VOLT INFORMATION SCIENCES, INC.
- --------------------------------------------------------------------------------
560 Lexington Avenue
New York, New York 10022-2928
(212) 704-2400
February 28,2006
TO OUR SHAREHOLDERS
We are pleased to invite you to attend the annual meeting of stockholders of
Volt Information Sciences, Inc. to be held on Thursday, April 6, 2006 at 10:OO
a.m., local time, at the First Floor Atrium, Volt Corporate Park, 2401 N.
Glassell Street, Orange, CA 92865. Details regarding the meeting and the
business to be conducted are more fully described in the accompanying Notice of
Annual Meeting and Proxy Statement.
Your vote is important. Whether or not you plan to attend the annual meeting, we
hope you will vote as soon as possible. You may vote by mailing a proxy card.
Voting by written proxy will ensure your representation at the annual meeting
regardless of whether you attend in person. Please review the instructions on
the proxy card regarding each of these voting options. Pursuant to Section
303A.l2(a) of the Rules of the NYSE, a company's annual report to its
shareholders must disclose that the previous year's ss.12(a) CEO Certification
was submitted to the NYSE. As required, the Company's ss.12(a) CEO Certification
for the previous year was submitted to the NYSE on May 3, 2005, and certifies
that the CEO was not aware of any violation by the Company of NYSE's Corporate
Governance listing standards.
Thank you for your ongoing support of and
continued interest in Volt Information Sciences, Inc.
Sincerely,
William Shaw
President and Chairman of the Board
VOLT INFORMATION SCIENCES, INC.
560 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022-2928
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 6, 2006
April 5, 2007
TO THE SHAREHOLDERS OF VOLT INFORMATION SCIENCES, INC.
The Annual Meeting of Shareholders of Volt Information Sciences, Inc. (the "Company"“Company”) will be held at the First Floor Atrium, Volt Corporate Park, 2401 N. Glassell Street, Orange, CA 92865, on Thursday, April 6, 2006,5, 2007, at 10:00 a.m., Pacific time, to consider the following:
1. The election of four Class I directors to serve until the 2008
Annual Meeting of Shareholders and until their respective
successors are elected and qualified;
2. A proposal to ratify the action of the Audit Committee of the
Board of Directors in appointing Ernst & Young LLP as the
Company's independent registered public accounting firm for
the fiscal year ending October 29, 2006; and
3. Such other business as may properly come before the meeting or
any adjournments or postponements thereof.
| 1. | The election of three Class II directors to serve until the 2009 Annual Meeting of Shareholders and until their respective successors are elected and qualified; |
| 2. | A proposal to ratify the action of the Board of Directors in appointing Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 28, 2007; |
| 3. | A proposal to approve the adoption by the Board of Directors of the Volt Information Sciences, Inc. 2006 Incentive Stock Plan; |
| 4. | The amendment of the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock ($.10 par value) from 30,000,000 to 120,000,000; and |
| 5. | Such other business as may properly come before the meeting or any adjournments or postponements thereof. |
Only shareholders of record at the close of business on February 22, 200616, 2007 will be entitled to notice of, and to vote at, the meeting and any adjournments or postponements thereof.
You are cordially invited to attend the meeting. Whether or not you plan to be present, kindly fill out and sign the enclosed Proxy exactly as your name appears on the Proxy, and mail it promptly in order that your vote can be recorded. A return envelope is enclosed for your convenience and requires no postage if mailed within the United States. The giving of this Proxy will not affect your right to vote in person in the event that you find it convenient to attend the meeting.
By Order of the Board of Directors
Jerome Shaw, Secretary
| By Order of the Board of Directors Jerome Shaw, Secretary |
New York, New York
February 28, 2007
VOLT INFORMATION SCIENCES, INC.
560 Lexington Avenue
New York, New York February 28, 2006
VOLT INFORMATION SCIENCES, INC.
560 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022-2928
PROXY STATEMENT
FOR
For
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement, to be mailed on or about February 28, 2006,2007, is furnished in connection with the solicitation by the Board of Directors of Volt Information Sciences, Inc., a New York corporation (the "Company"“Company” or "Volt"“Volt”), of Proxies in the accompanying form ("Proxy"(“Proxy” or "Proxies"“Proxies”) for use at the Annual Meeting of Shareholders of the Company to be held on April 6, 20065, 2007 and at any adjournments or postponements thereof (the "Annual Meeting"“Annual Meeting”).
All share amounts shown in this Proxy Statement have been adjusted to reflect the 3-for-2 stock split in the form of a stock dividend paid January 26, 2007.
Only holders of record of the Company'sCompany’s Common Stock (the "Common Stock"“Common Stock”) as of the close of business on February 22, 200616, 2007 are entitled to notice of, and to vote at, the Annual Meeting. As of the close of business on that date, there were issued and outstanding 15,380,34523,480,103 shares of Common Stock of the Company. Each issued and outstanding share of Common Stock on that date is entitled to one vote upon each matter to be acted upon at the Annual Meeting. The presence, in person or by proxy, of at least 35% of the total issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting.
All Proxies received will be voted in accordance with the specifications made thereon. Proxies received without specification on a matter will be voted as follows on that matter: (a) for the election of all nominees named herein to serve as directors, and (b) in favor of the proposal to ratify the appointment of Ernst & Young LLP ("(“Ernst & Young"Young”) as the Company'sCompany’s independent registered public accounting firm for the Company'sCompany’s fiscal year ending October 29,28, 2007 (“fiscal 2007”), (c) in favor of the proposal to approve the adoption by the Board of Directors of the Volt Information Sciences, Inc. 2006 ("fiscal 2006").Incentive Stock Plan and (d) in favor of the amendment of the Certificate of Incorporation to increase the number of authorized shares of Common Stock ($.10 par value) from 30,000,000 to 120,000,000. Management does not intend to bring before the Annual Meeting any matters other than those specifically described above and knows of no other matters to come before the Annual Meeting. IfMeeting.If any other matters or motions come before the Annual Meeting, it is the intention of the persons named in the accompanying form of Proxy to vote Proxies in accordance with their judgment on those matters or motions, including any matter dealing with the conduct of the Annual Meeting. Proxies may be revoked at any time prior to their exercise by written notification to the Secretary of the Company at the Company'sCompany’s principal executive offices located at 560 Lexington Avenue, New York, New York 10022-2928, by voting at the Annual Meeting or by submitting a later dated proxy.
The Company maintains a Savings Plan (the "Savings Plan"“Savings Plan”) in which separate accounts are maintained for Common Stock held under the Employee Stock Ownership Plan (the "ESOP Account"“ESOP Account”) and 401(k) Plan (the "401(k) Account"“401(k) Account”) features of the Savings Plan. Subaccounts are maintained for each participant under the ESOP Account and 401(k) Account. Separate Proxies are being transmitted to each employee of the Company who is a participant in the Savings Plan. Shares held in a participant'sparticipant’s subaccounts will be voted by the trustee of the Savings Plan as directed by the participant in a signed Proxy for Savings Plan participants which is timely returned to the Savings Plan'sPlan’s trustee or its designee. Shares as to which the Savings Plan trustee does not receive a timely direction will be voted by the trustee as directed by the administrator of the Savings Plan in such manner as the Savings Plan administrator deems proper in its fiduciary capacity for the benefit of the Savings Plan and its participants.
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A plurality of votes cast at the Annual Meeting in person or by proxy is required for the election of each nominee to serve as a director. The affirmative vote of a majority of votes cast at the Annual Meeting in person or by proxy is required to ratify the selection of Ernst & Young as the Company'sCompany’s independent registered public accounting firm for fiscal 2006.2007 and to approve the adoption by the Board of Directors of the Volt Information Sciences, Inc. 2006 Incentive Stock Plan. The affirmative vote of a majority of the issued and outstanding shares of the Company’s Common Stock in person or by proxy is required to approve the adoption by the Board of Directors of the amendment of the Certificate of Incorporation to increase the number of authorized shares of Common Stock ($.10 par value) from 30,000,000 to 120,000,000. Votes withheld, in the case of the election of directors, and abstentions and any broker non-votes with respect to the ratification of an independent registered public accounting firm or the approval of the Volt Information Sciences, Inc. 2006 Incentive Stock Plan, are not considered votes cast with respect to that matter and, consequently, will have no effect on the vote on that matter, but are counted in determining a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, MANAGEMENT AND NOMINEES
The following table sets forth information, as of February 15, 200612, 2007 (except as described in the footnotes to the following table), with respect to the beneficial ownership of Common Stock, the Company'sCompany’s only class of voting or equity securities, by (a) each person who is known to the Company to own beneficially more than five percent of the outstanding shares of Common Stock, (b) each of the executive officers named in the Summary Compensation Table contained under "Executive Compensation"“Executive Compensation”, (c) each of the directors of the Company, including nominees to serve as directors, and (d) executive officers and directors as a group:
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | ||||||
|---|---|---|---|---|---|---|---|---|
Jerome Shaw | 5,436,038(3) | 23.2% | ||||||
| c/o Volt Information Sciences, Inc. | ||||||||
| 2401 N. Glassell Street | ||||||||
| Orange, CA92665 | ||||||||
Deborah Shaw | 3,714,190(4) | 15.8% | ||||||
| c/o Volt Information Sciences, Inc. | ||||||||
| 560 Lexington Avenue | ||||||||
| New York, NY10022 | ||||||||
Bruce G. Goodman | 3,700,354(5) | 15.8% | ||||||
| c/o Hinckley, Allen & Snyder LLP | ||||||||
| 28 State Street | ||||||||
| Boston, MA02109-1775 | ||||||||
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| Linda Shaw | 3,700,354(6) | 15.8% | ||||||
| c/o Bruce G. Goodman | ||||||||
| Hinckley, Allen & Snyder LLP | ||||||||
| 28 State Street | ||||||||
| Boston, MA02109-1775 | ||||||||
Goldman Sachs Asset Management, L.P. | 3,199,798(7) | 13.6% | ||||||
| 32 Old Slip | ||||||||
| New York, NY 10005 | ||||||||
Estate of William Shaw | 2,474,432(8) | 10.5% | ||||||
| Troutman Sanders LLP | ||||||||
| 405 Lexington Avenue | ||||||||
| New York, NY 10174 | ||||||||
Dimensional Fund Advisors Inc. | 1,672,179(9) | 7.1% | ||||||
| 1299 Ocean Avenue, 11th Floor | ||||||||
| Santa Monica, CA 90401 | ||||||||
Barclays Global Investors, NA | 1,524,472(10) | 6.5% | ||||||
| 45 Fremont Street | ||||||||
| San Francisco, CA94105 | ||||||||
Lloyd Frank | 1,443,541(11) | 6.2% | ||||||
| c/o Troutman Sanders LLP | ||||||||
| 405 Lexington Avenue | ||||||||
| New York, NY10174 | ||||||||
Steven A. Shaw | 1,263,882(12)(13) | 5.4% | ||||||
| c/o Volt Information Sciences, Inc. | ||||||||
| 560 Lexington Avenue | ||||||||
| New York, NY10022-2928 | ||||||||
Howard B. Weinreich | 34,321(13) | * | ||||||
Thomas Daley | 1,811 | * | ||||||
Jack Egan | 3,364 | * | ||||||
Mark N. Kaplan | 15,750(13) | * | ||||||
Theresa A. Havell | 6,000 | * | ||||||
William H. Turner | 1,500 | * | ||||||
All executive officers and directors as a | 9,316,273(14) | 39.6% | ||||||
| group (15 persons) |
_________________
| (1) | Except as noted, the named beneficial owners have sole voting and dispositive power with respect to their beneficially owned shares. Shares beneficially owned include shares held in the executive officer’s ESOP Account and 401(k) Account. |
| (2) | Asterisk indicates less than 1%. Shares reflected as owned by a person that are not outstanding but that are issuable upon exercise of the portion of options held by such person that are |
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| exercisable on or within 60 days after February 12, 2007 are considered outstanding for the purpose of computing the percentage of outstanding Common Stock that would be owned by that person if the options were exercised, but (except for the calculation of the beneficial ownership by all executive officers and directors as a |
| (3) | Includes (i) 1,166,713 shares owned by Jerome Shaw and his wife as trustees of a revocable trust for their benefit or as community property, as to which shares they may be deemed to have shared voting and investment power (pursuant to the terms of the trust, Mr. Shaw may demand that the shares in trust be transferred to him at any time), (ii) 2,328,978 shares owned by Mr. Shaw as trustee under two trusts for his benefit, (iii) 301,875 shares owned by Mr. Shaw and his wife as trustees of a trust for the benefit of one of their children, as to which shares Mr. and Mrs. Shaw may be deemed to have shared voting and investment power, (iv) 9,825 shares owned by Mr. Shaw’s wife, as to which shares Mr. Shaw disclaims beneficial ownership; (v) an aggregate of 441,752 shares owned by Mr. Shaw, Michael Shaw, Steven A. Shaw and Lloyd Frank as co-trustees of a trust for the benefit of three of Jerome Shaw’s children, (vi) 14,250 shares held by a family foundation of which Mr. Shaw is a director as to which shares Mr. Shaw disclaims beneficial ownership, (vii) 146,748 shares owned by Mr. Shaw as trustee of a trust for the benefit of one of his children and (viii) an aggregate of 985,996 shares owned by Jerome Shaw, Linda Shaw, Deborah Shaw and Lloyd Frank as co-trustees of a trust for the benefit of the children of William Shaw. The inclusion of the shares in clauses (iii), (v), (vii) and (viii) is not an admission of beneficial ownership of those shares by Mr. Shaw. |
| (4) | Includes (i) 2,468,683 shares owned by the Estate of William Shaw of which Ms. Shaw is a co-executrix, (ii) 985,996 shares owned by Ms. Shaw, Linda Shaw, Jerome Shaw and Lloyd Frank as co-trustees of a trust for the benefit of the children of William Shaw, (iii) 5,749 shares held by a family foundation of which Ms. Shaw and Linda Shaw are directors, (iv) 71,220 shares owned by Ms. Shaw as custodian for her children and (v) 23,893 shares owned by Ms. Shaw’s husband. The inclusion of the shares in clauses (iv) and (v) is not an admission of beneficial ownership of those shares by Ms. Shaw. |
| (5) | Includes (i) 1,500 shares owned by Mr. Goodman as trustee of an irrevocable trust for the benefit of his children, (ii) 191,794 and 28,488 shares owned by Mr. Goodman’s wife, Linda Shaw, individually, and as custodian for two of her children, respectively, (iii) 5,749 shares held by a family foundation of which Mr. Goodman’s wife and Deborah Shaw are directors, as to all of which shares Mr. Goodman disclaims beneficial ownership, (iv) 985,996 shares owned by Mr. Goodman’s wife, Jerome Shaw, Deborah Shaw and Lloyd Frank as co-trustees of a trust for the benefit of the children of William Shaw, one of whom is Mr. Goodman’s wife and (v) 2,468,683 shares owned by the Estate of William Shaw of which Mr. Goodman’s wife is the co-executrix. The inclusion of the shares in clauses (ii), (iii), (iv) and (v) is not an admission of beneficial ownership of those shares by Mr. Goodman. |
| (6) | Includes (i) 2,468,683 shares owned by the Estate of William Shaw of which Ms. Shaw is a co-executrix, (ii) 985,996 shares owned by Ms. Shaw, Jerome Shaw, Deborah Shaw and Lloyd Frank as co-trustees of a trust for the benefit of the children of William Shaw, one of whom is Ms. Shaw, (iii) 28,488 shares owned by Ms. Shaw as custodian for two of her children, (iv) 5,749 shares held by a family foundation of which Ms. Shaw and Deborah Shaw are directors as to which shares Ms. Shaw disclaims beneficial ownership, (v) 18,744 shares owned by Ms. Shaw’s husband, individually and (vi) 1,500 shares owned by Ms. Shaw’s husband as trustee of an irrevocable trust for the benefit of his children. The inclusion of the shares in clauses (v) and (vi) is not an admission of beneficial ownership of those shares by Ms. Shaw. |
| (7) | Based on information as of December 31, 2006 (adjusted for the Company’s January 2007 stock split in the form of a stock dividend) contained in a Schedule 13G/A dated February 1, 2007 which indicates that Goldman Sachs Asset Management, L.P., an investment advisor, has sole voting power over 2,826,546 shares and has sole dispositive power over 3,199,798 shares. The |
4
| Company has no independent knowledge of the accuracy or completeness of the information set forth in such Schedule 13G/A filing, but has no reason to believe that such information is incomplete or inaccurate. |
| (8) | Includes 2,468,683 shares owned by the Estate of William Shaw. Also includes 5,749 shares held by a family foundation of which Deborah Shaw and Linda Shaw are directors, as to which shares Deborah Shaw and Linda Shaw each disclaim beneficial ownership. |
| (9) | Based on information as of December 31, 2006 (adjusted for the Company’s 2007 stock split in the form of a stock dividend) contained in a Schedule 13G/A dated February 2, 2007 which indicates that Dimensional Fund Advisors Inc., an investment advisor, has sole voting and/or investment power as to these shares which are owned by investment funds as to which it furnishes investment advice or serves as investment manager, but as to which it disclaims beneficial ownership. The Company has no independent knowledge of the accuracy or completeness of the information set forth in such Schedule 13G/A filing, but has no reason to believe that such information is incomplete or inaccurate. |
| (10) | Based on information as of December 31, 2006 (adjusted for the Company’s 2007 stock split in the form of a stock dividend) contained in a Schedule 13G dated January 23, 2007 which indicates that Barclays Global Investors, NA, a bank, has sole voting power over 1,081,504 shares and has sole dispositive power over 1,131,433 shares and Barclays Global Fund Advisors, an investment advisor, has sole voting and dispositive power over an additional 393,039 shares. The Company has no independent knowledge of the accuracy or completeness of the information set forth in such Schedule 13G filing, but has no reason to believe that such information is incomplete or inaccurate. |
| (11) | Includes (i) 3,793 shares owned by Mr. Frank’s wife, as to which shares Mr. Frank disclaims beneficial ownership, (ii) 441,752 shares owned by Mr. Frank, Jerome Shaw, Michael Shaw and Steven A. Shaw as co-trustees of a trust for the benefit of three children of Jerome Shaw and (iii) 985,996 shares owned by Mr. Frank, Jerome Shaw, Linda Shaw and Deborah Shaw as co-trustees of a trust for the benefit of the children of William Shaw. The inclusion of the shares in clauses (ii) and (iii) is not an admission of beneficial ownership of those shares by Mr. Frank. |
| (12) | Includes (i) 13,947 shares held by Steven A. Shaw as trustee of trusts for the benefit of two of his nephews, as to which Mr. Shaw disclaims beneficial ownership, and (ii) 441,752 shares owned by Steven A. Shaw, Jerome Shaw, Michael Shaw and Lloyd Frank as co-trustees of a trust for the benefit of the children of Jerome Shaw, of whom Steven A. Shaw is one. |
| (13) | Includes the following shares |
| (14) | Includes 53,250 shares issuable upon the exercise of the portion of options granted by the Company that are exercisable on or within 60 days after February 12, 2007. |
INTEREST OF DIRECTORS AND EXECUTIVE OFFICERSIN
MATTERS TO BE ACTED UPON
None of the portion of options held by such person that are exercisable onpersons who have been a director or within 60 days after February 15, 2006 are considered outstanding for
the purpose of computing the percentage of outstanding Common Stock
that would be owned by that person if the options were exercised, but
(except for the calculationexecutive officer of the beneficial ownership by allCompany at any time since November 1, 2004 have a direct or indirect substantial interest in any of the matters to be acted upon at the Annual Meeting. All executive officers and directors as a group) are not considered
outstanding foreligible to receive awards under the purpose of computing the percentage of outstanding
CommonVolt Information Sciences, Inc. 2006 Incentive Stock owned by any other person.
