Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Global Cash Access Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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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
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GLOBAL CASH ACCESS HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 2010
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TIME
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9:00 a.m., Pacific Daylight Time, on April 29, 2010 |
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LOCATION
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Green Valley Ranch Resort, Spa & Casino
2300 Paseo Verde Drive
Henderson, Nevada 89052 |
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PROPOSALS
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1. To elect one (1) Class II director to serve until the
2013 annual meeting of stockholders and until his successor
is elected and qualified. |
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2. To ratify the appointment of Deloitte & Touche LLP as
the independent registered public accounting firm for Global
Cash Access Holdings, Inc. for the fiscal year ending
December 31, 2010. |
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3. To consider such other business as may properly come
before the Annual Meeting and any adjournment or postponement
thereof. |
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These items of business are more fully described in the proxy
statement which is attached and made a part hereof. |
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RECORD DATE
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You are entitled to vote at the 2010 Annual Meeting of
Stockholders (the Annual Meeting) and any adjournment or
postponement thereof if you were a stockholder at the close
of business on March 12, 2010. |
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VOTING
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YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND
THE ANNUAL MEETING, YOU ARE URGED TO VOTE PROMPTLY TO ENSURE
YOUR PRESENCE AND THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING. You may vote your shares by using the Internet or
the telephone. Instructions for using these services are set
forth on the enclosed proxy card. You may also vote your
shares by marking, signing, dating and returning the proxy
card in the enclosed postage-prepaid envelope. If you send in
your proxy card and then decide to attend the Annual Meeting
to vote your shares in person, you may still do so. Your
proxy is revocable in accordance with the procedures set
forth in the proxy statement. |
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INTERNET
AVAILABILITY
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Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to be held on April 29,
2010. The proxy statement is available at www.proxyvote.com. |
By Order of the Board of Directors,
Scott Betts
Chief Executive Officer
Las Vegas, Nevada
March 26, 2010
GLOBAL CASH ACCESS HOLDINGS, INC.
3525 East Post Road, Suite 120
Las Vegas, Nevada 89120
(800) 833-7110
PROXY STATEMENT
GENERAL INFORMATION
Why am I receiving these proxy materials?
The Board of Directors (the Board) of Global Cash Access Holdings, Inc., a Delaware
corporation (the Company), is furnishing these proxy materials to you in connection with the
Companys 2010 annual meeting of stockholders (the Annual Meeting). The Annual Meeting will be
held at the Green Valley Ranch Resort, Spa & Casino, 2300 Paseo Verde Drive, Henderson, Nevada
89052, on April 29, 2010 at 9:00 a.m., Pacific Daylight Time. You are invited to attend the Annual
Meeting and are entitled and requested to vote on the proposals outlined in this proxy statement
(Proxy Statement).
This Proxy Statement and enclosed form of proxy are first being mailed to stockholders on or
about March 29, 2010.
What proposals will be voted on at the Annual Meeting?
There are two proposals scheduled to be voted on at the Annual Meeting:
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To elect one (1) Class II director to serve until the 2013 annual meeting of
stockholders and until his successor is elected and qualified. |
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To ratify the appointment of Deloitte & Touche LLP as the Companys independent
registered public accounting firm (hereinafter referred to as independent auditors) for
the fiscal year ending December 31, 2010. |
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To consider such other business as may properly come before the Annual Meeting and
any adjournment or postponement thereof. |
As to any other business which may properly come before the Annual Meeting, the persons named
on the enclosed proxy card will vote according to their best judgment. The Company does not know
now of any other matters to be presented or acted upon at the Annual Meeting.
What are the recommendations of the Board?
The Board recommends that you vote FOR the election of one (1) Class II Director, and FOR
the ratification of the appointment of Deloitte & Touche LLP as the Companys independent auditors
for the fiscal year ending December 31, 2010.
Management does not know of any matters to be presented at the Annual Meeting other than those
set forth in this Proxy Statement and in the Notice accompanying this Proxy Statement, nor have we
received notice of any matter by the deadline prescribed by Securities and Exchange Commission
(SEC) Rule 14a-4(c). Without limiting our ability to apply the advance notice provisions in our
Amended and Restated Bylaws with respect to the procedures that must be followed for a matter to be
properly presented at an annual meeting, if other matters should properly come before the Annual
Meeting, the proxy holders will vote on such matters in accordance with their best judgment.
What is the record date and what does it mean?
The record date for the Annual Meeting is March 12, 2010. The record date is established by
the Board as required by Delaware law. Stockholders of shares of the Companys common stock, par
value $0.001 per share
(Common Stock) at the close of business on the record date are entitled to receive notice of
the Annual Meeting and to vote at the Annual Meeting and any adjournments or postponements thereof.
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What shares can I vote?
Each stockholder of shares of Common Stock is entitled to one vote for each share of Common
Stock owned as of the record date. Holders of Common Stock are referred to herein as
Stockholders.
At the record date, 68,415,861 shares of Common Stock were issued and outstanding. Shares held
in treasury by the Company are not treated as being issued or outstanding for purposes of
determining the number of shares of Common Stock entitled to vote.
What constitutes a quorum?
The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote on the record date will constitute a quorum
permitting the Annual Meeting to conduct its business.
What is the impact of not casting your vote?
Under the General Corporation Law of the State of Delaware, an abstaining vote and a broker
non-vote are counted as present and are, therefore, included for purposes of determining whether a
quorum of shares of Common Stock is present at the Annual Meeting.
A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on
a particular proposal because the nominee does not have the discretionary voting instructions with
respect to that item and has not received instructions from the beneficial owner.
The rules governing the discretionary voting of brokers have changed. If you hold your shares
in street name it is critical to cast your vote if you want it to count with respect to the
Election of a Class II Director (Proposal 1). In the past if you held your shares in street name,
and you did not indicate how you wanted your shares to be voted in the election of directors, your
broker was allowed to vote those shares on your behalf in the election of directors as they felt
appropriate. Recent regulatory changes have taken away the ability of your broker to vote you,
uninstructed shares in the election of directors on a discretionary basis. Thus, if you hold your
shares in street name and you do not instruct your broker how to vote with respect to Proposal 1,
no votes will be cast on your behalf on Proposal 1. Your broker, however will continue to have
discretion to vote any uninstructed shares on the ratification of the Companys independent
registered accounting firm (Proposal 2).
For more information on this topic, see the SEC Investor Alert issued in February 2010
entitled New Shareholder Voting Rules for the 2010 Proxy Season at
http://www.sec.gov/investor/alerts/voting_rules2010.htm.
What is the voting requirement to approve each of the proposals?
Proposal 1. The one (1) Class II Director candidate receiving the greatest number of
affirmative votes of the shares of Common Stock present in person, or represented by proxy, and
entitled to vote at the Annual Meeting will be elected, provided a quorum is present and voting.
Abstentions and broker non-votes will not be counted toward a nominees total. Stockholders are
not entitled to vote for more than one nominee for election of the Class II Director.
Proposal 2. Ratification of the appointment of Deloitte & Touche LLP as the Companys
independent registered public accounting firm will require the affirmative vote of a majority of
the shares of Common Stock present in person, or represented by proxy, and entitled to vote at the
Annual Meeting. Abstentions will have the same effect as votes against Proposal 2.
All shares of Common Stock represented by valid proxies will be voted in accordance with the
instructions
contained therein.
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How do I vote my shares?
You can either attend the Annual Meeting and vote in person or give a proxy to be voted at the
Annual Meeting:
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by mailing the enclosed proxy card; |
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over the telephone by calling a toll-free number; or |
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electronically, by using the Internet. |
The Internet and telephone voting procedures have been set up for your convenience and are
designed to authenticate Stockholders identities, to allow Stockholders to provide their voting
instructions, and to confirm that their instructions have been recorded properly. The Company
believes the procedures that have been put in place are consistent with the requirements of
applicable law. Specific instructions for Stockholders who wish to use the Internet or telephone
voting procedures are set forth on the enclosed proxy card.
Who will tabulate the votes?
An automated system administered by Broadridge Financial Solutions, Inc. (Broadridge) will
tabulate votes cast by proxy at the Annual Meeting and a representative of the Company will
tabulate votes cast in person at the Annual Meeting.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual Stockholders are
handled in a manner that protects your voting privacy. Your vote will not be disclosed either
within the Company or to third parties, except (i) as necessary to meet applicable legal
requirements, or (ii) to allow for the tabulation and/or certification of the vote.
Can I change my vote after submitting my proxy?
You may revoke your proxy at any time before the final vote at the Annual Meeting. You may do
so by one of the following four ways:
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submitting another proxy card bearing a later date; |
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sending a written notice of revocation to the Secretary of the Company at 3525 East
Post Road, Suite 120, Las Vegas, Nevada 89120; |
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submitting new voting instructions via telephone or the Internet; or |
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attending AND voting in person at the Annual Meeting. |
Who is paying for this proxy solicitation?
This proxy solicitation is being made by the Company. This Proxy Statement and the
accompanying proxy were first sent by mail to the Stockholders on or about March 29, 2010. The
Company will bear the cost of soliciting proxies, including preparation, assembly, printing and
mailing of the Proxy Statement. The Company also will reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding solicitation materials to
such beneficial owners. In addition, proxies may be solicited by certain of the Companys
directors, officers and regular employees, without additional compensation, either personally, by
telephone, facsimile, or e-mail.
How can I find out the voting results?
The Company will report the voting results in a Form 8-K within four business days after the
end of the
Annual Meeting.
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How do I receive electronic access to proxy materials for future annual meetings?
Stockholders can elect to view future proxy statements and annual reports over the Internet
instead of receiving paper copies, which results in cost savings for the Company. If you are a
Stockholder of record and would like to receive future Stockholder materials electronically, you
can elect this option by following the instructions provided when you vote your proxy over the
Internet at www.proxyvote.com.
If you chose to view future proxy statements and annual reports over the Internet, you will
receive an e-mail notification next year with instructions containing the Internet address of those
materials. Your choice to view future proxy statements and annual reports over the Internet will
remain in effect until you contact either your broker or the Company to rescind your instructions.
You do not have to elect Internet access each year.
If your shares of Common Stock are registered in the name of a brokerage firm, you still may
be eligible to vote your shares of Common Stock electronically over the Internet. A large number of
brokerage firms are participating in the Broadridge online program, which provides eligible
Stockholders who receive a paper copy of this Proxy Statement the opportunity to vote via the
Internet. If your brokerage firm is participating in Broadridges program, your proxy card will
provide instructions for voting online. If your proxy card does not reference Internet information,
please complete and return your proxy card.
How can I avoid having duplicate copies of the proxy statements sent to my household?
Some brokers and other nominee record holders may be participating in the practice of
householding proxy statements and annual reports, which results in cost savings for the Company.
The practice of householding means that only one copy of the Proxy Statement and annual report
will be sent to multiple Stockholders in a Stockholders household. The Company will promptly
deliver a separate copy of either document to any Stockholder who contacts the Companys Investor
Relations department at 3525 East Post Road, Suite 120, Las Vegas, Nevada 89120, (702) 855-3000,
requesting such copies. If a Stockholder is receiving multiple copies of the Proxy Statement and
annual report at the Stockholders household and would like to receive a single copy of those
documents for a Stockholders household in the future, that Stockholder should contact their
broker, other nominee record holder, or the Companys investor relations department to request
mailing of a single copy of future proxy statements and annual reports.
When are stockholder proposals due for next years annual meeting?
Requirements for Stockholder Proposals to be Brought Before an Annual Meeting. For Stockholder
proposals to be considered properly brought before an annual meeting by a Stockholder, the
Stockholder must have given timely notice therefor in writing to the Secretary of the Company. To
be timely for the Companys 2011 Annual Meeting of Stockholders, a Stockholders notice must be
delivered to or mailed and received at the principal executive offices of the Company between
December 30, 2010 and January 29, 2011. A Stockholders notice to the Secretary must set forth as
to each matter the Stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of the Company which are beneficially owned by the
Stockholder, and (iv) any material interest of the Stockholder in such business.
Requirements for Stockholder Proposals to be Considered for Inclusion in the Companys Proxy
Materials. Stockholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act
of 1934, as amended (the Exchange Act) and intended to be presented at the Companys 2011 Annual
Meeting of Stockholders must be received by the Company not later than November 29, 2010 in order to
be considered for inclusion in the Companys proxy materials for that meeting.
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PROPOSAL 1
ELECTION OF CLASS II DIRECTOR
Our Amended and Restated Certificate of Incorporation provides that the number of directors
which shall constitute the Board shall be exclusively fixed by resolutions adopted by a majority of
the authorized directors constituting the Board. The Companys Amended and Restated Bylaws state
that the number of directors of the Company shall be fixed in accordance with the Companys
Certificate of Incorporation, then in existence. The authorized number of directors of the Company
is currently set at nine. Each Director will be elected to serve until his or her term has expired
and until his or her successor has been duly elected and qualified. The Companys Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws provide that the Board shall
be divided into three classes constituting the entire Board. The members of each class of
directors serve staggered three-year terms. Three positions on the Board are currently vacant. In
addition, Charles J. Fitzgerald notified the Company in February 2010 that he will not seek
reelection to the Board. In notifying the Company of his intention to not seek reelection,
Mr. Fitzgerald advised the Company that his decision was motivated by the increased gaming
regulatory burden that would have been imposed upon Summit Partners and the various entities and
persons affiliated with Summit Partners as a result of the Companys proposed acquisition of
Western Money Systems. Following the election of a Class II Director at the Annual Meeting, there
will be four vacancies on the Board.
The Nominating and Corporate Governance Committee and the Board at this time have not
determined whether to fill the additional vacancy that will result from Mr. Fitzgeralds upcoming
resignation. Stockholders are not entitled to vote for more than one (1) nominee for election of
the Class II Director.
Currently, the Board is composed of the following six members:
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Geoff Judge and Charles J. Fitzgerald |
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Patrick Olson and Fred C. Enlow |
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Scott Betts and E. Miles Kilburn |
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The Nominating and Corporate Governance Committee of the Board has recommended, and the Board
has nominated, the nominee named below for election as a Class II Director of the Company, to serve
a three-year term until the 2013 annual meeting of stockholders and until a qualified successor is
elected or until the directors earlier resignation or removal. Such nominee, who is a current
director of the Company, has consented, if elected as a Class II Director of the Company, to serve
until his term expires. The Board has no reason to believe that the nominee will not serve if
elected, but if such nominee should become unavailable to serve as a director, and if the Board
designates a substitute nominee, the person named as proxies will vote for the substitute nominee
designated by the Board.
Class II Director-Nominee For Three Year Term That Will Expire in 2013
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Geoff Judge
Age 56
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Geoff Judge has served as a member of the Board since
September 2006. Mr. Judge is an early stage private investor.
