Acxiom FY05 Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _______)
Filed by the Registrant [ X ]
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))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to § 240.14a-12
ACXIOM CORPORATION
(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):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-11 (Set forth the amount on which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule O-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its filing.
1) Amount previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
ACXIOM CORPORATION
1 Information Way
Little Rock, Arkansas 72202
501.342.1000
www.acxiom.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 3, 2005
[ACXIOM®]
Please join us for the 2005 Annual Meeting of Stockholders of Acxiom Corporation. The meeting will be held on
Wednesday, August 3, 2005, at 10:00 a.m. CDT at the Acxiom River Market Building, 601 East Third Street, Little Rock, Arkansas.
We are holding this meeting to vote on:
1. the election of three directors;
2. a proposal to amend our 2000 Associate Stock Option Plan;
3. a proposal to adopt a new stock purchase plan; and
4. to transact any other business that properly comes before the meeting.
To vote at the meeting, you must be a stockholder of record as of the close of business on June 15,
2005.
By Order of the Board of Directors
/s/ Catherine L. Hughes
Catherine L. Hughes
Secretary
Little Rock, Arkansas
June 24, 2005
YOUR VOTE IS IMPORTANT!
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY CARD OR VOTE BY TELEPHONE
OR THROUGH THE WEBSITE LISTED IN THE VOTING INSTRUCTIONS.
TABLE OF CONTENTS
PAGE
Questions and Answers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Proposals You May Vote On . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Information About the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Nominees for Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Board and Committee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Proposal to Amend the 2000 Associate Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Information About the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Benefits to Named Executive Officers and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Proposal to Adopt a New Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Information About the SPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Benefits to Named Executive Officers and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Stock Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Stock Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Holdings of Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Ownership of Major Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Option Grants for Last Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Option Exercises and Fiscal Year End Option Values . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Compensation of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . 21
Change in Control Arrangements / Agreements with Management . . . . . . . . . . . . . . . . . . . . . 21
Report of the Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Report of the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Fees Billed for Services Rendered by Independent Auditor . . . . . . . . . . . . . . . . . . . . . . . . 25
Independent Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 16(a) Beneficial Ownership Reporting Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Expenses of Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Householding of Proxy Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Appendix A - 2005 Equity Compensation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B - 2005 Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
QUESTIONS AND ANSWERS
Q: Who can vote?
A: If you owned any shares of Acxiom at the close of business on June 15, 2005, you are entitled to vote.
Q: How many shares can vote?
A: Every stockholder is entitled to one vote for each share held. As of June 15, 2005, our record date,
87,898,842 shares of common stock were issued and outstanding and are eligible to vote. A list of our
stockholders will be available for review at our principal offices, 1 Information Way, Little Rock,
Arkansas 72202, for at least 10 days prior to the 2005 annual meeting.
Q: What may I vote on?
A: The election of William T. Dillard II, Harry C. Gambill and Thomas F. (Mack) McLarty, III to the Board
of Directors; a proposal to amend our 2000 Associate Stock Option Plan; and a proposal to adopt a new
stock purchase plan.
Q: How does the board recommend I vote on the proposals?
A: The board recommends a vote FOR each of the proposals.
Q: How do I vote?
A: You can vote by proxy, which gives the proxy holder the right to vote your shares on your behalf. There
are three ways for you to send in your proxy:
• Sign and mail the proxy voting card in the enclosed return envelope;
• Call the 800 number listed in your proxy voting instructions to vote by telephone; or
• Log on to the Internet at the web site listed in your proxy voting instructions and follow the
instructions at that site.
You may also vote in person at the annual meeting, even if you have already sent in your proxy.
Q: Who will count the votes?
A: A representative of EquiServe, our transfer agent, will count the votes and act as the inspector of the
election.
Q: What does it mean if I get more than one proxy card?
A: If your shares are registered differently, or if they are in more than one account, you may receive more
than one proxy card. Follow the voting instructions on each proxy card to ensure that all of your
shares are voted.
1
Q: What vote is required to pass an item of business?
A: A majority of the holders of our outstanding common stock must be present in person or represented by
proxy to hold the meeting. A majority of the votes cast at the meeting is required to elect directors
and to approve the proposed stock option plan amendment and the new stock purchase plan.
Unless you indicate otherwise on your proxy card, the individuals named as your proxies will vote your
shares for all of the nominees for director; for the amendments to our 2000 Associate Stock Option Plan,
and for the adoption of a new stock purchase plan.
Q: Can I revoke my proxy?
A: Yes. There are three ways for you to revoke your proxy:
• File a written revocation with Acxiom's corporate secretary before the meeting;
• Sign and deliver before the meeting a proxy bearing a later date; or
• Vote in person at the meeting.
PROPOSALS YOU MAY VOTE ON
1. Election of Directors
There are three nominees for election this year. William T. Dillard II, Harry C. Gambill and Thomas F.
(Mack) McLarty, III. Messrs. Dillard, Gambill and McLarty are currently members of the Acxiom Board of
Directors with terms that expire at the meeting.
2. A proposal to amend our 2000 Associate Stock Option Plan
The Board of Directors has approved an amendment to our 2000 Associate Stock Option Plan so as to permit
the grant of additional types of equity awards such as restricted stock and restricted stock units under
the plan. The amended and restated plan, which would be renamed the "2005 Equity Compensation Plan," is
attached as Appendix A. No additional shares for the plan are being sought at this time.
3. A proposal to adopt a new stock purchase plan
The Board of Directors has approved a new stock purchase plan which would be offered to as many as
possible of our associates worldwide. This plan, a copy of which is attached as Appendix B, would take
the place of our previous U.S. stock purchase plan and our U.K. "sharesave" scheme. Under the new plan,
Acxiom employees ("associates") would be eligible to buy shares of Acxiom stock at a discount of up to
15% off the market price on the purchase date. A total of 2 million shares would be made available
under the plan, which has a term of 10 years.
With respect to Proposal 1, the form of proxy provides a method for you to (1) vote for all nominees as
a group, (2) vote only for certain nominees while withholding authority to vote for the other nominees, or (3)
withhold authority for all nominees. Please read the voting instructions contained in the attached proxy for
information on how to withhold authority for any or all nominees. If you withhold authority for a nominee, your
vote will be treated as an abstention and accordingly your shares will neither be voted for nor against the
nominee, but they will be counted for quorum purposes. A majority of the votes cast at the meeting is required
to elect any director.
With respect to Proposals 2 and 3, the form of proxy provides a method for you to (1) vote for each of
the proposals, (2) vote against each of the proposals, or (3) abstain from voting. By abstaining, your shares
will not be voted either for or against the amendments, but will be counted for quorum purposes. Provided a
quorum is present, a majority of the votes cast at the meeting is required to approve Proposals 2 and 3.
2
The board unanimously recommends a vote FOR each of these proposals. More detailed information on each
of the proposals is provided below.
While there may be instances in which you will wish to withhold your vote or abstain from voting, we
encourage you to vote your shares in your best judgment and to participate in the voting process to the fullest
extent possible.
Brokers who hold shares in street name for customers who are beneficial owners of the shares are
prohibited from giving a proxy to vote such customers' shares on non-routine matters in the absence of specific
instructions from their customers. This is commonly referred to as a "broker non-vote." Broker non-votes will
be treated in the same manner as abstentions for quorum and voting purposes (i.e., counted for quorum purposes,
but neither being voted for nor against the proposals and, therefore, having no effect on the outcome of the
votes).
INFORMATION ABOUT THE BOARD OF DIRECTORS
Nominees William T. Dillard II, Harry C. Gambill and Thomas F. (Mack) McLarty, III currently are members
of the Acxiom Board of Directors with terms that expire at the 2005 annual meeting. If elected, the three
nominees will serve for a three-year term. The names of the other six directors are: Dr. Ann Die Hasselmo,
William J. Henderson and Charles D. Morgan, whose terms will expire at the 2006 annual meeting; and Dr. Mary L.
Good, Rodger S. Kline and Stephen M. Patterson, whose terms will expire at the 2007 annual meeting.
Your proxy holder will vote your shares for the nominees unless you instruct otherwise. If a nominee is
unable to serve as a director, your proxy holder may vote for any substitute nominee proposed by the board unless
you withhold this authority. In the event of any director's resignation, death, disqualification or inability to
serve, the board will fill the vacancy.
Nominees for Director
The board nominates the following candidates for election at the 2005 annual meeting.
Director
Name Age Position Since
William T. Dillard II 60 Director 1988
Harry C. Gambill 59 Director 1992
Thomas F. (Mack) McLarty, III 59 Director 1999
Other Directors
Director
Name Age Position Since
Dr. Mary L. Good 74 Director 2004
Dr. Ann Die Hasselmo 60 Director 1993
William J. Henderson 58 Director 2001
Rodger S. Kline 62 Director and Chief Finance & Administration 1975
Leader
Charles D. Morgan 62 Chairman of the Board and Company Leader 1975
Stephen M. Patterson 54 Director 2000
Set forth on the following pages is biographical data for the three nominees and the other directors:
3
Mr. Dillard is the chairman of the board and chief executive officer of Dillard's, Inc. of Little Rock,
Arkansas, a chain of traditional department stores with approximately 330 retail outlets in 29 states. In
addition to serving as a director of Dillard's, Inc., Mr. Dillard is also a director of Barnes & Noble, Inc. and
serves on the J.P. Morgan Chase & Co. Texas Regional and National Advisory Boards. He holds a master's degree in
business administration from Harvard University and a bachelor's degree in the same field from the University of
Arkansas.
Mr. Gambill is a director and since 1992 has held the position of chief executive officer/president of
TransUnion LLC, a company engaged in the business of providing consumer credit reporting services, analytic
models and real estate settlement services. Mr. Gambill joined TransUnion in 1985 as vice president/general
manager of the Chicago division. He is a board member of Kanbay International, Inc., a global IT services firm.
He is past chairman of the Consumer Data Industry Association, and former director of Damian Services Corp., a
temporary staffing technology company. He holds degrees in business administration and economics from Arkansas
State University and is a member of the ASU Business School Advisory Board.
Mr. McLarty is vice chairman of the board of directors of Asbury Automotive Group, Inc., which is one of
the largest automotive retailers in the United States. He is also chairman and CEO of McLarty Companies, Inc.
and McLarty Management Company, Inc. of Little Rock, Arkansas, and president of Kissinger McLarty Associates of
Washington, D.C. He is a board member of the Americas Society of New York City; the Inter-American Dialogue of
Washington, D.C.; Ross University; The Center for the Study of the Presidency; and the M.D. Anderson Cancer
Center in Houston. He also serves on the advisory boards of various other entities. In 1983 he became chairman
and chief executive officer of Arkla, a Fortune 500 natural gas company. He was appointed by President George
Bush to the National Petroleum Council and the National Council on Environmental Quality, and he was a member of
the St. Louis Federal Reserve Board from 1989 through 1992. Beginning in 1992, he served President Clinton in
several key positions: White House Chief of Staff, counselor to the President and Special Envoy for the Americas,
with over five years of service in the president's Cabinet and on the National Economic Council. He holds a
degree in business administration from the University of Arkansas.
Dr. Good is the dean of the College of Information Science and Systems Engineering at the University of
Arkansas at Little Rock and is the Donaghey university professor. She is also a managing member for Venture
Capital Investors, LLC, and is a board member of BiogenIdec, Inc.; IDEXX Laboratories, Inc.; Research Solutions,
LLC; and Delta Trust and Bank. Previously, Dr. Good served for four years as the under secretary for technology
for the Technology Administration in the Department of Commerce in President Clinton's administration, while
simultaneously chairing the National Science and Technology Council's Committee on Technological Innovation
(NSTC/CTI) and serving on the National Science and Technology Council's Committee on National Security. From
1988-1993, Dr. Good served as the senior vice president of technology at Allied Signal, Inc., where she was
responsible for technology transfer, corporate research and commercialization support for new technologies.
During the eight years prior to that, she held the positions of president of Allied Signal's Engineered Material
Research Center, president of Signal Research Center, Inc. and director of research for UOP, Inc. From
1954-1980, Dr. Good was a professor at both the University of New Orleans and at Louisiana State University,
where she achieved LSU's highest professional rank, Boyd professor. She was appointed to the National Science
Board by President Carter in 1980 and again by President Reagan in 1986. She served as chairman of that board
until she was appointed in 1991 by President Bush to become a member of the President's Council of Advisors on
Science and Technology (PCAST). Dr. Good is an elected member of the National Academy of Engineering, a past
president of the American Chemical Society, and past president and a fellow of the American Association for the
Advancement of Science. Dr. Good received her B.S. in chemistry from the University of Central Arkansas and her
M.S. and Ph.D. degrees in inorganic chemistry from the University of Arkansas. She has received numerous awards
and honorary degrees from many colleges and universities, including most recently the College of William and
Mary, Polytechnic University of New York, Louisiana State University and Michigan State University.
Dr. Hasselmo is managing director of Academic Search Consultation Service in Washington, D.C., the
oldest and largest higher education consultation and academic search firm in the United States focused on college
and university presidencies. Prior to assuming that position, Dr. Hasselmo was vice president and partner in
A.T. Kearney, Inc.'s higher education practice. From 1992-2001, she served as president of Hendrix College in
Conway, Arkansas. She is a member of the board of visitors of Air University of the U.S. Air Force and a former
member of the board of directors of the National Merit Scholarship Corporation. She is past chair of the board
of directors for Educational and Institutional Insurance Administrators, the National Association of Independent
Colleges and Universities, the National Collegiate Athletic Association (NCAA) Division III President's Council
and the American Council on Education's Council of Fellows. Her memberships have included the American Council
on Education Board, the Arkansas Repertory Theatre Board and the NCAA Executive Committee. She formerly served
as dean of the H. Sophie Newcomb Memorial College and associate provost at Tulane University. Dr. Hasselmo
graduated summa cum laude from Lamar University, and earned a master's degree from the University of Houston and
a Ph.D. in counseling psychology from Texas A&M University.
4
Mr. Henderson was the 71st postmaster general of the United States and the fifth career employee to lead
the world's largest postal system. He served in that position from May 1998 until his retirement in May 2001.
From 1994 until his appointment as postmaster general and chief executive officer, Mr. Henderson served as chief
operating officer. From 1992-1994, he served as vice president of employee relations, then became chief
marketing officer and senior vice president. In addition to his service in Washington, D.C., he has served in
postal management positions in Chicago, Greensboro, Memphis and Stockton, among other locations. In 1997, Mr.
Henderson received the Postal Service's John Wanamaker Award, and in 1998 he received American University's Roger
W. Jones Award for Executive Leadership. In 1998, Mr. Henderson also received an honorary Mailing Excellence
Award from the National Postal Forum for his work with the nation's professional mailing industry. Mr. Henderson
currently serves as a director of ComScore Networks, the Committee for Economic Development, the Marrow Donor
Foundation and Nature's Best magazine. He is the chairman of the board of GMS Inc., a partner of Signature
Systems, and a Fellow with the National Academy of Public Administration. Mr. Henderson is a graduate of the
University of North Carolina at Chapel Hill and served in the U.S. Army.
Mr. Kline joined Acxiom in 1973 and has served as an officer and director of the Company since 1975. He
is currently Acxiom's Chief Finance and Administration Leader. Prior to joining Acxiom, Mr. Kline spent seven
years with IBM and two years as an officer in the U.S. Army. Mr. Kline holds a degree in electrical engineering
from the University of Arkansas at Fayetteville, where he has served since 1990 as chairman of the College of
Engineering Advisory Council.
Mr. Morgan joined Acxiom as an officer in 1972. He has been chairman of the board of directors since
1975 and serves as Acxiom's Company Leader. He is also a director and past chairman of the board of the Direct
Marketing Association. In addition, he serves as a member and is the past Chairman of the Board of Trustees of
Hendrix College. He was employed by IBM for six years prior to joining Acxiom. Mr. Morgan holds a mechanical
engineering degree from the University of Arkansas.
Mr. Patterson is the former president, CEO and major shareholder of Leisure Arts, a publishing and
direct mail company. Leisure Arts was acquired by Time Warner in 1992. Mr. Patterson is currently an investor
in Patterson Enterprises for which he served as president from 1994-2000. He currently is serving as Vice
Chairman of the Board of Trustees of Hendrix College. Mr. Patterson served on the board of directors of Worthen
Bank and its successor, Bank of America - Arkansas, for 12 years. Mr. Patterson has a bachelor of arts degree
from Hendrix College, an electrical engineering degree from Columbia University and a master's of business
administration degree, also from Columbia University.
Corporate Governance
Over the past three years the Board of Directors has adopted a number of measures designed to comply
with the requirements of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the final rules of the SEC
interpreting and implementing the Sarbanes-Oxley Act, as well as the revised listing standards of Nasdaq.
Specifically, the board has (1) appointed an independent Audit Committee and Compensation Committee, and has
established independent Corporate Governance and Nominating Committees; (2) adopted charters for each committee,
including a revised Audit Committee Charter which reflects changes required under the Sarbanes-Oxley Act; (3)
adopted a set of corporate governance principles; (4) adopted codes of ethics for the board, for financial
personnel, and for all associates; (5) adopted specific procedures requiring pre-approval by the Audit Committee
of audit, audit-related and non-audit services to be provided by the independent auditors; (6) instituted the
practice of scheduling time at each board and committee meeting for executive sessions of the independent
directors; and (7) established a process whereby stockholders may confidentially and anonymously communicate with
the independent directors and/or the Audit Committee. Copies of the charters for the various committees, the
codes of ethics, and the corporate governance principles are available on the Company's website at
www.acxiom.com. Also available on the website is information as to how stockholders may contact the board.
5
Acxiom's management and the Board of Directors closely monitor corporate governance developments and
will continue to evaluate their duties and responsibilities with the intention of maintaining full compliance
with all applicable laws, rules and regulations.
Board and Committee Matters
The board has determined that five of its nine members qualify as "independent" directors under Nasdaq
listing standards. The five independent directors are Mr. Dillard, Dr. Good, Dr. Hasselmo, Mr. Henderson, and
Mr. Patterson. In making these independence determinations, the board considered the relationship between Dr.
Good's employer, the University of Arkansas at Little Rock, and Acxiom, as disclosed under "Related Party
Transactions," and affirmatively determined that the relationship would not interfere with the ability of Dr.
Good to exercise independent judgment in carrying out her responsibilities as a director.
Quarterly meetings of the board are held to review significant developments affecting Acxiom and to act
on matters requiring board approval. If issues arise which require the full board's attention in between the
regularly scheduled meetings, special meetings are called. Time is allotted at the end of each board and
committee meeting for the independent directors to meet in executive session outside the presence of management.
The board currently has five standing committees to assist it in the discharge of its responsibilities.
All of the members of the Audit, Compensation, Corporate Governance, and Nominating Committees have been
determined by the board to be independent under the Nasdaq listing standards. A description of each of the
committees is set forth below:
Audit Committee
The members of the Audit Committee are Mr. Patterson (Chair), Mr. Dillard and Dr.
Hasselmo.
The Audit Committee reviews Acxiom's financial statements and financial reporting
processes, and approves our systems of internal accounting and financial controls.
This committee is responsible for the annual independent audit of our financial
statements and the engagement of the independent auditors, who report directly to the
committee. In addition, the committee oversees our internal audit function and
various legal compliance programs and has full authority to investigate the financial
and business affairs of the Company.
Both Mr. Dillard and Mr. Patterson have been determined by the board to be "audit
committee financial experts," as defined by the Securities Exchange Commission's rules
and regulations. Mr. Dillard currently serves as the CEO of a public company, in
which position he supervises the chief financial officer of that company. Mr.
Patterson has extensive experience in assessing the performance of companies with
respect to the preparation, auditing or evaluation of financial statements, and has
served in the past as the assistant treasurer of a public company, in which position
he prepared and analyzed financial statements. Both Mr. Patterson and Mr. Dillard
have significant experience in reviewing and analyzing financial statements and in
performing similar functions which result in similar expertise and experience.
Compensation Committee
The members of the Compensation Committee are Mr. Dillard (Chair), Dr. Good, Mr.
Henderson and Mr. Patterson.
6
The Compensation Committee annually reviews and approves goals and objectives for the
Company Leader, evaluates his performance, and sets his compensation level based on
this evaluation. The committee also approves the salaries for the rest of the Company
Leadership Team and approves the leadership team compensation plan. In addition, this
committee administers the Company's equity-based plans.
