400 North Ashley Drive
Tampa, Florida 33602
Tampa, Florida 33602
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY23, 200720, 2009
TO BE HELD MAY
To the Shareholders of Sykes Enterprises, Incorporated:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the “Annual Meeting”) of Sykes Enterprises, Incorporated (the “Company”) will be held at the Tampa Marriott Waterside, 700 South Florida Avenue,Sheraton Riverwalk Hotel, 200 N. Ashley Drive, Tampa, Florida, on Wednesday, May 23, 2007,20, 2009, at 9:00 a.m., Eastern Daylight Savings Time, for the following purposes:
1. To elect 4three directors to hold office until the 20102012 Annual Meeting of Shareholders;
2. To approve amendments to the Second Amended and Restated 2004 Non-employee Director Fee Plan;
3. To ratify the appointment of Deloitte & Touche LLP as independent auditors of the Company; and
Only shareholders of record as of the close of business on April 4, 2007,3, 2009, will be entitled to vote at the Annual Meeting or any adjournment or postponement of the Annual Meeting. Information relating to the matters to be considered and voted on at the Annual Meeting is set forth in the proxy statement accompanying this Notice.
By Order of the Board of Directors,
James T. Holder
Secretary
April 18, 200715, 2009
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDERS MEETING TO BE HELD ON MAY 20, 2009
This proxy statement and our 2008 Annual Report to Shareholders are available at:
http://materials.proxyvote.com/871237
http://materials.proxyvote.com/871237
YOUR VOTE IS IMPORTANT
To assure your representation at the Annual Meeting, please vote on the matters to be considered at the Annual Meeting by completing the enclosed proxy and mailing it promptly in the enclosed envelope. If your shares are held in street name by a brokerage firm, bank or other nominee, the nominee will supply you with a proxy card to be returned to it. It is important that you return the proxy card as quickly as possible so that the nominee may vote your shares. If your shares are held in street name by a nominee, you may not vote such shares in person at the Annual Meeting unless you obtain a power of attorney or legal proxy from such nominee authorizing you to vote the shares, and you present this power of attorney or proxy at the Annual Meeting.
TABLE OF CONTENTS
400 North Ashley Drive
Tampa, Florida 33602
Tampa, Florida 33602
PROXY STATEMENT
FOR
20072009 ANNUAL MEETING OF SHAREHOLDERS
FOR
This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Sykes Enterprises, Incorporated (the “Company”) for the Annual Meeting of Shareholders (the “Annual Meeting”) to be held at the Tampa Marriott Waterside, 700 South Florida Avenue,Sheraton Riverwalk Hotel, 200 N. Ashley Drive, Tampa, Florida, on Wednesday, May 23, 2007,20, 2009, at 9:00 a.m., Eastern Daylight Savings Time, or any adjournment or postponement of the Annual Meeting.
This Proxy Statement and the annual report to shareholders of the Company for the year ended December 31, 2006,2008, are first being mailed on or about April 20, 2007,2009, to shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
The record date for the Annual Meeting is April 4, 2007.3, 2009. Only shareholders of record as of the close of business on the record date are entitled to notice of the Annual Meeting and to vote at the Annual Meeting. As of the record date, 40,619,41941,256,414 shares of common stock were outstanding and entitled to vote at the Annual Meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspector of elections appointed for the Annual Meeting, who will also determine whether a quorum is present for the transaction of business. The Company’s Bylaws provide that a quorum is present if the holders of a majority of the issued and outstanding shares of common stock entitled to vote at the meeting are present in person or represented by proxy. At the Annual Meeting, if a quorum exists, Directorsdirectors will be elected by a plurality of the votes cast in the election. Abstentions will be counted as shares that are present and entitled to vote for purposes of determining whether a quorum is present. Shares held by nominees for beneficial owners will also be counted for purposes of determining whether a quorum is present if the nominee has the discretion to vote on at least one of the matters presented, even though the nominee may not exercise discretionary voting power with respect to other matters and even though voting instructions have not been received from the beneficial owner (a “broker non-vote”). Broker non-votes will not be counted as votes cast in determining whether a Proposal has been approved.
Shareholders are requested to vote by completing the enclosed Proxy and returning it signed and dated in the enclosed postage-paid envelope. Shareholders are urged to indicate their votes in the spaces provided on the Proxy. Proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given in the Proxy. Where no instructions are indicated, signed Proxies will be voted FOR each of the proposals listed in the Notice of Annual Meeting of Shareholders. Returning your completed Proxy will not prevent you from voting in person at the Annual Meeting, should you be present and wish to do so.
Any shareholder giving a Proxy has the power to revoke it at any time before it is exercised by:
| • | filing with the Secretary of the Company written notice of revocation, | |
| • | submitting a duly executed Proxy bearing a later date than the previous Proxy, or | |
| • | appearing at the Annual Meeting and voting in person. |
Proxies solicited by this Proxy Statement may be exercised only at the Annual Meeting and any adjournment of the Annual Meeting and will not be used for any other meeting. Proxies solicited by this Proxy Statement will be returned to the Board of Directors and will be tabulated by an inspector of elections designated by the Board of Directors.
The cost of solicitation of Proxies by mail on behalf of the Board of Directors will be borne by the Company. Proxies also may be solicited by personal interview or by telephone by directors, officers, and other employees of the Company
without additional compensation. The Company also has made arrangements with brokerage firms, banks, nominees, and other fiduciaries that hold shares on behalf of others to forward proxy solicitation materials to the beneficial owners of such shares. The Company will reimburse such record holders for their reasonableout-of-pocket expenses.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Company’s Board of Directors currently is comprised of 11 individuals, and is divided into three classes (designated “CLASS I,” “CLASS II,” and “CLASS III”), as nearly equal in number as possible, with each class serving a three-year term expiring at the third annual meeting of shareholders after its election. The term of the fourthree current CLASS IIIII directors will expire at the Annual Meeting. The Company’s Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated Paul L. Whiting, Mark C. Bozek, Lt. Gen. Michael DeLong (Ret.)Charles E. Sykes, Furman P. Bodenheimer, Jr., and Iain A. MacdonaldWilliam J. Meurer to stand for re-election as CLASS IIIII directors, whose terms will all expire at the 20102012 Annual Meeting of Shareholders.
In the event any nominee is unable to serve, the persons designated as proxies will cast votes for such other person in their discretion as a substitute nominee. The Board of Directors has no reason to believe that the nominees named herein will be unavailable or, if elected, will decline to serve.
The Board of Directors recommends the following nominees for election as directors in the ClassesClass specified and urges each shareholder to vote “FOR” the nominees. Executed proxies in the accompanying form will be voted at the Annual Meeting “FOR” the election as directors of the nominees named below, unless authority to do so is withheld.
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DIRECTORS STANDING FOR ELECTION AT THE 20072009 ANNUAL MEETING
CLASS III — TERM EXPIRES AT THE 2009 ANNUAL MEETING
Name | Age | Principal Occupation and Other Information | ||||
| Charles E. Sykes | 46 | Charles E. Sykes was elected to the Board of Directors in August, 2004 to fill the vacancy created by the retirement of the Company’s founder and former Chairman, John H. Sykes. Mr. Charles Sykes joined the Company in September, 1986 and has served in numerous capacities throughout his years with the Company. Mr. Charles Sykes was appointed as Vice President of Sales, North America in 1999 and between the years of 2000 to 2003 served as Group Executive, Senior Vice President of Marketing and Global Alliances, and Senior Vice President of Global Operations. Mr. Sykes was appointed President and Chief Operating Officer in July, 2003 and was named President and Chief Executive Officer in August 2004. Mr. Sykes received his Bachelor of Science degree in mechanical engineering from North Carolina State University in 1985. Mr. Sykes serves on a number of community and charitable organizations, including the Board of Directors of America’s Second Harvest of Tampa (a community food bank), Vice Chair of the Board of Directors of the Tampa Chamber of Commerce, the Tampa Bay Partnership — Council of Governors, the Board of Trustees for the University of Tampa, the Hillsborough County Economic Development Committee and a member of the Board of Directors of A Baseball Community, Inc. | ||||
| Furman P. Bodenheimer, Jr. | 79 | Furman P. Bodenheimer, Jr. was elected to the Board of Directors in 1991 and is a member of the Nominating and Corporate Governance Committee and the Finance Commitee. Mr. Bodenheimer has been President and Chief Executive Officer of Zickgraf Enterprises, Inc. and Nantahala Lumber in Franklin, North Carolina for more than the past five years. Mr. Bodenheimer is retired as president of the First Citizens Bank & Trust Company in North Carolina, where he was employed for 30 years. | ||||
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Name | Age | Principal Occupation and Other Information | ||||
| William J. Meurer | 65 | William J. Meurer was elected to the Board of Directors in October 2000 and is a member and Chairman of the Audit Committee and a member of the Finance Committee. Previously, Mr. Meurer was employed for 35 years with Arthur Andersen LLP where he served most recently as the Managing Partner for Arthur Andersen’s Central Florida operations. Since retiring from Arthur Andersen in 2000, Mr. Meurer has been a private investor and consultant. Mr. Meurer also serves on the Board of Trustees for St. Joseph’s Baptist Health Care and as a member of the Board of Directors of the Eagle Family of Funds, Tribridge, Inc., Walter Mortgage Company and Lifelink HealthCare Institite. | ||||
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
CLASS II — TERM EXPIRES AT THE 2010 ANNUAL MEETING
Name | Age | Principal Occupation and Other Information | ||||
| Paul L. Whiting | Paul L. Whiting was elected to the Board of Directors in December of 2003 and was elected Chairman in August, 2004. He is also a member of the Board’s Audit Committee. Since 1997 Mr. Whiting has been President of Seabreeze Holdings, Inc., a privately held consulting and investment company. From 1991 through 1996, Mr. Whiting held various positions within Spalding & Evenflo Companies, Inc., including Chief Executive Officer. | |||||
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| Mark C. Bozek | Mark C. Bozek was elected to the Board of Directors in August of 2003 and is a member and Chairman of the Compensation and Human Resource Development Committee. Mr. Bozek is the President of Galgos Entertainment, a privately held film production company which he founded in January 2003. From March 1997 until February 2003, Mr. Bozek served as the Chief Executive Officer of HSN (f/k/a Home Shopping Network). From April 1993 until February 1996, Mr. Bozek served as the Vice President of Broadcasting for QVC. | |||||
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Name | Age | Principal Occupation and | ||||
| Lt. | Lt. General Michael DeLong (USMC Retired) was elected to the Board of Directors in September of 2003 and is a member of the Nominating and Corporate Governance Committee. Since October 2003, Lt. Gen. DeLong has served as Vice Chairman of Shaw Arabia Limited, President of Shaw CentCom Services, LLC, and Senior Vice President of the Shaw Group, Inc. On February 19, 2008, Lt. Gen. DeLong was named President of Boeing Middle East, Ltd. From 1967 until his retirement on November 1, 2003, Lt. Gen. DeLong led a distinguished military career, most recently serving as the Deputy Commander, United States Central Command at MacDill Air Force Base, Tampa, Florida. He holds a Master’s Degree in Industrial Management from Central Michigan University and an honorary Doctorate in Strategic Intelligence from the Joint Military Intelligence | |||||
| Iain A. Macdonald | Iain A. Macdonald was originally elected to the Board of Directors in 1998 and served until 2001, when he resigned for personal reasons. Mr. Macdonald was re-elected to the Board of Directors in May of 2004 and | |||||
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CLASS I — TERM EXPIRES AT THE 20082011 ANNUAL MEETING
Name | Age | Principal Occupation and Other Information | |||||
| H. Parks Helms | H. Parks Helms has served as a director of the Company since its inception in 1977 and is a member and Chairman of the Nominating and Corporate Governance Committee. Mr. Helms is President and Managing Partner of the law firm of Helms, Henderson & Associates, P.A., in Charlotte, North Carolina and has been with the firm, and its predecessor firm, Helms, Cannon, Henderson & Porter, P.A. for more than the past five years. Mr. Helms has held numerous political appointments and elected positions, including as a member of the North Carolina House of | ||||||
| Linda McClintock-Greco, M.D. | 54 | Linda McClintock-Greco, M.D. was elected to the Board of Directors in May of 1998 and is a member of the Nominating and Corporate Governance Committee. Dr. | |||||
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Name | Age | Principal Occupation and Other Information | |||||
| James K. (Jack) Murray, Jr. | 73 | James K. Murray, Jr., was elected to the Board of Directors in May 2005 and is a member and Chairman of the Finance Committee and a member of the Compensation and Human Resource Development Committee. | |||||
| James S. MacLeod | James S. MacLeod was elected to the Board of Directors in May 2005 and is a member of the Compensation and Human Resource Development Committee and the Finance Committee. Mr. MacLeod has served as Managing Director of CoastalStates Bank in Hilton Head Island, South Carolina since February, 2004. Mr. MacLeod also serves on the Board of Directors of CoastalStates Bank and CoastalSouth Bancshares, its holding company. From June, 1982 to February, 2004, he held various positions at Mortgage Guaranty Insurance Corp in Milwaukee, Wisconsin, the last 7 years serving as its Executive Vice President. Mr. MacLeod has a Bachelor of Science degree in Economics from the University of Tampa, a Master of Science in Real Estate and Urban Affairs from Georgia State University and a Masters in City Planning from the Georgia Institute of Technology. Mr. MacLeod is currently a Trustee of the University of Tampa, Hilton Head Preparatory School and the Allianz Funds. | ||||||
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CORPORATE GOVERNANCE
The Company maintains a corporate governance page on its website which includes key information about its corporate governance initiatives, including its Corporate Governance Guidelines, Code of Ethics, and charters for the committees of the Board of Directors. The corporate governance page can be found atwww.sykes.com/investors.asp,, by clicking on “Corporate Governance.”
The Company’s policies and practices reflect corporate governance initiatives that are compliant with the listing requirements of the Nasdaq Stock Market and the corporate governance requirements of the Sarbanes-Oxley Act of 2002, including:
| • | the Board of Directors has adopted clear corporate governance policies; | |
| • | a majority of the board members are independent of the Company and its management; |
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| • | all members of the key board committees — the Audit Committee, the Compensation and Human Resource Development Committee, the Finance Committee and the Nominating and Corporate Governance Committee — are independent; | |
| • | the independent members of the Board of Directors meet regularly without the presence of management; | |
| • | the Company has adopted a code of ethics that applies to all directors, officers and employees which is monitored by its Nominating and Corporate Governance Committee; | |
| • | the charters of the Board committees clearly establish their respective roles and responsibilities; and | |
| • | the Company’s Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company, including the Board and the Audit Committee, regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. These procedures are described under “Communications With Our Board” below. |
Certain Relationships and Related Person Transactions
Review and Approval of Related Person Transactions.Transactions
In order to ensure that material transactions and relationships involving a potential conflict of interest for any executive officer or director of the Company are in the best interests of the Company, under the Code of Ethics adopted by the Board of Directors for all of our employees and directors, all such conflicts of interest are required to be reported to the Board of Directors, and the approval of the Board of Directors must be obtained in advance for the Company to enter into any such transaction or relationship. Pursuant to the Code, no officer or employee of the Company may, on behalf of the Company, authorize or approve any transaction or relationship, or enter into any agreement, in which such officer or any member of his or her immediate family, may have a personal interest without such Board approval. Further, no officer or employee of the Company may, on behalf of the Company, authorize or approve any transaction or relationship, or enter into any agreement, if they are aware that an executive officer or a director of the Company, or any member of any such person’s family, may have a personal interest in such transaction or relationship, without such Board approval.
The Company’s Audit Committee reviews all conflict of interest transactions involving executive officers and directors of the Company, pursuant to its charter.
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In the course of their review of a related party transaction, the Board and the Audit Committee considers:
| • | the nature of the related person’s interest in the transaction; | |
| • | the material terms of the transaction, including, without limitation, the amount and type of transaction; | |
| • | the importance of the transaction to the Company; | |
| • | the importance of the transaction to the related person; | |
| • | whether the transaction would impair the judgment of the director or executive officer to act in the best interests of the Company; and | |
| • | any other matters the Board or Committee deems appropriate. |
Any member of the Board or the Audit Committee who has a conflict of interest with respect to a transaction under review may not participate in the deliberations or vote respecting approval of the transaction, provided, however, that such director may be counted in determining the presence of a quorum.
Related Party Transactions.Transactions
During the year ended December 31, 2006,2008, the Company paid $365,816$185,810 to JHS Leasing of Tampa, Inc., an entity owned by Mr. John H. Sykes, former Chairman of the Board and Chief Executive Officer and current principal shareholder, for the use of its corporate aircraft. The lease of the aircraft is pursuant to a written agreement which has been approved by the Audit Committee and the Board. On a quarterly basis, the Audit Committee reviews a report which provides the details of each use of this aircraft by management, including the business purpose, the passengers, and the
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destination of each flight as well as the cost to the Company, to determine that each such use is in accordance with Company policy. On January 25, 2008, the Company entered into a real estate lease with Kingstree Office I, LLC, an entity controlled by Mr. John Sykes relating to the Company’s call center in Kingstree, South Carolina. On May 21, 2008 the Audit Committee of the Board reviewed this transaction and recommended approval to the full Board, which also approved the transaction. During the year ended December 31, 2008, the Company paid $346,456 to Kingstree Office I, LLC as rent on the Kingstree facility. On January 2, 2008, the Company entered into a Continuing Services Agreement in order to secure the services of David P. Reule, the Company’s former Sr. Vice President of Real Estate who retired on December 31, 2007. Upon retirement from the Company, Mr. Reule joined JHS Equity, LLC, a company controlled by Mr. John Sykes. Mr. Reule provided transitional services for the Company during 2008 primarily related to completion of a call center under construction at the time of his retirement, for which the Company paid $297,964 to JHS Equity, LLC during the year ended December 31, 2008. On May 21, 2008, the Audit Committee of the Board reviewed this transaction and recommended approval to the full Board, which also approved the transaction.
