UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant
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Filed by a Party other than the
Registrant
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Section 240.14a-12
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PIPER JAFFRAY COMPANIES
(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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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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transaction computed pursuant to Exchange Act Rule 0-11
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provided by Exchange Act Rule 0-11( a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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800 Nicollet Mall, Suite 800
Mail Stop J09N05
Minneapolis, Minnesota 55402
612
303-6000
March 14, 2008
Dear Shareholders:
You are cordially invited to join us for our 2008 annual meeting
of shareholders, which will be held on Wednesday, May 7,
2008, at 3:30 p.m., Central Time, in the Huber Room on the
12th floor of our Minneapolis headquarters in the
U.S. Bancorp Center, 800 Nicollet Mall, Minneapolis,
Minnesota. Holders of record of our common stock as of
March 10, 2008, are entitled to notice of and to vote at
the 2008 annual meeting. The Notice of Annual Meeting of
Shareholders and the proxy statement that follow describe the
business to be conducted at the meeting.
In addition to the election of directors and the ratification of
our independent auditor, the proxy statement contains a proposal
to approve an amended and restated version of our 2003 Annual
and Long-Term Incentive Plan, which is being amended and
restated principally to increase the number of shares available
for grant. The increase in shares will allow us to further our
goal of aligning employees interests with the interests of
shareholders, will foster an ownership culture among employees,
will assist in the recruitment and retention of employees, and
will allow us to pay compensation in equity, in lieu of cash.
The Board of Directors recommends that you vote for approval of
the new plan.
We hope you will be able to attend the meeting, and we have
included a map showing the location of U.S. Bancorp Center
on the back of the accompanying proxy statement for your
convenience. However, even if you plan to attend, please vote
your shares promptly to ensure they are represented at the
meeting. You may submit your proxy vote by Internet or telephone
as described in the following materials or by completing and
signing the enclosed proxy card and returning it in the envelope
provided. If you decide to attend the meeting and wish to change
your proxy vote, you may do so automatically by voting in person
at the meeting.
If your shares are held in the name of a broker, bank, trust or
other nominee, you may be asked for proof of ownership to be
admitted to the meeting, as described under How can I
attend the meeting? on page 5 of the proxy statement.
We look forward to seeing you at the annual meeting.
Sincerely,
Andrew S. Duff
Chairman and Chief Executive Officer
800 Nicollet Mall, Suite 800
Mail Stop J09N05
Minneapolis, Minnesota 55402
612
303-6000
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NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
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Date and
Time:
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Wednesday, May 7, 2008, at 3:30 p.m., Central Time
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Place:
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The Huber Room in our Minneapolis Headquarters
12th Floor, U.S. Bancorp Center
800 Nicollet Mall
Minneapolis, MN 55402
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Items of
Business:
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1. The election of three directors, each
for a one-year term.
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2. Ratification of the selection of
Ernst & Young LLP as the independent auditor of
Piper
Jaffray Companies for the year ending December 31, 2008.
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3. Approval of our Amended and Restated
2003 Annual and Long-Term Incentive
Plan.
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4. Any other business that may properly
be considered at the meeting or any
adjournment or postponement
of the meeting.
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Record
Date:
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You may vote at the meeting if you were a shareholder of record
at the close of business on March 10, 2008.
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Voting by
Proxy:
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Whether or not you plan to attend the annual meeting, please
vote your shares by proxy to ensure they are represented at the
meeting. You may submit your proxy vote by Internet or
telephone, as described in the following materials, by no later
than 11:59 p.m. Eastern Daylight Time on Tuesday,
May 6, 2008, or by completing, signing and promptly
returning the enclosed proxy card by mail. We encourage you to
vote by Internet or telephone in order to reduce our mailing and
handling expenses. If you choose to submit your proxy by mail,
we have enclosed an envelope addressed to our vote tabulator,
Broadridge Financial Solutions, Inc., for which no postage is
required if mailed in the United States.
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By Order of the Board of Directors
James L. Chosy
Secretary
March 14, 2008
PROXY
STATEMENT
TABLE OF CONTENTS
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Appendix A
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ii
PROXY
STATEMENT
2008
ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 7, 2008
The Board of Directors of Piper Jaffray Companies is soliciting
proxies for use at the annual meeting of shareholders to be held
on May 7, 2008, and at any adjournment or postponement of
the meeting. This proxy statement and the enclosed proxy card
are first being mailed or given to shareholders on or about
March 14, 2008.
QUESTIONS AND
ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What is the
purpose of the meeting?
At our annual meeting, shareholders will act upon the matters
outlined in the Notice of Annual Meeting of Shareholders, and
management will report on matters of current interest to our
shareholders and respond to questions from our shareholders. The
matters outlined in the notice include the election of
directors, ratification of the selection of our independent
auditor for 2008 and approval of the amendment and restatement
of our Amended and Restated 2003 Annual and Long-Term Incentive
Plan (the Incentive Plan), which is being amended
and restated principally to increase the number of shares of our
common stock available for issuance under the Incentive Plan by
1,000,000 shares.
With respect to the Incentive Plan proposal, the Board of
Directors believes that this proposal is critical to Piper
Jaffrays future success. The increase in shares will allow
us to further our goal of aligning employees interests
with the interests of shareholders, will foster an ownership
culture among employees, will assist in the recruitment and
retention of employees, and will allow us to pay compensation in
equity, in lieu of cash. The Board of Directors recommends that
you vote for approval of the Incentive Plan.
Who is
entitled to vote at the meeting?
The Board has set March 10, 2008, as the record date for
the annual meeting. If you were a shareholder of record at the
close of business on March 10, 2008, you are entitled to
vote at the meeting. As of the record date,
18,753,548 shares of common stock, representing all of our
voting stock, were issued and outstanding and, therefore,
eligible to vote at the meeting.
What are my
voting rights?
Holders of our common stock are entitled to one vote per share.
Therefore, a total of 18,753,548 votes are entitled to be
cast at the meeting. There is no cumulative voting.
How many
shares must be present to hold the meeting?
In accordance with our bylaws, shares equal to a majority of the
voting power of the outstanding shares of common stock entitled
to vote generally in the election of directors as of the record
date must be present at the annual meeting in order to hold the
meeting and conduct business. This is called a quorum. Shares
are counted as present at the meeting if:
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you are present and vote in person at the meeting; or
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you have properly and timely submitted your proxy as described
below under How do I submit my proxy?
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What is a
proxy?
It is your designation of another person to vote stock you own.
That other person is called a proxy. If you designate someone as
your proxy in a written document, that document also is called a
proxy or
a proxy card. When you designate a proxy, you also may direct
the proxy how to vote your shares. We refer to this as your
proxy vote. Two executive officers have been
designated as proxies for our 2008 annual meeting of
shareholders. These executive officers are James L. Chosy and
Thomas P. Schnettler.
What is a
proxy statement?
It is a document that we are required to give you, in accordance
with regulations of the Securities and Exchange Commission, when
we ask you to designate proxies to vote your shares of Piper
Jaffray Companies common stock at a meeting of our shareholders.
The proxy statement includes information regarding the matters
to be acted upon at the meeting and certain other information
required by regulations of the Securities and Exchange
Commission and rules of the New York Stock Exchange.
What is the
difference between a shareholder of record and a street
name holder?
If your shares are registered directly in your name, you are
considered the shareholder of record with respect to those
shares. If your shares are held in a stock brokerage account or
by a bank, trust or other nominee, then the broker, bank, trust
or other nominee is considered to be the shareholder of record
with respect to those shares, while you are considered the
beneficial owner of those shares. In that case, your shares are
said to be held in street name. Street name holders
generally cannot vote their shares directly and must instead
instruct the broker, bank, trust or other nominee how to vote
their shares using the method described below under How do
I submit my proxy?
How do I
submit my proxy?
If you are a shareholder of record, you can submit a proxy to be
voted at the meeting in any of the following ways:
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electronically, using the Internet;
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over the telephone by calling a toll-free number; or
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by completing, signing and mailing the enclosed proxy card.