(3) Includes the following shares issuable upon the exercise of the portion
of options granted by the Company that are exercisable on or within 60
days after February 15, 2006: William Shaw, 45,000 shares; Jerome Shaw,
45,000 shares; Steven A. Shaw, 40,000 shares; Howard B. Weinreich,
20,000 shares; James J. Groberg, 29,300 shares; Thomas Daley, 7,100
shares; and Mark N. Kaplan, 7,500 shares.
(4) Includes (i) 2,103,457 shares owned by William Shaw as trustee under
two trusts for his benefit and (ii) 3,833 shares held by a family
foundation of which Mr. Shaw and two other members of his family are
trustees, as to which shares Mr. Shaw disclaims beneficial ownership.
(5) Includes (i) 1,282,901 shares owned by Jerome Shaw and his wife as
trustees of a revocable trust for their benefit or as community
property, as to which shares they may be deemed to have shared voting
and investment power (pursuant to the terms of the trust, Mr. Shaw may
demand that the shares in trust be transferred to him at any time),
(ii) 1,114,048 shares owned by Mr. Shaw as trustee under two trusts for
his benefit, (iii) 201,250 shares owned by Mr. Shaw and his wife as
trustees of a trust for the benefit of one of their children, as to
which shares Mr. and Mrs. Shaw may be deemed to have shared voting and
investment power; (iv) 6,750 shares owned by Mr. Shaw's wife, as to
which shares Mr. Shaw disclaims beneficial ownership; (v) an aggregate
of 294,502 shares owned by Mr. Shaw, Michael Shaw, Steven A. Shaw and
Lloyd Frank as co-trustees of a trust for the benefit of three of
Jerome Shaw's children; (vi) 9,500 shares held by a family foundation
of which Mr. Shaw is a director as to which shares Mr. Shaw disclaims
beneficial ownership and (vii) an aggregate of 657,331 shares owned by
Jerome Shaw, Linda Shaw, Deborah Shaw Sevy and Lloyd Frank as
co-trustees of a trust for the benefit of the children
3
of William Shaw. The inclusion of the shares in clauses (iii), (v) and
(vii) is not an admission of beneficial ownership of those shares by
Mr. Shaw.
(6) Based on information as of December 31, 2005 contained in a Schedule
13G amendment dated February 1, 2006 which indicates that Dimensional
Fund Advisors Inc., an investment advisor, has sole voting and/or
investment power as to these shares which are owned by investment funds
as to which it furnishes investment advice or serves as investment
manager, but as to which it disclaims beneficial ownership.
(7) Based on information as of December 31, 2005 contained in a Schedule
13G dated January 31, 2006 which indicates that Barclays Global
Investors, NA, a bank, has sole voting power over 660,459 shares and
has sole dispositive power over 713,148 shares and Barclays Global Fund
Advisors, an investment advisor, has sole voting and dispositive power
over an additional 199,306 shares.
(8) Includes (i) 2,529 shares owned by Mr. Frank's wife, as to which shares
Mr. Frank disclaims beneficial ownership, (ii) 294,502 shares owned by
Mr. Frank, Jerome Shaw, Michael Shaw and Steven A. Shaw as co-trustees
of a trust for the benefit of three children of Jerome Shaw and (iii)
an aggregate of 657,331 shares owned by Mr. Frank, Jerome Shaw, Linda
Shaw and Deborah Shaw Sevy as co-trustees of a trust for the benefit of
the children of William Shaw. The inclusion of the shares in clauses
(ii) and (iii) is not an admission of beneficial ownership of those
shares by Mr. Frank.
(9) Includes (i) 9,298 shares held by Steven A. Shaw as trustee of trusts
for the benefit of two of his nephews, as to which Mr. Shaw disclaims
beneficial ownership, and (ii) an aggregate of 294,502 shares owned by
Steven A. Shaw, Jerome Shaw, Michael Shaw and Lloyd Frank as
co-trustees of a trust for the benefit of the children of Jerome Shaw,
of whom Steven A. Shaw is one.
(10) Includes (i) 400 shares owned by Mr. Goodman as custodian for his
children, (ii) 1,000 shares owned by Mr. Goodman as trustee of an
irrevocable trust for the benefit of his children, (iii) 124,798 and
9,496 shares owned by Mr. Goodman's wife, Linda Shaw, individually, and
as custodian for one of her children, respectively, (iv) 9,096 shares
owned by Mr. Goodman's wife, as custodian for their child, (v) 3,833
shares held by a family foundation of which Mr. Goodman's wife and two
other members of her family are trustees, as to all of which shares Mr.
Goodman disclaims beneficial ownership and (vi) an aggregate of 657,331
shares owned by Mr. Goodman's wife, Jerome Shaw, Deborah Shaw Sevy and
Lloyd Frank as co-trustees of a trust for the benefit of the children
of William Shaw, one of whom is Mr. Goodman's wife. The inclusion of
the shares in clauses (ii), (iii), (iv) and (vi) is not an admission of
beneficial ownership of those shares by Mr. Goodman.
(11) Includes (i) 9,496 and 9,096 shares owned by Ms. Shaw as custodian for
two of her children, respectively, (ii) an aggregate of 657,331 shares
owned by Ms. Shaw, Jerome Shaw, Deborah Shaw Sevy and Lloyd Frank as
co-trustees of a trust for the benefit of the children of William Shaw,
of whom Linda Shaw is one, (iii) 3,833 shares held by a family
foundation of which Ms. Shaw and two other members of her family are
trustees as to which shares Ms. Shaw disclaims beneficial ownership,
(iv) 11,496 and 400 shares owned by Ms. Shaw's husband, individually,
and as custodian for his children and (v) 1,000 shares owned by Ms.
Shaw's husband as trustee of an irrevocable trust for the benefit of
his children. The inclusion of the shares in clauses (iv) and (v) is
not an admission of beneficial ownership of those shares by Ms. Shaw
(12) Includes (i) 205,500 shares issuable upon the exercise of the portion
of options granted by the Company that are exercisable on or within 60
days after February 15, 2006 and (ii) the shares described in footnotes
(4), (5), (8), (9) and (10).
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ELECTION OF DIRECTORS
The Company'sCompany’s Board of Directors presently consists of seven directors, divided into two classes. The terms of office of Class I and Class II directors expire at the 20062008 and 2007 Annual Meetings of Shareholders, respectively. At each annual meeting, directors are chosen to succeed those in the class whose term expires at that annual meeting to serve for a term of two years each and until their respective successors are elected and qualified. Each of the present directors of the Company was elected by the Company's shareholders.
Company’s shareholders, except Deborah Shaw who was elected by the Board of Directors of the Company on August 16, 2006.
Unless otherwise directed, persons named in the enclosed Proxy intend to cast all votes pursuant to Proxies received for the election of Lloyd Frank, Bruce G.
Goodman, Mark N. KaplanDeborah Shaw, William H. Turner and StevenTheresa A. ShawHavell as Class III directors to serve until the 20082009 Annual Meeting of Shareholders and, in each case, until his or her respective successor is elected and qualified (those persons are referred to in this Proxy Statement as the "nominees"“nominees”). Each nominee has indicated his or her availability to serve as a director. In the event that any of the nominees should become unavailable or unable to serve for any reason, the holders of the Proxies have discretionary authority to vote for one or more alternate nominees who will be designated by the Board of Directors.
A plurality of the votes cast at the Annual Meeting in person or by proxy is required for the election of each nominee. Votes withheld will have no effect on the outcome of the election of directors.
BACKGROUND OF NOMINEES AND CONTINUING DIRECTORS
NOMINEES
(CLASS I)
LLOYD FRANK, 80, has been a director
Background of the Company since March 2000. He has
been Counsel to the law firm of Troutman Sanders LLP since April 2005Nominees and was
counsel to the law firm of Jenkens & Gilchrist Parker Chapin LLP from January
2005 to April 2005 and, from January 1977 until that time, was a partner in that
firm (and its predecessor, Parker Chapin LLP). Mr. Frank is also a director of
Dryclean USA, Inc. and Park Electrochemical Corp.
BRUCE G. GOODMAN, 57, has been a director of the Company since May 2000. He has
been a partner of the law firm of Hinckley, Allen & Snyder LLP since April 1995.
MARK N. KAPLAN, 75,Continuing Directors
Nominees
(Class II)
THERESA A. HAVELL, 60, has been a director of the Company since April 1991. He2004. She has been Of CounselPresident and Chief Executive Officer of Havell Capital Management LLC (a money management company) since 1996. Prior to the law firm of Skadden, Arps, Slate, Meagher & Flom LLP
since 1999 and, from October 1979 until that time,1996, Ms. Havell was a partner in that firm.
Mr. Kaplan is also a directorPartner, Member of American Biltrite, Inc., Autobytel Inc.,
Congoleum Corporation, DRS Technologies, Inc. and Refac.
STEVEN A. SHAW, 46, has been Executive Vice President, co-Chief Executive
OfficerCommittee, Director and Chief OperatingInvestment Officer of the Company since September 2005 and
prior thereto served as Executive Vice President and Chief Operating OfficerFixed Income Group of the Company since March 2005, Senior Vice President of the Company from November
2000 until March 2005 and a Vice President of the Company from April 1997 to
November 2000. HeNeubergerBerman.
DEBORAH SHAW, 51, has been employed by the Company in executive capacities since
November 1995. He has served as a director of the Company since August 1998.
DIRECTORS WHOSE TERM OF OFFICE CONTINUES AFTER THE ANNUAL MEETING (CLASS II)
WILLIAM SHAW, 81, a founder of the Company,2006. Dr. Shaw is and has been President, co-Chief
Executive Officer and Chairman ofa clinical psychologist with a private practice in Los Angeles, California for more than the Board of the Company since September 2005
and prior thereto served as President, Chief Executive Officer and Chairman of
the Board since its inception in 1957. He has been employed in
5
executive capacities by the Company and its predecessors since 1950. He has
served as a director of the Company since its formation in 1957.
past five years.
WILLIAM H. TURNER, 66, 67,has been a director of the Company since August 1998. He has been acting Dean at Stony Brook University School of Business since February 2004. He has also been the Senior Partner of Summus Ltd., a consulting firm, since October 2002. From September 1999 until his retirement in September 2002, and, from August 1997 to August 1999, he was President of PNC Bank, New Jersey. From October 1996 to July 1997, he was President and Chief Executive Officer of Franklin Electronic Publishers, Inc. (a designer and developer of hand-held electronic information products) and, from February 1991 to September 1996, he was Vice Chairman of The Chase Manhattan Bank and its predecessor, Chemical Banking Corporation. He is also a director of Ameriprise Financial,Amerprise, Inc., Franklin Electronic Publishers, Inc., New Jersey Resources Corp. and Standard Motor Products, Inc.
THERESA A. HAVELL, 59,
Directors Whose Term of Office Continues After the Annual Meeting (Class I)
LLOYD FRANK, 81, has been a director of the Company since March 2000. He has been Of Counsel to the law firm of Troutman Sanders LLP since April 2005, and was counsel to the law firm of Jenkens & Gilchrist Parker Chapin LLP from January 2005 to April 2005 and, from January 1977 until that time, was a partner in that firm (and its predecessor, Parker Chapin LLP). Mr. Frank is also a director of Dryclean USA, Inc. and Park Electrochemical Corp.
BRUCE G. GOODMAN, 58, has been a director of the Company since May 2000. He has been a partner of the law firm of Hinckley, Allen & Snyder LLP since April 1995.
6
MARK N. KAPLAN, 77, has been a director of the Company since April 2004. She1991. He has been Of Counsel to the law firm of Skadden, Arps, Slate, Meagher & Flom LLP since 1999 and, from October 1979 until that time, was a partner in that firm. Mr. Kaplan is also a director of American Biltrite, Inc., Autobytel Inc., Congoleum Corporation, DRS Technologies, Inc. and Refac Optical Group.
STEVEN A. SHAW, 47, has been President and Chief Executive Officer of Havell Capital Management LLC
(a money management company)the Company since 1996. Prior to 1996 Ms. Havell was a Partner,
Member of Executive Committee, DirectorMarch 2006, and Chief InvestmentOperating Officer of the Fixed Income GroupCompany since March 2005. He served as co-Chief Executive Officer of NeubergerBerman.
William Shawthe Company from September 2005 until March 2006, as Executive Vice President of the Company from March 2005 until March 2006 and Jerome Shaw are brothers. as Senior Vice President of the Company from November 2000 until March 2005. He has been employed by the Company in executive capacities since November 1995.
Steven A. Shaw is the son of Jerome Shaw. Deborah Shaw, a director of the Company, is the cousin of Steven A. Shaw and the niece of Jerome Shaw. Bruce G. Goodman, a director of the Company, is the son-in-lawhusband of Deborah Shaw’s sister, Linda Shaw. Deborah Shaw and her sister are co-executors of the Estate of William Shaw. William Shaw was Jerome Shaw’s brother and a founder of the Company, and was President and Co-Chief Executive Officer at the time of his death in March 2006. There are no other family relationships among the directorsexecutive officers or executive officersdirectors of the Company.
Messrs. William Shaw and Jerome Shaw are parties to employment agreements with
the Company. See "Executive Remuneration - Employment and Termination
Agreements."
CORPORATE GOVERNANCE
Corporate Governance
The Company'sCompany’s business and affairs are managed and under the direction of the Board of Directors. Members of the Board of Directors are kept informed of the Company'sCompany’s business through discussions with the Company'sCompany’s Chief Executive OfficersOfficer and other officers, by reviewing materials provided to them and by participating in meetings of the Board of Directors and its committees. The Company has an Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee.
The Board of Directors met seven16 times during the past fiscal year. Each incumbent director attended at least 75% of the meetings of the Board of Directors and Committees on which he or she served which were held during the fiscal year.
INDEPENDENT DIRECTORS; EXECUTIVE SESSIONS OF THE BOARD
year and during the period he or she was a director.
Independent Directors; Executive Sessions of the Board
The Board of Directors has determined that Theresa A. Havell, Mark N. Kaplan, Bruce G. Goodman, Deborah Shaw and William H. Turner meet the current independence requirements under the listing standards of the New York Stock Exchange. The Board of Directors made these determinations based primarily upon a review of the written responses of directors to questions regarding employment and compensation history, affiliations and family and other relationships and on discussions with them. The Board of Directors determined that there were no material relationships between any of such persons and the Company that could interfere with their exercise of independent judgment and that each meets the current independence requirements applicable to independent directors under the listing standards of the New York Stock Exchange to serve on the Board of Directors.