Director Independence
In accordance with NASDAQ rules, the Board affirmatively determines the independence of each Directordirector and nominee for election as a Directordirector in accordance with guidelines it has adopted, which include all elements of independence set forth in the NASDAQ listing standards. In conducting its evaluation of Mr. Whiting, the Board considered the Company’s consulting engagement of Mr. Whiting’s adult son, for which the compensation during each of the past two years has not exceeded $60,000.$120,000. In conducting its evaluation of Mr. Macdonald, the Board considered the business the Company conducted with Yakara, plc, a company that supplies interactive text response solutions that automate inbound and outbound customer contacts. Mr. Macdonald serves as Chairman of the Board of Yakara, plc. The Board determined that the business conducted with Yakara, plc was not material. The Board has determined that neither of these arrangements are of a level requiring disclosure under SEC rules and do not affect the independence of the subject Board members. Based upon these standards, at its meeting held on March 29, 2007,26, 2009, the Board
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determined that each of the following non-employee Directorsdirectors is independent and has no material relationship with the Company, except as a Directordirector and stockholdershareholder of the Company:
| (1 | ) | Paul L. Whiting | (6 | ) | Iain A. Macdonald | |||||
| (2 | ) | F. P. Bodenheimer, Jr. | (7 | ) | James S. MacLeod | |||||
| (3 | ) | Mark C. Bozek | (8 | ) | Linda McClintock-Greco, MD | |||||
| (4 | ) | Lt. Gen. Michael DeLong (Ret.) | (9 | ) | William J. Meurer | |||||
| (5 | ) | H. Parks Helms | (10 | ) | James K. Murray, Jr. |
| (1 | ) | Paul L. Whiting | (6 | ) | Iain A. Macdonald | |||||
| (2 | ) | F. P. Bodenheimer, Jr. | (7 | ) | James S. MacLeod | |||||
| (3 | ) | Mark C. Bozek | (8 | ) | Linda McClintock-Greco, MD | |||||
| (4 | ) | Lt. Gen. Michael DeLong (Ret.) | (9 | ) | William J. Meurer | |||||
| (5 | ) | H. Parks Helms | (10 | ) | James K. Murray, Jr. |
In addition, based on such standards, the Board affirmatively determined that Charles E. Sykes is not independent because he is the President and Chief Executive Officer of the Company.
Nominations for Directors
The Nominating and Corporate Governance Committee is responsible for screening potential director candidates and recommending qualified candidates to the boardBoard for nomination. In connection with carrying out its responsibility to identify individuals qualified to become members of the Board of Directors, the Committee has developed and recommendrecommended to the Board of Directors guidelines and criteria as to the desired qualifications of candidates for nomination for election as a director of the Company. In accordance with our Corporate Governance Guidelines, such criteria include considerations of age, skill, integrity, experience, time availability, appropriatestock exchange listing standards, and applicable federal and state lawlaws and regulations.
The Committee may use various sources for identifying and evaluating nominees for Directorsdirectors including referrals from our current Directors,directors, management and shareholders, as well as input from third party executive search firms retained at the Company’s expense. If the Committee retains one or more search firms, such firms may be asked to identify possible nominees, interview and screen such nominees and act as a liaison between the Committee and each nominee during the screening and evaluation process. The Committee will review the resume and qualifications of each candidate identified through any of the sources referenced above, and determine whether the candidate would add value to the Board. With respect to candidates that are determined by the Committee to be potential nominees, one or more members of the Committee will contact such candidates to determine the candidate’s general availability and interest in serving. Once it is determined that a candidate is a good prospect, the candidate will be invited to meet the full Committee which will conduct a personal interview with the candidate. During the interview, the Committee will evaluate whether the candidate meets the guidelines and criteria adopted by the Board, as well as exploring any special or unique qualifications, expertise and experience offered by the candidate and how such qualifications, expertiseand/or experience may complement that of existing Board members. If the candidate is approved by the Committee, as a result of the Committee’s determination that the candidate will be able to add value to the Board and the candidate expresses his or her interest in serving on the Board, the Committee will then review its conclusions with the Board and recommend that
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the candidate be selected by the Board to stand for election by the shareholders or fill a vacancy or newly created position on the Board.
The fourthree Class IIIII directors whose terms expire at the Annual Meeting have all been nominated by the Committee to stand for re-election.
The Committee will consider qualified nominees recommended by shareholders who may submit recommendations to the Committee in care of our Corporate Secretary, 400 North Ashley Drive, Tampa, Florida 33602. Any shareholder nominating an individual for election as a director at an annual meeting must provide written notice to the Secretary of the Company, along with the information specified below, which notice must be received at the principal business office of the Company no later than the date designated for receipt of shareholders’ proposals as set forth in the Company’s proxy statement for its annual shareholders’ meeting. If there has been no
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such prior public disclosure, then to be timely, a shareholder’s nomination must be delivered to or mailed and received at the principal business office of the Company not less than 60 days nor more than 90 days prior to the annual meeting of shareholders; provided, however, that in the event that less than 70 days notice of the date of the meeting is given to the shareholders or prior public disclosure of the date of the meeting is made, notice by the shareholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the annual meeting was mailed or such public disclosure was made.
To be considered by the Committee, shareholder nominations must be accompanied by: (1) the name, age, business and residence address of the nominee; (2) the principal occupation or employment of the nominee for at least the last five years and a description of the qualifications of the nominee; (3) the number of shares of our stock that are beneficially owned by the nominee; and (4) any other information relating to the nominee that is required to be disclosed in solicitations for proxies for election of directors under Regulation 14A of the Exchange Act, together with a written statement from the nominee that he or she is willing to be nominated and desires to serve, if elected. Also, the shareholder making the nomination should include: (1) his or her name and record address, together with the name and address of any other shareholder known to be supporting the nominee; and (2) the number of shares of our stock that are beneficially owned by the shareholder making the nomination and by any other supporting shareholders. Nominees for director who are recommended by our shareholders will be evaluated in the same manner as any other nominee for director.
We may require that the proposed nominee furnish us with other information as we may reasonably request to assist us in determining the eligibility of the proposed nominee to serve as a director. At any meeting of shareholders, the Chairman of the Board may disregard the purported nomination of any person not made in compliance with these procedures.
Communications with our Board
Shareholders and other parties interested in communicating with our Board of Directors may do so by writing to the Board of Directors, Sykes Enterprises, Incorporated, 400 N. Ashley Drive, Tampa, Florida 33602. Under the process for such communications established by the Board of Directors, the Senior Vice President and General Counsel of the Company reviews all such correspondence and regularly forwards to all members of the Board a summary of the correspondence. Directors may at any time review a log of all correspondence received by the Company that is addressed to the Board or any member of the Board and request copies of any such correspondence. Correspondence that, in the opinion of the Sr.Senior Vice President and General Counsel, relates to concerns or complaints regarding accounting, internal accounting controls and auditing matters is summarized and the summary and a copy of the correspondence is forwarded to the ChairChairman of the Audit Committee. Additionally, at the direction of the Audit Committee, the Company has established a worldwide toll free hotline administered by an independent third party through which employees may make anonymous submissions regarding questionable accounting or auditing matters. Reports of any anonymous submissions are sent to the Chairman of the Audit Committee and the Sr.Senior Vice President and General Counsel of the Company.
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MEETINGS AND COMMITTEES OF THE BOARD
The Board
Each Directordirector is expected to devote sufficient time, energy and attention to ensure diligent performance of his or her duties and to attend all Board, committee and stockholders’shareholders’ meetings. The Board met sixnine times during 2006,2008, of which four were regularly scheduled meetings and twofive of which were unscheduled meetings. All Directors directors
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attended at least 75% of the meetings of the Board and of the committees on which they served during the fiscal year ended December 31, 2006.2008. All of the Directorsdirectors attended the 20062008 Annual Meeting of StockholdersShareholders on May 23, 2006.21, 2008.
Committees of the Board
The boardBoard has threefour standing committees to facilitate and assist the Board in the execution of its responsibilities. The Board may also establish special committees as needed to assist the Board with review and consideration of non-routine matters. The standing committees are the Audit Committee, Finance Committee, the Compensation and Human Resource Development Committee and the Nominating and Corporate Governance Committee. In accordance with NASDAQ Stock Market and Securities and Exchange requirements, allAll the committees are comprised solely of non-employee, independent Directors.directors. Charters for each committee are available on the Company’s website atwww.sykes.com by first clicking on “Investors” and then on “Corporate Governance.” The charter of each committee is also available in print to any stockholdershareholder who requests it. The table below shows membership for the entire year 20062008 for each of the standing Board committees.committees (since May 22, 2008 for the Finance Committee, which was first appointed by the Board on that date).
| Nominating and Corporate | Compensation and Human Resource | |||||
| Audit Committee | Finance Committee | Governance Committee | Development Committee | |||
| William J. Meurer, Chair | James K. Murray, Jr., Chair | H. Parks Helms, Chair | Mark C. Bozek, Chair | |||
| Iain A. Macdonald | Furman P. Bodenheimer, Jr. | Dr. Linda McClintock-Greco | James K. Murray, Jr. | |||
| Paul L. Whiting | James S. MacLeod | Furman P. | James S. MacLeod | |||
| William J. Meurer | Lt. Gen. Michael P. DeLong (Ret) |
Audit Committee. The Audit Committee serves as an independent and objective party to monitor the Company’s financial reporting process and internal control system. The Committee’s responsibilities, which are discussed in detail in its charter, include, among other things, the appointment, compensation, and oversight of the work of the Company’s independent auditing firm, as well as reviewing the independence, qualifications, and activities of the auditing firm. The Company’s independent auditing firm reports directly to the Committee. All proposed transactions between the Company and the Company’s officers and directors, or an entity in which a Company officer or director has a material interest, are reviewed by the Committee, and the approval of the Committee is required for such transactions. DuringIn 2008, the year ended December 31, 2006, theAudit Committee held eleveneight meetings. The Board has determined that Mr. Meurer is an “audit committee financial expert” within the meaning of the rules of the Securities and Exchange Commission. The Committee is governed by a written charter, which is reviewed on an annual basis. A copy
Finance Committee. The principal purpose of the current AuditFinance Committee Charter is availableto assist the Board of Directors in evaluating significant investments and other financial commitments by the Company. The Committee has the authority to review and make recommendations to the Board with respect to debt and equity limits, equity issuances, repurchases of Company stock or debt, policies relating to the use of derivatives, and proposed mergers, acquisitions, divestitures or investments by the Company that require approval by the full Board. The Committee also has authority to approve capital expenditures not previously approved by the Board of Directors. The level of authority applies to capital expenditures in excess of $2 million but less than $5 million. This authority is used and the Committee convened only when management recommends a decision prior to the next Board meeting. In 2008, the Finance Committee held five meetings. The Committee is governed by a written charter, which is reviewed on the Company’s website atwww.sykes.com by first clicking on “Investors” and then on “Corporate Governance.”an annual basis.
Nominating and Corporate Governance Committee. The purpose of the Nominating and Corporate Governance Committee is to: (a) identify individuals qualified to become members of the Board of Directors of the Company and its subsidiaries; (b) recommend to the Board of Directors director nominees for election at the annual meeting of shareholders or for election by the Board of Directors to fill open seats between annual meetings;
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(c) recommend to the Board of Directors committee appointments for directors; (c) develop and recommend to the Board of Directors corporate governance guidelines applicable to the Company; and (d) monitor the Company’s compliance with good corporate governance standards. During the year ended December 31, 2006,In 2008, the Nominating and Corporate Governance Committee held four meetings. The Committee is governed by a written charter, which is reviewed on an annual basis. A copy of the current Nominating and Corporate Governance Committee Charter is available on the Company’s website at www.sykes.com by first clicking on “Investors” and then on “Corporate Governance.”
Compensation and Human Resource Development Committee. The Compensation and Human Resource Development Committee’s responsibilities, which are discussed in detail in its charter, include, among other things, the establishment of the base salary, incentive compensation and any other compensation for the Company’s President and Chief Executive Officer, and to review and approve the President and Chief Executive Officer’s recommendations for the compensation of
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certain executive officers reporting to him. This Committee also monitors the Company’s management incentive cash and equity based bonus compensation arrangements and other executive officer benefits, and evaluates and recommends the compensation policy for the Directorsnon-employee directors to the full Board for consideration. The Committee also determines compensationconsideration and benefits of the Company’s non-employee directors.approval. The Company engaged Mercer Human Resource Consulting to conduct a review of its total compensation program for executive officers and to assist the Committee in establishing a competitive compensation program for its executive officers that motivates performance and that is aligned with the interests of its stockholders.shareholders. This Committee is also responsible for providing oversight and direction regarding the Company’s employee health and welfare benefit programs as well as training and development. During 2006,In 2008, the Committee held foureight meetings. The Committee is governed by a written charter, which is reviewed on an annual basis. A copy of the current Compensation and Human Resource Development Committee Charter is available on the Company’s website at www.sykes.com by first clicking on “Investors” and then on “Corporate Governance.”
Compensation Committee Interlocks and Insider Participation
None
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EXECUTIVE COMPENSATION
Overview of Compensation Program
The Compensation and Human Resource Development Committee (referred to in this Analysis as the “Committee”) of the Board has been charged with the responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Committee’s goal is to ensure that the form and amount of compensation and benefits paid to its senior leadership team, specifically including the named executive officers, is fair, reasonable and sufficiently competitive to attract and maintain high quality executives who can lead the Company to achieve the goals that the Board believes will maximize shareholder value. Executive compensation matters are first considered by the Committee, which then makes recommendations to the Board, which then considers and approves or disapproves the Committee’s recommendations. As it relates to the compensation of the Company’s CEO, the Committee meets first with the CEO to obtain information regarding performance, objectives and expectations, discusses the matter with the Board and then makes a final compensation determination.
Compensation Philosophy and Objectives
The Committee believes that the most effective executive compensation program is one that is designed to enhance shareholder value by attracting and retaining the talent and experience best suited to manage, guide and build our business. This requires fair and competitive base salaries and benefits designed to attract qualified executives, as well as carefully designed bonus compensation strategies designed to link the interests of the executives to the long-term interests of our shareholders. In evaluating and determining the complete compensation
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packages for the Company’s executive officers generally, and the named executive officers specifically, the Committee reviews relevant market data provided by its consultant which includes an evaluation of the multiple components of the executive compensation and benefit packages paid to similarly situated executives of similarly situated peer companies. The Committee believes that the incentive bonus component of the executive compensation program has the potential to significantly influence the achievement of strategic goals of the Company, but to do that, must be carefully designed with those goals in mind. The Committee believes that this is best accomplished by rewarding the Company’s executives with a combination of cash and a meaningful component of stock-based compensation for the Company’s achievement of specific and pre-determined annual, long-term and strategic goals, and to withhold payment of that component of compensation if those goals are not achieved.
Setting Executive Compensation
Based on the foregoing objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive compensation program to motivate executives to achieve the business goals set by the Company and reward the executives for achieving those goals. The Committee meets on at least an annual basis with the Chief Executive Officer and representatives of Human Resources which together recommends a compensation outline for the executive management team other than the Chief Executive Officer. In furtherance of these goals, the Company, at the direction of the Committee engaged Mercer Human Resource Consulting, a division of Marsh & McLennan Companies (“Mercer”), to conduct a review of its total compensation program for all executive officers specifically including the President and Chief Executive Officer and the Chief Financial Officer as well as the other named executive officers. Mercer provided the Committee with relevant market data and alternatives to consider when making compensation decisiondecisions for the President and Chief Executive Officer, and on the recommendations being made by management for executives other than the President and Chief Executive Officer.
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In making its compensation decisions for 2006,2008, the Committee compared each element of total compensation against a peer group of ten (10)thirteen (13) other publicly traded companies which the Committee believes compete with the Company in the customer contact management segment and for executive talent as well (the “Compensation Peer Group”). The composition of the Compensation Peer Group will be reviewed annually to determine whether there are new companies which should be added, or existing companies which should be deleted. The other companies included in the Compensation Peer Group and used as the basis for comparison and analysis by the Committee for fiscal year 20062008 were:
• | • StarTek, Inc. | |
| • | • TechTeam Global, Inc. | |
| • | • | |
| • Convergys Corporation | • TeleTech Holdings, Inc. | |
| • ICT Group, Inc. | • APAC Customer Services, Inc. | |
| • MPS Group, Inc. | • Spherion Corp. | |
| • Etelecare Global Solutions |
As a result of the Committee’s belief that incentive compensation for its executives should be directly related to the Company’s performance, the Committee requested that Mercer perform a comparison of 74 general categories, (growth measures, margin measures, return measures and shareholder measures) which included 15 specific performance metrics of the Company on both a1-year and3-year comparison against the Compensation Peer Group. The growth performance metrics measured werewere: (a) 1-year sales growth,revenue, (b) 1-year diluted earnings per share growth,net income, (c) 1-year free cash flow, growth, (d) EBITDAdiluted EPS, and (e) EBITDA. The margin (e) operating income margin, (f)performance metrics measured were: (a) gross profit, (b) net profit, margin,(c) operating
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income, and(g) 3-year annualized (d) EBITDA. The return metrics measured were: (a) return on capital, (b) return on average equity, and (c) return on average assets. The shareholder performance metrics measured were: (a) total shareholder return.return as of12/31/07, (b) total shareholder return as of6/30/08 and (c) profit to earnings ratio as of12/31/07. Based upon fiscal year end 20052007 figures, the Company exceeded the Compensation Peer Group growth measure performance at the 50th percentile in one (1) of the five (5) measured metrics and at the 75th percentile on another on a1-year comparison, and exceeded the Compensation Peer Group on three (3) of the four (4) measured metrics at the 75th percentile on a3-year comparison. The Company exceeded the Compensation Peer Group margin measure performance at the 50th percentile in three (3) of the seven (7)four (4) measured metrics.metrics, and at the 75th percentile on the other on a1-year comparison, and exceeded the Compensation Peer Group margin measure performance at the 50th percentile on two (2) of the measured metrics, and at the 75th percentile on the other two (2) measured metrics on a3-year comparison. The Company exceeded the Compensation Peer Group return measure performance at the 50th percentile on one (1) of the three (3) measured metrics, and at the 75th percentile on the other two (2) measured metrics on a1-year comparison, and exceeded the Compensation Peer Group at the 75th percentile on all three measured metrics on a3-year comparison. The Company exceeded the Compensation Peer Group shareholder measure performance at the 50th percentile on two (2) of the three (3) measured metrics, and at the 75th percentile on the other on a1-year comparison, and exceeded the Compensation Peer Group at the 50th percentile on (1) of the measured metrics, and at the 75th percentile on the other two (2) on a3-year comparison. Based upon the measures and weightings used by Mercer in its analysis, the Company ranked third in overallexceeded the performance out of all companies in the Compensation Peer Group.Group’s overall performance at the 50th percentile on a1-year comparison, and at the 75th percentile on a3-year comparison.
When comparing the average aggregate total cash compensation paid by the Company in 20052007 to its top five (5)four (4) highest paid proxy-named executive officers to that paid by the Compensation Peer Group, the Company ranked sixth (6in the 50th) out of percentile, with the eleven. CurrentChief Executive Officer ranking just above the 25th percentile. Average current salaries of the Company’s named executive officers, and the entire executive management team, are also at an average of 80% of the 50th percentile of the Compensation Peer Group.Group, with the Chief Executive Officer ranking just above the 25th percentile. When comparing average aggregate total direct compensation paid by the Company in 20052007 to its top five (5)four (4) highest paid proxy-named executive officers to that paid by the Compensation Peer Group, the Company also ranked seventh (7in the 50th) out of percentile, with the eleven. The Committee attributedChief Executive Officer ranking between the relatively low aggregate total direct compensation rankings of25th percentile and the Company in part to the fact that, except for matching contributions under the deferred compensation plan, the Company has not made equity-based long-term incentive awards to its executive officers for the past three years.50th percentile.