From 2003 to 2005, he was an investor in and the chief
operating officer of Preclick, a digital photography software
firm. In 2002, he was the chief operating officer of Media
Solution Services, Inc., a provider of credit card billing
insert media. From 1997 to 2002, Mr. Judge was a co-founder
and senior vice president and general manager of the media
division of 24/7 Real Media. From 1995 to 1997 he was a vice
president of marketing for iMarket, Inc., a software company.
From 1985 to 1995, Mr. Judge was a vice president and general
manager in the credit card division of American Express.
Mr. Judge also serves as a director of several privately held
companies. The Board believes Mr. Judge is qualified to serve
as a member of our Board due to his knowledge of the Companys
business and his experience in the financial services and
payment processing industries primarily from his tenure at
American Express. |
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THE BOARD RECOMMENDS A VOTE FOR THE ELECTION
TO THE BOARD OF THE NOMINEE NAMED ABOVE
The Companys directors listed below will continue in office for the remainder of their terms
or earlier in accordance with the Companys Amended and Restated Bylaws. Information regarding the
business experience of each such director is provided below.
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Class III Directors Whose Terms Will Expire in 2011 |
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Fred Enlow
Age 70
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Fred C. Enlow has served as a member of the Board since
October 2006. Since 2000, Mr. Enlow has been a consultant to
various financial institutions, primarily involving
international consumer financial business. He is currently a
director and chairman of the audit committee of Prudential
Vietnam Finance Company. Previously, he was a group
executive director of Standard Chartered Bank PLC, a vice
chairman and director of MBNA America Bank, chairman of
MasterCard Internationals Asia Pacific region and member of
the board of directors and executive committee of MasterCard
International. The Board believes Mr. Enlow is qualified to
serve as a member of our Board due to his experience in the
financial services and payment processing industries. |
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Patrick Olson
Age 44
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Patrick Olson has served as a member of the Board since May
2008. Mr. Olson is a Managing Director of BlackRock, Inc., a
global investment management and risk management firm where
he is responsible for investments of that firms proprietary
capital and where he has been employed since 2005. Prior to
that, he was an investment banker at Merrill Lynch for eight
years, where he was a Managing Director and Head of the
Business and Information Services Investment Banking
practice, with a particular focus on the payments industry.
The Board believes that Mr. Olson is qualified to serve as a
member of our Board due to his experience in the investment
banking industry, his status as an audit committee
financial expert, his financial expertise, and his years of
experience providing strategic advisory services to
companies in the payments industry. |
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Class I Directors Whose Terms Will Expire in 2012 |
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Scott Betts
Age 56
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Scott Betts has served as the Companys President, Chief
Executive Officer and Secretary since October 2007 and
joined the Companys Board of Directors in October 2007.
From October 2007 through February 2008, Mr. Betts served
as interim Chief Financial Officer and Treasurer of the
Company. Prior to joining the Company, Mr. Betts served
as the Executive Vice President of First Data
Corporation, a payment processing services company, from
May 2002 to March 2006, having served as Senior Vice
President of Strategic Planning of First Data Corporation
from October 2001 to May 2002. From May 2002 to March
2006, he was also President of First Data Merchant
Services, which included First Data Corporations
TeleCheck check verification and guarantee business.
During this time period, he also served as First Data
Corporations President of Domestic Enterprise Payments.
From March 2006 until joining the Company, Mr. Betts also
served as an independent consultant to various companies
in the payments processing industry. Mr. Betts joined
Procter and Gamble, a multinational manufacturer of
personal care products, in 1977 and served as General
Manager/Vice President of North America Fem Care and
Global Tampax from 1997 to 2001. The Board believes that
Mr. Betts is qualified to serve as a member of our Board
due to his many years of managing and leading complex
business organizations as well as his expertise in the
payment processing industry. |
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E. Miles Kilburn
Age 47
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E. Miles Kilburn has served as a member of the Board
since March 2005 and currently serves as Chairman of the
Board. Mr. Kilburn has been a private investor since June
2004. Prior to that, he was Executive Vice President and
Chief Strategy Officer of Concord EFS, Inc., a payment
services and network services company (which became a
wholly-owned subsidiary of First Data Corporation in
February 2004) from 2003 to 2004, and Senior Vice
President of Business Strategy and Corporate Development
from 2001 to 2003. He served as Chief Executive Officer
of Primary Payment Systems, Inc., a provider of services
that combat check, identity and new account fraud, a
majority-owned subsidiary of Star Systems, Inc., a
provider of PIN-secured debit networks and secure
real-time electronic transactions from 2002 to 2003, and
Chief Financial Officer from 1997 to 1999. Mr. Kilburn
was Group Executive Vice President and Chief Financial
Officer of Star Systems, Inc. from 1999 to 2001. Mr.
Kilburn also serves as a director of several privately
held companies. The Board believes Mr. Kilburn is
qualified to serve as a member on our Board due to his
experience as an investor in companies in the payments
industry, as well as his status as an audit committee
financial expert. |
BOARD AND CORPORATE GOVERNANCE MATTERS
Board Leadership Structure and the Boards Role in Risk Oversight
We separate the roles and responsibilities of the Chief Executive Officer (CEO) and Chairman
of the Board. The CEO formulates our strategic direction and oversees the day to day management
and performance of the Company, while the Chairman of the Board provides general guidance to the
CEO, sets the agenda for Board meetings and presides over meeting of the full Board. Scott Betts
serves as our CEO and E. Miles Kilburn serves as the Chairman of the Board.
The Boards role in the Companys risk oversight process includes receiving regular reports
from members of our management team with respect to material risks that the Company faces,
including operational, financial, legal and regulatory, strategic and reputational risks. The
Board, or the applicable committee of the Board, receives these reports from members of our
management team to enable it to identify material risks and assess managements risk management and
mitigation strategies. As part of its charter, the Audit Committee assesses risks relating to the
Companys financial statements, oversees both the Companys external and internal audit function
and oversees the Companys compliance with all applicable laws and regulations. The Companys
Compensation Committee is responsible for overseeing the management of risks relating to the
Companys executive compensation plans and arrangements. The Nominating and Corporate Governance
Committee manages risks associated with the independence of the Board. While each committee is
responsible for evaluating certain risks and overseeing the management of such risks, the entire
Board is regularly informed through committee reports about such risks.
Board Committees and Meetings
During fiscal 2009, the Board held 17 meetings. Each director attended at least 75% of the
total number of the meetings of the Board and meetings of the committees of the Board on which he
served. The Board has three committees: Audit Committee, Compensation Committee, and Nominating and
Corporate Governance Committee.
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Each director of the Audit Committee, Compensation Committee and Nominating and Governance
Committee attended at least 75% of the meetings of each committee. The members of the committees
during fiscal 2009 are identified in the following table:
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NOMINATING AND CORPORATE |
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Scott Betts |
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E. Miles Kilburn |
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Chair |
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Charles J. Fitzgerald1 |
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Chair |
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Geoff Judge |
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Fred C. Enlow |
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Patrick Olson |
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Mr. Fitzgerald has notified the Company that he will not be seeking
re-election to the Board and his term will expire at the Annual
Meeting. |
Annual Meeting of Stockholders
The Company encourages, but does not require, its Board members to attend annual stockholders
meetings.
Committees of the Board
The Audit Committee met six times in fiscal 2009. The Audit Committee has the responsibility
for, among other things:
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conducting and supervising internal audit investigations, retaining independent legal,
accounting or other advisors to carry out its duties and if necessary, to institute
special investigations related to the Companys internal audit functions; |
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reviewing policies and procedures adopted by management regarding fair and accurate
presentation of financial statements in accordance with generally accepted accounting
principles and applicable rules and regulations of the SEC; |
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overseeing the Companys accounting and financial reporting processes, overseeing
audits of the Companys financial statements and reviewing the Companys audited financial
statements with management, including a review of major issues regarding accounting and
auditing principles and practices, and evaluating the adequacy and effectiveness of
internal controls that could significantly affect the Companys financial statements, as
well as the adequacy and effectiveness of the Companys disclosure controls and procedures
and managements reports thereon; |
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|
reviewing and discussing reports from the Companys independent auditor regarding:
(i) all critical accounting policies and practices to be used by the Company; (ii) all
alternative treatments of financial information within GAAP that have been discussed with
management; and (iii) other material written communications between the Companys
independent auditor and management; |
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|
reviewing major changes to the Companys auditing and accounting principles and
practices as suggested by the Companys independent auditor, internal auditors or
management, and reviewing the significant reports to management prepared by the Companys
internal auditing department and managements responses; |
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|
establishing procedures for: (i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls, or auditing
matters; and (ii) the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters; |
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|
advising the Board with respect to the Companys policies and procedures regarding
compliance with applicable laws and regulations; and |
8
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|
|
overseeing the work of the registered public accounting firm engaged in audit, review
or attest services for the Company, overseeing the appointment, compensation and retention
of the registered public accounting firm, and overseeing and ensuring the independence of
the Companys independent auditor, and reviewing and pre-approving of all audit services
and permissible non-audit services to be performed by the Companys independent auditor. |
The Board has determined that Messrs. Kilburn and Olson are both audit committee financial
experts as defined by Item 407(d)(5)(iii) of Regulation S-K and are both independent under
applicable New York Stock Exchange (NYSE) rules. A copy of the Audit Committee charter can be
viewed at the Companys website at www.gcainc.com.
The Compensation Committee met three times in fiscal 2009. The Compensation Committee has the
responsibility for, among other things:
|
|
|
assisting the Board in discharging its responsibilities relating to compensation of the
Companys directors and executive officers; |
|
|
|
reviewing and approving goals and objectives for CEO compensation and recommending to
the Board non-CEO compensation and incentive compensation plans and equity based plans
that are subject to Board approval; |
|
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|
administering the Companys incentive compensation plans and equity based plans,
approving new equity compensation plans or material changes to an existing plan where
Stockholder approval has not been obtained, and approving awards as determined by the
Board; and |
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|
ensuring corporate performance measures and goals are set and determining the extent
that established goals have been achieved and any related compensation earned. |
A copy of the Compensation Committee charter can be viewed at the Companys website at
www.gcainc.com.
The Nominating and Corporate Governance Committee did not formally meet as a separate
committee during 2009. However, during the course of various meetings of the Board in 2009, the
entire Board fully discussed and reviewed certain matters for which the Nominating and Corporate
Governance Committee has delegated responsibility for:
|
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|
developing and recommending to the Board, and implementing a set of corporate
governance principles and procedures; |
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developing and recommending to the Board, and implementing and monitoring compliance
with, a code of business conduct and ethics for directors, officers and employees, and
promptly disclosing any waivers for directors or executive officers; |
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assessing the adequacy of the code of business conduct and ethics and recommending any
changes; |
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assisting the Board in assessing Board composition, selecting nominees for election to
the Board consistent with criteria approved by the Board, and advising the Board on each
Committee of the Board regarding member qualifications, Committee appointments and
removals, Committee structure and operations and Committee reporting; |
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determining the compensation of members of the board and its Committees; |
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|
advising the Board on candidates for executive offices, and advising the Board on
candidates for the position of Chairman of the Board and CEO; and |
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|
establishing and monitoring a process of assessing the Boards effectiveness and
overseeing the evaluation of the Board and management. |
The Nominating and Corporate Governance Committee operates under a written charter setting
forth the functions and responsibilities of the committee. A copy of the charter can be viewed at
the Companys website at www.gcainc.com.
9
As provided in the charter of the Nominating and Corporate Governance Committee, nominations
for director may be made by the Nominating and Corporate Governance Committee or by a Stockholder
of record entitled to vote. The Nominating and Corporate Governance Committee will consider and
make recommendations to the Board regarding any Stockholder recommendations for candidates to serve
on the Board. Stockholders wishing to recommend candidates for consideration by the Nominating and
Corporate Governance Committee may do so by writing to the Companys Investor Relations Department
- Attention Nominating and Corporate Governance Committee at 3525 East Post Road, Suite 120, Las
Vegas, Nevada 89120 providing the candidates name, biographical data and qualifications, a
document indicating the candidates willingness to act if elected, and evidence of the nominating
Stockholders ownership of Common Stock at least 120 days prior to the next annual meeting to
assure time for meaningful consideration by the Nominating and Corporate Governance Committee.
There are no differences in the manner in which the Nominating and Corporate Governance Committee
evaluates nominees for director based on whether the nominee is recommended by a Stockholder. The
Company does not pay any third party to identify or assist in identifying or evaluating potential
nominees.
In reviewing potential candidates for the Board, the Nominating and Corporate Governance
Committee considers the individuals experience in the Companys industry, the general business or
other experience of the candidate, the needs of the Company for an additional or replacement
director, the personality of the candidate, the candidates interest in the business of the
Company, as well as numerous other subjective criteria. Of greatest importance is the individuals
integrity, willingness to be involved and ability to bring to the Company experience and knowledge
in areas that are most beneficial to the Company. The Board intends to continue to evaluate
candidates for election to the Board on the basis of the foregoing criteria. A detailed description
of the criteria used by the Nominating and Corporate Governance Committee in evaluating potential
candidates may be found in the charter of the Nominating and Corporate Governance Committee which
is posted on the Companys website at www.gcainc.com. The Nominating and Corporate
Governance Committee has the responsibility of assessing the Boards composition, including the
diversity of the Board, however, the Nominating and Corporate Governance Committee has no formal
policies and procedures with respect to assessing the diversity of the Board. In general, the
Nominating and Corporate Governance Committee seeks prospective nominees with a broad diversity of
experience, professions, skills and backgrounds but does not assign any specific weights to any
particular criteria to nominees. Nominees are not discriminated against on the basis of race,
religion, national origin, sexual orientation, disability or any other basis prohibited by law.