Corporate Governance Committee
The members of the Corporate Governance Committee are Mr. Henderson (Chair), Mr.
Dillard, Dr. Good, Dr. Hasselmo and Mr. Patterson.
The Corporate Governance Committee is responsible for reviewing and recommending to
the board the following: corporate governance principles; a management succession
plan; the structure of board committees; the annual compensation of directors; ethics
compliance programs; and director orientation and education programs. In addition,
this committee is charged with reviewing and approving related-party transactions
between the Company and any of its officers, directors or affiliates. The committee
also is responsible for developing and overseeing an annual self-evaluation process
for the board.
Nominating Committee
The members of the Nominating Committee are Dr. Hasselmo (Chair), Dr. Good and Mr.
Henderson.
The Nominating Committee is responsible for screening and recommending qualified
candidates to the board for membership, and for annually recommending to the board the
nominees for director to be submitted for election at each annual meeting of
stockholders. All nominations or appointments to the board are approved by the full
Board of Directors. When formulating its membership recommendations, the Committee
considers any advice and recommendations offered by the Company Leader or by the
stockholders.
The Nominating Committee is responsible for assessing the appropriate balance of
skills and characteristics required of board members. Nominees for director must meet
the qualifications set forth in our Corporate Governance Principles and the Nominating
Committee Charter, copies of which are posted in the corporate governance section of
our website at www.acxiom.com. Among the various criteria for selection as a board
member are the level of a potential candidate's experience, wisdom, integrity, ability
to make independent analytical inquiries, understanding of our business environment,
willingness to devote adequate time to board duties, and a commitment to serve on the
board for an extended period of time. Directors should possess the highest personal
and professional ethics and values, and be committed to representing the long-term
interests of the stockholders. They should have an objective perspective and mature
judgment. We endeavor to have a Board representing diverse experience at
policy-making levels in business, government, education and technology.
Nominees must also be able to comply with the Code of Business Conduct and Ethics
applicable to all board members, a copy of which is posted in the corporate governance
section of our website at www.acxiom.com. It is the policy of the board that no
representatives of institutional investors that have significant holdings of Acxiom
stock or of companies that are competitive with Acxiom will be submitted for
nomination by the board due to the possibility of conflicts of interest.
7
Any nominees proposed by stockholders will be evaluated by the Nominating Committee in
the same manner as nominees proposed by other sources. To be considered by the
Nominating Committee, a stockholder nominee must be submitted to the Corporate
Secretary at the address and within the timeframe specified below under the section
entitled "Stockholder Proposals."
Executive Committee
The members of the Executive Committee are Mr. Morgan (Chair) and Mr. Kline.
The Executive Committee implements the policy decisions of the full board and handles
routine matters which arise during the interim periods between board meetings
consistent with the authority which has been delegated to the committee by the board.
Meetings Held During Past Fiscal Year
During the past fiscal year, the board met five times, the Audit Committee met four times, the
Compensation Committee met seven times, the Corporate Governance Committee met three times, and the Nominating
Committee met one time. Action pursuant to unanimous written consent in lieu of a meeting was taken once by the
board, one time by the Compensation Committee and six times by the Executive Committee. All of the directors
attended at least three-fourths of the aggregate number of meetings of the board and of the committees on which
they served during the past fiscal year. Directors are expected to attend all board and stockholder meetings.
At the 2004 annual meeting of stockholders, four directors were in attendance.
PROPOSAL TO AMEND THE 2000 ASSOCIATE STOCK OPTION PLAN
The Board of Directors has approved amendments to the 2000 Associate Stock Option Plan (the "Plan")
whereby forms of equity compensation other than stock options such as restricted stock, restricted stock units,
performance awards and other stock unit awards may be issued. The Plan has been restated to reflect these
amendments, has been renamed the "2005 Equity Compensation Plan," and is now being submitted for approval by the
stockholders. A copy of the Plan is attached as Appendix A. If the stockholders do not approve this proposal,
the Plan will remain as it currently is (without the proposed amendments). The Board of Directors recommends a
vote "For" this proposal.
There are currently approximately 800,000 shares currently available for issuance under the Plan. No
additional shares are being requested at this time. In light of new accounting rules which are expected to
become effective by April 1, 2006, the Compensation Committee has determined that alternative forms of equity
compensation such as restricted stock units should be utilized instead of stock options as the Company's primary
long-term incentive ("LTI") vehicle. The Committee anticipates that if the amended Plan is approved, the use of
such other forms of compensation will result in significantly less dilution than the former LTI stock option
program. The total number of restricted stock units expected to be granted in the current year is approximately
400,000. Stock options may continue to be issued on a limited basis for recruiting and retention purposes. The
Compensation Committee will continue to take external market and regulatory developments into consideration when
determining LTI strategies and may further revise its policies so as to better align leadership long-term
incentive compensation with the Company's business strategies and with stockholder and investor interests.
Options to purchase approximately 17.9 million shares of Acxiom common stock are currently outstanding.
These options have a weighted average exercise price of $19.25 per share and a weighted average remaining
contractual life of 8.9 years.
Information About the Plan
Stockholders first approved the Plan at the 2000 annual meeting. The purpose of the Plan is to further
the growth and development of Acxiom by offering our associates, directors and other key individuals ways to
obtain shares of our common stock. We believe that providing these individuals with a proprietary interest in
Acxiom's business and, therefore, a more direct stake in its continuing welfare, will better align their
interests with those of our stockholders. The following summary is a description of the Plan. A copy of the
Plan as amended and restated is attached to this Proxy Statement as Appendix A, and stockholders are encouraged
to read the Plan for a complete understanding of its provisions.
8
Stock Options and Stock Appreciation Rights. Under the Plan, either incentive stock options or stock
options that do not qualify as incentive options (non-qualified stock options) may be granted. See the
discussion regarding options below under "Federal Income Tax Treatment." To date, only non-qualified stock
options have been granted under the Plan. Stock appreciation rights ("SARs") are also available for grant under
the Plan. To date, no SARs have been granted.
Other Forms of Equity Interests. Restricted stock, restricted stock units, performance awards and other
stock unit awards may be granted under the Plan. These awards may be subject to performance criteria being met
either by the Company, by the participant, or both. A minimum vesting period of two years is imposed on such
grants, with the exception of a total of 100,000 shares, which may be awarded with no vesting period.
Shares Reserved for Issuance. The total number of shares already approved by the stockholders for
issuance under the Plan is 13,325,000. Any shares of Acxiom stock subject to an award that is forfeited, or any
shares that are subject to an option that is canceled or unexercised within the exercise period, will be
available for re-issuance under the Plan. To the extent any shares of Acxiom common stock subject to an award
are not delivered to a participant because the shares are used to satisfy an applicable tax withholding
obligation, those shares will again be available for delivery in connection with awards under the Plan. If an
optionee delivers previously owned shares to the Company in payment of the exercise price of an option, only the
net number of option shares issued to the optionee will be counted against the remaining shares available for
grant under the Plan. In the event there is any change in the number of shares of Acxiom stock subject to the
Plan resulting from a merger, consolidation, reorganization, recapitalization, stock dividend, stock split or
similar occurrence, then the number of shares reserved for issuance, the number of shares for which options may
be granted to any one participant, and the number of shares and the price per share subject to outstanding
options will be proportionally adjusted.
Administration. The Plan specifies that that it will be administered by the Board of Directors
or the Compensation Committee, and their lawful designees. The administrator makes determinations such
as to whom awards will be made, what type of awards will be made, how many shares will be subject to
each grant, the duration and exercise price of stock options, vesting schedules, performance criteria,
conditions upon which a grant may be forfeited, and any restriction, limitation, procedure or deferral
related to a grant. The committee or the board may establish any rules and regulations it considers
necessary to administer the Plan. All determinations of the committee or the board will be final and
conclusive for all purposes.
Eligible Participants. Company employees ("associates"), directors, affiliates, independent contractors
and consultants of Acxiom or any subsidiary or affiliated company are eligible to participate in the Plan.
Stock Options. The exercise price for stock options may not be less than 100% of the fair market value
of Acxiom common stock on the date of the grant. Without the further approval of the stockholders, no
outstanding stock option granted under the Plan may be amended to reduce the exercise price or canceled in
consideration for an award having a lower exercise price. This will not, however, prohibit adjustments related
to stock splits, stock dividends, recapitalizations and other changes in the corporate structure or shares of
Acxiom. The duration of options granted under the Plan, including the duration of options following a
participant's termination of employment, death or disability, is determined by the committee or the board in its
sole discretion. Non-qualified options granted under the Plan may not be exercised more than 12 years after the
date of grant, and incentive options may not be exercised more than ten years after the date of the grant,
although each may be granted for a lesser duration. Incentive options granted to a participant owning more than
10% of the total combined voting power of all classes of Acxiom stock may not be exercised more than five years
from the date of grant.
At the time of exercise of an option, a participant must pay the full exercise price of the option in
cash, by check or electronic funds transfer. Additionally, a participant may pay the exercise price by one of
the following additional forms of payment, as may be approved by the committee or board:
9
o via a "broker's cashless exercise" (i.e., through the sale of shares, by way of a broker, acquired upon
exercise of the option having a fair market value equal to the exercise price pursuant to
procedures approved by Acxiom);
o by delivering previously-owned shares of Acxiom common stock owned by the participant for at least six
months and having a fair market value equal to the exercise price;
o by authorizing Acxiom to withhold a number of shares of Acxiom common stock otherwise issuable to the
participant upon exercise of an option having a fair market value equal to the exercise price;
or
o by any combination of the above.
Restricted Stock and Restricted Stock Units. Restricted stock awards comprise shares of Acxiom common stock
that are forfeitable until the restrictions imposed by the board or the Committee lapse. Awards of restricted
stock units provide the right to receive either shares, cash or a combination thereof upon the lapse of
restrictions imposed by the board or the Committee. Awards of restricted stock and restricted stock units may be
subject to time-based restrictions, performance-based restrictions, or both.
Performance Awards. The Plan also authorizes the award of performance awards, in the form of either
performance shares or performance share units, on any terms and conditions that the board or Committee deem
desirable. Performance awards may be paid in cash, in shares, or a combination thereof, as determined by the
board or the Committee.
The board or the Committee may set performance goals which, depending on the extent to which they are met
during a performance period applicable to an award, will determine the number of performance shares or units that
will be delivered to a participant at the end of the performance period. The performance goals may be set at
threshold, target, and maximum performance levels, and the number of performance shares or units to be delivered
may be tied to the degree of attainment of the various performance levels specified under the various performance
goals during the performance period. No payment may be made with respect to a performance award if any specified
threshold performance level is not attained.
If performance awards are intended to satisfy the conditions for deductibility under Section 162(m) of the
Internal Revenue Code as "performance-based compensation," the awards will contain pre-established objective
performance goals for each performance period using one or more of the following performance measures:
o earnings (either in the aggregate or on a per-share basis, reflecting dilution of shares as the
Committee deems appropriate and, if the Committee so determines, net of or including dividends) before
or after interest and taxes ("EBIT") or before or after interest, taxes, depreciation, and amortization
("EBITDA");
o gross or net revenue or changes in annual revenues;
o cash flow(s) (including operating, free or net cash flows);
o financial return ratios;
o total stockholder return, stockholder return based on growth measures or the attainment by the shares of
a specified value for a specified period of time;
o share price, or share price appreciation;
o earnings growth or growth in earnings per share;
o return measures, including return or net return on assets, net assets, equity, capital, investment, or
gross sales;
o adjusted pre-tax margin;
o pre-tax profits;
o operating margins;
o operating profits;
o operating expenses;
o dividends;
o net income or net operating income;
o growth in operating earnings or growth in earnings per share;
o value of assets;
10
o market share or market penetration with respect to specific designated products or product groups and/or
specific geographic areas;
o aggregate product price and other product measures;
o expense or cost levels, in each case, where applicable, determined either on a company-wide basis or in
respect of any one or more specified divisions;
o reduction of losses, loss ratios or expense ratios;
o reduction in fixed costs;
o operating cost management;
o cost of capital;
o debt reduction;
o productivity improvements;
o satisfaction of specified business expansion goals or goals relating to acquisitions or divestitures;
o customer satisfaction based on specified objective goals or an Acxiom-sponsored customer survey; or
o associate diversity goals.
The Committee will designate individuals eligible for an award of performance shares within the first 90
days of a year (or in the case of a performance period other than a year, no later than the date on which 25
percent of the performance period has lapsed) if such award is intended to qualify as "performance-based
compensation" under Section 162(m) of the Internal Revenue Code.
Performance goals may be applied to Acxiom as a whole (or a division, organization, or other business unit
thereof), a subsidiary, an affiliated company, or of an individual participant, and may be set at a specific
level or expressed as a relative percentage to the comparable measure at comparison companies or a defined index.
Performance goals shall, to the extent applicable, be based upon generally accepted accounting principles, but
may be adjusted by the Committee to take into account the effect of the following: (a) changes in accounting
standards that may be required by the Financial Accounting Standards Board (or any applicable successor entity)
after the performance goal is established; (b) realized investment gains and losses; (c) extraordinary, unusual,
non-recurring, or infrequent items; (d) "non-gaap financial measures" that have been included in Acxiom's
quarterly earnings releases and disclosed to investors in accordance with SEC regulations; and (e) and other
items as the Committee determines to be required so that the operating results shall be computed on a comparative
basis from period to period. Determinations made by the Committee shall be based on relevant objective
information and/or financial data, and will be final and conclusive with respect to all affected parties.
Other Awards. Other awards of shares and other awards that are valued in whole or in part by reference to,
or are otherwise based on, shares of Acxiom common stock or other property may be granted under the Plan to
participants, either alone or in addition to other awards under the Plan. Other stock awards may be paid in
shares, cash or any other form of property as the Committee or the Board may determine. Subject to the provisions
of the Plan, the Committee or the board shall have sole and complete authority to determine who will receive such
an award, the times at which such awards shall be made, the number of shares to be granted, and all other terms
and conditions of such awards.
Amendment and Termination. The Committee or the board may amend the Plan and/or the terms of
outstanding awards or grants; provided, however, that if an amendment would (i) materially increase the benefits
to participants under the Plan, (ii) increase the aggregate number of shares that may be issued under the Plan,
or (iii) materially modify the requirements for participation in the Plan by materially increasing the class or
number of persons eligible to participate, then stockholder approval must be obtained. To the extent necessary
to comply with applicable laws and regulations, certain other amendments to the Plan or to any outstanding grant
may require stockholder approval. Any amendment that would impair the rights of a participant may not be made
without the participant's consent. The Plan may be terminated at any time by the board. No termination,
however, will adversely affect the terms of any outstanding awards under the Plan.
11
Change of Control. In connection with a "change of control," which may include a merger or
consolidation of Acxiom, a sale of all or substantially all of its assets, the acquisition of a significant
percentage of the voting power of the Company or similar occurrence, the committee or board may determine that:
(1) any outstanding options may become immediately exercisable; (2) any outstanding options may terminate within
a specified number of days after notice to the affected participants, and the participant will receive an amount
of cash equal to the excess of the fair market value of the shares immediately prior to the occurrence of the
change of control (which shall be no less than the value being paid for such shares in the transaction) over the
exercise price of the option; (3) restrictions and deferral limitations applicable to any restricted stock or
restricted stock unit awards may become free of all restrictions and become fully vested and transferable; (4)
all performance awards may be considered to be prorated, and any deferral or other restriction may lapse and such
awards may be immediately settled or distributed; (5) the restrictions and deferral limitations and other
conditions applicable to any other stock unit awards or any other types of awards granted under the Plan may
lapse, and such awards may become free of all restrictions, limitations or conditions and become fully vested and
transferable to the full extent of the Award not previously forfeited or vested.
Federal Income Tax Treatment. The following discussion generally outlines certain U.S. federal income
tax consequences of participating in the Plan and is based on current U.S. laws and regulations, all of which
are subject to change. This summary does not constitute tax advice and does not attempt to describe all of the
possible tax consequences that could result from the acquisition, holding, exercise or disposition of any equity
award made under the Plan or any of the underlying shares of common stock. Because of the variety of awards that
may be made under the Plan and the complexities of the tax laws, participants are encouraged to consult a tax
advisor as to their individual circumstances.
Non-Qualified Stock Options. There are currently no federal income tax consequences to either
the participant or Acxiom upon the grant of a non-qualified option. Upon the exercise of a
non-qualified option, the participant will recognize ordinary compensation income in an amount equal to
the excess of the fair market value of each share on the date of exercise over the option price, and
Acxiom generally will be entitled to a federal income tax deduction in the same amount. Special rules
apply to a participant who exercises a non-qualified option by paying the exercise price, in whole or in
part, by the transfer of shares of previously-owned Acxiom common stock.
Incentive Stock Options. There are currently no federal income tax consequences to either the
participant or Acxiom upon the grant of an incentive option. The participant will not have to recognize
any income upon the exercise of an incentive option, and Acxiom will not be allowed any deduction, as
long as the participant does not dispose of the shares within two years from the date the incentive
option was granted or within one year from the date the shares were transferred to the participant.
Upon the sale of the shares after the holding period requirement is satisfied, the participant will
recognize a long-term capital gain (or loss) measured by the excess (or deficit) of the amount realized
from the sale over the exercise price of the shares, but no deduction will be allowed to Acxiom. If a
participant disposes of shares before the holding period is satisfied, the participant will recognize
ordinary income in the year of the disposition, and Acxiom will be entitled to a corresponding
deduction, in an amount equal to the lesser of (1) the excess of the fair market value of the shares on
the date of exercise over the exercise price of the shares, or (2) the excess of the amount realized
from the disposition over the exercise price of the shares. Where shares are sold before the holding
period is satisfied, the participant will also recognize a capital gain to the extent that the amount
realized from the disposition of the shares exceeded the fair market value of the shares on the date of
exercise.
Other Equity Incentives. In general, upon the grant of stock appreciation rights and certain
performance shares, a participant would recognize no taxable income and Acxiom would receive no
deduction. Generally, at the time a participant receives payment under any of these other equity
incentive awards, the participant will recognize compensation taxable as ordinary income in an amount
equal to the cash or fair market value of the common stock received, and Acxiom would be entitled to
receive a corresponding deduction.
A participant will not be taxed upon the grant of an equity award, including restricted stock
and restricted stock units, if such award is subject to a "substantial risk of forfeiture," as defined
in the Internal Revenue Code. When the shares of common stock that are subject to such an award are no
longer subject to a substantial risk of forfeiture, however, the participant will recognize compensation
taxable as ordinary income in an amount equal to the fair market value of the stock subject to the
award, less any amount paid for the stock, and the Company will then be entitled to a corresponding
deduction. If a participant so elects at the time of receipt of such an award, he or she may include
the fair market value of the stock subject to the award, less any amount paid for the stock, in income
at that time, and the Company will be entitled to a corresponding deduction at that time.
12
American Jobs Creation Act of 2004. The American Jobs Creation Act of 2004 added Section 409A
to the Internal Revenue Code, generally effective January 1, 2005. The IRS has so far issued only
limited guidance on the interpretation of this new law. Section 409A covers most programs that defer
the receipt of compensation to a succeeding year. It provides strict rules for elections to defer (if
any) and for timing of payouts. There are significant penalties placed on an individual participant for
failure to comply with Section 409A. However, it does not impact Acxiom's ability to deduct deferred
compensation. Certain awards may be granted under the Plan which allow for deferral of compensation.
Code Section 162(m). Awards granted under the Plan may qualify as "performance-based
compensation" under Section 162(m) of the Internal Revenue Code in order to preserve our federal income
tax deductions with respect to annual compensation required to be taken into account under Section
162(m) that is in excess of $1 million and paid to one of our five most highly compensated executive
officers. To so qualify, awards must be granted under the Plan by a committee consisting solely of two
or more "outside directors" (as defined under Section 162 regulations) and satisfy the Plan's limit on
the total number of shares that may be awarded to any one participant during any calendar year. In
addition, for awards (other than certain stock options) to qualify, the grant, issuance, vesting or
retention of the award must be contingent upon satisfying one or more of the performance criteria set
forth in the Plan, as established and certified by a committee consisting solely of two or more "outside
directors."
