UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Securities Exchange Act of 1934 (Amendment

(Amendment No.     )

Filed by the Registrant  þx                             

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨Preliminary Proxy Statement
¨Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
xDefinitive Proxy Statement
¨Definitive Additional Materials
¨Soliciting Material Pursuant to §240.14a-12

ARC DOCUMENT SOLUTIONS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

AMERICAN REPROGRAPHICS COMPANY

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
þxNo fee required.
¨Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)

Title of each class of securities to which transaction applies:

 

     

(2)

Aggregate number of securities to which transaction applies:

 

     

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

(4)

 

(4)

Proposed maximum aggregate value of transaction:

 

     

(5)

Total fee paid:

     

¨Fee paid previously with preliminary materials.
¨Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

 

 

(2)

(2)

Form, Schedule or Registration Statement No.:

 

 

(3)

(3)

Filing Party:

 

 

(4)

Date Filed:

 

 

 


AMERICAN REPROGRAPHICS COMPANYARC DOCUMENT SOLUTIONS, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held April 26, 201230, 2015

To Our Stockholders:

We cordially invite you to attend the 20122015 Annual Meeting of Stockholders of American Reprographics Company.ARC Document Solutions, Inc. The annual meeting will take place at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette,County Club, at 1700 Clubhouse Road, Diablo, California 9454994528 on Thursday, April 26, 2012,30, 2015, at 9:00 a.m. PDT. We look forward to your attendance either in person or by proxy.

The purpose of the annual meeting is to:

1. Elect the seven directors named in the proxy statement for the 20122015 annual meeting of stockholders, each for a term of one year or until their successors are elected and qualified;

2. Ratify the appointment of Deloitte & Touche LLP as American Reprographics Company’sARC Document Solutions, Inc.’s independent auditorsregistered public accounting firm for fiscal year 2012;2015;

3. Hold an advisory, non-binding vote on executive compensation; and

4. Transact any other business that may properly come before the annual meeting and any postponements or adjournments of the annual meeting.

The foregoing items of business are more fully described in the proxy statement accompanying this notice of annual meeting of stockholders. Only stockholders of record at the close of business on March 9, 20122, 2015 will receive notice of, and be eligible to vote at, the annual meeting or any postponements or adjournments of the annual meeting. A list of such stockholders will be available at the annual meeting and during ordinary business hours ten days prior to the annual meeting at the principal executive offices of American Reprographics CompanyARC Document Solutions, Inc. at 1981 North Broadway, Suite 385, Walnut Creek, California 94596. If you would like to review the stockholder list, please contact our principal executive offices at (925) 949-5100 to schedule an appointment.

A copy of American Reprographics Company’sARC Document Solutions, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 20112014, is included with this mailing. We are sending this proxy statement and related materials to stockholders on or about March 23, 2012.26, 2015.

 

By order of the Board of Directors,
LOGO

LOGO

John E.D. TothD. Jeffery Grimes

Chief Financial OfficerVice President, Senior Corporate Counsel and

Corporate Secretary

March 23, 201226, 2015

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Stockholders to Be Held on April 26, 201230, 2015

This proxy statement and our 20112014 Annual Report on Form 10-K are available at www.proxyvote.com. www.proxyvote.com.

 

YOUR VOTE IS VERY IMPORTANT

Please read the proxy statement and the voting instructions on the enclosed proxy card. Then, whether or not you plan to attend the annual meeting in person, and no matter how many shares you own, please complete, sign, date and promptly return the enclosed proxy card in the enclosed return envelope. This will ensure that your vote is counted even if you cannot attend the annual meeting in person. The enclosed return envelope requires no additional postage if mailed in either the United States or Canada.


AMERICAN REPROGRAPHICS COMPANYARC DOCUMENT SOLUTIONS, INC.

20122015 ANNUAL MEETING OF STOCKHOLDERS

PROXY STATEMENT

TABLE OF CONTENTS

 

Page

ANNUAL MEETING AND VOTING INFORMATION

   1  

PROPOSAL 1 — ELECTION OF DIRECTORS

   5  

PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM

   67  

PROPOSAL 3 ADVISORY, NON-BINDING VOTE ON EXECUTIVE COMPENSATION

   8  

CORPORATE GOVERNANCE PROFILE

   910  

DIRECTOR COMPENSATION

   14  

EXECUTIVE OFFICERS

15

AUDIT COMMITTEE REPORT

   16  

BENEFICIAL OWNERSHIP OF VOTING SECURITIESAUDIT COMMITTEE REPORT

   16  

EQUITY COMPENSATION PLAN INFORMATIONBENEFICIAL OWNERSHIP OF VOTING SECURITIES

   1918  

EQUITY COMPENSATION DISCUSSION AND ANALYSISPLAN INFORMATION

   1920  

COMPENSATION COMMITTEE REPORTDISCUSSION AND ANALYSIS

   2820  

EXECUTIVE COMPENSATION COMMITTEE REPORT

   2935  

EXECUTIVE COMPENSATION

35

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   3643  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   3643  

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   3745  

ADDITIONAL INFORMATION

   3745  


AMERICAN REPROGRAPHICS COMPANYARC DOCUMENT SOLUTIONS, INC.

1981 North Broadway, Suite 385

Walnut Creek, California 94596

(925) 949-5100

March 23, 201226, 2015

PROXY STATEMENT

The Boardboard of Directorsdirectors of American Reprographics CompanyARC Document Solutions, Inc. is furnishing you with this proxy statement in connection with the solicitation of proxies on its behalf for the 20122015 annual meeting of stockholders. The meeting will take place at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette,County Club, at 1700 Clubhouse Road, Diablo, California 9454994528 on Thursday, April 26, 2012,30, 2015, at 9:00 a.m. PDT. In this proxy statement, we refer to American Reprographics CompanyARC Document Solutions, Inc. as the “Company”, “we”, “us”, “our” or “ARC.”

By submitting your proxy (by signing and returning the enclosed proxy card), you authorize Kumarakulasingam Suriyakumar, the Chairman of the Board, President and Chief Executive Officer, and a director of ARC, and John E.D. Toth, Chief Financial OfficerD. Jeffery Grimes, Vice President, Senior Corporate Counsel and Corporate Secretary of ARC, to represent you and vote your shares at the meeting in accordance with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any postponements or adjournments of the meeting.

We are first sending this proxy statement, form of proxy and accompanying materials to stockholders on or about March 23, 2012.26, 2015.

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE AND SUBMIT YOUR PROXY CARD INCLUDED IN THE ENCLOSED ENVELOPE.

ANNUAL MEETING AND VOTING INFORMATION

The board seeks your proxy for use in voting at the annual meeting or any postponements or adjournments of the meeting. The annual meeting will be held at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette,County Club, at 1700 Clubhouse Road, Diablo, California 9454994528 on Thursday, April 26, 2012,30, 2015, at 9:00 a.m. PDT. We intend to begin mailing this proxy statement, the attached notice of annual meeting, the accompanying proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 20112014, on or about March 23, 201226, 2015, to all holders of our common stock entitled to vote at the meeting. Our Annual Report on Form 10-K for the fiscal year ended December 31, 20112014 does not constitute a part of the proxy solicitation materials and is not incorporated by reference into this proxy statement.

Purpose of the Annual Meeting

At the annual meeting, ARC stockholders will vote on the following items:

 

 1.The election of the seven directors named in this proxy statement, each for a term of one year or until their successors are elected and qualified;

 

 2.Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent auditorsregistered public accounting firm for fiscal year 2012;2015; and

 

 3.An advisory, non-binding vote on executive compensation.

Stockholders also will transact any other business that may properly come before the meeting. Members of ARC’s management team and representatives of Deloitte & Touche LLP, the Company’s independent auditorsregistered public accounting firm for fiscal year 2012,2014, will be present at the meeting to respond to appropriate questions from stockholders. Representatives of Deloitte & Touche LLP will also make a statement if they so desire.


Admission to the Annual Meeting

All record or beneficial owners of ARC’s common stock may attend the annual meeting in person. When you arrive at the annual meeting, please present photo identification, such as a valid driver’s license. Beneficial

owners must also provide evidence of stock holdings, such as a recent brokerage account or bank statement showing ownership of ARC common stock on the record date of March 9, 2012.2, 2015. ARC also has invited certain ARC employees and certain agents of the Company to attend the annual meeting.

Record Date

The record date for the annual meeting is March 9, 2012.2, 2015. Only stockholders of record at the close of business on that date are entitled to vote at the meeting. The only class of stock entitled to be voted at the meeting is ARC’s common stock. Each outstanding share of common stock is entitled to one vote for all matterson each matter presented for a vote at the meeting. At the close of business on the record date, there were 46,225,84746,836,307 shares of ARC common stock outstanding.

Quorum

A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of ARC common stock outstanding on the record date will constitute a quorum. Proxies received but marked as abstentions or treated as “broker non-votes” will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes. If a quorum is not present at the scheduled time of the meeting, the stockholders who are represented may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given.

Required Vote

Proposal 1.    The affirmative vote of a plurality of the votes cast at the meeting is required to elect the seven nominees for director named in Proposal 1. This means that the seven nominees for director receiving the highest number of votes cast will be elected. If you vote to abstain or withhold your vote with respect to one or more nominees, your shares will not be voted with respect to the person or persons indicated, although they will be counted for purposes of determining whether there is a quorum.

Proposals 2 and 3.3.    Approval of Proposals 2 and 3 requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy and entitled to vote.vote assuming a quorum is present.

Routine and Non-Routine Matters

Proposal 2 (ratification of the appointment of Deloitte & Touche LLP as our independent auditorsregistered public accounting firm for 2012)2015) is a routine matter under the New York Stock Exchange rules. A broker or other nominee may vote in theirits discretion on behalf of clients that have not provided voting instructions.

Proposal 1 (election of directors) and Proposal 3 (advisory vote on executive compensation) are non-routine matters under the New York Stock Exchange rules. This means that if your shares are held by your broker or other nominee in “street name,” and you do not provide your broker or other nominee with instructions on how to vote your shares, your broker or nominee will not be permitted to vote your shares on Proposals 1 and 3. This will result in “broker non-votes.”

Voting Shares Held in “Street Name”

If your shares are held by a broker or other nominee, you are considered the beneficial owner of shares held in “street name.” If your shares are held in “street name,” these proxy materials are being forwarded to you by your broker or nominee (the record holder), along with a voting instruction card. As the beneficial owner of shares held in “street name,” you have the right to instruct your broker or nominee how to vote your shares and your broker or nominee is required to vote your shares in accordance with your instructions. If you do not give instructions to your broker or nominee, your broker or nominee will nevertheless be entitled to vote your shares with respect to

“routine” “routine” items, but will not be permitted to vote your shares with respect to “non-routine” items. See the item above entitled “Routine and Non-Routine Matters” for additional details on routine and non-routine matters.

As the beneficial owner of shares, you are invited to attend the meeting. If you are a beneficial owner, however, you may not vote your shares in person at the meeting unless you obtain a proxy form from the record holder of your shares.

Treatment of Abstentions, Withhold Votes and “Broker Non-Votes”

Abstentions and Withhold Votes.    You may vote to abstain or withhold your vote on any of the matters to be voted on at the annual meeting. Abstentions and withhold votes will be treated as shares present for determining whether a quorum is present at the annual meeting. Abstentions and withhold votes will have no effect on the vote to elect our directors (Proposal 1), who are elected by a plurality of votes, but will be counted as votes against the ratification of the appointment of our independent auditorsregistered public accounting firm and the proposal regarding an advisory, non-binding vote on executive compensation (Proposals 2 and 3).

“Broker Non-Votes.”    Broker non-votes occur when a broker or other nominee is unable to vote on a “non-routine” item because of a lack of instructions from the beneficial holder (or the holder in “street name”). Shares that are subject to “broker non-votes” will be treated as shares present for quorum purposes, but will not be counted for or against any particular proposal. If you do not provide your broker or nominee with instructions on how to vote your shares held in “street name,” your broker or nominee will not be permitted to vote your shares on “non-routine” items. Under the rules of the New York Stock Exchange, Proposals 1 and 3 are “non-routine” items and Proposal 2 is a “routine” item. Your broker or nominee is not entitled to vote your shares on Proposals 1 and 3 without specific instructions from you on how to vote. Your broker or nominee is entitled, however, to vote your shares on Proposal 2 without your instructions.If you are the beneficial owner of ARC shares, we strongly encourage you to provide instructions to your broker regarding the voting of your shares.

Voting Instructions

If you properly complete and sign the accompanying proxy card and return it in the enclosed envelope, it will be voted in accordance with your instructions. By doing so, you are authorizing the individuals listed on the proxy card to vote your shares in accordance with your instructions. The enclosed envelope requires no additional postage if mailed in either the United States or Canada.

If you are a record holder, and attend the meeting in person, you may deliver your completed proxy card in person at the meeting. Additionally, we will pass outdistribute written ballots to record holders who wish to vote in person at the meeting. If you attend the annual meeting, please bring the enclosed proxy card or proof of identification. If you are the beneficial holder of shares held in “street name,” and you wish to vote at the meeting, you will need to obtain a proxy, executed in your favor, from your broker or other nominee and bring it with you to the meeting.

If your shares are held in “street name,” you may be able to vote your shares electronically by telephone or on the internet. A large number of banks and brokerage firms participate in a program provided through Broadridge Financial Solutions, Inc. that offers telephone and internet voting options. If your shares are held in an account at a bank or brokerage firm that participates in such a program, you may vote those shares electronically by telephone or on the internet by following the instructions set forth on the voting form provided to you by your record holder.

Revoking your Proxy

If you are the record holder of your shares, you may revoke your proxy at any time before your shares are voted and change your vote:

 

 Ÿ 

by signing another proxy with a later date and delivering it prior to the annual meeting in accordance with the instructions set forth in this proxy statement;

 Ÿ 

by giving written notice of your revocation to the corporate secretary of ARC prior to or at the meeting or by voting in person at the meeting; or

 

 Ÿ 

by attending the annual meeting and voting in person.

Your attendance at the meeting itself will not revoke your proxy unless you give written notice of revocation to our corporate secretary before your proxy is voted or you vote in person at the meeting. Any written notice of revocation, or later dated proxy, should be delivered to:

American Reprographics CompanyARC Document Solutions, Inc.

1981 North Broadway, Suite 385

Walnut Creek, California 94596

Attention: John E.D. Toth,D. Jeffery Grimes, Secretary

If your shares are held by a broker or other nominee, you must contact them in order to find out how to change your vote.

Tabulating Votes

Broadridge Financial Solutions, Inc. will tabulate and certify the votes. In addition, Broadridge Financial Solutions, Inc. will provide an inspector of elections at the annual meeting.

Solicitation of Proxies

ARC is soliciting the proxies and will bear the entire cost of this solicitation, including the preparation, assembly, printing and mailing of this proxy statement and any additional materials furnished to our stockholders. Our directors, officers and employees may solicit votes and request proxies by telephone. Copies of solicitation materials will be furnished to banks, brokerage houses and other agents holding shares in their names that are beneficially owned by others so that they may forward the solicitation materials to the beneficial owners. In addition, if asked, we will reimburse these persons for their reasonable expenses in forwarding the solicitation materials to the beneficial owners. We have asked banks, brokerage houses and other custodians, nominees and fiduciaries to forward all solicitation materials to the beneficial owners of the shares they hold of record.

Other Business

We know of no other business that will be presented at the meeting. If any other matter properly comes before the Company’s stockholders for a vote at the meeting, the proxy holders will vote your shares in accordance with their best judgment.

PROPOSAL 1

ELECTION OF DIRECTORS

Nominees for Director

The board currently consists of seven directors, each of whom has been nominated to serve for a term of one year or until their successors are duly elected and qualified. Our board is not classified and thus all of our directors are elected annually.

Each of the nominees has consented to being named in this proxy statement and has agreed to serve as a member of the board if elected. The Company has no reason to believe that any nominee will be unable to serve. If a nominee is unable to stand for election, the board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority to vote.

The affirmative vote of a plurality of the votes cast at the meeting is required to elect the seven director nominees listed below. This means that the seven nominees receiving the highest number of affirmative votes of the shares entitled to be voted for them will be elected as directors.

The following table sets forth, with respect to each nominee, his name, the year in which he first became a director of ARC, and his age as of March 1, 2012.2, 2015.

 

Name

Name

  Year
Elected
 Age   Year
Elected
 Age 

Kumarakulasingam Suriyakumar

Kumarakulasingam Suriyakumar

   1998(1)   58     1998(1)  61  

Thomas J. Formolo

Thomas J. Formolo

   2000(2)   47     2000(2)   50  

Dewitt Kerry McCluggage

Dewitt Kerry McCluggage

   2006     57     2006    60  

James F. McNulty

James F. McNulty

   2009    69     2009    72  

Mark W. Mealy

Mark W. Mealy

   2005     54     2005    57  

Manuel Perez de la Mesa

Manuel Perez de la Mesa

   2002(3)   54     2002(3)   58  

Eriberto R. Scocimara

Eriberto R. Scocimara

   2006    76     2006    79  

 

(1)

Served as an advisor of American Reprographics Holdings, L.L.C., a California limited liability company (“Holdings”), since 1998 and as a director of ARCthe Company since October 2004. We were previously organized as Holdings and immediately prior to our initial public offering on February 9, 2005, we reorganized as American Reprographics Company, a Delaware corporation.corporation, and subsequently changed our name to ARC Document Solutions, Inc.

 

(2) 

Served as an advisor of Holdings since 2000 and as a director of ARC since October 2004.

 

(3)

Served as an advisor of Holdings since 2002 and as a director of ARC since October 2004.

The following is a brief description of the principal occupation and business experience of each of our directors and their other affiliations.

Kumarakulasingam (“Suri”) Suriyakumar has served as our President and Chief Executive Officer since June 1, 2007, and he served as our President and Chief Operating Officer from 1991 until his appointment as Chief Executive Officer. On July 24, 2008, Mr. Suriyakumar was appointed Chairman of our board of directors. Mr. Suriyakumar served as an advisor of Holdings from March 1998 until his appointment as a director of American Reprographicsthe Company in October 2004. Mr. Suriyakumar joined Micro Device, Inc. (our predecessor company) in 1989. He became the Vice President of Micro Device, Inc. in 1990. Prior to joining the Company, Mr. Suriyakumar was employed with Aitken Spence & Co. LTD, a highly diversified conglomerate and one of the five largest corporations in Sri Lanka. Mr. Suriyakumar is an active membercurrently serves as Chairman of the International Reprographics Association (IRgA).board of directors of Mobitor, L.L.C, a privately held company. ARC’s Board believes that as a founder of the company with tremendous industry knowledge, a strong following within the company, and demonstrated leadership skills in a variety of economic and market-driven environments, Mr. Suriyakumar possesses unmatched experience in, and insight into, all aspects of our business, and his service on the Board is invaluable to ARC.

Thomas J. Formolo served as an advisor of Holdings from April 2000 until his appointment as a director of American Reprographicsthe Company in October 2004. Since 1997,1990, Mr. Formolo has been a partner ofemployed by CHS Capital LLC (formerly known as Code Hennessy & Simmons LLC), or CHS, and has been a partner since 1997. CHS is a private equity firm based in Chicago,

Illinois, that specializes in leveraged buyout and recapitalizations of middle market companies in partnership with company management through its private equity funds. In 2013, Mr. Formolo also founded New Harbor Capital, LLC, a lower middle market private equity firm focused on growth buyout, investing into business services, health care and education companies. He has been employed by CHS’s affiliates since 1990 and has been a member of the management committee since 2001. Mr. Formolo is currently a director of the following companies: AMF Bowling Worldwide, Inc., QubicaAMF Worldwide, S.a.r.L., Heartland Dental Care, Inc., Web Service Company, LLCWash Multifamily Laundry Systems and Royall & Co.PT Solutions Holdings Inc.LLC. The Board believes that Mr. Formolo’s financial acumen, experience in leveraged buyout, his independent director status and the fact that our board of directors has determined that he is an “audit committee financial expert” under SEC guidelines, given his understanding of accounting and financial reporting, make his service to the Board valuable to ARC.

Dewitt Kerry McCluggage was appointed a director of American Reprographicsthe Company in February 2006 and lead independent director in 2007. Mr. McCluggage currently serves as the President of Craftsman Films, Inc., which produces motion pictures and television programs, a company he started in January 2002. An active investor in media-related companies, Mr. McCluggage currently serves as a director of ContentFilm (AIM: CFL)Content Media Corporation, Ltd., a private UK-based, publicly-traded distributor of film and television products, andwhich was publicly traded on the AIM market but went private in 2012. Mr. McCluggage is actively involved withalso an equity investor in Trifecta Entertainment, LLC, offering independent syndication sales and barter advertising in the U.S. From 1991 to 2003, Mr. McCluggage served as President, and then in 1993 Chairman, of the Paramount Television Group, where he was responsible for overseeing all television operations.operations from 1991 until his resignation in 2002. Prior to that, Mr. McCluggage served as President of Universal Television from 1987 to 1991. The Board believes Mr. McCluggage’s principal executive officer experience, and his sales, marketing and operational experience has provided him with a deep understanding of business matters, and his status as an independent director renders his service on the Board valuable to ARC.

James F. McNulty was elected as a director of American Reprographicsthe Company in March 2009 .2009. Mr. McNulty served as Chairman and Chief Executive Officer of Parsons Company (“Parsons”), an international engineering, construction and management services firm from April 1996based in Pasadena, California until May 2008 and as Chairman of the board of directors of Parsons from January 1998 until November 2008. Mr. McNulty currently serves as a director of American States Water Company (NYSE: AWR). The Board believes that Mr. McNulty’s principal executive officer experience in the industry to which we target our primary products and services, as well as his service as a director of publicly-traded companies, have provided him with a deep understanding of business matters, and that this understanding, his broad operational acumen and his status as an independent director make his service on the Board valuable to ARC.

Mark W. Mealy was appointed as a director of American Reprographicsthe Company in March 2005. Mr. Mealy has served as Managing Partner of Colville Capital LLC, a private equity firm, since October 2005. Mr. Mealy also served as the Managing Director and Group Head of Mergers and Acquisitions of Wachovia Securities, Inc., an investment banking firm, from March 2000 until October 2004. Mr. Mealy served as the Managing Director, Mergers and Acquisitions, of First Union Securities, Inc., an investment banking firm, from April 1998 to March 2000, and as the Managing Director of Bowles Hollowell Conner & Co., an investment banking firm, from April 1989 to April 1998. Mr. Mealy is currently a director of the following companies: Insource Performance Solutions, LLC and Motion & Flow Control Products, Inc, Kurz Industrial Solutions, Inc., and Stored Energy Holdings, Inc. The Board believes that Mr. Mealy’s financial acumen, experience in mergers and acquisitions, his independent director status and the fact that our board of directors has determined that he is an “audit committee financial expert” under SEC guidelines, given his understanding of accounting and financial reporting, make his Board service valuable to ARC.

Manuel Perez de la Mesa served as an advisor of Holdings from July 2002 until his appointment as a director of American Reprographicsthe Company in October 2004. Mr. Perez de la Mesa has been Chief Executive Officer of Pool Corporation (NASDAQ: POOL), a wholesale distributor of swimming pool supplies and related equipment, since May 2001 and has also been the President of Pool Corporation since February 1999. Mr. Perez de la Mesa served as Chief Operating Officer of Pool Corporation from February 1999 to May 2001. Mr. Perez de la Mesa also serves as a director of Pool Corporation (NASDAQ: POOL).Corporation. The Board believes that Mr. Mesa’s principal executive officer experience and his service as a

director of another publicly-traded company, as well as his operations and management experience, have provided him with a deep understanding of business matters, and that this understanding, his independent director status and the fact that our board of directors has determined that he is an “audit committee financial expert” under SEC guidelines, given his understanding of accounting and financial reporting, make his Board service valuable to ARC.