Director Independence
Under independence standards established by the Board, a director does not qualify as
independent unless the Board affirmatively determines that the director does not have any material
relationship with the Company, either directly or as a partner, stockholder or officer of an
organization that has a relationship with the Company. The Board considers such facts and
circumstances as it deems relevant to the determination of director independence. To assist in
making its determination regarding independence, the Board considers, at a minimum, the following
categorical standards:
|
|
|
a director who is an employee, or whose immediate family member is an executive
officer, of the Company or any of its subsidiaries is not independent until three years
after the end of such employment relationship; |
|
|
|
a director who receives, or whose immediate family member receives, more than $120,000
per year in direct compensation from the Company or any of its subsidiaries, other than
director and committee fees and pension or other forms of deferred compensation for prior
service (provided such compensation is not contingent in any way on continued service), is
not independent until three years after he or she ceases to receive more than $120,000 per
year in such compensation; |
|
|
|
a director who is affiliated with or employed by, or whose immediate family member is
affiliated with or employed in a professional capacity by, a present or former internal or
external auditor of the Company or any of its subsidiaries is not independent until
three years after the end of the affiliation or the employment or auditing relationship; |
|
|
|
a director who is employed, or whose immediate family member is employed, as an
executive officer of another company where any of the Companys or any of its subsidiaries
present executives serve on
that companys compensation committee is not independent until three years after the
end of such service or the employment relationship; |
10
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|
|
a director who is an executive officer or an employee, or whose immediate family member
is an executive officer, of a company (which does not include chartable entities) that
makes payments to, or receives payments from, the Company or any of its subsidiaries for
property or services in an amount which, in any single fiscal year, exceeds the greater of
$1.0 million, or 2% of such other companys consolidated gross revenues, is not
independent until three years after falling below such threshold; and |
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|
|
any director that has a material relationship with the Company shall not be
independent. Any relationship not required to be disclosed pursuant to Item 404 of
Regulation S-K of the Securities Exchange Act of 1934, as amended, shall be presumptively
not material. For relationships not covered by the preceding sentence, the determination
of whether the relationship is material or not, and therefore whether the director would
be independent or not, shall be made by the Board. The Company shall explain in the next
proxy statement the basis for any board determination that a relationship is immaterial
despite the fact that it does not meet the categorical standards of immateriality set
forth above. |
The Board has determined that the following directors have no material relationship with the
Company (either directly or as a partner, stockholder or officer of an organization that has a
relationship with the Company), and each is independent within the meaning of independence as set
forth in the rules of the NYSE: Patrick Olson, E. Miles Kilburn, Geoff Judge and Fred C. Enlow.
Executive Sessions of Non-Management Directors
Mr. Kilburn has been selected as the Presiding Director to preside over meetings of our
non-management directors in executive session with no management or employees present. Our
independent directors met in executive session with no management directors or employees present at
least three (3) times last year.
Access to Corporate Governance Policies
Stockholders may access the Companys committee charters, the code of ethics and corporate
governance guidelines at Companys Internet website at www.gcainc.com. Copies of the
Companys committee charters, corporate governance guidelines and code of ethics will be provided
to any Stockholder upon written request to the Secretary of the Company, Global Cash Access
Holdings, Inc., 3525 East Post Road, Suite 120, Las Vegas, Nevada 89120 or via electronic mail to
secretary@gcamail.com.
Communication between Interested Parties and Directors
Stockholders and other interested parties may communicate with individual directors (including
the Presiding Director), the members of a committee of the Board, the independent directors as a
group or the Board as a whole by addressing the communication to the named director, the committee,
the independent directors as a group or the Board as a whole c/o Secretary, Global Cash Access
Holdings, Inc., 3525 East Post Road, Suite 120, Las Vegas, Nevada 89120 or via electronic mail to
secretary@gcamail.com. The Companys Secretary will forward all correspondence to the named
director, committee, independent directors as a group or the Board as a whole, except for spam,
junk mail, mass mailings, product complaints or inquiries, job inquiries, surveys, business
solicitations or advertisements, or patently offensive or otherwise inappropriate material. The
Companys Secretary may forward certain correspondence, such as product-related inquiries,
elsewhere within the Company for review and possible response.
11
Risk Considerations in our Compensation Policies
The Compensation Committee has reviewed and discussed the concept of risk as it related to the
Companys compensation policies and the Compensation Committee does not believe that the Companys
compensation policies encourage excessive or inappropriate risk for the following reasons:
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|
|
Our compensation structure consists of both salary and incentive-based compensation.
The salary component of our compensation structure is designed to provide a steady income
regardless of our Companys stock price so that executives are not overly focused on our
stock price or potentially distracted from focusing on other important business metrics
and strategic goals. |
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|
|
Our cash incentive bonuses assign equal weight to both Company-wide performance and
achievement of individual goals. The Company-wide performance components consist of
achieving revenue targets as well as cash earnings per share (EPS) targets. We believe
that these Company-wide performance components strike an appropriate balance to encourage
executives to focus on both top line sales growth but at the same focus on the overall
profitability and financial condition of the Company. We believe having a subjective cash
incentive bonus component allows executives to focus on non-financial goals and objectives
that are important to the Company achieving its long term strategic goals. |
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|
|
Both the Company-wide performance and subjective components of our cash incentive bonus
program are capped at a percentage of each executive officers base salary. In addition,
with respect to the Company-wide performance-components of the cash incentive bonuses, the
Company must achieve certain minimum performance targets before an executive is eligible
to receive any cash incentive bonus relating to such Company-wide performance components. |
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|
|
Our stock-based compensation and incentive programs focus on the long term performance
of the Company. Our equity awards generally vest over a period of four years and are
generally only valuable if our stock price increases over time. |
Directors Compensation
In 2009, all non-employee directors received an annual fee of $40,000. The chairman of the
Board received an annual fee of $60,000. In addition, each member of the Companys Audit
Committee, Compensation Committee and Nominating and Corporate Governance Committee that was
independent, within the meaning of the applicable rules of the New York Stock Exchange, received an
additional annual fee of $7,500 and the chairperson of each of the Companys Audit Committee,
Compensation Committee and Nominating/Corporate Governance Committee received an additional annual
fee of $20,000, $10,000 and $10,000, respectively.
Additionally, each non-employee director is granted, upon the directors initial appointment
to the Board, either an option to purchase 100,000 shares of Common Stock or an award of 100,000
restricted shares of Common Stock under the Companys 2005 Stock Incentive Plan. The exercise price
for these options is the fair market value of Common Stock at the close of the market on the day of
the grant of the stock options. For each grant, one eighth of the options or restricted stock will
vest after six months of service as a director, and the remainder will vest ratably in equal
monthly installments over the succeeding forty-two months; provided, however, that the options or
restricted stock will vest in their entirety upon a change of control of the Company. The options
have a term of ten years. Following their first full year of service, non-employee directors are
typically granted additional options to purchase shares of Common Stock or awards of restricted
shares of Common Stock under the Companys 2005 Stock Incentive Plan. Such options and restricted
stock vest according to the same schedule as the initial grants.
Relationships Among Directors or Executive Officers
There are no family relationships among any of the Companys directors or executive officers.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics for its directors, officers and
other employees. The Company will post on its website any amendments to, or waivers from, any
provision of its Code of Business Conduct and Ethics. A copy of the Code of Business Conduct and
Ethics is available on the Companys website at www.gcainc.com.
12
TRANSACTIONS WITH RELATED PERSONS
Stock Option and Restricted Stock Grants to Directors and Executive Officers
On February 24, 2009, E. Miles Kilburn, Patrick Olson, Fred Enlow, Charles J. Fitzgerald,
Geoff Judge, Scott Betts, George Gresham, Stephen Lazarus, Kathryn Lever, Mari Ellis, Scott Dowty
and Kurt Sullivan were granted options to purchase 100,000, 66,000, 66,000, 66,000, 66,000,
300,000, 100,000, 100,000, 100,000, 100,000, 100,000 and 60,000 shares of Common Stock,
respectively, at a per share exercise price of $2.20 per share, pursuant to the Companys 2005
Stock Incentive Plan, and 50,000, 34,000, 34,000, 34,000, 34,000, 200,000, 50,000, 50,000, 50,000,
50,000, 50,000 and 15,000 shares of restricted stock, respectively, pursuant to the Companys 2005
Stock Incentive Plan. Generally, stock options and restricted stock granted to Directors under the
Companys 2005 Stock Incentive Plan will vest at a rate of 12.5% of the shares underlying the
option after six months and the remaining shares will vest in equal portions over the following 42
months, such that all shares are vested after four years. Stock options and restricted stock
granted to Executive Officers under the Companys 2005 Stock Incentive Plan will vest at a rate of
25% of the shares underlying the option after one year and the remaining shares will vest in equal
portions over the following 36 months, such that all shares are vested after four years. Stock
options and restricted stock granted under the Companys 2005 Stock Incentive Plan generally expire
ten years from the date of grant. Mr. Fitzgerald has disclaimed beneficial ownership of the shares
issuable pursuant to his option award and the shares of restricted stock awarded to him except to
the extent of his pecuniary interest.
On February 16, 2010, E. Miles Kilburn, Patrick Olson, Fred Enlow, Geoff Judge, Scott Betts,
George Gresham, Stephen Lazarus, Kathryn Lever, Mari Ellis, Scott Dowty and Kurt Sullivan were
granted options to purchase 50,000, 30,000, 30,000, 30,000, 230,000, 65,000, 65,000, 65,000,
65,000, 65,000 and 25,200 shares of Common Stock, respectively, at a per share exercise price of
$7.77 per share pursuant to the Companys 2005 Stock Incentive Plan.
Extensions of Credit from Arriva Card, Inc.
Prior to the Companys decision to exit the credit card issuing business, officers, directors
and employees of the Company were issued credit cards by Arriva Card, Inc., a wholly-owned
subsidiary of the Company, in the ordinary course of business on the same terms and conditions
generally applicable to other applicants and cardholders. Arriva Card, Inc. has not issued any
additional credit cards to officers, directors or employees of the Company after the Companys
decision to exit this business.
Directors Compensation
See Executive Compensation Director Compensation in 2009.
Indemnification Agreements
See Executive Compensation Indemnification Agreements.
Entities Controlled by Karim Maskatiya and Robert Cucinotta
Karim Maskatiya and Robert Cucinotta each served as a member of the Board for a portion of
2008 and each held more than 5% of the Companys outstanding stock during a portion of 2009. On
June 24, 2009, the Company repurchased 5,785,602 shares from Mr. Cucinotta, which we believe to be
all of the shares then held by Mr. Cucinotta. Mr. Maskatiya disposed of a number of shares in open
market transactions that we believe to be all of the shares held by Mr. Maskatiya. Through our
wholly-owned subsidiary, Global Cash Access, Inc., the Company was a party to multiple agreements
with USA Payments, USA Payments Systems, and certain entities in which members of Mr. Maskatiyas
family or Messrs. Maskatiya and Cucinotta have significant ownership and management interests. The
Companys agreements with USA Payments and USA Payments Systems were terminated in 2009 as
described below. In 2009, the Company made payments for software development costs and system
maintenance to Infonox on the Web (Infonox) pursuant to agreements with Infonox. Prior to
Infonox being acquired by Total System Services, Inc. (TSYS) in November 2008, Infonox was
controlled by
Messrs. Maskatiya and Cucinotta. As a result of TSYS acquisition of Infonox in November
2008, neither Messrs. Maskatiya and Cucinotta nor any of the family members retained any interest
in, or management responsibilities for, Infonox.
13
To the Companys knowledge, USA Payments is wholly owned by Messrs. Maskatiya and Cucinotta,
and Messrs. Maskatiya and Cucinotta are members of its board of directors. To the Companys
knowledge, USA Payment Systems is owned 50% by Messrs. Maskatiya and Cucinotta, and Messrs.
Maskatiya and Cucinotta are members of its board of directors. The Company was a party to an
Amended and Restated Agreement for Electronic Payment Processing and a Technology Side Letter (the
USAP Agreement) with USA Payments and USA Payment Systems (together, USAP) pursuant to which
they performed for the Company electronic payment processing services relating to credit card cash
access transactions, point of sale (POS) debit card transactions and automatic teller machine
(ATM) withdrawal transactions, including transmitting authorization requests to the relevant
networks or gateways, forwarding transaction approvals or denials to the Company, and facilitating
the settlement of all funds in connection with approved and consummated transactions. In early
2009, USA Payments provided written notice of termination of the USAP Agreement as a result of
alleged breaches of the USAP Agreement by the Company. The Company disputed the alleged breaches.
On January 5, 2009, the Company commenced an action in the State of Nevada District Court, Clark
County, against USAP in connection with various disputes relating to the USAP Agreement, pursuant
to which USAP provided the Company with transaction processing services. On September 30, 2009,
the Company and USAP entered into a settlement agreement, pursuant to which USAP paid the Company
$1.75 million, and the parties agreed to the settlement of all claims and matters between the
parties, and the litigation was dismissed with prejudice.
During the year ended December 31, 2009, the Company paid USAP $4.96 million in connection
with USAP provision of services in connection with the USAP Agreement.
Review, Approval or Ratification of Transactions with Related Persons
Corporate governance guidelines adopted by the Board provide that any transaction that is
required to be reported under Item 404(a) of Regulation S-K promulgated by the SEC must be
reviewed, approved or ratified by the Audit Committee, the Nominating and Corporate Governance
Committee or another committee consisting entirely of independent directors under applicable NYSE
rules. The types of transactions covered by this policy include but are not limited to (i) the
purchase, sale or lease of assets to or from a related person, (ii) the purchase or sale of
products or services to or from a related person, or (iii) the lending or borrowing of funds from
or to a related person. Approval of transactions with related persons shall be at the discretion of
the reviewing body, but the reviewing body shall consider (A) the consequences to the Company of
consummating or not consummating the transaction, (B) the extent to which the Company has a
reasonable opportunity to obtain the same or a substantially similar benefit of the transaction
from a person or entity other than the related person, and (C) the extent to which the terms and
conditions of such transaction are more or less favorable to the Company and its stockholders than
the terms and conditions upon which the Company could reasonably be expected to negotiate with a
person or entity other than the related person. Further, our code of ethics requires our directors,
officers and employees to raise with our chief compliance officer any material transaction or
relationship that could reasonably be expected to give rise to a personal conflict of interest. Our
corporate governance guidelines also prohibit the Companys making of any personal loans to
directors, executive officers or their immediate family members, but expressly exclude the issuance
of credit cards by Arriva Card, Inc. from this prohibition.
Executive Officers
The following sets forth certain information regarding the Companys executive officers:
|
|
|
|
|
Name |
|
Age |
|
Position |
Scott H. Betts |
|
56 |
|
President, Chief Executive Officer and Director |
George W. Gresham |
|
43 |
|
Executive Vice President and Chief Financial Officer |
Kathryn S. Lever |
|
41 |
|
Executive Vice President and General Counsel |
Kurt D. Sullivan |
|
58 |
|
Executive Vice President, Check Services and Central Credit |
Stephen L. Lazarus |
|
43 |
|
Executive Vice President, Sales |
Mari Ellis |
|
54 |
|
Executive Vice President, Technology and Development |
Michael S. Dowty |
|
42 |
|
Executive Vice President, Business Development |
14
Scott Betts has served as the Companys President, Chief Executive Officer and Secretary since
October 2007 and joined the Companys Board in October 2007. From October 2007 through
February 2008, Mr. Betts served as interim Chief Financial Officer and Treasurer of the Company.
Prior to joining the Company, Mr. Betts served as the Executive Vice President of First Data
Corporation, a payment processing services company, from May 2002 to March 2006, having served as
Senior Vice President of Strategic Planning of First Data Corporation from October 2001 to
May 2002. From May 2002 to March 2006, he was also President of First Data Merchant Services, which
included First Data Corporations TeleCheck check verification and guarantee business. During this
time period, he also served as First Data Corporations President of Domestic Enterprise Payments.
