target. Payments under the
STIP are contingent upon continued employment, though pro rata
payments will be made in the event of death or disability based
on actual performance at the triggering event date relative to
targeted performance measures for each program. Further, if an
executive’s employment is involuntarily terminated (other
than for cause), the executive will be eligible to receive a pro
rata payment, subject to the execution of an appropriate release
and other applicable and customary termination procedures.
2009
STIP
The Compensation Committee approved the 2009 STIP on
January 6, 2009. The 2009 STIP is comprised of a cash
component that is a multiple of 2009 base salary. The
pre-established performance criteria for 2009 were based on
operating cash flow (as defined), total healthcare revenue, the
number of direct subscriber UIS and ARPU. The NEOs were eligible
for the following payments under the 2009 STIP:
|
Actual |
||||||||||||||
|
% of |
Target |
Payout |
||||||||||||
|
NEO
|
Job Title | Base Salary | Payout ($) | ($)(a) | ||||||||||
|
Vincent D. Kelly(b)
|
CEO | 200 | % | 1,200,000 | 1,369,200 | |||||||||
|
Thomas L. Schilling
|
COO/CFO | 100 | % | 346,500 | 395,357 | |||||||||
|
James H. Boso
|
EVP, Sales & Marketing | 75 | % | 206,719 | 235,866 | |||||||||
|
Bonnie Culp
|
EVP, HR & Administration | 75 | % | 151,939 | 173,362 | |||||||||
|
Thomas G. Saine
|
CIO | 75 | % | 206,250 | 235,331 | |||||||||
|
Total
|
2,111,408 | 2,409,116 | ||||||||||||
| (a) | The Company exceeded the performance targets resulting in an actual payment of 114.1 percent of each NEO’s eligible 2009 STIP award. The payments were made in March 2010. | |
| (b) | Pursuant to his employment agreement, Mr. Kelly received 50 percent of his 2009 STIP in common stock of the Company. He received 60,799 shares of common stock based on the closing stock price on February 26, 2010 of $11.26 per share. Mr. Kelly sold 25,658 shares of common stock to the Company in payment of required tax withholdings based on the Company’s closing stock price on February 26, 2010 of $11.26 per share. The shares of common stock purchased by the Company were retired and will not be reissued. |
The amounts paid under the Company’s 2009 STIP program were
determined based upon the Company’s actual achievement of
the following performance criteria:
|
Performance |
||||||||||||||||
|
(Dollars in |
||||||||||||||||
|
thousands |
||||||||||||||||
|
except for |
Achievement |
Weighted |
||||||||||||||
|
Performance Criteria(a)
|
Relative Weight | ARPU) | Against Target | Payout | ||||||||||||
|
Operating Cash Flow(b)
|
50 | % | $ | 82,093 | 125.0 | % | 62.5% | |||||||||
|
Healthcare Revenue
|
20 | % | $ | 115,351 | 107.5 | % | 21.5% | |||||||||
|
Direct UIS
|
15 | % | 2,014,094 | 88.4 | % | 13.3% | ||||||||||
|
ARPU
|
15 | % | $ | 8.77 | 112.3 | % | 16.8% | |||||||||
| 114.1% | ||||||||||||||||
| (a) | The Compensation Committee selected the performance criteria as key measures in determining stockholder value. The relative weight assigned to each performance measure reflects the judgment of the Compensation Committee as to the importance each measure has to stockholder value. |
| (b) | Operating cash flow is calculated as operating income plus depreciation, amortization and accretion less purchases of property and equipment (all determined in accordance with U.S. generally accepted accounting principles). |
17
Long-Term
Incentive Plan (LTIP) Compensation
2009
LTIP
On January 6, 2009 the Compensation Committee approved and
the Board ratified the 2009 LTIP. The 2009 LTIP provides
eligible employees (including the NEOs) the opportunity to earn
long-term incentive compensation based on the Company’s
attainment of certain financial goals determined by the
Compensation Committee and set forth in the 2009 LTIP during the
period from January 1, 2009 and December 31, 2012 (the
“performance period”). The 2009 LTIP may vest on
December 31, 2012 should the pre-established performance
goals be achieved. The Compensation Committee may revise the
performance goals in the event of a change in control or other
corporate reorganization, merger, similar transaction or other
extraordinary event, or as the Compensation Committee determines
is in the best interests of the Company. The purpose of the 2009
LTIP is to promote the success of the Company’s business,
advance the interests of the Company, attract and retain the
best available personnel for positions of substantial
responsibility, and provide additional incentives to selected
key employees for outstanding performance.
The Compensation Committee, in its sole discretion, determines
the target awards that may be earned by each 2009 LTIP
participant based on a multiple of the 2009 STIP target award
for each participant (or, with respect to participants selected
to participate in the 2009 LTIP after the commencement of a
performance period, the STIP target award for the year in which
the participant commenced participation in the 2009 LTIP). Under
the terms of the 2009 LTIP, 50 percent of the target award
is to be paid in cash and 50 percent of the target award is
paid in RSUs, which may vest at the end of the performance
period, as described below. Additionally, participants are
entitled to dividend equivalent rights with respect to the RSU
component of a target award to the extent that any cash
dividends or cash distributions (regular or otherwise) are paid
with respect to the Company’s common stock during the
performance period. Payments under the 2009 LTIP are subject to
the Company achieving a specified goal of operating expenses and
a target of earnings before interest, taxes, depreciation,
amortization and accretion expenses (“EBITDA”) for the
2012 calendar year (the “performance goals”), with the
two objectives accorded equal weight in determining the amount
of the final payments. Eligible participants will not receive
any payments under the 2009 LTIP until filing of the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2012 and will forfeit all
rights if terminated with cause or voluntarily separated before
the payment date. If the performance goals are achieved and the
participants are employed through the payment date, the
participants will receive a cash incentive payment, vested RSUs
paid in common stock of the Company and granted under the Equity
Plan, and dividend equivalent rights (if any) paid with accrued
interest in cash with respect to the vested RSUs. Any
participant who is involuntarily terminated without cause during
the first year of the performance period shall forfeit any right
to receive an award. After one year from the effective date of
the grant, a participant will earn a prorated portion of
100 percent of the target award for cash and equity awards
based on the number of days the participant was continuously
employed from January 1, 2009 through the termination date
divided by the total number of days in the performance period.
The number of RSUs awarded to a participant was based on the
closing price of the Company’s common stock on
December 31, 2008. The Board awarded a total of 329,416
RSUs to certain eligible employees (including the NEOs) and also
approved that future cash distributions related to the existing
RSUs will be set aside and paid in cash to each eligible
employees when the RSUs are converted into shares of common
stock. Existing RSUs would be converted into shares of common
stock on the earlier of: (1) a change in control of the
Company (as defined in the Equity Plan); or (2) on or after
the third business day following the day that the Company filed
its 2012 Annual Report on
Form 10-K
with the SEC. The RSUs were granted under the Equity Plan
pursuant to a Restricted Stock Unit Agreement dated
January 15, 2009. The fair value of the RSUs was calculated
at $12.01 per share, the Company’s closing stock price on
January 15, 2009, the date of grant.
Any unvested RSUs granted under the Equity Plan and the related
cash distributions are forfeited if the participant terminates
employment with the Company. During the second quarter of 2009,
7,571 RSUs and the related cash distributions were forfeited. As
of December 31, 2009, there were 321,845 RSUs outstanding.
During the first quarter of 2010, 24,213 RSUs and the related
cash distributions were forfeited.
Also on January 6, 2009, the Company provided for long-term
cash performance awards to the same certain eligible employees
(to include the NEOs) under the 2009 LTIP. Similar to the RSUs,
the performance period for
18
these long-term cash performance awards is 48 months and
would be paid on the earlier of a change in control of the
Company (as defined in the Equity Plan); or on or after the
third business day following the day that the Company files its
2012 Annual Report with the SEC. Any unvested long-term cash
performance awards are forfeited if the participant terminates
employment with the Company.
The table below details components of the 2009 LTIP for the NEOs:
|
% of 2009 |
Total LTIP |
Non-Equity |
Number of |
Fair Value at |
||||||||||||||||||||||||||
|
STIP |
Award |
Component |
Equity |
RSUs |
Grant Date |
|||||||||||||||||||||||||
| NEO | Job Title | Target | ($)(a) | (Cash Based) ($) | Component ($) | (#)(b) | ($)(c) | |||||||||||||||||||||||
|
Vincent D. Kelly
|
CEO | 150 | % | 1,800,000 | 900,000 | 900,000 | 77,787 | 934,222 | ||||||||||||||||||||||
|
Thomas L. Schilling
|
COO/CFO | 300 | % | 1,039,500 | 519,750 | 519,750 | 44,922 | 539,513 | ||||||||||||||||||||||
|
James H. Boso
|
EVP, Sales & Marketing | 300 | % | 620,156 | 310,078 | 310,078 | 26,800 | 321,868 | ||||||||||||||||||||||
|
Bonnie Culp
|
EVP, HR & Administration | 300 | % | 455,816 | 227,908 | 227,908 | 19,698 | 236,573 | ||||||||||||||||||||||
|
Thomas G. Saine
|
CIO | 300 | % | 618,750 | 309,375 | 309,375 | 26,739 | 321,135 | ||||||||||||||||||||||
|
Total
|
4,534,222 | 2,267,111 | 2,267,111 | 195,946 | 2,353,311 | |||||||||||||||||||||||||
| (a) | The 2009 LTIP award is amortized ratably over 48 months as compensation expense. The award may vest on December 31, 2012 should the pre-established performance goals be achieved. | |
| (b) | The number of RSUs awarded was based on the Company’s closing stock price on December 31, 2008 of $11.57. | |
| (c) | The fair value of the RSUs was calculated at $12.01 per share, the Company’s closing stock price on the date of grant on January 15, 2009. |
Discretionary
Award
2006
LTIP
On February 1, 2006, the Company’s Board of Directors
established the 2006 LTIP, which consisted of a cash component
and an equity component in the form of restricted stock. Of the
total 2006 LTIP award, 80 percent was considered the
Initial Target Award and was fully amortized and vested by
December 2008. The remaining 20 percent of the total 2006
LTIP award plus cumulative forfeitures was reserved as a
discretionary award (the “Additional Target Award”).