The Committee believes that it should generally set compensation of its executives in the general range of 80% to 120% of the 50th percentile of compensation paid to similarly situated executives of the companies comprising the Compensation Peer Group. However, variations from this objective may occur as dictated by the experience level of the individual and other market factors. The Committee recognizes, however, that long – term, equity incentive compensation awards may lift the total direct compensation of its executives above the 50th percentile of the Compensation Peer Group, but if that occurs, it will be as a result of the Company’s achievement of long term goals specifically targeted at increasing shareholder value.
A significant percentage of total compensation to our senior executives is allocated to performance-based incentives as a result of the philosophy mentioned above. ThereAlthough there is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term performance-based incentive compensation. Rather,compensation, in 2008 the Committee reviewed(upon the advice of Mercer) continued the structure utilized in 2007, which determined performance-based incentives as a percentage of base salary validated against current market data. The recommendations provided by Mercer were based upon a review of the peer group and industry standards, together with of each of the senior executive’s existing compensation and performance as relayed by the Chief Executive Officer, and requested that Mercer re-evaluate its recommendations based upon comments and suggestions from the Committee. The revised recommendations of Mercer ultimately formed the basis of the Committee’s senior executive compensation structure for 2006.Officer. Income from such incentive compensation is realized as a result of the performance of the Company or the
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individual, depending on the type of award, compared to established goals. During the three (3) years prior to 2006, the compensation granted by the Committee to our senior executives was almost exclusively in the form of cash. Beginning in 2006, the Committee has determined that to be effective over the long term, the compensation policy of the Company must require that a significant portion of total direct compensation be in the form of long-term equity incentive grants and, therefore, a significant percentage of total direct compensation to our executive officers in fiscal year 2006years 2007 and 2008 was in the form of non-cash, long-term equity incentive awards.
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Elements of Compensation
The current compensation program for our executives includes several direct compensation components. Those components are base salary, annual cash incentive awards and equity-based incentive awards, which are currently granted in the form of performance — basedperformance-based restricted stock (or restricted stock units), time-vested restricted stock and stock appreciation rights. Our executives are also permitted to participate in our 401(k) plan which is available to all employees, as well as our non-qualified executive deferred compensation plan. The purpose of the deferred compensation plan is to provide our executives with the ability to take advantage of tax deferred savings which may not be fully available to them under our 401(k) plan.
Base Salary
Base salary is designed to provide each executive with a fixed amount of annual compensation that is competitive with the marketplace. Having a certain level of fixed compensation provides stability which allows our executives to remain focused on business issues. Base salaries for the named executive officers are determined for each executive based on his or her position and responsibility by using market data provided to the Committee by Mercer. Base salary ranges of our executives are designed so that salary opportunities for a given position will be approximately between 80% and 120% of the midpoint of the base salaries of similarly positioned executives in the Compensation Peer Group. During its review of base salaries for executives, the Committee primarily considers (a) the market data provided by Mercer, (b) internal review of the executive’s compensation, both individually and relative to other officers, and (c) individual performance of the executive. Salary levels are typically considered annually as part of the Company’s performance review process as well as upon a promotion or other change in job responsibility. Merit based increases to salaries of our executive leadership team, other than the President and Chief Executive Officer, are based on the Committee’s assessment of the individual’s performance, with input from the President and Chief Executive Officer.
Performance-Based Annual Cash Incentive Compensation
The annual cash incentive component of the total direct compensation paid to our executive leadership team is designed to awardreward achievement of pre-determined annual corporate, and sometimes individual, performance goals. The annual incentive awards are designed to reward current performance by basing payment on the achievement of quantifiable performance measures that reflect contributions to the success of our business. The annual incentive program is intended to encourage actions by the executives that contribute directly to our operating and financial results. In fiscal year 2006,2008, the annual cash incentive component of total direct compensation paid to the President and Chief Executive Officer, and all other executive officers, (except for the Sr. Vice President, General Counsel and Secretary and the Sr. Vice President of Real Estate), was determined based solely upon the achievement ofpre-determined corporate financial goals. The annual cash incentive component of total direct compensation paid to the Sr. Vice President, General Counsel and Secretary was determined based 50% upon the achievement ofpre-determined corporate financial goals, and 50% upon the achievement of pre-determined individual performance goals. The annual cash incentive component of total direct compensation paid to the Sr. Vice President, Real Estate was based solely upon the achievement of pre-determined individual performance goals.
At the beginning of the year, the Committee sets minimum, target and maximum levels for the portion of the cash incentive component of total direct compensation that is determined by reference to corporate financial performance. Threshold performance represents the minimum performance that still warrants incentive recognition for that particular goal, and is paid at 50% of the target award level. Maximum performance represents the highest
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level likely to be attained and is paid at 150% of the target award level. No annual performance based cash incentive compensation determined by reference to corporate financial performance is paid to any executive of the Company if our financial results do not exceed the threshold determined for that year. At the beginning of each year, the Committee also sets the award percentage tied to salary for the President and Chief Executive Officer and recommends an award percentage for each of the other members of the executive leadership team that they will receive if the performance goals are met. The Committee’s goal in setting target award levels is to create a compensation program such that the potential incentive awards, when combined with each officer’s base salary, will provide a fully competitive total cash compensation opportunity, with the portion of compensation “at risk” (i.e., the target award level) being reflective of the level of that officer’s accountability for contributing to bottom line financial results, and the degree of influence that officer has over results. In setting these
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percentages, the Committee considers these factors as well as data from the market assessment provided by Mercer. In 2006,2008, the target award percentages were set at 75% of base salary for the President and Chief Executive Officer, 60% (increased to 70% as of Sept. 28, 2008) of base salary for the Chief Financial Officer, and between 30%40% and 40%60% of base salary for each of the other named executive officers and members of the executive leadership team.
For fiscal year 2006,2008, the Committee established the target financial goal of the Company on which the annual performance based cash incentive compensation awards would be based as $29,109,000$52,853,000 of consolidated earnings before taxes. The amount each named executive officer received in 20062008 under our annual performance based cash incentive compensation program has been reported in the Summary Compensation Table in the Non-Equity Incentive Compensation column. In previous years prior to 2006, these amounts were reported under the bonus column of the predecessor to the Summary Compensation Table.
Each of the named executive officers for the fiscal year ended December 31, 2005,2008, received the following payments in March 20062009 as payment of the annual cash performance bonus earned for fiscal year 20052008 performance.
| 2005 Annual Cash | 2008 Annual Cash | |||||||
Name | Performance Bonus | Performance Bonus | ||||||
| Charles E. Sykes | $ | 338,125 | $ | 465,000 | ||||
| W. Michael Kipphut | $ | 248,738 | $ | 290,282 | ||||
| James C. Hobby | $ | 206,250 | $ | 202,374 | ||||
| Lawrence Zingale | $ | -0- | ||||||
| Lawrence R. Zingale | $ | 206,217 | ||||||
| David L. Pearson | $ | 144,375 | $ | 145,555 | ||||
Performance-Based, Long-Term, Equity Incentive Compensation
The long-term, performance-based equity incentive compensation component of total direct compensation for our executives is designed to encourage them to focus on long-term Company performance and provides an opportunity for executive officers and certain designated key employees to increase their stake in the Company through grants of the Company’s common stock based on a three-year performance cycle. The Committee currently utilizes a combination of restricted stock (or restricted stock units for executives and key employees in foreign countries who would suffer unfavorable tax consequences due to local tax laws if they were to receive restricted stock) and stock appreciation rights (“SARs”). The Company has not issued stock options since 2003. By using a mix of restricted stock and SARS,SARs, the Company is able to compensate executives for sustained increases in the Company’s stock performance. The restricted stock component is only earned when certain Company financial performance goals are attained, and the full value is maximized when the value of the Company’s stock increases. The SARs component delivers valueawarded to executive officers represent the executive only whenright to receive, on the valuespecified dates, that number of shares of the Company’s common stock increases.determined by dividing (i) the total number of shares of stock subject to the SAR
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being exercised by the Participant, multiplied by the amount by which the fair market value of a share of the Company’s common stock on the day the right is exercised exceeds the fair market value of a share of the Company’s common stock on the date of grant of the SAR (the “Spread”), by (ii) the fair market value of a share of the Company’s common stock on the exercise date. The Committee believes both of these components of performance-based long-term equity incentive compensation directly align the interests of the Company’s executives with the interests of its shareholders. The Committee’s goal in setting target long-term equity incentive award levels is to create a complete compensation program, such that the potential annual cash and long-term equity incentive awards, when combined with each officer’s base salary, will provide a fully competitive total compensation opportunity, with there being a significant portion of potential compensation “at risk.” In setting award percentages (which are tied to salary), the Committee considers the level of each officer’s accountability for contributing to bottom line financial results, and the degree of influence that officer has over results, as well as data from the market assessment provided by Mercer.
The Committee first utilized this method offor determining long-term equity incentives in early 2006 in setting the long-termincentive compensation for theon a three-year performance cycle for the performance cycle beginning in fiscal yearJanuary 1, 2005.
2005 through 2007 Performance Cycle. In May, 2006, the Committee established the target level of Company financial performance for the performance-based long-term equity incentive component of total direct compensation that willwould be used to determine awards to certain of the named executive officers and other executive officers for the three-year performance cycle beginning on January 1, 2005 and ending on December 31, 2007. For this three-year performance cycle, the awards willwere only to be paid if the Company reachesreached the established target level of financial performance, and in that event, the payment willwould be made at 100% of the established awards. There iswas no opportunity for the participating executives to earn more than that amount under the long-term equity incentive component of compensation for this three-year measurement cycle. For the three-year performance cycle beginning in fiscal year 2005, the Committee made
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awards of performance-based restricted stock (or restricted stock units, as the case may be) and cash only. The target award percentages were set at 60% of base salary for both the President and Chief Executive Officer and the Chief Financial Officer, and between 35% and 50% of base salary for each of the other named executive officers and members of the executive leadership team. Twenty five (25) percent of the full award value willwas to be paid in cash to alleviate some of the tax burden associated with the delivery of the stock. The financial targets were achieved and the stock was delivered to the award recipients on April 1, 2008.
2006 through 2008 Performance Cycle.In May, 2006, the Committee also established minimum, target and maximum Company financial performance levels for the performance-based long-term equity incentive component of total direct compensation that would be used to determine awards to certain of the named executive officers, other executive officers and certain key employees for the three-year performance cycle beginning on January 1, 2006 and ending on December 31, 2008. Threshold performance represented the minimum performance that would still warrant incentive recognition for that particular goal, and would be paid at 80% of the target award level. Maximum performance represented the highest level likely to be attained and would be paid at 150% of the target award level. For the three-year performance cycle beginning in fiscal year 2006, the Committee made awards of performance-based restricted stock (or restricted stock units as the case may be) and time vesting SARs. The target award percentages for performance based restricted stock were set at 133% of base salary for the President and Chief Executive Officer, 80% of base salary for the Chief Financial Officer, and between 20% and 67% of base salary for each of the other named executive officers, members of the executive leadership team and other key employees. The target award percentages for SARs were set at 67% of base salary for the President and Chief Executive Officer, 40% of base salary for the Chief Financial Officer, and between 20% and 33% of base salary for each of the other named executive officers and members of the executive leadership team. The target goal for two thirds of the performance-based restricted share awards was established by the Committee to be that income from operations of
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the Company, as reported in its audited Consolidated Statement of Operations, had increased during fiscal years 2006, 2007 and 2008 (measured as of December 31, 2008) at least in an amount equal to 10% compounded annual growth over the amount reported for the 2005 fiscal year. The target goal for one third of the performance-based restricted share awards is that gross revenue from operations of the Company, as reported in its audited Consolidated Statements of Operations, had increased during fiscal years 2006, 2007 and 2008 (measured as of December 31, 2008) at least in an amount equal to 4% compounded annual growth over the amount reported for the 2005 fiscal year. The SAR awards vested in equal one third amounts based upon the executive being employed by the Company on each of March 29, 2007, March 29, 2008 and March 29, 2009. The financial targets were achieved at the 150% level and the stock was delivered to the award recipients on March 30, 2009.
2007 through 2009 Performance Cycle. In December, 2006, the Committee established minimum, target and maximum Company financial performance levels for the performance-based long-term equity incentive component of total direct compensation that will be used to determine awards to certain of the named executive officers, other executive officers and certain key employees for the three-year performance cycle beginning on January 1, 20062007 and ending on December 31, 2008.2009. Threshold performance represents the minimum performance that still warrants incentive recognition for that particular goal, and is paid at 80% of the target award level. Maximum performance represents the highest level likely to be attained and is paid at 150% of the target award level. None of the restricted stock awards will vest and be delivered to any executive of the Company if our financial results do not exceed the threshold determined for that three-year measurement period. For the three-year performance cycle beginning in fiscal year 2006,2007, the Committee made awards of performance-based restricted stock (or restricted stock units as the case may be) and time vesting SARs. The target award percentages for performance based restricted stock were set at 133% of base salary for the President and Chief Executive Officer, 80% of base salary for the Chief Financial Officer, and between 20% and 67% of base salary for each of the other named executive officers, members of the executive leadership team and other key employees. The target award percentages for SARs were set at 67% of base salary for the President and Chief Executive Officer, 40% of base salary for the Chief Financial Officer, and between 20% and 33% of base salary for each of the other named executive officers and members of the executive leadership team. The target goal for two thirds of the performance-based restricted share awards was established by the Committee to be that income from operations of the Company, as reported in its audited Consolidated Statement of Operations has increased during fiscal years 2006, 2007, 2008 and 20082009 (measured as offrom January 1, 2007 through December 31, 2008)2009) equals at least in an amount equal to 10% compounded annual growth over the amount reported for the 2005 fiscal year.$110,210,000. The target goal for one third of the performance-based restricted share awards is that gross revenue from operations of the Company, as reported in its audited Consolidated Statements of Operations has increased during fiscal years 2006,(measured from January 1, 2007 and 2008 (measured as ofthrough December 31, 2008)2009) equals at least in an amount equal to 4% compounded annual growth over the amount reported for the 2005 fiscal year.$1,992,000,000. The SARSSAR awards vest in equal one third amounts based upon the executive being employed by the Company on each of March 29, 2007,2008, March 29, 20082009 and March 29, 2009. The SARs awarded2010.
2008 through 2010 Performance Cycle. In December, 2007, the Committee established minimum, target and maximum Company financial performance levels for the performance-based long-term equity incentive component of total direct compensation that will be used to determine awards to certain of the named executive officers, other executive officers and certain key employees for the three-year performance cycle beginning on January 1, 2008 and ending on December 31, 2010. Threshold performance represents the right to receive, on the respective dates set forth above,minimum performance that number of sharesstill warrants incentive recognition for that particular goal, and is paid at 80% of the Company’s commontarget award level. Maximum performance represents the highest level likely to be attained and is paid at 150% of the target award level. None of the restricted stock awards will vest and be delivered to any executive of the Company if our financial results do not exceed the threshold determined by dividing (i)for that three-year measurement period. For the total numberthree-year performance cycle beginning in fiscal year 2008, the Committee made awards of sharesperformance-based restricted stock (or restricted stock units as the case may be) and time vesting SARs. The target award percentages for performance based restricted stock were set at 133% of stock subject tobase salary for the SAR being exercisedPresident and Chief Executive Officer, 80% of base salary for the Chief Financial
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Officer, and between 20% and 67% of base salary for each of the other named executive officers, members of the executive leadership team and other key employees. The target award percentages for SARs were set at 67% of base salary for the President and Chief Executive Officer, 40% of base salary for the Chief Financial Officer, and between 20% and 33% of base salary for each of the other named executive officers and members of the executive leadership team. The target goal for two thirds of the performance-based restricted share awards was established by the Participant, multipliedCommittee to be that income from operations of the Company, as reported in its audited Consolidated Statement of Operations, during fiscal years 2008, 2009 and 2010 (measured from January 1, 2008 through December 31, 2010) equals at least $183,720,000. The target goal for one third of the performance-based restricted share awards is that gross revenue from operations of the Company, as reported in its audited Consolidated Statements of Operations during fiscal years 2008, 2009 and 2010 (measured from January 1, 2008 through December 31, 2010) equals at least $2,388,953,000. The SAR awards vest in equal one third amounts based upon the executive being employed by the amount by whichCompany on each of January 2, 2009, January 2, 2010 and January 2, 2011.
2009 through 2011 Performance Cycle. In December, 2008, the fair market valueCommittee established minimum, target and maximum Company financial performance levels for the performance-based long-term equity incentive component of a sharetotal direct compensation that will be used to determine awards to certain of the Company’s common stocknamed executive officers, other executive officers and certain key employees for the three-year performance cycle beginning on January 1, 2009 and ending on December 31, 2011. Threshold performance represents the day the rightminimum performance that still warrants incentive recognition for that particular goal, and is exercised exceeds the fair market value of a sharepaid at 80% of the Company’s common stock ontarget award level. Maximum performance represents the date of granthighest level likely to be attained and is paid at 150% of the SAR (the “Spread”), by (ii) the fair market value of a sharetarget award level. None of the Company’s commonrestricted stock awards will vest and be delivered to any executive of the Company if our financial results do not exceed the threshold determined for that three-year measurement period. For the three-year performance cycle beginning in fiscal year 2009, the Committee made awards of performance-based restricted stock (or restricted stock units as the case may be) and time vesting SARs. The target award percentages for performance based restricted stock were set at 183% of base salary for the President and Chief Executive Officer, 93% of base salary for the Chief Financial Officer, and between 20% and 93% of base salary for each of the other named executive officers, members of the executive leadership team and other key employees. The target award percentages for SARs were set at 92% of base salary for the President and Chief Executive Officer, 47% of base salary for the Chief Financial Officer, and between 23% and 47% of base salary for each of the other named executive officers and members of the executive leadership team. The target goal for two thirds of the performance-based restricted share awards was established by the Committee to be that income from operations of the Company, as reported in its audited Consolidated Statement of Operations, during fiscal years 2009, 2010 and 2011 (measured from January 1, 2009 through December 31, 2011) equals at least $230,351,000. The target goal for one third of the performance-based restricted share awards is that gross revenue from operations of the Company, as reported in its audited Consolidated Statements of Operations during fiscal years 2009, 2010 and 2011 (measured from January 1, 2009 through December 31, 2011) equals at least $2,821,514,000. The SAR awards vest in equal one third amounts based upon the executive being employed by the Company on the exercise date.each of January 5, 2010, January 5, 2011 and January 5, 2012.
