def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
PROS Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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PROS Holdings, Inc.
Table of Contents
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1
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 2010
To The Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of stockholders of PROS Holdings, Inc.
will be held on Thursday, June 10, 2010 at 8:00 a.m., local time, at our corporate headquarters
located at 3100 Main Street Suite 900, Houston Texas 77002 for the following purposes:
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To elect two directors for a three year term expiring 2013; |
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To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2010; and |
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To transact such other business as may properly come before the meeting or any
adjournment thereof. |
The above matters are fully described in the proxy statement. We have not received
notice of any other matters that may be properly presented at the Annual Meeting.
We are pleased to take advantage of the U.S. Securities and Exchange Commission rules that
allow companies to furnish their proxy materials over the Internet. As a result, we are mailing to
our stockholders a Notice of Internet Availability of Proxy Materials or the Notice instead of a
paper copy of this proxy statement and our 2009 Annual Report. The Notice contains instructions on
how to access those documents over the Internet. The Notice also contains instructions on how to
request a paper copy of our proxy materials, including this proxy statement, our 2009 Annual Report
and a form of proxy card or voting instruction card. As a result of the Notice, not all
stockholders will receive a paper copy of our proxy materials.
Only stockholders of record at the close of business on April 16, 2010 will be entitled to
vote at the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be
available for inspection by any stockholder at our offices, 3100 Main Street, Suite 900, Houston,
TX 77002, during ordinary business hours, for 10 days prior to the Annual Meeting. If you would
like to review the stockholder list, please call our Corporate Communications Department at
713-335-5151 to schedule an appointment.
To ensure that your vote is recorded promptly, please vote as soon as possible, even if
you plan to attend the Annual Meeting. Most stockholders have three options for submitting their
vote: (1) via the Internet, (2) by telephone or (3) by mail using the paper proxy card. For
further details, see Voting Instructions and your proxy card or the email you received for
electronic delivery of this proxy statement. If you have Internet access, we encourage you to
record your vote on the Internet. It is convenient and it saves us significant postage and
processing costs.
For the Board of Directors,
PROS Holdings, Inc.
Charles H. Murphy
Executive Vice President and
Chief Financial Officer
Houston, Texas
April 28, 2010
2
PROS Holdings, Inc.
PROXY STATEMENT
2009 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 2010
General
The enclosed proxy is solicited on behalf of the board of directors of PROS Holdings,
Inc. for use at the Annual Meeting of stockholders to be held Thursday, June 10, 2010 at 8:00 a.m.,
local time, at our corporate headquarters located at 3100 Main Street, Suite 900, Houston Texas,
77002, or at any adjournment or postponement thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. Only stockholders of record at the close of
business on April 16, 2010 are entitled to notice of and to vote at the meeting.
These proxy solicitation materials and the Annual Report to Stockholders for the
year ended December 31, 2009, including financial statements, were first mailed or made available
on or about April 28, 2010 to stockholders entitled to vote at the meeting.
The purposes of the meeting are:
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To elect two directors for a three year term expiring 2013; |
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To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2010; and |
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To transact such other business as may properly come before the meeting or any
adjournment thereof. |
The board of directors unanimously recommends that stockholders vote FOR the proposals
being presented.
Record date and shares outstanding
Stockholders of record at the close of business on April 16, 2010 are entitled to notice
of and to vote at the meeting. As of this record date 26,012,124 shares of our common stock were
outstanding, all of which are entitled to vote with respect to all matters to be acted upon at the
annual meeting. Each stockholder of record as of that date is entitled to one vote for each share
of common stock held by him or her.
Vote required
If a quorum is present, a plurality vote of the holders of our common stock entitled to vote
and present or represented at the meeting is required for the election of a director. The
affirmative vote of the holders of a majority of the shares of common stock present or represented
by proxy and voting at the annual meeting is required to approve the ratification of the selection
of our independent auditors. We will not count abstentions as either for or against a director, so
abstentions have no effect on the election of a director. A properly executed proxy marked
abstain with respect to any matter is considered entitled to vote, and thus, will have the effect
of a vote against a matter, except for the election of directors.
Our bylaws provide that a majority of the outstanding shares of our stock entitled to vote,
whether present in person or represented by proxy, shall constitute a quorum for the transaction of
business at the meeting. Votes for and against, abstentions and broker non-votes (shares held by
a broker or nominee that does not have the authority, either express or discretionary, to vote on a
particular matter) will each be counted as present for purposes of determining the presence of a
quorum.
Effect of not casting your vote
The New York Stock Exchange or the NYSE recently changed its broker discretionary rules to
prohibit banks, brokers and other intermediaries to vote shares held in their clients accounts on
elections of directors unless the client has provided voting instructions. In the past, if you held
your shares in street name and you did not indicate how you wanted your shares voted in the
election of directors, your bank or broker was allowed to vote those shares on your behalf in the
election of directors as they felt appropriate. Recent rule changes take away the ability of your
bank or broker to vote your uninstructed shares in the election of directors on a discretionary
basis. Therefore, if you hold your shares in street name, it is important that you cast your vote
if you want it to count in the election of directors (Proposal One of this proxy statement).
3
Attending the annual meeting
The Annual Meeting will be held at 8:00 a.m., local time, on Thursday, June 10, 2010, at
our corporate headquarters located at 3100 Main Street, Suite 900, Houston Texas, 77002. When you
arrive, signs will direct you to the meeting room. Please note that the doors to the meeting room
will not be open until 8:00 a.m. You do not need to attend the Annual Meeting to vote. Even if
you plan to attend the Annual Meeting, please submit your vote in advance as instructed below.
Revocability of proxies
Any proxy given pursuant to this solicitation may be revoked by the person giving it at
any time before it is voted. Proxies may be revoked by:
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Filing with our Corporate Secretary at or before the taking of the vote at the meeting a
written notice of revocation bearing a later date than the proxy; |
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Duly executing a later-dated proxy relating to the same shares and delivering it to our
Corporate Secretary at or before the taking of the vote at the meeting; or |
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Attending the meeting and voting in person (although attendance at the meeting will not
in and of itself constitute a revocation of a proxy). |
Any written notice of revocation or subsequent proxy should be delivered to PROS Holdings,
Inc. at our headquarters located at 3100 Main Street, Suite 900, Houston Texas 77002, Attention:
Corporate Secretary, or hand-delivered to our Corporate Secretary before the taking of the vote at
the meeting.
Electronic delivery of PROS Holdings, Inc. stockholder communications
We are pleased to take advantage of the U.S. Securities and Exchange Commission or the SEC
rules that allow companies to furnish their proxy materials over the Internet. As a result, we are
mailing to our stockholders a Notice of Internet Availability of Proxy Materials or the Notice
instead of a paper copy of this proxy statement and our 2009 Annual Report. The Notice contains
instructions on how to access those documents over the Internet. The Notice also contains
instructions on how to request a paper copy of our proxy materials, including this proxy statement,
our 2009 Annual Report and a form of proxy card or voting instruction card. As a result of the
Notice, not all stockholders will receive a paper copy of our proxy materials.
Voting instructions
To ensure that your vote is recorded promptly, please vote as soon as possible, even if
you plan to attend the Annual Meeting in person. Most stockholders have three options for
submitting their votes: (1) via the Internet, (2) by telephone or (3) by mail using the paper proxy
card. If you have Internet access, we encourage you to record your vote on the Internet. It is
convenient and it saves us significant postage and processing costs. In addition, when you vote
via the Internet or by telephone prior to the meeting date, your vote is recorded immediately and
there is no risk that postal delays will cause your vote to arrive late and therefore not be
counted. If you attend the Annual Meeting, you may also submit your vote in person, and any
previous votes that you submitted, whether by Internet, telephone or mail, will be superseded by
the vote that you cast at the Annual Meeting.
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Vote by Internet. You can vote via the Internet. The website
address for Internet voting is www.proxyvote.com. Have your proxy card in hand
when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form. You can use the
Internet to transmit your voting instructions up until 11:59 P.M. Eastern Time
on June 9, 2010. Internet voting is available 24 hours a day. If you vote via
the Internet you do NOT need to vote by telephone or return a proxy card. |
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Vote by Telephone. You can also vote by telephone by calling
the toll-free telephone number provided on your proxy card. Have your proxy
card in hand when you call and then follow the instructions. You may transmit
your voting instructions from any touch-tone telephone up until 11:59 P.M.
Eastern Time on June 9, 2010. Telephone voting is available 24 hours a day. If
you vote by telephone you do NOT need to vote over the Internet or return a
proxy card. |
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Vote by Mail. If you received a printed copy of the proxy
card, you can vote by marking, dating and signing it, and returning it in the
postage-paid envelope provided to PROS Holdings, Inc., c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717. Please promptly mail your proxy card to
ensure that it is
received prior to the closing of the polls at the annual meeting |
4
If you are a beneficial owner, or you hold your shares in street name, please check your
voting instruction card or contact your bank, broker or nominee to determine whether you will be
able to vote by Internet or telephone.
Solicitation of proxies
We will bear the expense of soliciting proxies in the enclosed form. In addition, we
might reimburse banks, brokerage firms, and other custodians, nominees and fiduciaries representing
beneficial owners of our common stock, for their expenses in forwarding soliciting materials to
those beneficial owners. Proxies may also be solicited by our directors, officers or employees,
personally or by telephone, telegram, facsimile or other means of communication. We do not intend
to pay additional compensation for doing so.
Householding matters
Some banks, brokers and other nominee record holders may be participating in the
practice of householding proxy statements and annual reports. This means that only one copy of
this notice and proxy statement may have been sent to multiple stockholders in your household. If
you would prefer to receive separate copies of a proxy statement either now or in the future,
please contact our Corporate Communications Department by writing to our principal office at 3100
Main Street Suite 900, Houston, Texas 77002. Upon written request, we will provide a separate copy
of this proxy statement. In addition, stockholders sharing an address can request delivery of a
single copy of proxy statements if you are receiving multiple copies upon written request to our
Corporate Secretary at the address stated above.
5
PROPOSAL ONE
Our board of directors consists of seven directors, which are divided into three
classes, each of whose members serve for a staggered three-year term. The term of office of one
class of directors expires each year in rotation so that one class is elected at each Annual
Meeting for a full three-year term. Our Class III directors, Albert E. Winemiller and Ronald F.
Woestemeyer, have been nominated by the board of directors to fill a three-year term expiring in
2013. The two other classes of directors, who were elected or appointed for terms expiring at the
annual meetings in 2011 and 2012, respectively, will remain in office.
Unless a proxy is marked to withhold authority to vote, the proxy holders will vote the
proxies received by them for the two Class III nominees named below, each of whom is currently a
director and each of whom has consented to be named in this proxy statement and to serve if
elected. In the event that any nominee is unable or declines to serve as a director at the time of
the meeting, the proxies will be voted for any nominee designated by our board of directors to fill
the vacancy. We do not expect that any nominee will be unable or will decline to serve as a
director.
Vote required
Election of a director requires the plurality vote of the holders of our common stock entitled
to vote and present or represented at the meeting. Accordingly, the two nominees who receive the
highest number of properly executed FOR votes from the holders of common stock, will be elected
as directors. We will not count abstentions as either for or against a director, so abstentions
have no effect on the election of a director.
In accordance with Delaware law, abstentions will be counted for purposes of determining both
whether a quorum is present at the meeting and the total number of shares represented and voting on
this proposal. While broker non-votes will be counted for purposes of determining the presence or
absence of a quorum, broker non-votes will not be counted for purposes of determining the number of
shares represented and voting with respect to the particular proposal on which the broker has
expressly not voted and, accordingly, will not affect the approval of this proposal.
The NYSE recently changed its broker discretionary rules to prohibit banks, brokers and other
intermediaries to vote shares held in their clients accounts on elections of directors unless the
client has provided voting instructions. In the past, if you held your shares in street name and
you did not indicate how you wanted your shares voted in the election of directors, your bank or
broker was allowed to vote those shares on your behalf in the election of directors as they felt
appropriate. Recent rule changes take away the ability of your bank or broker to vote your
uninstructed shares in the election of directors on a discretionary basis. Therefore, if you hold
your shares in street name, it is important that you cast your vote if you want it to count in the
election of directors (Proposal One of this proxy statement).
The board of directors unanimously recommends voting FOR the two class III nominees listed below.
The name of and certain information regarding each Class III nominee as of April 16, 2010 is
set forth below, together with information regarding our Class I and Class II directors remaining
in office. This information is based on data furnished to us by the nominees and directors. The
business address for each nominee for matters regarding PROS Holdings Inc. is 3100 Main Street,
Suite 900, Houston, TX 77002.
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Director Since |
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Current Position(s) with PROS |
Class III Directors with Terms Expiring in 2010
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Albert E. Winemiller
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1999
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Chairman of the Board, President and
Chief Executive Officer |
Ronald F. Woestemeyer
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1985
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Executive Vice-President, Strategic
Business Planning and Director |
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Class I Directors with Terms Expiring in 2011
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Greg B. Petersen
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2007
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Director |
Timothy V. Williams
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2007
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Director |
Mariette M. Woestemeyer
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1985
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Director |
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Class II Nominees for Terms Expiring in 2012
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Ellen Keszler
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2008
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Director |
William Russell
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2008
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Director |
6
Class III directors
Albert E. Winemiller joined PROS Holdings Inc. in 1999 as our president and chief executive
officer and has served as chairman of our board of directors since October 2000. Mr. Winemiller
began his career as a software engineer at IBM and has over 20 years experience as an executive for
information services and software products companies. Mr. Winemillers experience includes serving
as president of infoUSA, a provider of business and consumer information and research services and
as senior vice president for Automatic Data Processing, a provider of transaction processing and
information-based business solutions. Mr. Winemiller holds a Bachelor of Science and Master of
Science degrees from the University of Missouri and a Master of Business Administration from
Harvard Business School.
Ronald F. Woestemeyer co-founded PROS Holdings Inc. in 1985 with his wife, Mariette
Woestemeyer, and has been a director since our founding and our executive vice president since
1997. From 1985 to 1997, Mr. Woestemeyer served as our chief executive officer. Prior to founding
PROS Holdings Inc., Mr. Woestemeyer spent 14 years at Texas International Airlines in various
management and executive positions with responsibility over sales and marketing. Mr. Woestemeyer
holds a Bachelor of Business Administration degree from the University of Houston.