From March 2006 until joining the Company, Mr. Betts also served as an independent consultant to
various companies in the payments processing industry. Mr. Betts joined Procter and Gamble, a
multinational manufacturer of personal care products, in 1977 and served as General Manager/Vice
President of North America Fem Care and Global Tampax from 1997 to 2001.
George W. Gresham joined the Company in February 2008 and currently serves as the Companys
Executive Vice President and Chief Financial Officer. Prior to joining the Company, from March 2005
to October 2007, Mr. Gresham was the Chief Financial Officer, Chief Administrative Officer and
Executive Vice President of EFD|eFunds Corporation, a provider of payments and payments related
technology and risk mitigation data for financial institutions. From May 2002 to March 2005, Mr.
Gresham was the Senior Vice President, Finance and Corporate Controller of EFD|eFunds Corporation.
Prior to joining EFD|eFunds Corporation, Mr. Gresham was a Senior Manager, Assurance and Advisory
Services of Deloitte & Touche, LLP.
Kathryn S. Lever joined the Company in September 2005 and currently serves as the Companys
Executive Vice President and General Counsel. From 2001 to 2005, Ms. Lever was a partner in the
corporate and transactional practice at the law firm of Schreck Brignone, now Brownstein Hyatt
Farber Schreck LLP. From 2000 to 2001, Ms. Lever engaged in securities practice at the law firm of
Catalyst Corporate Finance Lawyers in Vancouver, British Columbia, Canada, and prior to that
practiced corporate and commercial litigation in the Vancouver office of McCarthy Tetrault.
Kurt D. Sullivan joined the Company in December 2000 and currently serves as Executive Vice
President, Check and Central Credit Services, where he directs the development and deployment of
our QuickCashPlus Web and automated cashier machine (ACM) products and our QuikCredit and Central
Credit check warranty services. Prior to joining the Company, Mr. Sullivan had 22 years of
experience in the gaming industry, including 20 years with Circus Circus Enterprises, Inc. He
served on the Board of Directors of Circus Circus Enterprises, Inc. and held several management
positions, the most recent being senior vice president of operations and general manager.
Mr. Sullivan has also worked for the MGM Grand Hotel & Casino and Park Place Entertainment
Corporation.
Stephen L. Lazarus joined the Company in April 1997 and currently serves as the Executive Vice
President, Sales, a position he has held since February 2008. Prior to serving as the Companys
Executive Vice President, Sales, Mr. Lazarus served as a Senior Vice President, Sales from August
2003 through February 2008 and served in various sales positions for the Company prior to August
2003. Prior to joining the Company, from April 1996 to April 1997, Mr. Lazarus was the General
Manager of the Bakersfield Soccer and Hockey Center. Prior to April 1996, Mr. Lazarus worked for
Harrahs Hotel and Casino as a Casino Accounting Supervisor and System Support Specialist.
15
Mari Ellis joined the Company in February 2008 and currently serves as the Executive Vice
President, Technology and Development. Prior to joining the Company, from March 2007 to November
2007, Ms. Ellis was the Senior Vice President, Payment Products of Blackhawk Network, a prepaid and
payments network. From December 1997 to November 2006, Ms. Ellis held various positions at First
Data Corporation, including Senior Vice President and Chief Operating Officer (First Data Pre-Paid
Services) from April 2005 to November 2006, Senior Vice President Enterprise Business Integration
Office (Concord EFS acquisition integration) from April 2003 to April 2005, and Senior Vice
President New Business Implementations (First Data Resources) from January 2001 to March 2003.
Michael S. Dowty joined the Company in October of 2005 and currently serves as the Executive
Vice President of Business Development, a position he has held since July of 2008. Prior to serving
as the Companys Executive Vice President of Business Development, from October 2005 through
May 2007, Mr. Dowty was the Vice President of International Sales of the Company and from May of
2007 through July of 2008 Mr. Dowty was the Senior Vice President, International Business of the
Company. Prior to joining the Company, from September of 2000 through October 2005 Mr. Dowty was
the General Manager of First Data Loan Company, Canada, a provider of merchant processing services.
16
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP has served as the Companys independent registered public accounting
firm since 2000 and has been appointed by the Board to continue as the Companys independent
registered public accounting firm for the Companys fiscal year ending December 31, 2010. Although
the Company is not required to seek stockholder approval of its selection of independent registered
public accounting firm, the Board believes it to be sound corporate governance to do so. If the
appointment is not ratified, the Board will investigate the reasons for stockholder rejection and
will reconsider its selection of its independent registered public accounting firm. Even if the
appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a
different independent registered public accounting firm at any time during the fiscal year if the
Audit Committee determines that such a change would be in the Companys and its stockholders best
interests.
A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. The
representative will have an opportunity to make a statement if he or she desires to do so, although
we do not expect him or her to do so. The representative is expected to be available to respond to
appropriate questions.
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by Deloitte &
Touche LLP for audit of the Companys annual financial statements for the years ended December 31,
2009 and December 31, 2008 and fees billed for other services rendered by Deloitte & Touche LLP
during those periods.
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
Audit fees (1) |
|
$ |
1,657,257 |
|
|
$ |
1,464,198 |
|
Audit-related fees (2) |
|
|
|
|
|
|
|
|
Tax fees (3) |
|
|
347,086 |
|
|
|
217,172 |
|
All other fees (4) |
|
|
|
|
|
|
71,521 |
|
|
|
|
|
|
|
|
Total |
|
$ |
2,004,343 |
|
|
$ |
1,752,891 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees include fees for the following professional services: |
|
|
|
audit of the Companys annual financial statements for fiscal years 2009 and 2008; |
|
|
|
|
attestation services, technical consultations and advisory services in connection with
Section 404 of the Sarbanes-Oxley Act of 2002; |
|
|
|
|
reviews of the financial statements included in the Companys Quarterly Reports on Form
10-Q; |
|
|
|
|
statutory and regulatory audits, consents and other services related to SEC matters;
and |
|
|
|
|
professional services provided in connection with other statutory and regulator filings. |
|
|
|
(2) |
|
Audit-related fees include fees for the following professional services: |
|
|
|
Professional services in connection with securities offerings. |
|
|
|
(3) |
|
Tax fees include fees for tax planning (domestic and international), tax advisory and
tax compliance. |
|
(4) |
|
All other fees include fees for services related to agreed upon procedures surrounding
the Companys anti-money laundering program. |
|
(5) |
|
For 2009, the percentage of total fees paid to Deloitte & Touche LLP attributable to
Audit fees, Audit-related fees, Tax fees and All other fees was 43%. For 2008, the
percentage of total fees paid to Deloitte & Touche LLP attributable to Audit fees,
Audit-related fees, Tax fees and All other fees was 56%. |
17
In making its recommendation to ratify the appointment of Deloitte & Touche LLP as the
Companys independent registered public accounting firm for the fiscal year ending December 31,
2010, the Audit Committee has considered whether services other than audit and audit-related
services provided by Deloitte & Touche LLP are compatible with maintaining the independence of
Deloitte & Touche LLP.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered
Public Accounting Firm
The Audit Committee pre-approves all audit and permissible non-audit services provided by its
independent registered public accounting firm. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee has adopted a policy
for the pre-approval of services provided by its independent registered public accounting firm.
Under the policy, pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is subject to a specific budget.
In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis.
For each proposed service, the independent registered public accounting firm is required to provide
detailed back-up documentation at the time of approval.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE COMPANYS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE YEAR ENDING DECEMBER 31, 2010
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with respect to the
beneficial ownership as of February 28, 2010, (except as otherwise noted in the footnotes to the
table) by (i) all persons who are beneficial owners of five percent (5%) or more of Common Stock,
(ii) each director and nominee, (iii) the Named Executive Officers (as defined in the Executive
Compensation section below), and (iv) all current directors and executive officers as a group.
As of February 28, 2010, excluding shares of stock held in treasury by the Company, 68,265,813
shares of Common Stock were outstanding. The amounts and percentages of Common Stock beneficially
owned are reported on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the SEC rules, a person is deemed to be a beneficial owner of a
security if that person has or shares voting power, which includes the power to vote or to direct
the voting of such security, or investment power, which includes the power to dispose of or to
direct the disposition of such security. A person is also deemed to be a beneficial owner of any
securities of which that person has a right to acquire beneficial ownership within 60 days. Under
these rules, more than one person may be deemed a beneficial owner of securities as to which such
person has no economic interest. Unless otherwise noted the address of each beneficial owner in the
table is 3525 East Post Road, Suite 120, Las Vegas, Nevada 89120.
Number of Shares Beneficially Owned as of February 28, 2010
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
Beneficially Owned |
|
Name |
|
Number |
|
|
Percentage |
|
Directors and Executive Officers |
|
|
|
|
|
|
|
|
Charles J. Fitzgerald (1) |
|
|
9,568,908 |
|
|
|
13.5 |
% |
Scott H. Betts (2) |
|
|
1,215,040 |
|
|
|
1.7 |
% |
Miles E. Kilburn (3) |
|
|
388,542 |
|
|
|
* |
|
George W. Gresham (4) |
|
|
299,820 |
|
|
|
* |
|
Kathryn S. Lever (5) |
|
|
239,219 |
|
|
|
* |
|
Stephen L. Lazarus (6) |
|
|
216,268 |
|
|
|
* |
|
Geoffrey Judge (7) |
|
|
213,167 |
|
|
|
* |
|
Fred Enlow (8) |
|
|
208,000 |
|
|
|
* |
|
Kurt D. Sullivan (9) |
|
|
160,960 |
|
|
|
* |
|
Michael S. Dowty (10) |
|
|
145,794 |
|
|
|
* |
|
Helen M. Ellis (11) |
|
|
137,343 |
|
|
|
* |
|
Patrick Olson (12) |
|
|
103,250 |
|
|
|
* |
|
Directors and Executive Officers as a group (12 persons) (13) |
|
|
12,896,311 |
|
|
|
18.2 |
% |
|
|
|
|
|
|
|
|
|
Persons owning more than 5% of the Companys Common Stock |
|
|
|
|
|
|
|
|
Summit Partners L.P. (14) |
|
|
9,568,908 |
|
|
|
13.5 |
% |
Wells Fargo and Company (15) |
|
|
8,501,113 |
|
|
|
12.0 |
% |
BlackRock, Inc. (16) |
|
|
5,655,960 |
|
|
|
8.0 |
% |
FMR LLC (17) |
|
|
4,369,370 |
|
|
|
6.2 |
% |
|
|
|
* |
|
Less than 1% |
|
(1) |
|
As reported on Form 4/A, filed March 5, 2009 and as reported on Amendment 3 to Schedule 13G,
filed February 11, 2010, Mr. Fitzgeralds beneficial ownership includes (a) 34,000 shares of
Common Stock subject to vesting restrictions, (b) options to purchase 19,250 shares of Common
Stock that are currently exercisable or will be exercisable within 60 days of February 28,
2010 and (c) 9,515,618 shares owned by Summit Partners L.P., respectively. Mr. Fitzgerald
disclaims beneficial ownership of 9,568,908 shares except to the extent of his pecuniary
interest. Mr. Fitzgeralds address is c/o Summit Partners, L.P. 222 Berkeley Street,
18th Floor, Boston, Massachusetts 02116. |
19
|
|
|
(2) |
|
Includes (a) 186,290 shares of Common Stock subject to vesting restrictions and (b) options
to purchase 993,750 shares of Common Stock that are currently exercisable or will be
exercisable within 60 days of February 28, 2010. Includes 35,000 shares purchased on the open
market. |
|
(3) |
|
Includes (a) 75,000 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 213,542 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. Includes 100,000 shares purchased on the open market. |
|
(4) |
|
Includes (a) 46,070 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 218,750 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. |
|
(5) |
|
Includes (a) 50,677 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 188,542 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. |
|
(6) |
|
Includes (a) 52,726 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 163,542 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. |
|
(7) |
|
Includes (a) 44,000 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 167,167 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. Includes 2,000 shares purchased on the open market. |
|
(8) |
|
Includes (a) 44,000 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 163,000 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. Includes 1,000 shares purchased on the open market. |
|
(9) |
|
Includes (a) 12,210 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 148,750 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. |
|
(10) |
|
Includes (a) 49,960 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 95,834 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. |
|
(11) |
|
Includes (a) 46,010 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 83,333 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. Includes 8,000 shares purchased on the open market. |
|
(12) |
|
Includes (a) 34,000 shares of Common Stock subject to vesting restrictions and (b) options to
purchase 69,250 shares of Common Stock that are currently exercisable or will be exercisable
within 60 days of February 28, 2010. |
|
(13) |
|
Includes (a) 674,943 shares of Common Stock held by the current executive officers and
directors subject to vesting restrictions and (b) options to purchase an aggregate of
2,524,709 shares held by the current executive officers and directors that are currently
exercisable or will be exercisable within 60 days of February 28, 2010. |
20
|
|
|
(14) |
|
As reported on Amendment 3 to Schedule 13G, filed February 11, 2010, includes 9,568,908
shares held by Summit Partners, L.P., Summit Partners VI (GP), LLC, Summit Partners VI (GP),
L.P., Summit Ventures VI-A, L.P., Summit Ventures VI-B, L.P., Summit VI Advisors Fund, L.P.,
Summit VI Entrepreneurs Fund, L.P., and Summit Investors VI, L.P. Also includes (a) 34,000
shares of restricted stock, subject to vesting restrictions, granted to Mr. Fitzgerald, as
reported on Form 4/A filed on March 5, 2009 and (b) options to purchase 19,250 shares of
Common Stock that are currently exercisable or will be exercisable within 60 days of February
28, 2010, which may be beneficially owned by Summit Partners. Summit Partners, L.P. is the
managing member of Summit Partners VI (GP), LLC, which is the sole general partner of Summit
Partners VI (GP), L.P., which the sole general partner of each of (a) Summit Ventures VI-A,
L.P., (b) Summit Ventures VI-B, L.P., (c) Summit VI Advisors Fund, L.P., (d) Summit VI
Entrepreneurs Fund, L.P. and (e) Summit Investors VI, L.P. Summit Partners, L.P. has shared
voting and dispositive power as to 9,568,908 shares of Common Stock. Each of the reporting
persons expressly disclaims beneficial ownership except in the case of Summit Ventures VI-A,
L.P., Summit Ventures VI-B, L.P., Summit VI Advisors Fund, L.P., Summit VI Entrepreneurs Fund,
L.P. and Summit Investors VI, L.P. except to the extent of its pecuniary interest. The
address for each of these entities is 222 Berkeley Street, 18th Floor, Boston,
Massachusetts 02116. |
|
(15) |
|
As reported on Schedule 13G, filed January 22, 2010, includes 8,501,113 shares held by Wells
Fargo and Company on its own behalf and on behalf of the following subsidiaries: (a) Wells
Capital Management, Incorporated, (b) Evergreen Investment Management Company, LLC, (c)
Wachovia Bank, National Association, (d) Wells Fargo Funds Management, LLC and (e) Wells Fargo
Bank, N.A. Wells Fargo and Company has the sole voting power as to 5,913,203 shares of Common
Stock, the sole dispositive power as to 8,485,153 shares of Common Stock and shared
dispositive power as to 15,960 shares of Common Stock. The address for each of these entities
is 420 Montgomery Street, San Francisco, California 94163. |
|
(16) |
|
As reported on Schedule 13G, filed January 29, 2010, includes 5,655,960 shares held by
BlackRock, Inc. on its own behalf and on behalf of the following subsidiaries: (a) BlackRock
Asset Management Japan Limited, (b) BlackRock Institutional Trust Company, N.A., (c) BlackRock
Fund Advisors, (d) BlackRock Management Australia Limited, (e) BlackRock Advisors, LLC. (f)
BlackRock Capital Management, Inc., (g) BlackRock Investment Management, LLC, (h) BlackRock
International Ltd and (i) State Street Research & Management Co. BlackRock, Inc. has the sole
voting and dispositive power as to 5,655,960 shares of Common Stock. The address for Black
Rock, Inc. is 40 East 52nd Street, New York, NY 10022. |
|
(17) |
|
As reported on Schedule 13G, filed February 16, 2010, includes 4,369,370 shares held by FMR
LLC on its own behalf and on behalf of the following subsidiaries: (a) Fidelity Management &
Research Company, (b) Fidelity Funds and (c) Pyramis Global Advisors Trust Company. FMR LLC
has sole power to vote as to 741,890 shares of Common Stock, and has the shared dispositive
power as to 4,369,370 shares of Common Stock. The address for FMR LLC is 82 Devonshire
Street, Boston, Massachusetts 02109. |
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Objectives of Compensation Policies. The principal objective of the Companys executive
compensation policies is to align the executives incentives with the achievement of the Companys
strategic goals, which are in turn designed to enhance stockholder value. In order to achieve that
objective, the Companys executive compensation policies must help the Company attract and retain
key personnel who possess the necessary leadership and management skills, motivate key employees to
achieve specified goals and ensure that compensation provided to key employees is both fair and
reasonable in light of performance and competitive with the compensation paid to executives of
similarly situated companies. While the Company has attempted to design its executive compensation
to incent its executives to achieve the Companys strategic goals, it also believes it has designed
it executive compensation policies to discourage executives and other employees from taking
excessive risk as described below.