The Board of Directors has also determined that Lloyd Frank meets the current independence requirements under the listing standards of the New York Stock Exchange. Troutman Sanders LLP and Jenkens & Gilchrist Parker Chapin LLP and its
predecessortheir predecessors law firms to which Mr. Frank is now Of Counsel, and was formerly a partner, havehas been retained by the Company annually since 1962 to review and advise the Company with respect to its legal position on numerous matters. These firms havehad also rendered professional services to William Shaw and render professional services to his Estate and to Jerome Shaw, for which, the Company has been 6
and to Jenkens & Gilchrist Parker Chapin LLP
with respect to services rendered by them to the Company while Mr. Frank was
Counsel to such firms during the Company's 2005Company’s 2006 fiscal year, exclusive of disbursement reimbursement, represented less than 1%2% of each firm'sthe firm’s consolidated gross revenues during its 2005the firm’s 2006 fiscal year and were not material to either firm.the firm, which has in excess of 600 attorneys. Mr. Frank owns 8,00012,000 shares of the Company's Common Stock
7
Company’s stock and his spouse owns 2,529 shares.3,793 shares, and Mr. Frank is also one of the trustees of various trusts for the benefit of the children of William Shaw and Jerome Shaw as described above.Shaw. Mr. Frank has no other interests which precluded him from being independent under the criteria for service on the Board. The Board of Directors. After considering all of the
above facts and the advice of counsel, the Board of Directors has determined that, in the Board'sBoard’s business judgment, the relationship of Mr. Frank with the Company and with the Shaw families and the aforesaid ownership of Common Stockstock was not material to the Company, to Mr. Frank'sFrank’s law firm, ornor to Mr. Frank, and that such relationships did not interfere with Mr. Frank'sFrank’s exercise of his independent judgment and that he meets the current independence requirements applicable to independent directors under the listing standards of the New York Stock Exchange to serve on the Board of Directors.
The Company hasnon-management directors have held executive sessions of the non-management directors.sessions. In accordance with the listing standards of the New York Stock Exchange, these sessions are intended to promote open discussion among non-management directors. Mark N. Kaplan has been chosen to preside at these sessions.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholder Communications with the Board of Directors
Shareholders and interested parties may communicate directly with the Board of Directors by sending communications to the Board of Directors, c/o Howard B. Weinreich, General Counsel and& Senior Vice President, Volt Information Sciences, Inc., 560 Lexington Avenue, New York, NY 10022-2928. Mr. Weinreich will forward all such communications directly to the Board of Directors.
CODE OF BUSINESS CONDUCT AND CORPORATE GOVERNANCE GUIDELINES
Code of Business Conduct and Corporate Governance Guidelines
The Company has a Code of Business Conduct and Ethics and corporate governance guidelines. Copies of the Company'sCompany’s Code of Business Conduct and Ethics, and
other significant corporate policies and all committee charters are available at the Company'sCompany’s website:www.volt.com in the Investor Relations/Corporate Governance section.
COMPLIANCE WITH NEW YORK STOCK EXCHANGE CORPORATE GOVERNANCE GUIDELINES
Section. Copies of these documents are also available without charge upon request to Volt Information Sciences, Inc., 560 Lexington Avenue, New York, New York 10022-2928, 212-704-2400, Attention: Shareholder Relations
Compliance with New York Stock Exchange Corporate Governance Guidelines
On May 3, 2005, William1, 2006, Steven A. Shaw, as the Chief Executive Officer of the Company, certified to the New York Stock Exchange, on which the Company'sCompany’s Common Stock is listed, that, as of the date of his certification, he was unaware of any violation by the Company of the New York Stock Exchange'sExchange’s corporate governance listing standards.
AUDIT COMMITTEE
Audit Committee
The Audit Committee presently consists of Theresa A. Havell, Mark N. Kaplan and William H. Turner, each of whom is financially literate and meets the current independence requirements for audit committee membership under the rules of the Securities and Exchange Commission (the "SEC"the (“SEC”) and the listing standards of the New York Stock Exchange. The Board of Directors has determined that Mark N. Kaplan is an "audit“audit committee financial expert".expert” within the meaning of the applicable SEC rules and possesses accounting and related financial management expertise within the meaning of the listing standards of the New York Stock Exchange. This determination is based on Mr. Kaplan'sKaplan’s relevant experience as Chief Executive Officer of an investment banking firm, Chief Operating Officer of a public company, former Chairman and currentnow a member of the Audit Committee of The City of New York and as Co-Chair of the Audit Advisory Committee of the Board of Education of The City of New York.
The Audit Committee provides assistance to the Company's directors in fulfilling
the Board's oversight responsibility as to the Company's accounting, auditing
and financial reporting practices and as to the
7
quality and integrity of the publicly distributed financial reports of the
Company. The specific functions and responsibilities of the Audit Committee are set forth in a written charter of the Audit Committee adopted by the Board of Directors, which gives the Audit Committee sole authority to selectretain and dismiss the independent registered public accounting firm, to pre-approve all audit services, to approve the fees of the independent registered public accounting firm and to perform periodic reviews of the performance and independence from management of the independent registered public accounting firm, and grants the Audit Committee the authority to fulfill its obligations under SEC and New York Stock Exchange
8
requirements. Mark N. Kaplan, Chairman of the Audit Committee, has been designated by the Audit Committee to approve non-audit services to be performed by the independent registered public accounting firm. The Audit Committee reviews and reassesses its charter annually and recommends any changes to the Board of Directors for approval. A copy of the Audit Committee charter, as amended through February 22, 2006,Charter is attached as Exhibit
A to this Proxy Statement.available at the Company’s website:www.volt.com in the Investor Relations/Corporate Governance Section. A report of the Audit Committee appears under the caption "Audit“Audit Committee Report,"” below.
The Audit Committee met fifteen13 times during the past fiscal year.
COMPENSATION COMMITTEE
Compensation Committee
The Company'sCompany’s Compensation Committee consists of Lloyd Frank, Theresa A. Havell, Mark N. Kaplan and William H. Turner, each of whom meets the current independence requirements for compensation committee membership under the listing standards of the New York Stock Exchange. Mr. Turner serves as chair of the Compensation Committee. The Compensation Committee met twice during the past fiscal year.
The specific functions and responsibilities of the Compensation Committee are set forth in a written charter adopted by the Board of Directors which gives the Compensation Committee authority to approve and evaluate the director and officer compensation plans, policies and programs of the Company;Company and prepare an annual report on executive compensation for inclusion in the Company'sCompany’s proxy statement for its annual meeting of shareholders. A copy of the Compensation Committee'sCommittee’s charter is available at the Company'sCompany’s website:www.volt.com in the Investor Relations/Corporate Governance section.
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
Section.
Nominating/Corporate Governance Committee
The Company'sCompany’s Nominating/Corporate Governance Committee consists of Lloyd Frank, Theresa A. Havell, Mark N. Kaplan and William H. Turner, each of whom meets the
current independence requirements for Nominating/Corporate Governance Committee membership under the listing standards of the New York Stock Exchange. Ms. Havell serves as chair of the Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee did not formally meetmet once during the past fiscal year separate from the full Board of Directors.
year.
The responsibilities of the Nominating/Corporate Governance Committee include: identifying, evaluating and recommending to the Board prospective nominees for Director; reviewing the Company'sCompany’s corporate governance policies and making recommendations to the Board from time to time regarding matters of corporate governance; and reviewing the performance of the Board and its members. The Nominating/Corporate Governance Committee has not established a formal process to identify and evaluate prospective nominees for Director. Copies of the Company'sCompany’s Nominating/Corporate Governance Committee Charter and Corporate Governance Guidelines are available at the Company'sCompany’s website:www.volt.com in the Investor Relations/Corporate Governance section.
Section.
Stockholders may submit names of qualified candidates for director, along with detailed information on their backgrounds, to the Company'sCompany’s Secretary for referral to the Nominating/Corporate Governance Committee for consideration.
8
AUDIT COMMITTEE REPORT
Audit Committee Report
Management has the primary responsibility for the Company'sCompany’s financial reporting process, including its financial statements, while the Board is responsible for overseeing the Company'sCompany’s accounting, auditing and financial reporting practices and the Company'sCompany’s independent registered public accounting firm has the responsibility for the examination of the Company'sCompany’s annual financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States. In assisting the Board in fulfilling its oversight responsibility with respect to the Company'sCompany’s fiscal year ended October 30, 2005,29, 2006, the Audit Committee:
o
9
Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the Company'sCompany’s audited financial statements for the fiscal year ended October 30, 200529, 2006 be included in the Company'sCompany’s Annual Report on Form 10-K filed with the SECSecurities and Exchange Commission for that year.
Respectfully,
Mark N. Kaplan, Chair
Theresa A. Havell
William H. Turner
9
| Respectfully, | |
| Mark N. Kaplan, Chair | |
| Theresa A. Havell | |
| William H. Turner |
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EXECUTIVE REMUNERATION
SUMMARY COMPENSATION TABLE
Summary Compensation Table
The following table sets forth information concerning the compensation during the fiscal years ended October 29, 2006 (“fiscal 2006”), October 30, 2005 ("(“fiscal 2005"),2005) and October 31, 2004 ("(“fiscal 2004") and November 2, 2003 ("fiscal 2003"2004”) of the Company'sCompany’s co-Chief Executive Officers and each of the four other executive officers of the Company serving as executive officers of the Company at the end of fiscal 20052006 who received the highest regular cash compensation during fiscal 20052006 for services rendered in all capacities to the Company and its subsidiaries (the "Named“Named Executive Officers"Officers”):
| Summary Compensation Table | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Annual Compensation | |||||||||||||||||
| Principal Position | Year | Salary (1) | Bonus | Long-Term Compensation Securities Underlying Options | All Other Compensation (2) | ||||||||||||
| William Shaw, | 2006 | $ | 362,351 | (3) | -- | -- | $ | 1,823 | |||||||||
| President, Chairman and | 2005 | 455,250 | -- | -- | 3,038 | ||||||||||||
| Co-Chief Executive | 2004 | 432,231 | -- | -- | 2,911 | ||||||||||||
| Officer (through March 2006) | |||||||||||||||||
| Steven A. Shaw, | 2006 | $ | 400,192 | $ | 100,000 | -- | $ | 3,240 | |||||||||
| President and Chief | 2005 | 262,500 | 10,000 | -- | 3,302 | ||||||||||||
| Executive Officer | 2004 | 240,192 | 7,500 | -- | 2,848 | ||||||||||||
| (effective March 9, 2006 and | |||||||||||||||||
| March 13, 2006, respectively) (4) | |||||||||||||||||
| Jerome Shaw, | 2006 | $ | 498,462 | $ | 100,000 | -- | $ | 3,518 | |||||||||
| Executive Vice President (5) | 2005 | 455,250 | -- | -- | 3,375 | ||||||||||||
| 2004 | 432,231 | -- | -- | 3,191 | |||||||||||||
| Howard B. Weinreich | 2006 | $ | 306,942 | $ | 40,000 | -- | $ | 2,880 | |||||||||
| Senior Vice President and | 2005 | 290,360 | 18,000 | -- | 2,706 | ||||||||||||
| General Counsel (6) | 2004 | 274,792 | 170,000 | -- | 3,440 | ||||||||||||
| Thomas Daley, | 2006 | $ | 288,459 | $ | 256,081 | -- | $ | 3,174 | |||||||||
| Senior Vice President (8) | 2005 | 249,995 | 255,158 | -- | 2,984 | ||||||||||||
| 2004 | 249,995 | 81,585 | -- | 2,823 | |||||||||||||
| Jack Egan, | 2006 | $ | 280,087 | $ | 30,000 | -- | $ | 3,571 | |||||||||
| Senior Vice President and | 2005 | 232,104 | 19,500 | -- | 3,495 | ||||||||||||
| Chief Financial Officer (10) | 2004 | 206,038 | 5,000 | -- | 3,251 | ||||||||||||
_________________
| (1) | Includes compensation deferred under the Company’s deferred compensation plan and under Section 401(k) of the Internal Revenue Code of 1986, as amended. |
| (2) | Amounts in fiscal 2006 include (i) premiums under the Company’s group life insurance policy ($682 for Jerome Shaw, |
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| (3) | William Shaw passed away in March 2006 and his compensation through March 2006 is reflected in the table. Such compensation includes accrued vacation pay. |
| (4) | Steven A. Shaw was elected President and Chief Executive |
| (5) | Jerome Shaw’s annual base salary was increased to $520,000 effective June 12, 2006. |
| (6) | Howard Weinreich’s annual base salary was increased to $318,000 effective April 10, 2006. |
| (7) | A substantial portion of this amount is related to services in connection with the sale of the Company’s real estate during fiscal 2004. |
| (8) | Thomas Daley’s annual base salary was increased to $350,000 effective June 12, 2006. |
| (9) | Based on combined pre-tax income and |
| (10) | Jack Egan’s annual base salary was increased to $300,000 effective March 13, 2006. |
Option Grants in fiscal 2005 include (i) premiums under the Company's group
life insurance policy ($702 for each of William Shaw and Jerome Shaw,
$351 for each of Steven A. Shaw, Thomas Daley and Howard B. Weinreich
and $337 for James J. Groberg) and (ii) the Company's contribution
under the 401(k) Plan feature of the Savings Plan ($2,336 for William
Shaw, $2,673 for Jerome Shaw; $2,951 for Steven A. Shaw; $2,633 for
Thomas Daley and $2,355 for Howard B. Weinreich).
(3) Based on combined pre-tax income and improvement in performance of
divisions for which Mr. Daley has management responsibility.
(4) See also "Related Party Transactions".
(5) A substantial portion of this amount is related to services in
connection with the sale of the Company's real estate during fiscal
2004.
10
OPTION GRANTS IN LAST FISCAL YEAR
Last Fiscal Year
No options were granted by the Company during fiscal 20052006 to the Named Executive Officers.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
Stock Option Exercises and Fiscal Year-End Values
The following table sets forth certain information concerning shares of Common Stock of the Company subject to unexercised options held at October 30, 200529, 2006 by the Named Executive Officers:
| Name | Shares Deemed Acquired On Exercise | Value Realized | Name Number of Shares Underlying Unexercised Options at Fiscal Year-End (Exercisable / Unexercisable) | Value of In-the-Money Options at Fiscal Year-End (Exercisable / Unexercisable) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| William Shaw* | 67,500 | $ | 794,398 | - | - | |||||||||
| Steven A. Shaw | 35,750 | 541,418 | 24,750/6,000 | $678,376/$202,540 | ||||||||||
| Jerome Shaw | 67,500 | 431,402 | - | - | ||||||||||
| Howard B. Weinreich | 22,500 | 323,126 | 7,500/3,000 | 106,375/101,270 | ||||||||||
| Thomas Daley | - | - | 12,000/3,000 | 313,756/85,550 | ||||||||||
| Jack Egan | 13,500 | 129,132 | - | - | ||||||||||
*Acquired by Mr. Daley into the Company's General Counsel's
escrow account in accordance with the findingshis Estate.
Compensation of the Company's Audit Committee.
See "Related Party Transactions".
COMPENSATION OF DIRECTORS
Directors
Each director of the Company who is not an officer or employee of the Company receives a director'sdirector’s fee at the annual rate of $45,000 ($50,000 in the case of Mark N. Kaplan in view of his additional responsibilities as Chair of the Audit Committee) and is also reimbursed for out-of-pocket expenses related to his services. The Board of Directors determined that Mr. Kaplan receive an
additional fee of $50,000 as Chair of the Audit Committee and Mr. Turner and Ms.
Havell each receive an additional fee of $30,000 for their services on the Audit
Committee during the 2005 fiscal year, which amounts were paid during the fiscal
year.
Mark N. Kaplan holds an option to purchase 7,50011,250 shares of the Company'sCompany’s Common Stock at an exercise price of $40.03$26.6867, which expires on January 25,26, 2008.
EMPLOYMENT AND TERMINATION AGREEMENTS
Employment and Termination Agreements
The Company is a party to an employment agreementsagreement dated as of May 1, 1987 with William Shaw and Jerome Shaw. These agreements,This agreement, as amended, provideprovides for the employment of eachJerome Shaw in his present executive capacity at an annual base salary which is presently $485,000$520,000 (subject to increases and additional compensation, including bonuses, from time to time, at the discretion of the Board of Directors). The employment term
12
under eachhis employment agreement continues until the April 30 which is five years next following the giving by either the Company or the executiveJerome Shaw of notice to terminate such employment. The agreementsagreement also provideprovides for service thereafter for the remainder of the executive'sJerome Shaw’s life as a consultant to the Company for annual consulting fees equal to 75% for the first ten years of the consulting period, and 50% for the remainder of the consulting period, of his base salary as in effect immediately prior to the commencement of the consulting period. Upon the death of the executive,Jerome Shaw, the Company will pay to his beneficiary a death benefit equal to three times his annual base salary at the date of death if his death shall have occurred while employed as an executive, 2.25 times his annual base salary at the end of his employment as an executive if his death shall have occurred during the first ten years of the consulting period or 1.5 times his annual base salary at the end of his employment as an executive if his death shall have occurred during the remainder of the consulting period. EachThe employment agreement permits the executiveJerome Shaw to accelerate the commencement of the consulting period if a "change“change in control"control”, as defined in the agreements,agreement, of the Company shall occuroccurs or if the Company'sCompany’s office where the executiveJerome Shaw presently performs his principal services shall beis relocated to a different geographical area. 11
theirhis employment agreements, William Shaw andagreement, Jerome Shaw areis prohibited from engaging in any business competitive with the Company, competing with the Company for its customers or encouraging employees of the Company to leave their employment. These restrictions apply for the duration of the respective
agreementsagreement and for one year thereafter if the executive'sJerome Shaw’s employment shall have been terminated by the Company "for“for cause,"” as defined in the agreement. William
Shaw and Jerome Shaw will not be bound by these restrictions after a "change“change in control,"” as defined in the agreement, of the Company shall have occurred if, during their respectivehis consulting periods, theyperiod, he shall elect to terminate their
respectivehis employment agreementsagreement and thereby relinquish any further payments or other benefits thereunder.