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The Internet and telephone voting procedures have been set up
for your convenience. The procedures have been designed to
authenticate your identity, allow you to give voting
instructions, and confirm that those instructions have been
recorded properly. When you vote by Internet or telephone, you
reduce our mailing and handling expenses. If you are a
shareholder of record and would like to submit your proxy by
Internet or telephone, please refer to the specific instructions
provided on the enclosed proxy card. If you wish to vote using a
paper format, please return your signed proxy card promptly to
ensure we receive it before the annual meeting.
If you hold your shares in street name, you must vote your
shares in the manner prescribed by your broker, bank, trust or
other nominee. Your broker, bank, trust or other nominee has
enclosed or otherwise provided a voting instruction card for you
to use in directing the broker, bank, trust or other nominee how
to vote your shares. In many cases, you may be permitted to
submit your voting instructions by Internet or telephone.
How do I vote
if I hold shares in the Piper Jaffray Companies Retirement Plan
or U.S. Bancorp 401(k) Savings Plan?
If you hold shares of Piper Jaffray common stock in the Piper
Jaffray Companies Retirement Plan or U.S. Bancorp 401(k)
Savings Plan, your completed proxy card or the submission of
your proxy by Internet or telephone will serve as voting
instructions to the respective plans trustee. Your voting
instructions must be received at least five days prior to the
annual meeting in order to count. In accordance with the terms
of the Piper Jaffray Companies Retirement Plan and
U.S. Bancorp 401(k) Savings Plan, the trustee of each plan
will vote all of the shares held in the plan in the same
proportion as the actual proxy votes submitted by plan
participants at least five days prior to the annual meeting.
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What does it
mean if I receive more than one set of proxy
materials?
If you receive more than one set of proxy materials or multiple
control numbers for use in submitting your proxy, it means that
you hold shares registered in more than one account. To ensure
that all of your shares are voted, sign and return each proxy
card or voting instruction card you receive or, if you submit
your proxy by Internet or telephone, vote once for each card or
control number you receive.
Can I vote my
shares in person at the meeting?
If you are a shareholder of record, you may vote your shares in
person at the meeting by completing a ballot at the meeting.
Even if you currently plan to attend the meeting, we recommend
that you also submit your proxy as described above so your vote
will be counted if you later decide not to attend the meeting.
If you submit your vote by proxy and later decide to vote in
person at the annual meeting, the vote you submit at the meeting
will override your proxy vote.
If you are a street name holder, you may vote your shares in
person at the meeting only if you obtain and bring to the
meeting a signed letter or other form of proxy from your broker,
bank, trust or other nominee giving you the right to vote the
shares at the meeting.
If you are a participant in the Piper Jaffray Companies
Retirement Plan or U.S. Bancorp 401(k) Savings Plan, you
may submit voting instructions as described above, but you may
not vote your Piper Jaffray shares held in the Piper Jaffray
Companies Retirement Plan or U.S. Bancorp 401(k) Savings
Plan in person at the meeting.
How does the
Board recommend that I vote?
The Board of Directors recommends a vote:
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FOR
all of the nominees for director;
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FOR
the ratification of the selection of
Ernst & Young LLP as the independent auditor of Piper
Jaffray for the year ending December 31, 2008; and
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FOR
the amendment and restatement of the Incentive Plan,
which is being amended and restated principally to increase the
number of shares of our common stock available for issuance
under the Incentive Plan by 1,000,000 shares. The Board of
Directors believes that this proposal is critical to Piper
Jaffrays future success, so please vote your shares, or
instruct your broker, bank, trust or other nominee how to vote
on this proposal.
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What if I do
not specify how I want my shares voted?
If you are a shareholder of record and submit a signed proxy
card or submit your proxy by Internet or telephone but do not
specify how you want to vote your shares on a particular manner,
we will vote your shares as follows:
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FOR
all of the nominees for director;
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FOR
the ratification of the selection of
Ernst & Young LLP as the independent auditor of Piper
Jaffray for the year ending December 31, 2008; and
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FOR
the amendment and restatement of the Incentive Plan.
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Your vote is important. We urge you to vote, or to instruct
your broker, bank, trust or other nominee how to vote, on all
matters before the annual meeting.
If you are a street name
holder and fail to instruct the shareholder of record how you
want to vote your shares on a particular matter, those shares
are considered to be uninstructed. New York Stock
Exchange rules determine the circumstances under which member
brokers of the New York Stock Exchange may exercise discretion
to vote uninstructed shares held by them on behalf
of their clients who are street name holders. With respect
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to the election of the nominees for director and the
ratification of the selection of Ernst & Young as our
independent auditor for the year ending December 31, 2008,
the rules permit member brokers (other than our broker-dealer
subsidiary, Piper Jaffray & Co.) to exercise voting
discretion as to the uninstructed shares. If the broker, bank or
other nominee does not exercise this discretion, the
uninstructed share will be referred to as a broker
non-vote. With respect to the amendment and restatement of
the Incentive Plan, however, member brokers (including Piper
Jaffray & Co.) may
not
exercise voting
discretion and thus uninstructed shares will not be voted on
this proposal. For more information regarding the effect of
broker non-votes on the outcome of the vote, see below under
How are votes counted?
Our broker-dealer subsidiary, Piper Jaffray & Co., is
a member broker of the New York Stock Exchange and is a
shareholder of record with respect to shares of our common stock
held in street name on behalf of Piper Jaffray & Co.
clients. Because Piper Jaffray & Co. is our affiliate,
New York Stock Exchange rules prohibit Piper Jaffray &
Co. from voting uninstructed shares even on routine matters.
Instead, Piper Jaffray & Co. may vote uninstructed
shares on such matters only in the same proportion as the shares
represented by the votes cast by all shareholders of record with
respect to such matters.
Can I change
my vote after submitting my proxy?
Yes. You may revoke your proxy and change your vote at any time
before your proxy is voted at the annual meeting, in any of the
following ways:
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by submitting a later-dated proxy by Internet or telephone
before the deadline stated on the enclosed proxy card;
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by submitting a later-dated proxy to the corporate secretary of
Piper Jaffray Companies, which must be received by us before the
time of the annual meeting;
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by sending a written notice of revocation to the corporate
secretary of Piper Jaffray Companies, which must be received by
us before the time of the annual meeting; or
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by voting in person at the meeting.
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What vote is
required to approve each item of business included in the notice
of meeting?
The three director nominees who receive the most votes cast at
the meeting in person or by proxy will be elected. The
affirmative vote of the holders of a majority of the outstanding
shares of common stock present in person or represented by proxy
and entitled to vote at the annual meeting is required to ratify
the selection of our independent auditor and to amend and
restate the Incentive Plan, provided, however, that with respect
to the Incentive Plan, a majority of the total number of
outstanding shares of common stock must vote on the proposal.
How are votes
counted?
You may either vote FOR or WITHHOLD
authority to vote for each director nominee. You may vote
FOR, AGAINST or ABSTAIN on
the other proposals. If you properly submit your proxy but
withhold authority to vote for one or more director nominees or
abstain from voting on one or more of the proposals, your shares
will be counted as present at the meeting for the purpose of
determining a quorum and for the purpose of calculating the vote
on the particular matter(s) with respect to which you abstained
from voting or withheld authority to vote. If you do not submit
your proxy or voting instructions and also do not vote by ballot
at the annual meeting, your shares will not be counted as
present at the meeting for the purpose of determining a quorum
unless you hold your shares in street name and the broker, bank,
trust or other nominee has discretion to vote your shares and
does so. For more information regarding discretionary voting,
see the information above under What if I do not specify
how I want my shares voted?