Class I directors
Greg B. Petersen has served as a director of PROS Holdings Inc. since July 2007. Mr. Petersen
is currently the executive vice president and chief financial officer of Lombardi Software, Inc., a
Business Process Management software provider. From 2007 to 2008, Mr. Petersen was President of
Texas Capital Advisors LLC. Previously, Mr. Petersen was executive vice president and chief
financial officer from 2005 to 2007 and, from 2001 to 2005, the senior vice president and chief
financial officer of Activant Solutions, a provider of business management solutions to retail and
wholesale distribution businesses. From 2000 until 2001, Mr. Petersen served as vice president of
finance of Trilogy Software, a provider of enterprise software and business services, and as its
treasurer from 1999 until 2000. From 1997 to 1999, Mr. Petersen was Senior Vice President of
Planning and Business Development of RailTex, a short-line and regional rail service provider. From
1989 to 1997, Mr. Petersen held various finance and strategy positions at American Airlines, most
recently as managing director of corporate development. Mr. Petersen holds a Bachelor of Arts in
economics from Boston College and a Master of Business Administration from the Fuqua School of
Business at Duke University.
Timothy V. Williams has served as a director of PROS Holdings, Inc. since 2007. Mr. Williams
serves as senior vice president and chief financial officer of Blackbaud, Inc., a provider of
software and services to non-profit organizations, and has held this role since 2001. From 1994 to
2001, he served as executive vice president and chief financial officer of Mynd (now a subsidiary
of Computer Sciences Corporation), a provider of software and services to the insurance industry.
Prior to that, Mr. Williams worked at Holiday Inn, most recently as executive vice president and
chief financial officer. Mr. Williams holds a Bachelor of Arts from the University of Northern
Iowa.
Mariette M. Woestemeyer co-founded PROS Holdings Inc. in 1985 with her husband, Mr.
Woestemeyer, and has served as a director since our founding. Mrs. Woestemeyer was the chief
financial officer of Metro Networks, a broadcasting company, from 1983 to 1985 and held various
financial roles with Continental Airlines and its predecessor, Texas International Airlines, prior
to 1983. Mrs. Woestemeyer holds a Bachelor of Business Administration degree and a Master of
Business Administration from the University of Houston.
Class II nominees
Ellen Keszler has served as a director of PROS Holdings, Inc. since 2008. Mrs. Keszler
currently serves as president and chief executive officer of Clear Sky Associates, a management and
strategy consulting firm focused on the technology and travel industries. Previously, Mrs. Keszler
served as president of Travelocity Business from 2003 to 2007, a technology-focused corporate
travel management company. From 2000 to 2003, Mrs. Keszler served as senior vice president North
American Division of Sabre Travel Network, a travel technology and services business. From 1987 to
2000, Mrs. Keszler held various finance roles at Sabre Holdings, American Airlines and JCPenney.
These functions included financial planning, strategic analysis, treasury, mergers and
acquisitions, and financial operations. Mrs. Keszler holds a Bachelor of Science degree in Civil
Engineering from Texas A&M University and a Master of Business Administration from the University
of Texas at Austin.
William Russell has served as a director of PROS Holdings, Inc. since 2008 and also serves as
the lead independent director. Mr. Russell has served in a number of senior-level roles in his
more than 20 years at Hewlett-Packard, including vice president and general manager of the
multi-billion-dollar Enterprise Systems Group. He has served as a board director of a number of
enterprise software companies since he retired from Hewlett-Packard in May 2003. He has served in a
variety of roles on both public and private technology company boards and he previously served on
the boards of webMethods and Cognos. Mr. Russell holds a Bachelor of Science in Computer Science
from Edinburgh University and has completed several executive development programs from
institutions including Harvard Business School and INSEAD.
7
CORPORATE GOVERNANCE MATTERS
Board composition
Our board of directors currently is comprised of seven directors. Mrs. Woestemeyer, Mrs.
Keszler and Messrs. Petersen, Russell, Williams, Winemiller and Woestemeyer currently serve as our
directors. Our bylaws provide that the number of directors constituting our board of directors
shall be not more than nine, and the exact number of directors may be fixed or changed, by
resolution adopted by the affirmative vote of a majority of the directors then in office. Our
directors bring their leadership experience from a variety of information technology companies and
professional backgrounds. Through Messrs. Winemiller, Woestemeyer and Mrs. Woestemeyer, we have the
continuity and history of current and past management and direct relevant industry experience.
Mrs. Keszler and Mr. Russell have worked in various senior management roles and contribute their
significant operational experience. Messrs. Petersen and Williams have experience in the role of
chief financial officer and bring their extensive accounting and risk management knowledge to us.
In addition, our directors objective and sound judgment, high ethical standards, core values,
inquisitive nature, insight, integrity, intelligence, thoughtfulness, and constructive working
relationships with other directors are reflected in their contributions to our board and committee
meetings and our direction and strategy as a company.
Independence of Directors
The board of directors has adopted categorical standards or guidelines to assist our board of
directors in making its independence determinations with respect to each director. These standards
are published in our Corporate Governance Guidelines and are available under the Corporate
Governance Investor Relations section of our website at www.prospricing.com. The board of
directors has determined that the following four directors are independent within the meaning of
the NYSE listing standards and federal securities laws: Messrs. Petersen, Russell and Williams and
Mrs. Keszler. As part of such determination of independence, our board of directors has
affirmatively determined that none of these four directors have a relationship with us that would
interfere with the exercise of independent judgment in carrying out their responsibilities as
directors. A majority of our board of directors is independent, and our audit committee,
compensation committee and nominating and governance committee is comprised of all independent
directors.
Meeting attendance
During 2009, our board of directors held seven meetings, the audit committee held 14
meetings, the compensation committee held eight meetings, and the nominating and governance
committee held four meetings. No incumbent director attended fewer than 100% of the aggregate of
all meetings of our board of directors, and the committees on which he or she served, during 2009.
The board of directors encourages all directors to attend meetings of the stockholders. All
directors attended the 2009 meeting of the stockholders.
Director nomination
The nominating and governance committee of our board of directors has the responsibility for
establishing the criteria for recommending which directors should stand for re-election to our
board of directors and the selection of new directors to serve on our board of directors. In
addition, the nominating and governance committee is responsible for establishing the procedures
for our stockholders to nominate candidates to our board of directors. Although the nominating and
governance committee has not formulated any specific minimum qualifications for director
candidates, it has determined that desirable characteristics include, but are not limited to,
business experience, mature judgment, personal and professional ethics, and integrity and values.
The Company does not have a formal policy with respect to consideration of diversity in identifying
director nominees, however, in the process of selecting a director nominee, the nominating and
governance committee assesses backgrounds and expected contributions of the individuals to the
Board. These and other standards are published in our Corporate Governance Guidelines and are
available under the Corporate Governance Investor Relations section of our website at
www.prospricing.com.
Our bylaws permit any stockholder of record to nominate directors. Stockholders who
wish to submit nominees for election at an annual or special meeting of stockholders should follow
the procedure described on page 30. The nominating and governance committee applies the same
standards in considering candidates submitted by stockholders as it does in evaluating candidates
submitted by members of the board of directors.
8
Committees of the board of directors
Our board of directors has established an audit committee, a compensation committee and a
nominating and governance committee. In addition, the board of directors has elected a lead
independent director. The table below presents the members of each of our committees and the lead
independent director.
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Nominating and |
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Lead |
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Audit |
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Compensation |
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Governance |
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Independent |
Director |
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Committee |
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Committee |
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Committee |
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Director |
Albert E. Winemiller |
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Ronald F. Woestemeyer |
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Ellen Keszler
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X
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X |
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Greg B. Petersen
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X
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Chair
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X |
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William Russell
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X
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Chair
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X |
Timothy V. Williams
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Chair
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X
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X |
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Mariette M. Woestemeyer |
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Audit committee
The current members of our audit committee are Messrs. Petersen and Williams and Mrs. Keszler.
Our board of directors has determined that each member meets the independence requirements of the
NYSE listing standards and Rule 10A-3(b) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, and that each qualify as an audit committee financial expert within the meaning of
the SEC regulations and the rules of the NYSE. In arriving at this determination, the board has
examined each members scope of experience and the nature of their employment in the corporate
finance sector.
The audit committee oversees our accounting and financial reporting processes and the audits
of our financial statements. Primary responsibilities of our audit committee include:
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reviewing and providing oversight over the qualification, independence and
performance of our independent auditor and determining whether to retain or terminate
its services; |
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approving the terms of engagement of our independent auditor and pre-approving the
engagement of our independent auditor to perform permissible non-audit services; |
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reviewing and discussing with management and our independent auditor the results of
the annual audit and the independent auditors review of our annual and quarterly
financial statements and reports; |
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reviewing with management and our independent auditor matters that have a significant
impact on our financial statements; |
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conferring with management and our independent auditors regarding the scope, adequacy
and effectiveness of our internal control over financial reporting; |
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establishing procedures for the receipt, retention and treatment of complaints
received by us regarding accounting, internal control or auditing matters and for the
confidential, anonymous submission by our employees of concerns regarding questionable
accounting or auditing matters; and |
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reviewing and approving all related party transactions. |
Our audit committee operates under a written charter, a copy of which is available under the
Corporate Governance Investor Relations section of our website at www.prospricing.com. A printed
copy of our audit committee charter may be obtained by any stockholder upon sending a written
request to PROS Holdings, Inc., 3100 Main Street, Suite 900, Houston, Texas 77002, Attn: Corporate
Communications. In 2009, the audit committee held five in-person meetings and nine telephonic
meetings. The report of the audit committee begins on page 30.
9
Compensation committee
The current members of our compensation committee are Messrs. Petersen, Russell and Williams.
Each member of our compensation committee is a non-employee director, as defined in Rule 16b-3
promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m)
of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Our board of
directors has determined that Messrs. Petersen, Russell and Williams each meet the independence
requirements of the NYSE listing standards and federal securities laws.
The compensation committee discharges the responsibilities of our board of directors relating
to the compensation and benefits for our executive officers and directors. Primary
responsibilities of our compensation committee include:
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determining and reviewing all forms of compensation for our executive officers and
directors, including, among other things, annual salaries, bonuses, equity awards,
severance arrangements, change in control protections and other compensatory
arrangements; |
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reviewing and approving corporate performance goals and objectives relevant to such
compensation; |
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administering our equity incentive plans and granting awards of options and other
equity-based awards to our executive officers, directors and employees; |
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reviewing our compensation discussion and analysis and compensation committee report
required by the rules of the SEC; and |
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evaluating and recommending to our board of directors the compensation plans and
programs advisable for us, and evaluating and recommending the modification or
termination of existing plans and programs. |
Our compensation committee operates under a written charter, a copy of which is available
under the Corporate Governance Investor Relations section of our website at www.prospricing.com.
A printed copy of our compensation committee charter may be obtained by any stockholder upon
sending a written request to PROS Holdings, Inc., 3100 Main Street, Suite 900, Houston, Texas
77002, Attn: Corporate Communications. In 2009, the compensation committee held three in-person
meetings and five telephonic meetings. The report of the compensation committee begins on page 26.
Nominating and governance committee
The members of the nominating and governance committee are Messrs. Petersen, Russell and
Williams and Mrs. Keszler. The board has determined that each member meets the independence
requirements of the NYSE listing standards and federal securities laws. Primary responsibilities
of our nominating and governance committee include:
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identifying, evaluating and recommending to our board of directors candidates to
serve as members of our board of directors and considering the nomination of our
incumbent directors for reelection; |
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evaluating stockholder nominations of candidates for election to our board of
directors; |
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reviewing our general policy relating to selection of director candidates and members
of committees of our board of directors, including an assessment of the performance of
our board of directors; and |
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reviewing and making recommendations to our board of directors regarding corporate
governance principles. |
Our nominating and governance committee operates under a written charter, a copy of which is
available under the Corporate Governance Investor Relations section of our website at
www.prospricing.com. A printed copy of our nominating and governance committee charter may be
obtained by any stockholder upon sending a written request to PROS Holdings, Inc., 3100 Main
Street, Suite 900, Houston, Texas 77002, Attn: Corporate Communications. In 2009, the nominating
and governance committee held four in-person meetings.
10
Board Leadership Structure
The board of directors has determined that combining the chief executive officer and chairman
positions is the appropriate leadership structure for PROS Holdings, Inc. at this time. The board
of directors believes that combining the chief executive officer and chairman roles fosters clear
accountability, effective decision-making and alignment on corporate strategy. The board of
directors believes this leadership structure is particularly appropriate for the Company at this
time given the chief executive officers continuity of service with the Company since 1999.
Nevertheless, the board of directors believes the decision of whether to combine or separate the
positions of chief executive officer and chairman will vary company to company and depend upon a
companys particular circumstances at a given point in time. Accordingly, the board of directors
intends to carefully consider from time to time whether the chief executive officer and chairman
positions should be combined based on what the board of directors believes is best for the Company
and its stockholders.
The board of directors believes that an effective leadership structure could be achieved
either by combining or separating the chief executive officer and chairman positions, if the
structure encourages the free and open dialogue of competing views and provides for strong checks
and balances. Specifically, an effective governance structure must balance the powers of the chief
executive officer and the independent directors and ensure that the independent directors are fully
informed, able to discuss and debate the issues that they deem important, and able to provide
effective oversight of management.
The board of directors has elected a non-management director to serve in a lead capacity
(lead independent director) to coordinate the activities of the other non-management directors,
and to perform any other duties and responsibilities that the board of directors may determine.
While the board of directors elects a lead independent director, it is generally expected that he
or she will serve for more than one year. Mr. Russell was elected to serve as lead independent
director effective November 20, 2008.
The role of the lead independent director includes:
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presiding at non-management executive sessions, with the authority to call meetings
of the independent directors; |
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presiding at executive sessions; |
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functioning as principal liaison on Board-wide issues between the independent
directors and the Chairman; |
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if requested by shareholders, ensuring that he/she is available, when appropriate,
for consultation and direct communication. |
The lead independent director operates under a written charter, a copy of which is available
under the Corporate Governance Investor Relations section of our website at www.prospricing.com.