The Company is a party to an employment agreement with Thomas Daley effective as of the beginning of the Company'sCompany’s 2004 fiscal year, which provides for his continued employment as a Senior Vice President of the Company at an annual base salary which is presently $249,995$350,000 (subject to increases from time to time, at the discretion of the Company). In addition, the agreement provides for quarterly incentives and a year end improvement bonus which are based upon the profitability of certain business units. The employment term under the employment agreement is "at will"“at will” and may be terminated by either the Company or Mr. Daley by giving notice to terminate such employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Company was a party to an employment agreement with the late William Shaw dated May 1, 1987, which required the Company to pay his beneficiary a death benefit equal to three times his annual base salary at the date of his death if his death occurred while he was employed as an executive. Pursuant to that clause of the employment agreement, on March 9, 2006, upon the death of William Shaw, the Company owed a death benefit to his beneficiary in the amount of $1,455,000, payable over 36 months, $323,333 of which has been paid.
The Company is a party to an employment agreement with Jack Egan dated March 16, 2006 which provides for his continued employment as a Senior Vice President and the Chief (Principal) Financial Officer of the Company at an annual base salary which is presently $300,000 (subject to increases from time to time, at the discretion of the Company). The employment term under the agreement is “at will” and may be terminated by the Company or Mr. Egan by giving six months notice to terminate such employment.
The Company is a party to an employment agreement with Ludwig M.Guarino dated May 26, 2006 which provides for his continued employment as a Senior Vice President and Treasurer of the Company at an annual base salary which is presently $275,000 (subject to increases from time to time, at the discretion of the Company). The employment term under the agreement is “at will” and may be terminated by the Company or Mr. Guarino by giving four weeks notice to terminate such employment.
13
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
Decisions regarding the cash compensation of the Company's co-chief executive
officersCompany’s Chief Executive Officer are made either by the Compensation Committee or the Board of Directors, on recommendation of the Compensation Committee.
RELATED PARTY TRANSACTIONS
Related Party Transactions
During the Company's fiscal year ended October 30,2006, 2005 Troutman Sanders LLP,
of which firm Lloyd Frank has been Counsel since April 1, 2005, provided legal
services toand 2004, the Company. The Company paid or accrued $313,000$0.9 million, $0.8 million and $1.9 million, respectively, to that firm for
such services. Prior thereto,the law firms of which Lloyd Frank, a director of the Company, paid an additional $573,000 to Jenkens
& Gilchrist Parker Chapin LLP, the law firmis or was of which Mr. Frank was Counsel from
November 1, 2004 through March 31, 2005,counsel, for services rendered by that firm
while Mr. Frank was Counsel to it. Troutman Sanders LLP has been retained to
provide legal services to the Company during fiscal 2006.
During the Company's fiscal year endedand expenses reimbursed.
In October 30, 2005, Hinckley, Allen &
Snyder LLP, of which firm Bruce G. Goodman is a partner, provided legal services
to2006, the Company purchased 300,000 shares (adjusted for which it was paid $5,000, and that firm has been retained to
provide legal services to the Company during fiscal 2006.Company’s January 2007 stock split in the form of a stock dividend) of Common Stock from the Estate of William Shaw at a price of $26.50 per share, for a total of $7,950,000. The Company renders various payroll and related servicesintends to use these shares to fund awards under the Volt Information Sciences, Inc. 2006 Incentive Stock Plan. The shares were purchased at a corporation
primarily owned by Steven A. Shaw, an officer and director, forprice below the price at which the Company received approximately $5,000 in excess of its direct costs in fiscal
2005. Such services are performed on a basis substantially similar to those
performed by the Company for and at substantially similar rates as charged by
the Company to unaffiliated third parties. In addition, the Company rents
approximately 2,600 square feet of office space to that corporation in the
Company's El Segundo, California facility (which space is located within the
Company's facility and shares common areas), which the Company does not require
for its own use, on a month-to-month basis at a rental of $1,750 per month.
BasedCompany’s Common Stock was then being traded on the nature ofNew York Stock Exchange. The decision to make the premises and a report from a real estate broker, the
Company believes the rent is a fair and reasonable rate for the space.
In 2005, after an investigation conductedpurchase was made by independent counsel appointed by
the Audit Committee of the Board of Directors which delegated negotiation of the Audit Committee concluded
thatprice to senior management of the Company.
In fiscal 2006, the Company advanced $162,400 directly to the attorneys for Mr. Thomas Daley, an executive officer of the Company ($95,800 of which had been reported in July, 2005,
exercised options and sold the underlying shares of stock ofCompany’s proxy statement for its 2006 annual meeting). In fiscal 2006, the Company in
violation of the Company's Insider Trading Policy. The Audit Committee required
Mr. Daley to pay $31,500, representing the difference between the price at which
Mr. Daley sold the stock and the average market price of the Company's stock
over the three days following the Company's
12
release of its 3rd quarter results, and pay a further penalty of $10,000. These
moneys have been paid by Mr. Daley to the Company's General Counsel's attorney
escrow account. The matter was self-reported on behalf of the Company to the
SEC, which has advised independent counsel to the Audit Committee that no
enforcement action has been recommended at this time. In connection with this
matter, the Audit Committee recommended that the Company advance Mr. Daley's
legal fees upon his entering into a written agreement to repay such fees if it
were ultimately determined that he was not entitled to be indemnified for legal
expenses under applicable law. The Company has advanced to date $95,800 directly
to Mr. Daley's attorneys in connection with such matter. The Company has also paid to date$336,100 for legal fees of the independent counsel to the Audit Committee of approximately $260,000 associated with this matter.
The brother of Daniel Hallihan, an executive officer of the Company was
employed during fiscal 2005($260,000 of which had been reported in the Company's Computer Systems segment in an
inventory control positionCompany’s proxy statement for a compensation that is less than that specified
in Item 404 of Regulation S-K. The Company believes that he has been employed on
the same terms that the Company would employ a similarly situated unrelated
individual.
its 2006 annual meeting).
From time to time the Company has employed, and will continue to employ, relatives of executive officers, as well as relatives of other full time employees, during the summer months and in its Staffing Solutions Group. The Company believes that it has always employed, and will continue to employ, those individuals on substantially the same terms that it employs unrelated individuals.
REPORT WITH RESPECT TO EXECUTIVE COMPENSATION DETERMINATIONS
individuals and for a compensation that is less than the amount specified in Item 404 of Regulation S-K.
Report With Respect to Executive Compensation Determinations
The following report with respect to the Company'sCompany’s compensation policies applicable to the determination of the compensation of the Company'sCompany’s executive officers for fiscal 20052006 is presented by the Compensation Committee.
EXECUTIVE COMPENSATION.
Executive Compensation. Compensation of executive officers is currently comprised of
salary as a base compensation and bonuses.
All determinations as to the compensation of an executive officer who is also a member of the Board of Directors are made on an individual basis by the Compensation Committee after consultation with senior management or by the Board of Directors on the recommendation of the Compensation Committee. In making its decisions as to base salary, the Compensation Committee gives effect to the executive'sexecutive’s performance and responsibilities, inflationary trends competitive
market conditions and other subjective factors, without ascribing specific weights to these factors. Bonuses are based upon the Company's,Company’s, a segment'ssegment’s or a division'sdivision’s performance, as well as the executive'sexecutive’s overall performance, contribution toward the Company'sCompany’s profitability, meeting corporate objectives and, in certain instances, meeting specific corporate goals or completing specific programs or projects. The compensation (salary and bonuses) of executive officers who are not members of the Board of Directors is determined by senior management utilizing similar subjective criteria.
In fiscal 2006, the Compensation Committee approved all executive officer bonuses.
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The Company has utilized stock options to provide long-term incentive compensation to key employees, including executive officers, of the Company and its subsidiaries.
CO-CHIEF EXECUTIVE OFFICER COMPENSATION.
Co-Chief Executive Officer Compensation. The annual compensation of William Shaw, the Company's ChiefCompany’s former co-Chief Executive Officer, iswas fixed under the terms of his Employment Agreement with the Company (discussed under "Executive“Executive Remuneration - --— Employment and Termination Agreements,"” above), subject to increases and
additional compensation, including bonus, from time to time, at the discretion
of the Board of Directors. In determining whether to increase Mr. Shaw's base
salary or award bonuses or other additional compensation, the Board of Directors
uses similar criteria as it does for other executive officers who are directors.
The annual compensation of Mr. Shaw was increased by $35,000 during fiscal 2005.
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The annual compensation of Steven A. Shaw, the Company's Co-ChiefCompany’s current Chief Executive Officer, was increased by $50,000 to $305,000$355,000 when he was appointed to that position in March 2006 and was increased again to $520,000 effective June 12, 2006, is subject to increases and additional compensation, including bonus, from time to time, at the discretion of the Board of Directors. CERTAIN TAX LEGISLATION.The most recent salary increase was based upon an executive compensation report prepared by the Company’s Vice President, Human Resources, at the request of the Compensation Committee. The report contained an analysis and recommendation on compensation of chief executive officers of the Company’s competitors, and included base salary and bonus data for chief executive officers in the staffing services industry as well as for some companies of approximately the same size as the Company, as well as other data.
Certain Tax Legislation. Section 162(m) of the Internal Revenue Code of 1986 ("(“Section 162(m)"”) precludes a public company from taking a federal income tax deduction for annual compensation in excess of $1,000,000 paid to either of the Company'sCompany’s co-chief executive officers or any of the Company'sCompany’s four other most highly compensated executive officers. Certain "performance“performance based compensation"compensation” is excluded from the deduction limitation. All of the fiscal 20052006 compensation of itsthe Company’s executive officers is tax deductible. Options previously granted by the Board are not deemed "performance“performance based compensation"compensation” under Section 162(m). Therefore, the difference between the market value of the Company'sCompany’s Common Stock underlying those stock options at the date of their exercise and the exercise price of the options will be taken into account in determining whether the $1,000,000 Section 162(m) limitation is exceeded.
Respectfully,
William H. Turner, Chair
Lloyd Frank
Theresa A. Havell,
Mark N. Kaplan
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SHAREHOLDER RETURN PERFORMANCE GRAPH
| Respectfully, | |
| William H. Turner, Chair | |
| Lloyd Frank | |
| Theresa A. Havell | |
| Mark N. Kaplan |
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Shareholder Return Performance Graph
The Company'sCompany’s Common Stock has been listed on the New York Stock Exchange since May 7, 1997. The following graph compares the cumulative total shareholder return to holders of the Company'sCompany’s Common Stock with (a) the New York Stock Exchange Stock Market Index and (b) securities of companies traded on the New York Stock Exchange having market capitalizations that are within 5% of the market capitalization of the Company'sCompany’s Common Stock as at the end of the Company'sCompany’s latest fiscal year-end (this peer group has been historically selected by the Company because the Company has operated in four diverse business segments). The comparison assumes $100 was invested on November 3, 20004, 2001 in the Company'sCompany’s Common Stock and in each of the comparison groups, and assumes reinvestment of dividends (the Company paid no dividends during the periods):
COMPARE 5-YEAR
COMPARISON OF CUMULATIVE TOTAL REURN
AMONG VOLT INFORMATION SCIENCES, INC.
NYSE MARKET INDEX ANDRETURN OF ONE OR MORE
COMPANIES, PEER GROUP INDEX
[GRAPH OMITTED]
ASSUMES $100 INVESTED ON NOV. O3, 2000
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING OCT. 30, 2005
2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----
VOLT INFORMATION SCIENCES, INC. $100.00 $52.18 $61.84 $80.46 $133.56 $85.75
PEER GROUP INDEX $100.00 $62.06 $54.45 $79.21 $78.38 $80.52
NYSE MARKET INDEX $100.00 $83.50 $73.56 $89.55 $99.88 $111.83
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| VOLT INFORMATION SCIENCES, INC | $ | 100.00 | $ | 118.50 | $ | 154.18 | $ | 255.95 | $ | 164.32 | $ | 360.09 | ||||||||
| PEER GROUP INDEX | $ | 100.00 | $ | 80.80 | $ | 103.78 | $ | 106.85 | $ | 111.23 | $ | 128.32 | ||||||||
| NYSE MARKET INDEX | $ | 100.00 | $ | 88.10 | $ | 107.24 | $ | 119.62 | $ | 133.93 | $ | 158.13 | ||||||||
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, requiresas amended, and the Company'sregulations thereunder require the Company’s executive officers and directors, and persons who beneficially own more than 10% of the Company'sCompany’s Common Stock, to file initial reports of ownership, and reports of changes of ownership, of the Company'sCompany’s equity securities with the SEC and furnish copies of those reports to the Company. Based solely upon a review of the copies of the reports furnished to the Company to date and representations that no reports were required, the Company believes that all reports required to be filed by such persons with respect to the Company'sCompany’s fiscal year ended October 30, 200529, 2006 were timely filed, except for one Form 4 filed late for each of Steven
A. Shaw, Jerome Shaw and Lloyd Frank.
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RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors of the Company has, subject to shareholder ratification, selected Ernst & Young as the independent registered public accounting firm to audit the Company'sCompany’s financial statements for the fiscal year ending October 29, 2006.28, 2007. Ernst & Young did not render consulting services to the Company during the Company's 2005Company’s 2006 fiscal year.
AUDIT FEES
Audit Fees
Audit fees billed by Ernst & Young for its audits of the annual financial statements of the Company and its subsidiaries for fiscal 20042005, the audit of the Company’s internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act and for its reviews of the financial statements included in Quarterly Reports on Form 10-Q filed with the SEC for that year aggregated $1,128,110.$4,157,500. For fiscal 20052006 audit fees also include the performance of the audit of the Company's internal
controls over financial reporting under Section 404 of the Sarbanes-Oxley Act
and related regulations and aggregate $2,708,000.aggregated $4,830,000. The Company did not, prior to filing this definitive proxy statement with the SEC, receive a final bill for audit fees from Ernst & Young. In accordance with the FAQ issued by the Office of the Chief Accountant of the SEC dated January 16, 2001 (superseded on other issues by the Application of the SEC'sSEC’s Rules on Auditor Independence (December 13, 2004)), the Company has asked Ernst & Young for the amount that is expected to be billed for such services, and Ernst & Young has replied that it expects to bill the Company approximately an additional $1.9 million.$800,000. The Company has not yet received nor reviewed any supporting documentation for these charges.
AUDIT-RELATED FEES
Audit-Related Fees
Audit-related fees for services rendered in connection with employee benefit plans and other accounting consultations for fiscal 20042005 were $407,300$319,200 and for fiscal 20052006 were $319,200.
TAX FEES
$336,600.
Tax Fees
The aggregate fees billed by Ernst & Young for tax compliance, tax advice and tax planning for fiscal 2004the years ended October 30, 2005 and October 29, 2006 were $184,200$152,200 and for fiscal 2005 were $152,200.
ANTICIPATED ATTENDANCE BY ERNST$127,100, respectively.
Anticipated Attendance by Ernst & YOUNG AT THE ANNUAL MEETING
Young at the Annual Meeting
Ernst & Young has indicated to the Company that it intends to have a representative present at the Annual Meeting who will have the opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.
REQUIRED VOTE
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APPROVAL OF THE ADOPTION BY THE BOARD OF DIRECTORS OF THEVOLT
INFORMATION SCIENCES, INC. 2006 INCENTIVE STOCK PLAN
On September 6, 2006 the Company’s Board of Directors unanimously adopted the Volt Information Sciences, Inc. 2006 Incentive Stock Plan which was amended and restated on January 8, 2007 (the “Plan”). The Board of Directors is recommending that shareholders approve the Plan, which is designed to provide expanded equity compensation opportunities for employees and non-employee directors of the Company and any 50 percent or more owned subsidiaries (collectively referred to as the “Company” in this Proposal Three) who are selected to receive awards under the Plan (sometimes referred to as “participants” below).
The following summary of the Plan is qualified in its entirety by reference to the full text of the Plan, a copy of which is attached as Exhibit A resolutionto this Proxy Statement and is incorporated herein by reference.
Purpose of the Plan
The Plan permits the grant of Incentive Stock Options (“ISOs”), Non-Qualified Stock Options (“NQSOs”), Restricted Stock and Restricted Stock Units to employees of the Company and its subsidiaries; and NQSOs, Restricted Stock and Restricted Stock Units to non-employee directors. The purpose of the Plan is to promote the success of the Company and its subsidiaries by providing incentives to employees and non-employee directors that will promote the identification of their personal interest with the long-term financial success of the Company and with growth in shareholder value. The Plan is designed to provide flexibility to the Company and its subsidiaries, in its ability to motivate, attract, and retain the services of employees and non-employee directors upon whose judgment, interest, and effort the successful conduct of its operations is largely dependent.
Description of the Plan
Plan Term.The Plan became effective on September 6, 2006 (the “Effective Date”), subject to the approval by vote of shareholders of the Company and, if approved, will expire on September 5, 2016 except with respect to awards made prior to, and outstanding on, that date which will remain valid in accordance with their terms. Awards of ISOs, NQSOs and Restricted Stock Units may be granted under the Plan on or after the Effective Date of the Plan and prior to the date of shareholder approval of the Plan, provided, however, that if granted prior to the date of shareholder approval of the Plan, each such award will be submittedexpressly subject to shareholders at the Annual Meeting for the
ratificationapproval of the selectionPlan by vote of shareholders of the Company, and if such shareholder approval is not obtained, the Plan and all such awards previously granted under the Plan will terminate and become null and void. No awards have been granted under the Plan as of the date hereof.