Benefits to Named Executive Officers and Others
The following table sets forth information pertaining to the estimated number of stock options and
shares of restricted stock and/or restricted stock units ("RSUs") which may be granted under the Plan in the
current year to the individuals and groups described below. We anticipate that the majority of the long-term
compensation grants made under the Plan will be shares of restricted stock and/or RSUs, with stock option grants
being utilized primarily for recruiting and retention purposes. In calculating the value of stock options which
may be granted, we utilized the Black-Scholes valuation method based on the fair market value of our common stock
as of June 8, 2005, which was $21.52. Values for restricted stock/RSUs were calculated by multiplying $21.52 by
the number of anticipated restricted shares/RSUs. No discounts for restrictions that may apply to these
anticipated awards were applied to these calculations.
Total
Total Number of Shares
Number of Restricted Stock Dollar
Name of Options(1) and/or RSUs(1) Value
Charles D. Morgan 0 0 ___
Rodger S. Kline 0 0 ___
James T. Womble 0 0 ___
L. Lee Hodges 0 10,000 $215,200
C. Alex Dietz 0 10,000 $215,200
Executive Group 0 50,000(2) $1,076,000
Non-Executive Director Group 0 25,000 $538,000
Non-Executive Officer Employee Group 150,000 350,000 $8,696,000
------------------------------------------------
(1) The Compensation Committee will take external market and regulatory developments into consideration when
determining the Company's grant practices and may make adjustments to its grant strategies.
Consequently, the number of grants actually made in the coming year may vary from this estimate.
(2) Includes the 10,000 restricted shares/RSUs which are expected to be awarded to each of Mr. Hodges and
Mr. Dietz.
13
PROPOSAL TO ADOPT A NEW STOCK PURCHASE PLAN
The Board of Directors has approved a new stock purchase plan which would be offered to as many as
possible of our associates worldwide. The 2005 Stock Purchase Plan (the "SPP"), a copy of which is attached as
Appendix B, would take the place of our previous U.S. stock purchase plan and our U.K. "sharesave" scheme. A
total of 2 million shares would be made available under SPP, which has a term of 10 years. If the stockholders
do not approve the adoption of the SPP, it will not become effective and no purchases will be made thereunder.
No further purchases would be made under the existing U.S. stock purchase plan after the remaining authorized
shares are issued, which is expected to occur by September 2005. Likewise, no further offerings would be made
under the U.K. sharesave scheme after September 2005. The Board of Directors recommends a vote "For" this
proposal.
Information About the SPP
The following summary is a description of the SPP. Stockholders are encouraged to read the SPP attached
as Appendix B for a complete understanding of its provisions.
In the past, we have had a stock purchase plan which was available only to U.S. associates, and a
similar plan in the U.K. which was only available to our U.K. associates. With the recent expansion of our
business across Europe and in China and Australia, the board has determined that a new stock purchase plan should
be adopted in which broad participation would be permitted. We intend to make the SPP available to as many of
our associates as possible, subject to any restrictions which may be imposed by laws in jurisdictions outside of
the United States. The stockholders are being asked to approve the SPP for this purpose.
The SPP is intended to qualify as an "employee stock purchase plan" within the meeting of Section 423(b)
of the Internal Revenue Code. Subject to adjustment upon changes in Acxiom's capitalization, the maximum number
of shares available for sale under the SPP is 2,000,000. If any right granted under the SPP terminates without
having been exercised, the shares not purchased under that right may become available for re-issuance under the
SPP. The shares subject to the SPP may be authorized but unissued shares or reacquired shares, bought on the
open market or otherwise. The SPP will be administered by the Compensation Committee of the Board of Directors
unless and until the board delegates administration to a different committee. The only individuals eligible to
participate in the SPP are Acxiom employees (associates). Non-employee directors are not eligible to
participate.
Under the SPP, Acxiom associates may buy shares of Acxiom stock at a discount from the market price of
the stock. The amount of the discount will be determined by the Compensation Committee of the board from time to
time and may be changed by the Committee as circumstances or regulatory requirements may warrant. The maximum
discount available would be 15% off the market price on the purchase date, which will be the last day of each
offering period.
The purpose of the SPP is to provide a simple way for associates to acquire Acxiom stock through payroll
deductions. We believe that it is important to encourage our associates to become equity partners with the
Company and take the long-term view of stockholders. Under the SPP, accounts are established for each
participant with the plan administrator, which typically is a brokerage firm or other similar entity. Payroll
deductions are accumulated, and at the end of each offering period the amounts held on behalf of each participant
are used to purchase stock. Any commissions or other expenses associated with the stock purchases or the
administration of the SPP are born by the Company. No interest is paid on participants' withholdings pending a
purchase at the end of each offering period.
The Compensation Committee will determine the length of the offering periods, which we currently expect
to be one month in duration. Offering periods may not, in any case, be longer than 27 months. The shares
purchased at the end of each offering period are then held by the SPP administrator in an account for each
participant. After the shares are in a participant's account, full ownership rights to the shares accrue to the
participant, and he or she may hold, sell, transfer or otherwise dispose of the shares at will. Dividends
payable on the shares held in a participant's account will be reinvested in shares of Acxiom stock unless the
participant chooses to retain the cash.
14
Section 423 of the Internal Revenue Code limits the amounts which participants may contribute to make
purchases under the SPP. No one may be granted an option to the extent that his or her rights to purchase shares
under all Section 423 employee stock purchase plans of Acxiom accrue at a rate which exceeds $25,000 worth of
stock (determined at the fair market value of the shares at the time such option is granted) for each calendar
year in which such an option is outstanding at any time.
The SPP administrator may make appropriate adjustments to the shares subject to the SPP in the event of
a stock split, reverse stock split, stock dividend, combination or reclassification of shares, or any other
increase or decrease in the number of shares effected without receipt of consideration by Acxiom. Similarly,
adjustments may be made as the result of a merger, consolidation or other corporate reorganization in which
Acxiom is the surviving corporation.
The board or Committee may modify or amend the SPP. However, no amendment may be made without
stockholder approval if the amendment would (i) materially increase the benefits accruing to participants under
the SPP, (ii) increase the number of shares which may be issued under the SPP (other than as a result of changes
in capitalization under the terms of the SPP), or (iii) materially modify the requirements as to eligibility for
participation, except as allowed under certain provisions of the Internal Revenue Code.
Federal Income Tax Considerations. The following discussion generally outlines certain U.S. federal
income tax consequences of participation in the SPP and is based on current U.S. laws and regulations, all of
which are subject to change.
A participant will not recognize income for federal income tax purposes on the purchase of shares under
the SPP, but will instead defer federal income tax consequences until he or she sells or otherwise disposes of
the shares. Upon the sale or disposition of the shares, a participant may have both compensation income and a
capital gain or loss. The amount of each type of gain and loss will depend on when the participant sells the
shares. If a participant holds the shares for more than two years after the commencement of the offering period
during which the shares were purchased and more than one year after the date of that purchase, (1) any gain will
be treated as follows: (a) first, as ordinary income to the extent of the lesser of the participant's actual gain
or the participant's purchase price discount, and (b) second, as long-term capital gain; and (2) any loss will be
treated as a long-term capital loss. If a participant disposes of the shares prior to the expiration of the
holding period described above (a "disqualifying disposition"), the participant will have compensation income
equal to the extent that the value of the shares as of the date of acquisition exceeded the participant's
purchase price. A participant will also have a capital gain or loss to the extent of the difference between the
sales proceeds of the shares and the value of the shares as of the date of acquisition.
Subject to the limitations of Section 162(m) of the Internal Revenue Code, Acxiom will be entitled to
deduct the amount that a participant recognizes as ordinary income on a disqualifying disposition.
The discussion above assumes that the SPP qualifies as an "employee stock purchase plan" within the
meaning of Section 423(b) of the Internal Revenue Code. This information in not intended to constitute tax
advice and does not attempt to describe all of the possible tax consequences that could result from participation
in the SPP. It also does not address state, local, or foreign tax consequences. Because of the complexities of
the various tax laws, participants are encouraged to consult a tax advisor as to their individual circumstances.
Benefits to Named Executive Officers and Others
Since participation in the SPP is wholly voluntary on the part of all employees, it is not possible to
determine which, if any, of the named executive officers, the executive group, or the non-executive officer
employee group will choose to participate in the SPP or to what extent they may participate. No non-executive
directors will participate in the SPP due to the fact that they are not eligible to participate under the terms
of the SPP.
15
STOCK PERFORMANCE GRAPH
The graph below compares for each of the last five fiscal years the cumulative total return on Acxiom's common stock,
the Nasdaq Stock Market - U.S. Index, and the Nasdaq Stock Market - Computer and Data Processing Index. The
cumulative total return on Acxiom's common stock assumes $100 invested on March 31, 1999 in Acxiom's common stock.
YEAR 2000 2001 2002 2003 2004 2005
_______________________________________________________________________
Acxiom Corporation $100 $63 $52 $51 $66 $64
NASDAQ - US Index 100 47 42 22 39 38
NASDAQ - Computer &
Data Processing 100 32 32 25 35 35
* $100 INVESTED ON 03/31/00 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING MARCH 31.
16
STOCK OWNERSHIP
The following tables show the ownership of Acxiom common stock by its directors, executive officers and
major stockholders.
Holdings of Officers and Directors
This table shows the amount of Acxiom common stock held by each director or nominee and the named
executive officers, as well as all of Acxiom's directors and executive officers as a group, based upon 87,924,800
shares of Acxiom common stock issued and outstanding as of June 10, 2005.
Title of Name Amount And Nature Percent Of
Class of Beneficial Owner Of Beneficial Ownership Class
Common C. Alex Dietz 767,460(1) *
Common William T. Dillard II 37,974(2) *
Common Harry C. Gambill 17,777(2) *
Common Dr. Mary L. Good 5,552 *
Common Dr. Ann Die Hasselmo 20,821(2) *
Common William J. Henderson 16,100(2) *
Common L. Lee Hodges 345,758(3) *
Common Rodger S. Kline 2,529,006(4) 2.88%
Common Thomas F. (Mack) McLarty, III 14,712(2) *
Common Charles D. Morgan 3,935,668(5) 4.48%
Common Stephen M. Patterson 52,933(2) *
Common James T. Womble 1,794,373(6) 2.04%
Common All directors, nominees and
executive officers, as a group
(15 people) 10,179,268(7) 11.58%
* Denotes less than 1%.
(1) Includes shares held by Mr. Dietz's wife and 358,342 shares subject to options which are currently
exercisable (34,886 of which are held by Mrs. Dietz), of which 151,240 are in the money.
(2) Includes 2,768 shares subject to options which are currently exercisable, of which 2,768 are in the
money.
(3) Includes 329,356 shares subject to options which are currently exercisable, of which 164,854 are in the
money.
(4) Includes 511,151 shares subject to options which are currently exercisable, of which 223,519 are in the
money.
(5) Includes 605,140 shares subject to options which are currently exercisable, of which 170,218 are in the
money.
(6) Includes 481,838 shares subject to options which are currently exercisable, of which 231,018 are in the
money. Also includes 136,721 option shares which were exercised by Mr. Womble during fiscal year 2003,
the receipt of which he elected to defer. These shares will be held for future distribution to Mr.
Womble under Acxiom's supplemental executive retirement plan. Mr. Womble will have no ownership rights
in these shares until the deferred distribution date (expected to be August 23, 2005).
(7) Includes 2,914,961 shares subject to options which are currently exercisable, of which 1,178,892 are in
the money.
17
Ownership of Major Stockholders
The following table lists the persons known by Acxiom to be the beneficial owners of 5% or more of our
common stock. The percentages of outstanding shares listed below are calculated based upon 87,924,800 shares of
Acxiom common stock issued and outstanding as of June 10, 2005.
Title of Name And Address Of Beneficial Owner Amount And Nature Of Percent
Class Beneficial Ownership Of Class
---------------------------------------------------------------------------------------------------------------------
Common ValueAct Capital Master Fund, L.P. (as of 5/4/05) 9,941,630(1) 11.3%
ValueAct Capital Partners Co-Investors, L.P.
VA Partners, L.L.C.
Combined interests of:
Jeffrey W. Ubben
George F. Hamel, Jr.
Peter H. Kamin
435 Pacific Avenue, 4th Floor
San Francisco, CA 94133
Common Barclays Global Investors, NA. 5,303,064(2) 6.0%
Barclays Global Fund Advisors
Barclays Global Investors, Ltd.
Barclays Bank PLC
Palomino Limited
45 Fremont Street
San Francisco, CA 94105
Common Wellington Management Company, LLP 5,158,393(2) 5.9%
75 State Street
Boston, MA 02109
Common Marsh & McLennan Companies, Inc. 4,621,615(2) 5.3%
Putnam Investment Management, LLC
The Putnam Advisory Company
Combined interests of:
Putnam, LLC d/b/a Putnam Investments
One Post Office Square
Boston, MA 02109
(1) Based on information contained in a Schedule 13D filed with the Securities and Exchange Commission.
(2) Based on information contained in a Schedule 13G filed with the Securities and Exchange Commission.
18
EXECUTIVE COMPENSATION
This table shows the compensation paid for each of the last three fiscal years to Company Leader Charles D.
Morgan and the four other most highly compensated executive officers who were serving as such on March 31, 2005.
Summary Compensation Table
---------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
---------------------------- ------------------------------------------
Salary Bonus Other Awards Payouts
($)(1) ($) Annual ------------------------ ---------------
Name and Year Compen- Restricted Securities LTIP All Other
Principal sation Stock Underlying Payouts Compensation
Position ($)(1) Award(s) Options/ ($) ($)(2)
($) SARs
(#)
---------------------------------------------------------------------------------------------------------------------------------
Charles D. Morgan 2005 735,000 ___ $222,000 ___ ___ ___ $33,758(3)
Chairman of 2004 713,333 ___ 217,500 ___ ___ ___ 24,703
the 2003 688,844 ___ 0 ___ 203,608 ___ 18,273
Board and
Company Leader
---------------------------------------------------------------------------------------------------------------------------------
Rodger S. Kline 2005 486,667 ___ 110,250 ___ ___ ___ 19,567
Company 2004 471,833 ___ 144,000 ___ ___ ___ 13,130
Operations 2003 455,321 ___ 0 ___ 134,582 ___ 14,758
Leader
---------------------------------------------------------------------------------------------------------------------------------
James T. Womble 2005 410,000 ___ 93,375 ___ ___ ___ 16,504
Client Services 2004 393,000 ___ 120,000 ___ ___ ___ 10,979
Organization 2003 379,108 ___ 0 ___ 112,055 ___ 12,404
Leader
---------------------------------------------------------------------------------------------------------------------------------
L. Lee Hodges 2005 386,667 ___ 74,100 ___ 50,000 ___ 18,809(4)
Outsourcing and 2004 364,458 ___ 96,200 ___ 81,480 ___ 9,953
IT Services 2003 352,238 ___ 0 ___ ___ ___ 11,715
Leader
---------------------------------------------------------------------------------------------------------------------------------
C. Alex Dietz 2005 360,000 ___ 82,125 ___ ___ ___ 10,024
Products & 2004 344,167 ___ 107,500 ___ ___ ___ 8,309
Infrastructure 2003 332,208 ___ 0 ___ 98,192 ___ 8,564
Technology
Leader
---------------------------------------------------------------------------------------------------------------------------------
(1) These amounts represent the named executives' cash incentive pay for each of the past three fiscal
years. See the discussion below of "Cash Incentive Pay" under "Report of the Compensation Committee."
(2) Except as noted in footnotes (3) and (4) below, these amounts represent Acxiom's matching contributions
to each named executive's 401(k) and supplemental executive retirement plan accounts.
(3) $30,391 of this amount represents Acxiom's matching contributions to Mr. Morgan's 401(k) and
supplemental executive retirement plan accounts. The remaining $3,367 represents income that was
imputed to Mr. Morgan in accordance with applicable Treasury regulations relating to his personal use of
company aircraft. During fiscal 2005, Mr. Morgan paid $111,530 to Acxiom as reimbursement for the
incremental cost to the Company of his personal use of company aircraft.
(4) $14,809 of this amount represents Acxiom's matching contributions to Mr. Hodges' 401(k) plan and
supplemental executive retirement plan accounts. The remaining $4,000 represents payments made to Mr.
Hodges over and above the Company's standard relocation reimbursements. In connection with his
promotion to Chief Operations Leader in October 2005, Mr. Hodges was required to move from Illinois to
Arkansas.
19
Option Grants For Last Fiscal Year
This table contains information concerning options to acquire shares of Acxiom common stock granted
during the past fiscal year to the named executive officers.
Individual Grants
Percent of
Total
Number of Options
Securities Granted
Underlying to Grant Date
Options Employees Exercise or Present
Granted in Fiscal Base Price Expiration Value
Name (#) Year ($/Sh) Date ($)(2)
---------------------------------------------------------------------------------------------------------------
L. Lee Hodges 50,000(1) .04% $23.19 10/14/16 $478,060
(1) These options were granted on October 14, 2004 in connection with Mr. Hodges' promotion to Chief
Operations Leader, in which role he is directly responsible for all operational areas of the business
world-wide.
(2) The grant date present value calculation is based on the Black-Scholes Option Valuation Model, a widely
recognized method of valuing options. The following underlying assumptions were used to derive the
present value of these options: expected volatility of Acxiom's common stock of 27%, based upon the
actual monthly volatility as represented by the standard deviation in the stock price variance for the
two years prior to the grant date; a risk-free rate of return of 4.03%, based on the yield of the
two-year U.S. treasury notes as of the grant date; and exercise of the option ten years after the grant
date. The actual value, if any, the named individuals may realize will depend on the excess of the
stock price over the exercise price on the date the option is exercised; consequently, there is no
assurance the value realized by the named individuals will be at or near the value estimated by the
Black-Scholes Option Valuation Model.
Option Exercises and Fiscal Year End Option Values
This table shows stock options exercised by the named executives during the fiscal year ended March 31,
2005, and the number and value of the options they held at fiscal year end.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
Shares Value at Fiscal Year-End at Fiscal Year-End
Acquired on Realized (#) ($)
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------------------------------------------------------
Charles D. Morgan 100,026 $1,066,828 752,073 0 $1,144,771 $0
Rodger S. Kline 0 0 562,837 0 1,327,366 0
James T. Womble 14,244 250,338 481,838 0 1,115,120 0
L. Lee Hodges 50,000 551,766 329,356 0 349,120 0
C. Alex Dietz 0 0 397,362 0 992,139 0
20
Equity Compensation Plan Information
The following table contains information about our common stock which may be issued upon the exercise
of options under our existing equity compensation plans, as well as pursuant to outstanding warrants, as of March
31, 2005:
(c)
(a) Number of securities
Number of securities (b) available for future
to be issued upon Weighted-average issuance under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a))
---------------------------------------------------------------------------------------------------------------
Equity compensation plans 17,447,047(1) $19.01 894,513
approved by stockholders
Equity compensation plans not 368,290(2) $21.09 N/A
approved by stockholders
Total 17,815,337 $19.05 894,513
(1) This figure represents stock options issued under approved stock option plans, 1,499,194 of which
options were assumed in connection with our acquisitions of May & Speh, Inc., DataQuick
Information Systems and ProCD, Inc. in 1998, 1996 and 1995, respectively.
(2) These warrants were issued pursuant to a 1999 data management outsourcing agreement between Acxiom and
Allstate Insurance Company, one of our clients, in connection with annual incremental net revenue
increases under the agreement.
Compensation of Directors
Each year, the Corporate Governance Committee establishes the compensation to be paid to the Board of
Directors. Outside directors' compensation currently consists of a $55,000 annual retainer plus $2,000 for each
board meeting and $1,000 for each committee meeting attended. The Audit Committee Chairman receives an
additional $6,000 per quarter for his services as chairman. Directors may elect to receive their retainer and
their quarterly meeting fees in shares of Acxiom stock, cash or a combination of each. Fees for special meetings
are payable in cash. Outside board members are reimbursed for expenses reasonably incurred in connection with
their service on the board. Directors who are members of management do not receive any additional compensation
for their service on the board.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Mr. Dillard, Dr. Good, Mr. Henderson and Mr. Patterson.