The board of directors believes that the lead independent director position will balance the
need for effective and independent oversight of management with the need for strong, unified
leadership. The board of directors believes that this structure is in the best interest of PROS
Holdings, Inc. as it will allow for a balance between the chief executive officer and chairman and
the independent directors and will provide an environment in which its independent directors are
fully informed, have significant input into the content of board of directors meeting agendas and
are able to provide objective and thoughtful oversight of management.
Executive Sessions
Executive sessions, which are meetings of the non-employee members of the board of directors,
are regularly scheduled throughout the year. Non-employee directors meet by themselves, without
management or employee-directors present, at every regularly scheduled in-person board of directors
meeting. Non-employee directors and independent directors may hold other such sessions at the
request of any non-employee director or independent director. Non-employee and independent
directors shall notify the Lead Independent Director if they would like to hold such a session, and
the Lead Independent Director will facilitate the scheduling of such a session. Executive sessions
(whether of the non-employee directors or independent directors) will be led by Lead Independent
Director.
Oversight of Risk Management
The board of directors oversees the Companys risk management process. Management
reviews the process, including identification of key risks and steps taken to address them, with
the full board of directors on a periodic basis. Although the full board of
directors is responsible for this oversight function, the audit committee, the
compensation committee, and the nominating and governance committee assist the board of
directors in discharging its oversight duties.
11
The compensation committee reviews risks related to the subject matters enumerated in
its charter, including risks associated with the Companys compensation programs. The nominating
and governance committee considers risks related to the subject matters for which it is responsible
as identified in its charter, including risks associated with corporate governance. Similarly, the
audit committee considers risks related to the subject matters enumerated in its charter, including
risks relating to internal controls, disclosure, and financial reporting.
Accordingly, while each of the three committees contributes to the risk management
oversight function by assisting the board of directors in the manner outlined above, the
board of directors itself remains responsible for the oversight of the Companys risk
management program.
Compensation committee interlocks and insider participation
No member of our compensation committee and none of our executive officers has any
relationships that would constitute an interlocking relationship with executive officers and
directors of any another entity.
Director compensation
Under our 2009 director compensation policy, our non-employee members of our board of
directors received an annual retainer of $27,000 and a retainer of $13,000 if such director also
serves on our audit committee or compensation committee. All fees are paid on a quarterly basis.
We have also agreed to reimburse our directors for reasonable out-of-pocket expenses incurred in
connection with their attendance at our board of directors or committee meetings.
In addition, each non-employee members of our board of directors received a grant of 5,000
restricted stock units, the chairman of the audit committee, the lead independent director and the
chairman of the nominating and governance committee received a grant of 5,000 restricted stock
units, and the chairman of the compensation committee received a grant of 2,500 restricted stock
units. These grants of restricted stock units vested on January 1, 2010.
Fiscal year 2009 director compensation table
The following table presents the compensation details for each non-employee directors for
services to us during fiscal 2009:
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Fees |
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Earned |
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Restricted |
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or Paid |
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Stock |
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in Cash |
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Units |
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Name |
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($) |
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($) (1) |
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Total ($) |
Ellen Keszler |
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47,500 |
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21,450 |
(2) |
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68,950 |
|
Greg B. Petersen |
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64,736 |
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32,175 |
(3) |
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96,911 |
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William Russell |
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57,500 |
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42,900 |
(4) |
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100,400 |
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Timothy V. Williams |
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58,000 |
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42,900 |
(4) |
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100,900 |
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Mariette M. Woestemeyer |
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27,000 |
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21,450 |
(2) |
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48,450 |
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(1) |
|
These amounts represent the aggregate grant date fair value of equity
awards granted in the specified fiscal year as calculated pursuant to FASB
ASC Topic 718. For additional information about the valuation assumptions
with respect to equity awards, refer to Note 8 of our financial statements
in our Form 10-K for the year ended December 31, 2009, as filed with the
SEC. These restricted stock units were granted on March 13, 2009, vested in
full on January 1, 2010 and had a grant date fair value of $4.29 |
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(2) |
|
Represents 5,000 restricted stock units awarded to Mrs. Keszler and
Mrs. Woestemeyer. |
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(3) |
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Represents 7,500 restricted stock units awarded to Mr. Petersen. |
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(4) |
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Represents 10,000 restricted stock units awarded to Messrs.
Russell and Williams. |
12
The table below presents the aggregate number of outstanding shares of stock option and
restricted stock units held by our non-employee directors as of December 31, 2009.
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Restricted Stock |
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Stock Option |
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Units (#) |
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Awards (#) (1) |
Ellen Keszler |
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5,000 |
(2) |
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30,000 |
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Greg B. Petersen |
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7,500 |
(2) |
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30,000 |
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William Russell |
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20,000 |
(3) |
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Timothy V. Williams |
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10,000 |
(2) |
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30,000 |
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Mariette M. Woestemeyer |
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5,000 |
(2) |
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30,000 |
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(1) |
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Represents option to purchase 30,000 shares of our
common stock. Option awards are immediately exercisable
and vest on a monthly basis over a three-year period.
Messrs. Petersen and Williams and Mrs. Woestemeyers
option to purchase our common stock began vesting on
June 27, 2007 and Mrs. Keszlers option to purchase our
common stock began vesting on August 21, 2008. |
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(2) |
|
Represents restricted stock units
granted on March 13, 2009 under the 2009 director
compensation policy, as described above. These
restricted stock units represents the contingent right
to receive one share of PROS Holdings, Inc. common
stock and fully vested on January 1, 2010. |
|
(3) |
|
Represents restricted stock units
granted on March 13, 2009 under the 2009 director
compensation policy, as described above, and vested in
full on January 1, 2010. In addition, 15,000
restricted stock units were granted to Mr. Russell on
November 11, 2008, with 5,000 restricted stock units
that vested on November 11, 2009 and the remaining
10,000 that vest in equal installments on November 11,
2010 and November 11, 2011. These restricted stock
units represents the contingent right to receive one
share of PROS Holdings, Inc. common stock. |
Corporate governance guidelines
We believe in sound corporate governance practices and have adopted formal Corporate
Governance Guidelines to enhance our effectiveness. Our board of directors adopted these Corporate
Governance Guidelines in order to ensure that it has the necessary authority and practices in place
to review and evaluate our business operations as needed and to make decisions that are independent
of our management. The Corporate Governance Guidelines are also intended to align the interests of
directors and management with those of our stockholders. The Corporate Governance Guidelines set
forth the practices our board of directors follows, including, but not limited to, with respect to
board of directors and committee composition and selection, director responsibilities, director
access to officers and employees and chief executive officer performance evaluation and succession
planning. A printed copy of our Corporate Governance Guidelines may be obtained by any stockholder
upon sending a written request to PROS Holdings, Inc., 3100 Main Street, Suite 900, Houston, Texas
77002, Attn: Corporate Communications. A copy of our Corporate Governance Guidelines is also
available under the Corporate Governance Investor Relations section of our website at
www.prospricing.com.
Code of business conduct and code of ethics
Our board of directors has adopted a Code of Business Conduct and Ethics that applies to
all of our directors and employees. We will provide copies of our Code of Business Conduct and
Ethics without charge upon request. A printed copy of our Code of Business Conduct and Ethics may
be obtained by any stockholder upon sending a written request to PROS Holdings, Inc., 3100 Main
Street, Suite 900, Houston, Texas 77002, Attn: Corporate Communications. Our Code of Business
Conduct and Ethics is also available under the Corporate Governance Investor Relations section of
our website at www.prospricing.com.
Communications with our board of directors
Stockholders or interested parties who wish to communicate with members of our board of
directors, including the independent directors individually or as a group, may send correspondence
to them in care of our Corporate Secretary at 3100 Main Street, Suite 900, Houston, TX 77002. Such
communication will be forwarded to the intended recipient(s). We currently do not intend to have
our Corporate Secretary screen this correspondence, but we may change this policy if directed by
our board of directors due to the nature or volume of the correspondence.
Communications that are intended specifically for the lead independent director should be sent
to the street address noted above, to the attention of the Lead Independent Director.
13
PROPOSAL TWO
The audit committee of our board of directors has selected the independent registered
public accounting firm of PricewaterhouseCoopers LLP to audit our consolidated financial statements
for the fiscal year ending December 31, 2010 and recommends that stockholders vote for ratification
of such appointment. Notwithstanding the selection and ratification, the audit committee, in its
discretion, may appoint a different independent registered public accounting firm at any time, if
it believes doing so would be in our best interests and the best interests of our stockholders. In
the event of a negative vote on ratification, the audit committee will reconsider, but might not
change, its selection.
PricewaterhouseCoopers LLP has audited our financial statements annually since 2002.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so and are expected to be available to respond
to appropriate questions.
Vote required
Approval of the ratification of the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm requires the affirmative vote of the holders of at
least a majority of the outstanding shares of our common stock entitled to vote and present or
represented at the meeting. A properly executed proxy marked ABSTAIN with respect to this matter
is considered entitled to vote and thus, will have the effect of a vote against a matter.
In accordance with Delaware law, abstentions will be counted for purposes of determining
both whether a quorum is present at the meeting and the total number of shares represented and
voting on this proposal. While broker non-votes will be counted for purposes of determining the
presence or absence of a quorum, broker non-votes will not be counted for purposes of determining
the number of shares represented and voting with respect to the particular proposal on which the
broker has expressly not voted and, accordingly, will not affect the approval of this proposal.
The board of directors unanimously recommends that stockholders vote FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for
the fiscal year ending December 31, 2010.
Summary of fees
The audit committee has adopted a policy for the pre-approval of all audit and permitted
non-audit services that may be performed by our independent registered public accounting firm.
Under this policy, each year, at the time it engages the independent registered public accounting
firm, the audit committee pre-approves the audit engagement terms and fees and may also pre-approve
detailed types of audit-related and permitted tax services, subject to certain dollar limits, to be
performed during the year. All other permitted non-audit services are required to be pre-approved
by the audit committee on an engagement-by-engagement basis.
The following table summarizes the aggregate fees billed for professional services rendered to
us by PricewaterhouseCoopers LLP in 2009 and 2008. A description of these various fees and
services follows the table.
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2009 |
|
|
2008 |
|
Audit fees |
|
$ |
445,500 |
|
|
$ |
567,848 |
|
Tax fees |
|
|
24,508 |
|
|
|
35,000 |
|
|
|
|
|
|
|
|
Total fees |
|
$ |
470,008 |
|
|
$ |
602,848 |
|
|
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|
|
Audit fees
The aggregate fees billed to us by PricewaterhouseCoopers LLP in connection with the
annual audit of our financial statements, for the reviews of our financial statements included in
the quarterly reports on Form 10-Q, consents related to documents filed with the SEC and accounting
and financial reporting consultations and research necessary to comply with generally accepted
audit standards, were $445,500 and $567,848 for the years ended December 31, 2009 and 2008,
respectively.
Tax Fees
The aggregate fees billed to us by PricewaterhouseCoopers LLP in connection with tax services
were $24,508 and $35,000 for the years ended December 31, 2009 and 2008, respectively. Tax fees are
fees for tax compliance, tax advice and tax planning.
14
The audit committee is authorized by its charter to pre-approve all auditing and permitted
non-audit services to be performed by our independent registered public accounting firm. The audit
committee reviews and approves the independent registered public
accounting firms retention to perform attest services, including the associated fees. The
audit committee also evaluates other known potential engagements of the independent registered
public accounting firm, including the scope of the proposed work and the proposed fees, and
approves or rejects each service, taking into account whether the services are permissible under
applicable law and the possible impact of each non-audit service on the independent registered
public accounting firms independence from management. At subsequent meetings, the Committee will
receive updates on the services actually provided by the independent registered public accounting
firm, and management may present additional services for approval. The Committee has delegated to
the chairman of the audit committee the authority to evaluate and approve engagements on behalf of
the Committee in the event that a need arises for pre-approval between Committee meetings. If the
Chairman so approves any such engagements, he will report that approval to the full audit committee
at its next meeting. During fiscal 2009, all such services were pre-approved in accordance with the
procedures described above.
Our audit committee has reviewed the fees described above and believes that such fees are
compatible with maintaining the independence of PricewaterhouseCoopers LLP.
Stockholder ratification of the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm is not required by our bylaws or other applicable
legal requirement. However, the appointment of PricewaterhouseCoopers LLP is being submitted to the
stockholders for ratification. If the stockholders fail to ratify the appointment, the audit
committee will reconsider whether or not to retain the firm. Even if the appointment is ratified,
the audit committee at its discretion may direct the appointment of a different independent
registered public accounting firm at any time during the year if it determines that such a change
would be appropriate.
15
OTHER MATTERS
We do not know of any other matters to be submitted at the annual meeting. If any other
matters properly come before the annual meeting, it is the intention of the persons named in the
enclosed form of proxy to vote the shares they represent as our board of directors recommends.
EXECUTIVE OFFICERS
Certain information concerning our executive officers as of the date of this proxy statement
is set forth below, except that information concerning Messrs. Winemiller and Woestemeyer is set
forth above under PROPOSAL ONE.
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|
|
Name |
|
Age |
|
Position |
Albert E. Winemiller
|
|
67
|
|
Chairman of the Board, President and Chief Executive Officer |
Charles H. Murphy
|
|
65
|
|
Executive Vice President and Chief Financial Officer |
Ronald F. Woestemeyer
|
|
64
|
|
Executive Vice President, Strategic Business Planning and Director |
Andres D. Reiner
|
|
39
|
|
Executive Vice President of Product and Marketing |
Charles H. Murphy joined PROS Holdings, Inc. in 1998 and has served as our executive vice
president and chief financial officer since March 2001. Prior to joining the Company, Mr. Murphy
spent 13 years in chief financial officer positions with Expert Software, a publicly traded
software company, Merchant International, a software company, and Packaging Machinery Company, a
publicly traded manufacturer of packaging machinery. Mr. Murphy was vice president-treasurer with
Coleco Industries, a publicly traded toy and video game company, and began his career with Coopers
& Lybrand where he was a certified public accountant. Mr. Murphy holds a Bachelor of Science degree
from Bentley College.