Eriberto R. Scocimara was elected as a director of American Reprographicsthe Company in May 2006. Mr. Scocimara has served as the President and Chief Executive Officer of the Hungarian-American Enterprise Fund, a privately managed investment company created by the President and Congress of the United States and funded by the U.S. Government, from 1994 until 2011.since 1994. Mr. Scocimara also has served as the President and Chief Executive Officer of Scocimara & Company, Inc., a financial consulting firm, since 1984. Mr. Scocimara has overmore than 40 years of experience in corporate management, acquisitions and operational restructuring. Mr. Scocimara currently serves as a director of Euronet Worldwide, Inc.Incorporated (NASDAQ: EEFT), Rockwood Holdings L.P. and Kane Manufacturing Co., Inc. and previously served as a director of Carlisle Companies Incorporated (NYSE: CSL)., Roper Industries, Inc. (NYSE: ROP) and Quaker Fabric Corporation. The Board believes that Mr. Scocimara’s international business and finance experience and his service as a director of many other publicly-traded companies, have provided him with a deep understanding of business matters, and his broad financial acumen and his status as an independent director and the fact that our board of directors has determined that he is an “audit committee financial expert” under SEC guidelines, given his understanding of accounting and financial reporting, makes his service on the Board valuable to ARC.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”

THE ELECTION OF EACH OF THE SEVEN DIRECTOR NOMINEES LISTED ABOVE

PROPOSAL 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM

Appointment of Auditors

Deloitte & Touche LLP (“Deloitte”) was appointed as our independent auditorsregistered public accounting firm for the fiscal year ended December 31, 20112014, and has audited our financial statements for the 20112014 and 20102013 fiscal years. The Audit

Committee has appointed Deloitte to be our independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2012.2015. ARC stockholders are asked to ratify this appointment at the 20122015 annual meeting. Representatives of Deloitte will be present at the meeting to respond to appropriate questions and to make a statement if they so desire.

Auditor Fees

A summary of the services provided by Deloitte, our independent auditorsregistered public accounting firm for the fiscal years ended December 31, 20112014 and 2010,2013, and fees billed for such services (in thousands), is as follows:

 

  2011   2010   2014   2013 

Audit fees(a)(1)

  $900    $900    $1,190     $900  

Audit related fees(b)(2)

   118     143          77  

Tax fees

   50     12            

All other fees

   0     350     2     2  
  

 

   

 

   

 

   

 

 

Total

  $1,068    $1,405    $1,192     $979  
  

 

   

 

 

 

(a)(1) 

Consists of aggregate fees billed or expected to be billed for professional services rendered for the audit of our annual consolidated financial statements for the fiscal years ended December 31, 20112014 and 2010,2013, respectively, and reviews of our condensed consolidated financial statements in the Company’s quarterly reports on Form 10-Q forduring the fiscal years ended December 31, 20112014 and 2010.2013, respectively.

 

(b)(2) 

Consists of aggregate fees billed or expected to be billed for assurance and related services reasonably related to the performance of the audit or review of the Company’s financial statements for the fiscal yearsyear ended December 31, 2011 and 20102013, and are not included in the audit fees listed above. This category includes fees related to consultations concerning financial accounting and reporting standards, and audit services not required by statute or regulation.

Pre-Approval of Audit and Non-Audit Services

The Audit Committee has adopted a pre-approval policy governing the engagement of the Company’s independent registered public accounting firm for all audit and non-audit services. The Audit Committee’s pre-approval policy provides that the Audit Committee must pre-approve all audit services and non-audit services to be performed for the Company by its independent registered public accounting firm prior to their engagement for such services. The Audit Committee pre-approval policy establishes pre-approved categories of certain non-audit services that may be performed by the Company’s independent registered public accounting firm during the fiscal year, subject to dollar limitations that may be set by the Audit Committee. Pre-approved services include certain audit related services, tax services and various non-audit related services. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee may delegate pre-approval authority to one or more of its members. The member(s) to whom such authority is delegated must report any pre-approval decisions to the Audit Committee at its next meeting. One hundred percent of the services provided by Deloitte during 20112014 and 20102013 were approved by the Audit Committee in accordance with the pre-approval procedures described above.

Under Company policy and/or applicable rules and regulations, the independent registered public accounting firm is prohibited from providing the following types of services to the Company: (1) bookkeeping or other services related to the Company’s accounting records or financial statements, (2) financial information systems design and implementation, (3) appraisal or valuation services, fairness opinions or contribution-in-kind reports, (4) actuarial services, (5) internal audit outsourcing services, (6) management functions, (7) human resources, (8) broker-dealer, investment advisor or investment banking services, and (9) legal services.

The Audit Committee has sole authority to appoint ARC’s independent auditorsregistered public accounting firm for fiscal year 20122015 pursuant to the terms of the Audit Committee Charter. Accordingly, stockholder approval is not required to appoint Deloitte as ARC’s independent auditorsregistered public accounting firm for fiscal year 2012.2015. The board believes, however, that submitting the appointment of Deloitte to the stockholders for ratification is a matter of good corporate governance. If the

stockholders do not ratify the appointment of Deloitte, the Audit Committee will review its future selection of independent auditors.registered public accounting firm.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE

RATIFICATION OF DELOITTE & TOUCHE LLP AS ARC’S

INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 20122015

PROPOSAL 3

ADVISORY, NON-BINDING VOTE ON EXECUTIVE COMPENSATION

At our 2011 annual meeting, our stockholders voted (onWe received a non-binding basis) in favor of submission of our executive compensation to our stockholders on an annual basis. Following consideration of the outcome of the say-on-pay frequency vote at our 2011 annual meeting, and subsequent communications with shareholders, the Company has decided to propose an advisory, non-binding stockholder vote on 2011 executive compensation at our 2012 annual meeting under The Dodd-Frank Wall Street Reform and Consumer Protection Act.

We were pleased to receive a favorablemajority vote for our compensation program at our 20112014 annual meeting, with approximately 88%62% of our stockholders who voted at the meeting approving our compensation practices. We consider these voting results to affirm stockholder support forNevertheless, based on the feedback we received from stockholders last year during our proxy season on our non-binding proposal on executive compensation program(aka “Say-on-Pay”), in May 2014, the Company entered into an amended and restated executive employment agreement (the “Amended Employment Agreement”) with the Company’s Chief Executive Officer and President, Kumarakulasingam Suriyakumar. The Amended Employment Agreement aligns the terms under which is designedMr. Suriyakumar would be eligible to attract, motivate, reward and retain our senior executivesreceive an annual incentive bonus with growth in order to achieve our corporate objectives and increase long-term stockholder value, while also focusing on a pay-for-performance philosophy.adjusted EBITDA instead of earnings per share.

The Compensation Discussion and Analysis section, beginning on page 2520 of this proxy statement, describes our executive compensation program in greater detail. In particular, stockholders should note the following goals of our executive compensation program:

 

 Ÿ 

To establish pay levels based on competitive market studies provided by our compensation consultants that attract retainsuitable candidates for executive positions as necessary, and motivate highly qualifiedprovide incentives to our existing named executive officers taking into account overall market competition for such talent;(NEOs) that encourage performance that benefits our employees, customers, and stockholders;

 Ÿ 

To foster an “ownership mentality” and align the interests of our executive officers with those of our stockholders through long-term equity incentives;

 

 Ÿ 

To recognize and reward superior individual performance;

 

 Ÿ 

To balance base and incentive compensation to complement our short-term and long-term business objectives and encourage the fulfillment of those objectives through individual performance; and

 

 Ÿ 

To provide compensation opportunities based on the Company’s performance.performance;

Ÿ

To protect and preserve the domain expertise and deep customer relationships embodied in our key executives.

The Compensation Committee has also taken note of management’s success in transforming ARC to a digitally-enabled document solutions company serving the broader construction industry. In evaluating such success, the Compensation Committee took into consideration the particular economic and industry conditions that have challenged the Company overduring the past three years,2007-2009 recession and its aftermath, especially in regard to the lack of private non-residential construction activity and the influences commercial credit, unemployment, vacancy rates and consumer confidence continuethe substantive changes we are currently experiencing due to havethe impact of technology on our primary end market. Despite these challenges, which include a 40% drop

In fiscal year 2014, the demonstration of our success in net sales since 2008:transforming the Company included:

 

 Ÿ 

Gross margins for the company have generally remained at or above 30% over the past three years.Annual revenue growth year-over-year of 4.1%;

 

 Ÿ 

Annual EBITDA performance netadjusted diluted earnings per share (EPS) of non-cash or one-time items has remained consistently robust.$0.25 vs. $0.09 in 2013;

 

 Ÿ 

In 2011, the Company generated cash flow from operationsAnnual gross margin of 34.0% in excess of $49 million.2014 vs. 33.0% in 2013;

 

 Ÿ 

The Company has introduced new service lines—most significantly Managed Print Services—which have helped secure fifteen of the top 100 architecture, engineeringAnnual adjusted EBITDA grew $4.0 million, or 5.9% year-over-year; and construction firms in the country and offer the potential to open new markets and attract customers outside of our traditional market.

 

 Ÿ 

The Company continues to maintain a healthy capital structure, comprisedAnnual adjusted cash flow from operations of patient capital$54.0 million vs. $47.3 million in the form of our high-yield bond and most recently a $50 million asset-based revolving credit facility, both of which are designed to provide the Company with working capital and financial flexibility as the economy continues its slow recovery.2013.

For a description of adjusted EPS, adjusted cash flow from operations, adjusted EBITDA and adjusted EBITDA margin, please refer to the “Non-GAAP Financial Measures” section starting on page 20 in Item 7 of our 2014 Annual Report on Form 10-K, and for a calculation of adjusted EPS, adjusted cash flow from operations, adjusted EBITDA and adjusted EBITDA margin please refer to pages 22-23 in Item 7 of our 2014 Annual Report on Form 10-K.

For the reasons stated, above, we are requesting approval, in a non-binding vote, of the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation rules of the United States Securities and Exchange Commission, including in the Compensation Discussion and Analysis, the compensation tables and the related narrative discussion contained in the Company’s 20122015 Proxy Statement, is approved.”

The stockholder vote on Proposal 3 is advisory in nature and, thus, is not binding on the Company. The Compensation Committee, however, values the views expressed by the Company’s stockholders in their vote on this proposal and, as they did in 2014 following ARC’s annual meeting, will consider the outcome of the vote when making future compensation decisions for the Company’s executive officers.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”

THE APPROVAL OF THE COMPENSATION OF OUR EXECUTIVE OFFICERS

DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS AND RELATED

DISCLOSURES IN THE 20122015 PROXY STATEMENT

CORPORATE GOVERNANCE PROFILE

We are committed to good corporate governance practices. As such, we have adopted corporate governance guidelines to enhance the effectiveness of our corporate governance practices. A copy of our Corporate Governance Guidelines can be accessed on our investor relations website,www.e-arc.comir.e-arc.com, by clicking on the “Investors” link at the top of the page and then selecting “Corporate Governance” from the Investors webpage.navigation menu. You can request a printed copy of our Corporate Governance Guidelines, at no charge, by contacting Investor Relations at (925) 949-5100 or by sending a request by mail to 1981 North Broadway, Suite 385, Walnut Creek, California 94596, Attention: David Stickney, Vice President Corporate Communications.

Our Corporate Governance Guidelines govern board member responsibilities, committees, compensation, access, education, management succession, and performance evaluation, among other things. The guidelines also set forth a non-exhaustive list of director qualification standards and the factors to be considered in making nominations to the board. While the selection of qualified directors is a complex, subjective process that requires consideration of many factors, our Corporate Governance Guidelines provide that the Nominating and Corporate Governance Committee will take into account the judgment, experience, skills and personal character of any candidate, as well as the overall needs of the board, in considering board candidates. Additional information on this process is set forth below in the section entitled “Director Qualifications.”

We have adopted a Code of Conduct applicable to all employees, officers and directors, including our President and Chief Executive Officer and our Chief Financial Officer, which meets the definition of a “code of ethics” set forth in Item 406 of Regulation S-K of the Securities and Exchange Act of 1934 (“Exchange Act”). A copy of our Code of Conduct can be accessed on our investor relations website,www.e-arc.comir.e-arc.com, by clicking on the “Investors” link at the top of the page and then selecting “Corporate Governance” from the Investors webpage.navigation menu. We will post any amendments to the Code of Conduct, and any waivers that are required to be disclosed by the rules of either the United States Securities and Exchange Commission (“SEC”) or the New York Stock Exchange (“NYSE”), on our website.

Director Independence

Under our Corporate Governance Guidelines, independent directors must comprise a majority of our board. Our board has adopted independence requirements that reflect applicable NYSE rules and evaluates the independence of our directors annually, and at other appropriate times (e.g., in connection with a change in employment status) when a change in circumstances could potentially impact the independence of one or more directors.

In determining the independence of a director, the board considers whether a material relationship exists between the Company and each director, the board broadly considers all relevant facts and circumstances, including:

 

 Ÿ 

The nature of any relationships with the Company.Company;

 

 Ÿ 

The significance of the relationship to the Company, the other organization and the individual director.director;

 

 Ÿ 

Whether or not the relationship is solely a business relationship in the ordinary course of the Company’s and the other organization’s businesses, and does not afford the director any special benefits.benefits;

 

 Ÿ 

Any commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships and such other criteria as the board may determine from time to time.time;

 

 Ÿ 

If a proposed director serves as an executive officer, director or trustee of a tax exempt organization, whether contributions from the Company, or any of its consolidated subsidiaries, to such tax exempt organization in any of the last three fiscal years are less than the greater of (i) $1 million or (ii) 2% of the consolidated gross revenues of such tax exempt organization for its last completed fiscal year.

Pursuant to our Corporate Governance Guidelines, all members of the Audit Committee must also meet the following requirements:

 

 Ÿ 

Audit Committee members may not receive, directly or indirectly, any consulting, advisory or other compensatory fees from the Company or any of its subsidiaries (other than director fees paid for service on the Audit Committee, the board, or any other committee of the board).

 

 Ÿ 

No member of the Audit Committee may be an “affiliated person” (as defined under applicable SEC rules) of the Company or any of its subsidiaries.

After considering our Corporate Governance Guidelines and the NYSE independence standards, the board has determined that, in its judgment, all of our current directors are independent, except for Mr. Suriyakumar who is our President and Chief Executive Officer. The board also determined that all members of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee are independent.

Director Qualifications

Our Nominating and Corporate Governance Committee is responsible for identifying qualified individuals thatwho may become members of our board of directors and recommending to the board director nominees for our annual meetings of stockholders and nominees to fill any vacancies that may occur on the board. In the context of the selection process, the Nominating and Corporate Governance Committee takes into consideration those factors it considers appropriate to ensure an effective board of directors that is able to fulfill its oversight function for the Company and its stockholders. While the Nominating and Corporate Governance Committee has not established an exhaustive list of specific minimum qualifications for board members, desired personal qualifications and attributes of directors include mature, practical and sound judgment; independence necessary to make an unbiased evaluation of management’s performance and effectively carry out oversight responsibility; experience as a business leader; the ability to comprehend and analyze complex matters; strong personal and professional ethics and integrity; and a spirit of cooperation and collegiality that will enable our directors to interact effectively.

EachThe board believes that each nominee named in this proxy statement possesses the characteristics described above. Our directors possess extensive leadership experience from various industry sectors, as well as experience on other boards of directors, which, collectively, provide an understanding of different business processes, challenges and strategies. The diverse background and experiences of our directors (as described in the biographical information set forth under “Proposal 1 Election of Directors”) complement one another and provide a solid leadership framework required for the board to exercise its oversight function.

Board Diversity

The Company strives for diversity among its board members, management and employees. In keeping with this strategy, the primary goal of ARC board composition is to achieve a diverse and complementary set of back-

groundbackground and experiences that will benefit the strategic direction of the Company. In considering director nominees, the Nominating and Corporate Governance Committee takes into consideration those factors it considers appropriate to address the needs and situation of the Company at the time. While the Nominating and Corporate Governance Committee does not have a formal policy regarding diversity, in practice, the Committee carefully considers the nomineesnominees’ differences in background, education and overall skill set in order to ensure complementary perspectives and areas of expertise. This approach is demonstrated by the fact that our board is currently comprised of directors with diverse professional experiences, including individuals from the construction industry, financial and services sectors and the entertainment industry. The diverse backgrounds and experiences of our current directors are described in the biographical information included under “Proposal 1 – Election of Directors.”

Board Leadership Structure and Risk Oversight

Board Leadership Structure

Our board is currently comprised of six independent directors and one employee director. Mr. Suriyakumar has served as our President and Chief Executive Officer since June 2007 and the chairman of our board of directors since July 2008. We believe that our current board leadership structure is appropriate for the Company because it allows for common, strong leadership, with one individual having primary responsibility for both board-level and operational matters. This structure eliminates the potential for confusion, promotes efficiency and provides clear leadership for the Company, which is appropriate for our company which has widespread domestic and international operations.

Our board has designated Mr. McCluggage, one of our independent directors, to serve as lead independent director. The lead independent director chairs regularly-scheduled executive sessions of the independent directors without management present; serves as the primary point of contact between members of management and the board, which facilitates communications and promotes efficiency; and performs such other functions as the independent directors may designate from time to time. Mr. McCluggage currently serves as the lead independent director.

Risk Oversight

Senior management is responsible for assessing and managing the Company’s exposure to risk on a day-to-day basis. Our board is responsible for general oversight of management in its assessment and management of day-to-day risks that affect the Company. The board fulfills its general risk oversight function periodically during board and board committee meetings. To supplement the board’s general risk oversight function, the Audit Committee monitors the Company’s financial statements and regularly reviews the Company’s major financial risk exposures (and the steps management has taken to mitigate such exposures) and the Company’s internal controlscontrol over financial reporting. The Audit Committee also provides general oversight to the Company’s internal audit and compliance functions. The Compensation Committee monitors the design and implementation of the Company’s executive compensation program, as well as compensation matters relating to certain non-executive employees. Although the board has established separate board committees, all board members are generally present at each board committee meeting, which facilitates dissemination of information and fulfillment of the board’s overall risk oversight function.

Director Attendance at Annual Meeting and Board and Committee Meetings

All of the members of the board of directors who are standing for re-election attended our 20112014 annual meeting of stockholders. Although we do not have a formal policy regarding the attendance of board members at our annual meetings of stockholders, we encourage board members to attend.

In 2011,2014, each board member attended or participated in 75%80% or more of the aggregate of (i) the total number of board meetings (held during the period for which such person has been a director) and (ii) the total number of meetings held by all board committees on which such person served (during the periods that such person served).

Board Meetings

Our board of directors held foureight meetings and took action by unanimous written consent or electronic transmission without a meeting on four occasions in 2011.2014.

Board Committees

Our board has the following committees: Audit Committee; Compensation Committee; and Nominating and Corporate Governance Committee. Committee memberships are as follows:

 

Audit Committee

  

Compensation Committee

  

Nominating and

Corporate Governance

Committee

Eriberto R. Scocimara
(Chairman)

Thomas J. Formolo

Mark W. Mealy

Manuel Perez de la Mesa

  

James F. McNulty
(Chairman)

Thomas J. Formolo (Chairman)

Dewitt Kerry McCluggage
Manuel Perez de la Mesa

Dewitt Kerry McCluggage
(Chairman)

James F. McNulty

Mark W. Mealy (Chairman)

Eriberto R. Scocimara

Dewitt Kerry McCluggage

James F. McNulty

Audit Committee

The Audit CommitteeEach of our committees is governed by a charter. Copies of the Audit Committee Charter, which cancharters for our committees may be found in the Corporate Governance section under “Investors” on our investor relations website,www.e-arc.comir.e-arc.com, and is available, at no cost, to any stockholder who requests it by contacting Investor Relations at (925) 949-5100 or by sending a request by mail to 1981 North Broadway, Suite 385, Walnut Creek, California 94596, Attention: David Stickney, Vice President Corporate Communications.

Audit Committee

The functions of our Audit Committee are described in the Audit Committee Charter and include, among other things, the following: (i) reviewing the adequacy of our internal accounting controls; (ii) reviewing the results of the independent registered public accounting firm’s annual audit, including any significant adjustments, management judgments and estimates, new accounting policies and disagreements with management; (iii) reviewing our audited financial statements and discussing the statements with management; (iv) reviewing disclosures by our independent registered public accounting firm concerning relationships with the Company and the performance of our independent registered public accounting firm and annually recommending the independent registered public accounting firm; and (v) preparing such reports or statements as may be required by securities laws. The Audit Committee Charter provides that the Audit Committee shall meet as often as it determines advisable but no less frequently than quarterly.

The members of our Audit Committee are Eriberto R. Scocimara, Thomas J. Formolo, Mark W. Mealy and Manuel Perez de la Mesa. Our board of directors has determined that all members of our Audit Committee meet the applicable tests for independence and the requirements for financial literacy that are applicable to audit committee members under the rules and regulations of the SEC and NYSE. Our board of directors also has determined that Mr.Messrs. Scocimara, is anMealy, Perez de la Mesa and Formolo are “audit committee financial expert”experts” as defined by the applicable rules of the SEC and NYSE, as a result of his substantial familiarity and experience with the use and analysis of financial statements of public companies. For more than 40 years, Mr. Scocimara has served in various positions in which he analyzed financial statements in connection with corporate management, financial consulting, acquisition and development of manufacturing companies, and operational restructuring. Mr. Scocimara has also served as audit committee chair for Roper Industries, Inc., Carlisle Companies Incorporated, each a publicly-traded company, and Quaker Fabric Company, formerly a publicly-traded company. Our board of directors has also determined that Mark W. Mealy is an “audit committee financial expert” as defined by the applicable rules of the SEC and NYSE, as a result of his substantial familiarity and experience with the use and analysis of financial statements of public companies. For the last 20 years, Mr. Mealy has served in various positions in which he analyzed financial statements in connection with the refinance, recapitalization and restructure of debt and equity securities and the evaluation of mergers and acquisitions. Our board of directors has determined that Manuel Perez de la Mesa also is an “audit committee financial expert” as defined by the applicable rules of the SEC and NYSE as a result of his education and experience actively supervising a principal financial officer and controller.NYSE.

The Audit Committee held fivefour meetings in 2011.2014.

Compensation Committee

The Compensation Committee is governed by the Compensation Committee Charter, which can be found in the Corporate Governance Section under Investors on our website,www.e-arc.com, and is available, at no cost, to any stockholder who requests it by contacting Investor Relations at (925) 949-5100 or by sending a request by mail to 1981 North Broadway, Suite 385, Walnut Creek, California 94596, Attention: David Stickney, Vice President Corporate Communications. The functions of the Compensation Committee are described in the

Compensation Committee Charter and include, among other things, evaluating and approving director and officer compensation, benefit and perquisite plans, and compensation policies and programsprograms. The Committee may form and producingdelegate authority to subcommittees when appropriate. Members of a compensation committee report on executive officer compensation.subcommittee may include directors of the Company, employees of the Company, consultants or any other parties as determined by the Committee in its sole discretion.

The board has determined that all of the members of its Compensation Committee meet the definition of independent director as established by the NYSE.NYSE for compensation committees.

The Compensation Committee held four meetings and took action by written consent or electronic transmission without a meeting on three occasions in 2011.2014.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is governed by the Nominating and Corporate Governance Committee Charter, which can be found in the Corporate Governance Section under Investors on our website,www.e-arc.com, and is available, at no cost, to any stockholder who requests it by contacting Investor Relations at (925) 949-5100 or by sending a request by mail to 1981 North Broadway, Suite 385, Walnut Creek, California 94596, Attention: David Stickney, Vice President Corporate Communications.

The functions of the Nominating and Corporate Governance Committee are described in the Nominating and Corporate Governance Committee Charter and include, among other things, identifying individuals qualified to become members of the board, selecting or recommending to the board the nominees to stand for election as directors, developing and recommending to the board a set of corporate governance principles and overseeing the evaluation of the board.