In March 2009, the Compensation Committee approved the
Additional Target Award provided for in the 2006 LTIP after
filing of the 2008
Form 10-K
with the SEC. The Compensation Committee approved the payment of
the Additional Target Award under the 2006 LTIP due to the
achievement of the pre-established operating expense target for
2008. The Company’s actual operating expenses for calendar
year 2008 as defined in the 2006 LTIP were $241.5 million,
below the pre-established target of $249.0 million. The
Additional Target Award consisted of a cash and equity bonus.
The Additional Target Award was paid in March 2009. Also in
March 2009, the Company paid a total of $208,898 to the NEOs for
cash distributions on shares of common stock issued under the
2006 LTIP Additional Target Award.
19
The following table details the cash and equity components of
the Additional Target Award of the 2006 LTIP for the NEOs. The
Company used the fair-value based method of accounting for the
Additional Target Award. These amounts were reflected as 2009
compensation expenses as the Additional Target Award was
discretionary and not approved by the Compensation Committee
until March 2009.
|
Number of |
||||||||||||||||||||||||||||||||||
|
Additional |
Number of |
Fair Value |
Shares |
Fair Value |
||||||||||||||||||||||||||||||
|
Target |
Non-Equity |
Shares |
at Grant |
Sold to |
Number of |
Upon |
||||||||||||||||||||||||||||
|
Award |
Component |
Equity |
Awarded |
Date |
the Company |
Shares |
Issuance |
|||||||||||||||||||||||||||
| NEO | Job Title | ($)(a) | (Cash Based) ($) | Component ($) | (#)(b) | ($)(c) | (#)(d) | Issued (#) | ($)(c) | |||||||||||||||||||||||||
|
Vincent D. Kelly
|
CEO | 699,464 | 350,005 | 349,459 | 12,189 | 123,109 | (5,144) | 7,045 | 71,155 | |||||||||||||||||||||||||
|
Thomas L. Schilling
|
COO/CFO | 349,747 | 175,003 | 174,744 | 6,095 | 61,560 | (2,719) | 3,376 | 34,098 | |||||||||||||||||||||||||
|
James H. Boso
|
EVP, Sales & Marketing | 183,620 | 91,876 | 91,744 | 3,200 | 32,320 | (1,242) | 1,958 | 19,776 | |||||||||||||||||||||||||
|
Bonnie Culp
|
EVP, HR & Administration | 152,998 | 76,564 | 76,434 | 2,666 | 26,927 | (1,207) | 1,459 | 14,736 | |||||||||||||||||||||||||
|
Thomas G. Saine
|
CIO | 63,008 | 31,500 | 31,508 | 1,099 | 11,100 | (374) | 725 | 7,323 | |||||||||||||||||||||||||
|
Total
|
1,448,837 | 724,948 | 723,889 | 25,249 | 255,016 | (10,686) | 14,563 | 147,088 | ||||||||||||||||||||||||||
| (a) | The Additional Target Award is payable approximately 50 percent in cash and 50 percent in common stock. Each NEO is entitled to a prorated portion of the 20 percent of the total initial 2006 LTIP award and a prorated portion of the cumulative forfeitures. | |
| (b) | The number of shares of common stock awarded was based on the average closing price of the Company’s common stock for the period January 25, 2006 through January 31, 2006 of $28.67, the price used for the Initial Target Award. | |
| (c) | Fair value of the common stock is calculated at $10.10 per share, the Company’s closing stock price on March 9, 2009. | |
| (d) | Shares of common stock were sold to the Company in payment of required tax withholdings based on the Company’s closing stock price on March 9, 2009 of $10.10 per share. The shares of common stock purchased by the Company were retired and will not be reissued. |
Summary
Compensation
The Summary Compensation Table includes values for contingent
compensation, such as unvested equity awards. For example,
performance equity awards under the 2009 LTIP that have been
granted to the NEOs but not paid by the Company have been valued
in the table below based on the most probable outcome as of the
date of grant. The NEOs may never realize the value of certain
items included under the column headed “Total” (as is
the case in recent years), or the amounts realized may differ
materially from the amounts listed in the Summary Compensation
Table and related footnotes.
2009
Summary Compensation Table
|
Non-Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
|
Stock or RSU |
Incentive |
|||||||||||||||||||||||||||||||||||||||||||||||
| Awards |
Plan Compensation |
|||||||||||||||||||||||||||||||||||||||||||||||
|
2006 |
||||||||||||||||||||||||||||||||||||||||||||||||
|
LTIP |
||||||||||||||||||||||||||||||||||||||||||||||||
|
Initial |
||||||||||||||||||||||||||||||||||||||||||||||||
|
Discretionary |
STIP |
LTIP |
Target |
All Other |
||||||||||||||||||||||||||||||||||||||||||||
|
Salary |
Bonus |
Award |
Awards |
STIP Awards |
Award |
Compensation |
Total |
|||||||||||||||||||||||||||||||||||||||||
| NEO | Job Title | Year | ($)(a) | ($)(b) | ($)(c) | ($)(d)(e) | ($)(f) | ($)(g) | ($)(h) | Compensation ($) | ||||||||||||||||||||||||||||||||||||||
|
Vincent D. Kelly(i)
|
CEO | 2009 | 600,000 | 578,549 | 684,597 | 934,222 | 684,603 | — | 22,063 | 3,504,034 | ||||||||||||||||||||||||||||||||||||||
| 2008 | 600,000 | — | — | — | 1,263,600 | 720,000 | 277,288 | 2,860,888 | ||||||||||||||||||||||||||||||||||||||||
| 2007 | 600,000 | — | — | — | 1,352,400 | — | 135,358 | 2,087,758 | ||||||||||||||||||||||||||||||||||||||||
|
Thomas L. Schilling(j)
|
COO/CFO | 2009 | 346,500 | 289,285 | — | 539,513 | 395,357 | — | 4,900 | 1,575,555 | ||||||||||||||||||||||||||||||||||||||
| 2008 | 330,000 | — | — | — | 347,490 | 360,000 | 125,419 | 1,162,909 | ||||||||||||||||||||||||||||||||||||||||
| 2007 | 315,000 | — | — | — | 338,100 | — | 110,320 | 763,420 | ||||||||||||||||||||||||||||||||||||||||
|
James H. Boso(k)
|
EVP, Sales & | 2009 | 275,625 | 151,876 | — | 321,868 | 235,866 | — | 11,397 | 996,632 | ||||||||||||||||||||||||||||||||||||||
| Marketing | 2008 | 262,500 | — | — | — | 207,441 | 189,000 | 76,553 | 735,494 | |||||||||||||||||||||||||||||||||||||||
| 2007 | 250,000 | — | — | — | 211,313 | — | 28,096 | 489,409 | ||||||||||||||||||||||||||||||||||||||||
|
Bonnie Culp(l)
|
EVP, HR & | 2009 | 202,585 | 126,552 | — | 236,573 | 173,362 | — | 4,848 | 743,920 | ||||||||||||||||||||||||||||||||||||||
| Administration | 2008 | 192,938 | — | — | — | 152,685 | 157,500 | 56,793 | 559,916 | |||||||||||||||||||||||||||||||||||||||
| 2007 | 183,750 | — | — | — | 147,919 | — | 19,152 | 350,821 | ||||||||||||||||||||||||||||||||||||||||
|
Thomas G. Saine(m)
|
CIO | 2009 | 275,000 | 42,600 | — | 321,135 | 235,331 | — | 4,900 | 878,966 | ||||||||||||||||||||||||||||||||||||||
| 2008 | 231,250 | — | — | 41,972 | 182,630 | 126,000 | 4,106 | 585,958 | ||||||||||||||||||||||||||||||||||||||||
| 2007 | 62,115 | 30,000 | — | — | 29,605 | — | 392 | 122,112 | ||||||||||||||||||||||||||||||||||||||||
20
| (a) | Amounts represent base salaries for 2009, 2008 and 2007. Mr. Saine rejoined the Company in August 2007, and, accordingly, his 2007 annual salary was prorated. On January 1, 2008, Mr. Saine received a 17.6 percent increase in his annual salary due to his promotion to CTO and received an additional 37.5 percent increase in his annual salary effective August 1, 2008 due to his promotion to CIO. Accordingly, his 2008 annual salary was prorated. Effective January 1, 2007, Mr. Schilling and Ms. Culp each received a 5 percent salary increase and Mr. Boso received a 19 percent salary increase. Effective January 1, 2008, Mr. Schilling, Mr. Boso and Ms. Culp each received a 5 percent salary. Effective January 1, 2009, Mr. Schilling, Mr. Boso and Ms. Culp each received a 5 percent salary increase. | |
| (b) | Amounts in 2009 represent the Additional Target Award provided for in the 2006 LTIP which consisted of cash bonuses totaling $724,948, equity bonuses of $255,016 (based on 25,249 shares of common stock awarded at $10.10 per share on grant date) and the related cash distributions of $8.65 per share of common stock totaling $208,898. The amounts were expensed in 2009. Mr. Saine was not eligible to receive the $8.65 per share of common stock of cash distributions paid on the number of shares awarded due to the date he was employed by the Company. (See “Discretionary Award”.) In 2007, $30,000 sign-on bonus was paid to the Mr. Saine. | |
| (c) | Amount represents the equity portion of the 2009 STIP awarded to Mr. Kelly. Pursuant to his employment agreement, Mr. Kelly received 50 percent of his 2009 STIP award in common stock of the Company. On March 4, 2010, Mr. Kelly received 60,799 shares of common stock based on the closing stock price on February 26, 2010 of $11.26 per share. | |