No compensation committee interlocks exist with respect to the board's Compensation Committee, nor do any present
or past officers of Acxiom serve on the Compensation Committee.
Change in Control Arrangements / Agreements with Management
The Board of Directors has approved the execution of Executive Security Agreements between Acxiom and
certain of its key associates, including the named executive officers listed in the compensation tables above.
Payments under these agreements will be triggered if an associate is terminated (other than for cause) within the
three-year period following a change of control, or if he or she resigns for good reason, e.g., a demotion,
reduction in salary, relocation, significant change in responsibilities, etc. The amount payable to an
individual is 2.99 times annual compensation if terminated in the first year after a change of control; two times
annual compensation if terminated in the second year after a change of control; or one times annual compensation
if terminated in the third year after a change of control.
21
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors makes decisions on the compensation of Acxiom's
Company Leadership Team. The Compensation Committee is composed solely of independent directors. Set forth
below is a report submitted by Mr. Dillard, Dr. Good, Mr. Henderson and Mr. Patterson, in their capacity as
members of the Board's Compensation Committee, addressing the compensation policies for Acxiom's Company
Leadership Team, for the individuals named in the tables above, and for Mr. Morgan.
Compensation Policies
Compensation for Acxiom's Company Leadership Team is based upon principles designed to align leadership
compensation with business strategy, Acxiom values and management initiatives. The plan is designed to:
o align the leaders' interests with the stockholders' and investors' interests,
o motivate the leaders to achieve the highest level of performance,
o retain key leaders by linking executive compensation to Acxiom performance, and
o attract the best candidates through competitive, market-based plans.
The resulting compensation strategy is targeted to provide an overall level of compensation opportunity
that is competitive within the markets in which Acxiom competes, as well as within a broader group of companies
of comparable size and complexity. Actual compensation levels may eventually be greater than or less than the
average competitive market levels, based upon the achievement of Acxiom, as well as upon individual performance.
The Compensation Committee uses its discretion to set the parameters of the leadership compensation plan when
external, internal and/or individual circumstances warrant it.
Components of Compensation
Compensation paid to the members of the Company Leadership Team in the last fiscal year, the separate
elements of which are discussed below, consisted of the following: base pay, cash incentive pay, and long-term
incentive compensation ("LTI") granted under Acxiom's stock option plans.
Base Pay - Base salaries for Acxiom's Company Leadership Team were largely determined through market
comparisons. Actual salaries were based on individual performance contributions and the use of market surveys
for comparable companies and positions.
Cash Incentive Pay - In the past fiscal year, Acxiom's Leadership Compensation Plan provided Company
Leadership Team members with the opportunity to receive quarterly and annual cash incentive payments (calculated
as a percentage of each member's base pay.) The amount of total targeted cash incentive was determined through
market surveys of comparable companies and positions. In the past fiscal year, total targeted cash incentive pay
ranged from 55 - 100% of base pay, depending on position. For fiscal 2005, partial attainment payments were made
after the first and second quarters, constituting 30% of the total annual opportunity.
Long-Term Incentive Compensation - Long-Term Incentive ("LTI") compensation for the past fiscal year
was composed of awards of non-statutory stock options to recently appointed Company Leadership Team members.
Other Company Leadership Team members received no LTI awards in the past fiscal year due to the fact that they
had previously received a three-year grant of LTI options in 2002. (Company Leadership Team members were granted
the equivalent of three years' worth of non-statutory stock options in 1993, 1996, 1999 and 2002.) Company
Leadership Team members appointed after August 2002 have received one-year grants.
Under the Committee's guidelines which were in effect during the fiscal year ending March 31, 2003, the
terms of LTI non-statutory options were 15 years, vesting occurred over six years, and the exercise prices were:
one-half at the fair market value on the date of grant, one-fourth at a 25% premium over market, and one-fourth
at a 50% premium over market. When the Committee first began granting premium priced options in 1993, the
options had vesting periods of nine years and were granted one-fourth at fair market value, one-fourth at a 50%
premium over market, and one-half at a 100% premium over market. In 1997 the Committee changed the percentages
so that one-half of all LTI grants were made at market, with one-fourth being made at a 50% premium over market,
and one-fourth at a 100% premium over market. In 1999 the Committee changed the premium levels so that one-half
of the LTI grants were made at market, with one-fourth being made at a 25% premium over market, and one-fourth at
a 50% premium over market. The LTI vesting period for options granted from 1999 through the present was changed
from nine to six years, with 20% of the options becoming vested on each of the second through the sixth
anniversaries.
22
In May 2003, the Compensation Committee amended its stock option guidelines to be more in line with then
current practices among other companies in the information technology industry. Terms of non-statutory options
were capped at 12 instead of 15 years, and all options were granted at the fair market value of the stock on the
date of grant, instead of having half of the options being priced at above-market values. Vesting remained on a
six-year schedule, with 20% of the options becoming vested on each of the second through sixth anniversaries of
the grant date. As noted above, in previous fiscal years, multi-year grants were made to Company Leadership Team
members; however, beginning in fiscal year 2004, only annual grants have been made.
On March 24, 2005, the Acxiom Board of Directors voted to accelerate the vesting of all outstanding
stock options except for those held by the outside directors. This decision was made in anticipation of the
Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 123 (Revised 2004),
Share-Based Payment ("SFAS 123R"). SFAS 123R, originally expected to become effective for Acxiom by July 1,
2005, will require that compensation cost related to stock options be recognized in a company's financial
statements. Currently, the Company accounts for its stock options under the provisions of APB 25, which does not
necessarily require the recognition of stock options as a compensation cost in the statement of earnings.
Subsequent to the Board's action in March, the SEC postponed the effective date of SFAS 123R to April 1, 2006.
The Committee presently intends to use restricted stock and/or restricted stock units or similar awards
as the primary LTI compensation vehicle for fiscal year 2006. These awards will be made under the 2005 Equity
Compensation Plan described above under "Proposal to Approve Equity Compensation Plan." While some stock options
may continue to be granted, the Committee anticipates that options will primarily be utilized for recruiting and
retention purposes in FY 2006. The Committee will continue to take external market and regulatory developments
into consideration when determining the Company's LTI practices and may further update its guidelines so as to
better align long-term incentive compensation with the Company's business strategies and with stockholder and
investor interests.
Supplemental Executive Retirement Plan - All members of Acxiom's Company Leadership Team are eligible to
participate in Acxiom's Supplemental Executive Retirement Plan ("SERP"), which was adopted in fiscal 1996, by
contributing up to 100% of their pretax income into the plan. Acxiom matches at a rate of $.50 on the dollar up
to the first 6% of the participants' combined contributions under both the SERP and Acxiom's 401K Retirement
Plan. The Acxiom match is currently paid in Acxiom common stock.
Other Compensation Plans - Acxiom maintains certain broad-based employee benefit plans in which Company
Leadership Team members are permitted to participate on the same terms as non-leadership team associates who meet
applicable eligibility criteria, subject to any legal limitations on the amounts that may be contributed or the
benefits that may be payable under the plans.
Mr. Morgan's Compensation
During the past fiscal year (April 1, 2004 - March 31, 2005), Mr. Morgan received $735,000 in base pay,
$222,000 in cash incentive pay, and $3,367 in imputed earnings for personal use of company aircraft. His fiscal
year 2005 base pay increase of 2.1% was effective August 1, 2004. For fiscal year 2004 (April 1, 2003 - March
31, 2004), he received $713,333 in base pay and $217,500 in cash incentive pay. His base pay was increased 1.4%
effective August 1, 2003 and 1.4% effective February 1, 2004. His total fiscal year 2004 increase of 2.8% was
made as part of a company-wide program to implement one-half of all raises in August 2003 and one-half in
February 2004. In the previous fiscal year (April 1, 2002 - March 31, 2003), Mr. Morgan received $688,844 in
base pay and he did not receive any cash incentive pay since the Company's earnings per share targets were not
met.
23
On August 7, 2002, Mr. Morgan was granted 203,608 long-term incentive stock options as part of his total
compensation. This was a three-year grant, under the terms of the Committee's LTI strategy in place at the time
of grant. Half of the 203,608 options were granted at an exercise price of $16.35, the fair market value on the
date of grant, while one-fourth were granted at an exercise price of $20.55 (125% of the fair market value on the
date of grant) and the remaining one-fourth were granted at an exercise price of $24.53 (150% of the fair market
value on the date of grant). The actual value, if any, Mr. Morgan may ultimately realize will depend on the
excess of the stock price over the exercise price on the date he exercises the options. The stock options
granted to Mr. Morgan were intended to further encourage his long-term performance, while aligning his interests
with those of Acxiom's other stockholders with regard to the performance of Acxiom's common stock.
Section 162(m), "Limit on Deductibility of Compensation Expense"
Section 162(m) of the Omnibus Budget Reconciliation Act of 1993 generally prevents public corporations
from deducting as a business expense that portion of the compensation paid to the named individuals in the
Summary Compensation Table that exceeds $1,000,000. However, this deduction limit does not apply to
"performance-based compensation" paid pursuant to plans approved by stockholders. The Board has administered its
compensation plans so as to comply with Section 162(m) and to thereby retain the deductibility of executive
compensation, and it is Acxiom's intention to continue to monitor its compensation plans to comply with Section
162(m) in the future.
Submitted by the Compensation Committee:
William T. Dillard II, Chairman
Mary L. Good
William J. Henderson
Stephen M. Patterson
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors consists of Stephen M. Patterson, Chairman, William T.
Dillard II and Dr. Ann Die Hasselmo, each of whom has been determined by the Board of Directors to qualify
as independent under Nasdaq listing standards. The Audit Committee reviews Acxiom's financial statements and
financial reporting processes, and approves our systems of internal accounting and financial controls. This
Committee is responsible for the annual independent audit of our financial statements and the engagement of the
independent auditors, who report directly to the Committee. In addition, the Committee oversees our internal
audit function and various legal compliance programs. The Committee also has full authority to investigate the
financial and business affairs of Acxiom. Management has the primary responsibility for the financial statements
and the mechanics of the reporting process. Our independent auditor is responsible for expressing an opinion on
the conformity of our audited financial statements to generally accepted accounting principles. The Board of
Directors has adopted a written charter for the Audit Committee, and the Committee has satisfied its
responsibilities under the charter for the fiscal year ended March 31, 2005.
The Audit Committee met with management periodically throughout the year to consider the adequacy of
Acxiom's internal controls and the objectivity of its financial reporting. The Audit Committee discussed these
matters with the independent auditors and with the appropriate financial personnel and internal auditors. The
Audit Committee also discussed with Acxiom's senior management and the independent auditors the process used for
certifications by Acxiom's Company Leader and its Chief Finance & Administration Leader required by the SEC for
certain filings pursuant to the Sarbanes-Oxley Act of 2002. The Audit Committee has met privately with the
independent auditors and the internal auditors, each of whom has unrestricted access to the Audit Committee.
Among other things, the Committee discussed with the independent auditors and the internal auditors the overall
scope and plans for their respective audits.
24
The Audit Committee has (1) reviewed and discussed with management and the independent auditors the
audited financial statements for the year ended March 31, 2005, as well as any material financial or
non-financial arrangements of Acxiom which do not appear on the financial statements; (2) discussed with the
independent auditors the matters required by Statement on Auditing Standards No. 61 (as amended by Statement on
Auditing Standards No. 90), Communication with Audit Committee; (3) received the written disclosures and the
letter from the independent auditors required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees; and (4) discussed with the auditors their independence, and considered whether
the provision of non-audit services to Acxiom was compatible with such independence.
Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that
the audited financial statements for the year ended March 31, 2005 be included in our Annual Report on Form 10-K
for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee:
Stephen M. Patterson, Chairman
William T. Dillard II
Ann Die Hasselmo
FEES BILLED FOR SERVICES RENDERED BY INDEPENDENT AUDITOR
KPMG LLP was our independent auditor during the past fiscal year and also provided other non-audit
related services for us. For the fiscal years ended March 31, 2005 and March 31, 2004, KPMG LLP billed us in the
amounts set forth below:
2005 2004
Audit fees (including quarterly reviews) (1) $2,952,271 $ 753,399
Audit-related fees(2) 445,860 643,333
Tax services(3) 342,500 125,272
All other fees(4) 0 101,768
----------------- ----------------
Total $ 3,740,631 $ 1,623,772
(1) Audit fees relate to professional services rendered in connection with the audit of our annual financial
statements, the audit of management's assessment of internal controls over financial reporting, quarterly
reviews of financial statements included in our Form 10-Q's and 10-K, and audit services provided in
connection with other statutory and regulatory filings.
(2) Audit-related fees include professional services related to the audit of our financial statements, SAS
70 reviews of our data centers, acquisition due diligence assistance, reporting on compliance with debt
covenants, and audits of employee benefit plans.
(3) Tax fees include professional services rendered in connection with tax compliance and preparation
relating to our tax audits, international tax compliance and tax consulting, and planning services
relating to interest computations and international tax changes. We do not engage KPMG to perform
personal tax services for our executive officers.
(4) All other fees include advisory services performed in connection with the work being done in preparation
for compliance with Section 404 of the Sarbanes-Oxley Act.
The Audit Committee has adopted a policy for the pre-approval of engagements for audit, audit-related and
non-audit services by our independent auditor. The policy requires that the Committee pre-approve all audit services
and audit-related services to be performed by the independent auditor. For non-audit services, the principal
financial officer must provide a written explanation to the Audit Committee of the scope of the services, the
estimated costs, and other pertinent information, and then the Audit Committee or a designated member of the
Committee must pre-approve the proposed engagement. The requirement for pre-approval of an engagement for non-audit
services may be waived only if (i) the aggregate amount of all such non-audit services provided is less than five
percent of the total amount paid by the Company to the independent auditor during the fiscal year when the services
are provided; (ii) the services were not deemed by management at the time of the engagement to be non-audit services;
and (iii) the services are promptly brought to the attention of the Audit Committee and approved after the fact. All
audit and non-audit services reflected in the table above were pre-approved by the Audit Committee in accordance with
the policy.
25
INDEPENDENT AUDITOR
The Audit Committee has selected KPMG, LLP to serve as our independent auditor for fiscal 2006. We
anticipate that a representative of KPMG, LLP will be present at the 2005 annual stockholders meeting and will
have the opportunity to make a statement at the meeting if he or she desires to do so and to respond to
appropriate questions.
RELATED-PARTY TRANSACTIONS
Under a 1992 data center management agreement between Acxiom and TransUnion LLC, Acxiom (through a
subsidiary, Acxiom CDC, Inc.) acquired all of TransUnion's interest in its Chicago data center and agreed to
provide TransUnion with various data center management services. The term of the agreement, which was
renegotiated in 2004, expires in 2010. In addition to the data center management agreement, TransUnion and
Acxiom have entered into other agreements relating to data, software, consulting and other services, and joint
marketing of products and services. In the past fiscal year, we received approximately $96.0 million in revenue
from TransUnion and made payments to TransUnion in the amount of approximately $19.4 million pursuant to the
various contracts. For the current year, we anticipate that similar amounts will be received from and paid to
TransUnion. In connection with both the 1992 agreement and the recently renegotiated data center management
agreement, we agreed to use our best efforts to cause one person designated by TransUnion to be elected to our
Board of Directors. TransUnion designated its CEO and President, Harry C. Gambill, who has served on the Acxiom
board since 1992 and is a nominee for election at the 2005 annual stockholders meeting.
Acxiom paid BMC Media, Inc. ("BMC") approximately $131,000 during the past fiscal year in commissions.
BMC is controlled by F.B. McLarty, the brother of one of Acxiom's board members, Thomas F. (Mack) McLarty, III.
In 2001 and 2002, F.B. McLarty assisted with obtaining new contracts for Acxiom with several customers in the
travel and entertainment business. Other than the obligation to pay commissions to BMC on these contracts, there
are no current agreements in place between Acxiom and either of the McLarty's. Mack McLarty is not a
stockholder, director or employee of BMC and receives no personal benefit from the commissions paid to BMC. The
amount to be paid to BMC in the current fiscal year will be determined by the amount of revenue, if any, realized
from the previously-acquired customer contracts.
We have contracts with the University of Arkansas at Little Rock (UALR) pursuant to which we provide
funding for research projects done by UALR personnel. We also make charitable contributions to UALR. Dr. Mary
Good, who is a director, is employed by UALR as its Dean of the College of Information Science and Systems
Engineering. She is not personally the recipient of any Acxiom funding. The total amount paid to UALR in the
past fiscal year was approximately $226,000, which is less than half of 1% of UALR's total annual revenues. We
expect to pay a similar amount to UALR in the current fiscal year.
We have several reseller agreements in place with Cognitive Data, Inc. ("CDI"). CDI's president and
majority shareholder is the son-in-law of Company Leader Charles Morgan. The agreements allow CDI to resell our
products for standard commissions and reseller discounts. During the past fiscal year, CDI paid approximately
$812,000 to Acxiom under the various agreements. We expect to receive approximately $600,000 from CDI in the
current fiscal year.
26
Acxiom is a corporate sponsor of a celebrity race truck in the NASCAR Craftsman Truck Series. In the
past fiscal year, the amount of the sponsorship was $975,000, and in the current year the amount to be paid is
$625,000. Per the sponsorship agreement, the Acxiom brand is displayed on the sponsored race vehicles, drivers'
uniforms, transporter vehicles, press kits, and NASCAR collectibles offered to the public, and hospitality
services are made available for Acxiom customers at race events. The sponsorship agreement is with Morgan-Dollar
Motorsports, LLC ("MDM"), 51% of which was owned by RM Promotions, LLC ("RMP") until December 2004. Rob Morgan,
the son of Charles Morgan, was the majority owner and an employee of RMP until January 2004. At the present
time, neither Charles Morgan nor Rob Morgan has any direct or indirect ownership interest in MDM. MDM is
currently indebted to RMP in the amount of $1.04 million, payable by December 31, 2006. In addition, Rob Morgan
has guaranteed a promissory note owed by MDM to a bank in the current principal amount of $300,000. MDM was
previously indebted to Charles Morgan in the amount of $470,000. Mr. Morgan forgave that debt in the past fiscal
year in exchange for an agreement by MDM to pay Mr. Morgan commissions in the amount of 5% of any new
sponsorships (excluding the Acxiom sponsorship) acquired by MDM in 2005 and 2006. To date, no commissions have
been paid.
Acxiom leases an aircraft from MorAir, Inc., a corporation owned by Charles Morgan. The average monthly
payment made in the past fiscal year was approximately $75,000, which includes the lease payments, maintenance
and insurance. Total payments under the lease are expected to remain the same in the current fiscal year. The
term of the lease expires in August 2006.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Acxiom's executive officers, directors,
and the owners of more than 10 percent of our stock to file reports of ownership and changes in ownership with
the SEC. These reports are also filed with the National Association of Securities Dealers, Inc. A copy of each
report is furnished to Acxiom. SEC regulations require us to identify anyone who has failed to timely file his
or her Section 16(a) reports. Based solely on our review of reports furnished to us and the written
representations that no other reports were required during the fiscal year ended March 31, 2005, we believe that
all Section 16(a) filing requirements were met during the last fiscal year.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the 2006 annual meeting, and who wish to have those
proposals included in Acxiom's Proxy Statement for the 2006 annual meeting, must ensure that those proposals are
received by the Corporate Secretary at 1 Information Way, Little Rock, Arkansas 72202 on or before February 24,
2006. Such proposals must meet the requirements set forth in the rules and regulations of the SEC in order to be
eligible for inclusion in the Proxy Statement for Acxiom's 2006 annual meeting.
In addition, under Acxiom's bylaws, stockholders who intend to submit a proposal regarding a director
nomination or other matter of business at the 2006 annual meeting, and who do not intend to have such proposal
included in the Company's proxy statement and form of proxy relating to the 2006 meeting pursuant to SEC
regulations, must ensure that notice of any such proposal (including certain additional information specified in
Acxiom's bylaws) is received by the Corporate Secretary at the address specified above on or before April 5,
2006. Such proposals, and the additional information specified by the bylaws, must be submitted within this time
period in order to be considered at the 2006 annual meeting.