The board has determined that all of the members of its Nominating and Corporate Governance Committee meet the definition of independent director as established by the NYSE.

The Nominating and Corporate Governance Committee held one meetingthree meetings in 2011.2014.

All of the nominees listed under “Proposal 1 Election of Directors” are directors standing for re-election.

Stockholder Recommendations of Director Nominees

Our stockholders may recommend director nominees, and the Nominating and Corporate Governance Committee will consider nominees recommended by stockholders. We have not received any recommendations from our stockholders requesting that the board or any of its committees consider a nominee for inclusion in the board’s slate of nominees presented in this proxy statement for our 20122015 annual meeting. A stockholder wishing to submit a director nominee recommendation for future annual meetings of stockholders must comply with the applicable provisions of our Second Amended and Restated Bylaws, as described under the heading “Stockholder Proposals for the 20132015 Annual Meeting.” Nominees recommended by stockholders will be evaluated in the same manner as nominees recommended by the board and the Nominating and Corporate Governance Committee will consider all relevant qualifications, as well as the needs of the Company, in order to comply with NYSE and SEC rules.

Stockholder Communications with Directors

Stockholders seeking to communicate with the board should send correspondence to the attention of our corporate secretary at American Reprographics Company,ARC Document Solutions, Inc., 1981 North Broadway, Suite 385, Walnut Creek, California 94596. The corporate secretary will forward all such communications (excluding routine advertisements and business solicitations and other communications which the corporate secretary, in his sole discretion, deems to be a security risk or for harassment purposes)described below) to each member of the board, or if applicable, to the individual director(s) named in the correspondence.

ARC reserves the right to screen materials sent to its directors for potential security risks and/or harassment purposes, and ARC also reserves the right to verify ownership status before forwarding stockholder communications to the board and/or individual directors.

The corporate secretary will determine the appropriate timing for forwarding stockholder communications to the directors. The corporate secretary will consider each communication to determine whether it should be

forwarded promptly or compiled and sent with other communications and other board materials in advance of the next scheduled board meeting.

If a stockholder or other interested person seeks to communicate exclusively with the non-employee directors, such communication should be sent directly to the corporate secretary who will forward any such communication directly to the Chairman of the Nominating and Corporate Governance Committee. The corporate secretary will first consult with and receive the approval of the Chairman of the Nominating and Corporate Governance Committee before disclosing or otherwise discussing the communication with members of management or directors who are members of management.

DIRECTOR COMPENSATION

Cash Compensation

We pay an annual cash fee of $40,000$50,000 to each of our non-employee directors, payable quarterly. The board determined, based on a recommendation by the Compensation Committee, to increase the cash fee to our non-employee directors from $40,000 to $50,000 effective as of August 1, 2014. In addition, non-employee directors receive $5,000 cash per year for duties as chairman of any board committee. We also made changes to some of our committee chair assignments effective as of the 2014 annual meeting. Mr. McNulty was appointed as the Chairman of our Compensation Committee and Mr. McCluggage was appointed as Chairman of our Nominating and Corporate Governance Committee.

Equity Compensation

In addition to cash fees, effective as of our 2007 annual meeting of stockholders, we implemented a practice of granting each non-employee director a restricted stock award under our Planstock incentive plan for that number of shares of our common stock having an aggregate grant date value equal to $60,000, based on the closing price of our common stock on the NYSE on the date of grant. In light of the general economic downturn that began in 2009,2008, the board determined to reduce, based on a recommendation by the Compensation Committee, the value of the equity compensation of our non-employee directors, was reduced, effective as of our 2009 annual meeting,meeting; from $60,000 to $50,000 aggregate grant date value. The board determined, based on a recommendation by the Compensation Committee, to restore the value of the equity compensation for our non-employee directors to $60,000, effective as of the 2014 annual meeting. Grants of restricted stock to our non-employee directors are made automatically each year on the date of our annual meeting, without any further action of our board of directors, and compensates each non-employee director for his or her service since the later of (a) the last preceding annual meeting of stockholders, or (b) the date on which he or she was elected or appointed for the first time to be a director. Each restricted stock award granted to our non-employee directors during each fiscal year vests 100% on the one-year anniversary of the grant date.

Reimbursements

We reimburse our employee and non-employee directors for reasonable travel expenses relating to attendance at board meetings and participating in director continuing education.

The following table summarizes compensation earned by our non-employee directors during fiscal year 2011.2014. Mr. Suriyakumar, the Chairman of our board of directors, and our President and Chief Executive Officer, does not receive compensation for serving on our board of directors.

Director Compensation

For Fiscal Year Ended December 31, 20112014

 

Name

  Fees Earned
or Paid
in Cash
($)
  Stock
Awards(1)(2)
($)
   Total(3)
($)
 

Thomas J. Formolo(4)

   45,000(5)   50,000     95,000  

Dewitt Kerry McCluggage(6)

   40,000    50,000     90,000  

James F. McNulty(7)

   40,000    50,000     90,000  

Mark W. Mealy(8)

   45,000(9)   50,000     95,000  

Manuel Perez de la Mesa(10)

   40,000    50,000     90,000  

Eriberto R. Scocimara(11)

   45,000(12)   50,000     95,000  

Name

  Fees Earned
or Paid

in Cash
($)
  Stock
Awards(1)(2)
($)
   Total(3)
($)
 

Thomas J. Formolo(4)

   45,417    60,000     105,417  

Dewitt Kerry McCluggage(5)

   47,917(6)  60,000     107,917  

Mark W. Mealy(7)

   45,417    60,000     105,417  

Manuel Perez de la Mesa(8)

   44,167    60,000     104,167  

Eriberto R. Scocimara(9)

   49,167(10)  60,000     109,167  

James F. McNulty(11)

   47,917(12)   60,000     107,917  

 

 

 (1)

Reflects restricted stock awards granted under our Plan.2014 Stock Incentive Plan (“2014 Plan”). One hundred percent of the shares subject to restricted stock awards granted in 20112014 vest on the one-year anniversary of the date of grant.

 (2)

The amounts shown in this column reflect the fair value at the time of grant in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, formerly SFAS 123R (Revised 2004),Share-Based Payment. For a discussiondescription of the assumptions and methodologies used to calculate the amounts in these calculations,the table, see Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.2014.

 

 (3)

The amount of total compensation does not include amounts paid as reimbursement for reasonable travel expenses to attend board meetings and to participate in director continuing education.

 

 (4)

As of December December��31, 2011,2014, options to purchase 13,851 shares and 23,8059,479 shares of restricted stock, awarded to Mr. Formolo under our Plan, were outstanding.

 

 (5)

Includes cash compensation of $5,000 for serving as Chairman of the Compensation Committee for 2011.

  (6)

As of December 31, 2011,2014, options to purchase 3,997 shares and 10,4429,479 shares of restricted stock, awarded to Mr. McCluggage under our Plan, were outstanding.

 

   (7)

As of December 31, 2011, 18,189 shares of restricted stock awarded to Mr. McNulty, under our Plan, were outstanding.

  (8)

As of December 31, 2011, options to purchase 13,851 shares and 23,805 shares of restricted stock, awarded to Mr. Mealy under our Plan, were outstanding.

  (9)(6)

Includes cash compensation of $5,000 for serving as Chairman of the Nominating and Corporate Governance Committee for 2011.2014.

(7)

As of December 31, 2014, options to purchase 13,851 shares and 9,479 shares of restricted stock, awarded to Mr. Mealy were outstanding.

(8)

As of December 31, 2014, options to purchase 13,851 shares and 9,479 shares of restricted stock, awarded to Mr. Perez de la Mesa were outstanding.

(9)

As of December 31, 2014, options to purchase 3,997 shares and 9,479 shares of restricted stock, awarded to Mr. Scocimara were outstanding.

 

 (10) 

AsIncludes cash compensation of December 31, 2011, options to purchase 39,351 shares and 23,805 shares$5,000 for serving as Chairman of restricted stock, awarded to Mr. Perez de la Mesa under our Plan, were outstanding.the Audit Committee in 2014.

 

 (11) 

As of December 31, 2011, options to purchase 3,997 shares and 23,8052014, 9,479 shares of restricted stock awarded to Mr. Scocimara under our Plan,McNulty were outstanding.

 

 (12) 

Includes cash compensation of $5,000 for serving as Chairman of the AuditCompensation Committee in 2011.for 2014.

EXECUTIVE OFFICERS

Our executive officers are appointed by our board of directors and serve at the discretion of our board of directors. The names, ages and positions of all of our executive officers as of March 1, 20122, 2015 are listed below:

 

Name

  Age   

Position

Kumarakulasingam Suriyakumar

   5861    Chairman, President and Chief Executive Officer Director

John E.D. TothDilantha Wijesuriya

   4253    Chief FinancialOperating Officer Secretary

Rahul K. Roy

   5255    Chief Technology Officer

Dilantha Wijesuriya

50Chief Operating Officer

Jorge Avalos

   3639    Chief AccountingFinancial Officer Vice President Finance

The following is a brief description of the business experience of each of our executive officers and their other affiliations. Biographical information for Mr. Suriyakumar is provided above under “Proposal 1 – Election of Directors.”

John E.D. Toth was appointed Chief Financial Officer in July 2011. Prior to his appointment as the Company’s Chief Financial Officer, Mr. Toth was a strategy consultant to Chiquita Brands International, Inc. (NYSE: CQB). From 2008 until 2010, Mr. Toth was Chief Financial Officer of Bell-Carter Foods, Inc., a $200 million privately-held company operating in the food industry, where he was primarily responsible for developing strategic finance and broad-based growth initiatives. Mr. Toth served as Chief Financial Officer of Fresh Express, Inc., a subsidiary of Chiquita Brands International, Inc., from 2006 until 2008. While at Chiquita Brands International, Inc., Mr. Toth also served as Vice President Finance of the Salads and Healthy Snacking division. From 2001 until 2006, Mr. Toth was Chief Financial Officer and Co-Founder of Tennyson West, LLC, a privately-held mergers and acquisitions advisory firm. Mr. Toth received a Master’s Degree in Economics, and Bachelor’s degree in Economics and Political Science, from Stanford University.

Rahul K. Roy joined Holdings as its Chief Technology Officer in September 2000. Prior to joining the Company, Mr. Roy was the founder, President and Chief Executive Officer of MirrorPlus Technologies, Inc.,

which developed software for the reprographics industry, from August 1993 until it was acquired by the Company in 1999. Mr. Roy also served as the Chief Operating Officer of InPrint, a provider of printing, software, duplication, packaging, assembly and distribution services to technology companies, from 1993 until it was acquired by the Company in 1999.

Dilantha Wijesuriya joined Ford Graphics, a former division of the Company, in January of 1991. He subsequently became president of that division in 2001, and became a Company regional operations head in 2004, which position he retained until his appointment as the Company’s Senior Vice President—National Operations in August 2008. Mr. Wijesuriya was appointed Chief Operating Officer of the Company on February 25, 2011. Prior to his employment with the Company, Mr. Wijesuriya was a divisional manager with Aitken Spence & Co. LTD, a highly diversified conglomerate and one of the five largest corporations in Sri Lanka.

Rahul Roy joined Holdings as its Chief Technology Officer in September 2000. Prior to joining the Company, Mr. Roy was the founder, President and Chief Executive Officer of MirrorPlus Technologies, Inc., which developed software for the reprographics industry, from August 1993 until it was acquired by the Company in 1999. Mr. Roy also served as the Chief Operating Officer of InPrint, a provider of printing, software, duplication, packaging, assembly and distribution services to technology companies, from 1993 until it was acquired by the Company in 1999.

Jorge Avaloswas appointed Chief Financial Officer of ARC Document Solutions in January of 2015. From 2011 to his appointment as CFO, Mr. Avalos was Chief Accounting Officer/Officer and Vice President Finance of the Company on April 14, 2011.ARC. Mr. Avalos joined the Company in June 2006 as the Company’s Director of Finance and became the Company’s Corporate Controller in December 2006, and Vice President, Corporate Controller in December 2010. From March 2005 through June 2006,Prior to joining the Company Mr. Avalos was employed with Vendare Media Group, an online network and social media company, as its controller. From September 1998 through March 2005, Mr.  Avalos was employed in a variety of audit and management roles with PricewaterhouseCoopers LLP, a global professional services firm focusing on audit and assurance, tax and advisory services, and left as an assurance manager.LLP.

AUDIT COMMITTEE REPORT

The following is the report of the Audit Committee with respect to the Company’s audited financial statements for the year ended December 31, 2014. The information contained in this report shall not be deemed “soliciting material” or otherwise considered “filed” with the SEC, and such information shall not be incorporated by reference into any future filing under the Securities Act or the Exchange Act except to the extent that the Company specifically incorporates such information by reference in such filing.

All of the members of the Audit Committee are independent directors as required by the rules of the NYSE. The Audit Committee operates pursuant to a written charter adopted by the board.

The Audit Committee is responsible for overseeing the Company’s financial reporting process on behalf of the board. Management of the Company has the primary responsibility for the Company’s financial reporting process, principles andincluding the system of internal controls as well as preparation of itsover financial statements.reporting. The Company’s independent auditors areregistered public accounting firm is responsible for performing an audit of the Company’s consolidated financial statements and expressing an opinion as to the conformity of such financial statements with accounting principles generally accepted in the United States.

The Audit Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of the Company’s financial statements.

In performing its responsibilities, the Committee has reviewed and discussed with management and the Company’sindependent auditors the audited consolidated financial statements as of andin ARC’s Annual Report on Form 10-K for the year ended December 31, 2011 with management and the independent auditors.2014. The Audit Committee has also discussed with the independent auditors the matters required to be discussed under standards establishedby the Statement on Auditing Standards No. 61, as amended (Codification of Statements on Auditing Standards, AU 380), as adopted by the Public Company Accounting Oversight Board (United States). (PCAOB) in Rule 3200T.

The independent auditors have provided to the Audit Committee requiredreceived written disclosures and the letter from the independent auditors pursuant to the applicable requirements of the PCAOB regarding the independent auditors’ communications with the Committee concerning independence, and the Audit Committee has discussed with the auditors their independence from the Company. The Audit Committee has also considered whether the independent auditors’ tax fees and other non-audit services to the Company is compatible with maintaining the auditors’ independence. The Audit Committee has concluded that the independent auditors are independent from the Company and its management.

Based on the review and discussions described above, the Audit Committee has recommended to the board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 20112014, for filing with the SEC.

 

Eriberto R. Scocimara, Chairman
Thomas J. Formolo
Mark W. Mealy
Manuel Perez de la Mesa

BENEFICIAL OWNERSHIP OF VOTING SECURITIES

The following table sets forth information, as of March 9, 2012,2, 2015, regarding the beneficial ownership of our common stock by:

 

 Ÿ 

each person who is known to us to own beneficially more than 5% of our common stock;

 

 Ÿ 

all directors, nominees and executive officers as a group; and

 

 Ÿ 

each of our directors, nominees and each of our executive officers named in the Summary Compensation Table.

The table includes all shares of common stock issuable within 60 days of March 9, 20122, 2015, upon the exercise of options andor other rights beneficially owned by the indicated stockholders on that date. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. The applicable percentage of ownership for each stockholder is based on 46,225,84746,836,307 shares of common stock outstanding as of March 9, 2012, together with applicable options for that stockholder.2, 2015. Shares of common stock issuable upon exercise of options and other rights beneficially owned, to the extent exercisable within sixty days of March 2, 2015, were deemed outstanding for the purpose of computing the percentage ownership of the person holding these options and other rights, but are not deemed outstanding for computing the percentage ownership of any other person. The information on beneficial ownership in the table and footnotes below is based upon our records, the most recently-filed Schedules 13D or 13G and information supplied to us. To our knowledge, except under applicable community property laws or as otherwise indicated in the footnotes to this table, beneficial ownership is direct and the persons named in the table below have sole voting and sole investment control regarding all shares beneficially owned.

 

   Shares Beneficially
Owned
 

Name and Address of Beneficial Owner

  Number   Percent 

Principal Stockholders:

    

Sathiyamurthy Chandramohan(1)(2)

   6,518,882     14.1%  

Micro Device, Inc.

   5,684,842     12.3%  

Stadium Capital Management, LLC(4)

   5,893,877     12.8%  

550 NW Franklin Avenue, Suite 478

Bend, OR 97701

    

T. Rowe Price Associates, Inc.(5)

   3,361,690     7.3%  

100 E Pratt Street

Baltimore, MD 21202

    

PZENA Investment Management, LLC(6)

   2,969,312     6.4%  

120 West 45th Street, 20th floor

New York, NY 10036

    

Directors and Executive Officers:

    

Kumarakulasingam Suriyakumar(1)(3)(7)(8)

   7,392,821     16.0%  

Thomas J. Formolo(9)(10)(11)

   96,155     **  

Jonathan R. Mather(12)

   190,000     **  

Dewitt Kerry McCluggage(11)(13)(14)

   14,439     **  

James F. McNulty(11)

   18,189     **  

Mark W. Mealy(10)(11)(15)

   67,656     **  

Manuel Perez de la Mesa(11)(16)

   83,156     **  

Rahul K. Roy(17)

   482,253     1.0%  

Eriberto R. Scocimara(11)(14)

   27,802     **  

Dilantha Wijesuriya(18)

   413,620     **  

John Toth(19)

   30,000     **  

Jorge Avalos(20)

   49,750     **  
  

 

 

   

All directors and executive officers as a group (twelve persons)

   8,865,841     19.2%  
   Shares Beneficially
Owned
 

Name and Address* of Beneficial Owner

  Number   Percent 

Principal Stockholders:

    

Sathiyamurthy Chandramohan(1)

   3,000,000     6.4%

Capital World Investors(2)

333 South Hope Street

Los Angeles, CA 90071

   3,734,755     8.0%

BlackRock, Inc.(3)

40 East 52nd Street

New York, NY 10022

   2,658,947     5.7%

Directors and Executive Officers:

    

Kumarakulasingam Suriyakumar(4)(5)(6)

   4,483,102     9.6%

Thomas J. Formolo(7)

   158,939     **  

James F. McNulty(8)

   51,902     **  

Mark W. Mealy(9)

   131,369     **  

Manuel Perez de la Mesa(10)

   115,369     **  

Dewitt Kerry McCluggage(11)

   13,476     **  

Eriberto R. Scocimara(12)

   61,515     **  

Rahul Roy(13)

   291,585     **  

Dilantha Wijesuriya(14)

   618,481     1.3% 

John Toth(15)

   144,662     **  

Jorge Avalos(16)

   106,415     **  

All directors and executive officers as a group (eleven persons)

   6,176,815     13.2%

 

 

 *Except as otherwise noted, the address of each person listed in the table is c/o American Reprographics Company,ARC Document Solutions, Inc., 1981 North Broadway, Suite 385, Walnut Creek, California 94596.

 

 **Less than one percent of the outstanding shares of common stock.

 

    (1)

Includes 5,684,842Reflects shares of common stock previously held by Micro Device, Inc. As Messrs. Chandramohan and Suriyakumar have ownership interests of 56% and 44%, respectively, in Micro Device, Inc. and serve on its board of directors, each could be deemed to have beneficial ownership of all these shares. Messrs. Chandramohan and

Suriyakumar each disclaim beneficial ownership of these shares except to the extent of each of their pecuniary interests therein.

    (2)

Includes 328,648 shares previously heldThis information is based solely on an amended Schedule 13G filed by Dieterich Post Company, of which Mr. Chandramohan holds a 47.6% ownership interest.Capital World Investors on February 13, 2015. Capital World Investors is an investment advisor and is deemed to have sole voting and sole dispositive power over 3,734,755 shares.

 

   (3)

Includes 15,504This information is based solely on an amended Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on February 2, 2015. BlackRock has sole voting power over 2,582,691 shares of restricted stock which remain subject to a repurchase option in favor of the Company which lapses on March 27, 2012.and sole dispositive power over 2,658,947 shares.

 

   (4)

This information is based solely on a Schedule 13G/A filed jointly by Stadium Capital Management, LLC (“SCM”), Bradley R. Kent (“Kent”),(Suriyakumar) Includes 495,772 shares of common stock and Alexander M. Seaver (“Seaver”) as a group and Stadium Relative Value Partners, L.P. (“SRV”) on February 13, 2012. SRV is an investment limited partnership, the general partner266,666 shares issuable upon exercise of which is SCM, an investment advisor whose clients have the right to receive or the power to direct the receiptoutstanding stock options exercisable within 60 days of dividends from, or the sale of, the stock. Seaver and Kent are the managing partners of SCM. SRV filed the Schedule 13G jointly with SCM, Kent and Seaver, but is not a member of a group and expressly disclaims membership in a group.March 2, 2015.

 

   (5)

This information is based solely on a Schedule 13G/A filed jointly by T. Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Stock Fund, Inc. on February 10, 2012. These securities are owned by various individual and institutional investors, for which T. Rowe Price Associates, Inc. (“Price Associates”) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For the purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

  (6)

This information is based solely on a Schedule 13G filed by PZENA Investment Management, LLC (“PZENA”) on February 10, 2012. PZENA has sole voting power over 2,410,800 shares and sole dispositive power over 2,969,312 shares.

  (7)

(Suriyakumar) Includes 886,0522,720,664 shares held by the Suriyakumar Family Trust, the Suriyakumar Annuity Trust I and the Suriyakumar Annuity Trust II.which includes 2,501,330 shares of common stock previously held by Micro Device, Inc. Mr. Suriyakumar and his spouse, as trustees of the Suriyakumar Family Trust, the Suriyakumar Annuity Trust I and the Suriyakumar Annuity Trust II, share voting and investment power over these shares.

 

   (8)(6)

(Suriyakumar) Includes 258,223500,000 shares previously held by Dieterich Post Company, of whichthe Shiyulli Suriyakumar 2013 Irrevocable Trust, Shiyulli Suriyakumar, Trustee. Also includes 500,000 shares held by the Seiyonne Suriyakumar 2013 Irrevocable Trust, Seiyonne Suriyakumar Trustee. Mr. Suriyakumar holds a 37.4%and his spouse could be deemed to have beneficial ownership interest.of these shares but they disclaim beneficial ownership except to the extent of their pecuniary interest therein.

 

   (9)(7)

(Formolo) Includes 12,740 shares held by Danish-Italian Investors, L.P., Series A and 10,03032,441 shares held by the Andersen-Formolo Family Foundation. Mr. Formolo could be deemed to have beneficial ownership of all of these shares but disclaims beneficial ownership except to the extent of his pecuniary interest therein.

(10)

Includes Also includes 99,907 shares of common stock, which includes 9,479 shares of unvested restricted stock and 13,851 shares issuable upon the exercise of outstanding stock options exercisable within 60 days of March 9, 2012.2, 2015.

 

 (11)  (8)

(McNulty) Includes 5,58751,902 shares of restrictedcommon stock, which remain subject to a repurchase option in favorincludes 9,479 shares of the Company which lapses on April 28, 2012.unvested restricted stock.

 

 (12)  (9)

(Mealy) Includes 40,000 shares and 150,000 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 9, 2012.

(13)

Includes 587,518 shares of common stock, held by the Dewitt Kerry McCluggagewhich includes 9,479 shares of unvested restricted stock and Victoria L. McCluggage Trust. Mr. McCluggage and his spouse, as trustees of the Dewitt Kerry McCluggage and Victoria L. McCluggage Trust, share voting and investment power over these shares.

(14)

Includes 3,997 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 9, 2012.

(15)

Includes 30,000 shares held by Eastover Group LLC. Mr. Mealy has controlling voting and investment power over these shares.

(16)

Includes 39,351 Also includes 13,851 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 9, 2012 and 6,000 shares held by Mr. Perez’s children.2, 2015.

 (17)(10) 

(Perez) Includes 15,000101,518 shares of common stock, which includes 9,479 shares of unvested restricted stock which vest at the rate of 25% on each of the first four anniversaries of the date of grant; and 439,00013,851 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 9, 2012.2, 2015.