Andres D. Reiner joined PROS Holdings, Inc. in 1999 and serves as our executive vice president
of product and marketing. As executive vice president of product and marketing, Mr. Reiner is
responsible for product management, architecture, and development of the next generation Pricing
and Revenue Optimization software products. Mr. Reiner led, and continues to contribute to, the
development of the PROS Pricing Revenue Optimization (PRO) Platform, which is a set of Pricing,
Forecasting, and Optimization engines that are configured to form the component-based architecture
that is the foundation of the Companys products. Prior to joining the Company, Mr. Reiner held
various technical and management positions in technology companies including Platinum Technology,
ADAC Healthcare Information Systems, and Kinesix. Mr. Reiner holds a Bachelor of Science in
Computer Science with a minor in Mathematics from the University of Houston.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since January 1, 2007, there has not been, nor is there currently proposed, any transaction or
series of similar transactions to which we were or are a party in which the amount involved
exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more
than 5% of any class of our voting securities, or any member of the immediate family of any of the
foregoing persons, had or will have a direct or indirect material interest, other than compensation
arrangements with directors and executive officers, and the transactions described below.
Relationship with management, founders and investors
Ownership. Albert E. Winemiller, our chief executive officer, president and chairman of the
board of directors, and Ronald F. Woestemeyer, our executive vice president, director and one of
our founders, and Mariette Woestemeyer, who is married to Mr. Woestemeyer and serves on our board
of directors along with her husband, each hold more than 5% of our common stock.
Indemnification agreements. We have entered into indemnification agreements with each of our
current directors and executive officers. These agreements require us, among other things, to
indemnify these individuals to the fullest extent permitted under Delaware law against liabilities
that may arise by reason of their service to us, and to advance expenses incurred as a result of
any proceeding against them as to which they could be indemnified. We also intend to enter into
indemnification agreements with our future directors and executive officers.
Employment arrangements. We have entered into an employment agreement with each of
Messrs. Winemiller, Murphy, Woestemeyer, and Reiner, our executive officers, which address, among
other things, the terms of their employment.
16
Procedures for related party transactions
Under our Code of Business Conduct and Ethics, our employees and officers are discouraged from
entering into any transaction that may cause a conflict of interest fr us. In addition, they must
report any potential conflict of interest, including related party transactions, to their managers
or our compliance officer who then reviews and summarizes the proposed transaction for our audit
committee. Pursuant to its charter, our audit committee must then approve any related party
transactions, including those transactions involving our directors. In approving or rejecting such
proposed transactions, the audit committee considers the relevant facts and circumstances available
and deemed relevant to the audit committee, including the material terms of the transactions,
risks, benefits, costs, availability of other comparable services or products and, if applicable,
the impact on a directors independence. Our audit committee will approve only those transactions
that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as
our audit committee determines in the good faith exercise of its discretion.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial ownership of our common
stock as of April 16, 2010, unless otherwise noted below, for the following:
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|
each person or entity known to own beneficially more than 5% of the outstanding common
stock as of the date indicated in the corresponding footnote; |
|
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|
each director and director nominee; |
|
|
|
|
each of the persons named in the Summary Compensation table; and |
|
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|
all directors and executive officers as a group. |
Applicable percentage of ownership is based on 26,012,124 shares of our common stock
outstanding as of April 16, 2010, unless otherwise noted below, together with applicable options
for each stockholder. Beneficial ownership is determined under the rules and regulations of the
SEC and does not necessarily indicate beneficial ownership for any other purpose. Under these
rules, beneficial ownership includes those shares of common stock over which the stockholder has
sole or shared voting or investment power. It also includes shares of common stock that the
stockholder has a right to acquire within 60 days of April 16, 2010 through the exercise of any
option or other right.
Unless otherwise indicated, the principal address of each of the stockholders below is c/o
PROS Holdings, Inc., 3100 Main Street, Suite 900, Houston, Texas 77002.
|
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|
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|
|
|
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|
Share |
|
Total Shares |
|
Percentage |
|
|
Shares |
|
Under Exercisable |
|
Beneficially |
|
Beneficially |
Name of Beneficial Owner |
|
Number |
|
Options (1) |
|
Owned |
|
Owned |
Albert E. Winemiller (2) |
|
|
1,520,100 |
|
|
|
200,000 |
|
|
|
1,720,100 |
|
|
|
6.7 |
% |
Charles H. Murphy (3) |
|
|
236,100 |
|
|
|
200,000 |
|
|
|
436,100 |
|
|
|
1.7 |
% |
Ronald F. Woestemeyer (4) |
|
|
4,803,043 |
|
|
|
30,000 |
|
|
|
4,833,043 |
|
|
|
18.8 |
% |
Andres Reiner (5) |
|
|
65,810 |
|
|
|
149,947 |
|
|
|
215,757 |
|
|
|
0.8 |
% |
Jeff Robinson (6) |
|
|
12,561 |
|
|
|
119,270 |
|
|
|
131,831 |
|
|
|
0.5 |
% |
Ellen Keszler (7) |
|
|
5,000 |
|
|
|
30,000 |
|
|
|
35,000 |
|
|
|
0.1 |
% |
Greg B. Petersen (8) |
|
|
12,500 |
|
|
|
30,000 |
|
|
|
42,500 |
|
|
|
0.2 |
% |
William Russell (9) |
|
|
15,000 |
|
|
|
|
|
|
|
15,000 |
|
|
|
0.1 |
% |
Timothy V. Williams (10) |
|
|
10,000 |
|
|
|
30,000 |
|
|
|
40,000 |
|
|
|
0.2 |
% |
Mariette M. Woestemeyer (11) |
|
|
4,803,043 |
|
|
|
30,000 |
|
|
|
4,833,043 |
|
|
|
18.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brown Capital Management, Inc. (12) |
|
|
3,916,922 |
|
|
|
|
|
|
|
3,916,922 |
|
|
|
15.2 |
% |
FMR, LLC (13) |
|
|
1,908,630 |
|
|
|
|
|
|
|
1,908,630 |
|
|
|
7.4 |
% |
T. Rowe Price Assoicates, Inc. (14) |
|
|
1,330,415 |
|
|
|
|
|
|
|
1,330,415 |
|
|
|
5.2 |
% |
The Guardina Life Insurance Company of America (15) |
|
|
603,994 |
|
|
|
|
|
|
|
603,994 |
|
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group ( 10 people) |
|
|
6,667,553 |
|
|
|
669,947 |
|
|
|
7,337,500 |
|
|
|
28.5 |
% |
|
|
|
(1) |
|
Includes only equity awards exercisable within 60 days of April 16, 2010. |
|
(2) |
|
Consists of (a) 1,500,000 shares held of record by Albert E. Winemiller Jr. 2006
Irrevocable Trust; (b) 20,000 shares held of record by Debra Ann Winemiller; (c) stock
options to acquire 150,000 shares of our common stock, which were granted to Mr.
Winemiller on April 2, 2007, which are immediately exercisable and which vested at 25% on
April 2, 2008 and the remainder will vest monthly thereafter based on continued
employment through April 2, 2011, (d) 150,000 restricted stock units granted on May 13,
2009 which vest one third on May 13, 2010 with the remaining two thirds vesting annually
in equal installments over the next two years and (e) 100 shares held of record by Albert
E. Winemiller. Mr. Winemiller disclaims beneficial ownership of the shares held of
record by Albert E. Winemiller Jr. 2006 Irrevocable Trust and Debra Ann Winemiller,
except to the extent of his pecuniary interest therein. On March 9, 2010, Mr. Winemiller
was granted 44,000 restricted stock units which vest annually, in equal installments,
over a four-year period |
17
|
|
|
|
|
beginning on February 24, 2011. In addition, Mr. Winemiller was granted 69,000 stock
appreciation rights which vest at 25% on February 24, 2011 and monthly thereafter, in
equal installments, over the next three years. The stock appreciation rights are settled
in stock. In the event of a change in control, equity awards granted to Mr. Winemiller
after April 2, 2007 will fully vest. |
|
(3) |
|
Consists of (a) 209,350 shares held of record by Charles H. Murphy; (b) 26,750 shares
held of record by Emily L. Murphy, (c) stock options to acquire 150,000 shares of our
common stock, which were granted on April 2, 2007, which are immediately exercisable and
which vested at 25% on April 2, 2008 and the remaining will vest monthly thereafter based
on continued employment through April 2, 2011 and (d)150,000 restricted stock units
granted on May 13, 2009 which vest one third on May 13, 2010 with the remaining two
thirds vesting annually in equal installments over the next two years. On March 9, 2010,
Mr. Murphy was granted 18,000 restricted stock units which vest annually, in equal
installments, over a four-year period beginning on February 24, 2011. In addition, Mr.
Murphy was granted 28,000 stock appreciation rights which vest at 25% on February 24,
2011 and monthly thereafter, in equal installments, over the next three years. The stock
appreciation rights are settled in stock. In the event of a change in control, equity
awards granted to Mr. Murphy after April 2, 2007 will fully vest. |
|
(4) |
|
Consists of (a) 783,043 shares held of record by Ronald F. Woestemeyer and Mariette
Woestemeyer, (b) 1,500,000 shares held of record by Ronald F. Woestemeyer 2009 Two Year
Annuity Trust dated May 2009 Ronald F. Woestemeyer and Deutsche Bank Trust Company
Delaware TTEE, (c) 1,000,000 shares held of record by Mariette M. Woestemeyer 2009 Three
Year Annuity Trust dated May 2009, Mariette M. Woestemeyer and Deutsche Bank Trust
Company Delaware TTEE, (d) 1,000,000 shares held of record by DB Trust Co. Woestemeyer
1999 Gift Trust, of which DB Trust Company NA is the sole trustee, (e) 520,000 shares
held of record by Irrevocable Trust Agreement between Ronald F. Woestemeyer and Mariette
M. Woestemeyer, Deutsche Bank Trust Company Delaware is the trustee and (f) stock options
held by Mrs. Woestemeyer to acquire 30,000 shares, which are immediately exercisable.
Mr. Woestemeyer disclaims beneficial ownership of the shares held of record by the
Mariette M. Woestemeyer 2009 Three Year Annuity Trust dated May 2009, and Deutsche Bank
Trust Company Delaware TTEE, the Woestemeyer 1999 Gift Trust, the restricted stock units
granted to Mrs. Woestemeyer which vest on January 1, 2010 and the shares issuable upon
the exercise of the stock options held by Mrs. Woestemeyer. |
|
(5) |
|
Consists of (a) 84,310 shares held of record by Andres D. Reiner, (b) 6,250 shares
issuable upon the exercise of stock options granted to Mr. Reiner on February 10, 2005,
which are immediately exercisable and fully vested, (c) 10,782 shares issuable upon the
exercise of stock options granted to Mr. Reiner on December 30, 2005, which are
immediately exercisable and fully vested, (d) 50,000 shares issuable upon the exercise of
stock options granted to Mr. Reiner on March 26, 2007, which 37,499 are exercisable and
vested as of April 16, 2010 and continue to vest monthly until March 26, 2011, (e)
100,000 shares issuable upon the exercise of stock options granted to Mr. Reiner on
November 15, 2007, which 36,666 are exercisable and vested as of April 16, 2009 and
continue to vest monthly until November 1, 2012, (f) 50,000 shares issuable upon the
exercise of stock options granted to Mr. Reiner on May 14, 2008, which are immediately
exercisable and fully vested, (g) 50,000 restricted stock units granted to Mr. Reiner on
November 11, 2008 which 16,666 vested on January 1, 2010 with the remaining 33,334
vesting annually in equal installments over the next two years. (f) 25,000 restricted
stock units granted to Mr. Reiner on March 13, 2009 which 8,333 vested on March 13, 2010
with the remaining 16,667 vesting annually in equal installments over the next two years.
On March 9, 2010, Mr. Reiner was granted 30,000 restricted stock units, which vest
annually, in equal installments, over a four-year period beginning on February 24, 2011.
In addition, Mr. Reiner was granted 20,000 stock appreciation rights which vest at 25% on
February 24, 2011 and monthly thereafter, in equal installments, over the next three
years. The stock appreciation rights are settled in stock. |
|
(6) |
|
Consists of (a) 12,561 shares held of record by Jeffrey E. Robinson, (b) 938 shares
issuable upon the exercise of stock options granted to Mr. Robinson on December 30, 2005,
which are immediately exercisable and fully vested, (c) 35,417 shares issuable upon the
exercise of stock options granted to Mr. Robinson on March 26, 2007, which 22,916 are
exercisable and vested as of April 16, 2010 and continue to vest monthly until March 26,
2011, (d) 100,000 shares issuable upon the exercise of stock options granted to Mr.
Robinson on November 15, 2007, which 36,666 are exercisable and vested as of April 16,
2009 and continue to vest monthly until November 1, 2012,, (e) 50,000 shares issuable
upon the exercise of stock options granted to Mr. Robinson on May 14, 2008, which are
immediately exercisable and fully vested, (f) 50,000 restricted stock units granted to
Mr. Robinson on November 11, 2008 which 16,666 vested on January 1, 2010 with the
remaining 33,334 vesting annually in equal installments over the next two years and (g)
25,000 restricted stock units granted to Mr. Robinson on March 13, 2009 which 8,333
vested on March 13, 2010 with the remaining 16,667 vesting annually in equal installments
over the next two years. Mr. Robinson was no longer an executive officer for purposes of
Item 402 of Regulation S-K as of October 1, 2009. |
|
(7) |
|
Consists of 5,000 shares held of record by Ellen Keszler and 30,000 shares issuable
upon the exercise of stock options granted to Mrs. Keszler on August 21, 2008, which are
immediately exercisable and which vest in equal monthly installments over a three-year
period. On March 9, 2010, Mrs. Keszler was granted 5,000 restricted stock units, which
vest on January 1, 2011. In the event of a change in control, the restricted stock
units fully vest. |
|
(8) |
|
Includes 12,500 shares held of record by Greg Petersen and 30,000 shares issuable upon
the exercise of stock options granted to Mr. Petersen on June 27, 2007, which are
immediately exercisable and which vest in equal monthly installments over a three-year
period. On March 9, 2010, Mr. Petersen was granted 7,500 restricted stock units, which
vest on January 1, 2011. In the event of a change in control, the restricted stock units
fully vest. |
|
(9) |
|
Includes 15,000 shares held of record by William Russell. On November 11, 2008, Mr.