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If you withhold authority to vote for one or more of the
director nominees or you do not vote your shares on this matter
(whether by broker non-vote or otherwise), this will have no
effect on the outcome of the vote. With respect to the proposal
to ratify the selection of Ernst & Young LLP as our
independent auditor, if you abstain from voting this will have
the same effect as a vote against the proposal, but if you do
not vote your shares (or, for shares held in street name, if you
do not submit voting instructions and your broker, bank, trust
or other nominee does not or may not vote your shares), this
will have no effect on the outcome of the vote. Similarly,
abstentions regarding the Incentive Plan will have the same
effect as a vote against the proposal, and a failure to vote or
a broker non-vote on the Incentive Plan proposal will have no
effect on the outcome, provided, however, that a failure to vote
or a broker non-vote may affect the voting to the extent that
the failure to vote or the broker non-vote causes less than a
majority of the outstanding shares of common stock to be voted
on the Incentive Plan proposal.
How can I
attend the meeting?
All of our shareholders are invited to attend the annual
meeting. You may be asked to present valid photo identification,
such as a drivers license or passport, before being
admitted to the meeting. If you hold your shares in street name,
you also may be asked to present proof of ownership to be
admitted to the meeting. A brokerage statement or letter from
your broker, bank, trust or other nominee are examples of proof
of ownership. To help us plan for the meeting, please let us
know whether you expect to attend, by responding affirmatively
when prompted during Internet or telephone voting or by marking
the attendance box on the proxy card.
Who pays for
the cost of proxy preparation and solicitation?
Piper Jaffray pays for the cost of proxy preparation and
solicitation, including the reasonable charges and expenses of
brokerage firms, banks, trusts or other nominees for forwarding
proxy materials to street name holders. We have retained
Innisfree M&A Incorporated to assist in the solicitation of
proxies for the annual meeting for a fee of approximately
$25,000 plus reimbursement of out-of-pocket expenses. We are
soliciting proxies primarily by mail. In addition, our
directors, officers and regular employees may solicit proxies
personally, telephonically, electronically or by other means of
communication. Our directors, officers and regular employees
will receive no additional compensation for their services other
than their regular compensation.
Can I receive
future proxy statements and annual reports electronically
instead of receiving paper copies through the
mail?
Yes. If you are a shareholder of record, you may request and
consent to electronic delivery of future proxy statements and
annual reports by accessing the website
www.proxyvote.com
and following the instructions to vote. After you have voted
your proxy, you will be prompted regarding electronic delivery.
If your shares are held in street name, please contact your
broker, bank, trust or other nominee and ask about the
availability of electronic delivery.
Important notice regarding the availability of proxy
materials for our annual meeting of shareholders to be held on
May 7, 2008
: Our proxy statement and 2007 Annual Report
are available at
www.piperjaffray.com/proxymaterials
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ITEM 1
ELECTION OF DIRECTORS
The number of directors currently serving on our Board of
Directors is eight. In 2007, our Board of Directors and
shareholders approved an amendment and restatement of our
Amended and Restated Certificate of Incorporation, which
declassified our Board of Directors and provided for the annual
election of all of our directors in a manner that does not
affect the unexpired terms of the directors elected prior to our
2008 annual meeting. By staggering the implementation of the
declassified board in a manner that does not affect unexpired
terms, the directors who previously served in Class II are
the
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only nominees for election at our 2008 annual meeting. At our
2009 annual meeting, our shareholders will be asked to vote for
our directors who previously served in Classes II and III,
and at our 2010 annual meeting and each annual meeting
thereafter, our shareholders will be asked to vote for the
entire Board of Directors.
At this years annual meeting, the terms of our directors
who previously served as Class II directors will expire.
Michael R. Francis, Addison L. Piper and Lisa K. Polsky have
been nominated for reelection to the Board to serve until our
2009 annual meeting of shareholders or until their successors
are elected and qualified. Each of the nominees has agreed to
serve as a director if elected. The three nominees receiving a
plurality of the votes cast at the meeting in person or by proxy
will be elected. Proxies may not be voted for more than three
directors. If, for any reason, any nominee becomes unable to
serve before the annual meeting occurs, the persons named as
proxies may vote your shares for a substitute nominee selected
by our Board of Directors.
The Board of Directors recommends a vote FOR the election of
the three director nominees. Proxies will be voted FOR the
election of the three nominees unless otherwise specified.
Following is biographical information for each of the nominees
for election as director and for the directors whose terms of
office will continue after the meeting.
Nominees for
Election to the Board of Directors for a One-Year Term Expiring
in 2009
MICHAEL R. FRANCIS:
Age 45, director
since December 31, 2003. Mr. Francis has served as
executive vice president, marketing for Target Corporation since
2003. Target Corporation operates Target-brand general
merchandise discount stores and an online business, Target.com.
Mr. Francis began his career with Marshall Fields
department stores in 1985 and has been with Target Corporation
since its acquisition of Marshall Fields in 1990. He
previously served Target Corporation as senior vice president,
marketing from 2001 to 2003 and as senior vice president,
marketing and visual presentation of the department store
division from 1995 to 2001. Prior to that, he held a variety of
positions within Target Corporation.
ADDISON L. PIPER:
Age 61, director since
December 31, 2003. Mr. Piper retired from Piper
Jaffray effective at the end of 2006, having served as vice
chairman of Piper Jaffray Companies since the completion of our
spin-off from U.S. Bancorp on December 31, 2003. He
worked for Piper Jaffray from 1969 through 2006, serving as
assistant equity syndicate manager, director of securities
trading and director of sales and marketing. He served as chief
executive officer from 1983 to 2000 and as chairman from 1988 to
2003. From 1998 through August 11, 2006, Mr. Piper
also had responsibility for our venture and private capital fund
activities. Mr. Piper also is a member of the board of
directors of Renaissance Learning Corporation.
LISA K. POLSKY:
Age 51, director since
May 2, 2007. Since March 2008, Ms. Polsky has served
as partner and head of global investment solutions for Duff
Capital Advisors, which provides integrated portfolio solutions
to funding liabilities and fulfilling investment needs,
particularly in the retirement space. Prior to joining Duff
Capital Advisors, she served as the president of Polsky
Partners, a New York-based consulting firm specializing in hedge
fund allocation, risk management and valuation policy. Prior to
founding Polsky Partners in 2002, Polsky served as managing
director, head of client financing services and head of
leveraged client channel with Merrill Lynch & Co.,
Inc. from 2000 to 2002, and as managing director, chief risk
officer, head of risk policy, chief derivative strategist and
head of product development at Morgan Stanley DW Inc. from 1996
to 2000. Ms. Polsky also is a member of the board of
directors of Investools Inc.
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Members of the
Board of Directors Continuing in Office
Directors
Whose Terms End in 2009 (Previously Class III
Directors)
B. KRISTINE JOHNSON:
Age 56,
director since December 31, 2003. Since 2000,
Ms. Johnson has been president of Affinity Capital
Management, a Minneapolis-based venture capital firm that
invests primarily in seed and early-stage health care companies
in the United States. Ms. Johnson served as a consultant to
Affinity Capital Management in 1999. Prior to that, she was
employed for 17 years at Medtronic, Inc., a manufacturer of
cardiac pacemakers, neurological and spinal devices and other
medical products, serving most recently as senior vice president
and chief administrative officer from 1998 to 1999. Her
experience at Medtronic also included service as president of
the vascular business and president of the tachyarrhythmia
management business, among other roles.
JEAN M. TAYLOR:
Age 45, director since
July 27, 2005. Ms. Taylor is the president and chief
executive officer of Taylor Corporation, positions she has held
since 2001 and 2007, respectively. Taylor Corporation is a
privately held group of approximately 80 affiliated
entrepreneurial companies engaged in marketing, fulfillment,
personalization and printing services. These businesses operate
throughout North America, Europe and Australia and together
employ more than 15,000 employees. Ms. Taylor joined
Taylor Corporation in 1994 as vice president and served as
executive vice president from 1999 to 2001.
Directors
Whose Terms End in 2010 (Previously Class I
Directors)
ANDREW S. DUFF:
Age 50, chairman and
chief executive officer since December 31, 2003.