 

 (18)(11) 

(McCluggage) Includes 85,1709,479 shares of unvested restricted stock. Also includes 3,997 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 9, 2012; 30,0002, 2015.

(12)

(Scocimara) Includes 57,518 shares of restrictedcommon stock, which vest at the rateincludes 9,479 shares of 20% on each anniversary dateunvested restricted stock. Also includes 3,997 shares issuable upon exercise of grant;outstanding stock options exercisable within 60 days of March 2, 2015.

(13)

(Roy) Includes 43,253 shares of common stock, which includes 248,332 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 2, 2015.

(14)

(Wijesuriya) Includes 18,400 shares of common stock, which includes 290,031 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 2, 2015; and 298,050310,050 shares held by the Wijesuriya Family Trust. Mr. Wijesuriya and his spouse, as trustees of the Wijesuriya Family Trust, share voting and investment power over the shares held by the trust.

 

 (19)(15) 

(Toth) Includes 30,00032,500 shares of common stock. Also includes 8,500 shares of common stock held by the Toth Family Trust and 103,662 shares issuable upon exercise of outstanding stock options. Mr. Toth’s employment with the Company ended on January 30, 2015, at which point all of his outstanding stock options and restricted stock which vest at the rate of 25% on each of the first four anniversaries of the date of grant.grant were fully vested.

 

 (20)(16) 

(Avalos) Includes 28,75041,000 shares of common stock, which includes 23,750 shares of unvested restricted stock. Also includes 65,415 shares issuable upon exercise of outstanding stock options exercisable within 60 days of March 9, 2012.2, 2015.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information as of December 31, 20112014 regarding all compensation plans previously approved by our security holders and all compensation plans not previously approved by our security holders.

 

Plan Category

  (a)
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
  (b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
   (c)
Number of Securities
Remaining Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
 

Equity compensation plans approved by stockholders

     

2005 Stock Plan

   2,166,008(1)  $7.83     2,328,403(2) 

2005 Employee Stock Purchase Plan

      $     319,630  

Equity compensation plans not approved by stockholders

      $       
  

 

 

    

 

 

 

Total

   2,166,008   $     2,648,033  
  

 

 

    

 

 

 

   (a)  (b)   (c) 

Plan Category

  Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
  Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
   Number of Securities
Remaining Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
 

Equity compensation plans approved by stockholders

     

2005 Stock Plan

   3,149,043(1) $5.39      

2005 Employee Stock Purchase Plan

      $     294,332  

2014 Stock Plan(2)

   531,662(3)  $6.16     2,911,464  

Equity compensation plans not approved by stockholders

      $       
  

 

 

    

 

 

 

Total

   3,680,705      3,205,796  
  

 

 

    

 

 

 

 

 (1) 

Represents outstanding options to acquire shares of common stock granted under our 2005 Plan.

 

 (2)

The totalIncludes shares from the Company’s Predecessor Plan subject to issuance in the 2014 Stock Plan, as described in Section 5 of the 2014 stock Incentive Plan.

(3)

Represents outstanding options to acquire shares of common stock currently reserved and authorized for issuancegranted under our Plan equals 6,500,000 shares of common stock.2014 Plan.

COMPENSATION DISCUSSION AND ANALYSIS

OUR COMPENSATION GOVERNANCE PRACTICES

þWe reward outstanding performance that meets our stated performance objectives

þWe don’t pay performance-based awards for unmet performance objectives

þWe don’t guarantee minimum performance-based awards

þOur incentive plans are clear and based on metrics that are transparent and formulas that are clearly disclosed and well understood

þWe cap payouts under our incentive plans to discourage excessive risk taking by our NEOs and to reduce windfall benefits in volatile markets

þOur compensation plans contain clawback provisions

þWe have double-trigger change in control provisions

þWe have policies against hedging or pledging of our stock

þOur Compensation Committee has retained an independent compensation consultant

þWe work with a representative and relevant peer group

þWe hold an annual advisory vote on executive compensation

þWe solicit the feedback of our shareholders on our governance and compensation practices

This compensation discussion and analysis describes the material elements of the Company’s executive compensation program for each of the executives who served as our named executive officers (“NEOs”) during fiscal year 2014. For fiscal year 2014, our NEOs included the following officers:

Ÿ

Kumarakulasingam Suriyakumar, Chairman, President, Chief Executive Officer, Director

Ÿ

Dilantha Wijesuriya, Chief Operating Officer

Ÿ

Rahul Roy, Chief Technology Officer

Ÿ

John Toth, Chief Financial Officer

Ÿ

Jorge Avalos, Chief Accounting Officer and Vice President Finance

The Compensation Committee of the board of directors, which is comprised of independent directors, James F. McNulty (Chairman), Thomas J. Formolo, Dewitt Kerry McCluggage, and Manuel Perez de la Mesa, determined the compensation of the NEOs, as described below.

Executive Summary

Our Compensation Committee intends that our executive compensation program be appropriately aligned with the market, reflect our performance over time, and align the interests of our NEOs with those of our stockholders.

In 2014, ARC Document Solutions continued to demonstrate the power and sustainability of its new business lines. While the Company’s executive team worked on transforming ARC during the years of the recession and subsequent downturn in construction, we felt the real impact of becoming a technology-driven document solutions company over the past year as we explored new opportunities to engage with our customers and dramatically expanded the size of our market.

Revenue grew from sales increases in our Onsite Services and Color service lines, and was assisted by continuing stabilization of our Traditional Reprographics sales throughout the year. Gross margin grew from leveraging our fixed costs and continuing alignment of our operating costs, and our adjusted EBITDA margin benefited accordingly. ARC’s cash flows also delivered impressive gains from significant improvements in our capital structure and from the Company’s performance.

We offer a diversified portfolio of products and services, and our revenue model is comprised solelynow driven by the contractual, recurring and predictable needs of independent directors and is responsible for administering our stock plan and reviewing and making recommendationsbusinesses we serve all over the world. Construction project work remains important to our boardbusiness, but the services we offer in addition to the printing of directorsconstruction documents deliver greater and more enduring value to our customers who work in the field.

Our executive team, led by our President and CEO, Kumarakulasingam “Suri” Suriyakumar, has demonstrated its agility, work ethic, and creativity throughout the recent downturn and the Company is now reaping the benefit of their efforts as evidenced by:

Ÿ

Six consecutive quarters of year-over-year revenue growth

Ÿ

Adjusted diluted earnings per share (EPS) growth of $0.29 over the past two years

Ÿ

Gross margin growth of 360 basis points over the past two years

Ÿ

Adjusted EBITDA growth of nearly $12 million over the past two years

Ÿ

A 40% improvement in adjusted cash flow from operations since December 2012

Ÿ

Reduction of our senior debt by 14% and the restructuring of our 6.25% Term B debt facility to an approximately 2.75% Term A facility

For a description of adjusted EPS, adjusted cash flow from operations, adjusted EBITDA and adjusted EBITDA margin, please refer to the “Non-GAAP Financial Measures” section starting on page 20 in Item 7 of our 2014 Annual Report on From 10-K, and for a calculation of adjusted EPS, adjusted cash flow from operations, adjusted EBITDA and adjusted EBITDA margin please refer to pages 22-23 in Item 7 of our 2014 Annual Report on Form 10-K.

2014 Response to “Say-on-Pay” Vote: We received thoughtful commentary from investors during our 2014 proxy season with regard to our advisory, non-binding proposal on executive compensation (aka “Say-on-Pay”) that consisted primarily of their desire to better align the CEO’s incentive compensation to growth in adjusted EBITDA rather than to EPS growth.

In response to these comments, the Compensation Committee recast the CEO’s compensation structure immediately following the Company’s annual meeting in May 2014 to reflect those interests. (For more details on ARC’s CEO incentive bonus structure, please see “Consideration of 2014 Say-on-Pay Results” and “Annual Awards” below. The SEC filing regarding this change was made on May 19, 2014.)

2014 Non-CEO NEO Changes: As noted in our 2014 proxy, the Compensation Committee also determined that it would discontinue the use of three-year employment agreements for all non-CEO NEOs in the future and would, instead, institute “at-will” employment agreements to align with current best practices in executive compensation. In addition, the Committee decided that all non-CEO NEOs would earn annual incentive compensation based on performance against pre-determined corporate goals.

The award criteria for fiscal year 2014 includes Company performance in revenue generation, gross margin, and benefits programsadjusted earnings per share. A fourth opportunity for incentive bonus exists for each non-CEO executive in the achievement of individually determined performance objectives.

As a result of our strong performance in 2014, each of our executive officers. After consideringofficers met the threshold required to be eligible to receive incentive bonuses. (See “Annual Awards” below.)

For our President and CEO, the Compensation Committee awarded Mr. Suriyakumar an annual bonus of $1,208,100 in accordance with his 2014 amended and restated employment agreement. We paid the bonus award in 30% cash and 70% in restricted stock that vests over a four year period. The Compensation Committee elected to pay the bonus award with 30% cash and 70% restricted stock, consistent with Mr. Surlyakumar’s award last year, in the belief that long-term equity ownership incentives align his interests with those of our other stockholders. (See “Annual Awards” below.)

The following sections of this proxy statement discuss and analyze the compensation awarded to, earned by, or paid to the executive officers set forth in the Fiscal 2014 Summary Compensation Table of this proxy statement. It also discusses the principles underlying our policies and decisions.

Compensation Committee and the Compensation Decision-Making Process

ARC’s Compensation Committee periodically reviews a market analysis of executive compensation plans provided by an independent compensation consultant. In 2013, the compensation consultant selected and hired by the Compensation Committee was Lyons, Benenson & Company, Inc. (“L&B”). Their assignment was to provide a cross section of publicly-traded companies (including business services and engineering companies) considered comparable to the Company in terms of revenue, market capitalization and business alignment. This peer group was compiled in late 2013 for the Compensation Committee’s recommendations,use in establishing compensation metrics used in our NEO employment contracts. Company management and the entire board of directors reviews and approves the salaries, bonuses and benefit programs for our executive officers. Our Compensation Committee hasengaged with our compensation consultants in reviewing the authority to engagelist of criteria and the services of outside consultants to assist it.

Our Compensation Committee deemed the following list of publicly traded companies appropriate and consistent with its compensation philosophy and practices:

The Advisory Board CompanyEnnis, Inc.Multi-Color Corporation
Barrett Business Services, Inc.The E.W. Scripps CompanyPerformant Financial Corporation
Consolidated Graphics, Inc.Harte-Hanks, Inc.Reachlocal, Inc.
Courier CorporationInnerWorkings, Inc.Resources Connection, Inc.
Deluxe CorporationMAXIMUS, Inc.Schawk, Inc.
Digital Generation, Inc.TRC Companies

Based on the 2014 compensation program design, actual 2014 total NEO compensation was 101% of the peer group median compensation received by the Compensation Committee from L&B at the end of 2013.

Specifically, our CEO’s total compensation, and the other NEOs total compensation, were also relies upon recommendations from101% of the peer group median as shown in the table below.

Executive or Group

  Peer Group
Median
Compensation
   ARC Median
Compensation
   Percentage
of Peer
Group
Median
 

All NEOs

  $5,888,442    $5,949,143     101

Non-CEO NEOs (2nd thru 5th highest paid)

  $3,721,024    $3,767,141     101

CEO

  $2,167,418    $2,182,002     101

Based on the market analysis and a performance review of the CEO, the Compensation Committee makes a recommendation to the Board of Directors on the CEO’s base salary and annual cash incentive. The CEO makes a recommendation to the Committee for the base salaries and annual cash incentive targets for the other NEOs based on the needs and operating targets of the Company. The Committee and Board, in executive session, determine the CEO’s total compensation program and ratifies the design and programs of the other NEOs.

At various meetings held during 2014, usually conducted in executive session, the board reviewed the progress against each of the executive officers’ annual incentive targets, and in February 2015 the Board of Directors, reviewed and approved the final annual incentive bonus for all of the NEOs.

Consideration of 2014 Say-on-Pay Results

Approximately 62% of our Chief Executive Officer in providing recommendations regardingstockholders who voted at our 2014 annual meeting approved the compensation of our non-executive officers.

executive officers in 2013 (as described in our 2014 proxy statement).

Noting the vote percentage and having received thoughtful commentary on executive compensation from investors during our proxy season in 2014, our CEO and the Compensation Committee recast the CEO’s compensation structure after the Company’s annual shareholders meeting in May 2014 to reflect the feedback of the Company’s shareholders. While nearly all of the shareholders of the Company expressed appreciation for management’s actions in taking salary reductions throughout the difficult years of the recession and its aftermath, they also expressed a strong desire to better align the CEO’s incentive compensation to growth in adjusted EBITDA (rather than to EPS growth), a metric they felt has become more representative of the value of the Company as it has transformed.

The new bonus structure is based on year-over-year adjusted EBITDA growth: the greater the year-over-year adjusted EBITDA growth, the greater the CEO’s participation in that growth. For example, at modest growth levels (e.g., 3%), the CEO receives a modest percentage share (e.g., 20%) of the difference between the previous year’s adjusted EBITDA and the current year’s adjusted EBITDA. As growth in adjusted EBITDA increases, the CEO receives a greater percentage of the adjusted EBITDA dollars incremental to the previous year’s adjusted EBITDA. Further, the plan does not provide any reward for adjusted EBITDA growth less than 2.5%, and caps the bonus at $4.0 million. (For more details on ARC’s CEO incentive bonus structure, please see “Annual Awards” below. The SEC filing regarding this change was made on May 19, 2014.)

No comments from shareholders were received regarding the compensation of our other NEOs and, as the financial metrics used in their management objectives include performance goals that contribute to the overall value of the Company, we believe they are consistent with our compensation philosophy.

Executive Compensation Philosophy

Our executive compensation program is designed to attract retainsuitable candidates for executive positions as necessary, and motivateprovide incentives to our executive officers in a mannerexisting NEOs that is tied directly to achievement ofencourage performance that benefits our overall operatingemployees, customers, and financial goals and, in turn, to increase stockholder value over the long term.stockholders. We believe it is in the best interests of our stockholders and our executive officers that our compensation program reflect and be tied to company-wide and individual performanceperformance.

Our intention is to maintain the transparency and be easy to administer. We intend that this simplicity reduce the time and cost involved in setting and implementing our compensation policies and increase the transparencyresponsiveness of our compensation program. With this in mind, our compensation program provides our executive officers with the incentiveincentives to increase our revenues, improve our margins, and increase adjusted EBITDA and our earnings per share, to develop and enhance our industry-leading technology and to execute our long-term strategic plan, while at the same time providing a clear framework for

measuring and rewarding their performance.

We It also intendmeans that our executive compensation program reflect, to a certain extent, the prevailing economic environmentCompensation Committee will monitor and the resulting operations of the Company. As a result, in early 2009, the primary components of our executive compensation program were temporarily altered in response to the general economic downturn. The recent temporaryreview best practices, and make changes to our program when warranted.

We believe the alignment between stockholder interest and executive interest is best achieved by maintaining an appropriate balance in our overall compensation among base salaries, “at risk” incentive awards, and targeted grants of stock-based awards to foster a company ownership mentality in our executives. This means that a material portion of executive compensation program are discussed in “Temporary Executive Compensation Program Changes” below.

Objectives

The objectives of our executive compensation program are (a) to link executive compensation to continuous improvements in overall companyis variable and individual performance and an increase in stockholder value and (b) to attract and retain key talent. Our executive compensation program goals include the following:

Ÿ

To establish pay levels that attract, retain and motivate highly qualified executive officers, taking into account overall market competition for such talent;

Ÿ

To foster an “ownership mentality” and align the interests of our executive officers with those of our stockholders through long-term equity incentives;

Ÿ

To recognize and reward superior individual performance;

Ÿ

To balance base and incentive compensation to complement our short-term and long-term business objectives and encourage the fulfillment of those objectives through individual performance; and

Ÿ

To provide compensation opportunities based on the Company’s performance.

The Compensation Committee believes that these goals are equally appropriate for our non-executive officers, and has established that annual incentive bonuses and equity grants be included as fundamental elements of their compensation. As a result, the Compensation Committee determined that, beginning in 2008, the compensation of certain of the Company’s non-executive, management-level employees include an element directly tied to the Company’s achievementand individual performance, as shown below in the accompanying graphs.

LOGO

A significant portion of its forecastedour annual pre-taxincentive compensation is designed in such a way that no annual incentive bonus can be earned without achieving measurable growth in the Company’s revenue, gross margin and adjusted earnings per shareshare.

Our approach to attracting and retaining executives also takes into account the significant shift that our business is undergoing due to the adoption of technology by our customers. Whereas our business has historically focused on supporting the analog, print-based needs of construction project workers, today our offerings have shifted dramatically to facilitate digital document workflows for any role in the business of design, engineering or construction, including executives, administrators, managers, etc.

Having transformed the Company into a fully-diluted basis (EPS), which was subsequently revisedtechnology-enabled document solutions enterprise, we not only contend with the highly competitive talent market in San Francisco and the Silicon Valley, but we also compete with large, well-funded printing and imaging equipment manufacturers and highly attractive technology companies to Adjusted EBITDA (consistingacquire and retain executive talent.

As we consider this changing environment for recruiting and retaining key executives in the future, our intention is to increase the appeal of net income before interest, taxes, depreciationARC as a top tier employer, offer advancement and amortization, excludinggrowth opportunities commensurate with the talent we attract, and assert the advantages of Company ownership in the form of stock-based compensation expense and non-cash impairment charges), as this was deemed a better gauge of the performance of those non-executive, management-level employees.

Consideration of 2011 Say-on-Pay Results

Approximately 88% of our stockholders that voted at our 2011 annual meeting approved the compensation of our executive officers in 2010 (as described in our 2011 proxy statement). The Compensation Committee believes that this affirms stockholder support for our executive compensation program. As a result, the overall approach to executive compensation as described in our 2011 proxy statement has not changed. The Compensation Committeeawards. Such offerings will continue to consider the outcome of stockholder “say-on-pay” advisory votes when making futurealign our executives’ actions with stockholders interests, and are consistent in principle with our compensation decisions for our executive officers.

Broad-Based Compensation Data

Prior to entering into employment agreements with certain of our executive officers in February 2005, under which their base salaries were established, our then governing board of advisors (prior to our reorganization as a

Delaware corporation) engaged Mercer Human Resource Consulting (“Mercer”) to provide broad-based third-party survey data regarding base salary, annual incentive bonuses, long-term incentive compensation and other elements of executive remuneration for each of our executive officer positions, and recommendations for contracts between us and our executive officers. Based on Mercer’s data and recommendations at that time, the Company entered into employment agreements with three-year initial terms — through February 9, 2008 — with Mr. Suriyakumar, then our President and Chief Operating Officer (now our Chairman, President and Chief Executive Officer), and Mr. Roy, our Chief Technology Officer, setting their respective base salaries within approximately 10%practices of the salaries proposed by Mercer. We did not adjust the base salaries for Messrs. Suriyakumar and Roy during the initial three-year terms of their employment agreements.past.

In 2009, the Compensation Committee considered updated broad-based compensation data for executive officers of similarly-sized companies compiled by Mercer from its 2009 US Global Premium Executive Remuneration Suite and Watson Wyatt’s 2009/2010 Survey Report on Top Management, consisting of general survey data regarding base salary, target short-term incentives, target total cash compensation and total direct compensation. The Compensation Committee used this updated survey data in assessing the Company’s then-current executive compensation program and comparing it to compensatory market conditions.

Compensation Consultant; Peer Group Benchmarking

The Compensation Committee has the authority to engage its own advisors. In November 2010, the Compensation Committee directly retained the services of Lyons, Benenson & Company (“Lyons Benenson”), an independent compensation consulting firm, to conduct an executive compensation review to ensure the effectiveness and competitiveness of the Company’s executive compensation program. Other than services requested by the Committee, Lyons Benenson does not provide any services to the Company.

With the assistance of Lyons Benenson, the Compensation Committee identified a group of peer companies to use in assessing the Company’s executive compensation programs. The peer group was comprised of a cross section of publicly-traded companies (including business services and engineering companies) considered comparable to the Company in terms of revenue, market capitalization and net income and consisted of the following companies:

APAC Customer Services Inc.

G&K Services, Inc.Journal Communications Inc.Schawk, Inc.

Cenveo, Inc.

GSI Commerce, Inc.MDC Partners Inc.The Standard Register Company

Consolidated Graphics, Inc.

Harte-Hanks, Inc.Monster Worldwide, Inc.TeleTech Holdings, Inc.

Emdeon Inc.

Healthcare Services Group, Inc.Multi-Color CorporationTetra Tech, Inc.

Ennis, Inc.

InnerWorkings, Inc.Quad-Graphics, Inc.Vistaprint N.V.

The Compensation Committee reviewed compensation data at peer companies to inform its decision-making process regarding the Company’s executive compensation program. In particular, the Committee used the results of Lyons Benenson’s report in connection with the renewal of employment agreements with Messrs. Suriyakumar and Roy and in determining Mr. Wijesuriya’s compensation as Chief Operating Officer in early 2011 (as discussed in greater detail below).

Elements of Executive Compensation

The table below summarizes the key fiscal 2014 compensation program elements for our named executive officers:

Element

Form of Compensation

Purpose

Base SalaryCashProvides competitive, fixed compensation to attract and retain exceptional executive talent
Annual BonusCash / Cash & Restricted StockProvides a variable financial incentive to achieve short-term corporate and individual operating goals and rewards short-term improvements in Company financial measurements
Equity GrantsNon-Qualified Stock OptionsEncourages NEOs to build and maintain a long-term equity ownership position in ARC to align their interests with our stockholders
Change of Control and Severance AgreementsEmployment AgreementProvides reasonable employment security and certainty in the event of a termination due to a change of company control
Optional Participation in our Employee Stock Purchase PlanEligibility to participate and purchase at a discounted purchase priceProvides broad-based employee benefit available to all ARC employees
Health, Retirement and Other BenefitsEligibility to participate in benefit plans generally available to all our employees, including health, life insurance, and disability plans, and certain perquisitesBenefit plans are part of a broad-based employee benefits program; perquisites provide competitive benefits to our NEOs

We believe that each element of our compensation program plays a substantial role in maximizing long-term value for our stockholders and employees because of the significant emphasis on pay-for-performance principles. In general, more than 50% of our NEOs’ total available compensation is based on ARC’s results and the attainment of individual goals. As a result, the Compensation Committee intends for ARC’s performance to have a significant effect on the amount of compensation realized by the executive officers.

Each of these elements of pay is described and analyzed in more detail below.

Compensation Objectives

The objectives of our executive compensation program are (i) to link executive compensation to continuous improvements in overall Company and individual performance and an increase in stockholder value and (ii) to attract and retain key talent. Our executive compensation program includesgoals include the following elements:following:

 

 Ÿ 

Base salaryTo establish pay levels based on competitive market studies provided by our compensation consultants that attract suitable candidates for executive positions as necessary, and provide incentives to our existing NEOs that encourage performance that benefits our employees, customers, and stockholders;

 

 Ÿ 

Annual incentive bonusesTo foster an “ownership mentality” and align the interests of our executive officers with those of our stockholders through long-term equity incentives;

 

 Ÿ 

Equity grantsTo recognize and reward superior individual performance;

 Ÿ 

ChangeTo balance base and incentive compensation to complement our short-term and long-term business objectives and encourage the fulfillment of control and severance arrangementsthose objectives through individual performance;

 

 Ÿ 

Optional participation in our employee stock purchase planTo provide compensation opportunities based on the Company’s performance;

 

 Ÿ 

Other benefits that are generally available to all of our employees, such as optional participationTo protect and preserve the domain expertise and deep customer relationships embodied in our 401(k) programkey executives; and, health, life and disability insurance.

Ultimately, the objective of our compensation program is to both attract and retain senior executives capable of delivering long-term value to our stockholders and employees, otherwise expressed as “pay for performance.” Our compensation policies must also be flexible and scalable enough to offer appropriate base compensation and incentive awards to executives tasked to address value creation in the midst of an architectural, engineering and construction (AEC) industry that has been fundamentally transformed from a document management perspective.