The amount each named executive officer received in 20062008 as performance-based long-term equity incentive compensation for both the three-year measurement periodsperiod beginning in 2005 and 20062008 has been reported in the summary compensation table in the Equity Incentive CompensationStock Awards column. For the three-year period prior to 2006, the Company did not award any performance-based long-term equity incentive awards.
Executive Deferred Compensation
Participation in the Executive Deferred Compensation Plan (the “DC Plan”) is limited to employees at the Director level and above within the Company’s organizational structure (currently, in ascending order, Directors, Senior Directors, Executive Directors, Vice Presidents, Senior Vice Presidents, and the President). Participants in
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the DC Plan may elect to defer any amount of base compensation and bonus. The Company matches a portion of amounts deferred by participants at the level of vice presidentVice President and above on a quarterly basis as follows: 50% match on salary deferred, up to a total match of $12,000.00 per year for senior vice presidentsSenior Vice Presidents and above and $7,500.00 per year for vice presidents.Vice Presidents. No match is made on deferrals by other participants. The matching contributions made to the DC Plan by the Company are made in the form of Company common stock.
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Compensation deferred by a participant while participating in the DC Plan is deferred until such participant’s retirement, termination, disability or death, or a change in control of the Company, as defined in the DC Plan, and in such event is paid out to the participant or his beneficiary. Under current tax law, a participant does not recognize income with respect to deferred compensation until it is paid to him or her. Upon payment, the participant will recognize ordinary income in an amount equal to the sum of the cash and the fair market value of the shares of stock received, and the Company will be entitled to a deduction equal to the income recognized by the participant.
Distributions of the participants’ deferred compensation and Company stock contributed as matching contributions is made as soon as administratively feasible six months after retirement or termination of employment, unless the participant dies or becomes disabled while still an employee, in which case both distributions are made as soon as administratively feasible. Alternatively, a participant may, aton the timefirst day of initial participation in the DC Plan, elect to receive benefits undersecond month following the DC Plan in the event of retirementdeath or disability in 120 monthly installments.disability.
In the event the participant terminates employment (for reasons other than death, disability or retirement) without participating in the DC Plan for three years, the matching contributions and earnings attributable thereto are forfeited. In the event that a participant terminates employment after three years but less than five years of participation in the DC Plan, the participant forfeits 67% of the matching contribution and earnings. In the event a participant terminates employment after five years but less than seven years of participation in the DC Plan, the participant forfeits 33% of the matching contribution and earnings. In the event a participant terminates employment after seven years of participation in the DC Plan, the participant is entitled to retain all of the matching contribution and earnings.
In the event of a distribution of benefits as a result of a change in control, the Company will increase the benefitbenefits for the Senior Vice Presidents and the President by an amount sufficient to offset the income tax obligations created by the distribution of benefits.
Participants forfeit undistributed matching contributions if the participant is terminated for “cause” as defined in the DC Plan or the participant enters into a business or employment which the Company’s Chief Executive Officer determines to be in violation of any non-compete agreement between the participant and the Company.
Other Elements of Compensation
For our named executive officers, other than Mr. Zingale, the amount of compensation shown under the Other Compensation column of the Summary Compensation Table represents less than 2% of their total compensation for the year. The amount of “Other Compensation” for Mr. Zingale is larger because it includes the payment of relocation expenses upon his hiring in January, 2006. These amounts represented mainly Company matches to our deferred compensation plan,the DC Plan, excess group term life insurance premiums and additional compensation paid to executive employees related to health and welfare benefits. We also have change of control provisions in the employment agreements with our President and Chief Executive Officer, and our Chief Financial Officer, as well as in all of the equity incentive agreements with all of our executives and key employees. The change of control provisions in the two employment agreements are “double-trigger” arrangements, meaning that payments are only made if there is a change in control of the Company and the officer’s employment is terminated without cause, or the officer terminates employment for good reason, as such terms are defined in their respective employment agreements. All of our employment agreements with the named executive officers, and the other executive officers, contain severance agreements ranging from one to three years in the event of termination by the Company other than for cause. These agreements are discussed in greater detail on page 2533 under “Potential
21
Payments onUpon Termination or Change of Control.” We believe that providing these agreements helps increase our ability to attract, retain and motivate highly qualified management personnel and encourage their continued dedication without distraction from concerns over job security relating, among other things, to a change in control of the Company.
Perquisites and Other Personal Benefits
The Company provides named executive officers with perquisites and other personal benefits that the Company and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to named executive officers.
17
The named executive officers are permitted to fly in business class when traveling overseas on business and are permitted to attend sporting events utilizing companyCompany paid tickets that are not otherwise utilized in connection with business development.
Tax and Accounting Implications
Deductibility of Executive Compensation
As part of its role, the Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Cod,Code, which provides that the Company may not deduct compensation of more than $1,000,000 per year that is paid to certain individuals. The Company believes that compensation paid under the management incentive plans is generally fully deductible for federal income tax purposes. However, in certain situations, the Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for its executive officers.
Nonqualified Deferred Compensation
On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law, changing the tax rules applicable to nonqualified deferred compensation arrangements. TheFinal regulations have now become effective and the Company believes it is operating in compliancehas amended its agreements containing deferred compensation components to comply with the statutory provisions which were effective January 1, 2005.those regulations. A more detailed discussion of the Company’s nonqualified deferred compensation arrangements is provided beginning on page 1631 under the heading “Executive“Nonqualified Deferred Compensation.”
Accounting for Equity Based Compensation
Beginning on January 1, 2006, the Company began accounting for stock-based payments, including those under its long-term incentive programs, in accordance with the requirements of FASB Statement 123(R).
22
Stock Ownership Guidelines
The Board has adopted stock ownership guidelines for the named executive officers and other members of the senior management team, which vary by position from 150% to 400% of base salary. These guidelines, which allow the executives five (5) years beginning January 1, 2008 to acquire this amount of stock, were adopted in 2006. The Committee will review share ownership of the Company’s executives on an annual basis to ensure that the executive officers are aware of where each stands in relation to the established guidelines. For purposes of the guidelines, stock ownership includes fully vested stock options, directly held common stock, time-vested restricted stock, performance shares and indirectly held shares that are considered beneficially owned under applicable SEC rules. We believe that these guidelines are appropriate to encourage our executive officers to hold a sufficient amount of our equity to create a mutuality of interest between our executive officers and our shareholders. These guidelines are aspirational in nature, but the Committee will review the status of officer stock ownership on an annual basis to monitor compliance.
COMPENSATION AND HUMAN RESOURCE DEVELOPMENT COMMITTEE REPORT
The Compensation and Human Resource Development Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) ofRegulation S-K with management and, based on such review and discussions, the Compensation and Human Resource Development committeeCommittee recommended to the Board that the compensationCompensation Discussion and Analysis be included in this Proxy Statement.
THE COMPENSATION AND HUMAN RESOURCE DEVELOPMENT COMMITTEE
Mark C. Bozek, Chairman
James K. Murray, Jr.
James S. MacLeod
1823
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation paid to, or earned by, each of the named executive officers for the fiscal yearyears ending December 31, 2008, December 31, 2007 and December 31, 2006. The companyCompany has entered into employment agreements with each of the named executive officers which are summarized under the section entitled “Employment Agreements” below. When setting the total compensation for each of the named executive officers, the Committee considers all of the executive’s current compensation, including equity and non-equity based compensation.
Except for the signing bonus paid to Mr. Zingale in 2006, the named executive officers were not entitled to receive payments which would be characterized as “Bonus” payments for the fiscal yearyears ended December 31, 2008, December 31, 2007 and December 31, 2006. Amounts listed under column (g), “Non-Equity Incentive Plan Compensation” were paid in accordance with parameters determined by the Committee at its December 5, 2007, December 21, 2006 and March 15, 2006 meetingmeetings, respectively, and were paid in March, 2007.2009, March, 2008 and March, 2007, respectively.
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in | Change in | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension Value | Pension Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Equity | Nonqualified | Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Option | Incentive Plan | Deferred | All Other | Stock | Option | Incentive Plan | Deferred | All Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock | Awards | Compensation | Compensation | Compensation | Awards | Awards | Compensation | Compensation | Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salary | Bonus | Awards ($) | ($) | ($) | Earnings | ($) | Total | Salary | Bonus | ($) | ($) | ($) | Earnings | ($) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | (1) | (2) | (3) | ($) | (4) | ($) | Year | ($) | ($) | (1) | (2) | (3) | ($) | (4) | ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Charles E. Sykes | 2006 | 518,990 | 0 | 321,413 | 86,705 | 590,103 | 0 | 14,144 | 1,531,356 | 2008 | 500,000 | 0 | 999,084 | 323,496 | 473,797 | 0 | 25,401 | 2,321,778 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| President and Chief Executive Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| President and Chief Executive | 2007 | 500,000 | 0 | 750,324 | 219,600 | 505,150 | 0 | 24,995 | 2,000,069 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Officer | 2006 | 518,990 | 0 | 321,413 | 86,705 | 590,103 | 0 | 14,144 | 1,531,355 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| W. Michael Kipphut | 2006 | 368,500 | 0 | 162,547 | 38,150 | 348,902 | 0 | 29,060 | 947,159 | 2008 | 374,558 | 0 | 448,613 | 142,798 | 295,780 | 0 | 32,949 | 1,294,698 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President & Chief Financial Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President & Chief | 2007 | 368,500 | 0 | 358,798 | 96,855 | 299,125 | 0 | 33,522 | 1,156,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Officer | 2006 | 368,500 | 0 | 162,546 | 38,150 | 348,902 | 0 | 29,060 | 947,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| James C. Hobby | 2008 | 310,866 | 0 | 298,277 | 94,767 | 205,893 | 0 | 23,063 | 932,866 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President — Global | 2007 | 303,270 | 0 | 232,894 | 63,078 | 205,185 | 0 | 21,684 | 826,111 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operations | 2006 | 275,000 | 0 | 102,626 | 23,488 | 217,291 | 0 | 23,125 | 641,530 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lawrence R. Zingale(5) | 2006 | 286,231 | 25,000 | 64,839 | 26,050 | 228,750 | 0 | 86,143 | 717,014 | 2008 | 316,769 | 0 | 294,792 | 98,146 | 206,217 | 0 | 15,677 | 931,601 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President — Global Sales and Client Management | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| James C. Hobby | 2006 | 275,000 | 0 | 102,627 | 23,488 | 217,291 | 0 | 23,125 | 641,531 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President — Global Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President — Global | 2007 | 305,000 | 0 | 185,244 | 66,457 | 190,625 | 0 | 20,542 | 767,868 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales and Client Management | 2006 | 286,231 | 25,000 | 64,839 | 26,050 | 228,750 | 0 | 86,143 | 717,013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| David L. Pearson | 2006 | 210,000 | 0 | 70,817 | 17,936 | 168,541 | 0 | 23,045 | 490,339 | 2008 | 234,765 | 0 | 139,028 | 41,998 | 149,074 | 0 | 23,654 | 588,519 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President — Information Technology | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Vice President — | 2007 | 211,923 | 0 | 134,544 | 20,377 | 147,012 | 0 | 23,694 | 537,550 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Information Technology | 2006 | 210,000 | 0 | 70,817 | 17,936 | 168,541 | 0 | 23,045 | 490,339 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The amounts in column (e) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal |
24
| (2) | The amounts shown in column (f) represent stock appreciation rights granted as part of long-term, equity-based incentive awards. | |
| (3) | The amounts in column (g) reflect the cash awards to the named individuals pursuant to annual performance based incentive programs established by the Committee and discussed in more detail on page | |
| (4) | The amount shown in column (i) reflects for each named executive |
| • |
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| • | reimbursement for premiums attributable to increased coverage for vision, dental and group medical insurance | |
| • | the cost of premiums for term life and disability insurance benefits; | |
| • | the Company’s matching contribution to the Sykes Enterprises, Incorporated Employees’ Savings Plan and Trust. |
The amount in column (i) for Mr. Kipphut also includes a country club membership paid by the Company, and the amount in column (i) for Mr. Zingale includes relocation expenses.expenses paid in 2006.
| (5) | The amount in column (d) for Mr. Zingale represents a signing bonus paid at the inception of his employment in January, 2006. |
25
GRANTS OF PLAN-BASED AWARDS
The following table provides information about equity and non-equity awards granted to the named executives in 2006,2008, including (i) the grant date, (ii) the estimated future payouts under the non-equity incentive plan awards, (iii) the estimated future payouts under equity incentive plan awards, which consist of shares of restricted stock, (iv) all other stock awards which consist of shares of the Company’s stock contributed as matching contributions under the executive deferred compensation plan,Executive Deferred Compensation Plan, (v) all other option awards, which consist of stock appreciation rightsStock Appreciation Rights and the base price of those stock appreciation rights,Stock Appreciation Rights, and (vi) the fair value of the equity awards on the date of grant.
| �� | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (i) | (j) | (i) | (j) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All Other | All Other | (l) | All Other | All Other | (l) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock | Option | (k) | Grant | Stock | Option | (k) | Grant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Estimated Future Payouts | Estimated Future Payouts | Awards: | Awards: | Exercise | Date Fair | Estimated Future Payouts | Estimated Future Payouts | Awards: | Awards: | Exercise | Date Fair | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Under Non-Equity Incentive | Under Equity Incentive Plan | Number of | Number of | or Base | Value of | Under Non-Equity Incentive | Under Equity Incentive Plan | Number of | Number of | or Base | Value of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (b) | Plan Awards(1) | Awards(2) | Shares of | Securities | Price | Stock and | (b) | Plan Awards(1) | Awards(2) | Shares of | Securities | Price | Stock and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2006 | (c) | (d) | (e) | (f) | (g) | (h) | Stock or | Underlying | of Option | Option | 2008 | (c) | (d) | (e) | (f) | (g) | (h) | Stock or | Underlying | of Option | Option | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Options | Awards | Awards | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Options | Awards | Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | (#)(4) | ($/sh) | ($) | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | (#)(4) | ($/sh) | ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Charles E. Sykes | 3/29 | — | 72,800 | — | — | 20,000 | — | — | — | — | 291,200 | 1/02 | — | — | — | 29,827 | 37,325 | 55,960 | — | — | 17.87 | 666,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/29 | — | — | — | 36,538 | 45,673 | 68,510 | — | 47,117 | 14.56 | 1,008,010 | 1/02 | — | — | — | — | — | — | — | 46,296 | 17.87 | 333,333 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/02 | 187,500 | 375,000 | 562,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/31 | — | — | — | — | — | — | 682 | — | 17.59 | 11,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| W. Michael Kipphut | 3/29 | — | 45,500 | — | — | 12,500 | — | — | — | — | 182,000 | 1/02 | — | — | — | 13,189 | 16,505 | 24,745 | — | — | 17.87 | 294,944 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/29 | — | — | — | 16,198 | 20,247 | 30,371 | — | 20,731 | 14.56 | 445,724 | 1/02 | — | — | — | — | — | — | — | 20,472 | 17.87 | 147,400 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/31 | — | — | — | — | — | — | 412 | — | — | 5,842 | 1/02 | 120,000 | 240,000 | 360,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30 | — | — | — | — | — | — | 111 | — | — | 1,794 | 3/31 | — | — | — | — | — | — | 369 | — | 17.59 | 6,491 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9/30 | — | — | — | — | — | — | 88 | — | — | 1,791 | 6/30 | — | — | — | — | — | — | 111 | — | 18.86 | 2,093 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/31 | — | — | — | — | — | — | 125 | — | — | 2,203 | 9/30 | — | — | — | — | — | — | 95 | — | 21.96 | 2,086 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/31 | — | — | — | — | — | — | 67 | — | 19.12 | 1,281 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lawrence R. Zingale | 3/29 | — | — | — | 11,228 | 14,035 | 21,053 | — | 14,156 | 14.56 | 307,407 | 1/02 | — | — | — | 9,097 | 11,384 | 17,068 | — | — | 17.87 | 203,432 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| James C. Hobby | 3/29 | — | 29,120 | — | — | 8,000 | — | — | — | — | 116,480 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/29 | — | — | — | 10,124 | 12,655 | 18,982 | — | 12,764 | 14.56 | 277,170 | 1/02 | — | — | — | — | — | — | — | 14,120 | 17.87 | 101,667 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/31 | — | — | — | — | — | — | 245 | — | — | 3,474 | 1/02 | 80,500 | 161,000 | 241,500 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/31 | — | — | — | — | — | — | 98 | — | 17.59 | 1,724 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30 | — | — | — | — | — | — | 107 | — | 18.86 | 2,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9/30 | — | — | — | — | — | — | 91 | — | 21.96 | 1,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/31 | — | — | — | — | — | — | 99 | — | 19.12 | 1,893 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| James C. Hobby | 1/02 | — | — | — | 9,097 | 11,384 | 17,068 | — | — | 17.87 | 203,432 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/30 | — | — | — | — | — | — | 198 | — | — | 3,200 | 1/02 | — | — | — | — | — | — | — | 14,120 | 17.87 | 101,667 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9/30 | — | — | — | — | — | — | 157 | — | — | 3,195 | 1/02 | 83,875 | 167,750 | 251,625 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/31 | — | — | — | — | — | — | 118 | — | — | 2,082 | 3/31 | — | — | — | — | — | — | 682 | — | 17.59 | 11,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| David L. Pearson | 3/29 | — | 29,120 | — | — | 8,000 | — | — | — | — | 154,954 | 1/02 | — | — | — | 4,134 | 5,173 | 7,756 | — | — | 17.87 | 92,442 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/29 | — | — | — | 4,615 | 5,769 | 8,654 | — | 9,747 | 14.56 | 83,997 | 1/02 | — | — | — | — | — | — | — | 6,417 | 17.87 | 46,200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/31 | — | — | — | — | — | — | 846 | — | — | 11,996 | 1/02 | 63,525 | 127,050 | 190,575 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/31 | — | — | — | — | — | — | 682 | — | 17.59 | 11,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) |