Administration. With respect to awards to employees, the Plan will be administered by a committee of the Board of the Directors (the “Committee”) which will consist of at least two persons, each of whom will be a non-employee director as defined in Rule 16b-3, as amended, under the Securities Exchange Act of 1934, as amended, or any similar or successor rule, and “outside directors” within the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the “Code”). Unless otherwise determined by the AuditBoard of Directors, with respect to awards to employees, the Committee will consist of the Compensation Committee of the Board of Directors. Unless otherwise determined by the Board of Directors, with respect to awards to non-employee directors, the Committee will consist of the entire Board of Directors of Ernst & Youngthe Company. References to the Committee herein are intended to mean the applicable Committee (that is, the Compensation Committee in connection with determinations involving awards to employees and the Board of Directors in connection with determinations involving awards to non-employee directors).
The Committee will have the authority to grant awards under the Plan, from time to time, to such employees and/or non-employee directors as may be selected by the Committee. Each award will be
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evidenced by an agreement. In addition, the Committee will have the following specific powers: to determine the terms and conditions upon which the awards may be made, exercised and paid; to determine all terms and provisions of each award agreement, which need not be identical; to construe and interpret the award agreements and the Plan; to establish, amend, or waive rules or regulations for the Plan’s administration; to accelerate the exercisability of any award or the termination of any period of restriction or other restrictions imposed under the Plan; to change performance goals (subject to limitations under Section 162(m)(4)(C) of the Code for awards that are intended to qualify as performance-based compensation thereunder); and to make all other determinations and take all other actions necessary or advisable for the administration of the Plan. All determinations and decisions made by the Committee pursuant to the provisions of the Plan will be final, conclusive and binding.
The number of shares subject to each outstanding award, the option price for options, and the annual limits on and the aggregate number and class of shares for which awards thereafter may be made will be proportionately, equitably and appropriately adjusted, as the independent registered publicCommittee in its sole and absolute discretion deems appropriate, to retain the economic value or opportunity to reflect such events as stock dividends, stock splits, recapitalizations, mergers, consolidations, or reorganizations of or by the Company.
Eligibility. Only employees and non-employee directors of the Company and its subsidiaries are eligible to receive awards under the Plan. The Committee or the Board of Directors will determine which employees will participate in the Plan and will determine the terms of any grants to employees and non-employee directors. As of February 16, 2007 there were approximately 400 employees and 6 non-employee directors who would be eligible to participate in the Plan.
Shares Available for Grants. The maximum number of shares of the Company’s Common Stock available for issuance under the Plan is 1,500,000. If any award granted terminates, expires, lapses, or is forfeited for any reason, the shares of Common Stock subject to such award will be available for future awards. In addition, if the exercise price for a stock option is paid using previously acquired shares of Common Stock, the number of shares of Common Stock available for future awards under the Plan will be reduced only by the net number of new shares of Common Stock issued upon the exercise of the option. Similarly, if shares of Common Stock are surrendered by a participant as full or partial payment of withholding taxes, or if the number of shares of Common Stock otherwise deliverable is reduced for payment of withholding taxes, the number of shares of Common Stock surrendered or withheld will again be available for future awards under the Plan.
Annual Limits on Awards. Under the Plan, there are limits on the number of shares of Common Stock with respect to which awards may be made to any one individual in any calendar year as follows: stock options: 100,000 shares; restricted stock: 100,000 shares; and restricted stock units: 100,000 units.
Section 162(m) Performance-Based Awards. Awards may be granted that do or do not qualify as “performance-based compensation” under Section 162(m) of the Code.
Under Section 162(m), compensation paid to the Chief Executive Officer, the Chief Financial Officer and any other executive officer reported in the summary compensation table in a tax year is not deductible if it exceeds $1,000,000 unless it is “performance-based” compensation. Stock options are deemed to be performance-based compensation if the exercise price of the options to which the award relates is at least equal to fair market value of those shares on the date of the award and if the maximum number of shares available for awards is disclosed to and approved by shareholders. Awards of Restricted Stock and Restricted Stock Units under the Plan may be performance-based compensation if earning of such awards is based on achievement of objective performance goals set by a Committee and the material terms of the compensation or benefit to be paid, including the performance goals that may be used and the maximum that may be paid to any employee, are disclosed to and approved by shareholders before payment. In the case of such awards, the Committee must determine and certify the extent to which the applicable performance goals and any other material terms are, in fact, satisfied.
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The performance goals for Section 162(m) performance-based compensation with respect to the Plan will be determined by the Committee from the list of available performance measures (defined as “Performance Goals”) specified in the Plan; may be equal to, less than, or more than one year and may not be the same for all participants; may relate to performance of a subsidiary, division, strategic business unit or line of business; or may be based on the performance of the Company generally.
Performance Goals under the Plan.The Committee may, but is not limited to, adopt some or all of the following performance goals:
Performance goals may include a threshold level of performance below which no payment or vesting may occur, levels of performance at which specified payments or specified vesting will occur and a maximum level of performance above which no additional payment or vesting will occur. Performance goals may be absolute in their terms or measured against or in relationship to a market index; a group of other companies comparably, similarly, or otherwise situated; or a combination thereof. Each of the performance goals will be determined, where applicable and except as provided above, in accordance with generally accepted accounting firmprinciples. Once performance goals are established for an award, the Committee may adjust the evaluation of performance for certain significant events outlined in the plan, subject to auditany limitations under Section 162(m) of the Company's financial statementsCode for awards intended to be “performance-based” compensation for Section 162(m) purposes.
Generally, under the design of the Plan, all awards of stock options qualify as performance-based compensation. In addition, the Plan has been designed to enable any other award granted by the Committee, to the extent it so elects in establishing the award terms, to qualify as performance-based compensation.
Option Awards.The Committee may grant an employee either an ISO or a NQSO and may grant a non-employee director an NQSO. The Committee has complete discretion in determining the number of shares of Common Stock subject to options granted to each participant, provided, however, that (i) no participant may be granted options in any calendar year for more than One Hundred Thousand (100,000) shares, (ii) the aggregate fair market value (determined in accordance with the Plan at the time the award is made) of shares with respect to which any participant may first exercise ISOs granted under the Plan during any calendar year may not exceed $100,000 or such amount as will be specified in Section 422 of the Code and rules and regulations thereunder, (iii) no ISO may be granted on or following the tenth anniversary of the earlier of the Effective Date of the Plan or the date of shareholder approval of the Plan, and (iv) no ISO may be granted to a non-employee director.
The exercise price per share of Common Stock covered by an option (“Option Price”) will be determined by the Committee subject to the following limitations: The Option Price will not be less than 100% of the fair
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market value (generally the closing market price) of such Common Stock on the date of grant of the option. In addition, in order for an option to be an ISO where an Option is granted to an employee who, at the time of grant, owns (within the meaning of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the Option must have an Option Price which is at least equal to 110% of the fair market value of the Common Stock on the date of grant.
Each option will expire at such time as the Committee will determine at the time of grant, provided, however, that no ISO will be exercisable after the expiration of ten years from its date of grant (unless on that day the exchange on which the Common Stock then trades is closed, in which case those options will expire on the next day on which such exchange is open). In addition, in order for an option to be an ISO where an option is granted to an employee who, at the time of grant, owns (within the meaning of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option must not be exercisable after the expiration of five years from its date of grant.
Subject to the Committee’s determination, the Option Price of any option may be paid in cash, by delivery of previously held or owned Company shares valued at fair market value at the time of exercise, through an approved “cashless exercise,” or by delivery of a promissory note (in the Committee’s discretion and subject to restrictions and prohibitions of applicable law), or by a combination of these methods.
Restricted Stock.The Committee will have complete discretion in determining the number of shares of Restricted Stock granted under the Plan to employees and non-employee directors, provided, however, that no participant may be granted more than One Hundred Thousand (100,000) shares of Restricted Stock in any calendar year. Participants receiving Restricted Stock awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services. As determined by the Committee, shares of Restricted Stock may be issued in book-entry or electronic form or in certificated form. Unless otherwise determined by the Committee, custody of shares of Restricted Stock in certificated form will be retained by the Company or held in escrow by an escrow agent selected by the Committee until the termination of the period of restriction pertaining thereto.
Each Restricted Stock award will be evidenced by an agreement that will specify the period of restriction (the “Period of Restriction”), the number of shares of Restricted Stock granted, and the applicable restrictions (whether service-based restrictions, with or without performance acceleration, and/or performance-based restrictions) and such other provisions as the Committee will determine. Shares of Restricted Stock covered by each Restricted Stock award made under the Plan will become freely transferable by the participant after the last day of the Period of Restriction and, where applicable, after a determination of the satisfaction or achievement on any applicable performance goal(s) by the Committee.
Unless otherwise provided in the agreement, holders of Restricted Stock will have voting rights with respect to the shares of Common Stock which are Restricted Stock.
Unless otherwise provided in the agreement (which may or may not provide for the fiscalaccumulation and payment of dividends and other distributions made in cash or property other than shares until the shares of Restricted Stock to which the dividends and other distributions relate vest), during the Period of Restriction, participants entitled to or holding shares of Restricted Stock granted under the Plan will be entitled to receive all dividends and other distributions made in cash or property other than shares with respect to those shares of Restricted Stock. If any dividends or distributions are paid in shares, such shares will be subject to the same restrictions on transferability and the same rules for vesting, forfeiture, and custody as the shares of Restricted Stock with respect to which they were distributed.
In the event that the specified performance goal(s) are not satisfied within the time period established by the Committee, the shares of Restricted Stock which were awarded subject to the satisfaction of such performance goal(s) will be automatically forfeited and returned to the Company. However, in the case
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of an award not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee may waive all or any part of the performance goal(s) and provide for vesting of the award on such basis as it deems appropriate.
Restricted Stock Units.The Committee will have complete discretion in determining the number of Restricted Stock Units granted under the Plan (with one Restricted Stock Unit representing one share of Common Stock) to such employees and non-employee directors and in such amounts as it will determine, provided, however, that no participant may be granted more than One Hundred Thousand (100,000) Restricted Stock Units in any calendar year. Participants receiving Restricted Stock Unit awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.
Each Restricted Stock Unit award will be evidenced by an agreement that will specify the period of restriction (the “Period of Restriction”), the number of Restricted Stock Units granted, and the applicable restrictions (whether service-based restrictions, with or without performance acceleration, and/or performance-based restrictions) and such other provisions as the Committee will determine.
Holders of Restricted Stock Units will not have the right to vote the shares of Common Stock represented by the Restricted Stock Units. Unless otherwise provided in the agreement (which may or may not provide for the current payment, or for the accumulation subject to the same restrictions, vesting, forfeiture, and payment as the Restricted Stock Units to which they are attributable, of dividends and other distributions made in cash or property other than shares of Common Stock), during the Period of Restriction, participants holding Restricted Stock Units will have no rights to dividends and other distributions made in cash or property other than shares of Common Stock which would have been paid with respect to the shares of Common Stock represented by those Restricted Stock Units if such shares of Common Stock were outstanding. Unless otherwise provided in the agreement, if any deemed dividends or other distributions would be paid in shares of Common Stock, such shares of Common Stock will be considered to increase the participant’s Restricted Stock Units with respect to which they were declared based on one share of Common Stock equaling one Restricted Stock Unit. In addition, unless otherwise provided in the agreement, during the Period of Restriction, any such deemed dividends and other distributions for which rights are provided but which are not paid currently will be deemed converted to additional Restricted Stock Units based on the fair market value of a share of Common Stock on the date of payment or distribution of the deemed dividend or distribution.
Subject to the provisions of the agreement, upon the lapse of restrictions with respect to a Restricted Stock Unit, the participant is entitled to receive, without any payment to the Company (other than required tax withholding amounts), an amount equal to the product of multiplying (i) the number of shares of Common Stock with respect to which the restrictions lapse by (ii) the fair market value per share of Common Stock on the date the restrictions lapse (such amount, the “RSU Value”).
The agreement may provide for payment of the RSU Value at the time of vesting or, on an elective or non-elective basis, for payment of the RSU Value at a later date, adjusted (if so provided in the agreement) from the date of exercise based on an interest, dividend equivalent, earnings, or other basis (including deemed investment of the RSU Value in shares) set out in the agreement. The Committee is expressly authorized to grant Restricted Stock Units which are deferred compensation covered by Section 409A of the Internal Revenue Code, as well as Restricted Stock Units which are not deferred compensation covered by Section 409A of the Code.
In the event that the specified performance goal(s) are not satisfied within the time period established by the Committee, the Restricted Stock Units which were awarded subject to the satisfaction of such performance goal(s) will be automatically forfeited and returned to the Company. However, in the case of an award not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee may waive all or any part of the performance goal(s) and provide for vesting of the award on such basis as it deems appropriate.
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Federal Income Tax Consequences of Options Granted under the Plan
The following is a brief summary of the federal income tax consequences relating to options granted under the Plan based upon the federal income tax laws in effect on the date hereof (other than the compensation deduction limit under Section 162(m) of the Code that is described above). This summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences.
ISOs. A participant who receives an ISO will not be subject to taxation at the time of grant or exercise (if exercised not more than three months, or one year ending October 29, 2006.
if the participant is disabled, after ceasing to be an employee of the Company), nor will the Company be entitled to a deduction for federal income tax purposes at such times. However, the excess of the fair market value of shares on the date of exercise over the Option Price is a tax preference item for purposes of determining a participant’s alternative minimum tax. If an ISO is exercised more than three months, or one year if the participant is disabled, after ceasing to be an employee of the Company, the option will be treated as an NQSO for federal income tax purposes.
A disposition of the shares acquired on exercise of an ISO after the expiration of the required holding period at a gain will generate long-term capital gain in the year of disposition, and the Company will not be entitled to a deduction for federal income tax purposes. A disposition of the shares acquired on exercise of an ISO prior to the expiration of the applicable holding period (a disqualifying disposition) will subject the participant to taxation as ordinary compensation income in the year of disposition in an amount equal to the excess of the fair market value of shares on the date of exercise over the Option Price (or, if less, the excess of the amount realized on the disposition over the Option Price), and the Company generally will be entitled to a corresponding deduction for federal income tax purposes at that time. The applicable holding period is the longer of two years from the date of grant or one year from the date of exercise. A participant’s basis in the shares acquired on exercise of an ISO is equal to the exercise price paid plus any amount includible in income as a result of a disqualifying disposition.
NQSOs. An NQSO award results in no taxable income to the participant receiving the award or deduction to the Company at the time of grant. A participant who exercises an NQSO will realize ordinary compensation income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. The Company generally will be entitled to a corresponding deduction for federal income tax purposes at that time.
Change in Control
In the event of a Change in Control (as defined in the Plan) of the Company, the Committee, as constituted before such Change in Control, in its sole discretion may, as to any outstanding award, either at the time the award is made or any time thereafter, take any one or more of the following actions: (i) provide for the acceleration of any time periods relating to the exercise or realization of any such award so that such award may be exercised or realized in full on or before a date initially fixed by the Committee; (ii) provide for the purchase or settlement of any such award by the Company, with or without a participant’s request, for an amount of cash equal to the amount which could have been obtained upon the exercise of such award or realization of such participant’s rights had such award been currently exercisable or payable; (iii) make such adjustment to any such award then outstanding as the Committee deems appropriate to reflect such Change in Control; or (iv) cause any such award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation in such Change in Control.
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Modification, Extension, and Renewals of Awards
Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify, extend, or renew outstanding awards and may modify the terms of an outstanding agreement, provided that the exercise price of any award may not be lowered other than pursuant to provisions of the Plan which allow equitable and appropriate adjustments as the Committee in its sole discretion deems appropriate to reflect certain events. In addition, the Committee may accept the surrender of outstanding awards granted under the Plan or outstanding awards granted under any other equity compensation plan of the Company and authorize the granting of new awards pursuant to the Plan in substitution therefor so long as the new or substituted awards do not specify a lower exercise price (if the awards contain an exercise price) than the surrendered awards or awards and are not of a different type (with ISOs and NQSOs collectively being one type and all other awards being a different type), and otherwise, the new awards may specify a longer term than the surrendered awards or awards, may provide for more rapid vesting and exercisability than the surrendered awards or awards, and may contain any other provisions that are authorized by the Plan. Notwithstanding the foregoing, however, no modification of an award will, without the consent of the participant, adversely affect the rights or obligations of the participant.
Amendment, Modification, and Termination of the Plan
At any time and from time to time, the Board of Directors may terminate, amend, or modify the Plan. Such amendment or modification may be without shareholder approval except to the extent that such approval is required by the Code, the rules and regulations of the exchange on which the Company’s shares are listed, or pursuant to any other applicable laws, rules or regulations. No termination, amendment, or modification of the Plan, other than pursuant to the Plan, will in any manner adversely affect any award theretofore granted under the Plan, without the written consent of the participant.
Governing Law
The Plan has been adopted in New York, New York and all agreements thereunder will be deemed to have been entered into in New York, New York. The Plan, and all agreements thereunder, will be governed, construed, and administered in accordance with the laws of the State of New York applicable to contracts made and to be performed solely in the State of New York, and the intention of the Company is that ISOs granted under the Plan qualify as such under Section 422 of the Code. Any dispute under this Plan or under any agreement thereunder, will be adjudicated solely and exclusively in the Courts of the State of New York located in the borough of Manhattan, City and State of New York, and the Federal Court for the Southern District of New York, and no other Court will have jurisdiction of this Plan, any agreement issued under the Plan, any award issued under the Plan, or any dispute thereunder.
Unfunded Status of Plan
The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments as to which a participant has a fixed and vested interest but which are not yet made to a participant by the Company, nothing contained herein will give any such participant any rights that are greater than those of a general unsecured creditor of the Company.
The Board of Directors’ current intention is to fund the Plan by purchasing shares of Common Stock on the open market. However, the Board of Directors may utilize authorized but unissued shares in its discretion to make awards under the Plan.