Russell was granted 15,000 restricted stock units which vest annually in equal
installments over a three-year period. As of April 16, 2009, 10,000 shares remained
unvested in this grant. On March 9, 2010, Mr. Russell was granted 10,000 restricted
stock units, which vest on January 1, 2011. In the event of a change in control, the
restricted stock units fully vest. |
18
|
|
|
(10) |
|
Includes 10,000 shares held of record by Timothy V. Williams and 30,000 shares
issuable upon the exercise of stock options granted to Mr. Williams on June 27, 2007,
which are immediately exercisable and which vest in equal monthly installments over a
three-year period. On March 9, 2010, Mr. Williams was granted 10,000 restricted stock
units, which vest on January 1, 2011. In the event of a change in control, the
restricted stock units fully vest. |
|
(11) |
|
Consists of (a) 783,043 shares held of record by Ronald F. Woestemeyer and Mariette
Woestemeyer, (b) 1,500,000 shares held of record by Ronald F. Woestemeyer 2009 Two Year
Annuity Trust dated May 2009 Ronald F. Woestemeyer and Deutsche Bank Trust Company
Delaware TTEE, (c) 1,000,000 shares held of record by Mariette M. Woestemeyer 2009 Three
Year Annuity Trust dated May 2009, Mariette M. Woestemeyer and Deutsche Bank Trust
Company Delaware TTEE, (d) 1,000,000 shares held of record by DB Trust Co. Woestemeyer
1999 Gift Trust, of which DB Trust Company NA is the sole trustee (e) 520,000 shares held
of record by Irrevocable Trust Agreement between Ronald F. Woestemeyer and Mariette M.
Woestemeyer, Deutsche Bank Trust Company Delaware is the trustee, and (f) stock options
held by Mrs. Woestemeyer to acquire 30,000 shares, which are immediately exercisable.
Mrs. Woestemeyer disclaims beneficial ownership of the shares held of record by 2009 Two
Year Annuity Trust dated May 2009 Ronald F. Woestemeyer and Deutsche Bank Trust Company
Delaware TTEE and Woestemeyer 1999 Gift Trust. On March 9, 2010, Mrs. Woestemeyer was
granted 5,000 restricted stock units, which vest on January 1, 2011. In the event of a
change in control, the restricted stock units fully vest. |
|
(12) |
|
According to information contained in the Schedule 13G/A filed by Brown Capital
Management, Inc. with the SEC on January 27, 2010, Brown Capital Management, Inc.
reported that that it or certain of its affiliates beneficially owned 3,916,922 shares of
our common stock of December 31, 2009, and they had (a) sole voting power to direct the
vote of 2,090,612 shares of our common stock and (b) sole dispositive power with respect
to 3,916,922 shares of our common stock. |
|
(13) |
|
According to information contained in the Schedule 13G filed by FMR LLC with the SEC on
February 16, 2010, FMR LLC reported that it or certain of its affiliates beneficially
owned 1,908,630 shares of our common stock as of December 31, 2009 and that they had (a)
sole voting power to direct the vote of 675,523 shares of our common stock and (b) sole
dispositive power with respect to 1,908,630 shares of our common stock. |
|
(14) |
|
According to information contained in the Schedule 13G filed by T. Rowe Price
Associates, Inc. with the SEC on February 11, 2010, T. Rowe Price Associates, Inc.
reported that it or certain of its affiliates beneficially owned 1,330,415 shares of our
common stock as of December 31, 2009 and that they had (a) sole voting power to direct
the vote of 303,631 shares of our common stock and (b) sole dispositive power with
respect to 1,330,415 shares of our common stock. |
|
(15) |
|
According to information contained in the Schedule 13G filed by The Guardian Life
Insurance Company of America with the SEC on February 11, 2010, The Guardian Life
Insurance Company of America reported that it or certain of its affiliates beneficially
owned 603,994 shares of our common stock as of December 31, 2009 and that they had (a)
sole voting power to direct the vote of none of the shares of our common stock and (b)
sole dispositive power with respect to none shares of our common stock. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires our directors and executive officers, among
others, to file with the SEC and the NYSE an initial report of ownership of our common stock on a
Form 3 and reports of changes in ownership on a Form 4 or a Form 5. Persons subject to Section 16
are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file
related to transactions in our common stock. Under SEC rules, certain forms of indirect ownership
and ownership of our common stock by certain family members are covered by these reporting
requirements. As a matter of practice, our administrative staff assists our directors and
executive officers in preparing initial ownership reports and reporting ownership changes and
typically files these reports on their behalf.
Based on a review of the copies of such forms in our possession, and on written
representations from reporting persons, we believe that during 2009, all of our executive officers
and directors filed the required reports on a timely basis under Section 16(a), except a late Form
4 report was filed by Andres Reiner on January 5, 2009 to report the sale of shares in 2008
pursuant to a Rule 10b5-1 plan; a late Form 4 report was filed by Albert Winemiller and Charles
Murphy on May 18, 2009 to report the grant of restricted stock units by PROS Holdings Inc.; a late
Form 4 report was filed by Jeff Robinson on June 11, 2009 to report the sale of shares pursuant to
a Rule 10b5-1 plan; and a late Form 4 report was filed by William Russell on December 3, 2009 to
report the vesting of restricted stock units granted by PROS Holdings Inc.
19
COMPENSATION DISCUSSION AND ANALYSIS
The following discussion and analysis of compensation arrangements of our named executive
officers should be read together with the compensation tables and related disclosures set forth
below.
The goals of our executive compensation program are to:
|
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|
attract, motivate and retain talented and experienced executives in the pricing
and revenue software market; |
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|
|
align the interests of our executive officers and stockholders by motivating
executive officers to improve company performance and increase stockholder value; |
|
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|
|
compensate our executives to manage our business to meet our long-term
objectives. |
The responsibility for establishing, administering and interpreting our policies governing the
compensation and benefits for our executive officers lies with our compensation committee, which
consists entirely of non-employee directors. Our compensation committee has taken the following
steps to ensure that our executive compensation and benefit policies are consistent with both our
compensation philosophy and our corporate governance guidelines:
|
|
|
evaluated our executive compensation practices and assisted in developing and
implementing the executive compensation programs; |
|
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|
|
established a practice, in accordance with the rules of the NYSE, of reviewing the
performance and determining the compensation earned, paid or awarded to our chief
executive officer independent of input from him; and |
|
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|
|
established a policy, in accordance with the rules of the NYSE, to review on an
annual basis the performance of our other executive officers with assistance from our
chief executive officer and determining what we believe to be appropriate total
compensation for these executive officers. |
In 2008 and 2009, our compensation committee did not rely on any benchmark studies of
comparable companies in establishing executive compensation. Rather, the compensation committee
relied upon the experience and expertise of management and the members of our compensation
committee to adopt executive compensation programs. The compensation committee has engaged an
independent executive compensation firm to assist in providing guidance on future executive
compensation matters.
Our compensation committee typically invites our chief executive officer and chief financial
officer to attend meetings of the compensation committee. During deliberations of compensation
decisions relating to our executive officers, the compensation committee considers the
recommendations of our chief executive officer and chief financial officer. The compensation
committee then separately deliberates and makes determinations about executive compensation, for
persons other than the chief executive officer, in executive session. The chief executive officer
is typically present during some portion of these deliberations.
For compensation decisions regarding our chief executive officer and chief financial officer,
our compensation committee discusses with the chief executive officer his current compensation and
his perspective on his compensation for the upcoming year. The compensation committee then
deliberates and determines the compensation of the chief executive officer in executive session
outside of the presence of any executive officer, including our chief executive officer. The
compensation committee then communicates its decision on his compensation to him through the whole
compensation committee or the chairman of the compensation committee.
The compensation committee takes into consideration general economic and market conditions,
our financial condition and operating results, our operating plan, our geographic location and the
objectives of our executive compensation policies described below. In 2009, our compensation
committee did not prescribe individualized objectives or performance criteria by which to evaluate
the executive officers performance or contribution to specific items of corporate performance. The
compensation committee considered the executive officers individual performances in 2008 and
earlier years as representative of their continuing ability to perform the functions and to fulfill
the responsibilities of their respective positions.
Our compensation committee establishes executive compensation programs that the compensation
committee believes, based on the members experience, is the most appropriate to achieve the goals
described above. Our compensation committee will continue to evaluate our executive compensation
programs on a quantitative and qualitative basis on at least a yearly basis or as circumstances
dictate. Our compensation committee expects to make new awards and adjustments to our executive
compensation programs on an annual basis.
20
Our named executive officers include our principal executive officer, principal financial
officer and two other executive officers who earned or were paid in excess of $100,000 during 2009.
Although Mr. Robinson is no longer an executive officer for the purposes of Item 402 of Regulation
S-K as of October 1, 2009, he is included in the executive compensation analysis as if he were an
executive officer as of December 31, 2009.
Components of executive compensation
Base salaries
We use base salaries primarily to retain our executives. Base salaries for our executive
officers are reviewed on a yearly basis. In February 2009, the compensation committee reviewed the
responsibilities and performance of Messrs. Winemiller, Murphy, Woestemeyer and Reiner, their
tenure with us, their existing compensation packages and their expected contributions and
responsibilities for 2009. Based on this review, the current global economic challenges and our
actions to more closely manage its expenses, the compensation committee elected not to increase the
base salaries of the named executive officers for 2009. Messrs. Winemiller, Murphy, Woestemeyer
and Reiner base salaries for 2009 were $340,000, $300,000, $233,750 and $210,000, respectively. On
July 6, 2009, the board of directors promoted Mr. Reiner, to the position of executive vice
president. In connection with such appointment, the compensation committee reviewed Mr. Reiners
existing compensation package and expected contributions and responsibilities. Based on that
review, the compensation committee approved an increase in the base salary of Mr. Reiner from
$210,000 to $250,000 for the year 2009.
Cash incentive
We have a cash incentive plan for our executive officers under which cash incentive payments
may be made after the end of each year based on our performance against our corporate objectives
for the year. These cash incentive payments are intended to compensate our executive officers for
achievement of our corporate financial goals. The cash incentive payments are generally paid in
the first quarter following completion of a given year. Our compensation committee does not have
the discretion to increase the targets or decrease the amounts payable to any of our executives,
but it does have the discretion to lower the targets and increase the amounts payable under this
cash incentive plan. Traditionally, the committee has not exercised this discretion nor did it do
so in 2009.
Each component of this cash incentive plan is independent of the other components and has
minimum target and maximum target levels. The target incentive payment amounts are payable under
this cash incentive plan if we hit our target levels for each component. Actual results between
the minimum, target and the maximum goal levels would be pro-rated. We use our cash incentive plan
to align our executives performance with our financial results and to motivate our executives to
achieve annual goals.
2009 Cash Incentive Plan. In February 2009, our compensation committee approved our
Named Executive Officer Plan (2009 NEO Plan) cash incentive plan. The 2009 NEO Plan set target
incentive payment amounts based upon three components: (i) revenue, (ii) non-generally accepted
accounting principles, or non-GAAP, operating income, and (iii) discretionary. Each of the
components is independent of the others, but the weighting of the components as they relate to
potential incentive payments is set forth in the following table:
|
|
|
|
|
|
|
Weighting of component |
Component |
|
as a % of bonus payment |
Revenue |
|
|
45.0 |
% |
Non GAAP operating income (1) |
|
|
45.0 |
% |
Discretionary |
|
|
10.0 |
% |
|
|
|
(1) |
|
Non-GAAP operating income represents GAAP
operating income less stock-based compensation
charges as described in ASC 718. |
The compensation committee felt that increasing the weighting of the revenue and non-GAAP
operating income components of the 2009 NEO Plan would heighten managements focus on maximizing
our revenues and profitability during the 2009 fiscal year.
To align with the Companys reporting standards, the revenue and non-GAAP operating income
components of the 2009 NEO Plan were set on a quarterly basis by the compensation committee and
those components were measured at the end of each quarterly period against actual financial
results. There is a cumulative annual performance calculation for those two components. The
discretionary component was determined by the compensation committee on an annual basis at the end
of the Companys fiscal year. The maximum for the discretionary component was 20%. The payments
were made in 2010.
21
The potential payouts under the 2009 NEO Plan were based on our performance as a company
within a range of each components target. No incentive payment was to be earned below the target
threshold and the maximum bonus was to be earned at the target maximum. The ranges for each
component are set forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
Target minimum |
|
Target maximum |
Component |
|
(in millions) |
|
(in millions) |
|
Revenue |
|
$ |
67.2 |
|
|
$ |
70.4 |
|
Non-GAAP operating income |
|
|
9.9 |
|
|
|
12.1 |
|
The following table sets forth our revenue and non-GAAP operating income targets for 2009:
|
|
|
|
|
Component (In millions) |
|
Target |
|
Revenue |
|
$ |
69.0 |
|
Non-GAAP operating income |
|
|
11.7 |
|
The compensation committee set the amount of each incentive payment as a percentage of the
base salary of each executive officer as set forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At target |
|
|
|
|
|
At target |
Executive officer |
|
threshold |
|
At target |
|
maximum |
|
Albert E. Winemiller |
|
|
50 |
% |
|
|
100 |
% |
|
|
150 |
% |
Charles H. Murphy |
|
|
40 |
% |
|
|
80 |
% |
|
|
120 |
% |
Ronald F. Woestemeyer |
|
|
22.5 |
% |
|
|
45 |
% |
|
|
67.5 |
% |
Andres D. Reiner (1) |
|
|
30 |
% |
|
|
60 |
% |
|
|
90 |
% |
|
|
|
(1) |
|
On July 6, 2009, in connection with Mr. Reiners
promotion to the position of Executive Vice
President, Mr. Reiners bonus payment as percentage
of base salary was changed from previously reported
at target percentage of 50% and at target maximum
percentage of 100% of his base salary to at target
percentage of 60% and at target maximum percentage
of 90%. |
Under the 2009 NEO Plan, each executive officer, except Mr. Reiner, achieved 115% of the
target payout as presented above. Mr. Reiner achieved 120% of the target payout as presented
above.
Executive compensation activities in 2010. The Named Executive Officer Plan for 2010
sets target bonus amounts and performance criteria for participants. The performance criteria, the
criterias weighting and the general terms of the Named Executive Officer Bonus Plan for 2010 are
consistent with the Companys 2009 NEO Plan as described above, except that the performance targets
under the Named Executive Officer Bonus Plan for 2010 is measured at the end of each six month
period.
Long-term incentive award programs
Our base salary and cash incentive plan are intended to compensate and motivate for the
short-term. Our compensation committee believes that our executive officers participating in our
equity incentive plans will encourage long-term performance and help to further align their
interests with those of our stockholders. In the past, our compensation committee has granted
stock options and restricted stock units.