20
| (2) | Where amounts are shown in columns (f) and (h), then the amounts shown in column (f) reflect the Long-Term Incentive Stock Grant minimum which is 80% of the target amount shown in column (g), and the amount shown in column (h) is 150% of such target amount. |
26
| (3) | The amounts shown in column (i) reflect the number of shares of stock granted to each named executive officer as matching contributions pursuant to the Executive Deferred Compensation | |
| (4) | The amounts shown in column (j) reflect the number of Stock Appreciation Rights granted to each named executive officer as part of the Long-Term Incentive awards as described in more detail beginning on page |
2127
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information on the current holdings of stock option and stock awards by the named executives. The table includes both exercisable and unexercisable options together with the exercise price and the expiration date; unvested stock appreciation rights;Stock Appreciation Rights; the number of shares and market value of unvested matching contributions to the executive deferred compensation plan;Executive Deferred Compensation Plan; and the number of shares of long term incentive (“LTI”) restricted stock together with the market value of those shares.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||
| Equity | Incentive | |||||||||||||||||||||||||||||||||||
| Equity | Incentive | Plan | ||||||||||||||||||||||||||||||||||
| Incentive | Plan | Awards: | ||||||||||||||||||||||||||||||||||
| Plan | Awards: | Market or | ||||||||||||||||||||||||||||||||||
| Awards: | Market | Number of | Payout Value | |||||||||||||||||||||||||||||||||
| Number of | Number | Value of | Unearned | of Unearned | ||||||||||||||||||||||||||||||||
| Number of | Number of | Securities | of Shares | Shares or | Shares, Units | Shares, Units | ||||||||||||||||||||||||||||||
| Securities | Securities | Underlying | or Units | Units of | or Other | or Other | ||||||||||||||||||||||||||||||
| Underlying | Underlying | Unexercised | Option | of Stock | Stock That | Rights That | Rights That | |||||||||||||||||||||||||||||
| Unexercised | Unexercised | Unearned | Exercise | Option | That Have | Have Not | Have Not | Have Not | ||||||||||||||||||||||||||||
| Options (#) | Options (#) | Options | Price | Expiration | Not Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
| Charles E. Sykes | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
2005-2007 LTI RS(1) | — | — | — | — | — | — | — | 20,000 | 352,800 | |||||||||||||||||||||||||||
2006-2008 LTI RS(2) | — | — | — | — | — | — | — | 68,510 | 1,208,516 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(3) | — | 47,117 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(4) | — | — | — | — | — | 577 | 10,183 | — | — | |||||||||||||||||||||||||||
| W. Michael Kipphut | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
2005-2007 LTI RS(1) | — | — | — | — | — | — | — | 12,500 | 220,500 | |||||||||||||||||||||||||||
2006-2008 LTI RS(2) | — | — | — | — | — | — | — | 30,371 | 535,745 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(3) | — | 20,731 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 18,474 | — | — | 16.24 | 03/06/10 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 31,526 | — | — | 16.24 | 03/06/10 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 60,000 | — | — | 16.24 | 03/06/10 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(4) | — | — | — | — | — | 2,313 | 40,808 | — | — | |||||||||||||||||||||||||||
| Lawrence R. Zingale | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
2006-2008 LTI RS(2) | — | — | — | — | — | — | — | 21,053 | 371,375 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(3) | — | 14,156 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
| James C. Hobby | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
2005-2007 LTI RS(1) | — | — | — | — | — | — | — | 8,000 | 141,120 | |||||||||||||||||||||||||||
2006-2008 LTI RS(2) | — | — | — | — | — | — | — | 18,892 | 333,255 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(3) | — | 12,764 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(4) | — | — | — | — | — | 2,123 | 37,446 | — | — | |||||||||||||||||||||||||||
| David L. Pearson | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
2005-2007 LTI RS(1) | — | — | — | — | — | — | — | 8,000 | 141,120 | |||||||||||||||||||||||||||
2006-2008 LTI RS(2) | — | — | — | — | — | — | — | 8,654 | 152,657 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(3) | — | 9,747 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 6,750 | — | — | 25.82 | 02/24/07 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 7,000 | — | — | 13.18 | 07/03/10 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 10,000 | — | — | 4.05 | 10/17/10 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 10,000 | — | — | 9.00 | 02/01/12 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 3,300 | — | — | 9.00 | 02/01/12 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(4) | — | — | — | — | — | 1,496 | 26,391 | — | — | |||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||
| Equity | Incentive | |||||||||||||||||||||||||||||||||||
| Equity | Incentive | Plan | ||||||||||||||||||||||||||||||||||
| Incentive | Plan | Awards: | ||||||||||||||||||||||||||||||||||
| Plan | Awards: | Market or | ||||||||||||||||||||||||||||||||||
| Awards: | Market | Number of | Payout Value | |||||||||||||||||||||||||||||||||
| Number of | Number | Value of | Unearned | of Unearned | ||||||||||||||||||||||||||||||||
| Number of | Number of | Securities | of Shares | Shares or | Shares, units | Shares, Units | ||||||||||||||||||||||||||||||
| Securities | Securities | Underlying | or Units | Units of | or Other | or Other | ||||||||||||||||||||||||||||||
| Underlying | Underlying | Unexercised | Option | of Stock | Stock That | Rights That | Rights That | |||||||||||||||||||||||||||||
| Unexercised | Unexercised | Unearned | Exercise | Option | That Have | Have Not | Have Not | Have Not | ||||||||||||||||||||||||||||
| Options (#) | Options (#) | Options | Price | Expiration | Not Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
| Charles E. Sykes | ||||||||||||||||||||||||||||||||||||
2006-2008 LTI RS(1) | — | — | — | — | — | — | — | 68,510 | 1,309,911 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(2) | 31,411 | 15,706 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
2007-2009 LTI RS(3) | — | — | — | — | — | — | — | 56,689 | 1,083,894 | |||||||||||||||||||||||||||
2007-2009 SARs(4) | 14,392 | 28,786 | — | 17.64 | 01/02/17 | — | — | — | — | |||||||||||||||||||||||||||
2008-2010 LTI RS(5) | — | — | — | — | — | — | — | 55,960 | 1,069,955 | |||||||||||||||||||||||||||
2008-2010 SARs(6) | — | 46,296 | — | 17.87 | 01/02/18 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(7) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| W. Michael Kipphut | ||||||||||||||||||||||||||||||||||||
2006-2008 LTI RS(1) | — | — | — | — | — | — | — | 30,371 | 580,694 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(2) | 13,820 | 6,911 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
2007-2009 LTI RS(3) | — | — | — | — | — | — | — | 25,068 | 479,300 | |||||||||||||||||||||||||||
2007-2009 SARs(4) | 6,364 | 12,729 | — | 17.64 | 01/02/17 | — | — | — | — | |||||||||||||||||||||||||||
2008-2010 LTI RS(5) | — | — | — | — | — | — | — | 24,745 | 473,124 | |||||||||||||||||||||||||||
2008-2010 SARs(6) | — | 20,472 | — | 17.87 | 01/02/18 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 18,474 | — | — | 16.24 | 03/06/10 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 31,526 | — | — | 16.24 | 03/06/10 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 60,000 | — | — | 16.24 | 03/06/10 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(76) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Lawrence R. Zingale | ||||||||||||||||||||||||||||||||||||
2006-2008 LTI RS(1) | — | — | — | — | — | — | — | 21,053 | 402,533 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(2) | — | 4,718 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
2007-2009 LTI RS(3) | — | — | — | — | — | — | — | 17,290 | 330,585 | |||||||||||||||||||||||||||
2007-2009 LTI SARs(4) | 4,389 | 8,780 | — | 17.64 | 01/02/17 | — | — | — | — | |||||||||||||||||||||||||||
2008-2010 LTI RS(5) | — | — | — | — | — | — | — | 17,068 | 326,340 | |||||||||||||||||||||||||||
2008-2010 SARs(6) | — | 14,120 | — | 17.87 | 01/02/18 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(7) | — | — | — | — | — | 824 | 15,755 | — | — | |||||||||||||||||||||||||||
| James C. Hobby | ||||||||||||||||||||||||||||||||||||
2006-2008 LTI RS(1) | — | — | — | — | — | — | — | 18,982 | 362,936 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(2) | 8,509 | 4,255 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
2007-2009 LTI RS(3) | — | — | — | — | — | — | — | 17,290 | 330,585 | |||||||||||||||||||||||||||
2007-2009 LTI SARs(4) | 4,389 | 8,780 | — | 17.64 | 01/02/17 | — | — | — | — | |||||||||||||||||||||||||||
2008-2010 LTI RS(5) | — | — | — | — | — | — | — | 17,068 | 326,340 | |||||||||||||||||||||||||||
2008-2010 SARs(6) | — | 14,120 | — | 17.87 | 01/02/18 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(7) | — | — | — | — | — | 2,301 | 43,991 | — | — | |||||||||||||||||||||||||||
28
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||
| Equity | Incentive | |||||||||||||||||||||||||||||||||||
| Equity | Incentive | Plan | ||||||||||||||||||||||||||||||||||
| Incentive | Plan | Awards: | ||||||||||||||||||||||||||||||||||
| Plan | Awards: | Market or | ||||||||||||||||||||||||||||||||||
| Awards: | Market | Number of | Payout Value | |||||||||||||||||||||||||||||||||
| Number of | Number | Value of | Unearned | of Unearned | ||||||||||||||||||||||||||||||||
| Number of | Number of | Securities | of Shares | Shares or | Shares, units | Shares, Units | ||||||||||||||||||||||||||||||
| Securities | Securities | Underlying | or Units | Units of | or Other | or Other | ||||||||||||||||||||||||||||||
| Underlying | Underlying | Unexercised | Option | of Stock | Stock That | Rights That | Rights That | |||||||||||||||||||||||||||||
| Unexercised | Unexercised | Unearned | Exercise | Option | That Have | Have Not | Have Not | Have Not | ||||||||||||||||||||||||||||
| Options (#) | Options (#) | Options | Price | Expiration | Not Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
| David L. Pearson | ||||||||||||||||||||||||||||||||||||
2006-2008 LTI RS(1) | — | — | — | — | — | — | — | 8,654 | 165,464 | |||||||||||||||||||||||||||
2006-2008 LTI SARs(2) | 3,938 | 1,969 | — | 14.56 | 03/29/16 | — | — | — | — | |||||||||||||||||||||||||||
2007-2009 LTI RS(3) | — | — | — | — | — | — | — | 7,143 | 136,574 | |||||||||||||||||||||||||||
2007-2009 SARs(4) | 1,813 | 3,627 | — | 17.64 | 01/02/17 | — | — | — | — | |||||||||||||||||||||||||||
2008-2010 LTI RS(5) | — | — | — | — | — | — | — | 7,756 | 148,295 | |||||||||||||||||||||||||||
2008-2010 SARs(6) | — | 6,417 | — | 17.87 | 01/02/18 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 7,000 | — | — | 13.18 | 07/03/10 | — | — | — | —— | |||||||||||||||||||||||||||
| Options | 10,000 | — | — | 9.00 | 02/01/12 | — | — | — | — | |||||||||||||||||||||||||||
| Options | 3,300 | — | — | 9.00 | 02/01/12 | — | — | — | — | |||||||||||||||||||||||||||
| EDC Match(7) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| (1) | The figures in this row represent restricted shares that were issued to the named executive officer in connection with the | |
| (2) | The figures in this row represent Stock Appreciation Rights that were issued to the named executive officer in connection with the long-term incentive award for the2006-2008 performance measurement period. | |
| (3) | The figures in this row represent restricted shares that were issued to the named executive officer in connection with the | |
| The figures in this row represent |
22
| (5) | The figures in this row represent restricted shares that were issued to the named executive officer in connection with the long-term incentive award for the2008-2010 performance measurement period. | |
| (6) | The figures in this row represent Stock Appreciation Rights that were issued to the named executive officer in connection with the long-term incentive award for the2008-2010 performance measurement period. | |
| (7) | The figures in this row represent restricted shares granted to the named executive officer as matching contributions by the Company |
29
OPTION EXERCISES AND STOCK VESTED
The following table provides information for the named executive officers on (1) stock option and SAR exercises during 2006,2008, including the number of shares acquired upon exercise and the value realized; and (2) the number of shares acquired upon vesting of matching contributions under the executive deferred compensation plan,Executive Deferred Compensation Plan, and the value realized upon the vesting of such shares.
| Options Awards | Stock Awards(1) | Options Awards | Stock Awards | |||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||||
| Number of Shares | Value Realized | Number of Shares | Value Realized | Number of Shares | Value Realized | Number of Shares | Value Realized | |||||||||||||||||||||||||
| Acquired on Exercise | on Exercise | Acquired on Vesting | on Vesting | Acquired on Exercise | on Exercise | Acquired on Vesting | on Vesting | |||||||||||||||||||||||||
Name | (#) | ($) | (#) | ($) | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||
| Charles E. Sykes | ||||||||||||||||||||||||||||||||
| Options | 153,500 | 1,598,410 | — | — | — | — | — | — | ||||||||||||||||||||||||
| EDC Matching Contr. | — | — | 264 | 3,987 | ||||||||||||||||||||||||||||
| EDC Matching Contr.(1) | — | — | 682 | 11,996 | ||||||||||||||||||||||||||||
| 2005 LTI RS(2) | — | — | 20,000 | 351,800 | ||||||||||||||||||||||||||||
| 2005 SARs | — | — | — | — | ||||||||||||||||||||||||||||
| W. Michael Kipphut | ||||||||||||||||||||||||||||||||
| Options | 125,000 | 1,589,250 | — | — | — | — | — | — | ||||||||||||||||||||||||
| EDC Matching Contr. | — | — | 1,031 | 17,424 | ||||||||||||||||||||||||||||
| EDC Matching Contr.(1) | — | — | 642 | 11,951 | ||||||||||||||||||||||||||||
| 2005 LTI RS(2) | — | — | 12,500 | 219,875 | ||||||||||||||||||||||||||||
| 2005 SARs | — | — | — | — | ||||||||||||||||||||||||||||
| Lawrence R. Zingale | ||||||||||||||||||||||||||||||||
| Options | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| EDC Matching Contr. | — | — | — | — | ||||||||||||||||||||||||||||
| EDC Matching Contr.(1) | — | — | — | — | ||||||||||||||||||||||||||||
| 2005 LTI RS(2) | — | — | — | — | ||||||||||||||||||||||||||||
| 2005 SARs(3) | 2,557 | 51,063 | — | — | ||||||||||||||||||||||||||||
| James C. Hobby | ||||||||||||||||||||||||||||||||
| Options | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| EDC Matching Contr. | — | — | — | — | ||||||||||||||||||||||||||||
| EDC Matching Contr.(1) | — | — | 225 | 3,959 | ||||||||||||||||||||||||||||
| 2005 LTI RS(2) | — | — | 8,000 | 140,720 | ||||||||||||||||||||||||||||
| 2005 SARs | — | — | — | — | ||||||||||||||||||||||||||||
| David L. Pearson | ||||||||||||||||||||||||||||||||
| Options | — | — | — | — | 10,000 | 133,947 | — | — | ||||||||||||||||||||||||
| EDC Matching Contr. | — | — | 1,120 | 16,760 | ||||||||||||||||||||||||||||
| EDC Matching Contr.(1) | — | — | 2,441 | 42,933 | ||||||||||||||||||||||||||||
| 2005 LTI RS(2) | — | — | 8,000 | 140,720 | ||||||||||||||||||||||||||||
| 2005 SARs | — | — | — | — | ||||||||||||||||||||||||||||
| (1) | Reflects the Company’s matching contributions in the form of shares of its common stock held for the account of the named executive officer in the Executive Deferred Compensation Plan which vested during fiscal year ending December 31, | |
| (2) | Reflects the number of restricted shares vested (column (d)) and value the time of vesting (column (e)) from the grant of a long term incentive award to the named executive officer relating to the 2005 — 2007 performance period. | |
| (3) | Reflects the number of stock appreciation rights exercised by Mr. Zingale during 2008 (column (b)) and the value of the stock appreciation rights exercised (column (c)). |
30
PENSION BENEFITS
The Company does not maintain any pension plans for the benefit of its executive officers.
23
NONQUALIFIED DEFERRED COMPENSATION
Pursuant to the Company’s Executive Deferred Compensation Plan ( the “Plan”), certain executives, including the named executive officers, may defer all or any portion of their base salary, and all or any portion of their performance based non-equity incentive compensation. Deferral elections are made on or before December 3131st of each year for amounts to be deferred from income earned with respect to the following year. The table below shows the investment options available under the Deferred Compensation Plan and their annual rate of return for the calendar year ended December 31, 2006,2008, as reported by the administrator of the Plan.
| Rate | Rate | Rate | Rate | |||||||||||||||||
Name of Fund | of Return | Name of Fund | of Return | of Return | Name of Fund | of Return | ||||||||||||||
| Evergreen Money Market A | 4.28 | % | Davis Opportunity A | 17.59 | % | |||||||||||||||
| AIM Mid Cap Core Equity A | (27.45 | ) | Evergreen Money Market A | 2.28 | ||||||||||||||||
| Evergreen Core Bond A | 4.12 | % | Dreyfus Premier New Leaders A | 13.56 | % | (18.41 | ) | Dreyfus Premier New Leaders A | (44.73 | ) | ||||||||||
| AllianceBernstein Balanced Shares A | 13.21 | % | Columbia Small Cap Value I A | 19.28 | % | (28.45 | ) | Columbia Small Cap Value I A | (28.23 | ) | ||||||||||
| Van Kampen Comstock R | 15.78 | % | Putnam Capital Opportunities A | 15.59 | % | (36.09 | ) | Putnam Capital Opportunities A | (35.03 | ) | ||||||||||
| Evergreen Equity Index A | 15.19 | % | AIM Small Cap Growth A | 14.30 | % | (37.35 | ) | AIM Small Cap Growth A | (38.77 | ) | ||||||||||
| American Funds Growth Fund of America R3 | 10.63 | % | Evergreen International Equity A | 22.62 | % | (39.24 | ) | Evergreen International Equity A | (41.59 | ) | ||||||||||
| Goldman Sachs Mid Cap Value A | 15.61 | % | (36.73 | ) | American Century Inf-Adj Bond Inv. | (1.01 | ) | |||||||||||||
Distributions of the participants’ deferred compensation and any vested Company stock matching contributions are made as soon as administratively feasible six months after retirement or termination of employment, unless the participant dies or becomes disabled while still an employee, in which case both distributions are made as soon as administratively feasible. Alternatively, a participant may, at the time of initial participation in the Plan, elect to receive benefits under the Plan in the event of retirement or disability in 120 monthly installments.
In the event the participant terminates employment (for reasons other than death, disability or retirement) without participating in the plan for three years, the matching contributions and earnings attributable thereto are forfeited. In the event that a participant terminates employment after three years but less than five years of participation in the Plan, the participant forfeits 67% of the matching contribution and earnings. In the event a participant terminates employment after five years but less than seven years of participation in the Plan, the participant forfeits 33% of the matching contribution and earnings.
In the event of a distribution of benefits as a result of a change in control, the Company will increase the benefitbenefits for the Senior Vice Presidents and the President by an amount sufficient to offset the income tax obligations created by the distribution of benefits.
Participants forfeit undistributed matching contributions if the participant is terminated for “cause” as defined in the Plan or the participant enters into a business or employment which the Company’s chief executive officer determines to be in violation of any non-compete agreement between the participant and the Company.