The Compensation Committee has the responsibility to approve the overall compensation
strategy, administer the Companys annual and long-term compensation plans, and make all decisions
with respect to executive compensation. The Compensation Committee is responsible for establishing,
implementing and continually monitoring adherence with the objectives described above.
21
Design of Compensation Policies. The Companys executive compensation policies are designed to
reward executives in a manner that is proportionate to the achievement of, or performance above,
established goals. These goals may be expressed in terms of Company-wide performance, operating
segment performance or individual performance, and their achievement may be measured by either
operating metrics or financial metrics. Although not preferred by the Compensation Committee, in
certain cases, the achievement of goals may be subjective in nature. Where an individual executive
has responsibility for a particular business segment, the performance goals of that individual are
heavily weighted toward the operational performance of that business segment. Where an individual
executive has broader corporate responsibility, the goals are tailored to his or her objectives for
the period. Goals may be annual or longer term in nature; correspondingly, elements of compensation
may be annual (i.e. base salaries and bonuses) or longer term in nature (i.e. stock-based
compensation and incentives). For fiscal 2010, Company intends to administer a policy of rewarding
executives with a cash bonus, approximately one half of which is tied to the performance of his or
her functional area of responsibility and approximately one half of which is tied to the Companys
revenue and cash earnings per share.
Elements of Executive Compensation. The Compensation Committee evaluates both performance and
compensation to ensure that executive compensation is serving the objectives of attracting,
retaining and motivating key executives, including the senior key executive officers identified in
the Summary Compensation Table below (the Named Executive Officers). To that end, the
Compensation Committee believes executive compensation packages provided by the Company to its key
executives should include both cash and stock-based compensation and incentives. Under the
Companys executive compensation policies, cash compensation consists of an annual base salaries
and bonuses, and stock-based compensation and incentives consisting of stock options or awards of
restricted stock or a combination of both stock options and restricted stock.
Base Salaries. We want to provide our key executives with base salaries that provide an
appropriate level of assured cash compensation that is sufficient to retain their services. The
base salary of each executive officer is determined based upon his or her position, responsibility,
qualifications and experience, and reflects consideration of both external comparison to available
market data and internal comparison to other executive officers, as well as the individual
performance of the executive in the prior period. Base salary amounts are initially determined
through the recruitment process and are typically reconsidered annually as part of the Companys
performance review process. The amounts of the base salaries paid to Messrs. Betts and Gresham and
Ms. Lever and Ms. Ellis are fixed pursuant to the terms of their written employment agreements with
the Company. Amounts paid to Named Executive Officers as base salaries are included in the column
captioned Salary ($) in the Summary Compensation Table below.
Cash Incentive Bonuses. Each Named Executive Officers annual incentive based target cash
bonus for 2009 was established as a percentage of such Named Executive Officers base salary. Such
target cash bonus percentage was either established in the Named Executive Officers employment
agreement or as otherwise established by the Company. The actual potential bonus which each of
these officers could earn ranged from 0 to 150% of the Named Executive Officers target bonus.
Thus, if a Named Executive Officer had a target cash bonus percentage of 25% of his or her base
salary, such Named Executive Officer could receive a maximum cash incentive bonus equal to 37.5% of
his or her base salary.
22
The Companys cash incentive bonus plan consisted of a combination of Company-based and
individual-based performance targets and goals. Specifically, the Compensation Committee
established the following performance targets and goals in connection with the payment of annual
incentive cash bonuses to the Companys Named Executive Officers for the year ended December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
|
Target |
|
|
Maximum |
|
|
Maximum % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Target |
|
$ |
654,569,000 |
|
|
$ |
727,299,000 |
|
|
$ |
800,029,000 |
|
|
|
37.5 |
% |
(25% Weight) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash EPS Target |
|
$ |
0.696 |
|
|
$ |
0.775 |
|
|
$ |
0.851 |
|
|
|
37.5 |
% |
(25% Weight) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Targets and Goals Personal
and Specific to each Named Executive Officer
(50% Weight) |
|
Vary by Individual
Executive Officer
|
|
|
N/A |
|
|
|
N/A |
|
|
|
75.0 |
% |
The Companys performance targets for the year ended December 31, 2009 relating to revenue and
Cash EPS were each weighted twenty-five percent, and individual performance goals specific to each
Named Executive Officer were weighted fifty percent in calculating the amount of annual incentive
cash bonuses payable to the Companys Named Executive Officers. With respect to each of the
revenue and Cash EPS performance targets, a Named Executive Officer would not receive any bonus
compensation relating to such performance target if the Company failed to meet the minimum
threshold for such performance target. The actual amount payable under each of the revenue and
Cash EPS performance targets would increase proportionately assuming the minimum threshold amounts
were achieved. The maximum percentage amount for each of the objective and subjective performance
targets is equal to 150% of the percentage amount assigned to each such performance target.
The Compensation Committee established the individual performance goals for the Companys
Chief Executive Officer and the Chief Executive Officer established the individual performance
goals of each other Named Executive Officer and which were approved by the Compensation Committee.
In general, the individual performance goals of each Named Executive Officer were tied to achieving
specific goals or objectives in the areas for which such Named Executive Officers had
responsibility for overseeing and that were deemed important and material to achieving the
Companys overall strategic and financial goals. These personal targets and goals included both
objective criteria such as completing specific projects as well as subjective targets and goals
such as improving or developing certain skills. The actual amount of bonus payable under these
individual performance targets and goals was not tied to any specific formula given the subjective
nature of many of the performance targets and goals. The Compensation Committee determined the
amount of bonus allocable to the Companys Chief Executive Officer with respect to the Chief
Executives personal targets and goals, and the Chief Executive Officer determined the amount of
bonus allocable to the other Named Executive Officers personal targets and goals with such amounts
also being approved by the Compensation Committee.
For 2009, the Company established a revenue goal of $727,299,000 with a minimum threshold of
$654,569,000 and a Cash EPS goal of $0.755 per share with a minimum threshold of $0.696 per share.
The Company had revenue of $667,720,000 for the year ended December 31, 2009. This revenue amount
exceeded the minimum threshold amount but was less than the target revenue amount and resulted in a
total payout of cash incentive bonuses equal to 4.7% of each Named Executive Officers base salary
with respect to the revenue target. The Company had Cash EPS of $0.71 per share for the year ended
December 31, 2009. This Cash EPS amount exceeded the minimum threshold amount but was less than
the target Cash EPS amount and resulted in a total payout of 9.3% with respect to the Cash EPS
target. The actual amount of bonuses payable to the Named Executive Officers that were
attributable to the individual performance targets and goals varied for each Named Executive
Officer and the total amount of cash incentive compensation received by each Named Executive
Officer for 2009 is included in the Summary Compensation Table set forth below.
23
Stock-Based Compensation and Incentives. We believe that the award of stock-based compensation
and incentives is an effective way of aligning the executives interests with the goal of enhancing
stockholder value. To that end, stock options and awards of restricted stock may be granted to
executives and other employees under the Companys 2005 Stock Incentive Plan. Pursuant to the
Companys 2005 Stock Incentive Plan, the Board has authorized the Compensation Committee to approve
the grant of stock options and awards of restricted stock to employees other than executive
officers within ranges prescribed by the Board. The approval of the Board is required for the grant
of stock options or awards or restricted stock to executive officers or to employees other than
executive officers if in excess of the ranges prescribed by the Board.
Because of the direct relationship between the value of an option or restricted stock award,
on the one hand, and the stock price, on the other, we believe that stock options and restricted
stock awards motivate executives to manage the Companys business in a manner that is consistent
with stockholder interests. Stock option and restricted stock grants are intended to focus the
attention of the recipient on the Companys long-term performance which we believe results in
improved stockholder value. Through the grant of stock options and restricted stock grants that
vest over time, we can align executives interests with the long-term interests of our stockholders
who seek appreciation in the value of our Common Stock. To that end, the stock options and
restricted stock awards that we grant to executives typically vest and become fully-exercisable
over a four-year period, subject, in certain cases, to accelerated vesting upon the occurrence of
certain events such as termination of employment without cause or changes in control of the
Company. The grant of stock options and restricted stock awards also provides significant long-term
earnings potential in a competitive market for executive talent.
In the past, we have typically granted stock options to executives shortly following the
commencement of their employment, and restricted stock awards as part of our regular performance
review process. Our policy is to award stock options with an exercise price equal to the closing
price of our stock on the NYSE on the date of grant. The principal factors considered in granting
stock options or restricted stock awards to executives are prior performance, level of
responsibility, the amounts of other compensation attainable by the executive and the executives
ability to influence the Companys long-term growth and profitability. However, the 2005 Stock
Incentive Plan does not provide any quantitative method for weighing these factors and a decision
to grant an award is primarily based upon a subjective evaluation of the past as well as
anticipated future performance.
The compensation associated with stock options and restricted stock awards granted to Named
Executive Officers as are included in the Summary Compensation Table and other tables below.
Retirement Plans. We have established and maintain a retirement savings plan under Section
401(k) of the Internal Revenue Code of 1986 (the Code) to cover our eligible employees, including
our executive officers. The Code allows eligible employees to defer a portion of their
compensation, within prescribed limits, on a tax deferred basis through contributions to the 401(k)
plan. Our 401(k) plan is intended to constitute a qualified plan under Section 401(a) of the Code
and its associated trust is intended to be exempt from federal income taxation under Section 501(a)
of the Code. We make contributions to the 401(k) plan for the benefit of certain executive
officers.
Severance Benefits and Change in Control Payments. In order to retain the ongoing services of
certain of the Named Executive Officers, we have provided the assurance and security of severance
benefits and change in control payments. As described more fully below under the caption
Employment Contracts, Termination of Employment and Change in Control Arrangements, certain of
the Named Executive Officers are entitled to the payment of salary continuation and the payment of
target bonus amounts in the event of the termination of employment without cause, payment of
severance payments and tax gross up payments in the event of the termination of employment
without cause within 12 months after a change in control of the Company and accelerated vesting of
stock options and restricted stock awards in such events. Our employment agreements with such Named
Executive Officers also provide for continued health and other welfare benefits following
termination of employment. We believe that these severance benefits and change in control payments
reflect the fact that it may be difficult for such executives to find comparable employment within
a short period of time and that providing such benefits should eliminate, or at least reduce, the
reluctance of senior executives to pursue potential change in control transactions that may be in
the best interests of stockholders. We believe that these benefits are appropriate in size relative
to the overall value of the Company.
24
Other Compensation Plans. The Company has adopted general employee benefit plans in which
Named Executive Officers are permitted to participate on parity with other employees. The Named
Executive Officers, together with other executives, are entitled to reimbursement of certain
out-of-pocket payments incurred for health care.
Other Perquisites. We annually review the perquisites that our Named Executive Officers receive. During
2009, Mr. Betts received perquisites in the aggregate amount of $22,415, which included (i) $7,837
for travel reimbursement and (ii) $4,495 for the tax gross up with respect to amounts paid by the
Company to Mr. Betts for travel reimbursement, but specifically excludes the amounts for travel
reimbursement and executive housing that will be reimbursed by the Company in 2010 for the period
commencing March 1, 2009 through December 31, 2009, and will be paid to Mr. Betts in 2010 pursuant to the March 2010 amendment to Mr. Betts
employment agreement. During 2009, Ms. Ellis received perquisites in the aggregate amount of
$83,656, which included (i) reimbursement of $45,868 of executive housing and travel expenses and
(ii) $26,308 for tax gross up with respect to amounts paid by the Company to Ms. Ellis for
reimbursement of executive housing and travel expenses. These amounts are reflected in the column
captioned All Other Compensation ($) in the Summary Compensation Table below.