| (d) | Amounts represent the grant date fair value for the equity portion of the 2009 LTIP. The fair value of the RSUs was calculated at $12.01 per share, the Company’s closing stock price on the date of grant on January 15, 2009. The 2009 LTIP award may vest on December 31, 2012 should the pre-established performance goals be achieved. The 2009 LTIP award is amortized over 48 months as compensation expense. See “2009 LTIP” for additional information. | |
| (e) | On February 1, 2006, the Company’s Board of Directors established the 2006 LTIP, which consisted of a cash component and an equity component in the form of restricted stock. Of the total 2006 LTIP award, 80 percent was considered the Initial Target Award and was fully amortized and vested by December 2008. The aggregate fair value of the restricted stock of $1,390,238 (for the NEOs except for Mr. Saine) was calculated at $27.94 per share, the Company’s closing price on the date of grant on February 1, 2006 (which is not reflected in the table above). On November 14, 2008, the Compensation Committee and the Board approved an equity award to Mr. Saine under the 2006 LTIP Initial Target Award. Mr. Saine received 4,395 shares of restricted stock with an aggregate grant date fair value of approximately $41,972. The grant date fair value of the restricted stock was calculated at $9.55 per share, the closing stock price on the date of grant on November 14, 2008. Also on November 14, 2008, the Compensation Committee and the Board amended the vesting date for the 2006 LTIP Initial Target Award from January 1, 2009 to December 3, 2008. On December 3, 2008, 54,153 shares of restricted stock were fully vested under the 2006 LTIP Initial Target Award for the NEOs with an aggregate grant date fair value of approximately $1,432,210. The value realized on vesting for the NEOs of $616,803 was calculated based on the vesting price per share, which was the closing price per share of the Company’s common stock on December 3, 2008 of $11.39. | |
| (f) | Amounts represent the compensation expense for the 2009, 2008 and 2007 STIP awards. The STIP awards were paid to the NEOs in March 2010, 2009 and 2008, respectively. Pursuant to his employment agreement, Mr. Kelly received 50 percent of his 2009 STIP award in cash. Mr. Saine received a prorated amount of the 2007 STIP based on his respective hire date. | |
| (g) | Amounts represent the cash portion of the 2006 LTIP Initial Target Award. On November 14, 2008, the Compensation Committee and the Board approved a cash award to Mr. Saine under the 2006 LTIP Initial Target Award of $126,000. Also on November 14, 2008, the Compensation Committee and the Board amended the vesting date for the 2006 LTIP Initial Target Award from January 1, 2009 to December 3, 2008. The payment was made on December 11, 2008 to the NEOs. | |
| (h) | Additional information is provided in the “All Other Compensation” table below. | |
| (i) | Amount represents the grant date fair value of 77,787 RSUs awarded to Mr. Kelly under the 2009 LTIP, which is the target and maximum possible payout based on attainment of the specified performance goals. The fair |
21
| market value of the RSUs at December 31, 2009 was $856,435 based on the Company’s closing stock price on December 31, 2009 of $11.01. As of December 31, 2009 compensation expense was accrued on 19,447 RSUs with an aggregate grant date fair value of approximately $233,558. | ||
| (j) | Amount represents the grant date fair value of 44,922 RSUs awarded to Mr. Schilling under the 2009 LTIP, which is the target and maximum possible payout based on attainment of the specified performance goals. The fair market value of the RSUs at December 31, 2009 was $494,591 based on the Company’s closing stock price on December 31, 2009 of $11.01. As of December 31, 2009 compensation expense was accrued on 11,231 RSUs with an aggregate grant date fair value of approximately $134,884. | |
| (k) | Amount represents the grant date fair value of 26,800 RSUs awarded to Mr. Boso under the 2009 LTIP, which is the target and maximum possible payout based on attainment of the specified performance goals. The fair market value of the RSUs at December 31, 2009 was $295,068 based on the Company’s closing stock price on December 31, 2009 of $11.01. As of December 31, 2009 compensation expense was accrued on 6,700 RSUs with an aggregate grant date fair value of approximately $80,467. | |
| (l) | Amount represents the grant date fair value of 19,698 RSUs awarded to Ms. Culp under the 2009 LTIP, which is the target and maximum possible payout based on attainment of the specified performance goals. The fair market value of the RSUs at December 31, 2009 was $216,875 based on the Company’s closing stock price on December 31, 2009 of $11.01. As of December 31, 2009 compensation expense was accrued on 4,925 RSUs with an aggregate grant date fair value of approximately $59,149. | |
| (m) | Amount represents the grant date fair value of 26,739 RSUs awarded to Mr. Saine under the 2009 LTIP, which is the target and maximum possible payout based on attainment of the specified performance goals. The fair market value of the RSUs at December 31, 2009 was $294,396 based on the Company’s closing stock price on December 31, 2009 of $11.01. As of December 31, 2009 compensation expense was accrued on 6,685 RSUs with an aggregate grant date fair value of approximately $80,287. |
The following table summarizes all other compensation for the
NEOs for the years ended December 31, 2009, 2008 and 2007:
2009 All
Other Compensation Table
|
Company |
|||||||||||||||||||||||||||||||||
|
Cash |
Contribution to |
||||||||||||||||||||||||||||||||
|
Distributions |
Defined |
||||||||||||||||||||||||||||||||
|
Tax |
Paid |
Contribution |
|||||||||||||||||||||||||||||||
| NEO | Job Title | Year | Perquisites ($) | Reimbursement ($) | ($)(a) | Plans ($) | Total ($) | ||||||||||||||||||||||||||
|
Vincent D. Kelly(b)
|
CEO | 2009 | 17,163 | — | — | 4,900 | 22,063 | ||||||||||||||||||||||||||
| 2008 | 26,652 | — | 246,036 | 4,600 | 277,288 | ||||||||||||||||||||||||||||
| 2007 | 10,082 | — | 120,776 | 4,500 | 135,358 | ||||||||||||||||||||||||||||
|
Thomas L. Schilling(c)
|
COO/CFO | 2009 | — | — | — | 4,900 | 4,900 | ||||||||||||||||||||||||||
| 2008 | — | — | 120,819 | 4,600 | 125,419 | ||||||||||||||||||||||||||||
| 2007 | 35,174 | 27,089 | 45,288 | 2,769 | 110,320 | ||||||||||||||||||||||||||||
|
James H. Boso(d)
|
EVP, Sales & | 2009 | 6,497 | — | — | 4,900 | 11,397 | ||||||||||||||||||||||||||
| Marketing | 2008 | 8,497 | 970 | 62,486 | 4,600 | 76,553 | |||||||||||||||||||||||||||
| 2007 | 6,497 | — | 17,099 | 4,500 | 28,096 | ||||||||||||||||||||||||||||
|
Bonnie Culp
|
EVP, HR & | 2009 | — | — | — | 4,848 | 4,848 | ||||||||||||||||||||||||||
| Administration | 2008 | — | — | 52,193 | 4,600 | 56,793 | |||||||||||||||||||||||||||
| 2007 | — | — | 15,089 | 4,063 | 19,152 | ||||||||||||||||||||||||||||
|
Thomas G. Saine
|
CIO | 2009 | — | — | — | 4,900 | 4,900 | ||||||||||||||||||||||||||
| 2008 | — | — | — | 4,106 | 4,106 | ||||||||||||||||||||||||||||
| 2007 | — | — | — | 392 | 392 | ||||||||||||||||||||||||||||
| (a) | Cash distributions reported in 2008 represented amounts paid upon the vesting of the restricted stock under the 2006 LTIP Initial Target Award in December 2008 totaling $452,961 and amounts paid upon the final vesting of the restricted stock under the 2005 LTIP in January 2008 totaling $28,573. Cash distributions reported in 2007 represented amounts paid upon the quarterly vesting of the restricted stock under the 2005 LTIP totaling $198,252. Mr. Saine rejoined the Company in August 2007, and, accordingly, was not eligible for the 2006 LTIP Initial Target Award and the 2005 LTIP. |
22
| (b) | Perquisite amounts in 2009, 2008 and 2007 were for a car allowance. In addition to the car allowance in 2008, Mr. Kelly received $16,576 of reimbursement for legal fees related to the renegotiation of his employment agreement. | |
| (c) | Perquisite amounts in 2007 represent $22,139 in leased housing and $13,035 in commuting expenses and tax reimbursement of $27,089 related to these perquisites. | |
| (d) | Perquisite amounts in 2009, 2008 and 2007 were for a car allowance. In addition to the car allowance in 2008, Mr. Boso received a $2,000 gift card and $970 of tax reimbursement related to this card. |
Grants of
Plan-Based Awards
The following table sets forth the estimated possible and future
cash and equity payouts for the 2009 LTIP, 2009 STIP and the
2006 LTIP Additional Target Award that were awarded in 2009. No
stock options or other equity awards were granted in 2009 to the
NEOs.