31
The following table shows information regarding contributions by the named executive officers, the Company’s matching contributions, aggregate earnings on contributions during fiscal year 2006,2008, and the aggregate balance at year end. There were no distributions from the plan to named executive officers during the fiscal year.year 2008.
| (a) | (b) | (c) | (d) | (e) | (f) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||||||||||||||
| Executive | Registrant | Aggregate | Aggregate | Executive | Company | Aggregate | Aggregate | |||||||||||||||||||||||||||||||||
| Contributions | Contribution | Earnings | Aggregate | Balance at | Contributions | Contribution | Earnings | Aggregate | Balance at | |||||||||||||||||||||||||||||||
| in Last | in Last | in Last | Withdrawals/ | Last Fiscal | in Last | in Last | in Last | Withdrawals/ | Last Fiscal | |||||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | Distributions | Year End | Fiscal Year(1) | Fiscal Year(2) | Fiscal Year | Distributions | Year End(3) | |||||||||||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
| Charles E. Sykes | $ | 0 | $ | 0 | $ | 12,236 | $ | 0 | $ | 59,581 | 24,000 | 11,996 | (24,192 | ) | 0 | 107,940 | ||||||||||||||||||||||||
| W. Michael Kipphut | $ | 23,400 | $ | 11,700 | $ | 39,514 | $ | 0 | $ | 248,594 | 25,200 | 11,951 | (62,499 | ) | 0 | 276,725 | ||||||||||||||||||||||||
| Lawrence R. Zingale | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | 15,346 | 7,633 | (4,819 | ) | 0 | 37,900 | ||||||||||||||||||||||||
| James C. Hobby | $ | 29,964 | $ | 12,000 | $ | 10,413 | $ | 0 | $ | 96,101 | 147,703 | 11,996 | (43,049 | ) | 0 | 313,703 | ||||||||||||||||||||||||
| David L. Pearson | $ | 28,969 | $ | 12,000 | $ | 28,193 | $ | 0 | $ | 172,292 | 24,538 | 11,996 | (46,358 | ) | 0 | 204,651 | ||||||||||||||||||||||||
24
| (1) | The amounts shown are included in the amounts of “salary” in column (c) of the Summary Compensation Table. | |
| (2) | The amounts shown are included in the amounts of “Other Compensation” in column (i) of the Summary Compensation Table. | |
| (3) | The amounts shown include 100% of the aggregate executive and Company contributions which have all been reported in the Summary Compensation Table. |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the equity compensation plans under which the equity securities of Sykes may be issued as of December 31, 2006:2008:
| (a) | (b) | (c) | (a) | (b) | (c) | |||||||||||||||||||
| Number of Securities | Number of Securities | |||||||||||||||||||||||
| Number of | Remaining Available for | Number of | Remaining Available for | |||||||||||||||||||||
| Securities to be | Weighted Average | Future Issuance Under | Securities to be | Weighted Average | Future Issuance Under | |||||||||||||||||||
| Issued Upon | Exercise Price of | Equity Compensation | Issued Upon | Exercise Price of | Equity Compensation | |||||||||||||||||||
| Exercise of | Outstanding | Plans (Excluding | Exercise of | Outstanding | Plans (Excluding | |||||||||||||||||||
| Options, Warrants | Options, Warrants | Securities Reflected in | Options, Warrants | Options, Warrants | Securities Reflected in | |||||||||||||||||||
| and Rights | and Rights | Column (a)) | and Rights | and Rights | Column (a)) | |||||||||||||||||||
| Equity compensation plans approved by shareholders(1) | 598,663 | $ | 13.13 | (2) | 6,653,581 | 383,385 | 12.94 | (2) | 6,452,935 | |||||||||||||||
| Equity compensation plans not approved by shareholders | 50,587 | (3) | — | N/A | (3) | 61,181 | (3) | — | N/A | (3) | ||||||||||||||
| Totals | 649,250 | — | 6,653,581 | 444,566 | 6,452,935 | |||||||||||||||||||
| (1) | Includes shares of common stock of Sykes authorized for awards under the 2001 Equity Incentive Plan as well as the 2000 Stock Option Plan, the 1996 Employee Stock Option Plan, and the 1997 Management Stock Incentive Plan, all of which are predecessor plans to the 2001 Equity Incentive Plan. Also includes shares of common stock of Sykes reserved for issuance under the 1999 Employees’ Stock Purchase Plan, the Amended and Restated 1996 Non-Employee Director Stock Option Plan, the 1996 Non-Employee Director Fee Plan, and the 2004 Non-Employee Director Fee Plan. | |
| (2) | Represents the weighted average exercise price of stock options only. |
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| (3) | Represents shares of common stock of Sykes issued as matching grants under the Executive Deferred Compensation Plan for executives described in more detail beginning on page |
Shares awarded under all of the above plans may be from Sykes’ authorized and unissued shares, treasury shares or shares acquired in the open market. For a summary of the terms of Sykes’ equity compensation plans, see Note 2023 of our consolidated financial statements in the Annual Report onForm 10-K and incorporated herein by reference.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The tables below reflect the amount of compensation to each of the named executive officers of the Company in the event of a termination of such executive’s employment. The amount of compensation payable to each named executive officer upon voluntary termination, involuntarynot-for-cause termination, termination following a change of control and in the event of a disability or death of the executive is shown below. The amounts shown assume that such termination was effective as of December 31, 2006,2008, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.
Payments Made Upon Termination
Regardless of the manner in which a named executive officer’s employment terminates, he or she is entitled to receive amounts earned during his term of employment. Depending upon the date of a termination, such amounts may include:
| • | non-equity incentive compensation earned during the fiscal year; | |
| • | shares which have vested and for which the restrictions have lapsed under | |
| • | shares to be issued as a result of the vesting of SARs under |
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| • | amounts contributed to the Executive Deferred Compensation | |
| • | unused vacation pay. |
Payments Made Upon Termination by the Company Without Cause, or by the Executive with Good Reason
In the event the employment of Mr. Sykes’ employmentSykes or Mr. Kipphut is terminated by the Company prior to the expiration of the initial term of his employment agreement or any renewal period for any reason other than death, disability, or cause (as defined in histheir respective employment agreement)agreements), or if such officer terminates his employment agreement is terminated by Mr. Sykes prior to the expiration of the initial term or any renewal period for good reason (as defined below under “Employment Agreements”), the Company is required to pay Mr. Sykes an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 104 weeks, whichever is greater.
| • | Mr. Sykes will be entitled to receive an amount equal to two times his annual base salary. | |
| • | Mr. Kipphut will be entitled to receive an amount equal to his annual base salary, plus an amount equal to the maximum annual performance bonus he could earn under the performance based bonus plan in which Mr. Kipphut is then participating. |
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In the event that such officer terminates his employment agreement is terminated by Mr. Kipphut priorin connection with a change of control, such officer will be entitled to receive the expirationbenefits listed under the heading “Payments Made Upon a Change of the initial term or any renewal period for good reason (as defined below under “Employment Agreements”), the Company is required to pay Mr. Kipphut an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 52 weeks, whichever is greater, plus an amount equal to the maximum annual performance bonus he could earn (60% of his annual base salary), which would also be paid over the same period as the other payments.Control” below.
In the event of the termination by the Company of the employment of any named executive officer other than Mr. Sykes or Mr. Kipphut for any reason other than death, disability or cause, they will be entitled to receive an amount equal to their annual base salary payablesalary.
Except as provided below, the foregoing amounts are to be paid biweekly in equal installments over 52 weeks, commencing immediately upon such officer’s separation from service. If such officer is determined to be a one year period.“specified employee” on the date of his “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and applicable regulations), to the extent that he is entitled to receive any benefit or payment upon such separation from service under the employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not be provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid or provided on or after the date that is six months after the date of his separation from service will be paid or provided in accordance with the payment schedule described above.
Payments Made Upon Death or Disability
In the event of the death or disability of a named executive officer, in addition to the benefits listed under the heading “Payments Made Upon Termination” above, the named executive officer will receive benefits under the Company’s disability plan or payments under the Company’s life insurance plan, as appropriate. The Company pays for life insurance and accidental death and dismemberment coverage for its executive team in amounts equal to twice the executive’s base salary, up to a maximum of $500,000. The Company also pays for short term disability for its executives with a benefit of 70% of base salary, up to a maximum of $2,500 per week, and long term disability withutilizing multiple plans. The base long term disability plan provides for a benefit to the executives of 70% of base salary, up to a maximum of $15,000 per month. The base long term disability plan is supplemented with two individual policy plans designed to provide the executives with long term disability insurance approximating 75% of covered compensation.
Payments Made Upon a Change of Control
The Company has entered into employment agreements with Mr. Sykes and Mr. Kipphut which contain change of control payment provisions. Pursuant to these provisions, if Mr. Sykes’ or Mr. Kipphut’s employment is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability) or if Mr. Sykes or Mr. Kipphut terminate their employment in certain circumstancesconnection with a change of control (as defined in their respective agreements which constitutes “good reason,” in addition toemployment agreement), instead of the benefits listed under the heading “Payments Made Upon Termination”:Termination,” they will receive the following benefits:
Mr. Sykes. Mr. Sykes will be entitled to receive an amount equal to three times his then current base salary, plus an amount determined by multiplying the annual target bonus designated or otherwise indicated for Mr. Sykes in the year such change of control occurs by a factor of three. The target bonus amount is to be determined under the performance based bonus plan in which Mr. Sykes is then participating. In addition, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Sykes.
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Mr. Kipphut. Mr. Kipphut will be entitled to receive an amount equal to two times his then current base salary, plus an amount determined by multiplying the annual target bonus designated or otherwise indicated for Mr. Kipphut in the year such change of control occurs by a factor of two. The target bonus amount is to be determined under the performance based bonus plan in which Mr. Kipphut is then participating. In addition, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Kipphut.
Except as provided below, the foregoing amounts are to be paid biweekly in equal installments over 52 weeks, commencing immediately upon such officer’s separation from service. If such officer is determined to be a “specified employee” on the date of his “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and applicable regulations), to the extent that he is entitled to receive any benefit or payment upon such separation from service under the employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not be provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid or provided on or after the date that is six months after the date of his separation from service will be paid or provided in accordance with the payment schedule described above.
The named executive officers of the Company, other than Mr. Sykes and Mr. Kipphut, do not have change of control provisions in their respective employment agreements, but under various equity incentive agreements, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of the executive in the event of a change in control.
Charles E. Sykes
The following table shows the potential payments upon termination or a change of control of the Company for Charles E. Sykes, the Company’s President and Chief Executive Officer, as if such termination had occurred on December 31, 2006:2008:
| Company Initiated | Executive Initiated | Company Initiated | Executive Initiated | |||||||||||||||||||||||||||||||||||||
| Before | After | Before | After | |||||||||||||||||||||||||||||||||||||
| Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||
| Control | Control | Control | Control | |||||||||||||||||||||||||||||||||||||
| Termination | Termination | Voluntary | Termination | Termination | Voluntary | |||||||||||||||||||||||||||||||||||
| w/o Cause | w/o Cause | Termination | w/o Cause | w/o Cause | Termination | |||||||||||||||||||||||||||||||||||
| or for Good | or for Good | Voluntary | for ‘‘Good | Change in | or for Good | or for Good | Voluntary | for “Good | Change in | |||||||||||||||||||||||||||||||
| Reason | Reason | Termination | Reason” | Control | Reason | Reason | Termination | Reason” | Control | |||||||||||||||||||||||||||||||
Type of Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
| Severance Pay | 1,000,000 | 1,500,000 | 0 | 1,000,000 | 1,500,000 | 1,100,000 | 1,650,000 | 0 | 1,100,000 | 1,650,000 | ||||||||||||||||||||||||||||||
| Bonus Payment | 0 | 1,125,000 | 0 | 1,125,000 | 1,125,000 | 0 | 1,650,000 | 0 | 0 | 1,650,000 | ||||||||||||||||||||||||||||||
| Stock Grants Vesting Acceleration | 0 | 1,561,316 | 0 | 0 | 1,561,316 | 0 | 3,463,760 | 0 | 0 | 3,463,760 | ||||||||||||||||||||||||||||||
| Stock Option Vesting Acceleration | 0 | 145,120 | 0 | 0 | 145,120 | 0 | 172,093 | 0 | 0 | 172,093 | ||||||||||||||||||||||||||||||
| Deferred Compensation Vesting Acceleration | 0 | 10,178 | 0 | 0 | 10,178 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Payment for Taxes Resulting from Deferred Compensation Distribution | 0 | 35,101 | 0 | 0 | 35,101 | 0 | 38,817 | 0 | 0 | 38,817 | ||||||||||||||||||||||||||||||
| Total | 1,000,000 | 4,376,715 | 0 | 2,125,000 | 4,376,715 | 1,100,000 | 6,974,670 | 0 | 1,100,000 | 6,974,670 | ||||||||||||||||||||||||||||||
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W. Michael Kipphut
The following table shows the potential payments upon termination or a change of control of the Company for W. Michael Kipphut, the Company’s Sr.Senior Vice President and Chief Financial Officer, as if such termination had occurred on December 31, 2006:2008:
| Company Initiated | Executive Initiated | Company Initiated | Executive Initiated | |||||||||||||||||||||||||||||||||||||
| Before | After | Before | After | |||||||||||||||||||||||||||||||||||||
| Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||
| Control | Control | Control | Control | |||||||||||||||||||||||||||||||||||||
| Termination | Termination | Voluntary | Termination | Termination | Voluntary | |||||||||||||||||||||||||||||||||||
| w/o Cause | w/o Cause | Termination | w/o Cause | w/o Cause | Termination | |||||||||||||||||||||||||||||||||||
| or for Good | or for Good | Voluntary | for “Good | Change in | or for Good | or for Good | Voluntary | for “Good | Change in | |||||||||||||||||||||||||||||||
| Reason | Reason | Termination | Reason” | Control | Reason | Reason | �� | Termination | Reason” | Control | ||||||||||||||||||||||||||||||
Type of Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
| Severance Pay | 368,500 | 737,000 | 0 | 368,500 | 737,000 | 400,000 | 800,000 | 0 | 400,000 | 800,000 | ||||||||||||||||||||||||||||||
| Bonus Payment | 221,000 | 442,000 | 0 | 221,000 | 442,000 | 420,000 | 840,000 | 0 | 420,000 | 840,000 | ||||||||||||||||||||||||||||||
| Stock Grants Vesting Acceleration | 0 | 756,509 | 0 | 0 | 756,509 | 0 | 1,533,118 | 0 | 0 | 1,533,118 | ||||||||||||||||||||||||||||||
| Stock Option Vesting Acceleration | 0 | 63,851 | 0 | 0 | 63,851 | 0 | 75,943 | 0 | 0 | 75,943 | ||||||||||||||||||||||||||||||
| Deferred Compensation Vesting Acceleration | 0 | 40,808 | 0 | 0 | 40,808 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Payment for Taxes Resulting from Deferred Compensation Distribution | 0 | 129,529 | 0 | 0 | 129,529 | 0 | 99,515 | 0 | 0 | 99,515 | ||||||||||||||||||||||||||||||
| Total | 589,500 | 2,169,697 | 0 | 589,500 | 2,169,697 | 820,000 | 3,348,576 | 0 | 820,000 | 3,348,577 | ||||||||||||||||||||||||||||||
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Lawrence R. Zingale
The following table shows the potential payments upon termination or a change of control of the Company for Lawrence R. Zingale, the Company’s Sr.Senior Vice President — Global Sales and Client Management, as if such termination had occurred on December 31, 2006:2008:
| Company Initiated | Executive Initiated | Company Initiated | Executive Initiated | |||||||||||||||||||||||||||||||||||||
| Before | After | Before | After | |||||||||||||||||||||||||||||||||||||
| Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||
| Control | Control | Control | Control | |||||||||||||||||||||||||||||||||||||
| Termination | Termination | Voluntary | Termination | Termination | Voluntary | |||||||||||||||||||||||||||||||||||
| w/o Cause | w/o Cause | Termination | w/o Cause | w/o Cause | Termination | |||||||||||||||||||||||||||||||||||
| or for Good | or for Good | Voluntary | for “Good | Change in | or for Good | or for Good | Voluntary | for “Good | Change in | |||||||||||||||||||||||||||||||
| Reason | Reason | Termination | Reason” | Control | Reason | Reason | Termination | Reason” | Control | |||||||||||||||||||||||||||||||
Type of Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
| Severance Pay | 305,000 | 305,000 | 0 | 0 | 0 | 322,000 | 322,000 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Bonus Payment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Stock Grants Vesting Acceleration | 0 | 43,600 | 0 | 0 | 43,600 | 0 | 1,059,458 | 0 | 0 | 1,059,458 | ||||||||||||||||||||||||||||||
| Stock Option Vesting Acceleration | 0 | 26,391 | 0 | 0 | 26,391 | 0 | 52,160 | 0 | 0 | 52,160 | ||||||||||||||||||||||||||||||
| Deferred Compensation Vesting Acceleration | 0 | 0 | 0 | 0 | 0 | 0 | 15,755 | 0 | 0 | 15,755 | ||||||||||||||||||||||||||||||
| Payment for Taxes Resulting from Deferred Compensation Distribution | 0 | 0 | 0 | 0 | 0 | 0 | 13,631 | 0 | 0 | 13,631 | ||||||||||||||||||||||||||||||
| Total | 305,000 | 374,991 | 0 | 0 | 69,991 | 322,000 | 1,463,004 | 0 | 0 | 1,141,004 | ||||||||||||||||||||||||||||||
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James C. Hobby
The following table shows the potential payments upon termination or a change of control of the Company for James C. Hobby, the Company’s Sr.Senior Vice President — Global Operations, as if such termination had occurred on December 31, 2006:2008:
| Company Initiated | Executive Initiated | Company Initiated | Executive Initiated | |||||||||||||||||||||||||||||||||||||
| Before | After | Before | After | |||||||||||||||||||||||||||||||||||||
| Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||
| Control | Control | Control | Control | |||||||||||||||||||||||||||||||||||||
| Termination | Termination | Voluntary | Termination | Termination | Voluntary | |||||||||||||||||||||||||||||||||||
| w/o Cause | w/o Cause | Termination | w/o Cause | w/o Cause | Termination | |||||||||||||||||||||||||||||||||||
| or for Good | or for Good | Voluntary | for “Good | Change in | or for Good | or for Good | Voluntary | for “Good | Change in | |||||||||||||||||||||||||||||||
| Reason | Reason | Termination | Reason” | Control | Reason | Reason | Termination | Reason” | Control | |||||||||||||||||||||||||||||||
Type of Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
| Severance Pay | 275,000 | 275,000 | 0 | 0 | 0 | 335,500 | 335,500 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Bonus Payment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Stock Grants Vesting Acceleration | 0 | 39,313 | 0 | 0 | 39,313 | 0 | 1,019,861 | 0 | 0 | 1,019,861 | ||||||||||||||||||||||||||||||
| Stock Option Vesting Acceleration | 0 | 474,375 | 0 | 0 | 474,375 | 0 | 50,047 | 0 | 0 | 50,047 | ||||||||||||||||||||||||||||||
| Deferred Compensation Vesting Acceleration | 0 | 37,446 | 0 | 0 | 37,446 | 0 | 43,991 | 0 | 0 | 43,991 | ||||||||||||||||||||||||||||||
| Payment for Taxes Resulting from Deferred Compensation Distribution | 0 | 35,333 | 0 | 0 | 35,333 | 0 | 112,814 | 0 | 0 | 112,814 | ||||||||||||||||||||||||||||||
| Total | 275,000 | 861,467 | 0 | 0 | 586,467 | 335,500 | 1,562,213 | 0 | 0 | 1,226,713 | ||||||||||||||||||||||||||||||
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David L. Pearson
The following table shows the potential payments upon termination or a change of control of the Company for David L. Pearson, the Company’s Sr.Senior Vice President and Chief Information Officer, as if such termination had occurred on December 31, 2006:2008:
| Company Initiated | Executive Initiated | Company Initiated | Executive Initiated | |||||||||||||||||||||||||||||||||||||
| Before | After | Before | After | |||||||||||||||||||||||||||||||||||||
| Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||
| Control | Control | Control | Control | |||||||||||||||||||||||||||||||||||||
| Termination | Termination | Voluntary | Termination | Termination | Voluntary | |||||||||||||||||||||||||||||||||||
| w/o Cause | w/o Cause | Termination | w/o Cause | w/o Cause | Termination | |||||||||||||||||||||||||||||||||||
| or for Good | or for Good | Voluntary | for “Good | Change in | or for Good | or for Good | Voluntary | for “Good | Change in | |||||||||||||||||||||||||||||||
| Reason | Reason | Termination | Reason” | Control | Reason | Reason | Termination | Reason” | Control | |||||||||||||||||||||||||||||||
Type of Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
| Severance Pay | 210,000 | 210,000 | 0 | 0 | 0 | 254,100 | 254,100 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Bonus Payment | 0 | 0 | 0 | 0 | 0 | 0 | 22,368 | 0 | 0 | 22,368 | ||||||||||||||||||||||||||||||
| Stock Grants Vesting Acceleration | 0 | 30,021 | 0 | 0 | 30,021 | 0 | 450,333 | 0 | 0 | 450,333 | ||||||||||||||||||||||||||||||
| Stock Option Vesting Acceleration | 0 | 293,777 | 0 | 0 | 293,777 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Deferred Compensation Vesting Acceleration | 0 | 26,391 | 0 | 0 | 26,391 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Payment for Taxes Resulting from Deferred Compensation Distribution | 0 | 81,954 | 0 | 0 | 81,954 | 0 | 73,596 | 0 | 0 | 73,596 | ||||||||||||||||||||||||||||||
| Total | 210,000 | 642,143 | 0 | 0 | 432,143 | 254,100 | 800,397 | 0 | 0 | 546,297 | ||||||||||||||||||||||||||||||
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EMPLOYMENT AGREEMENTS
Charles E. Sykes. The Company and Mr. Sykes are parties to an amended and restated employment agreement, dated August 1, 2004, as amended on July 28, 2005 to correct a scrivener’s error, and as amended on January 3, 2006 to change compensation.December 30, 2008. The material terms and conditions of the agreement as amended are summarized below. Under the agreement, Mr. Sykes serves as President and Chief Executive Officer of the Company. The term of the agreement expires on July 31, 2007,2009, but will automatically be renewed, and will continue to be automatically renewed, for successive one-year terms unless one of the parties provides written notice of its intent not to renew the agreement at least 180 days prior to the expiration of the initial term or any renewal term. Under the agreement, as amended, Mr. Sykes’ annual base salary is $500,000.$550,000, subject to increase at the Company’s discretion. Mr. Sykes also is entitled to participate in a performance based bonus of up to 75% of his base salaryplan based upon the achievement of such goals as may be determined by the Compensation Committee, and to participate in such other bonus programs and benefit plans as are generally made available to other executive officers of the Company.