The Company provides equity awards under its 2007 equity incentive plan. Under the 2007
equity incentive plan, the company may provide incentives through the grant of: (i) restricted
stock awards; (ii) restricted stock unit awards; (iii) stock options; (iv) stock appreciation
rights; (v) phantom stock; and (vii) performance awards. As of December 31, 2009, there has not
been any issuance of restricted stock awards, stock appreciation rights, phantom stock or
performance awards under the 2007 equity incentive plan. The Company does not apply mandatory
holding periods with respect to stock acquired upon exercise of stock options or vesting of
restricted stock units.
The compensation committee believes that the use of equity awards offers the best approach to
achieve our compensation goals with respect to long-term incentives and currently provides tax and
other advantages to our executive officers relative to other forms of equity compensation. As of
December 31, 2009, we have granted stock options and restricted stock units since we believe that
these types of equity awards are competitive in our industry and are best understood by our
executive officers.
In 2009, the compensation committee determined the size of annual awards based upon the
committees subjective assessment of the incentive value of the executive officers respective
total equity interests relative to their roles in the company and their levels of vested and
unvested shares. We believe that our equity incentive program is an important retention tool for
our executive officers.
22
During 2009, the compensation committee conducted an annual review of the compensation
packages of our executive officers, including the retention value of their compensation components,
their contributions to our business and their ability to continue to provide leadership to us and
to maintain our success. The compensation committee believed it was in our best interests to
provide additional equity awards to our executive officers to incentivize them and to provide
additional retention value. In May 2009, we granted to each of our chief executive officer and
chief financial officer 150,000 restricted stock units. In addition, we granted Mr. Reiner 25,000
restricted stock units in March 2009. Mr. Woestemeyer was not granted any stock options at this
time because the compensation committee believed that his significant equity ownership was
sufficient for motivation and retention.
Security Ownership Guidelines. All executive officers are required to hold at least
$100,000 worth of the Companys stock, and/or the units issued as compensation for service, while
serving as an executive officer of the Company. New executive officers will have five years to
attain this ownership threshold. Shares, units or unexercised options held by an executive officer
under any of the Companys equity incentive plans are included in calculating the value of
ownership to determine whether this minimum ownership requirement has been met.
1999 equity incentive plan. Our 1999 equity incentive plan (1999 plan) authorized
us to grant options to purchase shares of common stock to our employees, directors and consultants
at our discretion. Our 1999 plan was terminated in March 2007 for purposes of granting any future
equity awards. There were issued and outstanding stock options to purchase 99,610 shares of our
common stock under this plan on December 31, 2009. None of these options were held by executive
officers.
2007 equity incentive plan. Our 2007 equity incentive plan (2007 plan) was adopted
in March 2007. The purpose of the 2007 plan is to promote our long-term growth and profitability.
The 2007 plan is intended to make available incentives that will help us to attract, retain and
reward employees whose contributions are essential to our success. Under the 2007 plan, our
employees, officers, directors and other individuals providing services to us or any our affiliates
are eligible to receive awards. The 2007 plan has an evergreen provision that allows for an annual
increase equal to the lesser of (i) 3.5% of our outstanding shares (ii) 900,000 shares or (iii) any
lesser amount determined by the compensation committee of the board of directors. We may provide
these incentives through the grant of: (i) restricted stock awards; (ii) restricted stock unit
awards; (iii) stock options; (iv) stock appreciation rights; (v) phantom stock; and (vii)
performance awards.
In February 2009, we increased the number of shares available to grant by 898,000 under the
evergreen provision in our 2007 plan increasing the number shares reserved for issuance to
3,668,000. On March 9, 2010, we further increased the number of shares available by 900,000 under
the evergreen provision in our 2007 equity incentive plan increasing the number of shares reserved
for issuance to 4,568,000. As of December 31, 2009, we had outstanding equity awards to acquire
3,587,917 shares of its common stock held by our employees, directors and consultants under the
2007 plan. Included in such outstanding equity awards is 1,331,500 restricted stock units held by
our employees, directors and consultants. As of December 31, 2009, 35,857 shares remained
available for grant under the 2007 plan. As of December 31, 2009, there has not been any issuance
of restricted stock awards, stock appreciation rights, phantom stock or performance awards under
this plan.
Stock options generally have a ten-year term and typically vest over three to four years of
which 99,610 are related to the 1999 equity incentive plan and 2,256,417 are related to the 2007
plan. In addition, there are 1,331,500 restricted stock units outstanding under the 2007 plan.
Stock options. Our 2007 plan permits the granting of options to purchase shares of our common
stock intended to qualify as incentive stock options, under Section 422 of the Internal Revenue
Code, and nonqualified stock options. The option exercise price and the term of each option are
determined by the compensation committee. The compensation committee also determines at what time
or times each option may be exercised and the period of time, if any, after retirement, death,
disability or termination of employment during which options may be exercised. The compensation
committee, as plan administrator, can determine vesting for grants which generally expire ten years
after the date of the grant.
Stock appreciation rights. The compensation committee may grant a right to receive a number
of shares or, in the discretion of the compensation committee, an amount in cash or a combination
of shares and cash, based on the increase in the fair market value of the shares underlying the
right during a stated period specified by the compensation committee.
Restricted stock awards and units. The compensation committee may award shares of our common
stock to participants at no cost or for a purchase price or restricted stock units that are settled
in shares of our common stock. These restricted stock and restricted stock unit awards may be
subject to restrictions or may be free from any restrictions under our 2007 plan. The purchase
price of the shares, if any, and any applicable restrictions, are determined by the compensation
committee.
23
Phantom stock. The compensation committee may grant stock equivalent rights, or phantom
stock, which entitles the recipient to receive credits which are ultimately payable in the form of
cash, shares of our common stock or a combination of both. Phantom stock does not entitle the
holder to any rights as a stockholder.
Performance awards. The compensation committee may grant performance awards to participants
entitling the participants to receive cash, shares of our common stock or a combination of both,
upon the achievement of performance goals and other conditions determined by the compensation
committee. The performance goals may be based on our operating income or on one or more other
business criteria selected by the compensation committee.
In the event of any stock split, stock dividend or similar transaction, the shares subject to
the 2007 plan and any outstanding awards will automatically be adjusted. The 2007 plan will
continue in effect until the tenth anniversary of its approval by our board, unless earlier
terminated earlier. The compensation committee may amend, terminate or modify the plan at any time.
In the event of certain significant corporate transactions, including a change in control of
the Company, any then-outstanding equity award or option under the 2007 plan may be assumed,
continued or substituted for by any surviving or acquiring entity (or its parent company). If the
surviving or acquiring entity (or its parent company) elects to assume, continue or substitute for
such awards or options and the holder of such award or option is terminated without cause or
resigns for good reason within 18 months of a change of control of the Company, such awards or
options shall vest in full. If the surviving or acquiring entity (or its parent company) elects not
to assume, continue or substitute for the equity awards or options under the 2007 plan, all
outstanding equity awards and options under the 2007 plan will vest in full and become fully
exercisable.
Benefits. We provide our executive officers the following benefits, generally on the
same terms as we provide our other employees.
health, dental, travel, accident insurance and vision;
life insurance;
employee assistance plan;
medical and dependent care flexible spending account;
short-and long-term disability, accidental death and dismemberment;
a 401(k) plan;
paid time off and vacations;
sick days; and
tuition reimbursement.
We believe these benefits are consistent with companies with which we compete for employees.
401(k) Plan. In May 1996, we adopted a tax-qualified employee savings and retirement plan, or
401(k) plan, which generally covers our full-time employees. The plan is intended to qualify under
Section 401(a) of the Internal Revenue Code. Contributions, and income earned thereon, are not
taxable to employees until withdrawn from this plan. Under this plan, employees may elect to reduce
their current compensation up to the statutorily prescribed annual limit and have the amount of the
reduction contributed to the plan. This plan also permits us to make matching contributions to the
plan on behalf of participants. Historically, the Companys matching contribution is defined as 50%
of the first 6% of employee contributions. The Company may also make discretionary contributions.
The Company temporarily discontinued the matching contribution in 2009 as a result the economic
conditions during 2009. The Company is planning to reinstate the 401(k) matching contribution in
the future upon achievement of certain performance targets.
Severance and termination provisions
We provide our executive officers severance packages if they are terminated without cause (as
defined in their employment or severance agreements) in order to attract and retain them. The
amount of severance benefits is described below. The compensation committee reviews the potential
payouts to ensure their market-competitiveness in order to incentivize our executive officers to
maintain focus on both daily and long-term efforts.
24
On March 24, 2009, the Company entered into a First Amendment of Employment Agreement with Mr.
Reiner. The First Amendment of Employment Agreement with Mr. Reiner would provide for payment of
(i) any unpaid bonus earned prior to the termination relating to completed bonus periods preceding
the date of termination, and (ii) the payment of a bonus at one hundred percent of performance
targets, including discretionary components, within the bonus plan in effect as if employed by the
Company for twelve months. The unpaid bonus described in subsection (i) shall be paid on or about
termination and the bonus as described in subsection (ii) shall be payable in equal installments
during the twelve month period following termination. Such bonuses are payable if Mr. Reiner is
terminated by us without cause, as defined in the agreement or by Mr. Reiner for good reason, as
defined in the agreement.
On March 24, 2009, the Company entered into a Second Amendment of Employment Agreement with
Messrs. Winemiller and Murphy. The Second Amendment of Employment Agreement will provide Messrs.
Winemiller and Murphy with payment of (i) any unpaid bonus earned prior to the termination relating
to completed bonus periods preceding the date of termination, and (ii) the payment of a bonus at
one hundred percent of performance targets, including discretionary components, within the bonus
plan in effect as if employed by the Company for twelve months. The unpaid bonus described in
subsection (i) shall be paid on or about termination and the bonus as described in subsection (ii)
shall be payable in equal installments during the twelve month period following termination. Such
bonuses are payable if Messrs. Winemiller and Murphy are terminated by us without cause, as defined
in the agreement or by Mr. Winemiller or Mr. Murphy, as applicable, for good reason, as defined
in the agreement. In addition, the amended employment agreements provides for the payment of (i)
any unpaid bonus earned prior to the termination relating to completed bonus periods preceding the
date of termination, and (ii) the payment of a bonus at one hundred percent of performance targets,
including discretionary components, within the bonus plan in effect as if employed by the Company
for eighteen months if such officer is terminated without cause or if such officer resigns for
good reason within six months prior to or any time after a change in control transaction of the
Company. Messrs. Winemiller and Murphy are subject to non-competition and non-solicitation
restrictions during the term of their employment and for the 12-month period following the
termination of their employment.
We entered into employment agreement with Mr. Reiner, our current executive vice president, on
April 24, 2008. This agreement is for a two-year term and automatically renews for one-year terms
unless the Company decides not to renew. The base salary payable to Mr. Reiner is subject to
periodic review by our compensation committee. Mr. Reiner is entitled to 12 months of severance,
up to 12 months of health benefits and acceleration of the vesting of his stock options or other
equity awards with respect to shares comprising fifty percent of the unvested shares under such
stock options or other equity awards as of the date of termination. Mr. Reiner is subject to
non-competition and non-solicitation restrictions during the term of his employment and for the
12-month period following the termination of his employment.
We entered into employment agreements with Mr. Winemiller, our chief executive officer, and
Mr. Murphy, our chief financial officer, on September 30, 2005. Both of these agreements were
originally for a two- year term and automatically renew for one-year terms unless the Company
decides not to renew them. The base salaries payable to each of Messrs. Winemiller and Murphy are
subject to periodic review by our compensation committee. Both Messrs. Winemiller and Murphy are
entitled to 12 months of severance, up to 12 months of health benefits and 12 months of
acceleration of the vesting on their stock options granted prior to April 2, 2007 if their
employment with us is terminated without cause or they resign with good reason, as defined in
those agreements. On April 2, 2007, our board amended these employment agreements to also provide
for the full acceleration of vesting, or lapse of all repurchase rights, of any options or other
equity awards granted to these executive officers on or after April 2, 2007, if any of these
officers is terminated without cause, resigns for good reason or if a change of control of the
Company occurs. In addition, the amended employment agreements provide for 18 months of severance
and 18 months of health benefits if such officer is terminated without cause or if such officer
resigns for good reason within six months prior to or any time after a change in control
transaction of the Company. Messrs. Winemiller and Murphy are subject to non-competition and
non-solicitation restrictions during the term of their employment and for the 12-month period
following the termination of their employment.
In January 1999, we entered into an employment agreement with Mr. Woestemeyer, our executive
vice president. This agreement was originally for a two-year term and automatically renews for
one-year terms unless the Company decides not to renew. Under this agreement, Mr. Woestemeyers
salary is subject to periodic review by our compensation committee, and he is entitled to 12 months
of severance if he is terminated without cause as defined in his agreement or we decide not to
renew his agreement without giving him notice. If we decide not to renew this agreement and we
provide 60-days notice of non-renewal to Mr. Woestemeyer, he is entitled to 10 months of severance.
In addition, Mr. Woestemeyer is subject to non-competition and non-solicitation restrictions during
the term of his employment and for the severance period following the termination of his
employment.
Cause is defined in these employment agreements as a breach by our officer of his duties of
confidentiality which causes a material harm to us, his conviction of, or a plea of guilty or no
contest to, a felony or his failure to perform his duties after notice and a cure period. In
addition, for Messrs. Winemiller, Murphy and Reiner, cause also includes an intentional wrongdoing
by them that adversely affects us. Messrs. Winemiller, Murphy and Reiner can resign for good
reason and be entitled to severance. Good reason is defined in their employment agreements as
the assignment of duties to them that are substantially inconsistent with their current roles with
us, the relocation of their offices to more than 50 miles from our present location, a material
reduction in their base salaries and our failure to provide them with similar benefits that we
provide to our other employees.