Mr. Duff became chairman and chief executive officer of
Piper Jaffray Companies following completion of our spin-off
from U.S. Bancorp on December 31, 2003. He also has
served as chairman of our broker-dealer subsidiary since 2003,
as chief executive officer of our broker-dealer subsidiary since
2000 and as president of our broker-dealer subsidiary since
1996. He has been with Piper Jaffray since 1980. Prior to the
spin-off from U.S. Bancorp, Mr. Duff also was a vice
chairman of U.S. Bancorp from 1999 through 2003.
SAMUEL L. KAPLAN:
Age 71, director since
December 31, 2003. Mr. Kaplan is a partner and
founding member of the law firm of Kaplan, Strangis and Kaplan,
P.A., Minneapolis, Minnesota, and has served as the firms
president continuously since the firm was founded in 1978.
Mr. Kaplan also is a member of the board of directors of
Vyyo Inc.
FRANK L. SIMS:
Age 57, director since
December 31, 2003. Mr. Sims retired from Cargill, Inc.
effective at the end of 2007, having served as corporate vice
president, transportation and product assurance and a member of
the management corporate center since July 2000. Cargill is a
marketer and distributor of agricultural and industrial products
and services. Mr. Sims had responsibility for global
transportation and supply chain solutions and served as a member
of the risk management and financial solutions platform.
Mr. Sims joined Cargill in 1972 and served in a number of
executive positions, including president of Cargills North
American Grain Division from 1998 to 2000.
INFORMATION
REGARDING THE BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
The Board of Directors conducts its business through meetings of
the Board and the following standing committees: Audit,
Compensation, and Nominating and Governance. Each of the
standing committees has adopted and operates under a written
charter, all of which are available on our website at
www.piperjaffray.com
. Other corporate governance
documents available on our website include our Corporate
Governance Principles, Director Independence Standards, Director
Nominee Selection Policy, Procedures for Contacting the Board of
Directors, Codes of Ethics and Business Conduct, and Complaint
Procedures Regarding Accounting and Auditing Matters. All of
these documents also are available in print to any shareholder
who requests them.
7
Codes of Ethics
and Business Conduct
We have adopted a Code of Ethics and Business Conduct applicable
to our employees, including our principal executive officer,
principal financial officer, principal accounting officer,
controller and other employees performing similar functions, and
a separate Code of Ethics and Business Conduct applicable to our
directors. Directors who also serve as officers of Piper Jaffray
must comply with both codes. Both codes are available on our
website at
www.piperjaffray.com
and are available in
print to any shareholder who requests them. We will post on our
website at
www.piperjaffray.com
any amendment to, or
waiver from, a provision of either of our Codes of Ethics and
Business Conduct within four business days following the date of
such amendment or waiver.
Director
Independence
Under applicable rules of the New York Stock Exchange, a
majority of the members of our Board of Directors must be
independent, and no director qualifies as independent unless the
Board of Directors affirmatively determines that the director
has no material relationship with Piper Jaffray. To assist the
Board with these determinations, the Board has adopted the
following categorical Director Independence Standards, which are
available on our website at
www.piperjaffray.com
. Under
the Director Independence Standards, a director will be deemed
independent for purposes of service on the Board if:
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(1)
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the director does not have any relationship described in Rule
303A.02(b) of the New York Stock Exchange corporate governance
rules;
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(2)
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in the event the director has a relationship that is not of a
type described in the Director Independence Standards or that
exceeds the limits of the relationships described in the
Director Independence Standards, the Board determines in its
judgment, after broad consideration of all relevant facts and
circumstances, that the relationship is not material; and
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(3)
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the Board reviews all commercial, banking, consulting, legal,
accounting, charitable, familial and other relationships the
director has with Piper Jaffray that are not of a type described
in the Director Independence Standards and determines in its
judgment, after broad consideration of all relevant facts and
circumstances, that the relationship is not material.
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Our Director Independence Standards deem the following types of
relationships not to be material relationships that would cause
a director not to be independent:
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(a)
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Piper Jaffray has made payments for goods or services to, or has
received payments for goods or services from, the primary
business affiliation of the director or an immediate family
member of the director in an aggregate amount during a fiscal
year that does not exceed the greater of $1 million or 2%
of such other companys consolidated gross revenues for
that fiscal year;
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(b)
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lending relationships, deposit relationships, or other banking
relationships between Piper Jaffray, on one hand, and a
directors or immediate family members primary
business affiliation, on the other hand, if the relationship is
in the ordinary course of business and on substantially the same
terms as those prevailing at the time for comparable
transactions with similarly situated non-affiliates;
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(c)
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the director or an immediate family member, or their primary
business affiliation, maintains a brokerage, margin or similar
account with, or has purchased investment services, investment
products, securities or similar products and services from Piper
Jaffray, including ownership of interests in partnerships or
funds sponsored or managed by Piper Jaffray, if the relationship
is on substantially the same terms as those prevailing at the
time for comparable transactions with similarly situated
non-affiliates;
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(d)
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the director or an immediate family member is a partner or
associate of, or of counsel to, a law firm providing services to
Piper Jaffray if (i) such person has not personally
provided legal services to Piper Jaffray, and (ii) the
aggregate payments received by the law firm from Piper
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Jaffray in any fiscal year do not exceed the greater of
$1 million or 2% of the law firms consolidated gross
revenues for that fiscal year;
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(e)
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a relationship arising solely from a directors, an
immediate family members, or their primary business
affiliations ownership of an equity or limited partnership
interest in an entity that engages in a transaction with Piper
Jaffray, if the directors or immediate family
members ownership interest does not exceed 5% of the total
equity or partnership interests in that other entity;
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(f)
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a relationship arising solely from a directors position as
a director of another company that provides services to, or is
provided services by, Piper Jaffray;
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(g)
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a relationship arising from both an interest as described in
subsection (e) and a position as described in
subsection (f) above;
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(h)
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a relationship arising solely because an immediate family member
of the director is a director or employee of another company
that provides services to, or is provided services by, Piper
Jaffray;
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(i)
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the director or an immediate family member has received personal
loans from Piper Jaffray that are specifically permitted under
Section 402 of the Sarbanes-Oxley Act of 2002 and any
regulations adopted thereunder; and
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(j)
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the director or an immediate family member is a director,
trustee or executive officer of a foundation, university or
other non-profit organization that receives from Piper Jaffray
or the Piper Jaffray Foundation charitable contributions in an
amount that does not exceed the greater of $100,000 or 5% of the
organizations aggregate annual charitable receipts during
its preceding fiscal year.
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For purposes of these standards, a directors primary
business affiliation means an entity of which the director
is an executive officer, partner or employee or owns directly at
least a 10% equity interest, and an immediate family
members primary business affiliation means an
entity of which the immediate family member is an executive
officer, general partner or owns directly or indirectly at a 10%
equity interest.
The Board has affirmatively determined, in accordance with the
foregoing Director Independence Standards, that none of our
non-employee directors other than Addison L. Piper has a
material relationship with Piper Jaffray and that other than Mr.
Piper, each non-employee director (including Michael R. Francis,
B. Kristine Johnson, Samuel L. Kaplan, Lisa K. Polsky, Frank L.
Sims and Jean M. Taylor) is independent. None of the independent
directors has a relationship described in Rule 303A.02(b)
of the New York Stock Exchange rules, and with the exception of
a relationship between Piper Jaffray and Ms. Johnson, every
relationship between Piper Jaffray and each of these directors
is of a type described in the Director Independence Standards
and does not exceed the limits set forth in the Director
Independence Standards. Within the types of relationships listed
above, Messrs. Francis, Kaplan and Sims, Ms. Johnson
and Ms. Taylor have relationships with Piper Jaffray of the
type described in (a); Messrs. Francis and Sims and
Ms. Johnson and Ms. Taylor have relationships with
Piper Jaffray of the type described in (f); Ms. Johnson has
a relationship with Piper Jaffray of the type described in (g);
and Messrs. Francis and Sims and Ms. Johnson,
Ms. Polsky and Ms. Taylor have relationships with
Piper Jaffray of the type described in (j). With respect to the
relationship not covered by our Director Independence Standards,
Ms. Johnsons primary business affiliation, a venture
capital company, owned equity interests in excess of 5% (as set
forth in our Director Independence Standards) but less than 10%
in three companies that engaged the company to provide
investment banking services in 2007. The Board broadly
considered all the relevant facts and circumstances, including
the fact that the equity ownership of Ms. Johnsons
primary business affiliation in each of these companies did not
exceed 10% and the fact that the transactions were conducted on
the same terms and conditions as other similarly-situated
transactions that did not involve the primary business
affiliation of a member of
9
the Board of Directors. After this analysis, the Board
affirmatively determined in its judgment that these facts do not
constitute a material relationship and that Ms. Johnson is
independent.