Summary Compensation Table
The following table sets forth certain information concerning compensation of each Named
Executive Officer during the fiscal years ended December 31, 2009, December 31, 2008 and December
31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Non-Equity |
|
|
|
|
|
|
|
Name and |
|
|
|
|
|
|
|
|
|
Awards |
|
|
Awards |
|
|
Incentive Plan |
|
|
All Other |
|
|
Total |
|
Principal Position |
|
Year |
|
|
Salary ($) |
|
|
($)(1) |
|
|
($)(2) |
|
|
Compensation ($)(3) |
|
|
Compensation ($) |
|
|
($) |
|
Scott H. Betts |
|
|
2009 |
|
|
$ |
575,754 |
|
|
$ |
440,000 |
|
|
$ |
366,200 |
|
|
$ |
264,723 |
|
|
$ |
22,415 |
(4) |
|
$ |
1,669,092 |
|
Principal Executive Officer |
|
|
2008 |
|
|
$ |
450,500 |
|
|
$ |
|
|
|
$ |
1,665,000 |
|
|
$ |
200,087 |
|
|
$ |
92,490 |
(5) |
|
$ |
2,408,077 |
|
|
|
|
2007 |
|
|
$ |
57,115 |
(6) |
|
$ |
|
|
|
$ |
4,130,000 |
|
|
$ |
37,603 |
|
|
|
|
|
|
$ |
4,224,718 |
|
George W. Gresham (7) |
|
|
2009 |
|
|
$ |
375,000 |
|
|
$ |
110,000 |
|
|
$ |
122,000 |
|
|
$ |
120,000 |
|
|
$ |
21,360 |
(8) |
|
$ |
748,360 |
|
Principal Financial Officer |
|
|
2008 |
|
|
$ |
302,888 |
(9) |
|
$ |
|
|
|
$ |
1,008,000 |
|
|
$ |
241,614 |
(10) |
|
$ |
150,125 |
(11) |
|
$ |
1,702,627 |
|
Mari H. Ellis (12) |
|
|
2009 |
|
|
$ |
275,000 |
|
|
$ |
110,000 |
|
|
$ |
122,000 |
|
|
$ |
101,750 |
|
|
$ |
83,656 |
(13) |
|
$ |
692,406 |
|
Executive Vice President,
Technology & Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen L. Lazarus (14) |
|
|
2009 |
|
|
$ |
300,000 |
|
|
$ |
110,000 |
|
|
$ |
122,000 |
|
|
$ |
81,000 |
|
|
$ |
8,033 |
(15) |
|
$ |
621,033 |
|
Executive Vice President, Sales |
|
|
2008 |
|
|
$ |
261,539 |
|
|
$ |
|
|
|
$ |
499,500 |
|
|
$ |
140,564 |
(16) |
|
$ |
|
|
|
$ |
901,603 |
|
Kathryn S. Lever |
|
|
2009 |
|
|
$ |
285,000 |
|
|
$ |
110,000 |
|
|
$ |
122,000 |
|
|
$ |
91,200 |
|
|
$ |
8,945 |
(17) |
|
$ |
617,145 |
|
Executive Vice President and |
|
|
2008 |
|
|
$ |
275,000 |
|
|
$ |
|
|
|
$ |
499,500 |
|
|
$ |
123,475 |
|
|
|
|
|
|
$ |
897,975 |
|
General Counsel |
|
|
2007 |
|
|
$ |
220,000 |
|
|
$ |
164,000 |
|
|
|
|
|
|
$ |
110,000 |
|
|
$ |
12,561 |
(18) |
|
$ |
506,561 |
|
|
|
|
(1) |
|
Represents the fair value of the directors restricted stock grants, as calculated in
accordance with FASB ASC Topic 718 (formerly FAS 123(R)). For a discussion of the
assumptions made in determining the valuation of the restricted stock awards, please see
Note 2, to the financial statements in our Annual Reports on Form 10-K for the years ended
December 31, 2007, 2008 and 2009. |
|
(2) |
|
Represents the fair value of the directors stock option grants, as calculated in
accordance with FASB ASC Topic 718 (formerly FAS 123(R)). For a discussion of the
assumptions made in determining the valuation of the stock option awards, please see Note
2, to the financial statements in our Annual Reports on Form 10-K for the years ended
December 31, 2007, 2008 and 2009. |
|
(3) |
|
Represents the amount of cash bonus earned under the Companys cash incentive bonus
program for the applicable fiscal year. Amounts earned for a particular fiscal year are typically paid
out to the Named Executive Officers in the first quarter of the following calendar year
unless otherwise indicated. |
|
(4) |
|
Includes (i) $7,837 for travel reimbursement, (ii) $4,495 for tax gross up with respect
to amounts paid by the Company to Mr. Betts for travel reimbursement and (iii)
contributions made by the Company of $8,143 under its 401(k) plan for the benefit of Mr.
Betts during fiscal year 2009. |
25
|
|
|
(5) |
|
Includes (i) payments of $64,233 for executive housing and travel made by the Company
on behalf of Mr. Betts in fiscal year 2008, (ii) $23,757 for tax gross up with respect to
amounts paid by the Company to Mr. Betts for executive housing and travel reimbursement and
(iii) contributions made by the Company of $4,500 under its 401(k) plan for the benefit of
Mr. Betts during fiscal year 2008. |
|
(6) |
|
Represents compensation paid to Mr. Betts from October 31, 2007 through December 31,
2007. |
|
(7) |
|
New addition to the Summary Compensation table in 2008; prior year information is not
required. |
|
(8) |
|
Includes (i) reimbursement of $4,228 of out-of-pocket health care expenses, (ii)
contributions made by the Company of $8,250 under its 401(k) plan for the benefit of Mr.
Gresham during fiscal year 2009 and (iii) tax gross up of $8,882 for travel and
executive housing for 2008 paid in 2009. |
|
(9) |
|
Represents compensation paid to Mr. Gresham from February 25, 2008 through December 31,
2008. |
|
(10) |
|
Represents (i) the aggregate signing cash bonus Mr. Gresham was entitled to receive in
fiscal year 2008 and (ii) the amount of cash bonus earned for performance during fiscal
year 2008 but paid in fiscal year 2009. |
|
(11) |
|
Includes (i) $65,911 for tax-gross up related to Mr. Greshams signing bonus, (ii)
$38,588 for relocation expenses, (iii) $19,879 for tax-gross up related to Mr. Greshams
relocation expenses, (iv) payments of $18,175 for executive housing and travel made by the
Company on behalf of Mr. Gresham during fiscal year 2008, and (v)
contributions made by the Company of $7,572 under its 401(k) plan for the benefit of Mr.
Gresham during fiscal year 2008. |
|
(12) |
|
New addition to the Summary Compensation Table in 2009; prior year information is not
required. |
|
(13) |
|
Includes (i) reimbursement of $3,230 of out-of-pocket health care expenses, (ii)
reimbursement of $45,868 of executive housing and travel expenses, (iii) $26,308 for tax
gross up with respect to the amount paid by the Company for Ms. Ellis for reimbursement of
executive housing and travel expenses and (iv) contributions made by the Company of $8,250
under its 401(k) plan for the benefit of Ms. Ellis in fiscal year 2009. |
|
(14) |
|
New addition to the Summary Compensation Table in 2008; prior year information is not
required. |
|
(15) |
|
Includes contribution made by the Company of $8,033 under its 401(k) plan for the benefit of
Mr. Lazarus during fiscal year 2009. |
|
(16) |
|
Includes (i) sales commissions of $28,814 paid to Mr. Lazarus during fiscal year 2008 and (ii)
a cash bonus earned for performance during fiscal year 2008 but paid in 2009. |
|
(17) |
|
Includes (i) reimbursement of $696 of out-of-pocket health care expenses and (ii)
contributions made by the Company of $8,250 under its 401(k) plan for the benefit of Ms.
Lever during fiscal year 2009. |
|
(18) |
|
Includes (i) reimbursement of $4,752 of out-of-pocket health care expenses in fiscal
year 2007, (ii) contributions made by the Company of $7,500 under its 401(k) plan for the
benefit of Ms. Lever in 2007 and (iii) $59 in expenses incurred by the Company in 2006 but
paid in 2007 in connection with Ms. Levers immigration status. |
26
Grants of Plan Based Awards in 2009
The following table sets forth certain information concerning grants of awards made to each
Named Executive Officer during the fiscal year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards: |
|
|
All Other |
|
|
Exercise or |
|
|
fair Value |
|
|
|
|
|
|
|
Estimated Future Payments under |
|
|
Number of Shares |
|
|
Option Awards: |
|
|
Base Price |
|
|
of Stock |
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards (1) |
|
|
of Stock or |
|
|
Number of Securities |
|
|
of Option |
|
|
and Option |
|
|
|
Grant |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Units |
|
|
Underlying Options |
|
|
Awards |
|
|
Awards |
|
Name |
|
Date |
|
|
($) (2) |
|
|
($) |
|
|
($) (3) |
|
|
(#) |
|
|
(#) |
|
|
($/Sh) |
|
|
($)(4) |
|
Scott H. Betts |
|
|
2/24/2009 |
|
|
|
4,136 |
|
|
|
413,630 |
|
|
|
620,445 |
|
|
|
200,000 |
|
|
|
300,000 |
|
|
$ |
2.20 |
|
|
$ |
806,000 |
|
George W. Gresham |
|
|
2/24/2009 |
|
|
|
1,875 |
|
|
|
187,500 |
|
|
|
281,250 |
|
|
|
50,000 |
|
|
|
100,000 |
|
|
$ |
2.20 |
|
|
$ |
232,000 |
|
Mari H. Ellis |
|
|
2/24/2009 |
|
|
|
1,375 |
|
|
|
137,500 |
|
|
|
206,250 |
|
|
|
50,000 |
|
|
|
100,000 |
|
|
$ |
2.20 |
|
|
$ |
232,000 |
|
Stephen L. Lazarus |
|
|
2/24/2009 |
|
|
|
1,500 |
|
|
|
150,000 |
|
|
|
225,000 |
|
|
|
50,000 |
|
|
|
100,000 |
|
|
$ |
2.20 |
|
|
$ |
232,000 |
|
Kathryn S. Lever |
|
|
2/24/2009 |
|
|
|
1,425 |
|
|
|
142,500 |
|
|
|
213,750 |
|
|
|
50,000 |
|
|
|
100,000 |
|
|
$ |
2.20 |
|
|
$ |
232,000 |
|
|
|
|
(1) |
|
Represents amounts potentially payable under the Companys cash incentive bonus
program. A more detailed discussion of how the threshold, target and maximum amounts are
determined and calculated is found in the Compensation Discussion & Analysis section of
this Proxy Statement. The actual amount realized by each Named Executive Officer under the
Companys cash incentive bonus program is set forth in the Non-Equity Incentive
Compensation column of the Summary Compensation Table for such Named Executive Officer. |
|
(2) |
|
Represents the maximum amount payable to the Named Executive Officer at the threshold
level. |
|
(3) |
|
Represents the maximum amount payable to the Named Executive Officer under the
Companys cash incentive program. |
|
(4) |
|
Represents the total fair value of the Named Executive Officers restricted stock
grants and stock option grants, as calculated in accordance with FASB ASC Topic 718
(formerly FAS 123(R)). For a discussion of the assumptions made in the valuation, please
see Note 8 to the financial statements in our Annual Report on Form 10-K for the year ended
December 31, 2009. |
Employment Contracts, Termination of Employment and Change in Control Arrangements
Employment Agreements
Betts Employment Agreement
The Company is a party to an employment agreement with Mr. Betts dated October 31, 2007, as
amended (the Betts Agreement) pursuant to which Mr. Betts currently receives a current annual
base salary of $600,000, with such salary subject to annual review by the Board. Additionally,
Mr. Betts is eligible for a discretionary bonus in an amount up to 112.5% of his then current base
salary based upon satisfaction of certain performance criteria or goals as are mutually agreed upon
by Mr. Betts and the Company. The target amount of the discretionary bonus, assuming the
achievement of the applicable performance goals and criteria, is 75% of his then current base
salary. In March 2010, the Betts Agreement was amended to reimburse Mr. Betts for all reasonable
out-of-pocket expenses that he incurs in the course of commuting from a residence outside of Las
Vegas, including airfare, rental car, taxi and rent and utilities for an apartment or other
residence in the Las Vegas metropolitan area. Such reimbursement is retroactive to March 1, 2009
because an amendment to the Betts Agreement in April 2009 inadvertently removed this benefit
commencing on March 1, 2009. These reimbursements will be treated as taxable income to Mr. Betts
and the Company will not provide Mr. Betts with any gross-up in connection with the income
recognized by Mr. Betts as a result of these reimbursements. In addition, the Betts Agreement
provided Mr. Betts the option to purchase 1,000,000 shares of Common Stock pursuant to the 2005
Stock Incentive Plan (the Notice of Stock Option Award and Option Award Agreement). The Notice of
Stock Option Award and Option Award Agreement were entered into by Mr. Betts and the Company on
October 31, 2007. In addition, during each of the first eighteen (18) months of Mr. Betts
employment with the Company, the Company
27
reimbursed Mr. Betts for all reasonable out-of-pocket
expenses that his wife incurred in the course of traveling to the Las Vegas metropolitan area not
more frequently than once per month for the purpose of preparing for the relocating of Mr. Betts
principal residence to the Las Vegas metropolitan area. The Betts Agreement also entitles
Mr. Betts to participate in the Companys group medical, dental, life insurance, 401(k), deferred
compensation or other benefit plans and programs on the same terms and conditions as other members
of the Companys senior executive management. In addition, Mr. Betts is also entitled to certain
termination and/or severance payments pursuant to the Betts Agreement. Specifically, the Betts
Agreement entitles Mr. Betts to receive his then current base salary for a period of twenty-four
(24) months if Mr. Betts is terminated by the Company without Cause (as defined in the Betts
Agreement) or Mr. Betts terminates his employment for Good Reason (as defined in the Betts
Agreement). Mr. Betts severance benefits are conditioned upon him executing releases in favor of
the Company. Additionally, the Company shall pay Mr. Betts all base salary due and owing and all
other accrued but unpaid benefits (including accrued vacation) through the last day Mr. Betts
actually worked prior to his termination by the Company without Cause or Mr. Betts termination of
his employment for Good Reason. Mr. Betts is terminated by the Company without Cause or Mr. Betts
terminates his employment for Good Reason, Mr. Betts is entitled to receive a bonus in the amount
of seventy-five percent (75%) of his then-current base salary, payable in equal installments
concurrent with the continued salary payments. Mr. Betts employment agreement also contains a
non-competition and non-solicitation provisions each lasting two years after termination of
Mr. Betts employment. The Betts Agreement also permits the Company to delay the payment of any
amount or provision of benefits under the agreement to the extent necessary to comply with
Section 409A of the Code.