Termination of Employment or Service
Unless otherwise provided in the agreement pertaining to an award, in the event that a participant’s employment or service with the Company and its subsidiaries terminates for any reason, then the unvested portion of such award will automatically be forfeited to the Company.
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Non-Transferability
Except for certain permitted transfers to family members and trusts (other than with respect to ISOs), awards granted under the Plan generally may not be assigned, transferred, pledged or otherwise encumbered by a participant, other than by will or the laws of descent and distribution.
Required Vote and Recommendation
The affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy will be required to adopt this resolution.the Plan. The Board of Directors recommends a vote "FOR" this resolution.“FOR” approval of the Volt Information Sciences, Inc. 2006 Stock Incentive Plan. Abstentions and broker non-votes will have no effect on the outcome of the vote on this proposal.
If
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information as of February 12, 2007 with respect to the shares that may be issued under all of the Company’s existing equity compensation plans without regard to the Plan described in this proposal.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity compensation plans | |||||||||||
| approved by security holders | 129,352 | (1) | $ | 16.09 | -- | ||||||
| Equity compensation plans not | |||||||||||
| approved by security holders | -- | -- | -- | ||||||||
| Total | 129,352 | $ | 16.09 | -- | |||||||
_________________
(1) The Company’s 1995 Non-Qualified Stock Option Plan terminated on May 16, 2005 except for options previously granted thereunder.
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PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 30,000,000 to 120,000,000
General
Article Fourth of the Certificate of Incorporation currently authorizes 30,000,000 shares of Common Stock, par value $0.10 per share, and 500,000 shares of Preferred Stock, par value $1.00 per share. Of the 30,000,000 shares of Common Stock currently authorized, 23,480,103 shares of Common Stock were issued and outstanding as of February 16, 2007 and an additional 129,352 shares of Common Stock are currently reserved for issuance under the Company’s 1995 Non-Qualified Stock Option Plan. No shares of Preferred Stock are issued or outstanding.
The holders of the Company’s Common Stock are entitled to one vote per share on all matters submitted to a vote of the Company’s shareholders. In addition, such holders are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor, subject to preferential dividend rights, if any, on shares of the Company’s preferred stock. In the event of the dissolution, liquidation or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities of the Company and the preference amount distributable to the holders of the shares of preferred stock. The holders of Common Stock do not have any subscription, redemption or conversion rights, nor do they have any preemptive or other rights to acquire or subscribe for additional, unissued or treasury shares.
Proposed Amendment
On January 8, 2007, the Board of Directors unanimously adopted a resolution selecting Ernst & Young LLPauthorizing and approving an amendment, subject to stockholder approval, to Article Fourth of the Certificate of Incorporation to increase the authorized number of shares of Common Stock of the Company from 30,000,000 to 120,000,000. The proposed amendment will not change the number of outstanding shares of Common Stock or the par value of the authorized shares, but will provide the Board of Directors with the ability to issue additional shares of Common Stock as it determines to be necessary for proper corporate purposes and in the Company's independent
registered public accounting firmbest interests of the Company.
Consideration in Support of the Proposal
The Board of Directors believes that the increase in the number of authorized shares from 30,000,000 to 120,000,000 will provide the Company with additional flexibility to issue additional shares of Common Stock to meet future business and financial needs and is, adoptedtherefore, in the best interest of the Company’s shareholders. The additional shares of Common Stock may be used for various purposes, including the following:
Moreover, this increase could save the Company the expense and delay of having to hold a special shareholders’ meeting when a specific need arises. These shares of authorized Common Stock would be available for issuance in the future, from time to time, by shareholders, the Audit
Committeeaction of the Board of Directors nevertheless retainswithout shareholder approval, unless otherwise required by law or by a regulation of the discretionNew York Stock Exchange, where the Company’s Common Stock is listed. At this time, the Company has no current or proposed plans to select different auditors should it then deem itissue any of the additional shares of Common Stock which are subject to this Proposal.
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The additional shares of Common Stock to be authorized by the proposed amendment to Article Fourth will have rights identical to the issued and outstanding shares of Common Stock of the Company. Adoption of the proposed amendment and issuance of the additional shares of Common Stock will not affect the rights of the holders of issued and outstanding shares of Common Stock, except for effects incidental to increasing the number of shares of Common Stock outstanding. Existing shareholders will have no preemptive rights to purchase any shares of Common Stock issued in the Company's best
interests. Anyfuture.
Other Considerations
The proposed increase in the authorized number of shares of Common Stock could be deemed to have an anti-takeover effect by discouraging an attempt by a third party to acquire control of the Company because the Company could issue the additional authorized shares of Common Stock in an effort to dilute the share ownership of the person seeking to obtain control or increase the voting power of persons who would support the Board of Directors in opposing the takeover attempt. However, the Board of Directors is not currently aware of any efforts to obtain control of the Company, and the proposal to increase the authorized number of shares of Common Stock is not in response to any such future selection need notefforts.
Required Vote and Recommendation
The affirmative vote of a majority of the of the issued and outstanding shares of the Company’s Common Stock in person or by proxy will be submittedrequired to adopt this Proposal Three. Abstentions and broker non-votes will have the same effect as a vote against the proposal. The Board of shareholders.
16
Although the Company believes that the material provisions of the amendment to the Certificate of Incorporation are set forth above, reference should be made to the text of the amendment, a copy of which is attached as Exhibit B to this Proxy Statement.
27
MISCELLANEOUS
COST OF SOLICITING PROXIES
Cost of Soliciting Proxies
The cost of solicitation of Proxies, including the cost of reimbursing banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding Proxy soliciting material to beneficial owners of Common Stock, will be borne by the Company. Proxies may be solicited without extra compensation by certain officers and regular employees of the Company by mail and, if determined to be necessary, by telephone, telegraph or personal interviews.
INDEMNIFICATION INSURANCE
Householding
Shareholders who hold their shares in the name of their bank or broker and live in the same household as other shareholders may receive only one copy of this Proxy Statement. This practice is known as “householding.” If you hold your shares in your broker’s name and would like additional copies of these materials, please contact your broker. If you receive multiple copies and would prefer to receive only one, please contact your broker as well. The Company does not use householding for the copies of the proxy statement that it delivers to shareholders and will not begin householding without notice to its shareholders.
Indemnification Insurance
New York law permits a corporation to purchase insurance covering a corporation'scorporation’s obligation to indemnify directors and officers and also covering directors and officers individually, subject to certain limitations, in instances in which they may not otherwise be indemnified by the corporation. The Company maintains insurance policies from National Union Fire Insurance Company
of Pittsburgh, PA, Federal Insurance Company and American Casualty Company of
Reading PAwith various insurance companies covering reimbursement to the Company for any obligation it incurs as a result of indemnification of officers and directors and also covering indemnification for officers and directors individually in certain cases where additional exposure might exist. The policies expire May 1, 2006.2007. The annual premium cost of the policies was $692,195.
SHAREHOLDER PROPOSALS
is $590,500.
Shareholder Proposals
From time to time shareholders may present for consideration at meetings of shareholders proposals which may be proper subjects for inclusion in the proxy statement and form of proxy distributed in connection with such meetings. In order to be so included, such proposals must be submitted in writing on a timely basis. Shareholder proposals intended to be included in the Company'sCompany’s proxy statement and form of proxy to be used in connection with the Company's 2007Company’s 2008 Annual Meeting of Shareholders must be received by the Company by October 31, 2006.2007. Any such proposals, as well as any questions relating thereto, should be directed to the Secretary of the Company, 560 Lexington Avenue, New York, New York 10022-2928.
The Company'sCompany’s by-laws, as amended, require shareholders who intend to nominate directors or propose business at any annual meeting to provide advance notice of such intended action, as well as certain additional information, to the Company. Such notice and information must be timely received by the Secretary of the Company at 560 Lexington Avenue, New York, New York 10022-2928 not less than 120 nor more than 150 days prior to the anniversary date of the notice of the annual meeting of shareholders held in the immediately preceding year. However, in the event the date of the annual meeting is changed by more than 30 days from the one year anniversary date of the date the annual meeting was held in such immediately preceding year and less than 130 days informal notice to shareholders or other public disclosure of the date of the annual meeting in the current year is given or made, advance notice of nominations or business proposed by a shareholder must be received by the Company not later than the close of business on the tenth calendar day following the date on which formal or informal notice or public disclosure of the date of the annual meeting is mailed or otherwise first publicly announced,
28
whichever first occurs. Copies of the by-law provision are available upon request made to the Secretary of the Company.
| By Order of the Board of Directors | |
| Jerome Shaw, Secretary |
New York, New York
February 28, 2007
29
EXHIBIT A
VOLT INFORMATION SCIENCES, INC.
2006 INCENTIVE STOCK PLAN
ARTICLE I
Establishment, Purpose, and Duration
1.1Establishment of the Plan. Volt Information Sciences, Inc., a New York corporation (the “Company”), hereby establishes an incentive stock plan for the Company and its Subsidiaries to be known as the “Volt Information Sciences, Inc. 2006 Incentive Stock Plan,” as set forth in this document. Unless otherwise defined herein, all capitalized terms shall have the meanings set forth in Section 2.1 herein. The Plan permits the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock and Restricted Stock Units to Employees and Non-Employee Directors.
The Plan was adopted on September 6, 2006, and was subsequently amended and restated on January 8, 2007, by the Board of Directors of the Company. The Plan shall become effective on September 6, 2006 (the “Effective Date”), subject to a delayed effective date for amendments thereafter adopted by the Board of Directors of the Company and subject to the approval by vote of shareholders of the Company on or before September 5, 2007 in accordance with applicable laws. Awards of Incentive Stock Options, Non-Qualified Stock Options and Restricted Stock Units may be granted under the Plan on or after the Effective Date of the Plan and prior to the date of shareholder approval of the Plan, provided, however, that if granted prior to the date of shareholder approval of the Plan, each such Award shall be expressly subject to the approval of the Plan by vote of shareholders of the Company in accordance with applicable laws on or before September 5, 2007, and if such shareholder approval is not obtained, the Plan and all such Awards previously granted under the Plan shall terminate and become null and void.
1.2Purpose of the Plan. The purpose of the Plan is to promote the success of the Company and its Subsidiaries by providing incentives to Employees and Non-Employee Directors that will promote the identification of their personal interest with the long-term financial success of the Company and with growth in shareholder value. The Plan is designed to provide flexibility to the Company and its Subsidiaries, in its ability to motivate, attract, and retain the services of Employees and Non-Employee Directors upon whose judgment, interest, and effort the successful conduct of its operation is largely dependent.
1.3Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 1.1 herein, and, if shareholder approval is obtained as provided in Section 1.1 herein, shall remain in effect, subject to the right of the Board of Directors Jerome Shaw, Secretary
New York, New York
February 28, 2006
17
EXHIBIT A
VOLT INFORMATION SCIENCES, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
Thereto terminate the Plan at any time pursuant to Article XI herein, through September 5, 2016 (the “Term”), at which time it shall terminate except with respect to Awards made prior to, and outstanding on, that date which shall remain valid in accordance with their terms.
ARTICLE II
Definitions
2.1Definitions. Except as otherwise defined in the Plan, the following terms shall have the meanings set forth below:
| (a) “Agreement” means a written agreement implementing the grant of each Award signed by an authorized officer of the Company and by the Participant. |
| (b) “Award” or “Grant” means, individually or collectively, a grant under the Plan of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock or Restricted Stock Units. |
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| (c) “Award Date” or “Grant Date” means the date on which an Award is made by the Committee under the Plan. |
| (d) “Board” or “Board of Directors” means the Board of Directors of the Company, unless such term is used with respect to a Subsidiary, in which event it shall mean the Board of Directors of that Subsidiary. |
| (e) “Change in Control” means the occurrence, on or after the Effective Date, of any of the following: |
| (i) the closing of a corporate reorganization in which the Company (or its successor) becomes a subsidiary of a holding company, the merger of the Company (or its successor) with or into another person, or the closing of the sale, conveyance, or other transfer of all or substantially all of the assets of the Company (or its successor) to another person, where the majority of the common stock of the acquiring or surviving entity is beneficially owned by persons who did not own the majority of the common stock of the Company (or its successor) immediately prior to the reorganization, merger, sale, conveyance or other transfer; or |
| (ii) individuals who constitute the Board on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof; provided that any person becoming a director subsequent to the date hereof whose nomination for election was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board shall be considered as though such person were a member of the Incumbent Board for purposes of this paragraph. |
| For purposes hereof, the term “person” shall include any individual, corporation, partnership, group, association, or other “person,” as such term is used in Section 14(d) of the Exchange Act, other than the Company (or its successor), any entity in which the Company (or its successor) owns a majority of the voting interest, or any employee benefit plan(s) sponsored by the Company (or its successor). |
| (f) “Code” means the Internal Revenue Code of 1986, as amended from time to time. |
| (g) “Committee” means the committee(s) of the Board appointed or otherwise serving, as provided below, to administer the Plan pursuant to Article III herein. |
| (i) With respect to Awards to Employees, the Committee shall consist of at least two persons, each of whom shall be “non-employee directors” as defined in Rule 16b-3, as amended, under the Exchange Act, or any similar or successor rule, and “outside directors” within the meaning of Section 162(m)(4)(C)(i) of the Code, as amended. Unless otherwise determined by the Board, with respect to Awards to Employees, the Committee shall consist of the Compensation Committee of the Board of Directors of the Company so long as it consists of at least two persons, each of whom is both a non-employee director and an outside director (as hereinbefore defined). |
| (ii) Unless otherwise determined by the Board, with respect to Awards to Non-Employee Directors, the Committee shall consist of the entire Board of Directors of the Company. |
| (h) “Company” means Volt Information Sciences, Inc., or any successor thereto as provided in Article XIII herein. |
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| (i) “Employee” means a current or prospective officer or other employee of the Company or any of its Subsidiaries (including any corporation, partnership, limited liability company, or joint venture, which becomes a Subsidiary after the adoption of the Plan by the Board). |
| (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
| (k) “Fair Market Value” of a Share means the closing market price (that is, the price at which last sold on the applicable principal U.S. market) of the Stock on the relevant date if it is a trading date or, if not, on the most recent date on which the Stock was traded prior to such date, as reported by the New York Stock Exchange; or if, in the opinion of the Committee, this method is inapplicable or inappropriate for any reason, the fair market value as determined pursuant to a reasonable method adopted by the Committee in good faith for such purpose. |
| (l) “Incentive Stock Option” or “ISO” means an option to purchase Stock, granted under Article VI herein, which is designated as an incentive stock option and is intended to meet the requirements of Section 422 of the Code. |
| (m) “Non-Employee Director” means an individual who is a member of the Board of the Company or a Subsidiary and who is not an employee of the Company or any Subsidiary (including any corporation, partnership, limited liability company, or joint venture, which becomes a Subsidiary after the adoption of the Plan by the Board). |
| (n) “Non-Qualified Stock Option” or “NQSO” means an option to purchase Stock, granted under Article VI, which is not intended to be an Incentive Stock Option. |
| (o) “Option” means an Incentive Stock Option or a Non-Qualified Stock Option. |
| (p) “Participant” means an Employee or Non-Employee Director who is granted or receives an Award under the Plan. |
| (q) “Performance Goal” means one or more performance measures or goals set by the Committee in its sole and absolute discretion for each grant of a performance-based compensation Award. The extent to which such performance measures or goals are met will determine the amount or value of the performance-based compensation Award that a Participant is entitled to exercise, receive, or retain. Performance Goals may be particular to a Participant; may relate to the performance of the Subsidiary, operating segment, division, branch, strategic business unit, or line of business, which employs him or her; or may be based on the performance of the Company generally. Performance Goals may be based on Stock value or increases therein; earnings per share or earnings per share growth; net earnings, earnings, or earnings growth (before or after one or more of taxes, interest, depreciation, and/or amortization); operating profit; operating cash flow; operating or other expenses; operating efficiency; return on equity, assets, capital, or investment; sales or revenues or growth thereof; working capital targets or cost control measures; regulatory compliance; gross, operating, or other margins; credit ratings; productivity; customer satisfaction; satisfactory internal or external audits; improvement of financial ratings; achievement of balance sheet or income statement objectives; quality measures; and any component or components of the foregoing (including, without limitation, determination thereof with or without the effect of discontinued operations and dispositions of business segments, non-recurring items, material extraordinary items that are both unusual and infrequent, special charges, and/or accounting changes), or implementation, management, or completion of critical projects or processes or other measurement determined by the Committee. Performance Goals may include a threshold level of performance below which no payment or vesting may occur, levels of performance at which specified payments or specified vesting will occur, and a maximum level of performance above which no additional payment or vesting will occur. |
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| Performance Goals may be absolute in their terms or measured against or in relationship to a market index; a group of other companies comparably, similarly, or otherwise situated; or a combination thereof. Each of the Performance Goals shall be determined, where applicable and except as provided herein or in the applicable Agreement, in accordance with generally accepted accounting principles applied in the United States of America. |
| The Committee, in its sole and absolute discretion and at any time but subject to any limitations under Section 162(m) of the Code in the case of an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, may adjust any Performance Goal and any evaluation of performance under a Performance Goal to take into account any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs, and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 (or in any replacement thereof) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year. |
| In addition, in the case of an Award not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its sole and absolute discretion and at any time, may adjust any Performance Goal and any evaluation of performance under a Performance Goal on such basis and for such reason as it may determine. |
| Prior to the payment of any compensation under an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall determine and certify the extent to which any Performance Goal and any other material terms under such Award have been satisfied (other than in cases where such relate solely to the increase in the value of Stock). |
| (r) “Period of Restriction” means the period during which Restricted Stock or Restricted Stock Units are restricted, pursuant to Article VII or VIII herein. |
| (s) “Plan” means the Volt Information Sciences, Inc. 2006 Incentive Stock Plan, as described and as hereafter from time to time amended. |
| (t) “Restricted Stock” means an Award of Stock granted to a Participant pursuant to Article VII herein. |
| (u) “Restricted Stock Unit” means an Award, designated as a Restricted Stock Unit, which is a bookkeeping entry granted to a Participant pursuant to Article VIII herein and valued by reference to the Fair Market Value of a Share, which is subject to restrictions and forfeiture until the designated conditions for the lapse of the restrictions are satisfied. A Restricted Stock Unit is sometimes referred to as a “Restricted Unit.” Restricted Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Committee. |
| (v) “Stock” or “Shares” means the Common Stock, $.10 par value per share, of the Company. |
| (w) “Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code (“Section 424(f) Corporation”) and any partnership, limited liability company or joint venture in which either the Company or a Section 424(f) Corporation is at least a fifty percent (50%) equity participant. |
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ARTICLE III
Administration
3.1The Committee. The Plan shall be a committeeadministered by the Committee, which shall have all powers necessary or desirable for such administration. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the BoardCommittee. In addition to any other powers and subject to the provisions of Directors knownthe Plan, the Committee shall have the following specific powers: (i) to determine the terms and conditions upon which the Awards may be made, exercised and paid; (ii) to determine all terms and provisions of each Agreement, which need not be identical; (iii) to construe and interpret the Agreements and the Plan; (iv) to establish, amend, or waive rules or regulations for the Plan’s administration; (v) to accelerate the exercisability of any Award or the termination of any Period of Restriction or other restrictions imposed under the Plan; (vi) to change Performance Goals (subject to limitations under Section 162(m)(4)(C) of the Code for Awards that are intended to qualify as performance-based compensation thereunder); and (vii) to make all other determinations and take all other actions necessary or advisable for the Audit
Committee. The Auditadministration of the Plan in its sole and absolute discretion. Any determination by the Committee shall be composedin the Committee’s sole and absolute discretion, and its determination shall be final and binding on all parties. Any exercise of three or more directors,
appointeddiscretion by the BoardCommittee shall be deemed to mean an exercise of Directors, who are independentdiscretion in its sole and absolute discretion, and its exercise shall be final and binding on all parties.