How Pay Was tied to the Company’s Performance in Fiscal Year 2014

During fiscal year 2014 we demonstrated the pay-for-performance basis of our compensation policy.

Consistent with the Company’s pay-for-performance philosophy and defined objective standards of performance, the threshold for eligibility of the CEO’s annual incentive bonus was met. Adjusted EBITDA grew 5.9% year-over-year, exceeding the 2.5% growth threshold by 3.4%. No part of the CEO’s bonus criteria was affected by, or was the result of, the Company’s refinancing of its senior debt in November 2014, or other financial reconfiguration of any kind. As such Mr. Suriyakumar was eligible for an annual incentive bonus of $1,208,100 under the terms of his annual bonus program.

The Compensation Committee chose to award the CEO’s annual incentive bonus in 30% cash and 70% in the Company’s restricted common stock that vests over four years.

The Company’s annual revenue, gross margin and adjusted annual earnings per share performance exceeded the threshold amount for non-CEO NEOs to become eligible for annual incentive bonus awards, and thus the Compensation Committee awarded cash bonuses to each executive based on the performance of each executive against his shared and individual management bonus objectives (“MBOs”), subject to maximums allowed under the executives’ employment agreements.

Also at the discretion of the Company’s Compensation Committee, grants for stock options in the aggregate amount of 221,292 shares were awarded to our NEOs in 2014, consistent with our philosophy of providing long-term incentives that encourage an “owner’s mentality” and alignment with our stockholders’ interests.

Base Salary

Base salaries for our executive officers are generally established based on the scope of their respective responsibilities, taking into account competitive market compensation paid by similarly-sized companies (as represented by the peer group compiled by the compensation consultant hired by the Compensation Committee) for similar positions. We intend that basepositions in the San Francisco Bay Area and Silicon Valley, as well as for any circumstances unique to the Company.

The Compensation Committee reviews the CEO’s salary every three years and reviews the non-CEO named executive officers’ salaries willannually as part of its overall competitive market assessment and may make adjustments based on talent, experience, performance, contribution levels, individual role, and positioning relative to market.

Base salaries provide executive officers with a reasonable and secure standard of living based on the executive officer’s position within the organization and geographical location. The CEO’s salary was set in accordance with his three-year amended employment agreement effective in 2014.

As noted in our 2014 proxy, the Compensation Committee determined that it would prospectively discontinue the use of three-year employment agreements for all non-CEO NEOs and would, instead, institute “at-will” employment agreements to align with current best practices in executive compensation. Thus the non-CEO NEO base salaries for 2014 are subject to the annual review of salaries set most recently in April 2014.

In setting the base salaries for our non-CEO NEOs, the Compensation Committee also considers the recommendations of the CEO based upon his annual review of their performance. Although the Compensation Committee takes into account the factors and information described above during its review and determination of the base salary for each executive officer, it uses its judgment taking into account all available information, including the competitive market assessment. The salaries of our NEOs relative to our peer group (described above) fell within the range of competitive practice at the time they were set.

President and Chief Executive Officer

In July 2007, we amendedUnder Mr. Suriyakumar’s February 2014 amended and restated three-year employment agreement, to extend its term until February 9, 2011 and to appoint him as our President and Chief Executive Officer. Mr. Suriyakumar’shis base salary was not increased from that fixed undermaintained at $950,000 per year. In maintaining his original February 2005 agreement when he was President and Chief Operating Officer of the Company.

The term of Mr. Suriyakumar’s employment agreement expired on February 9, 2011. The Compensation Committee recognized the importance of retaining the services of Mr. Suriyakumar as the Company’s President and Chief Executive Officer during the difficult economic conditions that the Company continues to face through the recovery period. As a result,annual base salary, the Compensation Committee considered it criticaldeemed his salary as appropriate to properly incentivize Mr. Suriyakumar to remain in his current position and has renewed his employment agreement for an additional three-year term (ending in February 2014). In light of the facttook under consideration that (i) Mr. Suriyakumar’s base salary had not been increased fromsubject to temporary reductions previously, as described in greater detail below under “Temporary Executive Compensation Program Changes,” (ii) his originalleadership and stewardship of the Company has been exemplary, and (iii) the Compensation Committee needed to properly incentivize him to remain in his position.

Chief Technology Officer

In April 2014, the Compensation Committee set Mr. Roy’s annual base salary at $575,000, maintaining his salary from the previous year as Chief Operating Officer in 2005 ,the Committee deemed his salary as competitive and in recognition of Mr. Suriyakumar’s leadership andappropriately recognizes his contributions to the Company during the recent recession,in developing our proprietary software applications. Previously, Mr. Suriyakumar’s base salary was increased from $650,000 per year to $950,000 under his renewed employment agreement, subject toRoy has accepted certain temporary reductions in his base salary, as described in greater detail below under “Temporary Executive Compensation Program Changes.”

Chief Technology Officer

The original term of the employment agreement with Rahul Roy, our Chief Technology Officer, expired in February 2008, but was automatically extended on a year-to-year basis thereafter. In April 2008, we amended Mr. Roy’s employment agreement to extend its term until March 31, 2011 and to increase his base salary from $400,000 to $450,000. In March 2011, Mr. Roy’s employment agreement was further amended to extend the term until March 31, 2014 and increase his base salary from $450,000 to $500,000, subject to temporary reductions in base salary, as described in greater detail below under “Temporary Executive Compensation Program Changes.” These increases in base salary were intended to recognize Mr. Roy’s accomplishments in developing our suite of proprietary software products and applying his technological expertise to the reprographics industry in general, and to compensate him, in part, with a base salary that is competitive with compensation paid to comparable executive officers of similarly-sized companies.

Chief Financial Officer

Jonathan Mather. Mr. Mather retired from his position as Chief Financial Officer in July 2011. When we hired Mr. Mather as our Chief Financial Officer in December 2006, we entered into an employment agreement with a three-year initial term that fixed Mr. Mather’s salary upon the recommendation of the Compensation Committee. In determining Mr. Mather’s base salary, we considered our revenue growth since the date of Mercer’s 2005 report, as well as then-existing market competitive factors to recruit a Chief Financial Officer with experience comparable to Mr. Mather, who served as Chief Financial Officer for another public company until he joined the Company. In April, 2008, we amended Mr. Mather’s employment agreement to extend its term until March 31, 2012 and to increase his base salary from $360,000 to $375,000. As was the case with the increase in

Mr. Roy’s base salary, the increase in Mr. Mather’s base salary was intended to reflect base salaries paid by companies of similar size to officers of comparable positions and to acknowledge and reward Mr. Mather’s performance as our Chief Financial Officer, as is consistent with the Company’s compensation objectives and philosophy.

John E.D. Toth.Mr. Toth was hired in July 2011 to replace Jonathan Mather, our former Chief Financial Officer, following his retirement. We entered into an employment agreement with Mr. Toth in connection with his appointment as Chief Financial Officer with an initial three-year term and an annual base salary of $300,000. In determining Mr. Toth’s base salary, we considered then-existing market factors to recruit a CFO with comparable experience and base salaries paid by public companies of similar size to officers of comparable positions, including relevant data provided by Lyons Benenson.

Chief Operating Officer

In connection with DilanthaApril 2014, the Compensation Committee set Mr. Wijesuriya’s appointment as our Senior Vice President – National Operations in August 2008, hisannual base salary was set at $250,000,$370,000, which we considered to be competitive with compensation paid to executive officers of similarly-sized companies based on the nature and scope of Mr. Wijesuriya’s position as Senior Vice President—National Operations. In light of Mr. Wijesuriya’s performancerepresents a 5.7% increase in his dutiessalary from the prior year, and from the salary set in his previous three-year employment agreement. The Committee deemed his salary as competitive and appropriately recognizes his contributions to the Company, including his effective supervision of Company-wide operations, Mr. Wijesuriya was promoted to Chief Operating Officer in February 2011 and his base salary was increased to $350,000.Company. Previously, Mr. Wijesuriya has agreed toaccepted certain temporary reductions in his base salary, as described in greater detail below under “Temporary Executive Compensation Program Changes.”

Chief Financial Officer

In April 2014, the Compensation Committee set Mr. Toth’s annual base salary at $325,000, which represented an 8.3% increase in his salary from the prior year, and from the salary set in his previous three-year employment agreement. The Committee deemed his salary as competitive and appropriately recognized his contributions to the Company. Previously, Mr. Toth has accepted certain temporary reductions in his base salary, as described in greater detail below under “Temporary Executive Compensation Program Changes.” Mr. Toth’s employment with the Company ended on January 30, 2015.

Chief Accounting Officer, Vice President Finance

In connection withApril 2014, the Compensation Committee set Mr. Avalos’ appointmentAvalos’s annual base salary at $280,000, which represents a 7.7% increase in his salary from the prior year, and from the salary set in his previous three-year employment agreement. The Committee deemed his salary as Chief Accounting Officer, Vice President Financecompetitive and appropriately recognizes his contributions to the Company. Previously, Mr. Avalos has accepted certain temporary reductions in April 2011, his base salary, was set at $260,000, which we considered to be competitive with compensation paid to comparable executive officers of similarly-sized companies, taking into account the nature and scope of this position and relevant data provided by Lyons Benenson.

In response to the general economic downturn, base salaries payable to certain of our executive officers were temporarily reduced for the 2009 through 2012 fiscal years. Seeas described in greater detail below under “Temporary Executive Compensation Program Changes” below for greater details.Changes.”

Annual Incentive Awards

We utilize annual incentive bonuses to focus corporatemanagement behavior on improved short-term financial performance and the achievement of specific annual objectives. Our annual incentive bonuses, as opposed to our stock option and restricted stock grants described below, are designed to reward our executive officers for their collective and individual performance during the most recent fiscal year. We believe that the immediacy of these

annual bonuses, in contrast to equity grants vesting over a longer time period, provides a more direct incentive to our executive officers to drive the Company’s currentnear-term financial performance and meet their respective individual objectives. We intend for our annual incentive bonuses to be an important motivating factor for our executive officers, and we thus apportion a substantial percentage of their total annual compensation to these bonuses.

At the first board meeting of each new calendar year—typically held in late February or early March—the Compensation Committee reviews the Company’s performance for the previous fiscal year and compares it to the associated performance targets set by the Compensation Committee the year before.

President and Chief Executive Officer

We adoptedPrior to May 2014 when Mr. Suriyakumar’s employment agreement was most recently amended, the recommendationstructure of Mercer in 2005 in connection with the executive employment agreements signed in February 2005 to base the annual incentive bonuses for our President and Chief Executive Officer was based solely on the year-over-year growth of our pre-tax adjusted EPS. We did so based onIt was our belief that a substantial portion of our President and Chief Executive Officer’s anticipated annual compensation should be directly tied to driving earnings — the most– an important measure of the Company’s performance for equity holders – and that aligning the interests of Mr. Suriyakumar with the interests of our stockholders in this manner iswas appropriate, especially since Mr. Suriyakumar is one of our founders and remains among the Company’s largest stockholders.

We received thoughtful commentary from our investors during the 2014 proxy season with regard to our advisory, non-binding proposal on executive compensation, specifically related to the CEO’s annual incentive program. While nearly all of the shareholders we spoke to expressed their appreciation for management’s actions in waiving bonuses and taking salary reductions throughout the difficult years of the recession and its aftermath, they expressed a strong desire to align the CEO’s incentive compensation to growth in adjusted EBITDA (rather than to earnings growth), a metric they felt was more representative of the value of the Company as it has transformed.

Thus, the Compensation Committee recast the CEO’s incentive compensation structure in response to shareholder comments shortly after the conclusion of our 2014 Annual General Meeting. The new bonus structure is based on year-over-year adjusted EBITDA growth: the greater the year-over-year adjusted EBITDA growth, the greater the CEO’s participation in that growth. The SEC filing regarding this change was made on May 19, 2014.

Under his original2014 amended and restated employment agreement, Mr. Suriyakumar was entitledis eligible to receive an annual incentive bonus in an amount equal to $60,000 for each full percentage point by which our pre-tax EPS forthe dollar value resulting from the product of (a) the year-over-year dollar increase in adjusted EBITDA, and (b) the applicable fiscal year exceeds our pre-tax EPS for“Participation Percentage” as determined per the immediately preceding fiscal year by more than 10%, after taking into account the amount of thetable below:

Year-over-Year Increase in Adjusted EBITDA  (%)

(“Percentage Increase”)

Participation Percentage
(%  of Adjusted EBITDA Increase)

Less than 2.5%

0

2.5 – 4.9%

20.0

5.0 – 7.4%

30.0

7.5% – 9.9%

40.0

10.0% or greater

50.0

No incentive bonus earned by Mr. Suriyakumar. Thiswill be awarded if the percentage increase is less than 2.5%, and no annual incentive bonus structure is maintained underwill be awarded in excess of $4 million. Mr. Suriyakumar’s employment agreement that was renewed in 2011 to continue to incentivize Mr. Suriyakumar to drive growth in the Company. In light of the continuing downturn in our primary markets, and the low absolute level of our pre-tax EPS, this bonus structure could have potentially resulted in an unusually large percentage change and bonus payment to Mr. Suriyakumar. As a result, the Compensation Committee and Mr. Suriyakumar agreed to include a provision in his renewed employment agreementstipulates that the amount of the annual incentive bonus is capped at $4,000,000 per year (plus any amount that is unearned in prior years). Any annual incentive bonus to Mr. Suriyakumar under the amended agreement is payable 70% in cash and 30%and/or in shares of restricted stock. TheAny such shares of restricted stock issued to Mr. Suriyakumar under his amended employment agreementassociated with the annual incentive grant will vest at the rate of 25% each year on the first four anniversaries of the date of grant. Under

Since the year-over-year adjusted EBITDA growth percentage was 5.9% in 2014, Mr. Suriyakumar’s originalSuriyakumar was eligible for $1,208,100 under the terms of his employment agreement his annual incentive bonus was not capped and was payable 100% in cash at Mr. Suriyakumar’s option. Since the pre-tax EPS target was not met in 2011, no annual incentive bonus was paid tosince adjusted EBITDA increased. Mr. Suriyakumar for that year.accepted the bonus award in 30% cash and 70% restricted stock.

Other Executive Officers

As recommended by Mercer prior to signing employment agreements with our executive officers in February 2005 (and in contrast toIn March 2014, the annual incentive bonuses available to ourCompensation Committee determined the NEOs (other than the President and Chief Executive Officer), our other executive officers are would be eligible to earnfor annual incentive bonuses, conditionedcompensation based upon achievement of overallpre-determined corporate financial metricsgoals, and fulfillment of individual performance criteria as recommended byit set the Chief Executive Officer and approved by the Compensation Committee. We intend that these goal-oriented awards be responsive to changing internal and external business conditions and objectives from year to year. Based on the accomplishments of our executive officers in past years, we continue to believe that carefully crafted, objectives-basedgoals for their 2014 annual incentive bonuses will drive operationalcompensation.

Under the 2014 incentive program, non-CEO NEOs have specific award opportunities related to four performance metrics, three of which are based on company performance, and technological success. Accordingly, at the beginningone of which is based on individual performance. The following table presents each named executive officer’s maximum bonus opportunity (on both a dollar and percentage of base salary basis) for fiscal 2014:

Executive

  FY14 Target %
of Base Salary
  FY14 Target
in Dollars
 

Rahul Roy

   80 $460,000  

Dilantha Wijesuriya

   100 $370,000  

John Toth

   80 $260,000  

Jorge Avalos

   80 $224,000  

In fiscal year overall corporate financial metrics and individual performance objectives are established2014, the award opportunities for each of our other executive officers (apart from our Presidentnon-CEO NEO’s include Company performance in revenue generation, gross margin, and Chief Executive Officer) against which their actualadjusted earnings per share. A fourth opportunity exists for each NEO in the achievement of individually determined performance is measured afterobjectives. The portions of each bonus assigned to each target are set forth in the endtable below.

Executive

  Annual
Revenue
  Annual Gross
Margin
  Annual
Adjusted
EPS
  Individual
Objective
 

Rahul Roy

   25  0  25  50

Dilantha Wijesuriya

   25  25  25  25

John Toth

   25  25  25  25

Jorge Avalos

   25  25  25  25

We chose the aforementioned performance metrics because:

Ÿ

Revenue, gross margin, and adjusted EPS measures correlate strongly to stockholder value creation for ARC;

Ÿ

Revenue, gross margin, and adjusted EPS measures are transparent to investors and are included in our quarterly earnings releases;

Ÿ

Revenue, gross margin, and adjusted EPS measures balance growth, efficiency, and profitability;

Ÿ

Individual performance goals align with our operational and strategic objectives, and provide opportunities for personal achievement within the scope of our executives’ scope of duties; and

Ÿ

Revenue and adjusted EPS performance targets are established based on a range of inputs, including external market economic conditions, growth outlooks for our product and service portfolio, the competitive environment, our internal budgets, and market expectations.

For the revenue performance portion of the relevantprogram, no bonus is awarded if fiscal year.year 2014 revenue is at or below $415 million. Payouts in increments of 10% of the target bonus amount are achieved for every $500,000 of revenue above $415 million, and reach 100% of the target bonus amount if the fiscal year 2014 revenue reaches $420 million. Payouts in increments of 2.5% of the target bonus amount are achieved for every $500,000 above $420 million and are capped at 150% of the target bonus amount, or $430 million in annual revenue. A similar logic and identical increments are applied to each of the other Company performance goals, substituting the gross margin percentage or adjusted EPS figure as appropriate. For the individual performance metric, the payout ranges from 0% to 100%. While the payout for each individual performance goal can exceed 100% of its

target – thus allowing for excellent performance in one area to partially offset poor performance in another – the aggregate amount for all four targets cannot exceed the maximum bonus payout stipulated in our executive employment agreements.

The following table summarizes the foregoing description of low, target and maximum performance levels and the relative payout at each level for each of the Company’s performance objectives:

   Low  Target  Max 

% of Base Target Bonus Amount

   0  100  150

Annual Revenue

  $415mm   $420mm   $430mm  

Annual Gross Margin

   33.2  33.5  34.0

Adjusted EPS

  $0.19   $0.22   $0.26  

Individual incentive bonus objectives for our other executive officers (apart from our President and Chief Executive Officer)performance goals are proposed to the Compensation Committee annually by our President and Chief Executive Officer, and the Compensation Committee reviews and refines the objectives with the President and Chief Executive Officer.objectives. The Compensation Committee also evaluates actual performance of these executive officers with the President and Chief Executive Officer periodically throughout the year. After fiscal year end, the Compensation Committee conducts a final review with our President and Chief Executive Officer of the performance of each of these executive officers and approves annual incentive bonuses payable to them.

In 2011, payment of annualSeparate and apart from incentive bonusescompensation, the Compensation Committee may grant a discretionary bonus related to our other executive officers (apart from our President and Chief Executive Officer) was subject to achievement of an Adjusted EBITDA target of $73.3 million. (EBITDA is a supplemental measure ofobjective or otherwise based on an individual’s exceptional performance, taking into account the Company’s performance that is not required by or presented in accordance with accounting principles generally accepted in the United States of America. Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization and excludes stock-based compensation expense and non-cash impairment charges.) Since the EBITDA target for 2011 was not met, no annual incentive bonuses were paid for the 2011 fiscal year.

Chief Financial Officer

John E.D. Toth, our current Chief Financial Officer, was appointed in July 2011 to replace Jonathan Mather, our former Chief Financial Officer. Under his employment agreement, Mr. Toth is eligible to receive an annual incentive bonus in an amount up to 80% of his annual base salary, payable in cash, contingent upon achievement of corporate and individual performance criteria to be established by our President and Chief Executive Officer in consultation with Mr. Toth and approvedrecommendations made by the Compensation Committee. In light of the transition within the Chief Financial Officer role during the 2011 fiscal year, annual incentive bonus objectivesCEO. There were not set for the

Chief Financial Officer position for 2011no such discretionary bonuses granted in order to allow for an appropriate transition period within this position.2014.

Chief Technology OfficerAchievement of Fiscal Year 2014 Performance Metrics

Mr. Roy’s employment agreement was renewedIn determining the degree of achievement in March 2011. Under his renewed agreement, Mr. Roy is eligible to receive an annual incentive bonus in an amount up to 80%each of his annual base salary, payable in cash or ARC stock, contingent upon achievement of corporate and individualour performance criteria to be established by our President and Chief Executive Officer in consultation with Mr. Roy, and approved bymetrics for fiscal 2014, the Compensation Committee. Committee took into account the relative success in meeting the quantitative performance measures, as well as the quantifiable and subjective elements assigned to each executive’s individual objectives.

For 2011, thefiscal 2014, our revenue target was $420 million, our gross margin target was 33.5%, and our adjusted EPS target was $0.22. The Compensation Committee determined that Mr. Roy’s annual incentive bonus objectiveswe achieved 100.9% of the revenue target, 101.5% of the gross margin target, and 113.6% of the adjusted EPS target. This performance resulted in a 117.5% achievement payout potential for the revenue target, 150% achievement payout potential for the gross margin target, and a 137.5% achievement payout potential of the adjusted EPS target.

The individual performance achievement payout potential for Messrs. Roy, Wijesiuriya, Toth and Avalos reflected technology platform advances, product launch and licensing, capital management, revenue and gross margin expansion, successful accounting systems implementation, and improvement of efficiency of financial reporting, as set forth in the table below. Their leadership, initiative, and drive were tied to the following goals (with equal weighting): successful launch of upgradesnoted and contributed to the Company’s ishipdocs and Abacus technology products, and achieve targeted licensing revenuessuccess throughout 2014. In rating individual executive performance, the Compensation Committee gives weight to the recommendations of $4.5 million, building information modeling (BIM) services revenuesour CEO, but final decisions about the compensation of $3.0 million and technology sales revenues of $1.0 million.

Chief Operating Officer

Mr. Wijesuriya (formerly our Senior Vice President – National Operations) was appointed Chief Operating Officer in February 2011. Mr. Wijesuriya’s employment agreement was amended in connection with his promotion to Chief Operating Officer. Under his amended agreement, Mr. Wijesuriya is eligible to receive an annual incentive bonus up to 100% of his base salary, payable in cash, contingent upon achievement of corporate and individual performance criteria to be established by our Chief Executive Officer in consultation with Mr. Wijesuriya, and approvednamed executive officers are made solely by the Compensation Committee. For 2011,

Executive

Individual Performance Objective

Rahul Roy

Technology platform advances and successful product launch

Dilantha Wijesuriya

Successful product launches and an international software licensing transaction

John Toth

Effective capital management, and implementation of systems to support new product launches to grow revenue and gross margins

Jorge Avalos

Successful accounting systems implementation and improvement of efficiency of financial reporting

In the Compensation Committee determined that Mr. Wijesuriya’stable below we provide our fiscal 2014 aggregate annual incentiveMBO bonus objectives, as Chief Operating Officer, were tiedachievement and actual bonus paid to the following goals (with equal weighting): completion of a targeted level of acquisitions in China; achieve $15 million of Company-wide cost savings initiatives; and achieve $0.10 earnings per share (on a pro forma, fully-diluted basis), $460 million in sales revenues and Global Services revenues of $58 million for fiscal year 2011.

In order to provide a long-term incentive component to Mr. Wijesuriya’s compensation as Chief Operating Officer, under his amended employment agreement, Mr. Wijesuriya is also eligible to receive an annual long-term equity incentive award, payable in the form of an annual stock option grant valued at $200,000 (based on the Black-Scholes valuation model) at an exercise price equal to the closing price of our common stock on the New York Stock Exchange on the date of grant. The shares subject to such option grants will vest at the rate of 25% each year on the first four anniversaries of the date of grant.