Our other directors, Mr. Duff and Mr. Piper, cannot be
considered independent directors because of relationships with
the company that are described in Rule 303A.02(b) of the
New York Stock Exchange corporate governance rules.
Specifically, Mr. Duff is employed as our chief executive
officer, and Mr. Piper was employed as an executive officer
of Piper Jaffray within the last three years.
Lead
Director
The Board of Directors has appointed Mr. Kaplan to serve as
the lead director of the Board. The lead director has the
following duties and responsibilities, as described in our
Corporate Governance Principles:
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presides at all meetings of the board at which the chairman is
not present, including executive sessions of the independent
directors, and coordinates the agenda for and moderates these
executive sessions;
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serves formally as a liaison between the chief executive officer
and the independent directors;
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monitors board meeting schedules and agendas to ensure that
appropriate matters are covered and that there is sufficient
time for discussion of all agenda items;
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monitors information sent to the board and advises the chairman
as to the quality, quantity and timeliness of the flow of
information;
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has authority to call meetings of the independent
directors; and
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if requested by major shareholders, makes himself available for
consultation and direct communication.
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Meetings of the
Outside Directors
At both the Board and committee levels, our non-employee
directors meet regularly in executive sessions in which
Mr. Duff and other members of management do not
participate. Mr. Kaplan, our lead director, serves as the
presiding director of executive sessions of the Board, and the
chairperson of each committee serves as the presiding director
at executive sessions of that committee. At least once annually,
our independent directors meet in an executive session without
Messrs. Piper and Duff.
Committees of the
Board
Audit
Committee
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Members:
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Frank L. Sims,
Chairperson
Samuel L. Kaplan
Lisa K. Polsky
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The Audit Committees purpose is to oversee the integrity
of our financial statements, the independent auditors
qualifications and independence, the performance of our internal
audit function and independent auditor, and compliance with
legal and regulatory requirements. The Audit Committee has sole
authority to retain and terminate the independent auditor and is
directly responsible for the compensation and oversight of the
work of the independent auditor. The Audit Committee meets with
management and the independent auditor to review and discuss the
annual audited and quarterly unaudited financial statements,
reviews the integrity of our accounting and financial reporting
processes and audits of our financial statements, and prepares
the Audit Committee Report included in the proxy statement. The
responsibilities of the Audit Committee are more fully described
in the Committees charter. The Audit Committee met eight
times during 2007. The Board has determined that all members of
the Audit Committee are independent (as that term is defined in
the applicable New York Stock Exchange rules and in regulations
of the Securities and Exchange Commission), that all members are
10
financially literate and have the accounting or related
financial expertise required by the New York Stock Exchange
rules, and that each of Mr. Sims and Ms. Polsky is an
audit committee financial expert as defined by
regulations of the Securities and Exchange Commission.
Compensation
Committee
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Members:
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Michael R. Francis,
Chairperson
Lisa K. Polsky
Frank L. Sims
Jean M. Taylor
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The Compensation Committee discharges the Boards
responsibilities relating to compensation of the executive
officers, oversees succession planning for the executive
officers jointly with the Nominating and Governance Committee
and ensures that our compensation and employee benefit programs
are aligned with our compensation and benefits philosophy. The
Committee has full discretion to determine the amount of
compensation to be paid to the executive officers. The Committee
also has sole authority to evaluate the chief executive
officers performance and determine the compensation of the
chief executive officer based on this evaluation. In addition,
the Committee is responsible for recommending stock ownership
guidelines for the executive officers and directors, for
recommending the compensation and benefits to be provided to our
non-employee directors, for reviewing and approving the
establishment of broad-based incentive compensation,
equity-based, retirement or other material employee benefit
plans, and for discharging any duties under the terms of these
plans.
The Committee has delegated authority to our chief executive
officer under the Incentive Plan to allocate awards to employees
other than our executive officers in connection with our annual
equity grants made in the first quarter of each year. The annual
equity grants are part of the payment of bonuses for the
preceding year. Under this delegated authority, the Committee
approves the aggregate amount of equity to be awarded to all
employees other than executive officers, and the chief executive
officer approves the award recipients and specific amount of
equity to be granted to each recipient. All other terms of the
awards are determined by the Committee. The Committee also has
delegated authority to the chief executive officer to grant
equity awards to employees other than executive officers in
connection with recruiting, retention and significant
promotions. This delegation permits the chief executive officer
to determine the recipient of the award as well the type and
amount of the award, subject to an annual share limitation set
by the Committee each year. All awards granted pursuant to this
delegated authority must be made in accordance with our equity
grant timing policy described below in Compensation
Discussion and Analysis Equity Grant Timing
Policy. All other terms of the awards are determined by
the Committee.
The work of the Committee is supported by our chief
administrative officer and our Human Resources department. These
personnel work closely with the chief executive officer and, as
appropriate, the chief financial and accounting officers and the
general counsel, to prepare and present information and
recommendations for review and consideration by the Committee,
as described below under Compensation Discussion and
Analysis Setting Compensation
Involvement of Executive Officers.
In 2007, the Compensation Committee engaged an independent
outside compensation consultant, Towers Perrin HR Services, to
provide peer group analyses, competitive assessments, program
design recommendations and advice to the Committee, as described
below under Compensation Discussion and
Analysis Setting Compensation
Compensation Consultant.
The Committee reviews and discusses with management the
disclosures regarding executive compensation to be included in
our annual proxy statement, and recommends to the Board
inclusion of the Compensation Discussion and Analysis in our
annual proxy statement. The responsibilities of the Compensation
Committee are more fully described in the Committees
charter. For more information regarding the Committees
process in setting compensation, please see Compensation
Discussion and Analysis Setting Compensation
below. The Compensation Committee met five times during 2007.
11
The Board has determined that all members of the Compensation
Committee are independent (as that term is defined in applicable
New York Stock Exchange rules).
Nominating and
Governance Committee
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Members:
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Samuel L. Kaplan,
Chairperson
Michael R. Francis
B. Kristine Johnson
Jean M. Taylor
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The Nominating and Governance Committee identifies and
recommends individuals qualified to become members of the Board
of Directors and recommends to the Board sound corporate
governance principles and practices for Piper Jaffray. In
particular, the Committee assesses the independence of our Board
members, identifies and evaluates candidates for nomination as
directors, responds to director nominations submitted by
shareholders, recommends the slate of director nominees for
election at the annual meeting of shareholders and candidates to
fill vacancies between annual meetings, recommends qualified
members of the Board for membership on committees, oversees the
director orientation and continuing education programs, reviews
the Boards committee structure, reviews and assesses the
adequacy of our Corporate Governance Principles, evaluates the
annual evaluation process for the chief executive officer, the
Board and Board committees, and oversees the succession planning
process for the executive officers jointly with the Compensation
Committee. The Nominating and Governance Committee also oversees
administration of our related person transaction policy and
reviews the transactions submitted to it pursuant to such
policy. The responsibilities of the Nominating and Governance
Committee are more fully described in the Committees
charter. The Nominating and Governance Committee met four times
during 2007. The Board has determined that all members of the
Nominating and Governance Committee are independent (as that
term is defined in applicable New York Stock Exchange rules).