Grants Of
Plan-Based Awards
|
Estimated Possible |
Estimated Possible |
|||||||||||||||||||||||||||||||||||||||||||||
|
or Future Payouts |
or Future Payouts |
|||||||||||||||||||||||||||||||||||||||||||||
|
Under Non-Equity |
Equity Incentive |
|||||||||||||||||||||||||||||||||||||||||||||
|
Incentive Plan Awards |
Plan Awards |
|||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | |||||||||||||||||||||||||||||||||||||||||||||
|
Grant Date Fair |
||||||||||||||||||||||||||||||||||||||||||||||
|
Value of Common |
||||||||||||||||||||||||||||||||||||||||||||||
|
All Other |
Stock or RSU |
|||||||||||||||||||||||||||||||||||||||||||||
|
Grant |
Effective |
Target |
Maximum |
Target |
Maximum |
Stock Awards |
Awards |
|||||||||||||||||||||||||||||||||||||||
| NEO | Job Title | Award | Date | Date | ($) | ($) | (#) | (#) | (#)(c) | ($)(d) | ||||||||||||||||||||||||||||||||||||
|
Vincent D. Kelly
|
CEO | 2009 LTIP | 1/15/2009 | 1/1/2009 | 900,000 | 900,000 | 77,787 | 77,787 | — | 934,222 | ||||||||||||||||||||||||||||||||||||
| 2009 STIP | 600,000 | 759,000 | $ | 600,000 | $ | 759,000 | — | 684,597 | ||||||||||||||||||||||||||||||||||||||
|
2006 LTIP Additional Target Award |
3/9/2009 | 3/9/2009 | 350,005 | 350,005 | — | — | 12,189 | 123,109 | ||||||||||||||||||||||||||||||||||||||
|
Thomas L. Schilling
|
COO/CFO | 2009 LTIP | 1/15/2009 | 1/1/2009 | 519,750 | 519,750 | 44,922 | 44,922 | — | 539,513 | ||||||||||||||||||||||||||||||||||||
| 2009 STIP | 346,500 | 438,323 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
|
2006 LTIP Additional Target Award |
3/9/2009 | 3/9/2009 | 175,003 | 175,003 | — | — | 6,095 | 61,560 | ||||||||||||||||||||||||||||||||||||||
|
James H. Boso
|
EVP, Sales & | 2009 LTIP | 1/15/2009 | 1/1/2009 | 310,078 | 310,078 | 26,800 | 26,800 | — | 321,868 | ||||||||||||||||||||||||||||||||||||
| Marketing | 2009 STIP | 206,719 | 261,499 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
2006 LTIP Additional Target Award |
3/9/2009 | 3/9/2009 | 91,876 | 91,876 | — | — | 3,200 | 32,320 | ||||||||||||||||||||||||||||||||||||||
|
Bonnie Culp
|
EVP, HR & | 2009 LTIP | 1/15/2009 | 1/1/2009 | 227,908 | 227,908 | 19,698 | 19,698 | — | 236,573 | ||||||||||||||||||||||||||||||||||||
| Administration | 2009 STIP | 151,939 | 192,202 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
2006 LTIP Additional Target Award |
3/9/2009 | 3/9/2009 | 76,564 | 76,564 | — | — | 2,666 | 26,927 | ||||||||||||||||||||||||||||||||||||||
|
Thomas G. Saine
|
CIO | 2009 LTIP | 1/15/2009 | 1/1/2009 | 309,375 | 309,375 | 26,739 | 26,739 | — | 321,135 | ||||||||||||||||||||||||||||||||||||
| 2009 STIP | 206,250 | 260,906 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
|
2006 LTIP Additional Target Award |
3/9/2009 | 3/9/2009 | 31,500 | 31,500 | — | — | 1,099 | 11,100 | ||||||||||||||||||||||||||||||||||||||
| (a) | Amounts represent the cash awards under the 2009 LTIP, 2009 STIP and the 2006 LTIP Additional Target Award. The 2009 LTIP may vest on December 31, 2012 should the pre-established performance goals be achieved. The grant does not provide for a threshold payout if the Company does not achieve the pre-established performance goals and does provide for a target payout if the Company achieves the target for operating expense reduction and EBITDA. The grant does not call for a maximum payout; hence, it is the same as the target payout. The Company exceeded the performance targets for the 2009 STIP resulting in an actual payment of 114.1 percent of each NEO’s eligible 2009 STIP award. The payments were made in March 2010 |
23
| and are reflected in the Summary Compensation Table. The 2006 LTIP Additional Target Award was discretionary and approved in March 2009. The actual cash payments were made in March 2009 and are reflected above as the target and maximum payouts. | ||
| (b) | Amounts represent the equity portion of the 2009 STIP awarded to Mr. Kelly and the RSUs awarded under the 2009 LTIP to the NEOs. Pursuant to his employment agreement, Mr. Kelly received 50 percent of his 2009 STIP award in common stock of the Company. On March 4, 2010, Mr. Kelly received 60,799 shares of common stock based on the closing stock price on February 26, 2010 of $11.26 per share. The number of RSUs awarded under the 2009 LTIP was based on the Company’s closing stock price on December 31, 2008 of $11.57. The 2009 LTIP may vest on December 31, 2012 should the pre-established performance goals be achieved. The grant does not provide for a threshold payout if the Company does not achieve the pre-established performance goals and does provide for a target payout if the Company achieves the target for operating expense reduction and EBITDA. The grant does not call for a maximum payout; hence, it is the same as the target payout. | |
| (c) | Amounts represent the common stock awarded under the 2006 LTIP Additional Target Award to the NEOs. The 2006 LTIP Additional Target Award was discretionary and approved in March 2009. The number of shares of common stock awarded was based on the average closing price of the Company’s common stock for the period January 25, 2006 through January 31, 2006 of $28.67, the price used for the Initial Target Award under the 2006 LTIP. The shares of common stock were granted and issued on March 9, 2009 and are reflected above as the target and maximum payouts. | |
| (d) | The fair value of the RSUs awarded to the NEOs under the 2009 LTIP was calculated at $12.01 per share, the Company’s closing stock price on the date of grant on January 15, 2009. The fair value of the common stock awarded to Mr. Kelly under the 2009 STIP was calculated at $11.26 per share, the Company’s closing stock price on February 26, 2010. The fair value of the common stock awarded to the NEOs under the 2006 LTIP Additional Target Award was calculated at $10.10 per share, the Company’s closing stock price on March 9, 2009. |
Outstanding
Equity Awards
At December 31, 2009, the RSUs granted and outstanding
under the 2009 LTIP and the estimated related market or payout
values of such units are shown in the following table for the
NEOs. No stock options were outstanding in 2009 for the NEOs.
Outstanding
Equity Awards at December 31, 2009
|
Equity Incentive |
||||||||||
|
Plan Awards: |
Equity Incentive |
|||||||||
|
Number of |
Plan Awards: Market |
|||||||||
|
Unearned RSUs |
or Payout Value of |
|||||||||
|
That Have Not |
Unearned RSUs That |
|||||||||
|
Vested |
Have Not Vested |
|||||||||
| NEO | Job Title | (#)(a) | ($)(b) | |||||||
|
Vincent D. Kelly
|
CEO | 77,787 | 856,435 | |||||||
|
Thomas L. Schilling
|
COO/CFO | 44,922 | 494,591 | |||||||
|
James H. Boso
|
EVP, Sales & Marketing | 26,800 | 295,068 | |||||||
|
Bonnie Culp
|
EVP, HR & Administration | 19,698 | 216,875 | |||||||
|
Thomas G. Saine
|
CIO | 26,739 | 294,396 | |||||||
|
Total
|
195,946 | 2,157,365 | ||||||||
| (a) | The RSUs awarded under the 2009 LTIP may vest on December 31, 2012 should the pre-established performance goals be achieved. | |
| (b) | Market or payout values of the outstanding RSUs are based on the Company’s closing stock price at December 31, 2009 of $11.01 for the 2009 LTIP. |
24
Vested
Common Stock
The grant date fair value of the common stock issued as
discretionary award under the 2006 LTIP Additional Target Award
is also reflected as the dollar value realized upon award of
such shares as shown in the following table for the NEOs. No
other stock awards held by the NEOs vested during 2009.
Stock
Awards Vested During 2009
| Stock Award | ||||||||||
|
Value Realized on |
||||||||||
|
Number of Shares |
Award |
|||||||||
| NEO | Job Title | Acquired on Award (#) | ($)(a) | |||||||
|
Vincent D. Kelly
|
CEO | 12,189 | 123,109 | |||||||
|
Thomas L. Schilling
|
COO/CFO | 6,095 | 61,560 | |||||||
|
James H. Boso
|
EVP, Sales & Marketing | 3,200 | 32,320 | |||||||
|
Bonnie Culp
|
EVP, HR & Administration | 2,666 | 26,927 | |||||||
|
Thomas G. Saine
|
CIO | 1,099 | 11,100 | |||||||
|
Total
|
25,249 | 255,016 | ||||||||
| (a) | Value realized on award is calculated based on the grant price of $10.10 per share, the Company’s closing stock price on March 9, 2009. |
Other
Discretionary Awards
The Company’s executives, along with other members of
senior management, are eligible to participate in the
Company’s discretionary award of stock options or shares of
restricted stock. Guidelines for the number of shares of
restricted stock granted to each executive are determined using
a procedure approved by the Compensation Committee based upon
several factors, including the executive’s salary, STIP
award, and the value of the shares of restricted stock at the
time of grant. Additional grants other than the discretionary
award may be made following a significant change in job
responsibility. As discussed above, under the 2006 LTIP
Additional Target Award the Compensation Committee approved the
award of shares of common stock to executives (including NEOs).
Such awards are an important component of the compensation
necessary to attract and retain talented executives.
Termination
and Change in Control Arrangements
The Company believes that providing severance to each of its
executives (including NEOs) is an important retention tool and
provides security to the executives with respect to their terms
of employment. The Company’s policies on severance are
intended to provide fair and equitable compensation in the event
of severance of employment.
Termination
Arrangements — CEO
On November 16, 2004, and as amended on October 30,
2008, the CEO entered into a four-year employment agreement with
the Company, if not terminated by either party, which provides
for severance benefits under certain events. For additional
details on Termination Arrangements for the CEO, refer to the
CEO’s employment agreement discussed below.
The Company did not pay or accrue any payments relating to
termination for the CEO for the year ended December 31,
2009.
Termination
and Change in Control Arrangements — NEOs excluding
CEO
Effective November 17, 2004, and as amended on
March 31, 2009, the Company maintains a specific USA
Mobility, Inc. Severance Pay Plan and Change in Control
Agreement (the “Severance Agreements”) for executives
(including NEOs but not the CEO) for the purpose of providing
severance payments and benefits upon a termination
25
of the executive’s employment without “cause” or,
following the occurrence of a change in control, a termination
of the executive’s employment without cause or a
resignation of the executive’s employment for “good
reason” as defined in the Severance Agreements.