The President or the General Counsel or such other officers of the managementCompany as shall be designated by the Committee are hereby authorized to execute, but only within the State of New York, Agreements on behalf of the Company and are freeto cause them to be delivered to the recipients of Awards.
For purposes of determining the applicability of Section 422 of the Code (relating to Incentive Stock Options), or in the event that the terms of any relationshipAward provide that it may become earned, exercised or vested only during employment or service or within a specified period of time after termination of employment or service, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of employment or service or continuous employment or service.
Subject to limitations under applicable law, the Committee is authorized in its sole and absolute discretion to issue Awards and/or accept notices, elections, consents, and/or other forms or communications by Participants by electronic or similar means, including, without limitation, transmissions through e-mail, voice mail, recorded messages on electronic telephone systems, and other permissible methods, on such basis and for such purposes as it determines from time to time.
Except in connection with the approval, modification or amendment of Awards to Non-Employee Directors, a majority of the entire Committee shall constitute a quorum and the action of a majority of the members present at any meeting at which a quorum is present (in person or as otherwise permitted by applicable law), or acts approved in writing by a majority of the Committee without a meeting, shall be deemed the action of the Committee. In connection with the approval, modification or amendment of Awards to Non-Employee Directors, the entire Committee shall constitute a quorum and the unanimous action of all of the members (in person or as otherwise permitted by applicable law), or acts approved in writing by unanimous consent of the Committee without a meeting, shall be deemed the action of the Committee.
3.2Selection of Participants. The Committee shall have the authority to grant Awards under the Plan, from time to time, to such Employees and/or Non-Employee Directors as may be selected by it to be Participants. Each Award shall be evidenced by an Agreement.
3.3Decisions Binding. All determinations and decisions made by the Board or the Committee pursuant to the provisions of the Plan shall be made in its sole and absolute discretion and shall be final, conclusive, and binding.
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3.4Requirements of Rule 16b-3 and Section 162(m) of the Code. Notwithstanding any other provision of the Plan, the Board or the Committee may impose such conditions on any Award, and amend the Plan in any such respects, as may be required to satisfy the requirements of Rule 16b-3, as amended (or any successor or similar rule), under the Exchange Act.
Any provision of the Plan to the contrary notwithstanding, and except to the extent that the Committee determines otherwise: (i) transactions by and with respect to officers and directors of the Company who are subject to Section 16(b) of the Exchange Act (hereafter, “Section 16 Persons”) shall comply with any applicable conditions of Rule 16b-3; (ii) transactions with respect to persons whose remuneration is subject to the provisions of Section 162(m) of the Code shall conform to the requirements of Section 162(m)(4)(C) of the Code; and (iii) every provision of the Plan shall be administered, interpreted, and construed to carry out the foregoing provisions of this sentence.
Notwithstanding any provision of the Plan to the contrary, the Plan is intended to give the Committee the authority to grant Awards that qualify as performance-based compensation under Section 162(m)(4)(C) of the Code as well as Awards that do not so qualify. Every provision of the Plan shall be administered, interpreted, and construed to carry out such intention, and any provision that cannot be so administered, interpreted, and construed shall to that extent be disregarded; and any provision of the Plan that would prevent an Award that the Committee intends to qualify as performance-based compensation under Section 162(m)(4)(C) of the Code from so qualifying shall be administered, interpreted, and construed to carry out such intention, and any provision that cannot be so administered, interpreted, and construed shall to that extent be disregarded.
3.5Indemnification of the Committee. In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense of any action, suit, or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted or made hereunder, and against all amounts reasonably paid by them in settlement thereof or paid by them in satisfaction of a judgment in any such action, suit, or proceeding, if such members acted in good faith and in a manner which they believed to be in, and not opposed to, the best interests of the Company and its Subsidiaries.
ARTICLE IV
Stock Subject to the Plan
4.1Number of Shares. Subject to adjustment as provided in Section 4.3 herein, the maximum aggregate number of Shares that may be issued pursuant to Awards made under the Plan shall not exceed One Million Five Hundred Thousand (1,500,000) Shares. Except as provided in Section 4.2 herein, only Shares actually issued or issuable in connection with the exercise of, or as other payment for, Awards under the Plan shall reduce the number of Shares available for future Awards under the Plan.
4.2 Lapsed Awards or Forfeited Shares; Shares Used as Payment of Exercise Price or for Taxes.
| (a) If any Award granted under the Plan terminates, expires, or lapses for any reason other than by virtue of exercise of the Award, or if Shares issued pursuant to Awards are forfeited, any Stock subject to such Award again shall be available for the grant of an Award under the Plan. |
| (b) In the event a Participant pays the Option Price for Shares pursuant to the exercise of an Option with previously acquired Shares, the number of Shares available for future Awards under the Plan shall be reduced only by the net number of new Shares issued upon the exercise of the Option. In addition, in determining the number of shares of Stock available for |
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| Awards, if Stock has been delivered or exchanged by, or withheld from, a Participant as full or partial payment to the Company for payment of withholding taxes, or if the number of shares of Stock otherwise deliverable by the Company has been reduced for payment of withholding taxes, the number of shares of Stock exchanged by or withheld from a Participant as payment in connection with the withholding tax or so reduced by the Company shall again be available for the grant of an Award under the Plan. |
4.3Capital Adjustments. The number and class of Shares subject to each outstanding Award, the Option Price, and the annual limits on and the aggregate number and class of Shares for which Awards thereafter may be made shall be proportionately, equitably and appropriately adjusted in such manner as the Committee shall determine in order to retain the economic value or opportunity to reflect any stock dividend, stock split, recapitalization, merger, consolidation, reorganization, reclassification, combination, exchange of shares or similar event in which the number or class of Shares is changed without the receipt or payment of consideration by the Company. Where an Award being adjusted is an ISO or is subject to Section 409A of the Code, the adjustment shall also be effected so as to comply with Section 424(a) of the Code and not to constitute a modification within the meaning of Section 424(h) or 409A, as applicable, of the Code.
ARTICLE V
Eligibility
5.1 Persons eligible to participate in the Plan and receive Awards are all Employees and all Non-Employee Directors who, in the opinion of the BoardCommittee, merit becoming Participants.
ARTICLE VI
6.1Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees and Non-Employee Directors would interfereat any time and from time to time as shall be determined by the Committee. The Committee shall have sole and absolute discretion in determining the number of Shares subject to Options granted to each Participant, provided, however, that (i) no Participant may be granted Options in any calendar year for more than One Hundred Thousand (100,000) Shares, (ii) the aggregate Fair Market Value (determined at the time the Award is made) of Shares with theirrespect to which any Participant may first exercise ISOs granted under the Plan during any calendar year may not exceed $100,000 or such amount as shall be specified in Section 422 of independent judgmentthe Code and rules and regulations thereunder, (iii) no ISO may be granted on or following the tenth anniversary of the earlier of the Effective Date of the Plan or the date of shareholder approval of the Plan, and (iv) no ISO may be granted to a Non-Employee Director.
6.2Option Agreement. Each Option grant shall be evidenced by an Agreement that shall specify the type of Option granted; the Option Price (as defined in Section 6.3 herein); the duration of the Option; the number of Shares to which the Option pertains; any conditions imposed upon the exercisability of Options in the event of retirement, death, disability, or other termination of employment or service; and such other provisions as the Committee shall determine. The Agreement shall specify whether the Option is intended to be an Incentive Stock Option within the meaning of Section 422 of the Code, or a Non-Qualified Stock Option not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code, provided, however, that if an Option is intended to be an Incentive Stock Option but fails to be such for any reason, it shall continue in full force and effect as a committee member. Members willNon-Qualified Stock Option.
6.3Option Price. The exercise price per Share of Stock covered by an Option (“Option Price”) shall be financially literate and at least one will
have accounting or related financial management expertise. Auditdetermined by the Committee memberssubject to the following limitations: The Option Price shall meet the requirementsnot be less than 100% of the listing standardsFair Market Value of such Stock on the Grant Date. In addition, in order for an Option to be an ISO where an Option is granted to an Employee who, at the time of grant, owns (within the meaning of Section 424(d) of the New York
Stock Exchange. A majority shall constitute a quorumCode) stock possessing more than 10% of the Audit Committee. A
majoritytotal combined voting
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power of the members in attendance shall decide any questions brought before
any meetingall classes of the Audit Committee.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Company's directors in
fulfilling the Board's oversight responsibility as to the Company's accounting,
auditing and financial reporting practices and as to the quality and integrity
of the publicly distributed financial reports of the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to oversee the corporate accounting and reporting practicesstock of the Company, relativethe Option must have an Option Price which is at least equal to internal controls110% of the Fair Market Value of the Stock on the Grant Date.
6.4Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant, provided, however, that no ISO shall be exercisable after the expiration of ten years from its Award Date (unless on that day the exchange on which the Stock then trades is closed, in which case those Options shall expire on the next day on which such exchange is open). In addition, in order for an Option to be an ISO where an Option is granted to an Employee who, at the time of grant, owns (within the meaning of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the Option must not be exercisable after the expiration of five years from its Award Date.
6.5Exercisability. Options granted under the Plan shall be exercisable at such times and generally accepted accounting
principles.be subject to such restrictions and conditions as the Committee shall determine, which need not be the same for all Participants.
6.6Method of Exercise. Options shall be exercised by the delivery of a written notice to the Company in the form prescribed by the Committee setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price shall be payable to the Company in full either in cash or certified check or wire transfer, by delivery of Shares of Stock valued at Fair Market Value at the time of exercise, by delivery of a promissory note (in the Committee’s sole and absolute discretion and subject to restrictions and prohibitions of applicable law (including, without limitation, the prohibition on extensions of credit to executive officers and directors under the Sarbanes-Oxley Act of 2002) or by a combination of the foregoing.
To the extent permitted under the applicable laws and regulations, at the request of the Participant and with the consent of the Committee, the Company agrees to cooperate in a “cashless exercise” of an Option. The cashless exercise shall be effected by the Participant delivering to a securities broker instructions to exercise all or part of the Option, including instructions to sell a sufficient number of shares of Stock to cover the costs and expenses associated therewith.
As soon as practicable, after receipt of written notice and payment of the Option Price and completion of payment of (or an arrangement satisfactory to the Company for the Participant to pay) any tax withholding required in connection with the Option exercise, the Company shall cause the appropriate number of Shares to be issued in the Participant’s name, which issuance shall be effected in book entry or electronic form, provided that issuance and delivery in certificated form shall occur if the Participant so requests or the Committee so directs.
6.7Restrictions on Stock Transferability.The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option under the Plan as it may deem advisable in its sole and absolute discretion, including, without limitation, (i) restrictions under applicable Federal securities laws, under the rules of any stock exchange upon which such Shares are then listed, and under any blue sky or state securities laws applicable to such Shares and (ii) a right of first refusal running to the Company, a buyback right by the Company or other restriction on transferability. In the event the Committee so doing,provides in an Agreement pertaining to an Option, Stock delivered on exercise of the AuditOption may be designated as Restricted Stock or Stock subject to a buyback right by the Company in the amount of, or based on, the Option Price therefor or otherwise in the event the Participant does not complete a specified service period after exercise.
ARTICLE VII
Restricted Stock
7.1 Grant of Restricted Stock. Subject to the terms and conditions of the Plan, the Committee, should maintain freeat any time and open meansfrom time to time, may grant Shares of communicationRestricted Stock under the Plan to
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such Employees and Non-Employee Directors and in such amounts as it shall determine, provided, however, that no Participant may be granted more than One Hundred Thousand (100,000) Shares of Restricted Stock in any calendar year. Unless otherwise provided in the applicable Agreement, Participants receiving Restricted Stock Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services. As determined by the Committee, Shares of Restricted Stock may be issued in book entry or electronic form or in certificated form. Unless otherwise determined by the Committee, custody of Shares of Restricted Stock in certificated form shall be retained by the Company or held in escrow by an escrow agent selected, and subject to change from time to time, by the Committee until the termination of the Period of Restriction pertaining thereto.
7.2Restricted Stock Agreement. Each Restricted Stock Award shall be evidenced by an Agreement that shall specify the Period of Restriction, the number of Shares of Restricted Stock granted, and the applicable restrictions (whether service-based restrictions, with or without performance acceleration, and/or performance-based restrictions) and such other provisions as the Committee shall determine. If an Award of Restricted Stock is intended to be a performance-based compensation Award, the terms and conditions of such Award, including the Performance Goal(s) and Period of Restriction and, if different, performance period, shall be set forth in an Agreement or in a subplan of the Plan, which is incorporated by reference into an Agreement, and the requirements to satisfy or achieve the Performance Goal(s) as so provided therein shall be considered to be restrictions under the Plan.
7.3Other Restrictions. The Committee may impose or notify Participants of other restrictions, including any restrictions under applicable Federal or state securities laws (including, without limitation, restrictions in connection with the Securities Act of 1933, as amended), as it may deem advisable, and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions.
7.4Certificate Legend. In addition to any legends placed on certificates pursuant to Section 7.3 herein, each certificate representing Shares of Restricted Stock granted pursuant to the Plan shall bear the following legend:
| “The sale, transfer, pledge, hypothecation or other disposition of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer set forth in the Volt Information Sciences, Inc. 2006 Incentive Stock Plan, in the rules and administrative procedures adopted pursuant to such Plan, and in an associated Restricted Stock Agreement. A copy of the Plan, such rules and procedures, and the applicable Restricted Stock Agreement may be obtained from the Secretary of Volt Information Sciences, Inc.” |
7.5Removal of Restrictions. Except as otherwise provided in this Article, Shares of Restricted Stock covered by each Restricted Stock Award made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction and, where applicable, after a determination of the satisfaction or achievement of any applicable Performance Goal(s) by the Committee. Once the Shares are released from the restrictions, the legend required by Section 7.4 herein shall be removed and, unless and until the Participant requests in writing, or the Committee directs, issuance and delivery in certificated form, the Shares of Stock may remain in book entry or electronic form or held in escrow by an escrow agent selected, and subject to change from time to time, by the Committee.
7.6Voting Rights. Unless otherwise provided in the Agreement, during the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise voting rights with respect to those Shares.
7.7Dividends and Other Distributions. Unless otherwise provided in the Agreement (which may or may not provide for the accumulation and payment of dividends and other distributions made in
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cash or property other than Shares until the Shares of Restricted Stock to which the dividends and other distributions relate vest), during the Period of Restriction, Participants entitled to or holding Shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions made in cash or property other than Shares with respect to those Shares of Restricted Stock. If any dividends or distributions are paid in Shares, such Shares shall be subject to the same restrictions on transferability and the same rules for vesting, forfeiture, and custody as the Shares of Restricted Stock with respect to which they were distributed.
7.8Failure to Satisfy Performance Goal(s). In the event that the specified Performance Goal(s) are not satisfied within the time period established by the Committee, the Shares of Restricted Stock which were awarded subject to the satisfaction of such Performance Goal(s) shall be automatically forfeited and returned to the Company. Notwithstanding the foregoing, in the case of an Award not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee may waive all or any part of such Performance Goal(s) and provide for vesting of the Award on such basis as it deems appropriate.