Meeting
Attendance
Our Corporate Governance Principles provide that our directors
are expected to attend meetings of the Board and of the
committees on which they serve, as well as our annual meeting of
shareholders. Our Board of Directors held eight meetings during
2007. Each of our directors attended at least 75% of the
meetings of the Board of Directors and the committees on which
he or she served during 2007. Attendance at our Board and
committee meetings during 2007 averaged 93.5% for our directors
as a group, and all of our directors attended the 2007 annual
meeting of shareholders.
Procedures for
Contacting the Board of Directors
The Board has established a process for shareholders and other
interested parties to send written communications to the Board
or to individual directors. Such communications should be sent
by U.S. mail to the attention of the Office of the
Secretary, Piper Jaffray Companies, 800 Nicollet Mall,
Suite 800, Mail Stop J09N05, Minneapolis, Minnesota 55402.
Communications regarding accounting and auditing matters will be
handled in accordance with our Complaint Procedures Regarding
Accounting and Auditing Matters. Other communications will be
collected by the secretary of the company and delivered, in the
form received, to the lead director or, if so addressed, to a
specified director.
Procedures for
Selecting and Nominating Director Candidates
The Nominating and Governance Committee will consider director
candidates recommended by shareholders and has adopted a policy
that contemplates shareholders recommending and nominating
director candidates. A shareholder who wishes to recommend a
director candidate for nomination by the Board at the annual
meeting of shareholders or for vacancies on the Board that arise
between shareholder meetings must timely provide the Nominating
and Governance Committee with sufficient written documentation
to permit a determination by the Board whether such candidate
meets the
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required and desired director selection criteria set forth in
our bylaws, our Corporate Governance Principles and our Director
Nominee Selection Policy described below. Such documentation and
the name of the director candidate must be sent by
U.S. mail to the Chairperson, Nominating and Governance
Committee,
c/o the
Office of the Secretary, Piper Jaffray Companies, 800 Nicollet
Mall, Suite 800, Mail Stop J09N05, Minneapolis, Minnesota
55402.
Alternatively, shareholders may directly nominate a person for
election to our Board by complying with the procedures set forth
in Article II, Section 2.4 of our bylaws, and with the
rules and regulations of the Securities and Exchange Commission.
Under our bylaws, only persons nominated in accordance with the
procedures set forth in the bylaws will be eligible to serve as
directors. In order to nominate a candidate for service as a
director, you must be a shareholder at the time you give the
Board notice of your nomination, and you must be entitled to
vote for the election of directors at the meeting at which your
nominee will be considered. In accordance with our bylaws,
director nominations generally must be made pursuant to notice
delivered to or mailed and received at our principal executive
offices at the address above, not later than the 90th day,
nor earlier than the 120th day, prior to the first
anniversary of the prior years annual meeting of
shareholders. Your notice must set forth all information
relating to the nominee that is required to be disclosed in
solicitations of proxies for the election of directors in an
election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange
Act of 1934 and
Rule 14a-11
thereunder (including the nominees written consent to
being named in the proxy statement as a nominee and to serving
as a director if elected).
As required by our Corporate Governance Principles and our
Director Nominee Selection Policy, when evaluating the
appropriate characteristics of candidates for service as a
director, the Nominating and Governance Committee takes into
account many factors. At a minimum, director candidates must
demonstrate high standards of ethics, integrity and
professionalism, independence, sound judgment, community
leadership and meaningful experience in business, law or finance
or other appropriate endeavor. Candidates also must be committed
to representing the long-term interests of our shareholders. In
addition to these minimum qualifications, the Committee
considers other factors it deems appropriate based on the
current needs and desires of the Board, including specific
business and financial expertise currently desired on the Board,
experience as a director of a public company, geography, age,
gender and ethnic diversity. The Committee will reassess the
qualifications of a director, including the directors
attendance and contributions at Board and committee meetings,
prior to recommending a director for reelection.
Compensation
Program for Non-Employee Directors
Directors who are not Piper Jaffray employees receive an annual
cash retainer of $50,000 for service on our Board and Board
committees. No separate meeting fees are paid. The lead director
and the chairperson of the Audit Committee each receives an
additional annual cash retainer of $8,000. The chairperson of
each other standing committee of the Board each receives an
additional annual cash retainer of $5,000. In addition to the
cash retainer, we grant equity awards to our non-employee
directors to further align their interests with those of our
shareholders. Starting in 2007, we began granting non-employee
directors who will continue their service on the Board following
an annual meeting of shareholders 1,000 shares of our
common stock on the date of the annual meeting. In addition,
each non-employee director receives 500 shares of our
common stock on the date of the directors initial election
to the Board. Prior to 2007, each non-employee director who
continued their service on the Board following an annual meeting
received a grant of immediately exercisable stock options with a
fair market value of $50,000, and each newly-elected
non-employee director received a grant of immediately
exercisable stock options with a fair market value of $20,000 on
the date of the directors initial election to the Board.
The number of shares underlying the grant of stock options was
determined using the Black-Scholes option-pricing model, and the
options were exercisable immediately. The equity awards and
options granted to our non-employee directors are granted under
the Incentive Plan. Non-employee directors who join our Board
after the first month of a calendar year are paid pro
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rata annual retainers and awarded pro rata equity awards based
on the period they serve as directors during the year.
Our non-employee directors may participate in the Piper Jaffray
Companies Deferred Compensation Plan for Non-Employee Directors,
which was designed to facilitate increased equity ownership in
the company by our non-employee directors. The plan permits our
non-employee directors to defer all or a portion of the cash
payable to them for service as a director of Piper Jaffray for
any calendar year. In 2007, we amended the plan to permit
non-employee directors to defer all or a portion of the shares
of common stock granted to them as part of the changes to our
non-employee director compensation program discussed above. With
respect to the 2007 share grant, each non-employee director
who was eligible to participate in the plan prior to 2007 and
who received a grant of shares during 2007 was deemed to have
deferred the entire 2007 grant. Beginning in 2008, non-employee
directors may elect to defer all or a portion of the shares
granted to them. All cash amounts and share grants deferred by a
participating director are credited to a recordkeeping account
and deemed invested in shares of our common stock as of the date
the deferred fees otherwise would have been paid or the shares
otherwise would have been issued to the director. This deemed
investment is measured in phantom stock, and no shares of common
stock are reserved, repurchased or issued pursuant to the plan.
With respect to cash amounts that have been deferred, the fair
market value of all phantom stock credited to a directors
account will be paid out to the director (or, in the event of
the directors death, to his or her beneficiary) in a
single lump-sum cash payment following the directors
cessation of service as a non-employee director. The amount paid
out will be determined based on the fair market value of the
stock on the last day of the year in which the directors
service with us terminates. Share amounts that have been
deferred will be paid out to the director (or, in the event of
the directors death, to his or her beneficiary) in the
form of shares of common stock in an amount equal to the full
number of shares credited to the non-employee directors
account as of the last day of the year in which the cessation of
service occurred. Directors who elect to participate in the plan
are not required to pay income taxes on amounts or grants
deferred but will instead pay income taxes on the amount of the
lump-sum cash payment paid to the director (or beneficiary) at
the time of such payment. Our obligations under the plan are
unsecured general obligations to pay in the future the value of
the participants account pursuant to the terms of the plan.
Non-employee directors also may participate in our charitable
gift matching program, pursuant to which we will match a
directors gifts to eligible organizations dollar for
dollar from a minimum of $50 up to an aggregate maximum of
$1,500 per year. In addition, our non-employee directors are
reimbursed for reasonable out-of-pocket expenses incurred in
connection with their service on the Board and committees of the
Board. Employees of Piper Jaffray who also serve as directors
receive compensation for their service as employees, but they do
not receive any additional compensation for their service as
directors. No other compensation is paid to our Board members in
their capacity as directors. Non-employee directors do not
participate in our employee benefit plans.
14
The following table contains compensation information for our
non-employee directors for the year ended December 31, 2007.