Termination Without Cause. Under the terms of
the Severance Agreements, the executives (including the NEOs but
not the CEO) would be entitled to the following severance
benefits upon a termination without cause occurring prior to a
change in control, subject to their executing a release of
claims.
| (1) | Continued payment of base salary for a minimum of six months, plus an additional two weeks for each year of service, up to a combined maximum of 12 months (the “Severance Period”); | |
| (2) | Continued group health plan benefits in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Under the Severance Agreements prior to the March 31, 2009 amendment, COBRA coverage was provided to NEOs at the discounted employee rate for a maximum period of six months; and at the end of such period, the NEOs were able to continue their COBRA coverage but they were fully responsible for the entire COBRA premium amount. The March 31, 2009 amendment modified this benefit to account for the COBRA Premium Reduction under the American Recovery and Reinvestment Act of 2009 (“ARRA”), which became effective on or about February 17, 2009 and is continuing. Under this amended benefit, eligible employees that elect continued group health care benefits under COBRA are responsible for paying the full COBRA premium amount, with the understanding that they may participate in the COBRA Premium Reduction program through which they will only be responsible for payment of 35 percent of the COBRA premium amount for 15 months. Under this amended benefit, the Company, in its sole discretion, also may provide the eligible employees with an additional transition benefit paid on a taxable basis, with the amount of any such benefit to be set by the Company in its sole discretion. The Company expects that when the COBRA Premium Reduction ceases, the Severance Agreements will return to the benefit provided before the March 31, 2009 amendment; and | |
| (3) | Prorated portion of the target award under the annual STIP for the calendar year in which the termination occurred based upon the length of employment in that calendar year. |
The benefits mentioned above are subject to certain
post-employment restrictions (principally execution of a release
of claims and satisfaction of non-compete obligations) and other
terms and conditions set forth in the Severance Agreements. All
severance payments are subject to the applicable Federal, state
and local taxes. In the event of death prior to the completion
of all payments, the remaining payments shall be made to the
executive’s beneficiary.
In accordance with the terms of the 2009 LTIP, the executives
(including NEOs but not the CEO), will be entitled to a prorated
award beginning on January 1, 2010, one year after the
effective date of the award (January 1, 2009) as
follows:
| • | Prorated portion of 100 percent of the target award for cash and equity awards, including dividend equivalent rights (if any) paid with accrued interest in cash with respect to the vested RSUs, based on the number of days the executive was continuously employed from January 1, 2009 through the termination date divided by the total number of days in the performance period. In the event of a participant’s death, the participant’s estate will be eligible to receive an amount not greater than 100 percent of the participant’s target award, based on the Compensation Committee’s determination of the Company’s achievement of the expense reduction goals and EBITDA. Payment will be made in the year following the participant’s death. For termination without cause or due to disability, the payment will be made on or after the third business day following the day that the Company filed its 2012 Annual Report on Form 10-K with the SEC. |
26
Assuming that the termination without cause occurred on
December 31, 2009 and that the Company’s closing stock
price at December 31, 2009 was $11.01, the targeted
payments to the NEOs (excluding the CEO) are set forth in the
following table:
|
Accrued |
||||||||||||||||||||||||||||
|
Vacation |
Health |
2009 |
||||||||||||||||||||||||||
|
Pay |
Benefits |
STIP |
||||||||||||||||||||||||||
| NEO | Job Title | Salary ($) | ($)(a) | ($)(b) | ($)(c) | Total ($) | ||||||||||||||||||||||
|
Thomas L. Schilling
|
COO/CFO | 239,885 | 17,663 | — | 395,357 | 652,905 | ||||||||||||||||||||||
|
James H. Boso
|
EVP, Sales & Marketing | 275,625 | 90,055 | — | 235,866 | 601,546 | ||||||||||||||||||||||
|
Bonnie Culp
|
EVP, HR & Administration | 202,585 | 15,275 | — | 173,362 | 391,222 | ||||||||||||||||||||||
|
Thomas G. Saine
|
CIO | 169,231 | 11,677 | — | 235,331 | 416,239 | ||||||||||||||||||||||
| (a) | These payments are based on accrued vacation hours at December 31, 2009 pursuant to the vacation policy for the NEOs. | |
| (b) | Under the ARRA, the Company would be subsidized for the Company’s portion of the health benefit costs for 15 months. As a result, the Company believes it would not have incurred any health benefit costs in connection with a termination occurring on December 31, 2009 for the NEOs. | |
| (c) | The Company exceeded the performance targets for 2009 resulting in 114.1 percent STIP payment. |
Change in Control. Under the Severance
Agreements, if a change in control with respect to the Company
occurs, and following such change in control, the applicable NEO
(other than the CEO) experiences a termination of employment by
the Company without cause or resigned for “good
reason” as defined in the Severance Agreements, then, in
addition to the payment in respect of the 2009 LTIP as described
above, the NEOs would be entitled to the following severance
benefits upon a termination without cause occurring after a
change in control, subject to their executing a release of
claims:
| (1) | A cash lump sum payment equal to a minimum of 1.5 times the executive’s base salary, plus an additional two weeks of base salary for each year of service up to a maximum of 2 times the executive’s base salary; | |
| (2) | Accident and health insurance benefits substantially similar to those that the executive was receiving immediately prior to termination until the earlier to occur of 18 months following termination or such time as the executive is covered by comparable programs of a subsequent employer, reduced to the extent of any comparable benefits received from another source; and | |
| (3) | An amount equal to 100 percent of the executive’s target award under the annual STIP for the calendar year in which the termination occurred based upon the length of employment in that calendar year. |
In addition, in accordance with the terms of the 2009 LTIP, the
executives (including NEOs but not the CEO), will be entitled to
the following accelerated vesting schedule in the event of a
change in control:
| (1) | Fifty percent (50 percent) of the participant’s target award shall vest if a change in control occurs during either of the first two years of the performance period (defined as January 1, 2009 through December 31, 2012); | |
| (2) | Seventy-five percent (75 percent) of the participant’s target award shall vest if a change in control occurs during the third year of the performance period; or | |
| (3) | One hundred percent (100 percent) of the participant’s target award shall vest if a change in control occurs during the fourth year of the performance period. |
Payment will be made on the earlier of: (1) a change in
control of the Company (as defined in the Equity Plan); or
(2) on or after the third business day following the day
that the Company filed its 2012 Annual Report on
Form 10-K
with the SEC.
If any payment or the value of any benefit received or to be
received (“Payments”) by the NEOs in connection with
their termination of employment or contingent upon a change in
control of the Company would be subject to any excise tax, the
Company shall pay to the NEO an additional amount
(“Gross-Up
Payment”) such that the net
27
amount the NEO retains, after deduction of the excise tax on
such
Gross-Up
Payment, shall be equal to the total present value of such
Payments at the time such Payments are to be made. The intent is
that the Company shall be solely responsible for and shall pay
any excise taxes on any Payments and
Gross-Up
Payment and any income and employment taxes imposed on the
Gross-Up
Payment as well as any loss of deduction caused by the
Gross-Up
Payment. Assuming the NEOs other than the CEO were terminated on
December 31, 2009, the NEOs would not be subject to any
Federal, state or local excise tax and the Company would not be
required to make a
Gross-Up
Payment.
Assuming a change in control resulted in a termination without
cause occurring on December 31, 2009 and that the
Company’s closing stock price at December 31, 2009 was
$11.01, the targeted payments to the NEOs (excluding the CEO)
are set forth in the following table. Amounts with respect to
the 2009 LTIP would be paid or vested upon a change in control,
regardless of whether a termination occurred:
|
Accrued |
2009 LTIP |
||||||||||||||||||||||||||||||||||||||||||
|
Vacation |
Health |
2009 |
Non-Equity |
2009 LTIP |
All Other |
||||||||||||||||||||||||||||||||||||||
|
Salary |
Pay |
Benefits |
STIP |
(Cash Based) |
Equity |
Compensation |
|||||||||||||||||||||||||||||||||||||
| NEO | Job Title | ($)(a) | ($)(b) | ($)(c) | ($)(d) | ($)(e) | ($)(f) | ($)(g) | Total ($) | ||||||||||||||||||||||||||||||||||
|
Thomas L. Schilling
|
COO/CFO | 586,385 | 17,663 | 12,208 | 395,357 | 259,875 | 247,296 | 44,922 | 1,563,706 | ||||||||||||||||||||||||||||||||||
|
James H. Boso
|
EVP, Sales & Marketing | 551,250 | 90,055 | 10,077 | 235,866 | 155,039 | 147,534 | 26,800 | 1,216,621 | ||||||||||||||||||||||||||||||||||
|
Bonnie Culp
|
EVP, HR & Administration | 405,170 | 15,275 | 12,208 | 173,362 | 113,954 | 108,437 | 19,698 | 848,104 | ||||||||||||||||||||||||||||||||||
|
Thomas G. Saine
|
CIO | 444,231 | 11,677 | 7,661 | 235,331 | 154,688 | 147,198 | 26,739 | 1,027,525 | ||||||||||||||||||||||||||||||||||
| (a) | These amounts assumed the NEOs have been paid their pro rata base salaries from January 1, 2009 through December 31, 2009. | |
| (b) | These payments are based on accrued vacation hours at December 31, 2009 pursuant to the vacation policy for executives. | |
| (c) | This is the cost of continuation of health benefits provided to the NEOs for 18 months. Under the ARRA, the Company would be subsidized for the Company’s portion of the health benefit costs for 15 months which is 65 percent of the total. The amounts reflected in the table include 100 percent of the health benefit costs for three months and 35 percent of the health benefit costs for 15 months. | |
| (d) | The Company exceeded the performance targets for 2009 resulting in 114.1 percent STIP payment. | |
| (e) | Amounts represent 50 percent of the target cash award under the 2009 LTIP. | |
| (f) | Amounts represent 50 percent of the RSUs granted under the 2009 LTIP multiplied by the Company’s closing stock price on December 31, 2009 of $11.01. | |
| (g) | Amounts represent 50 percent of the cash distributions accrued in 2009 for the related RSUs granted under the 2009 LTIP. |
The Company did not pay or accrue any payments relating to
termination and change in control for the COO/CFO; EVP,
Sales & Marketing; EVP, HR & Administration
and CIO for the year ended December 31, 2009.