Gresham Employment Agreement
The Company is a party to an employment agreement with Mr. Gresham dated February 25, 2008
(the Gresham Agreement), wherein Mr. Gresham is entitled to receive an annual base salary of
$375,000 and is eligible for a discretionary annual bonus in an amount of up to 75% of his then
current base salary depending upon the achievement of certain performance criteria and goals to be
determined. The target amount of the discretionary bonus, assuming the achievement of performance
criteria and goals, is 50% of his then current base salary. Mr. Gresham also received a one-time
signing bonus of $100,000, grossed up for all applicable taxes, that was repayable in the event
that he voluntarily resigned during the first year of his employment. In addition, the Gresham
Agreement provided Mr. Gresham upon approval by the Board the option to purchase 350,000 shares of
Common Stock pursuant to the 2005 Stock Incentive Plan (the Notice of Stock Option Award and
Option Award Agreement). The Notice of Stock Option Award and Option Award Agreement were entered
into by Mr. Gresham and the Company on February 25, 2008. In the Gresham Agreement, the Company
agreed to provide Mr. Gresham with furnished corporate housing in the Las Vegas metropolitan area
for six months and to pay the costs of either Mr. Gresham commuting back to his home in Arizona on
weekends or Mr. Greshams family traveling to Las Vegas once each month during the first six months
of his employment. The Company also agreed to pay the costs of Mr. Greshams relocation to the Las
Vegas metropolitan area, certain costs associated with Mr. Gresham selling his home in Arizona and
certain costs associated with Mr. Gresham purchasing a home in the Las Vegas metropolitan area. The
Gresham Agreement also entitles Mr. Gresham to participate in the Companys group medical, dental,
life insurance, 401(k), deferred compensation or other benefit plans and programs on the same terms
and conditions as other members of the Companys senior executive management. In addition,
Mr. Gresham is entitled to receive certain termination and/or severance payments pursuant to the
Gresham Agreement. Specifically, the Gresham Agreement entitles Mr. Gresham to receive his then
current base salary for a period of twelve (12) months if Mr. Gresham is terminated by the Company
without Cause (as defined in the Gresham Agreement) or Mr. Gresham terminates his employment for
Good Reason (as defined in the Gresham Agreement). Mr. Greshams severance benefits are conditioned
upon him executing releases in favor of the Company. Additionally, the Company shall pay
Mr. Gresham all base salary due and owing and all other accrued but unpaid benefits (including
accrued vacation) through the last day Mr. Gresham actually worked prior to his termination by the
Company without Cause or Mr. Greshams termination of his employment for Good Reason. Additionally,
if Mr. Gresham is terminated by the Company without Cause or Mr. Gresham terminates his employment
for Good Reason, Mr. Gresham is entitled to receive a bonus in the amount of fifty percent (50%) of
his then-current base salary, payable in equal installments concurrent with the continued salary
payments. Mr. Greshams employment agreement also contains a non-competition and non-solicitation
provisions each lasting two years after termination of Mr. Greshams employment. The Gresham
Agreement also permits the Company to delay the payment of any amount or provision of benefits
under the agreement to the extent necessary to comply with Section 409A of the Code.
28
Lever Employment Agreement
The Company is party to an employment agreement with Ms. Lever dated September 12, 2005, as
amended by that certain Amendment No. 1 to Employment Agreement dated March 16, 2006 and that
certain Amendment No. 2 to Employment Agreement dated August 11, 2008 (the Lever Agreement), with
a current annual base salary of $285,000 and eligibility for a discretionary bonus in an amount to
be determined by the Board in consultation with the Companys Chief Executive Officer. In addition,
the Lever Agreement provides Ms. Lever with a pro rated partial target bonus equal to one-half of
her base salary for the year in which her employment is terminated, one years salary continuation
and a target bonus equal to one-half of her base salary in the event her employment is terminated
without cause. Ms. Levers severance benefits are conditioned upon her executing releases in favor
of the Company and agreeing to a noncompetition covenant lasting for two years after termination of
her employment. The Lever Agreement was amended to permit the Company to delay the payment of any
amount or provision of any benefits under the agreement to the extent necessary to comply with
Section 409A of the Code.
Ellis Employment Agreement
The Company is party to an employment agreement with Ms. Ellis dated (the Ellis Agreement),
wherein Ms. Ellis is entitled to receive an annual base salary of $275,000 and is eligible for a
discretionary annual bonus in an amount of up to 75% of her then current base salary depending upon
the achievement of certain performance criteria and goals to be determined. The target amount of
the discretionary bonus, assuming the achievement of performance criteria and goals, is 50% of her
then current base salary. In the event Ms. Ellis employment is terminated without cause or for
good reason, she is entitled to receive twelve months base salary, a bonus in an amount of 50% of
twelve months base salary and continued health care coverage for twelve months following
termination of her employment. Under the terms of the Ellis Agreement, the Company has agreed to
provide Ms. Ellis with furnished corporate housing in the Las Vegas metropolitan area and will pay
the costs of Ms. Ellis commuting back to her home in Colorado on weekends. In connection with her
appointment to office, Ms. Ellis was granted an option under the Companys 2005 Stock Incentive
Plan to purchase an aggregate of 100,000 shares of Common Stock. Subject to Ms. Ellis continued
employment with the Company, the option will vest over a four-year period.
Employment Agreements with Lazarus and Dowty
Although the Company does not have any other formal employment agreements with any of the
other executive officers, the Company in 2009 agreed to provide Mr. Lazarus and Mr. Dowty with a
severance benefit such that each of them is entitled to receive twelve months base salary, a bonus
in an amount of 50% of an executive officers base salary and continued health care coverage for
twelve months following termination of employment if their employment is terminated without cause
or for good reason as defined in such severance policy.
29
The following table sets forth the estimated payments and benefits to the Named Executive
Officers based upon (A) a hypothetical termination without cause of each such executives
employment on December 31, 2009 that is not in connection with a change in control of us, (B) a
hypothetical change in control of us on December 31, 2009, and (C) a hypothetical termination
without cause of each executives employment on December 31, 2009 in connection with a change in
control of us:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Betts |
|
|
Mr. Gresham |
|
|
Ms. Ellis |
|
|
Mr. Lazarus |
|
|
Ms. Lever |
|
Termination without cause |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary continuation and
bonus |
|
$ |
2,100,000 |
|
|
$ |
562,500 |
|
|
$ |
412,500 |
|
|
$ |
450,000 |
|
|
$ |
427,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum severance
payments |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
142,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated vesting of
stock options and
restricted stock (1) |
|
$ |
1,587,000 |
|
|
$ |
809,584 |
|
|
$ |
529,000 |
|
|
$ |
529,000 |
|
|
$ |
529,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued group medical
coverage (2) |
|
$ |
17,946 |
|
|
$ |
16,743 |
|
|
$ |
7,794 |
|
|
$ |
12,622 |
|
|
$ |
9,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in control (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated vesting of
stock options and
restricted stock (1) |
|
$ |
3,252,917 |
|
|
$ |
1,184,084 |
|
|
$ |
903,500 |
|
|
$ |
903,500 |
|
|
$ |
903,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without cause
in connection with change
in control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated vesting of
stock options and
restricted stock (1) |
|
$ |
3,252,917 |
|
|
$ |
1,184,084 |
|
|
$ |
903,500 |
|
|
$ |
906,938 |
|
|
$ |
928,861 |
|
|
|
|
(1) |
|
The value attributed to the hypothetical acceleration of the vesting of any restricted
stock awards held by a Named Executive Officer is determined by (i) multiplying the number
of restricted stock unit awards accelerated by $7.49 (the closing price of Common Stock on
December 31, 2009). The value attributed to the hypothetical acceleration of vesting of
any stock options awards held by a Named Executive Officer is determined by multiplying (i)
the difference between the exercise price of the applicable stock option award and $7.49
(the closing price of Common Stock on December 31, 2009) and (ii) the number of unvested
shares underlying the applicable stock option award. The equity awards held by the Named
Executive Officers that are subject to possible acceleration are described as unexercisable
or not vested in the table entitled Outstanding Equity Awards at December 31, 2009
appearing earlier in this Proxy Statement. |
|
(2) |
|
Estimated value of continued coverage under group health insurance plans and other
healthcare-related perquisites through the end of the applicable severance period. |
|
(3) |
|
Assumes that the party acquiring control of the Company has assumed the Companys
obligations under the 2005 Stock Incentive Plan. |
30
Indemnification Agreements
The Company has entered into indemnification agreements with each of its directors and
executive officers and certain employees. The indemnity agreements provide, among other things,
that the Company will indemnify its directors, executive officers and certain employees under the
circumstances and to the extent provided therein, for expenses, damages, judgments, fines and
settlements each may be required to pay in actions or proceedings which either of them may be made
a party by reason of their positions as a director or other agent of the Company or any of its
subsidiaries, and otherwise to the fullest extent permitted under Delaware law and the Companys
Amended and Restated Bylaws.
Acceleration of Vesting of Stock Options and Restricted Stock Bonus Agreements
Change of Control
The agreements pursuant to which the Company granted stock options and shares of restricted
stock to Messrs. Betts and Gresham provide for full acceleration of vesting of the unvested portion
of stock options and restricted stock upon an acquisition or change of control of the Company. The
agreements pursuant to which the Company granted stock options and shares of restricted stock to
Ms. Lever, Ms. Ellis, Mr. Lazarus and Mr. Dowty vary in terms of the provisions relating to
acceleration of the unvested portions of stock options or restricted stock. In some instances, the
awards to these executive officers provide for full acceleration of vesting upon an acquisition or
change of control of the Company. In other instances, the unvested portions of the stock option
awards are accelerated in the event that the relevant executives employment is terminated without
cause within 18 months after an acquisition or change of control of the Company, and in other
instances there are no specific provisions relating to acceleration of the unvested portion of such
executives stock options and restricted stock awards.
Termination without Cause or For Good Reason
The agreements pursuant to which the Company granted stock options and shares of restricted
stock to Messrs. Betts and Gresham provide for full or partial acceleration of vesting on the
unvested portion of stock options and restricted stock if they are terminated without cause or for
good reason as such terms are defined in their respective employment agreements. The agreements
pursuant to which the Company granted stock options to Ms. Lever, Ms. Ellis, Mr. Lazarus and Mr.
Dowty in some instances providing for acceleration of the unvested portions of stock options if
they are terminated without cause or for good reason as such terms are defined in their employment
agreements.
31
Outstanding Equity Awards at December 31, 2009
The following table sets forth certain information concerning unexercised options, stock that
has not vested and equity incentive plan awards for each Named Executive Officer outstanding as of
the end of the fiscal year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION AWARDS |
|
|
STOCK AWARDS |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value of |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
|
|
|
|
Shares or Units |
|
|
Shares or Units |
|
|
|
Options |
|
|
Options |
|
|
Exercise |
|
|
Option |
|
|
of Stock that |
|
|
of Stock That |
|
|
|
(#) |
|
|
(#) |
|
|
Price |
|
|
Expiration |
|
|
Have Not Vested |
|
|
Have Not Vested |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
Scott H. Betts |
|
|
541,666 |
(1) |
|
|
458,334 |
|
|
$ |
9.99 |
|
|
|
10/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
229,166 |
(2) |
|
|
270,834 |
|
|
$ |
6.87 |
|
|
|
02/07/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000 |
(3) |
|
$ |
2.20 |
|
|
|
02/24/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
(4) |
|
$ |
1,498,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George W. Gresham |
|
|
160,416 |
(5) |
|
|
189,584 |
|
|
$ |
6.01 |
|
|
|
02/25/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
(6) |
|
$ |
2.20 |
|
|
|
02/24/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
(7) |
|
$ |
374,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mari H. Ellis |
|
|
45,833 |
(8) |
|
|
54,167 |
|
|
$ |
6.33 |
|
|
|
02/19/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
(9) |
|
$ |
2.20 |
|
|
|
02/24/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
(10) |
|
$ |
374,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen L. Lazarus |
|
|
50,000 |
(11) |
|
|
|
|
|
$ |
13.99 |
|
|
|
01/07/15 |
|
|
|
|
|
|
|
|
|
|
|
|
68,750 |
(12) |
|
|
81,250 |
|
|
$ |
6.87 |
|
|
|
02/07/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
(13) |
|
$ |
2.20 |
|
|
|
02/24/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313 |
(14) |
|
$ |
2,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146 |
(14) |
|
$ |
1,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
(14) |
|
$ |
374,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathryn S. Lever |
|
|
75,000 |
(15) |
|
|
|
|
|
$ |
13.99 |
|
|
|
09/12/15 |
|
|
|
|
|
|
|
|
|
|
|
|
68,750 |
(16) |
|
|
81,250 |
|
|
$ |
6.87 |
|
|
|
02/07/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
(17) |
|
$ |
2.20 |
|
|
|
02/24/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
469 |
(18) |
|
$ |
3,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,917 |
(18) |
|
$ |
21,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
(18) |
|
$ |
374,500 |
|
|
|
|
(1) |
|
These options were granted on October 31, 2007 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(2) |
|
These options were granted on February 7, 2008 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(3) |
|
These options were granted on February 24, 2009 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(4) |
|
The unvested shares consist of a restricted stock award of 200,000 shares granted on
February 24, 2009 and will be fully vested on February 7, 2013. |
|
(5) |
|
These options were granted on February 25, 2008 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
32
|
|
|
(6) |
|
These options were granted on February 24, 2009 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(7) |
|
The unvested shares consist of a restricted stock award of 50,000 shares granted on
February 24, 2009 and will be fully vested on February 7, 2013. |
|
(8) |
|
These options were granted on February 19, 2018 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(9) |
|
These options were granted on February 24, 2009 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(10) |
|
The unvested shares consist of a restricted award of 50,000 shares granted on February
24, 2009 and will be fully vested on February 7, 2013. |
|
(11) |
|
These options were granted on January 7, 2005 and vest at a rate of one-fourth per year
on the anniversary of the grant date. |
|
(12) |
|
These options were granted on February 7, 2008 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(13) |
|
These options were granted on February 24, 2009 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(14) |
|
These unvested shares consist of the following restricted stock awards: (i) 7,500
restricted shares granted on March 7, 2006 and will be fully vested on February 7, 2010,
(ii) 500 restricted shares granted on February 7, 2007 and will be fully vested on January
7, 2011 and (iii) 50,000 restricted shares granted on February 24, 2009 and will be fully
vested on February 7, 2013. |
|
(15) |
|
These options were granted on September 12, 2005 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(16) |
|
These options were granted on February 7, 2008 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(17) |
|
These options were granted on February 24, 2009 and vest at a rate of one-fourth per
year on the anniversary of the grant date. |
|
(18) |
|
These unvested shares consist of the following restricted stock awards: (i) 11,250
restricted shares granted on March 7, 2006 and will be fully vested on February 7, 2010,
(ii) 10,000 restricted shares granted on February 7, 2007 and will be fully vested on
January 7, 2011 and (iii) 50,000 restricted shares granted on February 24, 2009 and will be
fully vested on February 7, 2013. |
33
Option Exercises and Stock Vested in 2009
The following table sets forth certain information concerning each exercise of stock options
and each vesting of stock, including restricted stock, for each Named Executive Officer during
the fiscal year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Shares |
|
|
Value Realized |
|
|
Shares |
|
|
Value Realized |
|
|
|
Acquired on |
|
|
on |
|
|
Acquired on |
|
|
on |
|
|
|
Exercise |
|
|
Exercise |
|
|
Vesting |
|
|
Vesting |
|
Name |
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($)(1) |
|
Scott Betts |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
George Gresham |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Mari Ellis |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Stephen Lazarus |
|
|
|
|
|
$ |
|
|
|
|
2,000 |
|
|
$ |
11,967 |
|
Kathryn Lever |
|
|
|
|
|
$ |
|
|
|
|
5,313 |
|
|
$ |
43,140 |
|
|
|
|
(1) |
|
The value realized equals the closing price of Common Stock on the vesting date
multiplied by the number of shares that vested. |
Pension Benefits in 2009
During the fiscal year ended December 31, 2009, there were no plans that provide for payments
or other benefits at, following, or in connection with retirement of any Named Executive Officer
other than provisions in Companys stock option agreements with Named Executive Officers that
provide for the exercise of such options after the optionees retirement from the Company (which
includes termination of employment for any reason or no reason at all, other than for cause) for
the remainder of the option term, if on the date of termination the optionee has attained 10 years
of service to the Company and at least 50 years of age.