Chief Accounting Officer, Vice President Finance

Mr. Avalos was appointed our Chief Accounting Officer, Vice President Finance in April 2011. Under his employment agreement, Mr. Avalos isCompany’s NEOs, highlighting the maximum eligible to receive an annual incentive bonus, up to $150,000, payable in cash, upon achievement of performance criteria to be established by our Chief Financial Officer in consultation with Mr. Avalos and approved by the Compensation Committee. For 2011,aggregate bonus achieved vs. the Compensation Committee determined that Mr. Avalos’ annual incentive bonus objectives were tied to the following goals (with equal weighting): cash generation of 97.5% of EBT for fiscal year 2011; maintain past due accounts receivable to 10% or less; exceed $0.10 earnings per share (on a pro forma fully-diluted basis) for fiscal year 2011; exceed $15 million of Company-wide cost savings initiatives; and completion of certain tax-related projects by 2011 fiscal year end.

Temporary Executive Compensation Program Changes

We strive to keep our executive compensation program nimble in order to reflect the business conditions in our industry and the economypaid as a whole. As such, components of our executive compensation program have been temporarily adjusted over the last several years to take into account prevailing economic conditions. Those changes are summarized below.

2009 Fiscal Year. In light of prevailing economic conditions in 2009, and in connection with the Company’s overall cost reduction initiative, the employment agreements with our executive officers were amended in March

2009 to provide for voluntary temporary reductions of their respective base salaries from the effective date of the reduction through January 31, 2010 (or, in the case of Mr. Suriyakumar, until December 31, 2009). Under their respective employment agreement amendments, Mr. Suriyakumar agreed to a 50% reduction in base salary and each of Messrs. Mather, Roy and Wijesuriya agreed to a 10% reduction in base salary. In addition, under the employment agreement amendments, each of Messrs. Suriyakumar, Mather, Roy and Wijesuriya agreed to a waiverresult of the bonus opportunity for the Company’s fiscal year 2009.cap set forth in each executive’s employment agreement:

2010 Fiscal Year. Due to continued economic weakness in 2010, particularly in the architecture, engineering and construction (AEC) industry (the Company’s primary market), the employment agreements with our executive officers were further amended in early 2010 to provide for temporary 10% base salary reductions through the remainder of fiscal year 2010, with additional 5% base salary reductions effective from July through December 2010.

2011 Fiscal Year. In light of then-projected continuing challenges in the AEC industry, Mr. Suriyakumar agreed to a 25% temporary base salary reduction, Mr. Wijesuriya agreed to a 15% temporary base salary reduction and Mr. Roy agreed to a 10% base salary reduction from the date of amendment of their employment agreements in early 2011 through the remainder of fiscal year 2011.

2012 Fiscal Year. In light of projected continuing challenges in the AEC industry in 2012, Mr. Suriyakumar agreed to a 10% temporary base salary reduction, and each of Messrs. Wijesuriya and Roy agreed to a 5% temporary base salary reduction for fiscal year 2012.

2014 Achievement vs. Employment Agreement
Compensation

  Salary
($)
   Maximum
Bonus under
Employment
Agreement
($)
   Aggregate
MBO
Achievement
($)
   Actual
Bonus Paid
($)
 

Kumarakulasingam Suriyakumar

  $950,000    $4,000,000    $1,208,100    $1,208,100  

Rahul K. Roy

  $575,000    $460,000    $523,250    $460,000  

Dilantha Wijesuriya

  $370,000    $370,000    $467,125    $370,000  

John E.D. Toth

  $325,000    $260,000    $328,250    $260,000  

Jorge Avalos

  $280,000    $224,000    $282,800    $224,000  

Equity Grants

We believe that equity grants provide our executive officers, non-executive officers and other management-level employees with a strong link to our long-term performance, create an ownership culture and closely align the interests of these employees with the interests of our stockholders. The purpose of equity grants is to encourage a long-term view of the Company’s success and to reward achievements with respect to the Company’s strategic goals and financial performance priorities, as well as individual performance. Grants are made at the Compensation Committee’s discretion and are generally made once per year at fair market value at a Compensation Committee meeting during the first half of the fiscal year, although theyear. The Compensation Committee retains the right to make grants at other meetings if there are questions or open discussion items regarding such grants. Wee.g., for newly hired executives. In accordance with our Insider Trading Compliance Program, we do not decide when to grant equity awards based on our plans for release of material information to the public and we do not time the release of material information to the public based on when we make equity grants. Further, we do not necessarily make such grants every year.

Stock Options

Our executive officers and our non-executive, management-level employees are eligible to receive stock options pursuant to our 2014 Stock Plan. In 2014, the Compensation Committee used its discretion to make the following non-qualified stock plan.option grants to our executive officers:

In 2011,2014, Mr. Roy, our Chief Technology Officer, was granted an option to purchase 100,000 shares of the Company’s common stock.

In 2014, Mr. Wijesuriya, our Chief Operating Officer, was granted as an annual long-term incentive award, an optionoptions to purchase 45,24972,630 shares of the Company’s common stock understock.

In 2014, Mr. Toth, our 2005 Stock Plan. Details regardingformer Chief Financial Officer, was granted options to purchase 33,662 shares of the Company’s common stock.

In 2014, Mr. Avalos, our Chief Accounting Officer, was granted an option to purchase 15,000 shares of the Company’s common stock.

Named Executive Officer

  Value of 2014
Options Granted(1)
 

Rahul K. Roy

  $363,763  

Dilantha Wijesuriya(2)

  $290,941  

John E.D. Toth(3)

  $122,753  

Jorge Avalos

  $54,565  

(1)

The amounts shown in this column reflect the grant date fair value in accordance with FASB ASC 718 to the executive officer. For a discussion of the assumptions used in these calculations, see Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

(2)

Stock options listed for Mr. Wijesuriya, our Chief Operating Officer, include an annual long-term equity incentive award as a part of his 2014 employment agreement. This award is payable in the form of an annual stock option grant valued at $200,000 (based on the Black-Scholes valuation model) at an exercise price equal to the closing price of our common stock on the NYSE on the date of grant. The options vest at the rate of 25% each year on the first four anniversaries of the date of grant.

(3)

Stock options listed for Mr. Toth, our former Chief Financial Officer, include an annual long-term equity incentive award as a part of his 2014 employment agreement. This award is payable in the form of an annual stock option grant valued at $50,000 (based on the Black-Scholes valuation model) at an exercise price equal to the closing price of our common stock on the NYSE on the date of grant. The options vest at the rate of 25% each year on the first four anniversaries of the date of grant.

Details regarding these stock option grants are included in the “Summary Compensation Table” in this proxy statement. We did not grant any additional stock options to our executive officers in 2011.

Restricted Stock Awards

We use restricted stock awards on a targeted basis as a component of our executive compensation program. We believe that grants of restricted stock rewards exceptional performance by providing to our executive officers an opportunity for immediate ownership of our common stock, while also providing retention value through the imposition of vesting conditions. Restricted stock awards foster an ownership culture and help motivate our executive officers to perform at peak levels across economic and business cycles because the value of these awards is linked to the Company’s long-term performance. The Company determines the performance-based conditions for an award of restricted stock, and the conditions for vesting of restricted shares, as appropriate from time to time.

In 2011,2014, we made the following grantsdid not grant any shares of restricted stock to our executive officers:officers, other than the shares granted to our President and Chief Executive Officer, Mr. Suriyakumar, in connection with his incentive bonus.

Ÿ

A grant of 1,444 shares of restricted stock to Mr. Suriyakumar, as a component of his 2011 base salary pursuant to his employment agreement which was renewed in 2011.

Ÿ

A grant of 15,000 shares of restricted stock to Mr. Roy in April 2011 in recognition of his contributions to the Company’s technology products and services.

Ÿ

A grant of 15,000 shares of restricted stock to Mr. Avalos in connection with his appointment as our Chief Accounting Officer, Vice President Finance.

Ÿ

A grant of 30,000 shares of restricted stock to Mr. Toth in connection with his appointment as our Chief Financial Officer in July 2011.

Details regarding these restricted stock grants are included in the “SummaryThe Compensation Table” in this proxy statement.

We haveCommittee has reviewed and considered other forms of long-term equity compensation in addition to stock options and restricted stock. Considering the impact of alignment with stockholder interests, accounting costs, perceived value, and cash cost to the Company, we believethe Compensation Committee believes that granting long-term equity incentives primarily in the form of stock options and restricted stock, is the best approach for the Company.

Change of Control and Severance Arrangements

We have implemented change of control and severance arrangements for each of our executive officers, including salary and health benefits continuation through specific post-termination periods and accelerated vesting of restricted stock and stock options. We believeThe Company believes that implementing these types of arrangements for our executive officers is an important retention element by providing security against arbitrary termination and that they are appropriate elements of competitive market compensation. Currently, Messrs. Suriyakumar, Roy, Toth, Wijesuriya and Avalos have change of control and severance arrangements, which are described in the “Employment Contracts—Change in Control and Severance Arrangements”“Potential Payments Upon Termination or Change-in-Control” section of this proxy statement.

Employee Stock Purchase Plan

We offer all of our employees, including our executive officers, the opportunity to purchase our common stock through a tax-qualified employee stock purchase plan (ESPP). In 2014, Mr. Toth was the only NEO who participated in the plan. Under our ESPP, as amended, employees may elect to purchase annually, at a 15% discount (from the closing price of our common stock on the NYSE on the applicable date of purchase), up to the lesser of (a) 2,500 shares of our common stock, or (b) that number of shares of our common stock having an aggregate fair market value of $25,000.

Other Compensation

Our executive officers are eligible to participate in our health, life and disability insurance plans, and our 401(k) plan to the same extent that our other employees are entitled to participate in such plans. In light of2009 in

response to the prevailing economic conditions, in 2009, our 401(k) plan was amended to eliminate the Company’s mandatory matching contribution and to provide for discretionary matching contributions by the Company. No discretionary matching contributions were made to the 401(k) plan for several years. In July of 2013 the Company’s mandatory matching contribution was reinstated. This change appliesapplied to all 401(k) plan participants, including our executive officers.

Tax Considerations

Section 162(m) of the Internal Revenue Code limits the tax deductibility of compensation paid to our CEO, and the three other most highly compensated named executive officers employed at the end of the year (other than our CFO) to $1 million per year, unless such amounts are determined to be performance-based compensation. Our employment agreementspolicy with certainrespect to Section 162(m) seeks to balance the interests of the Company in maintaining flexible incentive plans against the possible loss of a tax deduction when taxable compensation for any of the executive officers subject to Section 162(m) exceeds $1 million per year. While we consider the deductibility of compensation in determining our executive compensation program, we look at other factors in making our executive compensation decisions and retain the discretion to grant awards or pay compensation that we determine to be consistent with the goals of our executive officers also provide for payment of certain perquisites, including car allowances and club membership dues. We believe that these benefitscompensation program, even if the awards or compensation are desirable and appropriatenot tax deductible.

Temporary Executive Compensation Program Changes

ARC has taken pains to keep our executive compensation program nimble in order to retain talentreflect the conditions of our business, our industry and remain competitivethe economy as a whole, especially with regard to the recent financial crisis and subsequent downturn of the construction industry. As such, our named executive officers have accepted temporary adjustments to their compensation over the past several years to take into account prevailing economic and business conditions. Those changes, occurring between the years 2009 to 2013, are summarized below.

2009 Fiscal Year.    In light of prevailing economic conditions in the marketplace2009, and are generally consistentin connection with the practices of our peers. Details about these perquisites are included in the Summary Compensation Table.

We have no current plans to further amendCompany’s overall cost reduction initiative, the employment agreements with our executive officers (except as requiredwere amended in March 2009 to reflect temporary reductions of their respective base salaries from the effective date of the reduction through January 31, 2010 (or, in the case of Mr. Suriyakumar, until December 31, 2009). Under their respective employment agreement amendments, Mr. Suriyakumar’s base salary was reduced by law or as required50% and each of Messrs. Mather, Roy and Wijesuriya were reduced by 10%. In addition, under the employment agreement amendments, each of Messrs. Suriyakumar, Mather, Roy and Wijesuriya were not entitled to clarifya bonus opportunity for the benefitsCompany’s fiscal year 2009.

2010 Fiscal Year.    Due to whichcontinued economic weakness in 2010, particularly in the AEC industry (the Company’s primary market), the employment agreements with each of our executive officers were amended in early 2010 to provide for temporary 10% base salary reductions through the remainder of fiscal year 2010, with additional 5% base salary reductions effective from July through December 2010.

2011 Fiscal Year.    In light of then-projected continuing challenges in the AEC industry, Mr. Suriyakumar’s base salary was temporarily reduced by 25%, Mr. Wijesuriya’s base salary was temporarily reduced by 15% and Mr. Roy’s base salary was temporarily reduced by 10% from the date of amendment of their employment agreements in early 2011 through the remainder of fiscal year 2011.

2012 Fiscal Year.    In light of then-projected continuing challenges in the AEC industry in 2012, Mr. Suriyakumar’s base salary was reduced by 10%, and each of Messrs. Wijesuriya and Roy base salary was temporarily reduced by 5% for fiscal year 2012. Later in the year, in view of continuing weakness in our markets, Messrs. Suriyakumar, Roy, and Wijesuriya accepted an additional 10% base salary reduction from November and December 2012. Mr. Toth accepted a 10% base salary reduction for November and December 2012, and Mr. Avalos accepted a 5% base salary reduction during the same time period.

2013 Fiscal Year.    Due to the ongoing challenges in the AEC industry in 2013, Mr. Suriyakumar accepted a continuing 10% temporary base salary reduction in addition to the original 2012 reduction for a total of 20% temporary base salary reduction through December 31, 2013. Each of Messrs. Wijesuriya and Roy also accepted a continuing 5% temporary base salary reduction in addition to the original 2012 reduction for a total of 10%

temporary base salary reduction through December 31, 2013. Mr. Toth accepted a continuing 10% temporary base salary reduction through December 31, 2013, and Mr. Avalos accepted a continuing 5% temporary base salary reduction through December 31, 2013. Mr. Suriyakumar received an annual incentive bonus for the first time in five years, but in recognition of the improvement in the Company’s performance relative to a year in which any positive growth would result in an outsized award, he accepted 37.9% of the amount he was eligible for as part of his annual incentive plan, with a reverse in the distribution of the award as configured under his restated and amended 2011 employment agreement, accepting 30% in cash and 70% in restricted stock with vesting in 25% increments per year over four years.

Recent Key Compensation Program and Other Related Changes

2015 Compensation Plan: The Compensation Committee approved an annual incentive compensation plan for the non-CEO NEOs for fiscal year 2015 that was similar to the incentive compensation plan approved in fiscal year 2014. As in fiscal year 2014, the incentive compensation plan is based on performance against pre-determined corporate goals for revenue, gross margin, adjusted earnings per share, and for individually determined performance objectives. The individual performance objectives for 2015 include team management, technology platform advances, product enhancements, cash management, revenue and gross margin expansion, and improvement of efficiency of financial reporting. The portions of the incentive compensation assigned to each target are entitled as set forth therein) or changein the levelstable below.

   Portion of Bonus Assigned to Target 

NEO (non-CEO)

  Annual
Revenue
  Annual Gross
Margin
  Annual Adjusted
EPS
  Individual
Objectives
 

Dilantha Wijesuriya

   25  25  25  25

Rahul K. Roy

   25  0  25  50

Jorge Avalos

   25  25  25  25

In early 2015, the Compensation Committee requested updated information on ARC’s peer group compensation levels. In setting targets for total compensation for each of benefits provided thereunder.ARC’s four* highest paid executives, the Compensation Committee determined that the aggregate compensation amount was approximately 103% of the median aggregate amount of the four highest paid executives in ARC’s peer group.

New Stock Ownership Guidelines: In March 2015, ARC’s Nominating and Governance Committee recommended instituting minimum stock ownership requirements for the Board’s independent directors and all Company NEOs, which included a window in which such ownership should be acquired. ARC’s Board unanimously approved the recommendation for implementation prior to December 31, 2015.

*The employment of our former CFO, John Toth, ended on January 30, 2015. He will receive the payments as fully described under “Potential Payments Upon Termination or Change-in-Control” below. As of the date of this filing, ARC does not intend to separately fill the role of Chief Accounting Officer vacated by Jorge Avalos when he was promoted to CFO after Mr. Toth’s departure.

Summary

After its review of all existing programs, consideration of current market and competitive conditions and alignment with our overall compensation objectives and philosophy, the Compensation Committee believes that

the total proposed compensation program for our executive officers is focused on increasing value for stockholders and enhancing the Company’s performance. The Compensation Committee currently believes that under the amended and restated employment agreement with our CEO and the new employment agreements for our other NEOs a significant portion of compensation of executive officers is properly tied to stock appreciation or stockholder value through stock options, restricted stock awards and/or annual incentive bonus measures. The Compensation Committee believes that our executive compensation levels are competitive with compensation programs offered by other companies with which we compete for executive talent.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the board of directors has reviewed and discussed the “Compensation Discussion and Analysis” section of this proxy statement with management. Based on this review and discussion, the Compensation Committee has recommended to the board of directors that the “Compensation Discussion and Analysis” section be included in this proxy statement.

James F. McNulty, Chairman

Thomas J. Formolo Chairman

Dewitt Kerry McCluggage

James F. McNulty

Manuel Perez de la Mesa

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table provides information regarding the compensation earned during the fiscal year indicated by our President and Chief Executive Officer (our principal executive officer), our current Chief Financial Officer (our principal financial officer), our former Chief Financial Officer (our principal financial officer for a portion of the 2011 fiscal year) and our three other most highly compensated executive officers (other than our principal executive officer and our principal financial officer) who were serving as executive officers as of December 31, 2011.

Summary Compensation Table

The following table provides information regarding the compensation earned during the fiscal year by our President and Chief Executive Officer (our principal executive officer), our Chief Financial Officer (our principal financial officer), and our three other most highly compensated executive officers who were serving as executive officers as of December 31, 2014.

Summary Compensation Table

 

Name and Principal
Position(1)

  Year   Salary
($)
  Bonus
($)
   Stock
Awards(2)
($)
   Option
Awards(2)
($)
  Non-Equity
Incentive Plan
Compensation
($)
   All Other
Compensation(3)
($)
   Total
($)
 

Kumarakulasingam Suriyakumar

   2011     687,053(4)   —       12,500     —      —       20,422     719,975  

President and Chief

   2010     574,313(5)   —       —       —      —       20,706     595,019  

Executive Officer

   2009     375,000(6)   —       —       —      —       30,024     405,024  

John E.D. Toth(7)

              

Chief Financial Officer

   2011     138,462    —       208,500     —      —       9,360     356,322  

Rahul K. Roy

   2011     438,534(8)   —       134,250     —      —       44,529     617,313  

Chief Technology

   2010     397,601(9)   —       —       —      —       45,617     443,218  

Officer

   2009     410,365(10)   —       —       30,346    —       48,699     489,410  

Dilantha Wijesuriya

   2011     286,130(11)   —       —       200,000(12)   —       33,645     519,775  

Chief Operating Officer

   2010     208,197(9)   —       —       —      —       30,692     238,889  
   2009     226,923(10)   —       183,300     86,052    —       28,905     525,180  

Jorge Avalos

   2011     242,548(13)   —       149,100     —      —       73,150     464,798  

Chief Accounting Officer, Vice President Finance

              

Jonathan R. Mather(14)

   2011     202,320    —       —       —      —       487,280     689,600  

Former Chief Financial

   2010     331,334(9)   —       —       —      —       15,648     346,982  

Officer

   2009     340,672    —       —       316,062    —       25,557     682,291  

Name and Principal Position(1)

 Year  Salary
($)
  Bonus
($)
 Stock
Awards
($)
  Option
Awards(2)
($)
  Non-Equity
Incentive Plan
Compensation
($)
  Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings

($)
 All Other
Compensation(3)
($)
  Total
($)
 

Kumarakulasingam Suriyakumar,

  2014    950,000     845,670(4)    362,430(4)    23,902    2,182,002  

President & Chief

  2013    760,000(5)   1,061,200    477,643(6)  454,800     22,869    2,776,512  
  2012    845,135(7)    298,000(8)     21,604    1,164,739  

John Toth

  2014    316,058      122,753(9)   260,000(10)   13,578    712,389  

Chief Financial Officer

  2013    270,000(11)    63,686(12)  200,000     14,387    548,073  
  2012    297,000(13)    89,400(14)    21,605    408,005  

Rahul Roy

  2014    575,000      363,763(15)   460,000(16)   23,989    1,422,752  

Chief Technology Officer

  2013    510,577(17)    398,036(18)  280,000     27,267    1,215,880  
  2012    473,365(19)    298,000(20)    37,004    808,369  

Dilantha Wijesuriya

  2014    362,846      290,941(21)   370,000(22)   27,320    1,051,107  

Chief Operating Officer

  2013    315,000(23)    295,529(24)  249,120     35,431    895,080  
  2012    331,356(25)    229,935(26)    34,850    596,141  

Jorge Avalos

  2014    272,846      54,565(27)  224,000(28)   29,482    580,893  

Chief Accounting Officer

  2013    247,000(29)    55,725(30)  135,000     30,761    468,486  
  2012    259,200(31)    59,600(32)    58,744    377,544  

 

 

(1) 

In addition to our principal executive officer and our principal financial officer, our other “executive officers” (as defined in Rule 3b-7 of the Exchange Act) in 20112014 were our Chief Technology Officer, Mr. Roy; our Chief Operating Officer, (formerlyMr. Wijesuriya; our Senior Vice President — National Operations),Chief Financial Officer, Mr. Wijesuriya;Toth; and our Chief Accounting Officer, Vice President Finance, Mr. Avalos.

 

(2)

The amounts shown in this column reflect the fair value at the time of grant by the Company in accordance with FASB ASC 718 to the executive officer. For a discussion of the assumptions used in these calculations, see Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.2014.

(3) 

The amounts in this column are set forth in the table below:

 

Name

  Year   Health,
Life and
Disability
Insurance
Premiums
($)
   Club
Membership
Dues

($)
   401(k)
Company
Match
($)
   Car
Allowance
($)
   Relocation
Benefits
($)
 Severance
Benefits
($)
  Year Health,
Life and
Disability
Insurance
Premiums
($)
 Club
Membership
Dues

($)
 401(k)
Company
Match
($)
 Car
Allowance
($)
 Relocation
Benefits
($)
 Total
($)
 

Kumarakulasingam Suriyakumar

   2011     20,422     0     0     0     0    0    2014    23,902    0    0    0    0    23,902  
   2010     20,706     0     0     0     0    0    2013    22,869    0    0    0    0    22,869  
   2009     30,024     0     0     0     0    0    2012    21,604    0    0    0    0    21,604  

John E.D. Toth

   2011     9,360     0     0     0     0    0  

John Toth

  2014    13,578    0    0    0    0    13,578  
  2013    14,387    0    0    0    0    14,387  

Rahul K. Roy

   2011     19,888     861     0     23,780     0    0  
  2012    21,605    0    0    0    0    21,605  

Rahul Roy

  2014    23,989    0    0    0    0    23,989  
   2010     20,457     1,314     0     23,846     0    0    2013    22,652    0    0    4,615    0    27,267  
   2009     22,164     2,142     547     23,846     0    0    2012    21,388    3,616    0    12,000    0    37,004  

Dilantha Wijesuriya

   2011     18,645     0     0     15,000
    0
   0    2014    19,915    0    2,040    5,365    0    27,320  
   2010     15,692     0     0     15,000     0    0    2013    19,711    0    720    15,000    0    35,431  
   2009     11,945     0     1,960     15,000     0    0    2012    19,850    0    0    15,000    0    34,850  

Jorge Avalos

   2011     14,757     0     0     4,500     53,893(1)   0    2014    25,256    0    2,080    2,146    0    29,482  
  2013    23,749    0    1,012    6,000    0    30,761  

Jonathan R. Mather

   2011     15,164     0     0     0     0    472,116(2) 
   2010     15,648     0     0     0     0    0    2012    22,340    0    0    6,000    30,404(a)  58,744  
   2009     23,597     0     1,960     0     0    0  

 

  (1)(a)

Consists of temporary relocation housing allowance of $22,682,a living allowance of $12,100 and one-time relocation allowance of $19,111.$30,404.