EXPENSES OF SOLICITATION
Acxiom will bear the expense of preparing and mailing the proxy. Arrangements will be made with
brokerage firms and other custodians, nominees and fiduciaries to forward the solicitation materials to our
stockholders, and we will provide reimbursement for reasonable out-of-pocket expenses incurred by these third
parties. We have retained The Proxy Advisory Group of Strategic Stock Surveillance, LLC to assist in the
solicitation of proxies for fees which are expected not to exceed $20,000.
27
HOUSEHOLDING OF PROXY MATERIALS
If you and others who share your mailing address own any stock held in street name (i.e., stock held in
a brokerage account), you may have received a notice that your household will receive only one annual report and
proxy statement from each company whose stock is held in these accounts. This practice, known as "householding,"
is designed to reduce the volume of duplicate information and reduce printing and postage costs. Unless you
responded that you did not want to participate in householding, you were deemed to have consented to it, and a
single copy of this Proxy Statement and the 2005 Annual Report have been sent to your address. Each stockholder
will continue to receive a separate voting instruction form.
If you would like to receive an extra copy of the 2005 Annual Report or this Proxy Statement, we will
send a copy to you by mail upon request to Catherine L. Hughes, Secretary, Acxiom Corporation, 1 Information Way,
Little Rock, Arkansas 72202, or by calling 1-501-342-1336. Each document is also available in digital form for
download or review in the "Investor Relations" section of our website at www.acxiom.com.
If you would like to revoke your consent to householding and in the future receive your own set of proxy
materials, or if your household is currently receiving multiple copies of the proxy materials and you would like
in the future to receive only a single set of proxy materials at your address, please contact the Householding
Department by mail at 51 Mercedes Way, Edgewood, NY 11717, or call 1-800-542-1061, and provide your name, the
name of each of your brokerage firms or banks where your shares are held, and your account numbers. The
revocation of a consent to householding will be effective 30 days following its receipt. You may also have an
opportunity to opt in or opt out of householding by following the instructions on your voting instruction form or
by contacting your bank or broker.
OTHER MATTERS
The board does not intend to present any items of business other than those listed in the Notice of
Annual Meeting of Stockholders above. If other matters are properly brought before the meeting, the persons
named in the accompanying proxy will vote the shares represented by it in accordance with their best judgment.
Discretionary authority to vote on other matters is included in the Proxy. The materials referred to in this
proxy statement under the captions "Report of the Compensation Committee," "Report of Audit Committee," and
"Stock Performance Graph" shall not be deemed soliciting material or otherwise deemed filed and shall not be
deemed to be incorporated by any general statement of incorporation reference in any filings made under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
By Order of the Board of Directors
/s/ Catherine L. Hughes
Catherine L. Hughes
Secretary
Little Rock, Arkansas
June 24, 2005
28
APPENDIX A
2005 EQUITY COMPENSATION PLAN
OF
ACXIOM CORPORATION
1. Establishment and Purpose. This 2005 Equity Compensation Plan of Acxiom Corporation (the "Plan") was
established under the name of the 2000 Associate Stock Option Plan of Acxiom Corporation (the "2000 Plan"). The
2000 Plan has been amended from time to time and hereby is amended, restated, and renamed as set forth herein,
effective August 3, 2005, subject to the approval of Acxiom Corporation ("Company") shareholders. The purpose
of the Plan is to further the growth and development of the Company and any of its present or future
Subsidiaries and Affiliated Companies (as defined below) by allowing certain Associates (as defined below) to
acquire or increase equity ownership in the Company, thereby offering such Associates a proprietary interest in
the Company's business and a more direct stake in its continuing welfare, and aligning their interests with
those of the Company's shareholders. The Plan is also intended to assist the Company in attracting and
retaining talented Associates, who are vital to the continued development and success of the Company.
2. Definitions. The following capitalized terms, when used in the Plan, have the following meanings:
(a) "Act" means the Securities Exchange Act of 1934, as amended and in effect from time to time.
(b) "Affiliated Company" means any corporation, limited liability company, partnership, limited liability
partnership, joint venture or other entity in which the Company or any of its Subsidiaries has
an ownership interest.
(c) "Associate" means any employee, officer (whether or not also a director), director, affiliate,
independent contractor or consultant of the Company, a Subsidiary or an Affiliated Company who
renders those types of services which tend to contribute to the success of the Company, its
Subsidiaries or its Affiliated Companies, or which may reasonably be anticipated to contribute
to the future success of the Company, its Subsidiaries or its Affiliated Companies.
(d) "Award" means the grant, pursuant to the Plan, of any Option, Stock Appreciation
Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Awards, Performance
Share, Performance Unit, Qualified Performance-Based Award, or Other Stock Unit Award. The
terms and conditions applicable to an Award shall be set forth in applicable Grant Documents.
(e) "Award Agreement" means any written or electronic agreement, contract, or other
document or instrument evidencing any Award granted by the Committee or the Board hereunder,
which may, but need not, be executed or acknowledged by both the Company and the Participant.
(f) "Board" means the Board of Directors of the Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended and in effect from time to
time.
(h) "Common Stock" means the common stock, par value $.10 per share, of the Company or any
security into which such common stock may be changed by reason of any transaction or event of
the type described in Section 15 of the Plan.
(i) "Committee" means the Compensation Committee of the Board (as well as any successor to
the Compensation Committee and any Company officers to whom authority has been lawfully
delegated by the Compensation Committee). All of the members of the Committee, which may not
be less than two, are intended at all times to qualify as "outside directors" within the
meaning of Section 162(m) of the Code and "Non-Employee Directors" within the meaning of Rule
16b-3, and each of whom is "independent" as set forth in the applicable rules and regulations
of the Securities and Exchange Commission and/or Nasdaq or any stock exchange upon which the
Shares may be listed in the future; provided, however, that the failure of a member of such
Committee to so qualify shall not be deemed to invalidate any Award granted by such Committee.
A-1
(j) "Covered Associate" shall mean a "covered employee" within the meaning of Section
162(m)(3) of the Code, or any successor provision thereto.
(k) "Date of Grant" means the date specified by the Committee or the Board, as applicable,
on which a grant of an Award will become effective.
(l) "Exercise Period" means the period during which an Option shall vest and become
exercisable by a Participant (or his or her representatives or transferees) as specified in
Section 6(c) below.
(m) "Exercise Price" means the purchase price per share payable upon exercise of an
Option.
(n) "Fair Market Value" means, as of any applicable determination date or for any
applicable determination period, the closing price of the Company's Common Stock as reported by
Nasdaq (or any other stock exchange upon which the Common Stock may be listed for trading).
(o) "Grant Documents" means any written or electronic Award Agreement, memorandum, notice,
and/or other document or instrument evidencing the terms and conditions of the grant of an
Award by the Committee or the Board under the Plan, which may, but need not, be executed or
acknowledged by both the Company and the Participant.
(p) "Incentive Stock Option" means an Option intended to be and designated as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
(q) "Legal Requirements" means any laws, or any rules or regulations issued or promulgated
by the Internal Revenue Service (including Section 422 of the Code), the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., Nasdaq (or any other
stock exchange upon which the Common Stock may be listed for trading), or any other
governmental or quasi-governmental agency having jurisdiction over the Company, the Common
Stock, or the Plan.
(r) "Non-Qualified Stock Option" means any Option that is not an Incentive Stock Option.
(s) "Option" means an option granted to a Participant pursuant to the Plan to acquire a
certain number of Shares at such price(s) and during such period(s) and under such other terms
and conditions as the Committee or Board shall determine from time to time.
(t) "Other Stock Unit Award" means any right granted to a Participant by the Committee or
Board pursuant to Section 10 hereof.
(u) "Participant" means an Associate who is selected by the Committee or the Board to
receive an Award under the Plan.
(v) "Performance Award" means any Award of Performance Shares or Performance Units
pursuant to Section 9 hereof.
(w) "Performance Goals" means the pre-established objective performance goals established
by the Committee for each Performance Period. The Performance Goals may be based upon the
performance of the Company (or a division, organization or other business unit thereof), a
Subsidiary, an Affiliated Company, or of an individual Participant, using one or more of the
A-2
Performance Measures selected by the Committee in its discretion. Performance Goals may be set
at a specific level, or may be expressed as a relative percentage to the comparable measure at
comparison companies or a defined index. Performance Goals shall, to the extent applicable, be
based upon generally accepted accounting principles, but shall be adjusted by the Committee to
take into account the effect of the following: changes in accounting standards that may be
required by the Financial Accounting Standards Board after the Performance Goal is established;
realized investment gains and losses; extraordinary, unusual, non-recurring, or infrequent
items; "non-gaap financial measures" that have been included in Acxiom's quarterly earnings
releases and disclosed to investors in accordance with SEC regulations; and other items as the
Committee determines to be required so that the operating results of the Company (or a
division, organization or other business unit thereof), a Subsidiary or an Affiliated Company
shall be computed on a comparative basis from Performance Period to Performance Period.
Determinations made by the Committee shall be based on relevant objective information and/or
financial data, and shall be final and conclusive with respect to all affected parties.
(x) "Performance Measures" means one or more of the following criteria, on which
Performance Goals may be based: (a) earnings (either in the aggregate or on a per-Share basis,
reflecting dilution of Shares as the Committee deems appropriate and, if the Committee so
determines, net of or including dividends) before or after interest and taxes ("EBIT") or
before or after interest, taxes, depreciation, and amortization ("EBITDA"); (b) gross or net
revenue or changes in annual revenues; (c) cash flow(s) (including operating, free or net cash
flows); (d) financial return ratios; (e) total stockholder return, stockholder return based on
growth measures or the attainment by the Shares of a specified value for a specified period of
time, (f) Share price, or Share price appreciation; (g) earnings growth or growth in earnings
per Share; (h) return measures, including return or net return on assets, net assets, equity,
capital, investment, or gross sales; (i) adjusted pre-tax margin; (j) pre-tax profits; (k)
operating margins; (l) operating profits; (m) operating expenses; (n) dividends; (o) net income
or net operating income; (p) growth in operating earnings or growth in earnings per Share;
(q) value of assets; (r) market share or market penetration with respect to specific designated
products or product groups and/or specific geographic areas; (s) aggregate product price and
other product measures; (t) expense or cost levels, in each case, where applicable, determined
either on a company-wide basis or in respect of any one or more specified divisions; (u)
reduction of losses, loss ratios or expense ratios; (v) reduction in fixed costs; (w) operating
cost management; (x) cost of capital; (y) debt reduction; (z) productivity improvements;
(aa) satisfaction of specified business expansion goals or goals relating to acquisitions or
divestitures; (bb) customer satisfaction based on specified objective goals or a
Company-sponsored customer survey; or (cc) Associate diversity goals.
Performance Measures may be applied on a pre-tax or post-tax basis, and may be based upon the
performance of the Company (or a division, organization or other business unit thereof), a
Subsidiary, an Affiliated Company, or of an individual Participant. The Committee may, at time
of grant, in the case of an Award intended to be a Qualified Performance-Based Award, and in
the case of other grants, at any time, provide that the Performance Goals for such Award may
include or exclude items to measure specific objectives, such as losses from discontinued
operations, extraordinary gains or losses, the cumulative effect of accounting changes,
acquisitions or divestitures, foreign exchange impacts, and any unusual nonrecurring gain or
loss.
(y) "Performance Period" means that period established by the Committee or the Board at
the time any Award is granted or at any time thereafter during which any performance goals
specified by the Committee or the Board with respect to such Award are to be measured.
(z) "Performance Share" means any grant pursuant to Section 9 hereof of a right to receive
the value of a Share, or a portion or multiple thereof, which value may be paid to the
Participant by delivery of such property as the Committee or Board shall determine, including,
without limitation, cash, Shares, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the Committee or the Board shall establish
at the time of such grant or thereafter.
A-3
(aa) "Performance Unit" means any grant pursuant to Section 9 hereof of a right to receive
the value of property other than a Share, or a portion or multiple thereof, which value may be
paid to the Participant by delivery of such property as the Committee or Board shall determine,
including, without limitation, cash, Shares, or any combination thereof, upon achievement of
such Performance Goals during the Performance Period as the Committee or the Board shall
establish at the time of such grant or thereafter.
(bb) "Qualified Performance-Based Award" means an Award to a Covered Associate who is a
salaried employee of the Company or to an Associate that the Committee determines may be a
Covered Associate at the time the Company would be entitled to a deduction for such Award,
which Award is intended to provide "qualified performance-based compensation" within the
meaning of Code Section 162(m).
(cc) "Restricted Stock" means any Share issued with the restriction that the holder may not
sell, transfer, pledge, or assign such Share and with such other restrictions as the Committee
or the Board, in their sole discretion, may impose (including, without limitation, any
forfeiture condition or any restriction on the right to vote such Share, and the right to
receive any cash dividends), which restrictions may lapse separately or in combination at such
time or times, in installments or otherwise, as the Committee or the Board may deem appropriate.
(dd) "Restricted Stock Award" means an award of Restricted Stock or Restricted Stock Units
under Section 8 hereof.
(ee) "Restricted Stock Unit" means a right awarded to a Participant that, subject to
Section 8(c), may result in the Participant's ownership of Shares upon, but not before, the
lapse of restrictions related thereto.
(ff) "Restriction Period" means the period of time specified by the Committee or Board
pursuant to Sections 8 and 10 below.
(gg) "Rule 16b-3" means Rule 16b-3 under Section 16 of the Act, as such Rule may be in
effect from time to time.
(hh) "Shares" means the shares of Common Stock of the Company, $.10 par value.
(ii) "Stock Appreciation Right" means the right pursuant to an Award granted under Section
7 of the Plan, to surrender to the Company all (or a portion) of such right and, if applicable,
a related Option, and receive cash or shares of Common Stock in accordance with the provisions
of Section 7.
(jj) "Strike Price" shall have the meaning set forth for such term in Section 7(b) of the
Plan.
(kk) "Subsidiary" means any corporation, limited liability company, partnership, limited
liability partnership, joint venture or other entity in which the Company owns or controls,
directly or indirectly, not less than 50% of the total combined voting power or equity
interests represented by all classes of stock, membership or other interests issued by such
corporation, limited liability company, partnership, limited liability partnership, joint
venture or other entity.
(ll) "Substitute Awards" shall mean Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, by a company acquired by the Company or with which the
Company combines.
A-4
3. Administration. The Plan shall be administered by the Committee and the Board. Except as otherwise
provided herein, each of the Committee or the Board has the full authority and discretion to administer the Plan,
and to take any action that is necessary or advisable in connection with the administration of the Plan
including, without limitation, the authority and discretion to:
(a) select the Associates eligible to become Participants under the Plan;
(b) determine whether and to what extent Awards are to be granted;
(c) determine the number of Shares to be covered by each grant;
(d) determine the terms and conditions, not inconsistent with the terms of the Plan, of any grant hereunder
(including, but not limited to, the term of the Award, the Exercise Price or Strike Price and
any restriction, limitation, procedure, or deferral related thereto, provisions relating to the
effect upon the Award of a Participant's cessation of employment, acceleration of vesting,
forfeiture provisions regarding an Award and/or the profits received by any Participant from
receiving an Award of exercising an Option or Stock Appreciation Right, and any other terms and
conditions regarding any Award, based in each case upon such guidelines and factors as the
Committee or Board shall determine from time to time in their sole discretion);
(e) determine whether, to what extent and under what circumstances grants under the Plan are to be made and
operate, whether on a tandem basis or otherwise, with other grants or awards (whether equity or
cash based) made by the Company under or outside of the Plan; and
(f) delegate to one or more officers of the Company the right to grant Awards under the Plan, provided
that such delegation is made in accordance with the provisions of applicable state and federal laws.
Each of the Committee and the Board shall have the authority to adopt, alter and repeal such rules,
guidelines and practices governing the Plan as it shall from time to time deem advisable; to interpret the terms
and provisions of the Plan and any Award granted under thereunder (and any Grant Documents relating thereto); and
to otherwise supervise the administration of the Plan.
Each of the Committee and the Board shall also have the authority to provide, in their discretion, for
the rescission, forfeiture, cancellation or other restriction of any Award granted under the Plan, or for the
forfeiture, rescission or repayment to the Company by a Participant or former Participant of any profits or gains
related to any Award granted hereunder, or other limitations, upon the occurrence of such prescribed events and
under such circumstances as the Committee or the Board shall deem necessary and reasonable for the benefit of the
Company; provided, however, that this provision shall have no application after a Change of Control (as defined
below in Section 11) has occurred.
All decisions made by the Committee and the Board pursuant to the provisions of the Plan shall be made
in the Committee's or Board's sole discretion and shall be final and binding on all persons including the Company
and any Participant. No member of the Committee or Board will be liable for any such action or determination
made in good faith.
Notwithstanding any provision of the Plan to the contrary, the Committee shall have the exclusive
authority and discretion to award, administer or otherwise take any action required or permitted to be taken with
respect to Qualified Performance-Based Awards or under any provisions of the Plan with respect to Awards that are
intended to comply with the requirements of Section 162(m) of the Code.
4. Shares Subject to the Plan.
(a) The total number of Shares which may be issued pursuant to the Plan shall not exceed the
number of previously authorized remaining Shares under the 2000 Plan (not subject to outstanding Awards
and not delivered out of Shares reserved thereunder) as of the date of shareholder approval of the
Plan. Such Shares may consist, in whole or in part, of authorized and unissued shares or treasury
shares, as determined in the discretion of the Committee or the Board.
A-5
(b) If any Award made under the 2000 Plan or the Plan is forfeited, any Option (and the related Stock
Appreciation Right, if any), or any Stock Appreciation Right not related to an Option terminates,
expires or lapses without being exercised, or any Stock Appreciation Right is exercised for cash, the
Shares subject to such Awards that are, as a result, not delivered to the Participant shall again be
available for delivery in connection with Awards. If a Stock Appreciation Right is exercised, only the
number of Shares issued will be deemed delivered for purposes of determining the maximum number of
Shares available for delivery under the Plan. If the Exercise Price of any Option is satisfied by
delivering Shares to the Company (by either actual delivery or by attestation), only the number of
Shares issued net of the Shares delivered or attested to shall be deemed delivered for purposes of
determining the maximum number of Shares available for delivery pursuant to Awards under the Plan. To
the extent any Shares subject to an Award are not delivered to a Participant because such Shares are
used to satisfy an applicable tax withholding obligation, such Shares shall again be available for
delivery in connection with Awards; provided, further, that only Shares that are used to satisfy an
applicable tax withholding obligation upon exercise of an Option shall again be available for delivery
pursuant to Incentive Options.
(c) Shares available for issuance or reissuance under the Plan will be subject to adjustment as
provided in Section 15 below.
5. Eligible Participants. All Associates shall be eligible to receive Awards and thereby become
Participants in the Plan, regardless of such Associate's prior participation in the Plan or any other benefit
plan of the Company, provided that (1) only Associates who are employees of the Company or a Subsidiary may
receive Incentive Stock Options; and (2) for any Performance Period for which Awards are intended to be Qualified
Performance-Based Awards to eligible classes of Associates as set forth in Section 13, the Committee shall
designate the Associates eligible to be granted Awards no later than the 90th day after the start of the fiscal
year (or in the case of a Performance Period based upon a time period other than a fiscal year, no later than the
date 25% of the Performance Period has elapsed). No executive officer named in the Summary Compensation Table of
the Company's then current Proxy Statement shall be eligible to receive in excess of 200,000 Options or Stock
Appreciation Rights in any one-year period.
6. Options.
(a) Grant of Options. The Committee, the Board or their lawful designees may from time to
time authorize Grants of Options to any Participant upon such terms and conditions as the Committee
or Board may determine in accordance with the provisions set forth in the Plan. Each grant will
specify, among other things, the number of Shares to which it pertains; the Exercise Price, the
form of payment to be made by the Participant for the shares purchased upon exercise of any
Option; the required period or periods (if any) of continuous service by the Participant with
the Company, a Subsidiary or an Affiliated Company and/or any other conditions to be satisfied
before the Options or installments thereof will vest and become exercisable. Options granted
under the Plan may be either Non-Qualified Options or Incentive Stock Options.
Notwithstanding any provision of the Plan to the contrary, the aggregate Fair Market
Value (as determined on the Date of Grant) of the Common Stock with respect to which Incentive
Stock Options granted are exercisable for the first time by any Participant during any calendar
year (under all plans of the Company and its Subsidiaries) shall not exceed the maximum amount
specified by Section 422 of the Code, as amended from time to time (currently $100,000).