7.9Restrictions on Stock Transferability.The Committee may impose such restrictions on any Shares delivered to a Participant pursuant to this Article as it may deem advisable in its sole and absolute discretion, including, without limitation, (i) restrictions under applicable Federal securities laws, under the rules of any stock exchange upon which such Shares are then listed, and under any blue sky or state securities laws applicable to such Shares and (ii) a right of first refusal running to the Company, a buyback right by the Company or other restriction on transferability. In the event the Committee so provides in an Agreement, Stock delivered pursuant to the Plan in connection with Awards of Restricted Stock may be subject to a buyback right by the Company in the amount of, or based on, a specific or formula price therefor or otherwise in the event the Participant does not complete a specified service, consulting or noncompetition period after issuance or delivery of the Stock to the Participant.
ARTICLE VIII
Restricted Stock Units
8.1Grant of Restricted Stock Units. Subject to the terms and conditions of the Plan, the Committee, at any time and from time to time, may grant Restricted Stock Units under the Plan (with one Restricted Stock Unit representing one Share) to such Employees and Non-Employee Directors and in such amounts as it shall determine, provided, however, that no Participant may be granted more than One Hundred Thousand (100,000) Restricted Stock Units in any calendar year. Participants receiving Restricted Stock Unit Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.
8.2Restricted Stock Unit Agreement. Each Restricted Stock Unit Award shall be evidenced by an Agreement that shall specify the Period of Restriction, the number of Restricted Stock Units granted, and the applicable restrictions (whether service-based restrictions, with or without performance acceleration, and/or performance-based restrictions) and such other provisions as the Committee shall determine. If a Restricted Stock Unit Award is intended to be a performance-based compensation Award, the terms and conditions of such Award, including the Performance Goal(s) and Period of Restriction and, if different, performance period, shall be set forth in an Agreement or in a subplan of the Plan, which is incorporated by reference into an Agreement, and the requirements to satisfy or achieve the Performance Goal(s) as so provided therein shall be considered to be restrictions under the Plan.
8.3Dividends and Other Distributions. Unless otherwise provided in the Agreement (which may or may not provide for the current payment, or for the accumulation subject to the same restrictions, vesting, forfeiture, and payment as the Restricted Stock Units to which they are attributable, of dividends and other distributions made in cash or property other than Shares), during the Period of Restriction, Participants holding Restricted Stock Units shall have no rights to dividends and other distributions made in cash or property other than Shares which would have been paid with respect to the Shares represented
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by those Restricted Stock Units if such Shares were outstanding. Participants holding Restricted Stock Units shall have no right to vote the Shares represented by such Restricted Stock Units until such Shares are actually issued. Unless otherwise provided in the Agreement, if any deemed dividends or other distributions would be paid in Shares, such Shares shall be considered to increase the Participant’s Restricted Stock Units with respect to which they were declared based on one Share equaling one Restricted Stock Unit. In addition, unless otherwise provided in the Agreement, during the Period of Restriction, any such deemed dividends and other distributions for which rights are provided but which are not paid currently shall be deemed converted to additional Restricted Stock Units based on the Fair Market Value of a Share on the date of payment or distribution of the deemed dividend or distribution.
8.4Payment after Lapse of Restrictions. Subject to the provisions of the Agreement, upon the lapse of restrictions with respect to a Restricted Stock Unit, the Participant is entitled to receive, without any payment to the Company (other than required tax withholding amounts), an amount equal to the product of multiplying (i) the number of Shares with respect to which the restrictions lapse by (ii) the Fair Market Value per Share on the date the restrictions lapse (such amount, the “RSU Value”).
The Agreement may provide for payment of the RSU Value at the time of vesting or, on an elective or non-elective basis, for payment of the RSU Value at a later date, adjusted (if so provided in the Agreement) from the date of vesting based on an interest, dividend equivalent, earnings, or other basis (including deemed investment of the RSU Value in Shares) set out in the Agreement (the “adjusted RSU Value”). The Committee is expressly authorized to grant Restricted Stock Units which are deferred compensation covered by Section 409A of the Code, as well as Restricted Stock Units which are not deferred compensation covered by Section 409A of the Code.
Payment of the RSU Value or adjusted RSU Value to the Participant shall be made in cash or Shares as provided in the Agreement, valued at the Fair Market Value on the date or dates the restrictions on the Award lapse in the case of an immediate payment after vesting, or at the Fair Market Value on the date of settlement in the event of an elective or non-elective delayed payment. Any payment in Shares shall be effected in book entry or electronic form, provided that issuance and delivery in certificated form shall occur if the Participant so requests in writing or the Committee so directs.
8.5Restrictions on Stock Transferability.The Committee may impose such restrictions on any Shares delivered to a Participant in settlement of a Restricted Stock Unit as it may deem advisable in its sole and absolute discretion, including, without limitation, (i) restrictions under applicable Federal securities laws, under the rules of any stock exchange upon which such Shares are then listed, and under any blue sky or state securities laws applicable to such Shares and (ii) a right of first refusal running to the Company, a buyback right by the Company or other restriction on transferability. In the event the Committee so provides in an Agreement, Stock delivered on the settlement of a Restricted Stock Unit may be designated as Restricted Stock or Stock and/or may be subject to a buyback right by the Company in the amount of, or based on, a specific or formula price therefor or otherwise in the event the Participant does not complete a specified service, consulting or noncompetition period after settlement.
8.6Failure to Satisfy Performance Goal(s). In the event that the specified Performance Goal(s) are not satisfied within the time period established by the Committee, the Restricted Stock Units which were awarded subject to the satisfaction of such Performance Goal(s) shall be automatically forfeited and returned to the Company. Notwithstanding the foregoing, in the case of an Award not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee may waive all or any part of such Performance Goal(s) and provide for vesting of the Award on such basis as it deems appropriate.
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ARTICLE IX
Change in Control
9.1 In the event of a Change in Control of the Company, the Committee, as constituted before such Change in Control, in its sole and absolute discretion may, as to any outstanding Award, either at the time the Award is made or any time thereafter, take any one or more of the following actions: (i) provide for the acceleration of any time periods relating to the exercise or realization of any such Award so that such Award may be exercised or realized in full on or before a date initially fixed by the Committee; (ii) provide for the purchase or settlement of any such Award by the Company, with or without a Participant’s request, for an amount of cash equal to the amount which could have been obtained upon the exercise of such Award or realization of such Participant’s rights had such Award been currently exercisable or payable; (iii) make such adjustment to any such Award then outstanding as the Committee deems appropriate to reflect such Change in Control; or (iv) cause any such Award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation in such Change in Control.
ARTICLE X
Modification, Extension, and Renewals of Awards
10.1 Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify, extend, or renew outstanding Awards and may modify the terms of an outstanding Agreement, provided that the exercise price of any Award may not be lowered other than pursuant to Section 4.3 herein. In addition, the Committee may accept the surrender of outstanding Awards granted under the Plan or outstanding awards granted under any other equity compensation plan of the Company and authorize the granting of new Awards pursuant to the Plan in substitution therefor, so long as the new or substituted awards do not specify a lower exercise price than the surrendered Awards or awards and are not of a different type (with Options being one type and all other Awards being a different type), and otherwise, the new Awards may specify different performance goals from the surrendered Awards or awards, may provide for more rapid or slower exercisability or vesting than the surrendered Awards or awards, and may contain any other provisions that are authorized by the Plan. Notwithstanding the foregoing, however, no modification of an Award shall, without the consent of the Participant, adversely affect the rights or obligations of the Participant.
ARTICLE XI
Amendment, Modification, and Termination of the Plan
11.1Amendment, Modification and Termination. At any time and from time to time, the Board may terminate, amend, or modify the Plan. Such amendment or modification may be without shareholder approval except to the extent that such approval is required by the Code, pursuant to the rules under Section 16 of the Exchange Act, by any national securities exchange or system on which the Stock is then listed or reported, by any regulatory body having jurisdiction with respect thereto, or under any other applicable laws, rules, or regulations.
11.2Awards Previously Granted. No termination, amendment, or modification of the Plan, other than pursuant to Section 4.3 or 14.10 herein, shall in any manner adversely affect any Award theretofore granted under the Plan, without the written consent of the Participant.
ARTICLE XII
Withholding
12.1Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, State, and local taxes (including the Participant’s FICA obligation, if any) required by law to be withheld with respect to any grant, exercise or payment made under or as a result of the Plan.
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12.2Stock Withholding. With respect to withholding required upon the exercise of Non-Qualified Stock Options, upon the lapse of restrictions on Restricted Stock or upon the occurrence of any other taxable event with respect to any Award, Participants may elect, subject to the approval of the Committee, or the Committee may require Participants to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares of Stock having a Fair Market Value equal to the amount required to be withheld. The value of the Shares to be withheld shall be based on the Fair Market Value of the Shares on the date that the amount of tax to be withheld is to be determined. All elections by Participants shall be irrevocable and be made in writing and in such manner as determined by the Committee in advance of the day that the transaction becomes taxable.
ARTICLE XIII
Successors
13.1 All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
ARTICLE XIV
General
14.1Requirements of Law. The granting of Awards and the issuance of Shares of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or self-regulatory organizations (i.e., exchanges) as may be required.
14.2Effect of Plan. The establishment of the Plan shall not confer upon any Employee or Non-Employee Director any legal or equitable right against the Company, a Subsidiary, or the Committee, except as expressly provided in the Plan. The Plan does not constitute an inducement or consideration for the employment or service of any Employee or Non-Employee Director, nor is it a contract between the directors,Company or any of its Subsidiaries and any Employee or Non-Employee Director. Participation in the independent registered public
accounting firm,Plan shall not give any Employee or Non-Employee Director any right to be retained in the internal auditors,employment or service of the Company or any of its Subsidiaries. Except as may be otherwise expressly provided in the Plan or in an Agreement, no Employee or Non-Employee Director who receives an Award shall have rights as a shareholder of the Company prior to the date Shares are issued to the Participant pursuant to the Plan.
14.3Creditors. The interests of any Participant under the Plan or any Agreement are not subject to the claims of creditors and may not, in any way, be assigned, alienated, or encumbered.
14.4Governing Law. The Plan has been adopted in New York, New York and all Agreements hereunder shall be deemed to have been entered into in New York, New York. The Plan, and all Agreements hereunder, shall be governed, construed, and administered in accordance with the laws of the State of New York applicable to contracts made and to be performed solely in the State of New York. Any dispute under the Plan, or under any Agreement hereunder, shall be adjudicated solely and exclusively in the Courts of the State of New York located in the borough of Manhattan, City and State of New York, and the financial managementFederal Court for the Southern District of New York, and no other Court shall have jurisdiction of this Plan, any Agreement issued under the Plan, any Award issued under the Plan, or any dispute hereunder.
14.5Severability. In the event any provision of the Company.
In carrying out its responsibilities,Plan shall be held illegal or invalid for any reason, the Audit
Committee will:
1. Appoint, compensateillegality or invalidity shall not affect the remaining parts of the Plan, and oversee the workPlan shall be construed and enforced as if the illegal or invalid provision had not been included.
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14.6Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company.
14.7Transferability. Unless the Agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly states that it is transferable as provided in this section, no Award granted under the Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated, or otherwise transferred in any manner, other than by will or the laws of descent and distribution, prior to the vesting or lapse of any independent registered
public accounting firm engagedand all restrictions applicable to perform any audit, reviewShares issued under an Award. The Committee may in its sole and absolute discretion grant an Award (other than an ISO) or attest
servicesamend an outstanding Award (other than an ISO) to provide that the Award is transferable or assignable to a member or members of the Participant’s “immediate family,” as such term is defined under Exchange Act Rule 16a-l(e), or to a trust for the benefit solely of a member or members of the Participant’s immediate family, or to a partnership or other entity whose only owners are members of the Participant’s family, provided that, following any such transfer or assignment, the Award will remain subject to substantially the same terms applicable to the Award while held by the Participant, as modified as the Committee in its sole and absolute discretion shall determine appropriate, and the Participant shall execute an agreement agreeing to be bound by such terms.
14.8Termination of Employment or Service. Unless otherwise provided in the Agreement pertaining to an Award, in the event that a Participant terminates his or her employment or service with the Company and its divisionsSubsidiaries for any reason, then the unvested portion of such Award shall automatically be forfeited to the Company. Unless otherwise provided in the Agreement pertaining to an Award, in determining cessation of employment or service, transfers between the Company and/or any Subsidiary shall be disregarded, and subsidiaries.
2. Havechanges in status between that of an Employee and a clear understandingNon-Employee Director shall be disregarded. The Committee may provide in an Agreement made under the Plan for vesting of Awards in connection with the independent registered public
accounting firm thattermination of a Participant’s employment or service on such basis as it is ultimately accountabledeems appropriate, including, without limitation, any provisions for vesting at death, disability, retirement, or in connection with a Change in Control, with or without the further consent of the Committee. The Agreements evidencing Awards may contain such provisions as the Committee may approve with reference to the Audit
Committee.
3. Revieweffect of approved leaves of absence.
14.9Registration and Other Laws and Regulations. The Plan, the independencegrant and performanceexercise of Awards hereunder, and the independent registered
public accounting firm.
4. Meet with the independent registered public accounting firm and
financial managementobligation of the Company to reviewsell, issue, or deliver Shares under such Awards, shall be subject to all applicable federal, state, and foreign laws, rules, and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver any Shares prior to the scopecompletion of any registration or qualification of such Shares under any federal, state, or foreign law or any ruling or regulation of any government body which the Committee shall, in its sole and absolute discretion, determine to be necessary or advisable.
14.10Nonqualified Deferred Compensation Plan Omnibus Provision. It is intended that any compensation, benefits, or other remuneration, which is provided pursuant to or in connection with the Plan, which is considered to be nonqualified deferred compensation subject to Section 409A of the proposed
auditCode, shall be provided and paid in a manner, and at such time and in such form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for the current yearnon-compliance. The Committee is authorized to amend any Agreement and the audit proceduresto amend or declare void any election by a Participant as may be determined by it to be utilized, and
at the conclusionnecessary or appropriate to evidence or further evidence required compliance with Section 409A of the audit, reviewCode.
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ARTICLE XV
Substitution of Awards under Other Plans or Agreements
15.1 The Committee is hereby authorized to grant Awards on such audit, including commentsbasis as it deems appropriate, and to effect the issuance of Stock under this Plan in substitution for options, stock appreciation rights, or recommendationsother forms of equity compensation awarded and outstanding under any equity compensation plan of, or agreement entered into with, a business entity which is acquired by the Company or otherwise becomes a Subsidiary on such terms and conditions as it deems appropriate. The Committee is expressly authorized to provide that the exercise price of an assumed option or stock appreciation right may be higher or lower than the Fair Market Value of the independent registered public accounting
firm.
5. Review withStock to which a substitute Option relates in order to approximate the independent registered public accounting firm, the
Company's internal auditor, and financial and accounting personnel, the
adequacy and effectivenessinherent economic value of the accounting assumed option or stock appreciation right.
Approved on September 6, 2006,
and financial controls of
the Company,amended and elicit any recommendations for the improvement of such
controls or particular areas where new or more detailed controls or
procedures are desirable. Discuss with the independent registered
public accounting firm significant financial risk exposures
and the steps management has taken to monitor, control and report such
exposures.
6. Review the internal audit function of the Company, including its
independence, authority, reporting obligations, organizational
structure, staff qualifications and the proposed internal audit plans
for the current year.
7. Review the Company's annual audited financial statements prior to
filing or distribution with management and the independent registered
public accounting firm to determine that the independent registered
public accounting firm is satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Any
changes in accounting principles should be reviewed.
8. Review with financial management and the independent registered public
accounting firm the Company's quarterly financial results, and discuss
any significant changes to the Company's accounting principles and any
items required to be communicatedrestated on
January 8, 2007, by the independent registered public
accounting firm in accordance with Statement of Auditing Standards 61.
9. Review with financial management and the independent registered public
accounting firm their judgments about the accounting principles
employed by the Company.
10. Provide sufficient opportunity for the internal auditors and the
independent registered public accounting firm to meet with the members
of the Audit Committee without members of management present. Among the
items to be discussed in these meetings are the independent registered
public accounting firm's evaluation of the Company's financial,
accounting and auditing personnel and the cooperation that the
independent registered public accounting firm received during the
course of the audit.
11. Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each Audit Committee meeting with, the
Board of Directors.
12. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if,
in its judgment, that is appropriate.
13. Review and reassess the adequacy of this charter at least annually.
Submit this charter to
the Board of Directors for approval
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EXHIBIT B
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
VOLT INFORMATION SCIENCES, INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
* * * * *
WE, THE UNDERSIGNED, Steven Shaw and have
this charter published at least every three years in accordance with
SecuritiesHoward B. Weinreich, being respectively the President and Exchange Commission regulations.
14. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's
annual proxy statement.
Nothing contained in this charterAssistant Secretary of Volt Information Sciences, Inc., hereby certify:
| 1. | The name of the corporation is The certificate of Article Third of the Certificate of Incorporation is deleted in its entirety and is replaced by the following: “The amount of the capital stock is $12,500,000.” Article Fourth (a) and (a)(1) and (a)(2) of the Certificate of Incorporation are deleted in their entirety and are replaced by the following: The amendment was authorized by the affirmative vote of the majority of the issued and outstanding shares of the Common Stock at the April 5, 2007 Annual IN WITNESS WHEREOF, we have signed this certificate on the ____ day of __________ 2007 and we affirm the statements contained therein as true under penalties of perjury. B-1 |