Non-Employee
Director Compensation for 2007
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Fees Earned or
Paid in Cash
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Annual
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Additional
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Stock
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Option
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All Other
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Retainer
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Retainer
(2)
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Awards
(3)(4)
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Awards
(4)
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Compensation
(5)
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Total
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Director
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($)
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($)
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($)
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($)
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($)
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($)
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Michael R. Francis
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50,000
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5,000
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64,870
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3,943
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123,813
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B. Kristine Johnson
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50,000
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(6)
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64,870
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4,249
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119,119
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Samuel L. Kaplan
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50,000
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(6)
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13,000
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(6)
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64,870
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4,422
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132,292
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Addison L. Piper
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50,000
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(6)
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145,060
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(7)
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19,018
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(7)
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129,123
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343,201
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Lisa K.
Polsky
(1)
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33,426
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(6)
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75,833
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109,259
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Frank L. Sims
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50,000
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8,000
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64,870
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8,519
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131,389
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Jean M. Taylor
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50,000
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(6)
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64,870
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124,493
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(1)
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Ms. Polsky
joined the Board of Directors effective May 2, 2007.
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(2)
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The amounts in this
column reflect the additional cash retainer of $8,000 paid to
each of the lead director and the chairperson of the Audit
Committee as well as the additional cash retainer of $5,000 paid
to the chairperson of each other standing committee of the Board.
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(3)
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Each non-employee
director except Ms. Polsky received a grant of
1,000 shares of our common stock on May 2, 2007, the
day of our 2007 annual meeting of shareholders. Ms. Polsky
received a grant of 1,169 shares, consisting of her initial
grant of 500 shares upon her election to the Board and a
pro-rated annual award of 669 shares based on a May 2,
2007 start date. The full stock award granted to each
non-employee director was deemed to have been deferred pursuant
our Deferred Compensation Plan for Non-Employee Directors. The
values in this column reflect the $64.87 closing sales price of
our common stock on the New York Stock Exchange on May 2,
2007 multiplied by the number of shares granted, which is grant
date fair value of each award computed in accordance with
FAS 123R.
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(4)
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As of
December 31, 2007, our non-employee directors held stock
and option awards as set forth in the table below. The stock
award values are based on the $46.32 closing sales price of our
common stock on the New York Stock Exchange on December 31,
2007, and the option award values are based on the difference
between the exercise price of the in-the-money stock options and
the closing price of $46.32. The amounts for Mr. Piper
include restricted stock and stock option awards granted to him
in 2005, 2006 and 2007 during his tenure as an executive officer
of the company. Refer to Note 22 in the Notes to
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
filed on February 28, 2008 for a discussion of the relevant
assumptions used to determine the valuation of our stock and
option awards for accounting purposes.
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Stock
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Year-End Value
of
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Option
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Year-End Value
of
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Awards
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Stock Awards
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Awards
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Option Awards
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Director
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(#)
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($)
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(#)
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($)
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Michael R. Francis
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1,000
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46,320
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11,800
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104,605
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B. Kristine Johnson
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1,000
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46,320
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11,800
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104,605
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Samuel L. Kaplan
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1,000
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46,320
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11,800
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104,605
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Addison L. Piper
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11,924
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552,320
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11,614
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14,546
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Lisa K. Polsky
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1,169
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54,148
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Frank L. Sims
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1,000
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46,320
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11,800
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104,605
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Jean M. Taylor
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1,000
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46,320
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5,963
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104,605
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(5)
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All other
compensation for non-employee directors for the year ended
December 31, 2007 consists of the following:
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15
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Amounts for
Messrs. Francis, Kaplan and Sims and Ms. Johnson
include airfare provided by the company for the directors
spouses who accompanied the directors to a strategic off-site
meeting of the Board of Directors at the companys
invitation.
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The amounts for
Ms. Johnson and Messrs. Kaplan and Sims include $1,500
of charitable matching contributions made by Piper Jaffray.
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The amount for
Mr. Piper consists of the following: (A) $100,000 for
a one-time, retirement-related, charitable contribution made by
Piper Jaffray to a charitable organization designated by
Mr. Piper, acknowledging Mr. Pipers community
commitment during his tenure at Piper Jaffray, (B) $20,279
for the provision of office space that the company agreed to
provide Mr. Piper following his retirement, (C) $4,500
paid to Mr. Piper for his service as a member of an
investment committee for certain funds managed by our private
equity business, (D) $2,844 related to airfare provided by
the company for Mr. Pipers spouse who accompanied him
to a strategic off-site meeting of the Board of Directors at the
companys invitation, and (E) $1,500 of charitable
matching contributions made by Piper Jaffray. In addition to the
office space provided by Piper Jaffray, Mr. Piper received
secretarial support and computer and communications equipment at
minimal or no incremental cost to the company in connection with
his retirement.
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(6)
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All of the cash fees
received were deferred pursuant to the Piper Jaffray Companies
Deferred Compensation Plan for Non-Employee Directors.
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(7)
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The amounts relate
to restricted stock and stock option awards granted to
Mr. Piper in 2004, 2005, 2006 and 2007 under our Incentive
Plan during his tenure as an executive officer of the company.
Mr. Piper received these awards as part of his annual
incentive compensation for the year preceding the year of grant.
The amounts in these columns reflect a three-year amortization
of each award, all of which cliff-vest on the third anniversary
of the grant date so long as Mr. Piper complies with the
terms and conditions of the applicable award agreement.
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Throughout this proxy statement, the individuals who served as
our chief executive officer and chief financial officer during
the year ended December 31, 2007, and the other individuals
included in the Summary Compensation Table, are referred to as
the named executive officers. These individuals are:
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Andrew S. Duff, our chairman and chief executive officer;
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Thomas P. Schnettler, our vice chairman and chief financial
officer;
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Jon W. Salveson, head of our Investment Banking business;
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Robert W. Peterson, head of our Equities business; and
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Benjamin T. May, head of our High Yield and Structured Products
business.
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All of the named executive officers currently serve on our
executive management team, which we refer to as the Management
Committee. The Management Committee also includes our chief
administrative officer, general counsel, and the head of our
Public Finance Services business, all of whom are executive
officers of Piper Jaffray.
Compensation
Philosophy and Objectives
Our executive compensation program is designed to drive and
reward corporate performance annually and over the long term, as
measured by increasing shareholder value. Compensation also must
be internally equitable and externally competitive. We
continually review our executive compensation
16
program to ensure it reflects good governance practices and the
best interests of shareholders, while meeting the following core
objectives:
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Pay for Performance
A large portion of the
total compensation for each named executive officer is intended
to be variable and delivered on a pay-for-performance basis. The
amount of compensation paid is based first on the performance of
the company and each business unit, as measured against internal
goals designed to maximize shareholder value creation; second on
the officers performance against individualized goals
reflecting the officers role, responsibilities and
professional development objectives; and third on an assessment
of external market data to ensure that our pay levels are
competitive relative to the compensation paid by companies with
which we compete for executive talent.
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Stock Ownership
We are committed to utilizing
our compensation program to increase executive stock ownership
over time. We believe that equity ownership directly aligns the
interests of our executives with those of our shareholders and
helps to focus our executives on long-term shareholder value
creation. In light of our spin-off from U.S. Bancorp at the
end of 2003, we have had only four years to build equity
ownership among our Management Committee members. Accordingly,
each year, we pay a significant portion of the total
compensation for our named executive officers in the form of
equity awarded under our Amended and Restated 2003 Annual and
Long-Term Incentive Plan.
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Recruiting and Retention
Due to the intensely
competitive nature of the securities industry, we are committed
to providing total compensation opportunities that are
competitive with the practices of other firms in our industry.
We intend for our compensation program to be sufficiently
aligned with industry practices such that we can continue to
attract and retain outstanding executives who are motivated to
achieve our mission to build the leading international middle
market investment bank and institutional securities firm.