Each Option granted under this Plan will be evidenced by Grant Documents delivered to
the Participant containing such further terms and provisions, not inconsistent with the Plan,
as the Committee or Board may approve in their discretion.
A-6
(b) Exercise Price.
(i) The Exercise Price for each share of Common Stock purchasable under any Option
shall be not less than 100% of the Fair Market Value per share on the Date of Grant as
the Committee or Board shall specify. All such Exercise Prices shall be subject to
adjustment as provided for in Section 15 hereof.
(ii) If any Participant to whom an Incentive Stock Option is to be granted under
the Plan is on the Date of Grant the owner of stock (as determined under Section
425(d) of the Code) possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any one of its Subsidiaries or Affiliated
Companies, then the Exercise Price per share of Common Stock subject to such Incentive
Stock Option shall not be less than 110% of the Fair Market Value of one share of
Common Stock on the Date of Grant.
(c) Exercise Period. Subject to Section 11 hereof, the period during which an Option
shall vest and become exercisable by a Participant (or his or her representative(s) or
transferee(s)) whether during or after employment or following death, retirement or
disability (the "Exercise Period") shall be such period of time as may be designated
by the Committee or the Board as set forth in the Committee's or Board's applicable
rules, guidelines and practices governing the Plan and/or in the Grant Documents
executed in connection with such Option. If the Committee or Board provides, in their
sole discretion, that any Option is exercisable only in installments, the Committee or
Board may waive or accelerate such installment exercise provisions at any time at or
after grant in whole or in part, based upon such factors as the Committee or Board
shall determine, in their sole discretion.
The maximum duration of any Incentive Stock Option granted under the Plan
shall be ten (10) years from the Date of Grant (and no such Incentive Stock Option
shall be exercisable after the expiration of such (10) year period), unless the
Incentive Stock Option is granted to a Participant who, at the time of the grant, owns
stock representing more than 10% of the voting power of all classes of stock of the
Company, in which case the term may not exceed five (5) years from the Date of Grant.
The duration of Non-Qualified Stock Options shall be for such period as determined by
the Committee or Board in its sole discretion, not to exceed twelve years.
(d) Exercise of Option. Subject to Section 11 hereof, an Option may be exercised by a
Participant at any time and from time to time during the Exercise Period by giving written
notice of such exercise to the Company specifying the number of shares of Common Stock to be
purchased by the Participant. Such notice shall be accompanied by payment of the Exercise
Price in accordance with subsection (e) below.
(e) Payment for Shares. Full payment of the Exercise Price for the Shares purchased upon
exercise of an Option, together with the amount of any tax or excise due in respect of the sale
and issue thereof, may be made in one of the following forms of payment:
(i) Cash, by check or electronic funds transfer;
(ii) Pursuant to procedures approved by the Company, through the sale (or margin)
of Shares acquired upon exercise of the Option through a broker-dealer to whom the
Participant has submitted an irrevocable notice of exercise and irrevocable
instructions to deliver promptly to the Company the amount of sale (or if applicable
margin loan) proceeds sufficient to pay for the Exercise Price, together with, if
requested by the Company, the amount of federal, state, local or foreign withholding
taxes payable by reason of such exercise;
A-7
(iii) By delivering previously-owned shares of Common Stock owned by the Participant
for a period of at least six months having a Fair Market Value on the date upon which
the Participant exercises his or her Option equal to the Exercise Price, or by
delivering a combination of cash and shares of Common Stock equal to the aggregate
Exercise Price;
(iv) By authorizing the Company to withhold a number of shares of Common Stock
otherwise issuable to the Participant upon exercise of an Option having an aggregate
Fair Market Value on the date upon which the Participant exercises his or her Option
equal to the aggregate Exercise Price; or
(v) By any combination of the foregoing.
Provided, however, that the payment methods described in clause (iv) immediately above
shall not be available to a Participant without the prior consent of either the Committee or
its authorized designee(s), or if at any time the Company is prohibited from purchasing or
acquiring Shares under applicable law. The Committee or the Board may permit a Participant to
exercise an Option and defer the issuance of any Shares, subject to such rules and procedures
as the Committee or Board may establish.
The Company will issue no certificates for Shares until full payment of the Exercise
Price has been made, and a Participant shall have none of the rights of a shareholder until
certificates for the Shares purchased are issued; provided however, that for purposes of this
Section 6, full payment shall be deemed to have been received by the Company upon evidence of
delivery to a broker-dealer of the irrevocable instructions contemplated by clause (ii)
immediately above.
(f) Withholding Taxes. The Company may require a Participant exercising a Non-Qualified
Stock Option or Stock Appreciation Right granted hereunder to reimburse the Company (or the
entity which employs the Participant) for taxes required by any government to be withheld or
otherwise deducted and paid by such corporation in respect of the issuance of the Shares. Such
withholding requirements may be satisfied by any one of the following methods:
(i) A Participant may deliver cash in an amount which would satisfy the
withholding requirement;
(ii) A Participant may deliver previously-owned Shares (based upon the Fair Market
Value of the Common Stock on the date of exercise) in an amount which would satisfy
the withholding requirement; or
(iii) With the prior consent of either the Committee or the Board, or its authorized
designees, a Participant may request that the Company (or the entity which employs the
Participant) withhold from the number of Shares otherwise issuable to the Participant
upon exercise of an Option such number of Shares (based upon the Fair Market Value of
the Common Stock on the date of exercise) as is necessary to satisfy the withholding
requirement.
(g) Conditions to Exercise of Options. The Committee or the Board may, in their
discretion, require as conditions to the exercise of Options or Stock Appreciation Rights and
the issuance of shares thereunder either (a) that a registration statement under the Securities
Act of 1933, as amended, with respect to the Options or Stock Appreciation Rights and the
shares to be issued upon the exercise thereof, containing such current information as is
required by the Rules and Regulations under said Act, shall have become, and continue to be,
effective; or (b) that the Participant or his or her transferee(s) (i) shall have represented,
warranted and agreed, in form and substance satisfactory to the Company, both that he or she is
acquiring the Option or Stock Appreciation Right and, at the time of exercising the Option or
Stock Appreciation Right, that he or she is acquiring the shares for his/her own account, for
investment and not with a view to or in connection with any distribution; (ii) shall have
agreed to restrictions on transfer, in form and substance satisfactory to the Company; and
(iii) shall have agreed to an endorsement which makes appropriate reference to such
representations, warranties, agreements and restrictions both on the option and on the
certificate representing the shares.
A-8
(h) Use of Proceeds. Proceeds realized from the sale of Common Stock pursuant to Options
granted hereunder shall constitute general funds of the Company.
7. Stock Appreciation Rights.
(a) When granted, Stock Appreciation Rights may, but need not be, identified with a
specific Option (including any Option granted on or before the Date of Grant of the Stock
Appreciation Rights) in a number equal to or different from the number of Stock Appreciation
Rights so granted. If Stock Appreciation Rights are identified with Shares subject to an
Option, then, unless otherwise provided in the applicable Grant Documents, the Participant's
associated Stock Appreciation Rights shall terminate upon the expiration, termination,
forfeiture or cancellation of such Stock Option or the exercise of such Option.
(b) The Strike Price of any Stock Appreciation Right shall (i) for any Stock Appreciation
Right that is identified with an Option, equal the Exercise Price of such Option, or (ii) for
any other Stock Appreciation Right, be not less than 100% of the Fair Market Value of a Share
of Common Stock on the Date of Grant as the Committee or Board shall specify.
(c) Subject to Section 11 hereof, (i) each Stock Appreciation Right which is identified
with any Option grant shall vest and become exercisable by a Participant as and to the extent
that the related Option with respect to which such Stock Appreciation Right is identified may
be exercised; and (ii) each other Stock Appreciation Right shall vest and become exercisable by
a Participant, whether during or after employment or following death, retirement or disability,
at such time or times as may be designated by the Committee or Board as set forth in the
applicable rules, guidelines and practices governing the Plan and/or the Grant Documents
executed in connection with such Stock Appreciation Right.
(d) Subject to Section 11 hereof, Stock Appreciation Rights may be exercised by a
Participant by delivery to the Company of written notice of intent to exercise a specific
number of Stock Appreciation Rights. Unless otherwise provided in the applicable Grant
Documents, the exercise of Stock Appreciation Rights which are identified with Shares of Common
Stock subject to an Option shall result in the cancellation or forfeiture of such Option to the
extent of the exercise of such Stock Appreciation Right.
(e) The benefit to the Participant for each Stock Appreciation Right exercised shall be
equal to (i) the Fair Market Value of a Share of Common Stock on the date of exercise, minus
(ii) the Strike Price of such Stock Appreciation Right. Such benefit shall be payable in cash,
except that the Committee or Board may provide in the applicable rules, guidelines and
practices governing the Plan and/or the Grant Documents that benefits may be paid wholly or
partly in Shares of Common Stock.
8. Restricted Stock Awards.
(a) Issuance. A Restricted Stock Award shall be subject to restrictions imposed by the
Committee or the Board during a period of time specified by the Committee or Board (the
"Restriction Period"). Restricted Stock Awards may be issued hereunder to Participants for no
cash consideration or for such minimum consideration as may be required by applicable law,
either alone or in addition to other Awards granted under the Plan. The provisions of
Restricted Stock Awards need not be the same with respect to each Participant.
A-9
(b) Restricted Stock.
(i) The Company may grant Restricted Stock to those Associates the Committee or
the Board may select in their sole discretion. Each Award of Restricted Stock shall
have those terms and conditions that are expressly set forth in or are required by the
Plan and the Grant Documents as the Committee or the Board may determine in their
discretion.
(ii) While any restriction applies to any Participant's Restricted Stock,
(a) unless the Committee or the Board provides otherwise, the Participant shall receive
the dividends paid on the Restricted Stock and shall not be required to return those
dividends to the Company in the event of the forfeiture of the Restricted Stock; (b)
the Participant shall receive the proceeds of the Restricted Stock in any stock split,
reverse stock split, recapitalization, or other change in the capital structure of the
Company, which proceeds shall automatically and without need for any other action
become Restricted Stock and be subject to all restrictions then existing as to the
Participant's Restricted Stock; and (c) the Participant shall be entitled to vote the
Restricted Stock during the Restriction Period.
(iii) The Restricted Stock will be delivered to the Participant subject to the
understanding that while any restriction applies to the Restricted Stock, the
Participant shall not have the right to sell, transfer, assign, convey, pledge,
hypothecate, grant any security interest in or mortgage on, or otherwise dispose of or
encumber any shares of Restricted Stock or any interest therein. As a result of the
retention of rights in the Restricted Stock by the Company, except as required by any
applicable law, neither any shares of the Restricted Stock nor any interest therein
shall be subject in any manner to any forced or involuntary sale, transfer,
conveyance, pledge, hypothecation, encumbrance, or other disposition or to any charge,
liability, debt, or obligation of the Participant, whether as the direct or indirect
result of any action of the Participant or any action taken in any proceeding,
including any proceeding under any bankruptcy or other creditors' rights law. Any
action attempting to effect any transaction of that type shall be void.
(iv) Unless other provisions are specified in the Grant Documents or Plan
guidelines which may be adopted by the Committee or the Board from time to time, any
Restricted Stock held by the Participant at the time the Participant ceases to be an
Associate for any reason shall be forfeited by the Participant to the Company and
automatically re-conveyed to the Company.
(v) The Committee or the Board may withhold, in accordance with Section 16(f)
hereof, any amounts necessary to collect any withholding taxes upon any taxable event
relating to Restricted Stock.
(vi) The making of an Award of Restricted Stock and delivery of any Restricted
Stock is subject to compliance by the Company with all applicable laws. The Company
need not issue or transfer Restricted Stock pursuant to the Plan unless the Company's
legal counsel has approved all legal matters in connection with the delivery of the
Restricted Stock.
(vii) The Restricted Stock will be book-entry Shares only unless the Committee or
the Board decides to issue certificates to evidence any shares of Restricted Stock.
The Company may place stop-transfer instructions with respect to all Restricted Stock
on its stock transfer records.
A-10
(viii) At the time of grant of Restricted Stock (or at such earlier or later time as
the Committee or the Board determines to be appropriate in light of the provisions of
Code Section 409A), the Committee or the Board may permit a Participant of an Award of
Restricted Stock to defer receipt of his or her Restricted Stock in accordance with
rules and procedures established by the Committee or the Board. Alternatively, the
Committee or the Board may, in their discretion and at the times provided above,
permit an individual who would have been a Participant with respect to an Award of
Restricted Stock, to elect instead to receive an equivalent Award of Restricted Stock
Units, and the Committee or the Board may permit the Participant to elect to defer
receipt of Shares under the Restricted Stock Units in accordance with Section
8(c)(viii).
(ix) The minimum Restriction Period applicable to any Award of Restricted Stock
that is not subject to performance conditions restricting the grant size, the transfer
of the shares, or the vesting of the award shall be two (2) years from the date of
grant; provided, however, that a Restriction Period of less than two (2) years may be
approved under the Plan for such Awards with respect to up to a total of 100,000
Shares.
(c) Restricted Stock Units.
(i) The Company may grant Restricted Stock Units to those Associates as the
Committee or the Board may select in its sole discretion. Restricted Stock Units
represent the right to receive Shares in the future, at such times, and subject to
such conditions as the Committee or the Board shall determine. The restrictions
imposed shall take into account potential tax treatment under Code Section 409A.
(ii) Until the Restricted Stock Unit is released from restrictions and any Shares
subject thereto are delivered to the Participant, the Participant shall not have any
beneficial ownership in any Shares subject to the Restricted Stock Unit, nor shall the
Participant have the right to sell, transfer, assign, convey, pledge, hypothecate,
grant any security interest in or mortgage on, or otherwise dispose of or encumber any
Restricted Stock Unit or any interest therein. Except as required by any law, no
Restricted Stock Unit nor any interest therein shall be subject in any manner to any
forced or involuntary sale, transfer, conveyance, pledge, hypothecation, encumbrance,
or other disposition or to any charge, liability, debt, or obligation of the
Participant, whether as the direct or indirect result of any action of the Participant
or any action taken in any proceeding, including any proceeding under any bankruptcy
or other creditors' rights law. Any action attempting to effect any transaction of
that type shall be void.
(iii) Upon the lapse of the restrictions, the Participant holder of Restricted Stock
Units shall, except as noted below, be entitled to receive, as soon as
administratively practical, (a) that number of Shares subject to the Award that are no
longer subject to restrictions, (b) cash in an amount equal to the Fair Market Value
of the number of Shares subject to the Award that are no longer subject to
restrictions, or (c) any combination of Shares and cash, as the Committee or the Board
shall determine in their sole discretion, or shall have specified at the time the
Award was granted.
(iv) Restricted Stock Units and the entitlement to Shares, cash, or any combination
thereunder will be forfeited and all rights of a Participant to such Restricted Stock
Units and the Shares thereunder will terminate if the applicable restrictions are not
satisfied.
(v) A Participant holder of Restricted Stock Units is not entitled to any rights
of a holder of the Shares (e.g., voting rights and dividend rights), prior to the
receipt of such Shares pursuant to the Plan. The Committee or the Board may, however,
provide in the Grant Documents that the Participant shall be entitled to receive
dividend equivalent payments on Restricted Stock Units, on such terms and conditions
as the Grant Documents may specify.
A-11
(vi) The Committee or the Board may withhold, in accordance with Section 16(f)
hereof, any amounts necessary to collect any withholding taxes upon any taxable event
relating to any Restricted Stock Units.
(vii) The granting of Restricted Stock Units and the delivery of any Shares is
subject to compliance by the Company with all applicable laws.
(viii) At the time of grant of Restricted Stock Units (or at such earlier or later
time as the Committee or the Board determines to be appropriate in light of the
provisions of Code Section 409A), the Committee or the Board may permit a Participant
to elect to defer receipt of the Shares or cash to be delivered upon lapse of the
restrictions applicable to the Restricted Stock Units in accordance with rules and
procedures that may be established from time to time by the Committee or the Board.
Such rules and procedures shall take into account potential tax treatment under Code
Section 409A, and may provide for payment in Shares or cash.
9. Performance Awards.
(a) Grant. The Company or the Board may grant Performance Awards to Associates on any
terms and conditions the Committee or the Board deem desirable. Each Award of Performance
Awards shall have those terms and conditions that are expressly set forth in, or are required
by, the Plan and the Grant Documents.
(b) Performance Goals. The Committee or the Board may set Performance Goals which,
depending on the extent to which they are met during a Performance Period, will determine the
number of Performance Shares or Performance Units that will be delivered to a Participant at
the end of the Performance Period. The Performance Goals may be set at threshold, target, and
maximum performance levels, and the number of Performance Shares or Units to be delivered may
be tied to the degree of attainment of the various performance levels specified under the
various Performance Goals during the Performance Period. No payment shall be made with respect
to a Performance Share if any specified threshold performance level is not attained.
(c) Beneficial Ownership. A Participant receiving a Performance Award shall not have any
beneficial ownership in any Shares subject to such Award until Shares are delivered in
satisfaction of the Award, nor shall the Participant have the right to sell, transfer, assign,
convey, pledge, hypothecate, grant any security interest in or mortgage on, or otherwise
dispose of or encumber any Performance Award or any interest therein. Except as required by
any law, neither the Performance Award nor any interest therein shall be subject in any manner
to any forced or involuntary sale, transfer, conveyance, pledge, hypothecation, encumbrance, or
other disposition or to any charge, liability, debt, or obligation of the Participant, whether
as the direct or indirect result of any action of the Participant or any action taken in any
proceeding, including any proceeding under any bankruptcy or other creditors' rights law. Any
action attempting to effect any transaction of that type shall be void.
(d) Determination of Achievement of Performance Awards. The Committee or the Board shall,
promptly after the date on which the necessary financial, individual or other information for a
particular Performance Period becomes available, determine and certify the degree to which each
of the Performance Goals have been attained.
(e) Payment of Performance Awards. After the applicable Performance Period has ended, a
recipient of a Performance Award shall be entitled to payment based on the performance level
attained with respect to the Performance Goals applicable to the Performance Award.
Performance Awards shall be settled as soon as practicable after the Committee or Board
determines and certifies the degree of attainment of Performance Goals for the Performance
Period. Subject to the terms and conditions of the Grant Documents, payment to a Participant
with respect to a Performance Award may be made (a) in Shares, (b) in cash, or (c) any
combination of Shares and cash, as the Committee or the Board may determine at any time in
their sole discretion.
(f) Limitation on Rights/Withholding. A recipient of a Performance Award is not entitled
to any rights of a holder of the Shares (e.g. voting rights and dividend rights), prior to the
receipt of such Shares pursuant to the Plan. No dividend equivalents will be paid with respect
to Performance Awards. The Committee or the Board may withhold, in accordance with Section
16(f) hereof, any amounts necessary to collect any withholding taxes upon any taxable event
relating to Performance Awards.
10. Other Stock Unit Awards. Other Awards of Shares and other Awards that are valued in whole or
in part by reference to, or are otherwise based on, Shares or other property ("Other Stock Unit Awards") may be
granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan. Other
Stock Unit Awards may be paid in Shares, cash or any other form of property as the Committee or the Board may
determine. Subject to the provisions of the Plan, the Committee or the Board shall have sole and complete
authority to determine the Associates to whom such Awards shall be made, the times at which such Awards shall be
made, the number of Shares to be granted pursuant to such Awards, and all other terms and conditions of such
Awards. The provisions of Other Stock Unit Awards need not be the same with respect to each Participant. For
any Award or Shares subject to any Award made under this Section, the vesting of which is conditioned only on the
passage of time, such Restriction Period shall be a minimum of two (2) years for full vesting. Shares (including
securities convertible into Shares) subject to Awards granted under this Section may be issued for no cash
consideration or for such minimum consideration as may be required by applicable law.