Nonqualified Deferred Compensation in 2009
During the fiscal year ended December 31, 2009, there were no defined contribution or other
plans that provide for the deferral of compensation on a basis that is not tax-qualified to any
Named Executive Officer.
We have established and maintained a retirement savings plan under Section 401(k) of the
Internal Revenue Code of 1986, or the Code, to cover our eligible employees. The Code allows
eligible employees to defer a portion of their compensation, within prescribed limits, on a tax
deferred basis through contributions to the 401(k) plan. Our 401(k) plan is intended to constitute
a qualified plan under Section 401(a) of the Code and its associated trust is intended to be exempt
from federal income taxation under Section 501(a) of the Code. During fiscal 2009, we made matching
contributions on behalf of the Named Executive Officers as described in the Summary Compensation
Table set forth above and the related footnotes thereto.
Director Compensation in 2009
All non-employee directors receive an annual fee of $40,000. The chair of the Board will
receive an annual fee of $60,000. In addition, each member of the Companys Audit Committee,
Compensation Committee and Nominating and Corporate Governance Committee that is independent,
within the meaning of the applicable rules of the NYSE, will receive an additional annual fee of
$7,500. The chairperson of each of the Companys Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee will receive an additional annual fee of $20,000,
$10,000 and $10,000, respectively.
34
In addition, each member of the Companys Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee that was independent, within the meaning of the
applicable rules of the NYSE received an additional annual fee of $5,000 and the chairman of the
Companys Audit Committee received a further additional annual fee of $5,000. In addition, each
non-employee director that was not affiliated with a principal stockholder of the Company was
granted, upon the directors initial appointment to the Board, an option to purchase 100,000 shares
of Common Stock under the Companys 2005 Stock Incentive Plan. The exercise price for these options
was the fair market value of the Common Stock at the time of the grant of the stock options. For
each grant, one eighth of the options are to vest after six months of service as a director, and
the remainder will vest ratably in equal monthly installments over the succeeding forty-two months;
provided, however, that the options will vest in their entirety upon a change of control of the
Company. The options have a term of ten years. Following their first full year of service,
non-employee directors are typically granted additional options to purchase shares of Common Stock
or awards of restricted shares of Common Stock under the Companys 2005 Stock Incentive Plan. Such
options and restricted stock vest according to the same schedule as the initial grants.
The following table sets forth certain information concerning the compensation of our
non-employee directors for the fiscal year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
Stock Awards |
|
|
Option Awards |
|
|
Total |
|
Name |
|
Paid in Cash |
|
|
($) (1) |
|
|
($) (2) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miles E. Kilburn (3) |
|
$ |
95,000 |
|
|
$ |
110,000 |
|
|
$ |
122,000 |
|
|
$ |
327,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J.
Fitzgerald (4) |
|
$ |
23,028 |
|
|
$ |
74,800 |
|
|
$ |
80,520 |
|
|
$ |
178,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geoff Judge (5) |
|
$ |
47,500 |
|
|
$ |
74,800 |
|
|
$ |
80,520 |
|
|
$ |
202,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred Enlow (6) |
|
$ |
47,500 |
|
|
$ |
74,800 |
|
|
$ |
80,520 |
|
|
$ |
202,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Olson (7) |
|
$ |
62,500 |
|
|
$ |
74,800 |
|
|
$ |
80,520 |
|
|
$ |
217,820 |
|
|
|
|
(1) |
|
Represents the fair value of the directors restricted stock grants in fiscal year
2009, as calculated in accordance with FASB ASC Topic 718. For a discussion of the
assumptions made in the valuation of the directors restricted stock grants, please see
Note 2 to the 2009 consolidated financial statements contained in the Companys Annual
Report on Form 10-K for the year ended December 31, 2009. |
|
(2) |
|
Represents the fair value of the directors stock option grants in fiscal year 2009, as
calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions made
in the valuation of the directors stock option grants, please see Note 2 to the 2009
consolidated financial statements contained in the Companys Annual Report on Form 10-K for
the year ended December 31, 2009. |
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(3) |
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At December 31, 2009, Mr. Kilburn had 43,126 shares of unvested restricted stock
outstanding and unvested options to purchase 160,417 shares of Common Stock. |
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(4) |
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At December 31, 2009, Mr. Fitzgerald had 26,917 shares of unvested restricted stock
outstanding and unvested options to purchase 52,250 shares of Common Stock. |
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(5) |
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At December 31, 2009, Mr. Judge had 29,834 shares of unvested restricted stock
outstanding and unvested options to purchase 125,167 shares of Common Stock. |
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(6) |
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At December 31, 2009, Mr. Enlow had 29,834 shares of unvested restricted stock
outstanding and unvested options to purchase 127,250 shares of Common Stock. |
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(7) |
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At December 31, 2009, Mr. Olson had 26,917 shares of unvested restricted stock
outstanding and unvested options to purchase 112,667 shares of Common Stock. |
35
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or was formerly an officer or employee of the
Company or its subsidiaries. No interlocking relationship exists between any member of the
Companys Board or Compensation Committee and any member of the Board or compensation committee of
any other companies, nor has such interlocking relationship existed in the past.
EQUITY COMPENSATION PLANS
The following table sets forth information about shares of Common Stock that may be issued
under the Companys equity compensation plans, including compensation plans that were approved by
the Companys stockholders as well as compensation plans that were not approved by the Companys
stockholders. Information in the table is as of December 31, 2009. The amounts in columns (a) do
not include shares of restricted stock issued and outstanding under the Companys 2005 Stock
Incentive Plan.
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Number of Securities |
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Remaining Active for |
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Number of Securities |
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Future Issuance Under |
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to be Issued Upon |
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Weighted Average |
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Equity Compensation |
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Exercise of Outstanding |
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Exercise Price of |
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Plans (Excluding |
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Options, Warrants and |
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Outstanding Options, |
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Securities Reflected in |
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Rights |
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Warrants and Rights |
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Column a) |
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Plan Category |
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(a) |
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(b) |
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(c)(2) |
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Equity compensation plans approved
by stockholders (1) |
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8,861,833 |
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$ |
6.98 |
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2,180,335 |
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Equity compensation plans not
approved by stockholders |
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Total/weighted average/Total |
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8,861,833 |
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$ |
6.98 |
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2,180,335 |
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(1) |
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Represents shares of Common Stock issuable upon exercise of options outstanding under
the Companys 2005 Stock Incentive Plan. |
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(2) |
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Under the annual refresh provisions of the Companys 2005 Stock Incentive Plan, the
total number of shares reserved for issuance upon exercise of stock options was increased
by 2,500,334 on January 1, 2010. |
36
REPORT OF COMPENSATION COMMITTEE
The information contained in the following report shall not be deemed to be soliciting
material or to be filed with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any future filing under the Securities Act of 1933, as amended,
or the 1934 Securities Exchange Act, as amended, except to the extent that the Company specifically
incorporates it by reference in such filing.
The Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis set forth in this Proxy Statement. Based upon such review and discussions,
the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Proxy Statement.
MEMBERS OF THE COMPENSATION COMMITTEE
Charles J. Fitzgerald
E. Miles Kilburn
Patrick Olson
37
REPORT OF THE AUDIT COMMITTEE
The information contained in the following report shall not be deemed to be soliciting
material or to be filed with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any future filing under the Securities Act of 1933, as amended,
or the 1934 Securities Exchange Act, as amended, except to the extent that the Company specifically
incorporates it by reference in such filing.
The Audit Committee of the Board consists of Messrs. Kilburn, Enlow, Olson and Judge.
Mr. Kilburn serves as Chairman of the Committee. The Board has determined that each member of the
Audit Committee meets the experience requirements of the rules and regulations of the NYSE and the
SEC, as currently applicable to the Company. The Board has also determined that each member of the
Audit Committee meets the independence requirements of the rules and regulations of the NYSE and
the SEC, as currently applicable to the Company.
The Audit Committee operates under a written charter approved by the Board. A copy of the
charter is available on our website at www.gcainc.com.
The primary function of the Audit Committee is to assist the Board in fulfilling its oversight
responsibilities by reviewing financial reports and other financial information provided by the
Company to any governmental body or the public, the Companys systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and the Board have
established, and the Companys auditing, accounting and financial reporting processes generally.
The Audit Committee annually recommends to the Board the appointment of an independent registered
public accounting firm to audit the consolidated financial statements and internal controls over
financial reporting of the Company and meets with such personnel of the Company to review the scope
and the results of the annual audits, the amount of audit fees, the Companys internal controls
over financial reporting, the Companys consolidated financial statements in the Companys Annual
Report on Form 10-K and other related matters.
The Audit Committee has reviewed and discussed with management the consolidated financial
statements for fiscal year 2009 audited by Deloitte & Touche LLP, the Companys independent
registered public accounting firm, and managements assessment of internal controls over financial
reporting. The Audit Committee has discussed with Deloitte & Touche LLP various matters related to
the financial statements, including those matters required to be discussed by Auditing Standards
No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU Section 380) as adopted by the Public
Accounting Oversight Board in Rule 3200T. The Audit Committee has also received the written
disclosures and the letter from Deloitte & Touche LLP required by the Public Company Accounting
Oversight Board, regarding Deloitte & Touche LLPs communications with the Audit Committee
concerning independence and has discussed with Deloitte & Touche LLP its independence. Based upon
such review and discussions, the Audit Committee recommended to the Board that the audited
consolidated financial statements be included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2009 for filing with the SEC.
The Audit Committee and the Board also have recommended, subject to stockholder ratification,
the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the
year ending December 31, 2010.
MEMBERS OF THE AUDIT COMMITTEE
E. Miles Kilburn
Fred C. Enlow
Geoff Judge
Patrick Olson
38
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys
directors, executive officers and any persons who directly or indirectly hold more than
10 percent of Common Stock (Reporting Persons) to file reports of ownership and changes in
ownership with the SEC. Reporting Persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received and written representations
from certain Reporting Persons that no such forms were required, the Company believes that during
fiscal 2009, all Reporting Persons complied with the applicable filing requirements on a timely
basis, except for the following inadvertent failures to file Forms 4 on a timely basis two Form
4s on behalf of Kurt Sullivan, two Form 4s on behalf of Stephen Lazarus, one Form 4 on behalf
of Katie Lever and one Form 4 on behalf of Michael Dowty.
OTHER MATTERS
The Company knows of no other matters that will be presented for consideration at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is intended that
proxies in the enclosed form will be voted in respect thereof in accordance with the judgments of
the persons voting the proxies.
ANNUAL REPORT ON FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, GLOBAL CASH ACCESS HOLDINGS, INC., 3525
EAST POST ROAD, SUITE 120, LAS VEGAS, NEVADA, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON SOLICITED A COPY OF THE FISCAL 2008 REPORT, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES FILED THEREWITH.
By Order of the Board of Directors,
Scott Betts
Chief Executive Officer
March 26, 2010
Las Vegas, Nevada
39
GLOBAL CASH ACCESS HOLDINGS, INC.
ATTN: CORPORATE SECRETARY
3525 EAST POST ROAD, SUITE 120
LAS VEGAS, NV 89120
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting
date. Have your proxy card in hand when you
access the web site and follow the
instructions to obtain your records and to
create an electronic voting instruction
form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs
incurred by our company in mailing proxy
materials, you can consent to receiving all
future proxy statements, proxy cards and
annual reports electronically via e-mail or
the Internet. To sign up for electronic
delivery, please follow the instructions
above to vote using the Internet and, when
prompted, indicate that you agree to receive
or access proxy materials electronically in
future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59 P.M.
Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in
hand when you call and then follow the
instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and
return it in the postage-paid envelope we
have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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GLOBAL CASH ACCESS HOLDINGS, INC.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line below. |
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The Board of Directors recommends that you
vote FOR the following:
Vote on Director
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1. Election of one Class II Director. |
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Nominee: |
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01) Geoff Judge |
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Vote on Proposal
The Board of Directors recommends that you vote FOR the following proposal:
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For
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Against
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Abstain |
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2. To ratify the appointment of Deloitte & Touche LLP as
the Companys independent registered public accounting
firm for the fiscal year ending December 31, 2010.
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3. In their discretion, the proxies are authorized to vote
on such other business as may properly come before the
Annual Meeting or any adjournment thereof. |
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Please sign exactly as your name(s) appears hereon. When
signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners
should each sign personally. All holders must sign. If
a corporation or a partnership, please sign in full
corporate or partnership name, by authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
GLOBAL CASH ACCESS HOLDINGS, INC.
Annual Meeting of Stockholders
April 29, 2010 9:00 AM
The undersigned holder of Common Stock, par value $.001, of Global Cash Access Holdings, Inc.
(the Company) hereby appoints Scott Betts and Kathryn Lever, or either of them, proxies for the
undersigned, each with full power of substitution, to represent and to vote as specified in this
Proxy all Common Stock of the Company that the undersigned stockholder would be entitled to vote if
personally present at the 2010 Annual Meeting of Stockholders (the Annual Meeting) to be held on
April 29, 2010 at 9:00 a.m., Pacific Daylight Time, at the Green Valley Ranch Resort, Spa and
Casino, 2300 Paseo Verde Drive, Henderson, Nevada 89052, and at any adjournments or postponements
thereof. The undersigned stockholder hereby revokes any proxy or proxies heretofore executed for
such matters.
This proxy, when properly executed, will be voted in the manner as directed herein by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2
AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING. The undersigned stockholder may revoke this proxy at any time before it is voted by
delivering to the Corporate 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 REGARDING THE ELECTION OF THE CLASS
II DIRECTOR NOMINEE, AND FOR PROPOSAL 2 REGARDING THE RATIFICATION OF DELOITTE & TOUCHE LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31,
2010.
Continued and to be signed on reverse side