If the agreement is terminated by the Company prior to the expiration of the initial term or anya renewal period for any reason other than death, disability, or cause (as defined in the agreement), or if the agreement is terminated by Mr. Sykes prior to the expiration of the initial term or any renewal period for good reason (as defined below), the Company is required to pay Mr. Sykes an amount equal to two times his weeklyannual base salary, through the end of the initial term or renewal period of the agreement or for 104 weeks, whichever is greater, and during such period Mr. Sykes is prohibited for a period of two years from soliciting the Company’s employees and competing with the Company in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. If the agreement is terminated by Mr. Sykes following a change inof control of the Company (as defined in the agreement) prior to the expiration of the initial term or any renewal period, the Company is required to pay Mr. Sykes an amount equal to three times his weeklyannual base salary, for 156 weeks from the date of termination, rather than 104 weeks, and to pay himplus an amount determined by multiplying the annual target bonus designated or otherwise indicated for himMr. Sykes in the year such change of control occurs by a factor of three,three. The target bonus amount is to be determined under the performance based bonus plan in which Mr. Sykes is then participating. Except as provided below, the foregoing amounts are to be paid biweekly in equal installments over 52 weeks, commencing immediately upon his separation from service. If Mr. Sykes is determined to be a “specified employee” on the date of his “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and payingapplicable regulations), to the extent that he is entitled to receive any benefit or payment upon such amount overseparation from service under the156-week period. employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not be provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid or provided on or after the date that is six months after the date of his separation from service will be paid or provided in accordance with the payment schedule described above.
Also, in the event the agreement is terminated by Mr. Sykes followingin connection with a change inof control of the Company, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Sykes upon the event of termination.Sykes.
“Good reason” for Mr. Sykes’ termination of the agreement is defined in the agreement as: (i) a change of control of the Company (as defined in the agreement), (ii) a good faith determination by Mr. Sykes that the Company has breached the employment agreement, (iii) a material adverse change in working conditions or status, (iv) the deletion of, or change
29
in, any of the titles of CEO or President, (v) a significant relocation of Mr. Sykes’ principal office, (vi) a significant increase in travel requirements, or (vii) an impairment of Mr. Sykes’ health to an extent that made the continued performance of his duties under the agreement hazardous to his physical or mental health or his life.
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The agreement provides that if Mr. Sykes’ employment is terminated by the Company due to his death, disability or for cause, or voluntarily by Mr. Sykes other than for good reason, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, and Mr. Sykes may not solicit any of the Company’s employees or compete directly or indirectly with the Company during the term of the agreement and for a period of one year after its termination, regardless of the reason for its termination. The agreement contains customary confidentiality provisions.
W. Michael Kipphut. The Company and Mr. Kipphut are parties to an amended and restated employment agreement, dated March 6, 2005,December 30, 2008, the material terms and conditions of which are summarized below. The employment agreement provides that Mr. Kipphut will serve as an executive of the Company. Mr. Kipphut serves as Group Executive, Senior Vice President — Finance.Finance and Chief Financial Officer. The initial term of the agreement expired on March 5, 2007,2009, but was automatically renewed, and will continue to be automatically renewed, for successive one-year terms unless one of the parties provides the other with written notice of its intent not to renew the agreement at least 30 days prior to the expiration of the initial term or anya renewal term. Under the agreement, Mr. Kipphut’s annual base salary is $368,500,$400,000, subject to increase at the Company’s discretion. Mr. Kipphut also is entitled to participate in a performance based bonus up to 60% of his base salaryplan based upon the achievement of specifiedsuch goals as may be determined by the Compensation Committee, and to participate in such other bonus programs and benefit plans as are generally made available to other executive officers of the Company.
If the agreement is terminated by the Company prior to the expiration of the initial term or anya renewal period for any reason other than death, disability, or cause (as defined in the agreement), or if the agreement is terminated by Mr. Kipphut prior to the expiration of the initial term or any renewal period for good reason (as defined below), the Company is required to pay Mr. Kipphut an amount equal to his weeklyannual base salary, through the end of the initial term or renewal period of the agreement or for 52 weeks, whichever is greater, plus an amount equal to the maximum annual performance bonus he could earn (60% of his annual base salary),under the performance based bonus plan in which would also be paid over the same period as the other payments.Mr. Kipphut is then participating. If the agreement is terminated by Mr. Kipphut following a change in control of the Company (as defined in the agreement) prior to the expiration of the initial term or any renewal period, the Company is required to pay Mr. Kipphut an amount equal to twice his weeklyannual base salary, plus an amount determined by multiplying the annual target bonus designated or otherwise indicated for 104Mr. Kipphut in the year such change of control occurs by a factor of two. The target bonus amount is to be determined under the performance based bonus plan in which Mr. Kipphut is then participating. Except as provided below, the foregoing amounts are to be paid biweekly in equal installments over 52 weeks, commencing immediately upon his separation from service. If Mr. Kipphut is determined to be a “specified employee” on the date of termination, rather than 52 weeks, plus an amount equalhis “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and applicable regulations), to twice the maximum annual performance bonusextent that he could earn, which would alsois entitled to receive any benefit or payment upon such separation from service under the employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not be provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid overor provided on or after the104-week period. date that is six months after the date of his separation from service will be paid or provided in accordance with the payment schedule described above.
Also, in the event the agreement is terminated by Mr. Kipphut followingin connection with a change inof control of the Company, all stock options, stock grants or other similar equity incentivesand/or compensation programs will immediately accelerate and become fully vested and exercisable at the option of Mr. Kipphut upon the event of termination.Kipphut.
“Good reason” for Mr. Kipphut’s termination of the agreement is defined in the agreement as: (i) a change of control of the Company (as defined in the agreement), (ii) a good faith determination by Mr. Kipphut that the
39
Company has breached the employment agreement, (iii) a material adverse change in working conditions or status, (iv) the deletion of, or change in, any of the titles of Senior Vice President and Chief Financial Officer, (v) a significant relocation of Mr. Kipphut’s principal office, (vi) a change in reporting such that Mr. Kipphut is required to report to someone other than the CEO, or (vii) a significant increase in travel requirements.
The agreement provides that if Mr. Kipphut’s employment is terminated by the Company due to his death, disability or for cause, or voluntarily by Mr. Kipphut other than for good reason, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination.
The agreement provides that Mr. Kipphut may not solicit any of the Company’s employees or compete directly or indirectly with the Company during the term of the agreement and for one year after its expiration in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. If the agreement is terminated by the Company or Mr. Kipphut prior to the end of its term, regardless of the reason for its termination the non-solicitation and non-competition provisions will remain in effect through the end of the initial term or renewal period or for 52 weeks after termination, whichever is greater. The agreement contains customary confidentiality provisions.
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James Hobby, Jr.Hobby. The Company and Mr. Hobby are parties to an amended and restated employment agreement, dated January 3, 2005,December 29, 2008, the material terms and conditions of which are summarized below. The employment agreement provides that Mr. Hobby will serve as an executive of the Company. Mr. Hobby serves as Senior Vice President, Global Operations. The agreement had an initial term which expired January 2, 2007, but was automatically renewed, and will continue to be automatically renewed, for successive one-year periods unlessuntil terminated by one of the parties provides written notice of its intent not to renew the agreement at least 180 days prior to the expiration of the initial term or any renewal term.parties. Under the agreement, Mr. Hobby’s annual base salary will not be less than $275,000, and heis $335,500, subject to increase at the Company’s discretion. He also is entitled to participate in a performance based bonus plan based upon the achievement of up to 50% of his base salary in accordance withsuch goals as may be determined by the Company’s standard policy for the payment of performance bonuses,Compensation Committee and to standard executive fringe benefits.
If the agreement is terminated by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Hobby an amount equal to his weekly base salary through the end of the initial term or renewal period of the agreement or for 52 weeks after the termination of the agreement, whicheveragreement. Except as provided below, the foregoing amount is greater, andto be paid biweekly in equal installments over 52 weeks, commencing immediately upon his separation from service. If Mr. Hobby mayis determined to be a “specified employee” on the date of his “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and applicable regulations), to the extent that he is entitled to receive any benefit or payment upon such separation from service under the employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not competebe provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid or provided on or after the date that is six months after the date of his separation from service will be paid or provided in accordance with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. After the end of the initial term or renewal period of the agreement, the Company may discontinue making such payments if it releases Mr. Hobby from the restrictions in the non-competition provision. The agreement provides that ifpayment schedule described above. If Mr. Hobby’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Hobby, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, andtermination. In any event, Mr. Hobby may not compete with the Company for a period throughin any area in which the end ofCompany’s clients were conducting business during the initial term or renewal period of the agreement, or for 52 weeks following the termination of his employment, whichever is greater. The agreement provides that, after termination of his employment for any reason, whether by the Company or Mr. Hobby, Mr. Hobby may not solicit the Company’s employees, for the longer of (i) the full stated term or renewal period of the agreement or (ii) a period of 52 weeksone year after termination of his employment. The agreement also contains customary confidentiality provisions.
Lawrence R. Zingale. The Company and Mr. Zingale are parties to an amended and restated employment agreement, dated January 3, 2006,December 29, 2008, the material terms and conditions of which are summarized below. The employment agreement provides that Mr. Zingale will serve as an executive of the Company. Mr. Zingale serves as Sr.Senior Vice President, Global Sales and Client Management. The agreement continueswill continue until terminated by one of the parties. Under the agreement, Mr. Zingale’s annual base salary is $322,000, subject to be not less than $305,000 throughincrease at the end of the term of the agreement, and heCompany’s
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discretion. He also is entitled to participate in a performance based bonus program ranging from 0% to 40%plan based upon the achievement of his base salary,such goals as may be determined by the Compensation Committee and to standard executive fringe benefits. The agreement also provides for the one time payment of a lump sum of $25,000 as a signing bonus and for the payment of a one time lump sum relocation bonus of $75,854 at the inception of his employment.
If the agreement is terminated by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Zingale an amount equal to his weekly base salary for 52 weeks after the termination of the agreement, andagreement. Except as provided below, the foregoing amount is to be paid biweekly in equal installments over 52 weeks, commencing immediately upon his separation from service. If Mr. Zingale mayis determined to be a “specified employee” on the date of his “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and applicable regulations), to the extent that he is entitled to receive any benefit or payment upon such separation from service under the employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not competebe provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid or provided on or after the date that is six months after the date of his separation from service will be paid or provided in accordance with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement. The agreement also provides that ifpayment schedule described above. If Mr. Zingale’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Zingale, then the Company will have no obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, andtermination. In any event, Mr. Zingale may not compete with the Company for a period through the end of the initial term or renewal period of the agreement or for 52 weeks following the termination of his employment, whichever is greater. The agreement provides that, after termination of his employment forin any reason, whether by the Company or Mr. Zingale, Mr. Zingale may not solicitarea in which the Company’s employees forclients were conducting business during the longer of (i) the remaining term of the agreement, or (ii)solicit the Company’s employees, for a period of one year after termination of his employment. The agreement also contains customary confidentiality provisions.
David L. Pearson. The Company and Mr. Pearson are parties to an amended and restated employment agreement, dated September 20, 2005,December 29, 2008, the material terms and conditions of which are summarized belowbelow. The employment agreement provides that Mr. Pearson will serve as an executive of the Company. Mr. Pearson serves as Senior Vice President, Information Technology. The agreement had an initial term which expired on September 19, 2006, but was automatically renewed, and will continue to automatically renew, for successive one-year terms unlessuntil terminated by one of the parties provides written notice of its
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If the agreement is terminated by the Company prior to the expiration of the initial term or any renewal period for any reason other than death, disability, or cause (as defined in the agreement), the Company is required to pay Mr. Pearson an amount equal to his weekly base salary for 52 weeks after the termination of the agreement, andagreement. Except as provided below, the foregoing amount is to be paid biweekly in equal installments over 52 weeks, commencing immediately upon his separation from service. If Mr. Pearson mayis determined to be a “specified employee” on the date of his “separation from service” (each as defined in Section 409(A) of the Internal Revenue Code and applicable regulations), to the extent that he is entitled to receive any benefit or payment upon such separation from service under the employment agreement that constitutes deferred compensation within the meaning of Section 409A of the Internal Revenue Code before the date that is six months after the date of his separation from service, such benefits or payments will not competebe provided or paid to him on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum on the first business day after the date that is six months after the date of his separation from service (or, if earlier, within fifteen (15) days following his date of death). All remaining payments and benefits otherwise required to be paid or provided on or after the date that is six months after the date of his separation from service will be paid or provided or paid in accordance with the Company during such period in any area in which the Company’s clients were conducting business during the initial term or any renewal term of the agreement.payment schedule described above. The agreement also provides that if Mr. Pearson’s employment is terminated by the Company due to his death, disability or cause, or voluntarily by Mr. Pearson, then the Company will have no
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obligation to pay him any salary, bonus or other benefits other than those payable through the date of termination, andtermination. In any event, Mr. Pearson may not compete with the Company for a period through the end of the initial term or renewal period of the agreement or for 52 weeks following the termination of his employment, whichever is greater. The agreement provides that, after termination of his employment forin any reason, whether by the Company or Mr. Pearson, Mr. Pearson may not solicitarea in which the Company’s employees forclients were conducting business during the longer of (i) the remaining term of the agreement, or (ii)solicit the Company’s employees, for a period of one year after termination of his employment. The agreement also contains customary confidentiality provisions.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation for service as members of either the Board of Directors or any committees of the Board.
2004 Non-Employee Director Fee Plan
In May 2005, the shareholders of the Company approved the 2004 Non-Employee Director Fee Plan (the “2004 Fee Plan”). ThePrior to amendments adopted by the Board of Directors in August 2008 which are described below, the 2004 Fee Plan providesprovided that all new non-employee Directorsdirectors joining the Board willwould receive an initial grant of common stock units (“CSUs”) on the date the new Directordirector is appointed or elected, the number of which will be determined by dividing a dollar amount to be determined from time to time by the Board (initially set at $30,000)($30,000 in 2008) by an amount equal to 110% of the average closing prices of the Company’s common stock for the five trading days prior to the date the new Directordirector is appointed or elected. The initial grant of CSUs will vest in three equal installments, one-third on the date of each of the following three annual shareholders’ meetings. A CSU is a bookkeeping entry on the Company’s books that records the equivalent of one share of common stock. OnPrior to amendments to the 2004 Fee Plan adopted by the Board of Directors in March 2008 which are described below, the initial grant of CSUs vested in three equal installments, one-third on the date of each CSUof the following three annual shareholders’ meetings, and all unvested and unearned CSUs automatically vested upon the termination of a director’s service as a director, whether by reason of death, retirement, resignation, removal or failure to be reelected at the end of his or her term.
In March 2008, the 2004 Fee Plan was amended by the Board, upon the recommendation of the Compensation and Human Resource Development Committee, to provide that, beginning with grants in 2008, instead of an award of CSUs, a new non-employee director would receive an award of shares of common stock. The initial grant of stock to directors joining the Board would vest and be earned in twelve equal quarterly installments over the following three years, and all unvested and unearned stock will lapse in the event the person ceases to serve as a director of the Company. Until a quarterly installment of stock vests and becomes payable, the Directordirector has none of the rights of a shareholder with respect to the unearned stock grants.