The Company maintains a policy related to the LTIP awards, both
cash and equity. Under these provisions, executives (including
NEOs) who are terminated upon failure to substantially perform
duties, failure to carry out any lawful and reasonable
directive, conviction or plea of nolo contendere to a felony or
crime of moral turpitude, material breach of their obligations
as an employee or commission of an act of fraud, embezzlement,
misappropriation or otherwise acting in a manner detrimental to
the Company’s interests as determined by the Board, will
forfeit any outstanding awards as of the date of termination.
These provisions serve to help ensure that executives act in the
best interest of the Company and its stockholders.
Compensation
Recovery Policy
The Company maintains a clawback provision regarding severance
benefits. Under the clawback provision, executives (including
NEOs) who violate non-competition, non-solicitation or
confidentiality agreements forfeit all severance amounts paid or
to be paid by the Company. Further, it is the Company’s
policy to seek the reimbursement of severance benefits paid to
executives (including NEOs) who violate non-competition,
non-solicitation or
28
confidentiality agreements, or otherwise breach the Separation
Agreements and Release between themselves and the Company.
The Company’s Restricted Stock Agreement under the Equity
Plan include a “Spendthrift Clause” to protect
unvested restricted stock against any interest or transfer.
EMPLOYMENT
AGREEMENT AND ARRANGEMENTS
Vincent
D. Kelly
Mr. Kelly entered into an employment agreement with the
Company on November 16, 2004, as amended on
October 30, 2008. The initial term of the agreement ended
on November 15, 2007, but was automatically renewed for an
additional one year period, in accordance with the terms of the
agreement. In October 2008, the Compensation Committee
renegotiated the CEO’s employment agreement and authorized
the reimbursement of the CEO’s legal expenses in this
regard. Had the employment agreement not been renegotiated it
would have automatically been renewed for another one year term.
Following the renegotiation, the CEO’s employment agreement
was amended and restated on October 30, 2008 to commence on
November 16, 2008 and end on December 31, 2012,
without a provision for automatic renewal.
Under the amended and restated employment agreement,
Mr. Kelly receives a stated annual base salary of $600,000
and is eligible to participate in all of the Company’s
benefit plans, including fringe benefits available to the
Company’s senior executives, as such plans or programs are
in effect from time to time, and use of an automobile. The Board
shall review Mr. Kelly’s base salary annually and may
increase, but not decrease, the amounts of his base salary. In
addition to base salary, Mr. Kelly is eligible for an
annual STIP compensation target equal to 200 percent of
base salary based on achievement of certain performance targets
set by the Board or a committee thereof; provided that
Mr. Kelly is employed by the Company on December 31 of the
applicable calendar year and he has not voluntarily terminated
his employment in the Company prior to the date such annual STIP
is payable. Provided that the Company’s stock is publicly
traded on a national securities exchange, the annual STIP
compensation from 2009 through 2012 shall be payable one-half in
cash and one-half in common stock of the Company, unless the
Compensation Committee and Mr. Kelly mutually agree
otherwise.
The employment agreement contains a covenant restricting
Mr. Kelly from soliciting employees of the Company and its
subsidiaries and from competing against the Company during
Mr. Kelly’s employment and for a period of two years
after the date of termination (as defined in the employment
agreement) for any reason.
Under the employment agreement, the Company may terminate such
agreement with 30 days written notice at any time if
Mr. Kelly is disabled (as defined in the employment
agreement) for a period of six months or more; at any time with
“cause” (as defined in the employment agreement); and
at any time without cause upon notice from the Company.
Mr. Kelly may terminate such agreement with the Company at
any time upon 60 days notice to the Company. Furthermore,
the employment agreement may be terminated by mutual agreement
of the parties and shall automatically terminate upon
Mr. Kelly’s death.
Disability. The employment agreement provides
that in the event of disability until the termination date,
following the use of all accrued sick and personal days, the
Company shall pay Mr. Kelly:
| (1) | A disability benefit equal to 50 percent of the base salary during the disability period; | |
| (2) | All other unpaid amounts under any Company fringe benefit and incentive compensation programs, at the time such payments are due; | |
| (3) | An amount equal to the product of (i) the number of years (and/or fraction thereof) remaining in the term of the employment agreement as of the date of termination, times (ii) the full base salary then in effect payable within 45 days after the date of termination; and | |
| (4) | An amount equal to the product of (i) a fraction based on the prorated number of days earned in the calendar year as of the date of termination, times (ii) the annual STIP target amount payable within 45 days after the date of termination. |
29
Any payments made to Mr. Kelly during the disability period
shall be reduced by any amounts paid or payable to him under the
Company’s disability benefit plans.
Death. The employment agreement provides that
upon death, Mr. Kelly’s estate will be entitled to:
| (1) | Base salary through the date of death; | |
| (2) | All other unpaid amounts under any Company fringe benefit and incentive compensation programs, at the time such payments are due; | |
| (3) | An amount equal to the product of (i) the number of years (and/or fraction thereof) remaining in the term of the employment agreement as of the date of death, times (ii) the full base salary then in effect payable within 45 days after the date of death; and | |
| (4) | An amount equal to the product of (i) a fraction based on the prorated number of days earned in the calendar year as of the date of death, times (ii) the annual STIP target amount payable within 45 days after the date of termination. |
Termination Without Cause or For Good
Reason. The employment agreement provides that
upon a termination of employment, either by the Company without
cause or by Mr. Kelly for good reason, he will be entitled
to:
| (1) | Base salary through the date of termination payable within 10 business days; | |
| (2) | All other unpaid amounts under any Company fringe benefit and incentive compensation programs, at the time such payments are due; | |
| (3) | An amount equal to the product of (i) the greater of (x) two years or (y) the number of years (and/or fraction thereof) remaining in the term of the employment agreement as of the date of termination, times (ii) the full base salary then in effect payable within 45 days after the date of termination; | |
| (4) | An amount equal to the annual STIP target for the calendar year in which the termination occurs, payable within 45 days after the date of termination; | |
| (5) | An amount equal to the product of (i) a fraction based on the prorated number of days earned in the calendar year as of the date of termination, times (ii) the annual STIP target amount payable within 45 days after the date of termination; | |
| (6) | Reimbursement of the cost of continued group health plan benefits in accordance with COBRA for 18 months, to the extent elected by the CEO and to the extent the CEO is eligible and subject to the terms of the plan and the law; | |
| (7) | Reimbursement for expenses reasonably incurred by Mr. Kelly in securing outplacement services through a professional person or entity of his choice, subject to the approval of the Company, at a level commensurate with Mr. Kelly’s position, for up to one year commencing on or before the one-year anniversary of the date of termination at his election, not to exceed $35,000; and | |
| (8) | Full vesting of any unvested equity awards. |
If any Payment received or to be received by Mr. Kelly in
connection with his termination of employment or contingent upon
a change in control of the Company would be subject to any
excise tax, the Company shall pay to Mr. Kelly a
Gross-Up
Payment such that the net amount Mr. Kelly retains, after
deduction of the excise tax on such
Gross-Up
Payment, shall be equal to the total present value of such
Payments at the time such Payments are to be made. The intent is
that the Company shall be solely responsible for and shall pay
any excise taxes on any Payments and
Gross-Up
Payment and any income and employment taxes imposed on the
Gross-Up
Payment as well as any loss of deduction caused by the
Gross-Up
Payment. Payments made in connection with Mr. Kelly’s
termination of employment will not be made prior to six months
following his termination date if required by Section 409A
of the Code.
30
Assuming that the termination without cause or a resignation for
good reason occurring on December 31, 2009 and the
Company’s closing stock price at December 31, 2009 was
$11.01, the targeted payments to the CEO are set forth in the
following table:
|
Termination |
|||||||||||||||
|
without |
|||||||||||||||
|
Cause or For |
|||||||||||||||
|
Disability |
Good Reason |
||||||||||||||
|
Vincent D. Kelly CEO
|
($)(a) | Death ($) | ($)(b) | ||||||||||||
|
Other Income(c)
|
175,000 | — | — | ||||||||||||
|
Salary Benefit(d)
|
1,800,000 | 1,800,000 | 1,800,000 | ||||||||||||
|
Life Insurance(e)
|
N/A | 50,000 | N/A | ||||||||||||
|
Accrued Vacation Pay(f)
|
349,000 | 347,668 | 347,668 | ||||||||||||
|
Health Benefits(g)
|
— | — | 12,208 | ||||||||||||
|
2009 STIP — Non-Equity (Cash Based)(h)
|
1,369,206 | 1,369,206 | 2,738,412 | ||||||||||||
|
2009 LTIP — Non-Equity (Cash Based)(i)
|
— | — | 900,000 | ||||||||||||
|
2009 LTIP — Equity(j)
|
— | — | 856,435 | ||||||||||||
|
All Other Compensation(k)
|
— | — | 190,574 | ||||||||||||
|
Total
|
3,693,206 | 3,566,874 | 6,845,297 | ||||||||||||
| (a) | For purposes of the Disability benefits, Mr. Kelly is assumed to be disabled on June 1, 2009, with a termination date of December 31, 2009. | |
| (b) | Should these payments be subject to any Federal, state or local excise tax, Mr. Kelly is entitled to a Gross-Up Payment. The intent is that the Company shall be solely responsible for and shall pay any excise taxes on any Payments and Gross-Up Payment and any income and employment taxes imposed on the Gross-Up Payment as well as any loss of deduction caused by the Gross-Up Payment. Assuming Mr. Kelly was terminated on December 31, 2009, Mr. Kelly would not be subject to any Federal, state or local excise tax. The Company would not be required to make a Gross-Up Payment. | |
| (c) | This amount assumes Mr. Kelly has been paid his pro rata base salary from January 1, 2009 through December 31, 2009 under the “Death” and “Termination without Cause or For Good Reason” scenarios. The payment to Mr. Kelly under “Disability” scenario includes Mr. Kelly’s accrued sick and personal days as of May 31, 2009. | |
| (d) | These amounts represent the relevant payments of base salary through the contract date (December 31, 2012) pursuant to Mr. Kelly’s employment agreement. | |
| (e) | This is a standard benefit available to all employees. | |
| (f) | This payment is based on accrued vacation hours at May 31, 2009 under the “Disability” scenario and at December 31, 2009 under the “Death” and “Termination without Cause or For Good Reason” scenarios. This is pursuant to Mr. Kelly’s employment agreement and the vacation policy for NEOs. | |
| (g) | This is the cost of continuation of health benefits provided to Mr. Kelly. At his expense, Mr. Kelly or his beneficiary is entitled to continuation of health coverage pursuant to COBRA under the “Disability” or “Death” scenario. The amount reflected in the table under “Termination without Cause or For Good Reason” scenario include 100 percent of the health benefit costs for three months and 35 percent of the health benefit costs for 15 months. Under the ARRA, the Company would be subsidized for the Company’s portion of the health benefit costs for 15 months which is 65 percent of the total. | |
| (h) | The Company exceeded the performance targets for 2009 resulting in 114.1 percent STIP payment. | |
| (i) | Pursuant to the terms under the 2009 LTIP, the prorated award is effective on January 1, 2010; therefore, Mr. Kelly was not entitled to any award as of December 31, 2009 under the “Disability” and “Death” scenarios. Under the “Termination without Cause or For Good Reason” scenario, Mr. Kelly was entitled to 100 percent of the target cash award under the 2009 LTIP. |
31
| (j) | Pursuant to the terms under the 2009 LTIP, the prorated award is effective on January 1, 2010; therefore, Mr. Kelly was not entitled to any award as of December 31, 2009 under the “Disability” and “Death” scenarios. Under the “Termination without Cause or For Good Reason” scenario, Mr. Kelly was entitled to 100 percent of the target equity award under the 2009 LTIP. The amount was calculated based on 77,787 RSUs awarded multiplied by the Company’s closing stock price at December 31, 2009 of $11.01. | |
| (k) | Amount represents the maximum reimbursement for outplacement services of $35,000 and the cash distributions accrued in 2009 for the RSUs awarded under the 2009 LTIP. |
Thomas L.