 

  (2)(4)

ConsistPayment of severance paymentbonus based on 2014 performance of $375,000the year-over-year growth of our adjusted EBITDA. Total bonus was $1,208,100 paid 70% in restricted stock vesting at the rate of 25% each year on the first four anniversaries of the date of grant, and costs associated with acceleration of vesting of stock options of $97,116.30% in cash.

 

  (4)(5)

Effective January 1, 20112013 through December 31, 2011,2013, Mr. Suriyakumar agreed to a 25%20% base salary reduction.

 

  (5)(6)

On March 08, 2013, Mr. Suriyakumar was granted an option to purchase 300,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $2.70 which was the closing price of our common stock on the NYSE on the date of grant.

(7)

Effective January 1, 20102012, through December 31, 2010,2012, Mr. Suriyakumar agreed to a 10% base salary reduction. In addition, effective July 24, 2010 through December 31, 2010, Mr. Suriyakumar subsequently agreed to reduce his annual salary by an additional 5% base salary reduction.10% in November and December of 2012.

 

  (6)(8)

On May 23, 2012 Mr. Suriyakumar agreedwas granted an option to a 50% reduction inpurchase 100,000 shares of our common stock under the amount2005 Plan, at an exercise price equal to $5.37 which was the closing price of his annual base salary, effective March 7, 2009 until December 31, 2009.our common stock on the NYSE on the date of grant.

 

  (7)(9)

On May 1, 2014 Mr. Toth joinedwas granted an option to purchase 13,662 shares of our common stock under the Company as Chief Financial Officer effective July 18, 2011.

  (8)

Effective January 1, 2011 through December 31, 2011,2014 Plan, at an exercise price equal to $6.33 which was the closing price of our common stock on the NYSE on the date of grant. On, June 02, 2014 Mr. Roy agreedToth was also granted an option to a 10% base salary reduction.

  (9)

Effective February 1, 2010 through December 31, 2010, this executive officer agreedpurchase 20,000 shares of our common stock under the 2014 Plan, at an exercise price equal to a 10% base salary reduction. In addition, effective July 24, 2010 through December 31, 2010, this executive officer agreed to an additional 5% base salary reduction.$6.16 which was the closing price of our common stock on the NYSE on the date of grant.

 

(10) 

Effective February 1, 2009 through January 31, 2010, this executive officer agreed to a 10% reductionPayment of bonus based on his performance against his pre-determined shared and individual MBOs in the amount of his annual base salary.2014.

 

(11) 

Effective January 1, 20112013 through December 31, 2011,2013, Mr. WijesuriyaToth agreed to a 15%10% base salary reduction.reduction

 

(12) 

On March 15, 2011,08, 2013 Mr. WijesuriyaToth was granted an option to purchase 45,24940,000 shares of our common stock under the 2005 Plan, as amended, at an exercise price equal to $8.66$2.70 which was the closing price of our common stock on the NYSE on the date of grant.

 

(13) 

Effective November 10, 2012 through December 31, 2012, Mr. Toth agreed to a 10% base salary reduction.

(14)

On May 23, 2012 Mr. Toth was granted an option to purchase 30,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $5.37 which was the closing price of our common stock on the NYSE on the date of grant.

(15)

On, June 02, 2014 Mr. Roy was granted an option to purchase 100,000 shares of our common stock under the 2014 Plan, at an exercise price equal to $6.16 which was the closing price of our common stock on the NYSE on the date of grant.

(16)

Payment of bonus based on his performance against his pre-determined shared and individual MBOs in 2014.

(17)

Effective January 1, 2013 through December 31, 2013, Mr. Roy agreed to a 10% base salary reduction.

(18)

On March 08, 2013 Mr. Roy was granted an option to purchase 250,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $2.70 which was the closing price of our common stock on the NYSE on the date of grant.

(19)

Effective January 1, 2012 through December 31, 2012, Mr. Roy agreed to a 5% base salary reduction. Mr. Roy subsequently agreed to reduce his annual salary by an additional 10% in November and December of 2012.

(20)

On May 23, 2012 Mr. Roy was granted an option to purchase 100,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $5.37 which was the closing price of our common stock on the NYSE on the date of grant.

(21)

On February 13, 2014 Mr. Wijesuriya was granted an option to purchase 47,630 shares of our common stock under the 2014 Plan, at an exercise price equal to $7.19 which was the closing price of our common stock on the NYSE on the date of grant. On, June 02, 2014 Mr. Wijesuriya was also granted an option to purchase 25,000 shares of our common stock under the 2014 Plan, at an exercise price equal to $6.16 which was the closing price of our common stock on the NYSE on the date of grant.

(22)

Payment of bonus based on his performance against his pre-determined shared and individual MBOs in 2014.

(23)

Effective January 1, 2013 through December 31, 2013, Mr. Wijesuriya agreed to a 10% base salary reduction.

(24)

On February 21, 2013 Mr. Wijesuriya was granted an option to purchase 143,792 shares of our common stock under the 2005 Plan, at an exercise price equal to $2.37 which was the closing price of our common stock on the NYSE on the date of grant. On, March 08, 2013 Mr. Wijesuriya was also granted an option to purchase 60,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $2.70 which was the closing price of our common stock on the NYSE on the date of grant.

(25)

Effective November 10, 2012 through December 31, 2012 Mr. Wijesuriya agreed to a 5% reduction in the amount of his annual base salary. Mr. Wijesuriya subsequently agreed to reduce his annual salary by an additional 10% in November and December of 2012.

(26)

On April 26, 2012 Mr. Wijesuriya was granted an option to purchase 63,941 shares of our common stock under the 2005 Plan, at an exercise price equal to $5.62 which was the closing price of our common stock on the NYSE on the date of grant. On May 23, 2012 Mr. Wijesuriya was also granted an option to purchase 10,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $5.37 which was the closing price of our common stock on the NYSE on the date of grant.

(27)

On, June 02, 2014 Mr. Avalos was appointed Chief Accounting Officer, Vice President Financegranted an option to purchase 15,000 shares of our common stock under the Company effective April 14, 2011,2014 Plan, at an exercise price equal to $6.16 which was the closing price of our common stock on the NYSE on the date of grant.

(28)

Payment of bonus based on his performance against his pre-determined shared and was paid $181,547 asindividual MBOs in 2014.

(29)

Effective January 1, 2013 through December 31, 2013, Mr. Avalos agreed to a 5% base salary in this capacity for the remaining portion of fiscal year 2011. Prior to April 14, 2011,reduction.

(30)

On March 08, 2013 Mr. Avalos heldwas granted an option to purchase 35,000 shares of our common stock under the 2005 Plan, at an exercise price equal to $2.70 which was the closing price of our common stock on the NYSE on the date of grant.

(31)

Effective November 10, 2012 through December 31, 2012 Mr. Avalos agreed to a non-executive, senior management position with5% reduction in the Company, for which he was paid $61,001 asamount of his annual base salary.

 

(14)(32) 

On May 23, 2012 Mr. Mather retired asAvalos was granted an option to purchase 20,000 shares of our common stock under the Company’s Chief Financial Officer effective July 18, 2011.2005 Plan, at an exercise price equal to $5.37 which was the closing price of our common stock on the NYSE on the date of grant.

Grants of Plan-Based Awards for 20112014

The following plan-based equity awards were granted to our executive officers during 2011.2014.

 

Name

 Grant
Date
  Estimated Future Payouts
under Non-Equity Incentive
Plan Awards
 Estimated Future Payouts
under Equity Incentive Plan
Awards
 All Other
Stock
Awards;
Number
of Shares
of Stock
or Units

(#)
  All Other
Option
Awards:
Number of
Securities
underlying
Options

(#)
  Exercise
or Base
Price of
Option
Awards

($/sh)
  Grant Date
Fair Value
of Stock
and
Option
Awards

($) (1)
  Grant
Date
  Estimated Future Payouts
under Non-Equity Incentive
Plan Awards
 Estimated Future Payouts
under Equity Incentive Plan
Awards
 All
Other
Stock
Awards;
Number
of
Shares
of Stock
or Units
(#)
  All Other
Option
Awards:
Number of
Securities
underlying
Options
(#)
  Exercise
or Base
Price of
Option
Awards
($/sh)
  Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)(1)
 
 Threshold
($)
 Target
($)
 Maximum
($)
 Threshold
(#)
 Target
(#)
 Maximum
(#)
   Threshold
($)
 Target
($)
 Maximum
($)
 Threshold
(#)
 Target
(#)
 Maximum
(#)
 

Kumarakulasingam Suriyakumar

  3/15/2011          1,444(2)     12,500    3/13/2014          143,794(2)     1,061,200  

John E.D. Toth

  7/27/2011          30,000(3)     208,500  

Rahul K. Roy

  4/29/2011          15,000(4)     134,250  

Rahul Roy

  6/02/2014           100,000(3)  6.16    363,763  

Dilantha Wijesuriya

  3/15/2011           45,249(5)   8.66    200,000    2/13/2014           47,630(4)  7.19    200,000  
  6/02/2014           25,000(3)  6.16    90,941  

John Toth

  5/01/2014           13,662(5)  6.33    50,000  
  6/02/2014           20,000(3)  6.16    72,753  

Jorge Avalos

  4/14/2011          15,000(6)     149,100    6/02/2014           15,000(3)  6.16    54,565  

Jonathan R. Mather

           

 

(1) 

Under our 2005 Stock Plan, as amended, and our 2014 Stock Plan the grantexercise price for a restricted stock Option grant is the closing price of our common stock as listed by the NYSE on the grant date.

 

(2) 

On March 15, 2011,13, 2014, we granted Mr. Suriyakumar 1,444143,794 restricted shares of our common stock. Twenty-five percentstock under our 2005 Plan in connection with his bonus for fiscal year 2013. The shares vest at a rate of these shares will vest25% on each of the first four anniversary datesanniversaries of the grant date, of grant.subject to Mr. Suriyakumar’s continued employment with the Company.

 

(3) 

On July 27, 2011, we granted Mr. Toth 30,000 restricted sharesThe options vests at a rate of our common stock. Twenty-five percent of these shares will vest33% on each of the first fourthree anniversary dates of the date of grant.

 

(4) 

On April 29, 2011, we granted Mr. Roy 15,000 restricted shares of our common stock. Twenty-five percent of these shares will vest on each of the first four anniversary dates of the date of grant.

(5)

On March 15, 2011,February 13, 2014, we granted Mr. Wijesuriya an option to purchase 45,24947,630 shares of our common stock under our 2005 Plan, at an exercise price equal to $8.66,$7.19, which was the closing price of our common stock on the NYSE on the date of grant. The option vests at a rate of 25% on each of the first four anniversaries of the grant date, subject to Mr. Wijesuriya’s continued employment with the Company.

 

(6)(5) 

On April 14, 2011,May 1, 2014, we granted Mr. Avalos 15,000 restrictedToth an option to purchase 13,662 shares of our common stock. Twenty-five percentstock under our 2014 Plan, at an exercise price equal to $6.33, which was the closing price of those shares will vestour common stock on eachthe NYSE on the date of grant. Mr. Toth’s employment with the first four anniversary datesCompany ended on January 30, 2015, at which point all of the grant.his outstanding stock options fully vested.

Outstanding Equity Awards at Fiscal 20112014 Year-End

The following table provides information as of December 31, 20112014 regarding outstanding equity awards held by the executive officers listed in the Summary Compensation Table.

Outstanding Equity Awards at Fiscal Year-End

 

 Option Awards Stock Awards

Name

 

Number of
Securities
underlying
Unexercised
Options

(#)

 

Number of
Securities
underlying
Unexercised
Options

(#)

 Equity
Incentive
Plan
Awards;
Number of
Securities
underlying
Unexercised
Unearned
Options
 Option
Exercise
Price
 Option
Expiration
 

Number
of
Shares
or Units
of Stock
that
Have

Not
Vested

 

Market
Value of
Shares
or Units
of Stock

that

Have

Not

Vested

 Equity
Incentive
Plan
Awards;
Number of
Unearned
Shares,
Units or
Other
Rights that
Have Not
Vested
 Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights that
Have Not
Vested
Exercisable Unexercisable (#) ($) Date (#) ($) (#) ($)

Kumarakulasingam Suriyakumar

  66,666    33,334    $5.37    5/23/2022    361   $3,689(1)   
  100,000    200,000    $2.70    3/8/2023    143,794   $1,469,575(1)   

John Toth

  20,000    10,000    $5.37    5/23/2022    7,500   $76,650(1)   
  13,333    26,667    $2.70    3/8/2023      
  Option Awards   Stock Awards       13,662(2)   $6.33    5/1/2024      
  

Number of
Securities
Underlying
Unexercised
Options

(#)

 

Number of
Securities
Underlying
Unexercised
Options

(#)

 Option
Exercise
Price
   Option
Expiration
   Number
of Shares
or Units of
Stock that
Have Not
Vested
 Market
Value of
Shares
or Units of
Stock that
Have Not
Vested
       20,000(3)   $6.16    6/2/2024      

Name

  Exercisable Unexercisable ($)   Date   (#) ($) 

Kumarakulasingam Suriyakumar

                     15,504(1)   71,163  
         1,444(2)   6,628  

John E.D. Toth

                     30,000(3)   137,700  

Rahul K. Roy

   100,000        5.25     5/10/2012     15,000(4)   68,850  
   224,000     5.25     5/10/2012     

Rahul Roy

  15,000(4)       $8.20    5/21/2019    3,750   $38,325(1)   
   100,000        5.85     5/30/2014       66,666    33,334    $5.37    5/23/2022      
   15,000(5)       8.20     5/21/2019       83,333    166,667    $2.70    3/8/2023      
      100,000(5)   $6.16    6/2/2024      

Dilantha Wijesuriya

   7,500(6)       5.25     5/10/2012     18,000(7)   82,600    15,000(4)       $8.20    5/21/2019       $    
   15,000(5)       8.20     5/21/2019       12,500(4)       $8.20    5/21/2019      
   12,500(5)       8.20     5/21/2019       25,000(4)       $8.20    5/21/2019      
   25,000(5)       8.20     5/21/2019       13,858        $6.20    2/19/2019      
   9,239(8)   4,619(8)   6.20     2/19/2019       33,936    11,313    $8.66    3/15/2021      
       45,249(9)   8.66     3/15/2021       31,970    31,971    $5.62    4/26/2022      
  6,666    3,334    $5.37    5/23/2022      
  35,948    107,844    $2.37    2/21/2023      
  20,000    40,000    $2.70    3/8/2023      
      47,630(6)   $7.19    2/13/2024      
      25,000(7)   $6.16    6/2/2024      

Jorge Avalos

   7,500(5)       8.20     5/21/2019     4,500(10)   20,655    7,500(4)       $8.20    5/21/2019    3,750   $38,325(1)   
   6,250(5)       8.20     5/21/2019     15,000(11)   68,850    6,250(4)       $8.20    5/21/2019      
   15,000(5)       8.20     5/21/2019       15,000(4)       $8.20    5/21/2019      
  13,333    6,667    $5.37    5/23/2022      

Jonathan R. Mather

   150,000        8.20     10/18/2012     
  11,666    23,334    $2.70    3/8/2023      
      15,000(8)   $6.16    6/2/2024      

 

(1)

15,504 restrictedThe Market value of shares remain subject to a reacquisition option in favorthat have not vested is based on the closing stock price as of the Company in the event Mr. Suriyakumar’s continuous service to the Company is terminated,December 31, 2014, which reacquisition option lapses on March 27, 2012.was $10.22.

 

(2)

On March 15, 2011,May 1, 2014, we granted Mr. Suriyakumar 1,444 restrictedToth 13,662 stock option shares with an aggregate value of $12,500. Twenty-five percent of those shares willthat vest 25% on the first four anniversaries of the date of grant.

(3)

On July 27, 2011,June 2, 2014, we granted Mr. Toth 30,000 restricted20,000 stock option shares of our common stock with an aggregate value of $208,500. Twenty-five percent of those shares willthat vest 33% on each of the first fourthree anniversaries of the grant date.date of grant.

 

(4)

On April 29, 2011, we granted Mr. Roy 15,000 restricted shares of our common stock with an aggregate value of $134,250. Twenty-five percent of those shares will vest on each of the first four anniversaries of the grant date.

  (5)

Under the Company’s 2009 stock option exchange program, this stock option was exchanged for an option covering an equivalent number of shares with an exercise price of $8.20, equal to the closing price of the Company’s common stock on the New York Stock Exchange on May 21, 2009, the date of grant of the replacement option. Fifty percent of the shares subject to the option vestvested on the first anniversary date of grant and the remaining 50% of the shares subject to the option vestvested on the second anniversary of the grant date.

 

  (6)

The option was granted on May 10, 2002 and vested at a rate of 20% on each of the first five anniversaries of the grant date.

  (7)

Restricted shares remain subject to a reacquisition option in favor of the Company in the event Mr. Wijesuriya’s continuous service to the Company is terminated. These restricted shares were granted on October 28, 2009 and vest at the rate of 20% on each of the first five anniversaries of the grant date.

  (8)(5)

On February 19, 2009,June 2, 2014, we granted Mr. Wijesuriya was granted anRoy 100,000 stock option to purchase 13,858 shares of our common stock under our Plan, at an exercise price equal to $6.20, which was the closing price of our common stockthat 33% on the

NYSE on the grant date. The option vests at a rate of 33.33% on each of the first three anniversaries of the grant date subject to Mr. Wijesuriya’s continued employment with the Company.of grant.

 

  (9)(6)

On March 15, 2011,February 13, 2014 we granted Mr. Wijesuriya was granted an47,630 stock option to purchase 45,249 shares of our common stock under our Plan, at an exercise price equal to $8.66, which was the closing price of our common stock on the NYSE on the grant date. The option vests at a rate ofthat vest 25% on each of the first four anniversaries of the grant date subject to Mr. Wijesuriya’s continued employment with the Company.of grant.

 

(10)(7)

On October 28, 2009,June 2, 2014, we granted Mr. Avalos 7,500 restrictedWijesuriya 25,000 stock option shares of our common stock with an aggregate value of $45,825. Twenty percent of those shares willthat vest 33% on each of the first fivethree anniversaries of the grant date.date of grant.

 

(11)(8)

On April 14, 2011,June 2, 2014, we granted Mr. Avalos 15,000 restrictedstock option shares of our common stock with an aggregate value of $149,100. Twenty-five percent of those shares willthat vest 33% on each of the first fourthree anniversaries of the grant date.date of grant.

Option Exercises and Stock Vested in 20112014

The following table presents certain information concerning the exercise of options, and vesting of restricted stock held, by each of the executive officers listed in the Summary Compensation Table during the fiscal year ended December 31, 2011.2014.

Option Exercises and Stock Vested

 

  Stock Awards   Option Awards   Stock Awards 

Name

  Number of Shares
Acquired on Vesting

(#)
   Value Realized on Vesting($)   Number of Shares
Acquired on Exercise
(#)
   Value Realized  on
Exercise

($)
   Number of Shares
Acquired on Vesting
(#)
   Value Realized  on
Vesting

($)
 

Kumarakulasingam Suriyakumar

       —         —         361    $2,661  

John E.D. Toth

       —         —  

Rahul K. Roy

   28,253     127,704  

John Toth

       7,500    $43,425  

Rahul Roy

   100,000    135,924     3,750    $23,138  

Dilantha Wijesuriya

   6,000     25,140         6,000    $60,060  

Jorge Avalos

   1,500     6,285         5,250    $38,940  

Jonathan R. Mather

   60,000     247,200  

Pension Benefits

None of our executive officers participates in, or has account balances in, qualified or non-qualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

None of our executive officers participates in or has account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us.

Potential Payments Upon Termination or Change-in-Control

We haveThe employment agreements we entered into employment agreements with our executive officers that requirealso required us to provide compensation and other benefits to our executive officers if their employment terminatesterminated or they resignresigned under specified circumstances .

circumstances. The following discussion summarizes the potential payments upon termination of employment pursuant to the employment agreements in affect as of December 31, 2014 with our executive officers (other than Mr. Mather, who was no longer employed by the Company on December 31, 2011).NEOs. The amounts specified below assume that employment terminated on

December 31, 20112014 and the calculations of the value of equity awards reflect the closing price of our common stock on the NYSE on December 31, 2011.2014.

 

 Ÿ 

Kumarakulasingam Suriyakumar.Suriyakumar. If Mr. Suriyakumar iswas terminated without “Cause” (as defined below) or his employment terminateswas terminated for “Good Reason” (as defined below), he iswould have been entitled to receive: (a) his then base salary throughfor twenty-four months following the February 9, 2014 expirationeffective date of his employment agreement;termination; (b) earned but unpaid incentive bonus; (c) continued payment of premiums for him and his eligible dependents to remain covered by our group medical insurance programs, until the earlier of (i) medical insurance coverage being available through another employer, (ii) termination of eligibility for his children under our policies and applicable laws, or (iii) qualification of him and his spouse, in each instance, for Medicare coverage; (c)(d) continued payment of employer-paid benefits, including without limitation, the lease of automobiles, throughfor twenty-four months following the February 9, 2014 expirationeffective date of his employment agreement,termination, provided that the annual cost to the Company shall not exceed $10,000; and (d)(e) immediate vesting of any unvested stock options, restricted stock or similar rights granted to him as of the effective date of termination. As of December 31, 2011,2014, payment of all the foregoing in connection with termination of Mr. Suriyakumar’s employment without Cause or for Good Reason would have totaled approximately $2,122,645.$6,317,523. Accelerated vesting of Mr. Suriyakumar’s outstanding unvested stock options would have resulted in vesting of 233,334 shares of common stock subject to unvested options as of December 31, 2014, with an aggregate fair market value of approximately $1,665,670 (representing the aggregate amount by which the accelerated stock options would have been “in the money” on December 31, 2014). Accelerated vesting of Mr. Suriyakumar’s unvested restricted stock would have resulted in vesting of 16,948144,155 shares of unvested restricted common stock outstanding as of December 31, 20112014 with an aggregate market value of approximately $77,791,$1,473,264. In the case of both stock options and restricted stock, the aggregate market value is based on the closing price on the NYSE on that date.December 31, 2014.

 

 Ÿ 

John E.D. Toth. If Mr. Toth is terminated without “Cause” (as defined below) or his employment terminates for “Good Reason” (as discussed below), he is entitled to receive: (a) his base salary for twelve months following the effective date of termination; (b) continued payment of premiums for Mr. Toth and his eligible dependents to remain covered by our group medical insurance programs for twelve months following the effective date of termination; and (c) immediate vesting of all unvested stock options, restricted stock or similar rights granted to him as of the effective date of termination; and (d) a pro-rated incentive bonus based on the number of days Mr. Toth is employed with us during the fiscal year in which his employment is terminated. As of December 31, 2011, payment of all of the foregoing in connection with termination of Mr. Toth’s employment without Cause or for Good Reason would have totaled approximately $458,122. Accelerated vesting of Mr. Toth’s outstanding unvested restricted stock would have resulted in vesting of 30,000 shares of unvested restricted common stock outstanding as of December 31, 2011 with an aggregate market value of approximately $137,700, based on the closing price on the NYSE on December 31, 2011.