11. Change in Control. Notwithstanding any other provision of the Plan to the contrary, the
Committee or Board may determine, in their discretion, that upon the occurrence of a transaction involving a
merger or consolidation of the Company, a sale of all or substantially all of its assets, or the acquisition of a
significant percentage of the voting power of the Company, or such other form of transaction as the Committee or
Board may determine from time to time to constitute a change in control of the Company, that (i) Stock Options
and Stock Appreciation Rights may become immediately exercisable; (ii) restrictions and deferral limitations
applicable to any Restricted Stock or Restricted Stock Unit Award may become free of all restrictions and
limitations and become fully vested and transferable; (iii) all Performance Awards may be considered to be
prorated, and any deferral or other restriction may lapse and such Performance Awards may be immediately settled
or distributed; (iv) the restrictions and deferral limitations and other conditions applicable to any Other Stock
Unit Awards or any other Awards granted under the Plan may lapse and such Other Stock Unit Awards or such other
Awards may become free of all restrictions, limitations or conditions and become fully vested and transferable to
the full extent of the Award not previously forfeited or vested.
The Committee or the Board, in their discretion, may also determine that, upon the occurrence of such a
change in control transaction, each Stock Option or Stock Appreciation Right outstanding hereunder shall
terminate within a specified number of days after notice to the holder, and such holder shall receive, with
respect to each share of Common Stock subject to such Stock Option or Stock Appreciation Right, an amount equal
to the excess of the fair market value of the Shares immediately prior to the occurrence of such transaction
(which shall be no less than the value being paid for such Shares pursuant to such transaction) over the Exercise
Price or Strike Price, as applicable, of such Stock Option or Stock Appreciation Right; such amount shall be
payable in cash, in one or more of the kinds of property payable in such transaction, or in a combination
thereof, as the Committee or Board in their discretion shall determine.
12. Transferability of Awards.
(a) Incentive Stock Options granted under the Plan shall not be transferred by a Participant, except by
will or by the laws of descent and distribution.
(b) Other Awards (subject to the limitations in paragraph (c) below) granted under the Plan may
be transferred by a Participant to: (i) the Participant's family members (whether related by
blood, marriage, or adoption and including a former spouse); (ii) trust(s) in which the
Participant's family members have a greater than 50% beneficial interest; (iii) trusts,
including but not limited to charitable remainder trusts, or similar vehicles established for
estate planning and/or charitable giving purposes; and (iv) family partnerships and/or family
limited liability companies which are controlled by the Participant or the Participant's family
members, such transfers being permitted to occur by gift or pursuant to a domestic relation
order, or, only in the case of transfers to the entities described in clauses (i), (ii) and
(iii) immediately above, for value. The Committee or Board, or their authorized designees may,
in their sole discretion, permit transfers of Awards to other persons or entities upon the
request of a Participant. Subsequent transfers of previously transferred Awards may only be
made to one of the permitted transferees named above, unless the subsequent transfer has been
approved by the Committee or the Board, or their authorized designee(s). Otherwise, such
transferred Awards may be transferred only by will or the laws of descent and distribution.
A-13
(c) Notwithstanding the foregoing, if at the time any Option is transferred as permitted under
this Section 12, a corresponding Stock Appreciation Right has been identified as being granted in tandem
with such Option, then the transfer of such Option shall also constitute a transfer of the
corresponding Stock Appreciation Right, and such Stock Appreciation Right shall not be
transferable other than as part of the transfer of the Option to which it relates.
(d) Concurrently with any transfer, the transferor shall give written notice to the Plan's then
current Plan administrator of the name and address of the transferee, the number of shares being
transferred, the Date of Grant of the Awards being transferred, and such other information as
may reasonably be required by the administrator. Following a transfer, any such Awards shall
continue to be subject to the same terms and conditions as were applicable immediately prior to
transfer. The provisions of the Plan and applicable Grant Documents shall continue to be
applied with respect to the original Participant, and such Awards shall be exercisable by the
transferee only to the extent that they could have been exercised by the Participant under the
terms of the original Grant Documents. The Company disclaims any obligation to provide notice
to a transferee of any termination or expiration of a transferred Award.
13. Code Section 162(m) Provisions and Award Limitations.
(a) Notwithstanding any other provision of the Plan, (i) to the extent Awards to salaried
employees (each an "eligible employee" for purposes of Code Section 162(m) and the Treasury
Regulations thereunder with regard to shareholder approval of the material terms of the
Performance Goals) are intended to be Qualified Performance-Based Awards; or (ii) if the
Committee determines at the time any Award is granted to a salaried employee who is, or who may
be as of the end of the tax year in which the Company would claim a tax deduction in connection
with such Award, a Covered Associate, then the Committee may provide that this Section 13 is
applicable to such Award.
(b) If an Award is subject to this Section 13, then the lapsing of restrictions thereon
and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall
be subject to the achievement or attainment of one or more objective Performance Goals as
determined by the Committee, using one or more Performance Measures also as determined by the
Committee. Such Performance Goals shall be established by the Committee no later than 90 days
after the beginning of the Performance Period to which the Performance Goals pertain and while
the attainment of the Performance Goals is substantially uncertain, and in any event no later
than the date 25% of the Performance Period has elapsed.
(c) Notwithstanding any provision of this Plan (other than Section 11 or 14), with respect
to any Award that is subject to this Section 13, the Committee may adjust downwards, but not
upwards, the amount payable pursuant to such Award, and the Committee may not waive the
achievement of the applicable Performance Goals except in the case of the death or disability
of the Participant
A-14
(d) The Committee shall have the power to impose such other restrictions on Awards subject
to this Section 13 as it may deem necessary or appropriate to ensure that such Awards satisfy
all requirements for "performance-based compensation" within the meaning of Section 162(m)
(4) (C) of the Code, or any successor provision thereto. Whenever the Committee determines that
it is advisable to grant or pay Awards that do not qualify as Qualified Performance-Based
Awards, the Committee may make grants or payments without satisfying the requirements of Code
Section 162(m).
(e) Notwithstanding any provision of this Plan other than Section 15, commencing with
calendar year 2005, (i) no Participant may be granted in any twelve (12) month period an
aggregate amount of Options and/or Stock Appreciation Rights with respect to more than 200,000
Shares, and (ii) no Participant may be granted in any twelve (12) month period an aggregate
amount of Restricted Stock Awards, Restricted Stock Unit Awards, Performance Awards or Other
Stock Unit Awards, with respect to more than 50,000 Shares (or cash amounts based on the value
of more than 50,000 Shares).
14. Alteration, Termination, Discontinuance, Suspension, and Amendment.
(a) The Committee or the Board may amend, alter, suspend, discontinue or terminate the
Plan or any portion thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination shall be made without (i) shareholder approval if
such approval is necessary to qualify for or comply with any tax or regulatory requirement for
which or with which the Committee or Board deems it necessary or desirable to qualify or
comply; or (ii) the consent of the affected Participant, if such action would impair the rights
of such Participant under any outstanding Award. Notwithstanding anything to the contrary
herein, the Committee or the Board may make technical amendments to the Plan as may be
necessary so as to have the Plan conform to any laws or regulations in any jurisdiction within
or outside the United States, so long as shareholder approval of such technical amendments is
not required.
(b) The Committee or Board may amend the terms of any outstanding Award, prospectively or
retroactively, except to the extent that such action would cause an Award subject to Section 13
not to qualify for the exemption from the limitation on deductibility imposed by
Section 162(m)(4)(c) of the Code, and except that no such amendment shall impair the rights of
any Participant without his or her consent. Subject to the requirements of paragraph (c)
below, the Committee or Board may, without the consent of the Participant, amend any Grant
Documents evidencing an Option or Stock Appreciation Right granted under the Plan, or otherwise
take action, to accelerate the time or times at which an Option or Stock Appreciation Right may
be exercised; to extend the expiration date of an Award; to waive any other condition or
restriction applicable to an Award or to the exercise of an Option or Stock Appreciation Right;
to reduce the Exercise Price or Strike Price, as applicable, of an Option or Stock Appreciation
Right; to amend the definition of a change in control of the Company (if such a definition is
contained in such Grant Documents) to expand the events that would result in a change in
control and to add a change in control provision to such Grant Documents (if such provision is
not contained in such Grant Documents); and may amend any such Grant Documents in any other
respect with the consent of the Participant.
(c) If an amendment would (i) materially increase the benefits to participants under the
Plan, (ii) increase the aggregate number of Shares that may be issued under the Plan, or (iii)
materially modify the requirements for participation in the Plan by materially increasing the
class or number of persons eligible to participate in the Plan, then such amendment shall be
subject to shareholder approval.
(d) If required by any Legal Requirement, any amendment to the Plan or any Award will also
be submitted to and approved by the requisite vote of the shareholders of the Company. If any
Legal Requirement requires the Plan to be amended, or in the event any Legal Requirement is
amended or supplemented (e.g., by addition of alternative rules) to permit the Company to
remove or lessen any restrictions on or with respect to an Award, the Board and the Committee
each reserve the right to amend the Plan or any Grant Documents evidencing an Award to the
extent of any such requirement, amendment or supplement, and all Awards then outstanding will
be subject to such amendment.
A-15
(e) Notwithstanding any provision of the Plan to the contrary, the Committee or the Board
may not, without prior approval of the shareholders of the Company, reprice any outstanding
Option by either lowering the Exercise Price thereof or canceling such outstanding Stock Option
in consideration of a grant having a lower Exercise Price. This paragraph 14(d) is intended to
prohibit the repricing of "underwater" Options without prior shareholder approval and shall not
be construed to prohibit the adjustments provided for in Section 15 hereof.
(f) The Plan may be terminated at any time by action of the Board. The termination of the
Plan will not adversely affect the terms of any outstanding Award.
15. Adjustment of Shares; Effect of Certain Transactions. Notwithstanding any other provision of
the Plan to the contrary, in the event of any change in the shares of Common Stock subject to the Plan or to any
Award (through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, issuance of rights to subscribe, or change in
capital structure), appropriate adjustments or substitutions shall be made by the Committee or the Board as to
the (i) maximum number of shares of Common Stock subject to the Plan, (ii) maximum number of Shares of Common
Stock for which Awards may be granted to any one Associate, and (iii) the number of Shares of Common Stock and
price per share subject to outstanding Awards as shall be equitable to prevent dilution or enlargement of rights
under previously granted Awards. The determination of the Committee or Board as to these matters shall be
conclusive; provided, however, that (i) any such adjustment with respect to an Incentive Stock Option and any
related Stock Appreciation Right shall comply with the rules of Section 424(a) of the Code; and (ii) in no event
shall any adjustment be made which would disqualify any Incentive Stock Option granted hereunder as an Incentive
Stock Option for purposes of Section 422 of the Code.
16. General Provisions.
(a) No Associate or Participant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Associates or Participants
under the Plan.
(b) Except to the extent that such action would cause an Award subject to Section 13 not
to qualify for the exemption from the limitation on deductibility imposed by
Section 162(m)(4)(c) of the Code, the Committee or Board shall be authorized to make adjustments
in performance award criteria or in the terms and conditions of other Awards in recognition of
unusual or nonrecurring events affecting the Company or its financial statements or changes in
applicable laws, regulations or accounting principles. The Committee or Board may correct any
defect, supply any omission, or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem desirable to carry it into effect. In the event the
Company shall assume outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of or combination with another
corporation or business entity, the Committee or Board may, in their discretion, make such
adjustments in the terms of Awards under the Plan as it shall deem appropriate.
(c) All certificates for Shares delivered under the Plan pursuant to any Award shall be
subject to such stock transfer orders and other restrictions as the Committee or Board may deem
advisable under the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Shares are then listed, and any applicable state
of Federal securities law, and the Committee or Board may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
(d) No Award granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the Committee or the Board in
their sole discretion has determined that any such offer, if made, would be in compliance with
all applicable requirements of the U.S. federal securities laws and any other laws to which
such offer, if made, would be subject.
A-16
(e) The Committee or the Board shall be authorized to establish procedures pursuant to
which the payment of any Award may be deferred. Subject to the provisions of the Plan and any
Grant Documents, the recipient of an Award (including, without limitation, any deferred Award)
may, if so determined by the Committee or the Board, be entitled to receive, currently or on a
deferred basis, cash dividends, or cash payments in amounts equivalent to cash dividends on
Shares ("dividend equivalents"), with respect to the number of Shares covered by the Award, as
determined by the Committee or the Board, in their sole discretion, and the Committee or Board
may provide that such amounts (if any) shall be deemed to have been reinvested in additional
Shares or otherwise reinvested.
(f) The Company shall be authorized to withhold from any Award granted or payment due
under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder
and to take such other action as may be necessary in the opinion of the Plan administrator to
satisfy all obligations for the payment of such taxes, not to exceed the statutory minimum
withholding obligation. The Committee or Board shall be authorized to establish procedures for
election by Participants to satisfy such obligations for the payment of such taxes (i) by
delivery of or transfer of Shares to the Company, (ii) with the consent of the Committee or the
Board, by directing the Company to retain Shares otherwise deliverable in connection with the
Award, (iii) by payment in cash of the amount to be withheld, or (iv) by withholding from any
cash compensation otherwise due to the Participant.
(g) Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to shareholder approval if required, and such
arrangements may be either generally applicable or applicable only in specific cases.
(h) The validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the laws of the state of Delaware
and applicable Federal law.
(i) If any provision of this Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee or the Board, such provision shall be construed or deemed
amended to conform to applicable law, or if it cannot be construed or deemed amended without,
in the determination of the Committee or the Board, materially altering the intent of the Plan,
it shall be stricken, and the remainder of the Plan shall remain in full force and effect.
(j) Awards may be granted to Participants who are foreign nationals or employed outside
the United States, or both, on such terms and conditions different from those applicable to
Awards to Employees employed in the United States as may, in the judgment of the Committee or
the Board, be necessary or desirable in order to recognize differences in local law or tax
policy. The Committee or Board also may impose conditions on the exercise or vesting of Awards
in order to minimize the Company's obligations with respect to tax equalization for Associates
on assignments outside their home country.
(k) No Award shall be granted or exercised if the grant of the Award or the exercise and
the issuance of shares or other consideration pursuant thereto would be contrary to law or the
regulations of any duly constituted authority having jurisdiction.
(l) The Plan will not confer upon any Participant any right with respect to continuance of
employment or other service with the Company or any Subsidiary or Affiliated Company, nor will
it interfere in any way with any right the Company or any Subsidiary or Affiliated Company
would otherwise have to terminate a Participant's employment or other service at any time.
A-17
APPENDIX B
2005 STOCK PURCHASE PLAN
OF
ACXIOM CORPORATION
This 2005 Stock Purchase Plan of Acxiom Corporation (the "Plan") is effective as of August 3, 2005, or at such later time
as the Plan may be approved by the stockholders of Acxiom Corporation (the "Company").
1. Purpose. The purposes of the Plan are to provide a method whereby employees ("Associates") of the Company or
of any Qualified Subsidiary (as defined below), will have an opportunity to acquire a proprietary interest in the Company through
the purchase of Shares (as defined below) pursuant to a plan which is intended to qualify as an "employee stock purchase plan"
within the meeting of Section 423(b) of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall be
construed so as to extend and limit participation in a manner consistent with the requirements of Section 423 of the Code.
2. Definitions.
(a) "Administrator" shall mean the administrator of the Plan, as determined pursuant to Section 15 hereof.
(b) "Associate" shall mean any person who renders services to the Company or a Subsidiary in the status of
an employee within the meaning of Code Section 3401(c). "Associate" shall not include any director of the Company or a Subsidiary
who does not render services to the Company or a Subsidiary in the status of an employee within the meaning of Code Section 3401(c).
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, as currently in effect or as may be
amended in the future.
(e) "Committee" shall mean the committee appointed to administer the Plan pursuant to Section 15 hereof.
(f) "Company" shall mean Acxiom Corporation, a Delaware corporation, and any successor by merger,
consolidation or otherwise.
(g) "Compensation" shall mean all base, straight-time gross earnings and commissions, exclusive of payments
for overtime, shift premium, incentive compensation, incentive payments, bonuses and other compensation.
(h) "Effective Date" shall mean August 3, 2005, or such later date as the Plan may be approved by the
stockholders of the Company.
(i) "Eligible Associate" shall mean an Associate of the Company or of a Qualified Subsidiary: (i) who does
not, immediately after the option is granted, own stock possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Company or a Subsidiary (as determined under Section 423(b)(3) of the Code); (ii) whose
customary employment is for at least twenty (20) hours per week; and (iii) whose customary employment is for at least five (5)
months in any calendar year. For purposes of clause (i), the rules of Section 424(d) of the Code with regard to the attribution
of stock ownership shall apply in determining the stock ownership of an individual, and stock which an Associate may purchase
under outstanding rights or options shall be treated as stock owned by the Associate. Notwithstanding the foregoing, to the extent
B-1
there is any Associate who is not paid on the Company's regular payroll system, such Associate must be employed with the Company
for two (2) years before becoming eligible to participate in the Plan. The preceding sentence is not intended, and should not be
construed, to expand the definition of Associate beyond those individuals who render services for the Company within the meaning
of Section 3401 of the Code. The Company may, from time to time, modify the definition of Eligible Associate, provided that
such modification shall neither permit nor deny participation in the Plan contrary to the requirements of the Code (including,
but not limited to, Section 423 (b)(3), (4), (5), and (8) thereof).
(j) "Enrollment Date" shall mean the first day of each Offering Period.
(k) "Fair Market Value" shall mean, as of any date, the value of the Shares determined as follows:
(i) Where the Shares are not purchased in the open market, the closing sales price per share of the
Shares (or the closing bid price, if no such sales were reported) on the Nasdaq's National Market System
("NMS"), or such stock exchange or other national market system on which the Shares are listed or traded,
on the Purchase Date.
(ii) Where the Shares are purchased in the open market, the average of the actual prices, if such actual
prices vary, at which the Shares were purchased on the Purchase Date.
(iii) In the event that the foregoing valuation methods are not practicable, such other reasonable
valuation method as the Administrator shall, in its discretion, select and apply in good faith as of such date.
(l) "Offering Period" shall mean, subject to Section 4, the period commencing on the first day of any month
and terminating on the Purchase Date. The duration and timing of Offering Periods may be changed pursuant to
Section 4 of the Plan.
(m) "Participating Associate" shall mean an Associate who participates in the Plan.
(n) "Plan" shall mean this 2005 Stock Purchase Plan of Acxiom Corporation.
(o) "Purchase Date" shall mean the last day of each Offering Period. If the last day of any Offering Period
falls on a day on which Nasdaq or the national stock exchanges are not open for trading, the Purchase Date shall be the trading
day next following the last day. The timing of the Purchase Date may be changed pursuant to Section 4 of the Plan.
(p) "Purchase Price" shall mean an amount not less than 85% or greater than 100% of the Fair Market Value of
a Share on the Purchase Date, as determined from time to time by the Board or by an authorized Committee of the Board. In the
absence of such a determination by the Board or Committee, the Purchase Price shall be 85% of the Fair Market Value of a Share on
the Purchase Date.
(q) "Qualified Subsidiary" shall mean all Subsidiaries of the Company in existence as of the Effective Date
or which may exist in the future. The Board or an authorized Committee of the Board may initiate or terminate the designation
of a Subsidiary as a Qualified Subsidiary without the approval of the stockholders of the Company.
(r) "Shares" shall mean the common stock of the Company, $0.10 par value.
(s) "Subsidiary" shall mean any entity, domestic or foreign, of which not less than 50% of the voting rights
are held by the Company or a Subsidiary, whether or not such entity now exists or is hereafter organized or acquired by the
Company or a Subsidiary.
B-2
3. Eligibility.
(a) Any Eligible Associate who is employed by the Company or a Qualified Subsidiary on the first day
of any Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the
requirements of Section 5 and the limitations imposed by Section 423(b) of the Code.
(b) Each Associate who first becomes an Eligible Associate subsequent to the first day of
a given Offering Period will be eligible to become a Participating Associate in the Plan on the first day of the
first Offering Period following the day on which such person becomes an Eligible Associate, subject to the
requirements of Section 5 and the limitations imposed by Section 423(b) of the Code.
(c) No Eligible Associate shall be granted an option under the Plan to the extent that his
or her rights to purchase Shares under all Section 423 employee stock purchase plans of the Company and its
Subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at
the fair market value of the shares at the time such option is granted) for each calendar year in which such
option is outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the
Code and the Treasury Regulations thereunder.
(d) As provided under Treasury Regulation Section 1.421-1(h)(2), an employee on a leave of
absence covered by the Family Medical Leave Act, the Uniformed Services Employment and Reemployment Rights Act,
or any similar statute or contract that provides for reemployment or continued employment rights will be deemed
to be continuously employed for purposes of this Plan.