Schilling
The Company employed Mr. Schilling pursuant to an offer
letter dated November 30, 2004. The offer letter provides
for Mr. Schilling to receive an annual base salary of
$300,000, as well as an annual STIP award ranging from
50 percent to 100 percent of his base salary, which
will be based on the accomplishment of predetermined goals and
objectives set by the Board. In addition, the offer letter
provides for Mr. Schilling to participate in the
Company’s Equity Plan at a level below the CEO of the
Company.
The offer letter provides for Mr. Schilling to receive a
severance benefit in accordance with the Company’s
Severance Agreements if his employment is terminated by the
Company for any reason other than for cause (as defined in the
Severance Agreements). The offer letter contains a provision
restricting Mr. Schilling from competing against the
Company or soliciting employees of the Company for a period of
one year following the termination of his employment. In October
2007, Mr. Schilling was appointed the COO/CFO of the
Company.
James H.
Boso
Mr. Boso became an employee of the Company upon the merger
of Metrocall and Arch. Mr. Boso is employed at will with no
separate arrangement other than the severance benefits outlined
in the Company’s Severance Agreements.
Bonnie
Culp
Ms. Culp became an employee of the Company upon the merger
of Metrocall and Arch. Ms. Culp is employed at will with no
separate arrangement other than the severance benefits outlined
in the Company’s Severance Agreements.
Thomas G.
Saine
The Company employed Mr. Saine pursuant to an offer letter
dated July 24, 2007 in the role of Vice President for
Corporate Technical Operations at an annual salary of $170,000
with an annual STIP award up to 40 percent of his base
salary, based on the accomplishment of predetermined goals and
objectives set by the Board. The offer included a sign-on bonus
of $30,000. On October 18, 2007, Mr. Saine was
promoted to CTO and on January 1, 2008, Mr. Saine
received a related salary increase to $200,000. In this new
role, Mr. Saine was eligible for an annual STIP award of
75 percent of his base salary, which was based on the
accomplishment of predetermined goals and objectives set by the
Board. On July 16, 2008, Mr. Saine was promoted to CIO
and received a salary increase to $275,000 effective
August 1, 2008. Mr. Saine is employed at will with no
separate arrangement other than the severance benefits outlined
in the Company’s Severance Agreements.
Tax
Deductibility of Compensation
Section 162(m) of the Code limits the Company’s
Federal income tax deduction for certain executive compensation
in excess of $1.0 million paid to the CEO and the four
other most highly compensated executives. The $1.0 million
deduction limit does not apply, however, to
“performance-based compensation” as that term is
defined in the Code and the applicable regulations. Awards
granted under the Company’s Equity Plan, subject to certain
conditions, are intended to qualify as performance-based
compensation under Section 162(m) of the Code. The
Compensation Committee recognizes the possibility that if the
amount of the base salary and other compensation of an NEO
exceeds $1.0 million, it may not be fully deductible for
Federal income tax purposes. The Compensation Committee will
make a determination at any such time whether to authorize the
payment of such amounts without regard to deductibility or
whether the terms of such payment should be modified as to
preserve any deduction otherwise available.
32
COMPENSATION
COMMITTEE REPORT
The Compensation Committee reviewed and discussed the
Company’s Compensation Discussion and Analysis
(“CD&A”) for the year ended December 31,
2009 with management. Based on the review and discussion, the
Compensation Committee recommended to the Board that the
Company’s CD&A be included in its Proxy Statement for
the year ended December 31, 2009, for filing with the SEC.
Compensation Committee:
Brian O’Reilly
Samme L. Thompson
Royce Yudkoff
The foregoing report shall not be deemed incorporated by
reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Acts, except to
the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed
filed under the Acts.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2009:
| • | Mr. O’Reilly served as Chair of the Compensation Committee and Messrs. Thompson and Yudkoff served as members of the Compensation Committee throughout 2009; | |
| • | None of the members of the Compensation Committee were officers (or former officers) or employees of the Company or any of its subsidiaries; | |
| • | None of the members of the Compensation Committee entered into (or agreed to enter into) any transaction or series of transactions with the Company or any of its subsidiaries in which the amount involved exceeded $120,000 except for Mr. Thompson whose relationships with ATC (since the merger with SpectraSite, Inc.), a landlord of a substantial percentage of transmission tower sites used by the Company, is described under “The Board of Directors and Committees,” and amounts paid by the Company to ATC (since the merger with SpectraSite, Inc.) are listed under “Certain Relationships and Related Transactions”; | |
| • | None of the Company’s executive officers served on the Compensation Committee (or another Board committee with similar functions) of any entity where one of that entity’s executive officers served on the Company’s Compensation Committee; | |
| • | None of the Company’s executive officers were directors of another entity where one of that entity’s executive officers served on the Company’s Compensation Committee; and | |
| • | None of the Company’s executive officers served on the Compensation Committee (or another Board committee with similar functions) of another entity where one of that entity’s executive officers served as a director on the Board. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
OWNERS AND MANAGEMENT
The following table provides summary information regarding
beneficial ownership of the Company’s common stock as of
March 17, 2010 for:
| • | Each person or group who beneficially owns more than 5 percent of the Company’s common stock on a fully diluted basis including restricted stock granted; | |
| • | each of the NEOs; | |
| • | each of the directors and nominees to become a director; and | |
| • | all of the directors and executive officers (including the NEOs) as a group. |
33
Beneficial ownership of shares is determined under the rules of
the SEC and generally includes any shares over which a person
exercises sole or shared voting
and/or
investment power. The information on beneficial ownership in the
table is based upon the Company’s records and the most
recent Form 3, Form 4, Schedule 13D or
Schedule 13G filed by each such person or entity through
March 17, 2010. Except as indicated by footnote, and
subject to applicable community property laws, each person
identified in the table possesses sole voting and investment
power with respect to all shares of common stock shown as
beneficially owned by them. Unless otherwise noted, the address
for each director and executive officer (including NEOs) is
c/o USA
Mobility, Inc., 6677 Richmond Highway, Alexandria, Virginia
22306. Effective May, 2010 USA Mobility will relocate its
headquarters to 6850 Versar Center, Suite 420, Springfield,
Virginia 22151.