25
Tax considerations
We are subject to Internal Revenue Code Section 162(m), which limits the amount that we may
deduct for compensation paid to our chief executive officer and to each of our four most highly
compensated officers to $1,000,000 per person per year, unless certain exemption requirements are
met. Exemptions to this deductibility limit may be made for various forms of performance-based
compensation approved by our stockholders. In addition to salary and bonus compensation that is not
performance-based, the exercise of stock options may cause an officers total compensation to
exceed $1,000,000. However, compensation from options that meet certain requirements will be exempt
from the $1,000,000 cap on deductibility. In the past, annual cash compensation to our executive
officers has not exceeded $1,000,000 per person. Although we do not currently anticipate such
compensation to exceed the $1,000,000 limit, our officer compensation could in the future exceed
this limit, and we may not be able to deduct the compensation amount in excess of $1,000,000. While
the compensation committee cannot predict how the deductibility limit may impact our compensation
program in future years, the compensation committee intends to maintain an approach to executive
compensation that strongly links pay to performance.
COMPENSATION COMMITTEE REPORT
The compensation committee has reviewed and discussed the preceding Compensation Discussion
and Analysis section of this proxy statement with our management. Based on this review and
discussion, the compensation committee recommended to our board of directors that the Compensation
Discussion and Analysis be included in our proxy statement and incorporated by reference into our
Annual Report on Form 10-K for the year ended December 31, 2009.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Greg B. Petersen, Chairman
Timothy V. Williams
William Russell
EXECUTIVE COMPENSATION
Summary compensation table
The following table presents the compensation paid to or earned by our chief executive
officer, our chief financial officer and our highest compensated executive officers (collectively,
our Named Executive Officers) during 2009.
|
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Non-equity |
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Restricted |
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|
|
|
|
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|
|
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|
|
|
|
|
Incentive Plan |
|
Stock |
|
Option |
|
All Other |
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|
Name and |
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|
|
|
|
|
|
Compensation |
|
Units |
|
Awards |
|
Compensation |
|
|
Principal Position |
|
Year |
|
Salary ($) |
|
($) (1) |
|
($) (2) |
|
($) (2) |
|
($) (3) |
|
Total ($) |
Albert E. Winemiller |
|
|
2009 |
|
|
|
340,000 |
|
|
|
390,541 |
|
|
|
823,500 |
(6) |
|
|
|
|
|
|
6,817 |
|
|
|
1,560,858 |
|
President and Chief Executive Officer |
|
|
2008 |
|
|
|
340,000 |
|
|
|
301,334 |
|
|
|
|
|
|
|
|
|
|
|
13,074 |
|
|
|
654,408 |
|
|
|
|
2007 |
|
|
|
300,000 |
|
|
|
438,000 |
|
|
|
|
|
|
|
739,500 |
(9) |
|
|
13,974 |
|
|
|
1,491,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles H. Murphy |
|
|
2009 |
|
|
|
300,000 |
|
|
|
275,676 |
|
|
|
823,500 |
(6) |
|
|
|
|
|
|
5,345 |
|
|
|
1,404,521 |
|
Executive Vice President and Chief |
|
|
2008 |
|
|
|
300,000 |
|
|
|
212,706 |
|
|
|
|
|
|
|
|
|
|
|
11,145 |
|
|
|
523,851 |
|
Financial Officer |
|
|
2007 |
|
|
|
275,000 |
|
|
|
321,750 |
|
|
|
|
|
|
|
739,500 |
(9) |
|
|
12,803 |
|
|
|
1,349,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald F. Woestemeyer |
|
|
2009 |
|
|
|
233,750 |
|
|
|
120,824 |
|
|
|
|
|
|
|
|
|
|
|
10,672 |
|
|
|
365,246 |
|
Executive Vice President |
|
|
2008 |
|
|
|
233,750 |
|
|
|
93,226 |
|
|
|
|
|
|
|
|
|
|
|
13,054 |
|
|
|
340,030 |
|
|
|
|
2007 |
|
|
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233,750 |
|
|
|
154,275 |
|
|
|
|
|
|
|
|
|
|
|
17,194 |
|
|
|
405,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andres Renier |
|
|
2009 |
|
|
|
250,000 |
(5) |
|
|
179,798 |
|
|
|
107,250 |
(7) |
|
|
|
|
|
|
9,308 |
|
|
|
546,356 |
|
Executive Vice President - |
|
|
2008 |
|
|
|
210,000 |
|
|
|
93,059 |
|
|
|
275,500 |
(8) |
|
|
284,000 |
(10) |
|
|
15,732 |
|
|
|
878,291 |
|
Product and Marketing |
|
|
2007 |
|
|
|
182,000 |
|
|
|
163,800 |
|
|
|
|
|
|
|
1,047,500 |
(11) |
|
|
5,460 |
|
|
|
1,398,760 |
|
|
|
|
|
|
|
|
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|
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|
|
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Jeff Robinson (4) |
|
|
2009 |
|
|
|
210,000 |
|
|
|
106,206 |
|
|
|
107,250 |
(7) |
|
|
|
|
|
|
11,641 |
|
|
|
435,097 |
|
Senior Vice President, Pricing |
|
|
2008 |
|
|
|
210,000 |
|
|
|
93,059 |
|
|
|
275,500 |
(8) |
|
|
284,000 |
(10) |
|
|
16,094 |
|
|
|
878,653 |
|
|
|
|
2007 |
|
|
|
182,000 |
|
|
|
163,800 |
|
|
|
|
|
|
|
1,047,500 |
(11) |
|
|
5,460 |
|
|
|
1,398,760 |
|
|
|
|
(1) |
|
Amounts shown in this column represent cash bonuses paid in the indicated year
under the applicable Named Executive Officer Bonus Plan. |
|
(2) |
|
These amounts represent the aggregate grant date fair value of equity awards
granted in the specified fiscal year as calculated pursuant to FASB ASC Topic 718.
For additional information about the valuation assumptions with respect to equity
awards, refer to Note 8 of our financial statements in our Form 10-K for the year
ended December 31, 2009, as filed with the SEC. |
|
(3) |
|
Represents matching contributions for each individuals 401(k) plan
contributions, life insurance premiums and health insurance. |
|
(4) |
|
Mr. Robinson is no longer an executive officer for purposes of Item 402 of
Regulation S-K as of October 1, 2009. Mr. Robinson maintains a leadership position
within the Companys pricing sales organization. |
|
(5) |
|
On July 6, 2009, in connection with Mr. Reiners promotion to the position of
executive vice president, Mr. Reiners base salary was increased from $210,000 to
$250,000 for the year 2009. |
26
|
|
|
(6) |
|
Represents 150,000 restricted stock units awarded to Messrs. Winemiller and
Murphy on May 13, 2009. The restricted stock units vest annually in one third
installments on the date of grant and have a grant date fair value of $5.49. |
|
(7) |
|
Represents 25,000 restricted stock units awarded to Messrs. Reiner and
Robinson on March 13, 2009. The Restricted Stock Units vest annually in one third
installments on the date of grant and have a grant date fair value of $4.29. |
|
(8) |
|
Represents 50,000 restricted stock units awarded to Messrs. Reiner and
Robinson on November 11, 2008. The restricted stock units vest as follows: 16,666
restricted stock units will vest on January 1, 2010, 16,667 restricted stock units
will vest on January 1, 2011, and 16,667 restricted stock units will vest on
January 1, 2012. These restricted stock units have a grant date fair value of
$5.51. |
|
(9) |
|
Represents 150,000 options awarded to Messrs. Winemiller and Murphy on April
2, 2007. They are immediately exercisable and vested 25% on April 2, 2008 with the
remaining options vesting monthly, in equal installments, thereafter based on
continued employment through April 2, 2011. These options have a grant date fair
value of $4.93. |
|
(10) |
|
Represents 50,000 options awarded to Messrs. Reiner and Robinson on May 14,
2008. They vest monthly, in equal installments, over an 18 month period from the
date of grant. These options have a grant date fair value of $5.68. |
|
(11) |
|
Represents 50,000 and 100,000 options awarded to Messrs. Reiner and Robinson
on March 26, 2007 and November 15, 2007, respectively. The options granted on
March 26, 2007 vest at 25% on March 26, 2008 with the remaining options vesting
monthly, in equal installments, thereafter over a three year period. These options
will be fully vested on March 26, 2011. These options have a grant date fair value
of $4.93. The options granted on December 30, 2005 vest at 25% on December 30,
2006 with the remaining options vesting monthly, in equal installments, thereafter
over a three year period. These options will be fully vested on December 30, 2009.
These options have a grant date fair value of $8.01. |
Grants of plan-based awards for 2009
The Company awards bonuses pursuant to a 2009 Bonus Plan, which provides for the award of
annual cash bonuses, based upon threshold, target and maximum payout amounts. Please see
Compensation Discussion and Analysis Components of executive compensation for 2009 Executive
compensation activities in 2009 for additional information on the 2009 Bonus Plan. The actual
amount paid to each named executive officer for the fiscal year ended December 31, 2009 is set
forth in the Summary Compensation Table under the heading, Non-Equity Incentive Plan
Compensation.
The following table presents information relating to a 2009 Bonus Plan awards granted to our
Named Executive Officers in 2009.
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Estimated Payouts under |
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Non-equity Incentive Plan Awards |
Name |
|
Grant Date |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
Albert E. Winemiller |
|
|
2/25/2009 |
|
|
|
170,000 |
|
|
|
340,000 |
|
|
|
510,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles H. Murphy |
|
|
2/25/2009 |
|
|
|
120,000 |
|
|
|
240,000 |
|
|
|
360,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald F.
Woestemeyer |
|
|
2/25/2009 |
|
|
|
52,594 |
|
|
|
105,188 |
|
|
|
157,781 |
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|
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|
|
|
|
|
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|
Andres Reiner |
|
|
7/9/2009 |
|
|
|
75,000 |
|
|
|
150,000 |
|
|
|
225,000 |
|
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|
|
|
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|
|
|
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|
Jeff Robinson |
|
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2/25/2009 |
|
|
|
52,500 |
|
|
|
105,000 |
|
|
|
210,000 |
|
27
Outstanding equity awards at fiscal 2009 year-end
The following table presents the number of shares covered by exercisable and
unexercisable options and unvested restricted stock units held by the Named Executive Officer on
December 31, 2009. We have not granted Mr. Woestemeyer any equity based awards because of his
equity position in the Company.
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Option Awards |
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Restricted Stock Units |
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Equity incentive |
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Equity incentive |
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plan awards: |
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plan awards: |
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Number of |
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Number of |
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number of |
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market or payout |
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securities |
|
securities |
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unearned shares |
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value of |
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underlying |
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underlying |
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units or other |
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unearned shares |
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unexercised |
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unexercised |
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Option |
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Option |
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rights that |
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units or other rights |
|
|
options (#) |
|
options (#) |
|
exercise |
|
expiration |
|
have not |
|
that have not |
Name |
|
Exercisable |
|
Unexercisable |
|
price ($) |
|
date |
|
vested (#) |
|
vested ($) |
Albert E. Winemiller |
|
|
150,000 |
(1) |
|
|
|
|
|
|
6.00 |
|
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4/2/2017 |
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|
|
|
|
|
|
150,000 |
(4) |
|
|
1,552,500 |
|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles H. Murphy |
|
|
150,000 |
(1) |
|
|
|
|
|
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6.00 |
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|
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4/2/2017 |
|
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150,000 |
(4) |
|
|
1,552,500 |
|
|
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|
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|
|
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|
Andres Reiner |
|
|
6,250 |
|
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|
|
|
|
|
0.43 |
|
|
|
2/10/2015 |
|
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|
|
|
|
|
|
10,782 |
|
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|
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|
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0.65 |
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12/30/2015 |
|
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34,374 |
|
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|
15,626 |
(2) |
|
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6.00 |
|
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3/26/2017 |
|
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23,333 |
|
|
|
76,667 |
(3) |
|
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16.73 |
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11/15/2017 |
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50,000 |
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12.72 |
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5/14/2018 |
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50,000 |
(5) |
|
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517,500 |
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25,000 |
(6) |
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258,750 |
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Jeff Robinson |
|
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938 |
|
|
|
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|
|
|
0.65 |
|
|
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12/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
19,791 |
|
|
|
15626 |
(2) |
|
|
6.00 |
|
|
|
3/26/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
23,333 |
|
|
|
76,667 |
(3) |
|
|
16.73 |
|
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11/15/2017 |
|
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50,000 |
|
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12.72 |
|
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5/14/2018 |
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50,000 |
(5) |
|
|
517,500 |
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|
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|
25,000 |
(6) |
|
|
258,750 |
|
|
|
|
(1) |
|
These options were awarded to Messrs. Winemiller and Murphy on April 2, 2007. They
are immediately exercisable and vested 25% on April 2, 2008 with the remaining options
vesting monthly, in equal installments, thereafter based on continued employment
through April 2, 2011. |
|
(2) |
|
These options were awarded to Messrs. Reiner and Robinson on March 26, 2007. The
options vested 25% on March 26, 2008 with the remaining options vesting monthly, in
equal installments, thereafter over a three year period. These options will be fully
vested on March 26, 2011. |
|
(3) |
|
These options were awarded to Messrs. Reiner and Robinson on November 15, 2007. The
options vest monthly, in equal installments, over a 30 month period commencing June 1,
2009. These options will be fully vested on December 1, 2011. |
|
(4) |
|
The restricted stock units were awarded to Messrs. Winemiller and Murphy on May
13, 2009. The restricted stock units vest annually in one third installments from the
date of grant. |
|
(5) |
|
The restricted stock units were awarded to Messrs. Reiner and Robinson on November
11, 2008. The restricted stock units vest as follows: 16,666 restricted stock units
vested on January 1, 2010, 16,667 restricted stock units will vest on January 1, 2011,
and 16,667 restricted stock units will vest on January 1, 2012. |
|
(6) |
|
The restricted stock units were awarded to Messrs. Reiner and Robinson on March
13, 2009. The restricted stock units vest annually in one third installments from the
date of grant. |
Options exercised and restricted stock units vested in 2009
The following table presents information on stock options exercised during the year ended
December 31, 2009.
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|
|
Option Awards |
|
|
Number of shares |
|
Value realized |
Name |
|
acquired on exercise (#) |
|
on exercise ($) (1) |
Jeff Robinson |
|
|
14,219 |
|
|
$ |
98,401 |
|
|
|
|
(1) |
|
Based on the difference
between the market price of the Companys common
stock on the date of exercise and the exercise
price. |
For the year ended December 31, 2009, Messrs. Winemiller, Murphy and Reiner did not exercise
any stock options. No restricted stock units vested during 2009. Mr. Woestemeyer has not been
granted any equity based awards because of his equity position in the Company.