4. Offering Periods. The Plan shall be implemented by consecutive Offering Periods which shall continue
until the Plan expires or is terminated in accordance with Section 20 hereof. Subject to Section 20, Offering
Periods shall be one month in duration, unless a longer period (not to exceed 27 months) is otherwise specified
by the Administrator. The Administrator shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) and Purchase Dates with respect to future offerings without
stockholder approval.
5. Participation.
(a) An Eligible Associate may become a Participating Associate in the Plan as soon as administratively
practicable following the completion of an enrollment form and the filing of such form with the Company.
(b) Payroll deductions or contributions for a Participating Associate shall commence on the first payroll
following the first day of the Offering Period and shall end on the last payroll in the Offering Period to which such
authorization is applicable, unless terminated sooner by the Participating Associate as provided in Section 11 hereof.
(c) During a leave of absence approved by the Company or a Subsidiary and as long as the
requirements of Treasury Regulation Section 1.421-1(h)(2) are met, a Participating Associate may continue to
participate in the Plan by making cash payments to the Company on each pay day equal to the amount of the
Participating Associate's payroll deductions or contributions under the Plan for the pay day immediately
preceding the first day of such Participating Associate's leave of absence. If a leave of absence is unapproved
or fails to meet the requirements of Treasury Regulation Section 1.421-1(h)(2), the Participating Associate will
automatically cease to participate in the Plan. In such event, the Company will automatically cease to deduct
the Participating Associate's payroll under the Plan. The Company will pay to the Participating Associate his or
her total payroll deductions for the Offering Period, in cash and in one lump sum, without interest, as soon as
practicable after the Participating Associate ceases to participate in the Plan.
B-3
(d) A Participating Associate's completion of an enrollment form will enroll such
Participating Associate in the Plan for each successive and subsequent Offering Period on the terms contained
therein until the Participating Associate either submits a new enrollment form, withdraws from participation
under the Plan as provided in Section 11 hereof, or otherwise becomes ineligible to participate in the Plan.
6. Payroll Deductions and Contributions.
(a) At the time a Participating Associate files his or her enrollment form, he or she
shall elect to have payroll deductions made on each payday during an Offering Period in an amount not less than
$5.00 USD (or foreign equivalent thereof) and not more than ten percent (10%) (or such other maximum percentage
as the Board may establish from time to time before an Enrollment Date) of such participant's Compensation on
each payday during the Offering Period.
(b) Where payroll deductions are not permitted in a country outside of the United States,
a Participating Associate may elect to make contributions on each pay day during any Offering Period in an amount
not less than the foreign equivalent of $5.00 USD and not more than ten percent (10%) (or such other maximum
percentage as the Board may establish from time to time before an Enrollment Date) of such participant's
Compensation which he or she receives for the payroll period immediately preceding the relevant the Offering
Period.
(c) All payroll deductions and contributions made for a Participating Associate shall be
credited to his or her Payroll Deduction Account (as defined in Section 7) under the Plan. A Participating
Associate may not make any additional payments into such account.
(d) A Participating Associate may discontinue his or her participation in the Plan as
provided in Section 11 hereof, or may increase or decrease the rate of his or her payroll deductions or
contributions during the Offering Period by completing a revised enrollment form authorizing a change in payroll
deduction or contribution and filing it with the Company. An election to increase or decrease a Participating
Associate's payroll deductions or contributions shall be permitted no more than once every thirty days.
(e) Notwithstanding the foregoing, to the extent necessary to comply with Section
423(b)(8) of the Code and Section 3(c) hereof, a Participating Associate's payroll deductions may be decreased to
zero percent (0%) at any time during an Offering Period.
(f) At the time the option is exercised, in whole or in part, or at the time some or all
of the Shares issued under the Plan are disposed of, the Participating Associate must make adequate provision for
the Company's or Subsidiary's federal, national, state, local municipal, or other tax or Social Security
withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Shares.
At any time, the Company or any Subsidiary may, but shall not be obligated to, withhold from the Participating
Associate's Compensation the amount necessary for the Company or the Subsidiary to meet applicable withholding
obligations, including any withholding required to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of the Shares by a Participating Associate.
7. Payroll Deduction Account. The Company shall establish a payroll deduction account ("Payroll
Deduction Account") for each Participating Associate, and shall credit all payroll deductions and contributions
made on behalf of each Participating Associate pursuant to Section 6 to his or her Payroll Deduction Account.
8. Grant of Option. On the Enrollment Date of each Offering Period, each Eligible Associate
participating in such Offering Period shall be granted an option to purchase on each Purchase Date during such
Offering Period (at the applicable Purchase Price) up to a number of Shares determined by dividing such
Participating Associate's payroll deductions accumulated on such Purchase Date and retained in the Participating
Associate's Payroll Deduction Account as of the Purchase Date by the applicable Purchase Price. Exercise of the
option shall occur as provided in Section 9 hereof, unless the Participating Associate has Withdrawn pursuant to
Section 11 hereof or otherwise becomes ineligible to participate in the Plan. The option shall expire on the
last day of the Offering Period.
B-4
9. Exercise of Option.
(a) By the Purchase Date, the Company shall cause a statement of the balance in each
Participating Associate's Payroll Deduction Account to be forwarded to the securities brokerage firm as set
forth in Section 10 for purchase on his or her account of the number of Shares determined under subparagraphs
(b) and (c) of this Section.
(b) Unless a Participating Associate Withdraws from the Plan as provided in Section 11
hereof or otherwise becomes ineligible to participate in the Plan, his or her option for the purchase of Shares
shall be exercised automatically on the Purchase Date, and the maximum number of full Shares and fractional
Shares subject to the option shall be purchased for such Participating Associate at the applicable Purchase Price
with the accumulated payroll deductions in his or her account. During a Participating Associate's lifetime, a
Participating Associate's option to purchase Shares hereunder is exercisable only by him or her.
(c) If the Administrator determines that, on a given Purchase Date, the number of Shares
with respect to which options are to be exercised may exceed (i) the number of Shares that were available for
sale under the Plan on the first day of the applicable Offering Period, or (ii) the number of shares available
for sale under the Plan on such Purchase Date, the Administrator shall allocate the available Shares among such
Participating Associates in as uniform a manner as shall be practicable. The balance of the amount credited to
the account of each Participating Associate which has not been applied to the purchase of Shares shall be paid to
such Participating Associate in one lump sum in cash as soon as reasonably practicable after the Exercise Date,
without any interest thereon.
10. Brokerage Accounts. By enrolling in the Plan, each Eligible Associate shall be deemed to have
authorized the establishment of a brokerage account ("Brokerage Account") on his or her behalf at a securities
brokerage firm to be selected from time to time by the Administrator. The Brokerage Account shall be governed
by, and shall be subject to, the terms and conditions of this Plan and of a written agreement between the Company
and the securities brokerage firm and, if applicable, the Participating Associate and the securities brokerage
firm. As promptly as practicable after each Purchase Date on which a purchase of Shares occurs, the Company may
arrange for the deposit into each Participating Associate's Brokerage Account of the number of Shares purchased
upon exercise of his or her option. Shares purchased on behalf of any Participating Associate pursuant to the
Plan shall be held in the Participating Associate's Brokerage Account in his or her name.
11. Withdrawal.
(a) A Participating Associate may withdraw all but not less than all of the payroll
deductions or contributions credited to his or her Payroll Deduction Account and not yet used to exercise his or
her option under the Plan at any time prior to a Purchase Date by giving written notice to the Company
authorizing payroll deductions ("Withdraw" or "Withdrawal"). All of the Participating Associate's payroll
deductions or contributions credited to his or her account during the Offering Period shall be paid to such
Participating Associate as soon as practicable after receipt of the notice of Withdrawal. Thereafter, such
Participating Associate's option for the Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participating
Associate Withdraws from an Offering Period, payroll deductions or contributions shall not resume at the
beginning of any succeeding Offering Periods unless the Participating Associate delivers to the Company a new
enrollment form; provided, however, that any Eligible Associate who is deemed to be an "executive officer" of the
Company as defined by Section 16b-3 of the Securities Exchange Act of 1934 shall not renew his or her
participation in the Plan until at least six (6) months have elapsed since the date of Withdrawal.
B-5
(b) A Participating Associate's Withdrawal from an Offering Period shall not have any
effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the
Company or in succeeding Offering Periods.
12. Termination of Employment. Upon (i) a Participating Associate's ceasing to be an Eligible
Associate for any reason, including termination of employment, disability or death or (ii) a Participating
Associate's being granted a leave of absence and failing to return to active employment upon the expiration of
his or her leave in accordance with the Company's policy with respect to permitted absences, he or she shall be
deemed to have elected to Withdraw from the Plan, the payroll deductions on behalf of the Participating Associate
shall be discontinued, and any amounts credited to such Participating Associate's Payroll Deduction Account
during the Offering Period shall be paid to such Participating Associate or, in the case of his or her death, to
the person or persons entitled thereto under Section 16 hereof, as soon as reasonably practicable, and such
Participating Associate's option for the Offering Period shall be automatically terminated. A transfer of a
Participating Associate's employment between or among the Company and any Qualified Subsidiary shall not be
treated as a termination of employment for purposes of the Plan.
13. Interest. No interest shall accrue on the payroll deductions or contributions of a
Participating Associate in the Plan, unless required to accrue in a country outside of the United States.
14. Shares Subject to Plan.
(a) Subject to adjustment upon changes in capitalization of the Company as provided in
Section 19 hereof, the maximum number of Shares which shall initially be made available for sale under the Plan
shall be 2,000,000. If any right granted under the Plan shall for any reason terminate without having been
exercised, the Shares not purchased under such right may, in the sole discretion of the Administrator, become
available for issuance under the Plan. The Shares subject to the Plan may be authorized but unissued Shares or
reacquired Shares, bought on the market or otherwise.
(b) With respect to Shares subject to an option granted under the Plan, a Participating
Associate shall not be deemed to be a stockholder of the Company, and the Participating Associate shall not have
any of the rights or privileges of a stockholder, until such Shares have been issued to the Participating
Associate or his or her nominee following exercise of the Participating Associate's option. A Participating
Associate shall have rights as a stockholder with respect to all Shares which are purchased under the Plan for
such Participating Associate's account; provided, however, that a Participating Associate shall have no right to
vote any fractional interest in a Share credited to his or her account.
15. Administration.
(a) The Plan shall be administered by the Compensation Committee of the Board unless and
until the Board delegates administration to a different committee as set forth below. The Compensation Committee
of the Board may delegate administration of the Plan to an internal Committee made up of Associates if permitted
by applicable law and the rules and regulations of any stock exchange or market upon which the Company's shares
may be listed and/or traded. The term "Committee" shall apply to any persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to exercise, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.
References in the Plan to the "Administrator" shall mean the Board unless administration is delegated to a
Committee or subcommittee, in which case references in the Plan to the Administrator shall thereafter be to the
Committee or subcommittee.
B-6
(b) It shall be the duty of the Administrator to conduct the general administration of the
Plan in accordance with the provisions of the Plan. The Administrator shall have the power to interpret the Plan
and the terms of the options and to adopt such rules for the administration, interpretation, and application of
the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All determinations by the
Administrator in carrying out and administering the Plan and in construing and interpreting the Plan shall be
final, binding and conclusive for all purposes and upon all persons interested. The Administrator at its option
may utilize the services of such other persons as are necessary to assist in the proper administration of the
Plan. The Administrator may select a securities brokerage firm to assist with the purchase of the Shares and the
maintenance of Brokerage Accounts for Participating Associates in the Plan. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the
Plan.
(c) All expenses and liabilities incurred by the Administrator in connection with the
administration of the Plan shall be borne by the Company and its Qualified Subsidiaries; provided, however, that
all sales commissions incurred upon sale by a Participating Associate of Shares out of his or her Brokerage
Account shall be borne by the Participating Associate. The Administrator may, with the approval of the Board,
employ attorneys, consultants, accountants, appraisers, or such other persons as the Administrator deems
necessary or appropriate to carry out its duties under the Plan. The Administrator, the Company and its officers
and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons so employed
by the Administrator.
16. Designation of Beneficiaries / Transferability.
(a) A Participating Associate may file a written beneficiary designation naming those
persons who are to receive any cash from the Participating Associate's Payroll Deduction Account, together with
any Shares and/or cash from the Participating Associate's Brokerage Account, in the event of the Participating
Associate's death. If a Participating Associate is married and the designated beneficiary is not the
Participating Associate's spouse, spousal consent may be required for such designation to be effective.
(b) Neither payroll deductions credited to a Participating Associate's Payroll Deduction
Account nor any rights with regard to the exercise of an option or rights to receive Shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in by the Plan) by a Participating Associate. Shares acquired by a Participating
Associate pursuant to the exercise of an option hereunder, however, are freely transferable.
17. Use of Funds. All funds received or held by the Company under the Plan may be used by the
Company for any corporate purpose. The Company shall not be obligated to segregate such funds unless required to
in a country outside of the United States.
18. Reports. Statements of account shall be provided to Participating Associates at least
annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price(s), and the
number of Shares purchased.
19. Adjustments Upon Changes in Outstanding Shares on Capitalization, Merger, Consolidation or
Corporate Reorganization. Subject to any required action by the stockholders of the Company, the number of
Shares which have been authorized for issuance under the Plan but not yet placed under option, the maximum number
of Shares each Participating Associate may purchase each Offering Period (pursuant to Section 9), as well as the
price per Share and the number of Shares covered by each option under the Plan which has not yet been exercised,
shall be automatically adjusted to give proper effect to any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares,
or any other increase or decrease in the number of Shares effected without receipt of consideration by the
Company, or by reason of any merger, consolidation or other corporate reorganization in which the Company is the
surviving corporation. Such adjustment shall be made by the Administrator, whose determination in that respect
shall be final, binding and conclusive.
B-7
20. Amendment or Termination.
(a) The Board or an authorized Committee or subcommittee may, in its discretion and, to
the extent necessary or desirable, at any time, and from time to time, modify or amend the Plan in any respect,
including, but not limited to, (i) altering the Purchase Price for any Offering Period, including an Offering
Period underway at the time of the change in Purchase Price, by setting the Purchase Price as an amount that is
within the range of either 85% - 100% of the Fair Market Value of a Share on the Purchase Date, or 85% - 100%
of the lesser of (x) the Fair Market Value of a Share on the Purchase Date, and (y) the Fair Market Value of a
Share on the first day of the applicable Offering Period; (ii) shortening or lengthening any Offering Period so
that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the
Board action, provided, however, that no Offering Period shall be shorter than one month or longer than 27
months; and allocating Shares as provided in Section 9(c). Such modifications or amendments shall not require
stockholder approval or the consent of any Participating Associates, except that no amendment shall be made
without the affirmative vote of stockholders holding at least a majority of the voting stock of the Company
represented in person or by proxy at a duly held stockholders' meeting, if such amendment would:
(i) materially increase the benefits accruing to Participating Associates under the Plan;
(ii) increase the number of Shares which may be issued under the Plan (other than as
permitted under Section 19 hereof); or
(iii) materially modify the requirements as to eligibility for participation under the Plan,
except as allowed under Section 423(b)(4) of the Code.
(b) This Plan and all rights of Participating Associates hereunder may be terminated at any time by the
Administrator or by the Board or an authorized Committee. Upon termination of the Plan, all payroll deductions and
contributions shall cease and all amounts then credited to the Participating Associates' Payroll Deduction Accounts shall
be equitably applied to the purchase of whole Shares then available for sale, and any remaining amounts shall be promptly
refunded to the Participating Associates.
21. Participation by Foreign Employees. Notwithstanding Section 20 hereof, the Board shall have
the authority to amend the Plan from time to time by adopting or modifying appendices that shall (a) contain such
terms and conditions with respect to the operation of the Plan in one or more countries outside of the United
States as are necessary or appropriate, as determined by the Administrator or the Board in its sole discretion,
to bring the Plan into compliance with applicable law, tax policy or local custom, and (b) name those Associates,
or describe those classes of Associates, who shall be deemed Eligible Associates from among those Associates who
reside in the country or countries outside of the United States to which such appendix relates. Nothing
contained in this Section 21 shall be deemed to grant the Administrator or the Board the authority to: (i) change
the list of Qualified Subsidiaries or otherwise change the designation of corporations whose employees may be
offered options under the Plan; (ii) change the class of securities issuable under the Plan; (iii) increase the
aggregate number of Shares that may be sold pursuant to options granted under the Plan; or (iv) increase the
maximum number of Shares subject to an Eligible Associate's option pursuant to Section 3. Any such appendices
adopted need not comply with the Code and associated regulations.
22. Notices. All notices or other communications by a Participating Associate to the Company under
or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the
Company at the location, or by the person, designated by the Company for the receipt thereof.
B-8
23. Conditions to Issuance of Shares / Dividends. Certificates for whole Shares purchased
hereunder shall be issued as soon as practicable following a Participating Associate's written request, for which
a reasonable charge may be made. Fractional interests in Shares shall be carried forward in a Participating
Associate's Brokerage Account until they equal one whole Share or until termination of the Participating
Associate's Brokerage Account, in which event an amount in cash equal to the value of such fractional interest
shall be paid to him or her in cash. Any cash dividends payable on Shares held in a Participating Associate's
Brokerage Account will be used to purchase additional Shares unless otherwise directed by the Participant.
24. Term of Plan. The Plan shall become effective on the Effective Date and shall remain in effect
for a term of ten (10) years, unless sooner terminated under Section 20 hereof.
25. Equal Rights and Privileges. All Eligible Associates of the Company (or of any Qualified
Subsidiary) will have equal rights and privileges under this Plan so that this Plan qualifies as an "employee
stock purchase plan" within the meaning of Section 423 of the Code or applicable Treasury Regulations
thereunder. Any provision of this Plan that is inconsistent with Section 423 or applicable Treasury Regulations
will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with
the equal rights and privileges requirement of Section 423 or applicable Treasury Regulations.
26. No Employment Rights. Nothing in the Plan shall be construed to give any person (including any
Eligible Associate or Participating Associate) the right to remain in the employ of the Company or a Subsidiary
or to affect the right of the Company or any Subsidiary to terminate the employment of any person (including any
Eligible Associate or Participating Associate) at any time, with or without cause.
27. Governing Law. The internal laws of the State of Delaware shall govern all matters relating to
this Plan except to the extent superseded by the laws of the United States.
B-9
(Side 1)
PROXY PROXY
ACXIOM CORPORATION
This Proxy Is Solicited on Behalf of The Board of Directors
for the Annual Meeting of Stockholders
to be Held on August 3, 2005
The undersigned hereby appoints Catherine L. Hughes and Jerry C. Jones as Proxies, or either of them, with the power to
appoint their substitutes, and hereby authorizes them to represent and vote, as designated below, all of the shares
of common stock of Acxiom Corporation held of record by the undersigned on June 15, 2005, at the Annual Meeting of Stockholders to
be held at the Acxiom River Market Building, 601 East Third Street, Little Rock, Arkansas at 10:00 a.m. CDT on August 3, 2005, or
any postponement or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2 and 3.
Please mark, sign, date and return the proxy card promptly using the enclosed envelope.
SEE REVERSE
SIDE
(Side 2)
ACXIOM CORPORATION
[X] Please mark your
votes as in this
example.
FOR all
nominees listed WITHHOLD
at right AUTHORITY
1. Election of [ ] [ ] (INSTRUCTION: To withhold authority to vote for an
directors individual nominee, strike a line through the nominee's
name in the list below.)
Nominees: William T. Dillard II
Harry C. Gambill
Thomas F. (Mack) McLarty, III
FOR AGAINST ABSTAIN
2. Approval of an amendment to the 2000 Associate [ ] [ ] [ ]
Stock Option Plan
3. Approval of the adoption of a new stock purchase plan [ ] [ ] [ ]
------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3
------------------------------------------------------------------------------------
4. In their discretion, the proxies are authorized to consider and vote upon such other business that may come before the
meeting or any postponement or adjournment thereof.
NOTE: Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign
in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by
authorized person.
SIGNATURE(S)_________________________________________________________________ DATED:_____________________________________, 2005
SIGNATURE(S)_________________________________________________________________ DATED:_____________________________________, 2005