Ÿ

Rahul K. Roy. If Mr. Roy is terminated without “Cause” (as defined below) or his employment terminates for “Good Reason” (as defined below), he is entitled to receive: (a) his then base salary throughfor 12 months following the March 31, 2014 expirationeffective date of his employment agreement;the termination; (b) earned but unpaid incentive bonus; (c) continued payment of premiums for him and his eligible dependents to remain covered by our group medical insurance programs for the period in which he is entitled to continue to receive his base salary; (c) continued payment of employer-paid benefits, including without limitation, automobile leasing, for the period in which he is entitled to continue to receive his base salary; and (d) immediate vesting of all unvested stock options, restricted stock or similar rights granted to him as of the effective date of termination. As of December 31, 2011,2014, payment of all the foregoing in connection with termination of Mr. Roy’s employment without Cause or for Good Reason would have totaled approximately $1,236,674.$2,918,319. Accelerated vesting of Mr. Roy’s outstanding unvested stock options would have resulted in vesting of 300,001 shares of common stock subject to unvested options as of December 31, 2014, with an aggregate fair market value of approximately $1,821,006 (representing the aggregate amount by which the accelerated stock options would have been “in the money” on December 31, 2014). Accelerated vesting of Mr. Roy’s outstanding unvested restricted stock would have resulted in full vesting of 15,0003,750 shares of unvested restricted common stock as of December 31, 20112014 with an aggregate market value of approximately $68,850,$38,325. In the case of both stock options and restricted stock, the aggregate market value is based on the closing price on the NYSE on December 31, 2011. (All of Mr. Roy’s outstanding stock options were fully vested in accordance with their terms as of December 31, 2011.)2014.

 

 Ÿ 

Dilantha Wijesuriya.Wijesuriya. If Mr. Wijesuriya is terminated without “Cause” (as defined below) or his employment terminates for “Good Reason” (as discussed below), he is entitled to receive: (a) his base salary for twelve months following the effective date of termination; (b) earned but unpaid incentive bonus; (c) continued payment of premiums for Mr. Wijesuriya and his eligible dependents to remain covered by our group medical

insurance programs for twelve months following the effective date of

termination; and (c)(d) immediate vesting of all unvested stock options, restricted stock or similar rights granted to him as of the effective date of termination. As of December 31, 2011,2014, payment of all of the foregoing in connection with termination of Mr. Wijesuriya’s employment without cause or for “Good Reason” would have totaled approximately $451,265.$2,333,994. Accelerated vesting of Mr. Wijesuriya’s outstanding unvested stock options would have resulted in vesting of 49,868267,092 shares of common stock subject to unvested options as of December 31, 2011,2014, with an aggregate fair market value of approximately $0.00$1,574,079 (representing the aggregate amount by which the accelerated stock options would have been “in the money” on December 31, 2011)2014). Accelerated vesting of Mr. Wijesuriya’s outstanding unvested restricted stock would have resulted in full vesting of 18,000 shares of unvested restricted common stock as of December 31, 2011 with an aggregate market value of approximately $82,620. In the case of both stock options and restricted stock, the aggregate market value is based on the closing price on the NYSE on December 31, 2011.2014.

 

 Ÿ 

Jorge Avalos.Avalos. If Mr. Avalos is terminated without “Cause” (as defined below) or his employment terminates for “Good Reason” (as discussed below), he is entitled to receive: (a) his base salary for twelve months following the effective date of termination; (b) earned but unpaid incentive bonus; (c) continued payment of premiums for Mr. Avalos and his eligible dependents to remain covered by our group medical insurance programs for twelve months following the effective date of termination; and (c)(d) immediate vesting of all unvested stock options, restricted stock or similar rights granted to him as of the effective date of termination. As of December 31, 2011,2014, payment of all of the foregoing in connection with termination of Mr. Avalos’ employment without cause or for “Good Reason” would have totaled approximately $370,338.$836,287. Accelerated vesting of Mr. Avalos’ outstanding unvested stock options would have resulted in vesting of 45,001 shares of common stock subject to unvested options as of December 31, 2014, with an aggregate fair market value of approximately $268,707 (representing the aggregate amount by which the accelerated stock options would have been “in the money” on December 31, 2014). Accelerated vesting of Mr. Avalos’ outstanding unvested restricted stock would have resulted in full vesting of 19,5003,750 shares of unvested restricted common stock as of December 31, 20112014 with an aggregate market value of approximately $89,505.$38,325. In the case of both stock options and restricted stock, the aggregate market value is based on the closing price on the NYSE on December 31, 2011. (All2014.

Ÿ

John Toth. Mr. Toth’s employment with the Company ended on January 30, 2015, without “Cause” (as defined below) and as a result, he is entitled to receive: (a) his then base salary for twelve months following the effective date of termination; (b) earned but unpaid incentive bonus; (c) continued payment of premiums for Mr. Toth and his eligible dependents to remain covered by our group medical insurance programs for twelve months following the effective date of termination; and (d) immediate vesting of all unvested stock options, restricted stock or similar rights granted to him as of the effective date of termination. As of December 31, 2014, payment of all of the foregoing in connection with termination of Mr. Avalos’Toth’s employment without Cause or for Good Reason would have totaled approximately $1,058,609. Accelerated vesting of Mr. Toth’s outstanding unvested stock options were fully vestedwould have resulted in accordance with their termsvesting of 70,329 shares of common stock subject to unvested options as of December 31, 2011.)2014, with an aggregate fair market value of approximately $383,381 (representing the aggregate amount by which the accelerated stock options would have been “in the money” on December 31, 2014). Accelerated vesting of Mr. Toth’s outstanding unvested restricted stock would have resulted in vesting of 7,500 shares of unvested restricted common stock outstanding as of December 31, 2014 with an aggregate market value of approximately $76,650. In the case of both stock options and restricted stock, the aggregate market value is based on the closing price on the NYSE on December 31, 2014.

The severance payments and benefits described above are only payable if the executive officer executes and delivers to us an agreement releasing us and our related parties for all claims and liabilities that the executive officer may have against us and our related parties.

Under each of our employment agreements with Messrs. Suriyakumar, Roy, Wijesuriya, Toth, Wijesuriya and Avalos:

 

 Ÿ 

“Cause” means a willful refusal to perform the duties set forth in the agreement or as delegated to him, gross negligence, self dealingself-dealing or willful misconduct injurious to the Company, fraud or misappropriation of our business and assets, habitual insobriety or use of illegal drugs, criminal activity involving moral turpitude, indictment or trial for a felony or misdemeanor involving moral turpitude, any felony

conviction or guilty plea that harms the reputation or business of the Company, or material breach of the employment agreement or any material policy of the Company.

 

 Ÿ 

“Good Reason” means a material change in his respective title, duties and responsibilities set forth in the employment agreement, without his written consent, a reduction in his compensation, other than as expressly provided in the employment agreement,without his written consent, a material breach by the Company of any other material terms of the employment agreement, or a change of control, as a result of which he is not offered the same or comparable position in the surviving company, or within 12 months after accepting such position, he is terminated without Cause, or he terminates his employment for Good Reason, as provided in the employment agreement. Certain of ourA change in the officer to whom the executive officers entered into amendments to their respective employment agreements in 2009 through 2012 in connection with temporary reductions in base salary, thereby voluntarily waiving any claim for termination for Good Reason due to a temporary base salary reduction in fiscal years 2009 through 2012.reports, without his consent, also constitutes

“Good Reason” under the employment agreements with Messrs. Roy, Wijesuriya, Toth, and Avalos. Certain of our executive officers entered into amendments to their respective employment agreements in 2009 through 2012 in connection with temporary reductions in base salary, thereby waiving any claim for termination for Good Reason due to a temporary base salary reduction in fiscal years 2009 through 2014.

 

 Ÿ 

“Change of Control” means: (a) our being merged with any other corporation, as a result of which we are not the surviving company or our shares are not exchanged for or converted into more than 50% of the voting securities of the merged company; (b) our sale or transfer of all or substantially all of our

assets; or (c) any third party becoming the beneficial owner in one transaction or a series of transactions within 12 months, of at least 50% of our voting securities

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our Compensation Committee from January 20112014 to December 20112014 were Messrs. Formolo, McCluggage, McNulty and Perez de la Mesa. No member of our Compensation Committee during the last fiscal year (i) was, during fiscal year 2011,2014, an officer or employee of the Company, (ii) was formerly an officer of the Company, or (iii) had any relationship requiring disclosure under Item 404 of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain of our directors, executive officers, 5% beneficial owners and their affiliates have engaged in transactions with us in the ordinary course of business. We believe these transactions involved terms comparable to terms that would be obtained from an unaffiliated third party at the times the transactions were consummated. The following is a description of these transactions during our fiscal year ended December 31, 2011.2014.

Policies and Procedures Regarding Related Transactions

Our Related Party Transactions Policy provides that we will only enter into or ratify a transaction with a related party when our board of directors, acting through the Audit Committee, determines that the transaction is in the best interests of ARC and our stockholders.

For the purposes of this policy, a related party means:

Ÿ

a member of the board of directors (or a nominee to the board of directors);

Ÿ

an executive officer;

Ÿ

any person who is known to be the beneficial owner of more than five percent of any class of our securities; or any immediate family member of any of the persons listed above.

We review all known relationships and transactions in which ARC and our directors, executive officers, and significant stockholders or their immediate family members are participants to determine whether such persons have a direct or indirect interest. Our legal staff is primarily responsible for developing and implementing processes and controls to obtain information regarding our directors, executive officers, and significant stockholders with respect to related party transactions and then determining, based on the facts and circumstances, whether

ARC or a related party has a direct or indirect interest in these transactions. On a periodic basis, the legal team will review all transactions involving payments between ARC and any company that has an ARC executive officer or director as an officer or director. In addition, our directors and executive officers are required to notify us of any potential related party transactions and provide us with the information regarding such transactions.

If our legal department determines that a transaction is a related party transaction, the Audit Committee must review the transaction and either approve or disapprove it. If advance approval of a transaction is not feasible, the chair of the Audit Committee may approve the transaction and the transaction may be ratified by the Audit Committee in accordance with the Related Party Transactions Policy. In determining whether to approve or ratify a transaction with a related party, the Audit Committee will take into account all of the relevant facts and circumstances available to it, including, among any other factors it deems appropriate:

Ÿ

the benefits to us of the transaction;

Ÿ

the nature of the related party’s interest in the transaction;

Ÿ

whether the transaction would impair the judgment of a director or executive officer to act in the best interests of ARC and our stockholders;

Ÿ

the potential impact of the transaction on a director’s independence; and whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances.

Any member of the Audit Committee who is a related party with respect to a transaction under review may not participate in the deliberations or vote on the approval of the transaction.

Related Party Real Property Leases

During our fiscal year ended December 31, 2011,2014, we were a party to real property leases with entities owned by our former Chairman of the board and greater-than-5% stockholder, Mr. Chandramohan, and our current Chairman of the Board, President and Chief Executive Officer, Mr. Suriyakumar, for eightfour of our facilities located in Costa Mesa, California, Los Angeles, California, San Jose, California, Irvine, California, Sacramento, California, Oakland, California, Gaithersburg, Maryland, Costa Mesa, California and Monterey Park,Irvine, California. These facilities are leased to us under written lease agreements between us and Sumo Holdings Los Angeles,Costa Mesa, LLC, Sumo Holdings, LA, LLC, Sumo Holdings San Jose, LLC, and Sumo Holdings Irvine, LLC, Sumo Holdings Sacramento, LLC (for both Sacramento and Oakland, California facilities), Sumo Holdings Maryland, LLC, Sumo Holdings Costa Mesa, LLC, and Dieterich-Post Company, respectively. Messrs. Chandramohan and Suriyakumar are the only members of each of the Sumo Holdings limited liability companies and collectively own 85% of the outstanding shares of Dieterich-Post Company.companies.

Under these real property leases, we paid these entities rent in the aggregate amount of $1.5 million$546,829 in 2011.2014. We were also obligated to reimburse these entities for certain real property taxes and the actual costs incurred by these entities for insurance and maintenance on a triple net basis.

Policies and Procedures Regarding Related Transactions

The real property leases described above were originally entered into by us between November 17, 1997 and September 23, 2003. Our board of directors determined that, as of the February 2005 closing of our initial public offering, we would not enter into any arrangements to lease any additional facilities from Messrs. Chandramohan and Suriyakumar or their affiliates. Our board of directors reviews and approves the renewal terms for any existing real property leases and requires that any extensions will not be approved if the proposed base rent exceeds the then-existing fair market rate in the applicable geographic market. Our Chief Financial Officer reviews relevant market data to ensure that lease term base rent for any extension term does not exceed the fair market rate and is authorized to consult with and retain the services of professionals, as necessary, to determine prevailing market rental rates.

In addition to the guidelines regarding real property leases, guidelines adopted by our board of directors require that the board review and approve any proposed transaction with any principal stockholder, director, or executive officer, including their affiliates and other related persons.

Indemnification Agreements

We have entered into, and expect to continue to enter into, indemnification agreements with our directors and executive officers that provide indemnification under certain circumstances for acts and omissions that may

not be covered by any directors’ and officers’ liability insurance. The indemnification agreements may require us, among other things, to indemnify our officers and directors against certain liabilities that may arise by reason of their status or service as officers and directors (other than liabilities arising from willful misconduct of a culpable nature), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain officers’ and directors’ insurance if available on reasonable terms.

Registration Rights Agreement

On April 10, 2000, we entered into a registration rights agreement with Messrs. Chandramohan and Suriyakumar, and with certain other holders of our common stock and holders of warrants to purchase our common stock, including entities affiliated with our director, Mr. Formolo, and our former director, Mr. Code, which registration rights agreement was amended as of December 29, 2004. Currently, the registration rights agreement is only in effect with respect to shares held by Messrs. Chandramohan and Suriyakumar (or entities in which they control a majority of voting shares), which are entitled to certain rights with respect to the registration of such shares under the Securities Act. These registration rights are summarized below.

Piggyback Registrations.    If we propose to register any of our equity securities under the Securities Act (other than pursuant to a demand registration of registrable securities or a registration on Form S-4 or Form S-8) for us or for holders of securities other than the registrable securities, we will offer the holders of registrable securities the opportunity to register their registrable securities.

Conditions and Limitations; Expenses.    The registration rights are subject to conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration and our right to delay or withdraw a registration statement under specified circumstances. We will pay the registration expenses of the holders of registrable securities in demand registrations and piggyback registrations in connection with the registration rights agreement.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires directors and certain officers of the companyCompany and persons who own more than 10% of our common stock to file with the SEC initial reports of beneficial ownership (Form 3) and reports of subsequent changes in their beneficial ownership (Form 4 or Form 5) of ARC’s common stock. Such directors, officers and greater-than-10% stockholders are required to furnish us with copies of the Section 16(a) reports they file. The SEC has established specific due dates for these reports, and ARC is required to disclose in this report any late filings or failures to file.

Based solely on our review of copies of the Section 16(a) reports received or written representations from such officers, directors and greater-than-10% stockholders, we believe that all Section 16(a) filing requirements applicable to our officers, directors and greater-than-10% stockholders were complied with during the fiscal year ended December 31, 2011.2014.

ADDITIONAL INFORMATION

Householding

Under rules adopted by the SEC, we are permitted to deliver a single set of any proxy statement, information statement, annual report and prospectus to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. This process, called householding, allows us to reduce the number of copies of these materials we must print and mail. Even if householding is used, each stockholder will continue to receive a separate proxy card or voting instruction card.

The Company is not householding for those stockholders who hold their shares directly in their own name. If you share the same last name and address with another Company stockholder who also holds his or her shares directly, and you would each like to start householding for the Company’s annual reports, proxy statements, information statements and prospectuses for your respective accounts, then please contact our corporate secretary

c/o American Reprographics Company,ARC Document Solutions, Inc., 1981 North Broadway, Suite 385, Walnut Creek, California 94596, Attention: John E.D. Toth,D. Jeffery Grimes, Secretary, telephone (925) 949-5100.

This year, some brokers and nominees who hold Company shares on behalf of stockholders may be participating in the practice of householding proxy statements and annual reports for those stockholders. If your household received a single proxy statement and annual report for this year, but you would like to receive your own copy this year, please contact our corporate secretary c/o American Reprographics Company,ARC Document Solutions, Inc., 1981 North

Broadway, Suite 385, Walnut Creek, California 94596, Attention: John E.D. Toth,D. Jeffery Grimes, Secretary, telephone (925) 949-5100, and we will promptly send you a copy. If a broker or nominee holds Company shares on your behalf and you share the same last name and address with another stockholder for whom a broker or nominee holds Company shares, and together both of you would like to receive only a single set of the Company’s disclosure documents, please contact your broker or nominee as described in the voting instruction card or other information you received from your broker or nominee.

If you consent to householding, your election will remain in effect until you revoke it. Should you later revoke your consent, you will be sent separate copies of those documents that are mailed at least 30 days or more after receipt of your revocation.

Stockholder Proposals for the 20132016 Annual Meeting

In order to present a proposal at our 20132016 annual meeting, a stockholder must comply with the specific requirements set forth in our Second Amended and Restated Bylaws, including the requirement to provide notice in writing to our corporate secretary at our principal executive offices not later than the 90th day nor earlier than the 120th day before the one-year anniversary of our 20122015 annual meeting of stockholders. The stockholder’s notice must include the specific items set forth in our Second Amended and Restated Bylaws. If a stockholder submits a proposal pursuant to our bylaws, we are not required to include that proposal in our proxy materials for the 2013 annual meeting of stockholders.

In order to submit a proposal for inclusion in our proxy materials for the 20132016 annual meeting of stockholders, a stockholder must submit the proposal not later than November 24, 201227, 2015 pursuant to Rule 14a-8 of the Exchange Act. If we hold our 2016 annual meeting of stockholders more than 30 days before or after April 30, 2015 (the one-year anniversary date of the 2015 Annual Meeting of Stockholders), we will disclose the new deadline by which stockholders proposals must be received in our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably determined to inform stockholders. Proposals also comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials.

You may contact our corporate secretary c/o American Reprographics Company,ARC Document Solutions, Inc., 1981 North Broadway, Suite 385, Walnut Creek, California 94596, and Attention: John E.D. Toth,D. Jeffery Grimes, Secretary, telephone (925) 949-5100 to request a printed copy of the relevant provision of our Second Amended and Restated Bylaws regarding the requirements for presenting stockholder proposals at our annual meetings of stockholders.

Additional Information

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the public reference room. The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that issuers file electronically with the SEC. The SEC’s internet site iswww.sec.gov.

Our investor relations internet address iswww.e-arc.comir.e-arc.com. You can access our Investor Relations webpage through our internet site,www.e-arc.com, by clicking on the “Investors” link at the top of the page. We make available free of charge, on or through our Investorsinvestor relations webpage, our proxy statements, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Exchange Act, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We also make available, through our Investors webpage, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater stockholders and others under Section 16 of the Exchange Act. The reference to our website address does not constitute incorporation by reference of the information contained in the website and should not be considered part of this document.

A copy of our Code of Conduct, as defined under Item 406 of Regulation S-K, including any amendments thereto or waivers thereof, our Corporate Governance Guidelines, and board committee charters can also be

accessed on our investor relations websitewww.e-arc.comir.e-arc.com, by clicking on the “Investors” link at the top of the page and then selecting “Corporate Governance” from the Investors webpage.navigation menu. Our Code of Conduct applies to all directors, officers and employees, including our Chief Executive Officer, our Chief Financial Officer and our Controller. We will post any amendments to the Code of Conduct, and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE, on our website.

You can request a printed copy of these documents, excluding exhibits, at no cost, by contacting Investor Relations at (925) 949-5100 or by sending a request by mail to 1981 North Broadway, Suite 385, Walnut Creek, California 94596, Attention: David Stickney, Vice President Corporate Communications.

YOUR VOTE AT THIS YEAR’S ANNUAL MEETING OF STOCKHOLDERS IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY.

By order of the Board of Directors,

By order of the Board of Directors,
LOGO
John E.D. Toth
Chief Financial Officer and

LOGO

March 26, 2015

D. Jeffery Grimes

Vice President, Senior Corporate Counsel & Corporate Secretary

March 23, 2012

 

AMERICAN REPROGRAPHICS COMPANY

ATTN: Tracey Luttrell

1981 N. BROADWAY, STE 385

WALNUT CREEK, CA 94596

 

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ARC DOCUMENT SOLUTIONS, INC.

ATTN: ARC Legal Department

1981 N. BROADWAY, SUITE 385

WALNUT CREEK, CA 94596

 

Electronic Delivery of FutureELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

 

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

 

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
 

KEEP THIS PORTION FOR YOUR RECORDS

DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

      — — — — — — — — — — —  — —  —  —  —  —  —  —  — —  —  —  — —  —  — — — — — — — — — — — — — — — — — — — —  — — — — — — — — — — 

DETACH AND RETURN THIS PORTION ONLY

THIS    PROXY    CARD    IS    VALID    ONLY     WHEN    SIGNED    AND    DATED.

    

For

For

All

 

Withhold  

All  

 

For All

Except

   

To withhold authority to vote for  any  individual

nominee(s), mark “For All Except” and write the

number(s) of the nominee(s) on the line  below.

      
   

The Board of Directors recommends you vote

FOR the following:

¨

 

 

¨

 

 

¨

¨

       
   

 

1.

 

 

Election of Directors

     

 

   
    

Nominees

            
   

01  

 

01K. Suriyakumar                             02  Thomas J. Formolo            03  Dewitt Kerry McCluggage             04  James F. McNulty            05  Mark W. Mealy

   06 Manuel Perez de la Mesa            07  Eriberto R. Scocimara 
  
   The Board of Directors recommends you vote FOR proposals 2 and 3.3ForAgainstAbstain

LOGO

   ForAgainstAbstain
2

2.

 

 

Ratify the appointment of Deloitte & Touche LLP as the Company’sARC Document Solutions, Inc.’s independent auditorsregistered public accounting

 firm for 2012.2015.

 

¨

 

¨

 

¨

   3

3.

 

 

Advisory Approve advisory, non-binding vote to approveon executive compensation disclosed in the 2012 proxy statement.compensation: and

 

¨

 

¨

 

¨

  
LOGO  

NOTE:NOTESuch: Transact any other business asthat may properly come before the annual meeting orand any adjournment thereof.postponements and any adjournments of the annual meeting.

    
    

 

Yes

 

No

         
  

Please indicate if you plan to attend this meeting

 

¨

 

¨

         
  

 

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

 

     
                     
                     
    

Signature [PLEASE SIGN WITHIN BOX]

 

Date

         

Signature (Joint Owners)

Date

  

Date        

      


 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Annual Report is/are available atwww.proxyvote.com.

— — — — — — — — — — — — — —  — — — — — — — — — — — — — — — — — — — —  — — — — — — — — — — — —

LOGO

 

   

LOGO

 

ARC DOCUMENT SOLUTIONS, INC.

AMERICAN REPROGRAPHICS COMPANYAnnual Meeting of Stockholders

April 30, 2015 9:00 AM PDT

This proxy is solicited by the Board of Directors

Annual Meeting of Stockholders

4/26/2012 9:00 a.m. PDT

 

The undersigned hereby appoints Kumarakulasingam Suriyakumar, the Chairman of the Board, Chief Executive Officer, President and a director of ARC Document Solutions, Inc., and John E. D. Toth, Chief Financial Officer andJeffery Grimes, Secretary of ARC Document Solutions, Inc., and each of them, with full power of substitution, proxies of the undersigned to vote all shares of Common Stock of American Reprographics CompanyARC Document Solutions Inc. held by the undersigned on March 9, 2012,2, 2015, at the annual meeting of stockholders to be held at the Lafayette Park Hotel, 3287 Mount Diablo Blvd., Lafayette,Country Club, 1700 Clubhouse Road, Diablo, CA 9454994528 on Thursday, April 26, 2012,30, 2015 at 9:00 a.m. PDT, and at any postponements or adjournments thereof. Without limiting the authority granted herein, the above named proxies are expressly authorized to vote as directed by the undersigned as to those matters set forth on the reverse side hereof.If no directions are given, this Proxy will be voted “FOR” all of the director nominees named on the reverse side under Proposal 1 and “FOR” Proposals 2 and 3.The above named proxies will vote in their discretion on all other matters that are properly brought before the annual meeting. The undersigned hereby revokes any proxy heretofore given to vote at such meeting.

 

Continued and to be signed on reverse side