28
Potential payments upon termination or change in control
Termination events
Our employment agreements with each of our Named Executive Officers provide that in the case
of a termination of employment by us without cause, as defined in the agreement, or by the Named
Executive Officer for good reason, as defined in the agreement, the Named Executive Officers,
with the exception of Mr. Woestemeyer, would be entitled to (i) a payment equal to one year of his
then current base salary, (ii) any unpaid bonus earned prior to the termination related to
completed bonus periods preceding the date of termination, (iii) up to 12 months of health benefits
and (iv) the payment of a bonus at one hundred percent of performance targets, including
discretionary components, within the bonus plan in effect as if employed by the Company for twelve
months. In addition, Messrs. Winemiller and Murphy would be entitled to full acceleration of his
vesting of any stock option award or equity award granted on or after April 2, 2007 and Mr. Reiner
would be entitled to acceleration of the vesting on their stock options or other equity awards with
respect to shares comprising fifty percent of the unvested shares under such stock options or other
equity awards as of the date of termination. Mr. Woestemeyer would be entitled to a payment equal
to one year of his then current base salary.
The following table presents the amounts of such severance payments to Messrs. Winemiller,
Murphy, Woestemeyer and Reiner assuming the event that triggered the payment occurred December 31,
2009:
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of |
|
|
|
|
|
|
|
|
|
|
|
|
Health |
|
Vesting of Unvested |
|
|
Name |
|
Severance ($) (1) |
|
Bonus ($) (2) |
|
Benefits ($) (3) |
|
Equity Awards ($) (4) |
|
Total ($) |
Albert E. Winemiller |
|
|
340,000 |
|
|
|
340,000 |
|
|
|
6,817 |
|
|
|
1,770,000 |
|
|
|
2,456,817 |
|
Charles H. Murphy |
|
|
300,000 |
|
|
|
240,000 |
|
|
|
5,345 |
|
|
|
1,770,000 |
|
|
|
2,315,345 |
|
Ronald F. Woestemeyer |
|
|
233,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
233,750 |
|
Andres Reiner |
|
|
250,000 |
|
|
|
150,000 |
|
|
|
9,308 |
|
|
|
374,913 |
|
|
|
784,221 |
|
|
|
|
(1) |
|
Reflects the then current base monthly salary for twelve months, payable on normal
payroll cycles. |
|
(2) |
|
Reflects the payment of a bonus at one hundred percent of performance targets,
including the discretionary components, within the bonus plan in effect as if employed by
the Company for twelve months. The amounts in this column assume that as of December 31,
2009, there was no bonus earned but unpaid prior to termination. |
|
(3) |
|
Reflects health benefits as made generally available to employees for twelve months. |
|
(4) |
|
Reflects the acceleration of vesting on unvested equity awards using the closing price
of the Companys stock on December 31, 2009. |
On March 24, 2009, the Company entered into a First Amendment of Employment Agreement
with Mr. Reiner. The First Amendment of Employment Agreement with Mr. Reiner would provide for
payment of (i) any unpaid bonus earned prior to the termination related to completed bonus periods
preceding the date of termination, and (ii) the payment of a bonus at one hundred percent of
performance targets, including discretionary components, within the bonus plan in effect as if
employed by the Company for twelve months. The unpaid bonus described in subsection (i) shall be
paid on or about termination and the bonus as described in subsection (ii) shall be payable in
equal installments during the twelve month period following termination. Such bonuses are payable
if Mr. Reiner is terminated by us without cause, as defined in the agreement or by Mr. Reiner for
good reason, as defined in the agreement.
On March 24, 2009, the Company entered into a Second Amendment of Employment Agreement with
Messrs. Winemiller and Murphy. The Second Amendment of Employment Agreement will provide Messrs.
Winemiller and Murphy with payment of (i) any unpaid bonus earned prior to the termination related
to completed bonus periods preceding the date of termination, and (ii) the payment of a bonus at
one hundred percent of performance targets, including discretionary components, within the bonus
plan in effect as if employed by the Company for twelve months. The unpaid bonus described in
subsection (i) shall be paid on or about termination and the bonus as described in subsection (ii)
shall be payable in equal installments during the twelve month period following termination. Such
bonuses are payable if Messrs. Winemiller and Murphy are terminated by us without cause, as defined
in the agreement or by Messrs. Winemiller or Murphy, as applicable, for good reason, as defined
in the agreement.
Termination events after a change-in-control
Our employment agreements with Messrs. Winemiller and Murphy provide that in the event of a
termination of employment without cause or for good reason within six months of or anytime after
a change-in-control, Messrs. Winemiller and Murphy each would be entitled to (i) a payment equal to
18 months of his then current base salary, (ii) 18 months of health benefits, (iii) full
acceleration on the vesting on any stock option award or equity award granted on or after April 2,
2007, (iv) any unpaid bonus earned prior to the termination, and (v) the payment of a bonus for the
next 12 months at one hundred percent of performance targets, including discretionary components,
within the bonus plan in effect as if employed by the Company.
29
The following table presents potential payments to the Messrs. Winemiller and Murphy in
the event of a termination without cause or termination for good reason by Messrs. Winemiller and
Murphy within six months of a change-in-control, in each case assuming the event that triggered the
payment occurred December 31, 2009:
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|
|
|
Acceleration of |
|
|
|
|
|
|
|
|
|
|
|
|
Health |
|
Vesting of Unvested |
|
|
Name |
|
Severance ($) (1) |
|
Bonus ($) (2) |
|
Benefits ($) (3) |
|
Equity Awards ($) (4) |
|
Total ($) |
Albert E. Winemiller |
|
|
510,000 |
|
|
|
340,000 |
|
|
|
10,226 |
|
|
|
1,770,000 |
|
|
|
2,630,226 |
|
Charles H. Murphy |
|
|
450,000 |
|
|
|
240,000 |
|
|
|
8,018 |
|
|
|
1,770,000 |
|
|
|
2,468,018 |
|
|
|
|
1. |
|
Reflects the then current base monthly salary for 18 months, payable on normal payroll
cycles. |
|
2. |
|
Reflects the payment of a bonus at one hundred percent of performance targets,
including the discretionary component, within the bonus plan in effect as if employed by
the Company for twelve months. The amounts in this column assume that as of December 31,
2009, there was no bonus earned but unpaid prior to termination. |
|
3. |
|
Reflects health benefits as made generally available to employees for 18 months. |
|
4. |
|
Reflects acceleration of vesting on unvested equity awards using the closing price
of the Companys stock on December 31, 2009. |
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
Our audit committee has (1) reviewed and discussed the audited financial statements with
management, (2) discussed with PricewaterhouseCoopers LLP, our independent registered public
accounting firm, the matters required to be discussed by the statement on Auditing Standards No.
61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T, and (3) received the written disclosures and the
letter from the independent accountant required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountants communications with the audit
committee concerning independence. Based upon these discussions and reviews, the audit committee
recommended to our board of directors that the audited financial statements be included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and filed with the SEC.
Our board of directors has determined that each member meets the independence
requirements of the NYSE and Rule 10A-3 (b) of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, and that each qualify as an audit committee financial expert within the meaning
of SEC regulations and the rules of the New York Stock Exchange. Our audit committee operates under
a written charter adopted by our board of directors, a copy of which is available under Corporate
Governance in the Company Investor Relations section of our website at www.prospricing.com.
PricewaterhouseCoopers LLP served as our independent registered public accounting firm
since 2002 and audited our consolidated financial statements for the year ended December 31, 2009.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Timothy V. Williams, Chairman
Greg B. Petersen
Ellen Keszler
STOCKHOLDERS PROPOSALS
Stockholders may present proposals for action at meetings of stockholders only if they comply
with the proxy rules established by the SEC, applicable Delaware law and our amended and restated
bylaws as contained in the From 8-K filed with the SEC on August 27, 2008, a copy of which was
filed as Exhibit 3.2.1 to our Registration Statement on Form S-1/A filed with the SEC on June 15,
2007. No stockholder proposals were received for consideration at our 2010 annual meeting of
stockholders.
Pursuant to the various rules promulgated by the SEC, stockholders interested in submitting a
proposal for inclusion in our proxy materials and for presentation at the 2011 Annual Meeting of
Stockholders may do so by following the procedures set forth in Rule 14a-8 under the Securities
Exchange Act of 1934, as amended. To be eligible for inclusion in such proxy materials,
stockholder proposals must be received by our Secretary no later than December 31, 2010.
Under our bylaws, with respect to any stockholder proposal or director nomination
that is not submitted for inclusion in the next years proxy statement but instead is proposed to
be presented directly at our 2011 annual meeting, the stockholder must provide us written notice
not less than one hundred and twenty (120) days in advance of the date that our proxy statement is
released to stockholder. Any such notice shall set forth the following as to each matter the
stockholder proposes to bring before the meeting: (a) a brief description of the business desired
to be brought before the meeting and the reasons for conducting such business at the meeting and;
(b) the name and address, as they appear on our corporate books, of the stockholder proposing such
business; (c) the class and number of our shares that are beneficially owned by such stockholder;
and (d) any material interest of the stockholder in such business. In the absence of such notice
meeting the above requirements, a stockholder shall not be entitled to present any business at
any meeting of stockholders.
30
Notwithstanding the above, in the event that the number of directors to be elected at an
annual meeting is increased and there is no public announcement by the Company naming the nominees
for the additional directorships at least one hundred thirty (130) days prior to the first
anniversary of the date that the Companys proxy statement was released to stockholders in
connection with the previous years annual meeting, a stockholders notice shall also be considered
timely, but only with respect to nominees for the additional directorships, if it shall be
delivered to the Secretary of the Company at the principal executive offices of the Company not
later than the close of business on the tenth (10th) day following the day on which such public
announcement is first made by the Company. In the event the Company calls a special meeting of
stockholders for the purpose of electing one or more directors to the board of directors, any such
stockholder may nominate a person(s), for election to such positions as are specified in the
Companys notice of meeting, if the stockholders notice shall be delivered to the Secretary of the
Corporation at the principal executive offices of the Company not earlier than the ninetieth (90th)
day prior to such special meeting and not later than the close of business on the later of the
seventieth (70th) day prior to such special meeting or the tenth (10th) day following the day on
which public announcement is first made of the date of the special meeting and of the nominees
proposed by the board of directors to be elected at such meeting.
ANNUAL REPORT ON FORM 10-K
We have furnished or made available a copy of our Annual Report, as filed with the SEC,
including the financial statements thereto to each person whose proxy is being solicited. Our
Annual Report and exhibits thereto may be viewed on the Internet at www.prospricing.com or at
www.sec.gov. We will furnish to any such person any exhibit described in the list accompanying the
Annual Report. Requests for copies of such report and/or exhibit(s) should be directed to
Corporate Communications Department, PROS Holdings, Inc., 3100 Main Street Suite 900, Houston,
Texas 77002.
NO INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY STATEMENT
Notwithstanding anything to the contrary set forth in any of our filings made under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate information in this proxy statement, neither the audit committee Report nor the
compensation committee Report is to be incorporated by reference into any such filings as provided
by SEC regulations. In addition, this Proxy Statement includes certain website addresses intended
to provide inactive, textual references only. The information on these websites shall not be deemed
part of this proxy statement.
31
PROS HOLDINGS, INC.
3100 MAIN STREET
SUITE 900
HOUSTON, TX 77002
|
|
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card
in hand when you access the web site and follow the instructions to obtain your records and to
create an electronic voting instruction form. |
|
|
|
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by PROS Holdings, Inc. in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future years. |
|
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VOTE BY TELEPHONE- 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you call and
then follow the instructions. |
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to PROS Holdings, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M24596-P92398 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD
IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY |
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PROS HOLDINGS, INC. |
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For |
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Withhold |
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For All |
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To withhold
authority to vote
for any individual
nominee(s), mark
For All Except and
write the number(s)
of the nominee(s) on
the line below. |
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The Board of Directors recommends that you vote FOR the following: |
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All |
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Except |
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Vote on Directors |
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1. |
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Election of Directors |
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Nominees: |
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01) Albert E. Winemiller |
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02) Ronald F. Woestemeyer |
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Vote on Proposal |
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For |
Against |
Abstain |
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The Board of Directors recommends you vote FOR the following proposal: |
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2. |
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To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public
accounting firm of PROS Holdings, Inc. for the fiscal year ending December 31, 2010. |
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NOTE: Such other business as may properly come before the meeting or any adjournment thereof. |
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The Board of Directors recommends a
vote IN FAVOR OF the directors listed above and IN FAVOR OF the appointment of PricewaterhouseCoopers LLP. This Proxy, when
properly executed, will be voted as specified above. If no specification is made, this Proxy will be voted IN FAVOR OF the election of the
directors listed above and IN FAVOR OF the appointment of PricewaterhouseCoopers LLP. |
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For address changes and/or comments, please check this box and write them on the back where indicated. |
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Please indicate if you plan to attend this meeting. |
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Please indicate if you wish to view meeting materials
electronically via
the Internet rather
than receiving a
hard copy. Please
note that you will
continue to receive
a proxy card for
voting purposes
only. |
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Yes |
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No |
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Yes |
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No |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All
holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] |
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Date
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Signature (Joint Owners)
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Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
PROS HOLDINGS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
June 10, 2010
The stockholder(s) hereby appoint(s) Albert E. Winemiller and Charles H. Murphy, or each of them,
as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to
represent and to vote, as designated on the reverse side of this ballot, all of the shares of
Common Stock of PROS Holdings, Inc. that the stockholder(s) is/are entitled to vote at the Annual
Meeting of Stockholders to be held at 8:00 a.m. CDT on June 10, 2010, at 3100 Main Street, Suite
900, Houston, TX 77002, and any adjournment or postponement thereof.
Such shares shall be voted as indicated with respect to the proposals listed on the reverse side
hereof and the proxies discretion on such other matters as may properly come before the meeting
or any adjournment thereof.
The Board of Directors recommends a vote In FAVOR OF the directors listed on the reverse side and
IN FAVOR OF the appointment of PricewarerhouseCoopers LLP. This Proxy, when properly executed,
will be voted as specified. If no specification is made, this Proxy will be voted IN FAVOR OF the
election of directors listed on the reverse side of this proxy card and IN FAVOR OF the
appointment of PricewaterhouseCoopers LLP.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse
side.)
Continued and to be signed on reverse side