|
Amount and |
||||||||
|
Nature of |
||||||||
|
Beneficial |
Percentage |
|||||||
|
Name of Beneficial Owner
|
Ownership | of Class | ||||||
|
Vincent D. Kelly(a)
|
35,142 | * | ||||||
|
Thomas L. Schilling(b)
|
— | * | ||||||
|
James H. Boso(c)
|
8,157 | * | ||||||
|
Bonnie Culp(d)
|
— | * | ||||||
|
Thomas G. Saine(e)
|
— | * | ||||||
|
Royce Yudkoff(f)
|
9,581 | * | ||||||
|
Nicholas A. Gallopo(g)
|
8,595 | * | ||||||
|
Brian O’Reilly(f)
|
1,950 | * | ||||||
|
Matthew Oristano(h)
|
1,086 | * | ||||||
|
Samme L. Thompson(f)
|
10,062 | * | ||||||
|
All directors and executive officers as a group (10 persons)
|
74,573 | * | ||||||
|
Russell B. Faucett(i)
|
1,335,000 | 6.0 | % | |||||
|
The Vanguard Group, Inc.(j)
|
1,496,152 | 6.7 | % | |||||
|
BlackRock Inc.(k)
|
3,102,757 | 13.9 | % | |||||
|
Renaissance Technologies LLC and James H. Simons(l)
|
1,509,188 | 6.8 | % | |||||
| * | Denotes less than 1%. | |
| (a) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on March 4, 2010. | |
| (b) | The information regarding this stockholder is derived from an amended Form 4 filed by the stockholder with the SEC on March 23, 2009. | |
| (c) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on March 9, 2009. | |
| (d) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on November 12, 2009. | |
| (e) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on May 19, 2009. | |
| (f) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on January 5, 2010. Included in the table above are 1,086 shares of restricted stock, which will vest on April 1, 2010. | |
| (g) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on January 5, 2010. Included in the table above are 1,357 shares of restricted stock, which will vest on April 1, 2010. | |
| (h) | The information regarding this stockholder is derived from a Form 4 filed by the stockholder with the SEC on March 3, 2010. Included in the table above are 1,086 shares of restricted stock, which will vest on April 1, 2010. | |
| (i) | The information regarding this stockholder is derived from a Schedule 13G filed by the stockholder with the SEC on January 21, 2010. The shares reported herein include 858,000 shares and 477,000 shares held by |
34
| Barrington Investors, L.P. and Barrington Partners, respectively, both California limited partnerships. Mr. Faucett is the manager and general partner, respectively, of these two pooled investment vehicles. In such capacities, Mr. Faucett has sole voting and investment power with respect to all shares reported herein. Mr. Faucett’s address is as follows: 2001 Wilshire Boulevard, Suite 401, Santa Monica, CA 90403. | ||
| (j) | The information regarding this stockholder is derived from a Schedule 13G filed by the stockholder with the SEC on February 1, 2010. The Vanguard Group, Inc. has sole voting power with respect to 34,223 shares and sole dispositive power with respect to 1,461,929 shares and shared dispositive power with respect to 34,223 shares. The Vanguard Group, Inc.’s address is as follows: 100 Vanguard Blvd, Malvern, PA 19355. | |
| (k) | The information regarding this stockholder is derived from a Schedule 13G filed by the stockholder with the SEC on January 7, 2010. BlackRock Inc. has sole voting and investment power with respect to all shares reported herein. BlackRock Inc.’s address is as follows: 40 East 52nd Street, New York, NY 10022. | |
| (l) | The information regarding this stockholder is derived from a Schedule 13G filed by the stockholder with the SEC on February 11, 2010. Renaissance Technologies LLC and Mr. Simons have sole voting power with respect to 1,440,600 shares and sole dispositive power with respect to 1,460,273 shares and shared dispositive power with respect to 48,915 shares. Renaissance Technologies LLC and Mr. Simons’ address is as follows: 800 Third Avenue, New York, NY 10022. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Company’s executive officers and directors, and persons who
own more than 5 percent of a registered class of the
Company’s stock to file reports of ownership and changes in
ownership with the SEC. Executive officers, directors and
greater than 5 percent stockholders are required by SEC
regulation to furnish the Company with copies of all
Section 16(a) reports they file. Based solely on a review
of such reports furnished to the Company, the Company believes
that, for the year ended December 31, 2009, all
Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 5 percent
beneficial owners were timely met.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions
with Related Persons
As of November 16, 2004, two current or former members of
the Board, Messrs. Samme L. Thompson and David C. Abrams,
also served as directors for entities that lease transmission
tower sites to the Company.
Mr. Thompson was a member of the Board of SpectraSite, Inc.
from June 2004 to August 2005. Since August 2005, he has been a
member of the Board of ATC (which merged with SpectraSite,
Inc.), a landlord of a substantial percentage of tower
transmission sites used by the Company. Due to his relationships
with SpectraSite, Inc. and ATC, Mr. Thompson has recused
himself from any decision by the Board on matters relating to
SpectraSite, Inc., and has and will continue to recuse himself
from any decision by the Board on matters relating to ATC (since
the merger with SpectraSite, Inc.).
Mr. Abrams was a member of the Board from November 2004
through January 2008. In January 2008, Mr. Abrams
voluntarily resigned from the Board and effective
January 1, 2008 is no longer a related person.
The amount of business during 2009 between the Company, as
tenant, and ATC, as landlord, was $12.3 million.
Review,
Approval or Ratification of Transactions with Related
Persons
Related party transactions have the potential to create actual
or perceived conflicts of interest between the Company and its
directors
and/or
executive officers and members of their families. While the
Company does not maintain a written policy with respect to the
identification, review, approval or ratification of transactions
with related persons, the Company’s Code of Business
Conduct and Ethics prohibits conflicts of interest between an
employee and the Company and requires an employee to report any
such potential conflict to the EVP, Human Resources &
Administration, who will review the matter with the Audit
Committee. In addition, each director is
35
expected to identify to the Secretary, by means of an annual
director questionnaire, any transactions between the Company and
any person or entity with which the director may have a
relationship that is engaged or about to be engaged in a
transaction with the Company. The Board reviews with the
Secretary and management any such transaction with the affected
director excused from such review. There were no transactions
involving the Company and related persons during 2009, other
than the tower leasing contract with ATC identified above.
CODE OF
BUSINESS CONDUCT AND ETHICS
USA Mobility has adopted a Code of Business Conduct and Ethics
that applies to all of the Company’s employees including
the CEO, COO/CFO, and Chief Accounting Officer/Controller. This
Code of Business Conduct and Ethics may be found on the
Company’s website at
http://www.usamobility.com/about_us/investor_relations/.
During the period covered by this report, the Company did not
request a waiver of its Code of Business Conduct and Ethics and
did not grant any such waivers.
STOCKHOLDER
PROPOSALS
Stockholder proposals intended for inclusion in the
Company’s Proxy Statement for the Annual Meeting of
Stockholders in the year 2011 must be received by Sharon Woods
Keisling, Secretary and Treasurer, USA Mobility, Inc., 6850
Versar Drive, Suite 420, Springfield, Virginia 22151, no
later than November 26, 2010.
The Company’s Bylaws provide that stockholders desiring to
nominate a director or bring any other business before the
stockholders at an Annual Meeting must notify the Secretary of
the Company thereof in writing during the period 60 to
90 days before the first anniversary of the date of the
preceding year’s Annual Meeting (or, if the date of the
Annual Meeting is more than 20 days before or more than
60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered during the period
60 to 90 days before such Annual Meeting or 10 days
following the day on which public announcement of the date of
such meeting is first made by the Company). Pursuant to the
requirements of the Company’s Bylaws, stockholders must
notify the Secretary in writing at a time that is not before
February 21, 2011 and not after March 24, 2011. These
stockholder notices must set forth certain information specified
in the Company’s Bylaws.
OTHER
MATTERS
The Board knows of no other business that will be presented at
the Annual Meeting. If any other business is properly brought
before the Annual Meeting, proxies will be voted in respect
thereof in accordance with the judgments of the persons voting
the proxies.
Stockholders are urged to submit the proxy or voting
instructions by telephone or over the Internet.
The Company has filed its 2009
Form 10-K
with the SEC. Stockholders may obtain, free of charge, a copy of
the Annual Report which includes the 2009
Form 10-K
by writing to USA Mobility, Inc., Attn: Investor Relations, 6677
Richmond Highway, Alexandria, Virginia 22306. In May, 2010 the
Company will relocate to 6850 Versar Center, Suite 420,
Springfield, Virginia 22151. Stockholders may also obtain a copy
of the 2009
Form 10-K
by accessing the Company’s website at www.usamobility.com.
By Order of the Board of Directors,
Sharon Woods Keisling
Secretary and Treasurer
March 23, 2010
Alexandria, Virginia
36
| Electronic Voting Instructions You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Daylight Time, on May 20, 2009. Vote by Internet • Log on to the Internet and go to www.envisionreports.com/usmo • Follow the steps outlined on the secured website. Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the United States, Canada & Puerto Rico any time on a touch tone telephone. There is NO CHARGE to you for the call. • Follow the instructions provided by the recorded message. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2. 1. Election of Directors: 01 — Nicholas A. Gallopo 02 — Vincent D. Kelly 03 — Brian O’Reilly 04 — Matthew Oristano 05 — Thomas L. Schilling 06 — Samme L. Thompson 07 — Royce Yudkoff Mark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees 01 02 03 04 05 06 07 For All EXCEPT — To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. 2. Ratification to appoint Grant Thornton LLP as the 3. In their discretion, the proxies are authorized to vote upon Company’s independent registered public accounting firm for such other business as may properly come before the the year ending December 31, 2009. meeting or any adjournments thereof. B Non-Voting Items Change of Address — Please print new address below. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. |
| 3 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 Proxy — USA MOBILITY, INC. FORM OF PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby appoints Thomas L. Schilling and Vincent D. Kelly (the “Proxy Committee”), and each of them singly, with full power of substitution to act as the lawful agent and proxy for the undersigned and to vote all shares of common stock of USA Mobility, Inc. that the undersigned is entitled to vote and holds of record on March 17, 2009 at the Annual Meeting of Stockholders of USA Mobility, Inc. to be held on Wednesday, May 20, 2009, at The Westin Alexandria, 400 Courthouse Square, Edison Room B, Alexandria, VA, 22314 at 9:00 a.m., local time, and at any adjournments thereof, on all matters coming before the Annual Meeting. You are encouraged to specify your choices by marking the appropriate boxes on the reverse side but you need not mark any boxes if you wish to vote in accordance with the recommendations of the Board of Directors. The Proxy Committee cannot vote your shares unless you sign and return this card. You may revoke this proxy at any time before it is voted by delivering to the Secretary of the Company either a written revocation of the proxy or a duly executed proxy bearing a later date, or by appearing at the Annual Meeting and voting in person. This proxy when properly executed will be voted in the manner you have directed. If you do not specify any directions, this proxy will be voted for proposal 1 and 2 and in accordance with the Proxy Committee’s discretion on such other matters that may properly come before the meeting to the extent permitted by law. IF YOU CHOOSE TO VOTE BY MAIL, PLEASE MARK, SIGN AND DATE YOUR CARD AND RETURN YOUR PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. (TO BE SIGNED ON REVERSE SIDE) |
TABLE OF CONTENTS
NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERSPROXY STATEMENTVOTING SECURITIESPROXIES AND REVOCATIONPROXY SOLICITATIONADJOURNMENTSPROPOSAL NO. 1 ELECTION OF DIRECTORSPROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTHE BOARD OF DIRECTORS AND COMMITTEESFEES AND SERVICESAUDIT COMMITTEE REPORTDIRECTOR COMPENSATIONEXECUTIVE OFFICERSCOMPENSATION DISCUSSION AND ANALYSIS (CD&A)EMPLOYMENT AGREEMENT AND ARRANGEMENTSCOMPENSATION COMMITTEE REPORTCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCECERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSCODE OF BUSINESS CONDUCT AND ETHICSSTOCKHOLDER PROPOSALSOTHER MATTERS