In August 2008, upon the recommendation of the Compensation and Human Resource Development Committee, the Board of Directors amended the 2004 Fee Plan to provide that and that the initial grant of shares to directors joining the Board will become entitledbe the number determined by dividing $60,000 by an amount equal to receive a sharethe closing price of the Company’s common stock andon the CSU will be canceled.day preceding the new director’s election. The increase in the amount of the share award is subject to shareholder approval at the Annual Meeting. See “Proposal 2” below.
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CSUs will automatically vestvested upon the termination of a Director’sdirector’s service as a Director,director, whether by reason of death, retirement, resignation, removal or failure to be reelected at the end of his or her term. Until a CSU vests, the Director has none
As part of the rightsamendments to the 2004 Fee Plan in March 2008, the 2004 Fee Plan was amended to provide that, beginning with grants in 2008, the annual retainer grants of stock to directors would vest and be earned in eight equal quarterly installments, with the first installment being made on the day following the annual meeting of shareholders, and the remaining seven installments to be made on each third monthly anniversary of such date thereafter. In the event a shareholderperson ceases to serve as a director of the Company, the award lapses with respect to the CSU or the commonall unvested stock, underlying the CSU. CSUs are not transferable.and such unvested stock is forfeited.
In addition to the annual retainer award, the 2004 Fee Plan also provides for additional annual cash compensationawards to non-employee directors who serve on board committees. These annual awards for committee members also were increased in August 2008, effective retroactively to May 2008. The additional annual cash award for the amount of $100,000. The Chairperson of the Audit Committee receives additionalwas increased from $10,000 to $20,000, and Audit Committee members’ awards were increased from a per meeting fee of $1,250 to an annual fee award of $10,000. The annual cash compensation in the amount of $12,000, andawards for the Chairpersons of the Compensation and Human Resource Development Committee, Finance Committee and the Nominating and Corporate Governance Committee were each receiveincreased from $5,000 to $12,500, and the awards for members of such committees were increased from a per meeting fee of $1,250 to an annual award of $7,500. The additional annual cash compensationaward in the amount of $5,000.$100,000 for a non-employee Chairman of the Board was not changed. These additional cash awards also vest in eight equal quarterly installments, one-eighth on the day following the annual meeting of shareholders, and one eighth on each third monthly anniversary of such date thereafter, and the award lapses with respect to all unpaid cash in the event the non-employee director ceases to be a director of the Company, and such unvested cash is forfeited.
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The following table contains information regarding compensation paid to the non-employee directors during fiscal year ending December 31, 2006,2008, including cash, and restricted stock units.units and common stock.
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||||||||||||||||
| Change in | Change in | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension | Pension | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Value and | Value and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nonqualified | Nonqualified | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees Earned | Non-Equity | Deferred | Fees Earned | Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||||||||||||||||||
| or Paid in | Stock | Option | Incentive Plan | Compensation | All Other | or Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||||||||||||||||
| Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||||||||||||||||
Name | ($) | ($)(2) | ($) | ($) | ($) | ($) | ($) | ($)(1) | ($)(2) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||||||||||||||
| Furman P. Bodenheimer, Jr. | 23,000 | 37,500 | — | — | — | — | 60,500 | 43,083 | 14,898 | — | — | — | — | 57,981 | ||||||||||||||||||||||||||||||||||||||||||
| Mark C. Bozek | 31,000 | 37,500 | — | — | — | — | 68,500 | 41,750 | 14,898 | — | — | — | — | 56,648 | ||||||||||||||||||||||||||||||||||||||||||
| Lt. Gen. Michael DeLong (Ret) | 23,500 | 37,500 | — | — | — | — | 61,000 | 36,833 | 14,898 | — | — | — | — | 51,731 | ||||||||||||||||||||||||||||||||||||||||||
| H. Parks Helms | 31,000 | 37,500 | — | — | — | — | 68,500 | 41,750 | 14,898 | — | — | — | — | 56,648 | ||||||||||||||||||||||||||||||||||||||||||
| Iain Macdonald | 25,125 | 37,500 | — | — | — | — | 62,625 | 39,917 | 14,898 | — | — | — | — | 54,815 | ||||||||||||||||||||||||||||||||||||||||||
| James S. MacLeod | 23,000 | 37,500 | — | — | — | — | 60,500 | 45,583 | 14,898 | — | — | — | — | 60,481 | ||||||||||||||||||||||||||||||||||||||||||
| Linda McClintock-Greco, M.D. | 23,000 | 37,500 | — | — | — | — | 60,500 | 37,583 | 14,898 | — | — | — | — | 52,481 | ||||||||||||||||||||||||||||||||||||||||||
| William J. Meurer | 41,750 | 37,500 | — | — | — | — | 79,250 | 57,750 | 14,898 | — | — | — | — | 72,648 | ||||||||||||||||||||||||||||||||||||||||||
| James K. Murray, Jr. | 23,500 | 37,500 | — | — | — | — | 61,000 | 51,750 | 14,898 | — | — | — | — | 66,648 | ||||||||||||||||||||||||||||||||||||||||||
| Paul L. Whiting | 127,750 | 37,500 | — | — | — | — | 165,250 | 142,417 | 14,898 | — | — | — | — | 157,315 | ||||||||||||||||||||||||||||||||||||||||||
| (1) | ||
| (2) |
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SECURITY OWNERSHIP
Security Ownership of Directors and Executive Officers
The following table sets forth the beneficial ownership of the Company’s Common Stockcommon stock as of April 16, 2007,9, 2009, for each director, each executive officer named in the Summary Compensation Table herein, and by all Directorsdirectors and executive officers of the Company as a group.
| Stock Settled | Stock Settled | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock | Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Appreciation | Appreciation | |||||||||||||||||||||||||||||||||||||||||||||||
| Options | Rights | Options | Rights | |||||||||||||||||||||||||||||||||||||||||||||
| Currently | Vested and | Total Stock | Percent of | Currently | Vested and | Total Stock | Percent of | |||||||||||||||||||||||||||||||||||||||||
| Exercisable or | Vesting | and Stock | Total | Exercisable or | Vesting | and Stock | Total | |||||||||||||||||||||||||||||||||||||||||
| Common | Common | Exercisable | Within 60 | Based | Outstanding | Common | Common | Exercisable | Within 60 | Based | Outstanding | |||||||||||||||||||||||||||||||||||||
Name | Stock | Stock Units(1) | Within 60 Days | Days(2) | Holdings | Stock | Stock | Stock Units(1) | Within 60 Days | Days(2) | Holdings | Stock | ||||||||||||||||||||||||||||||||||||
| Furman P. Bodenheimer, Jr. | 72,156 | 3,180 | 52,500 | 0 | 127,836 | * | 78,250 | 1,148 | 40,000 | 0 | 119,398 | * | ||||||||||||||||||||||||||||||||||||
| Mark C. Bozek | 3,020 | 3,180 | 10,000 | 0 | 16,200 | * | 9,115 | 1,148 | 10,000 | 0 | 20,263 | * | ||||||||||||||||||||||||||||||||||||
| Lt. Gen. Michael DeLong (Ret) | 7,020 | 3,180 | 8,333 | 0 | 18,533 | * | 13,115 | 1,148 | 8,333 | 0 | 22,596 | * | ||||||||||||||||||||||||||||||||||||
| H. Parks Helms(3) | 20,043 | 3,180 | 25,000 | 0 | 48,223 | * | 21,139 | 1,148 | 12,500 | 0 | 34,787 | * | ||||||||||||||||||||||||||||||||||||
| Iain Macdonald | 6,999 | 4,788 | 0 | 0 | 11,787 | * | 14,692 | 1,148 | 0 | 0 | 15,840 | * | ||||||||||||||||||||||||||||||||||||
| James S. MacLeod | 5,622 | 4,224 | 0 | 0 | 9,846 | * | 13,804 | 1,148 | 0 | 0 | 14,952 | * | ||||||||||||||||||||||||||||||||||||
| Linda McClintock-Greco, M.D. | 15,241 | 3,180 | 17,500 | 0 | 35,921 | * | 21,336 | 1,148 | 12,500 | 0 | 34,984 | * | ||||||||||||||||||||||||||||||||||||
| William J. Meurer | 41,111 | 3,180 | 27,500 | 0 | 71,791 | * | 64,706 | 1,148 | 10,000 | 0 | 75,854 | * | ||||||||||||||||||||||||||||||||||||
| James K. Murray, Jr.(4) | 11,122 | 4,224 | 0 | 0 | 15,346 | * | 19,304 | 1,148 | 0 | 0 | 20,452 | * | ||||||||||||||||||||||||||||||||||||
| Charles E. Sykes(5) | 163,391 | 0 | 0 | 3,484 | 166,875 | * | 240,557 | 0 | 0 | 8,494 | 249,051 | * | ||||||||||||||||||||||||||||||||||||
| Paul L. Whiting(6) | 109,916 | 3,180 | 25,000 | 0 | 138,096 | * | 116,011 | 1,148 | 25,000 | 0 | 142,159 | * | ||||||||||||||||||||||||||||||||||||
| W. Michael Kipphut(7) | 70,299 | 0 | 110,000 | 1,533 | 181,832 | * | 112,054 | 0 | 110,000 | 3,737 | 225,791 | * | ||||||||||||||||||||||||||||||||||||
| Lawrence R. Zingale(8) | 38,430 | 0 | 0 | 1,047 | 39,477 | * | 66,245 | 0 | 0 | 873 | 67,118 | * | ||||||||||||||||||||||||||||||||||||
| James C. Hobby(9) | 44,359 | 0 | 0 | 944 | 45,303 | * | 69,974 | 0 | 0 | 2,305 | 72,279 | * | ||||||||||||||||||||||||||||||||||||
| David L. Pearson(10) | 23,797 | 0 | 37,050 | 437 | 61,284 | * | 33,298 | 0 | 20,300 | 1,065 | 54,663 | * | ||||||||||||||||||||||||||||||||||||
| All Directors and executive officers as a group — 18 persons | 674,584 | 35,496 | 333,883 | 9,320 | 1,053,283 | 2.6 | % | |||||||||||||||||||||||||||||||||||||||||
| All directors and executive officers as a group — 18 persons | 959,998 | 11,480 | 294,633 | 17,501 | 1,283,612 | 3.11 | % | |||||||||||||||||||||||||||||||||||||||||
| * | Less than 1.0% | |
| (1) | Represents stock settled Common Stock Units granted pursuant to the 2004 Non-Employee Director Fee Plan that will vest within 60 days of the date of this proxy | |
| (2) | Shares of common stock which may be acquired within sixty days |
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| being exercised, multiplied by the amount by which the fair market value (as defined in the Plan) of a share of stock on the day the right is exercised exceeds the fair market value of a share of stock on the date of grant of the SAR, by (ii) the fair market value of a share of stock on the exercise date. | ||
| (3) | Excludes 600 shares held by Mr. Helms’ spouse over which Mr. Helms disclaims beneficial ownership. | |
| (4) | Includes 8,182 shares held by Murray Corporation, of which Mr. Murray is an officer and principal stockholder. Excludes 1,000 shares held | |
| (5) | Includes |
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| (6) | Includes | |
| (7) | Includes | |
| (8) | Includes | |
| (9) | Includes | |
| (10) | Includes |
Security Ownership of Certain Beneficial Owners
As of December 31, 2006,April 9, 2009, the Company’s records and other information available from outside sources indicated that the following stockholdersshareholders were beneficial owners of more than five percent of the outstanding shares of the Company’s Common Stock.common stock. The information below is as reported in their filings with the Securities and Exchange Commission. The Company is not aware of any other beneficial owner or more than 5% of the Company’s Common Stock.common stock.
| Amount and Nature of Beneficial Ownership | ||||||||||||||||
| Common Stock | Amount and Nature of Beneficial Ownership Common Stock | |||||||||||||||
Name | Shares | Percent | Shares | Percent | ||||||||||||
| John H. Sykes(1) | 7,656,096 | 18.85 | 5,632,241 | 13.65 | % | |||||||||||
| Barclays Global Investors, NA.(2) | 2,130,639 | 5.25 | ||||||||||||||
| 45 Fremont Street San Francisco, CA 94105 | ||||||||||||||||
| Wells Fargo & Company(2) 420 Montgomery Street San Francisco, CA 94163 | 3,402,227 | 8.25 | % | |||||||||||||
| Barclays(3) 400 Howard Street San Francisco, CA 94105 | 2,323,177 | 5.63 | % | |||||||||||||
| BlackRock, Inc.(4) 40 East 52nd Street New York, New York, 10022 | 2,439,239 | 5.91 | % | |||||||||||||
| (1) | Represents shares owned by Mr. John Sykes through Jopar Investments Limited Partnership, a North Carolina limited partnership in which Mr. Sykes is the sole limited partner and the sole shareholder of the limited |
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| partnership’s sole general partner. Excludes 7,950 shares owned by Mr. Sykes’ wife, as to which Mr. Sykes disclaims beneficial ownership. Mr. Sykes’ business address is P.O. Box 2044, Tampa, Florida33601-2044. | ||
| (2) | All information is based upon the Schedule 13G filed with the Security and Exchange Commission by | |
| (3) | All information is based upon the Schedule 13G filed with the Security and Exchange Commission by Barclays Global Investors, NA., Barclays Global Fund Advisors, Barclays Global Investors, Ltd., Barclays Global Investors Japan Limited, Barclays Global Investors Canada Limited, Barclays Global Investors Australia Limited, and Barclays Global Investors (Deutschland) AG on February 5, 2009. | |
| (4) | All information is based upon the Schedule 13G filed with the Security and Exchange Commission by BlackRock, Inc. (“BlackRock”) on February 10, 2009. BlackRock is a parent holding company and a registered investment advisor under Section 240 of the |
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE 2004 NON-EMPLOYEE DIRECTOR FEE PLAN
The non-employee directors of the Company are currently compensated with both cash and equity awards pursuant to the provisions of the Third Amended and Restated 2004 Non-Employee Directors Fee Plan (the “2004 Fee Plan”). In August 2008, the Board of Directors adopted amendments to the 2004 Fee Plan which increased the equity awards under the 2004 Fee Plan, subject to shareholder approval at the Annual Meeting. Such increases are described below. For a summary of all of the 2008 amendments to the 2004 Fee Plan, please see the description of the 2004 Fee Plan under the heading “Director Compensation” above. None of the other amendments are subject to shareholder approval. A copy of the Third Amended and Restated 2004 Fee Plan, which contains all amendments made in 2008, including those described below, is attached to this proxy statement as Exhibit A.
The purpose of the 2004 Fee Plan is to secure for the Company and its shareholders the benefits of the incentive inherent in increased ownership of common stock of the Company by members of the Board of Directors who are not employees by providing for the payment of a portion of each non-employee director’s compensation in common stock. It is believed that such ownership further aligns the interests of such non-employee directors with the shareholders of the Company, thereby promoting the long-term profits and growth of the Company, and encourages such non-employee directors to remain directors of the Company. It is also believed that the 2004 Fee Plan will encourage qualified persons to become directors of the Company.
The 2004 Fee Plan currently provides that all new non-employee directors joining the Board will receive an initial grant of shares of common stock on the date the new director is appointed or elected, the number of which will be determined by dividing a dollar amount to be determined from time to time by the Board (currently $30,000) by an amount equal to 110% of the closing price of the closing price of the Company’s common stock on the day preceding the new director’s election to the Board. The initial grant of shares to directors joining the Board vest and are earned in twelve equal quarterly installments over the following three years, and all unvested and unearned shares lapse in the event the person ceases to serve as a director of the Company.
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The 2004 Fee Plan also provides that each non-employee director will receive, on the day after the annual shareholders meeting, an annual retainer award of shares of common stock for service as a non-employee director, the amount of which shall be determined from time to time by the Board. The number of shares to be awarded is determined by dividing the amount of the annual retainer to be paid in shares (currently $37,500) by an amount equal to 105% of the closing price for the Company’s common stock on the date of the annual meeting of the Company’s shareholders. The annual retainer grants of shares to directors vest and are earned in eight equal quarterly installments over the following two years, and all unvested and unearned shares lapse in the event the person ceases to serve as a director of the Company.
In August 2008, the Compensation and Human Resource Committee recommended to the Board, and the Board adopted, amendments to the 2004 Fee Plan, which provide that the initial grant of shares of common stock to directors joining the Board will be the number determined by dividing $60,000 by an amount equal to the closing price of the Company’s common stock on the day preceding the new director’s election to the Board. The amount of the annual retainer award was also amended, to provide that, effective retroactively to May 2008, the equity portion of the annual retainer will be increased from $37,500 to $45,000, with the number of shares to be determined by dividing the dollar amount of the annual retainer to be paid in shares by an amount equal to the closing price of a share of the Company’s common stock on the date of the Company’s annual meeting of shareholders. To become effective, these amendments must be approved by the shareholders at the Annual Meeting.
Each of the Company’s non-employee directors who are serving on the board after the Annual Meeting will receive an additional award of $15,000 worth of common stock on the day after the Annual Meeting if these amendments are approved — $7,500 worth due to the retroactive application of the amendments described above to the 2008 annual retainer, and $7,500 worth for the 2009 annual retainer, in addition to the $37,500 worth of common stock that would have been awarded under the 2004 Fee Plan prior to the approval of the amendments. The number of shares will be determined by dividing such amount by an amount equal to the closing price of a share of the Company’s common stock on the date of the 2009 Annual Meeting. Five-eighths of the shares issued with respect to the 2008 annual retainer will vest immediately, and the remainder will vest and be earned in three equal quarterly installments in August and November of 2009, and February of 2010. If the amendments are not approved, the Third Amended and Restated 2004 Fee Plan attached to this proxy statement as Exhibit A will be revised to retain the initial stock award for new non-employee directors at $30,000 worth of stock and the annual retainer award of stock at $37,500 worth of stock.
The Board of Directors recommends the approval of the amendments to the 2004 Fee Plan described above and urges each shareholder to vote “FOR” the amendments. Executed proxies in the accompanying form will be voted at the Annual Meeting in favor of the adoption of the amendments unless the proxy is marked otherwise.
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee engaged Deloitte & Touche LLP as the Company’s independent auditors to audit the 2007 consolidated financial statements of the Company for the year ended December 31, 20072009 and the effectiveness of the Company’s internal control over financial reporting as of December 31, 20072009 and express an opinion thereon, and issue an attestation report on management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007.2009. Although the Company is not required to seek shareholder ratification of this appointment, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Audit Committee will reconsider the appointment, but will not be required to engage a different auditing firm.
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Representatives of Deloitte & Touche are expected to be present at the Annual Meeting. Those representatives will have the opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions.
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