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Tax Deductibility and Compliance
Our
executive compensation program is designed to maximize the tax
deductibility of compensation payments to our named executive
officers, to ensure that compensation is delivered as
cost-efficiently as possible, and to comply with the deferred
compensation rules set forth in Section 409A of the
Internal Revenue Code, to avoid the payment of punitive excise
taxes by our executive officers.
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Setting
Compensation
The Compensation Committee of our Board of Directors has
responsibility for approving the compensation paid to our
executive officers and ensuring it meets our objectives.
Throughout this Compensation Discussion and Analysis, we refer
to the Compensation Committee as the Committee.
Early each year, the Committee approves the amount of incentive
compensation to be paid to our executive officers in recognition
of prior-year performance, approves their base salaries for the
upcoming year, and establishes performance goals for the
Management Committee under an annual incentive program. Subject
to limits on the compensation that may be paid under the annual
incentive program (as described below under Compensation
Program Annual Incentive Compensation), the
Committee has full discretion to determine the amount of
compensation to be paid to the executive officers.
Involvement of
Executive Officers
The work of the Committee is supported by our chief
administrative officer and our Human Resources department. Our
chief administrative officer and head of human resources work
closely with our chief executive officer and, as appropriate,
our chief financial and accounting officers and general counsel,
to prepare and present information and recommendations for
review and consideration by the Committee in connection with its
executive compensation decisions, including regarding the
performance goals to be established under the annual incentive
program; financial information reviewed in connection with
executive compensation decisions; the firms to be included in
the compensation peer group (as described below under
Compensation Peer Group); the
performance evaluations and
17
compensation recommendations for the executive officers; and the
evaluation and compensation process to be followed by the
Committee.
Compensation
Peer Group
Our Human Resources department annually identifies a
compensation peer group of firms with which we compete for
executive talent. We use available data reflecting base
salaries, cash incentives and long-term incentive compensation
to compile market data to ensure that our pay levels are
competitive relative to the compensation paid by our peer group.
To ensure we have statistically relevant data for each of our
executive officers, we also use data from external market
surveys reflecting a broad number of firms within our industry
and labor markets, which typically include many of the firms
comprising our compensation peer group. In addition, we may
review publicly available data for similar companies that are
not direct competitors, and we may review data from different
combinations of companies participating in the surveys or within
our peer group for each of our executive officers, based on the
availability of data and the comparability of positions.
We compete with companies of various sizes for executive talent,
and therefore the Committee generally reviews composite market
data reflecting the market median compensation paid to similarly
situated executives at the companies included in the surveys or
the compensation peer group. The Committee compares the base
salaries, cash incentives and long-term incentive compensation
of our executive officers to the market median data as a way to
gauge relative competitiveness of our compensation levels,
taking into consideration the features and constraints of the
data. While market data is an important factor considered by the
Committee when setting compensation, it is only one of multiple
factors considered by the Committee, and the amount paid to each
executive may be more or less than the composite market median
based on the roles and responsibilities of the executive,
experience level of the individual, internal equity and other
factors that the Committee deems important.
We consider our compensation peer group to consist of Cowen
Group, Inc.; FBR Capital Markets Corporation; Jefferies Group,
Inc.; KBW, Inc.; and Thomas Weisel Partners Group, Inc. To
benchmark the named executive officers compensation
against this peer group, we use the relevant data contained in
the following external market surveys:
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McLagan Partners Regional Capital Markets and Infrastructure
Survey
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McLagan Partners Investment Banking Survey
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Towers Perrin/MGMC Equity Sales and Trading Survey
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Towers Perrin/MGMC Fixed Income Survey
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Towers Perrin/MGMC Summary of Total Compensation for Selected
Executives
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Mercer Human Resources Executive Compensation Survey
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2007 US Mercer Benchmark Database
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Compensation
Consultant
In 2007, the Committee engaged an independent outside
compensation consultant, Towers Perrin HR Services, to provide
peer group analyses, competitive assessments, program design
recommendations and advice to the Committee. The independent
compensation consultant participated in four Committee meetings
during the year, advised the Committee regarding the
competitiveness of the market data presented to the Committee by
our Human Resources department, the competitiveness of the base
salary and incentive compensation recommendations presented to
the Committee, and the competitiveness of the ultimate
compensation levels approved by the Committee for each executive
officer. The only services provided by the compensation
consultant to the company related to its services for the
Committee, provided, however that our Human Resources department
uses three external market surveys of MGMC, Inc., which was
acquired by Towers Perrin during 2007.
18
Compensation
Program and Payments
The key components of our executive compensation program are
base salary and annual incentive compensation, and the equity
portion of our annual incentive compensation serves as our
long-term incentive compensation component. Our executives also
have the opportunity to participate in our company-wide
Retirement Plan and to receive certain personal benefits, as
described below. From time to time, some of our executives
receive (or may be entitled to receive in the future)
compensation paid out under historical compensation programs in
which they participated in prior years and that continue to
provide benefits, also as described below.
Base
Salary
The purpose of base salary is to provide a set amount of cash
compensation for each executive that is not variable in nature
and is generally competitive with market practices. Base
salaries for our executive officers are determined annually by
the Committee based on a review of the executives role and
responsibilities, external market data for similar positions in
companies with which we compete for executive talent, and the
recommendations of the chief executive officer. The base salary
levels of our named executive officers reflect a desire to
maintain a relatively equitable compensation baseline among the
individuals serving on our Management Committee other than our
chief executive officer, whose contribution is distinguished by
a higher base salary, reflective of the decision-making
responsibility with this position. Consistent with industry
practice and our pay-for-performance objective, the base salary
for each of our named executive officers accounts for a
relatively small portion of his overall compensation. In 2007,
the base salaries paid to our named executive officers
represented from approximately 9% to 19% of the total cash and
equity compensation paid to them.
Historically, we have not adjusted base salaries for our
Management Committee members on an annual basis but have
adjusted salaries for individuals upon their initial appointment
to the Management Committee, and have adjusted salaries for the
Management Committee as a group when warranted to reflect
changes in market pay levels, as reported in external
compensation sources, changes in the officers roles or
responsibilities, or changes in contributions to the company.
Consistent with this practice, the Committee made no changes to
the base salaries of named executive officers for 2008,
following increases for certain executive officers in 2007. The
2007 increases consisted of changes for Mr. Duff (from
$380,000 to $400,000) and for Messrs. Peterson, May,
Salveson and Schnettler (from $205,000 to $225,000). Prior to
2007, the base salaries for Messrs. Duff, Peterson and
Schnettler had been unchanged for the preceding three years, and
the base salary for Mr. May had been unchanged since he
joined the Management Committee in August 2006. We believe the
2007 salary levels are appropriate for 2008 based on the
officers roles, responsibilities, experience and
contributions to the company, as well as market data.
Annual
Incentive Compensation
The Committee has established an annual incentive program for
our Management Committee that provides a significant portion of
the total compensation paid to our named executive officers. The
objective of the program is to provide cash and equity
compensation that is variable based on the achievement of annual
performance goals determined each year by the Committee.
Delivering a significant portion of our compensation to the
Management Committee through the annual incentive program
reflects the core objectives of our compensation program,
particularly pay for performance. The program is administered by
the Committee under the Piper Jaffray Companies Amended and
Restated 2003 Annual and Long-Term Incentive Plan and is
designed to comply with the requirements of Section 162(m)
of the Internal Revenue Code to ensure the tax deductibility of
incentive compensation paid to our named executive officers.
Under Section 162(m), we cannot deduct compensation in
excess of $1 million that is paid to a named executive
officer in any year unless the compensation qualifies as
performance-based compensation under
Section 162(m). Awards under the annual incentive program
are referred to as qualified performance-based
awards.
19
2007
Program
At the outset of each year, the Committee grants
performance-based awards to each of the named executive officers
that are subject to the achievement of an annual performance
goal of the company typically a financial
performance goal related to pre-tax operating income. Consistent
with this practice, the Committee granted qualified
performance-based awards in February 2007 to each of the named
executive officers in an amount equal to 5% of our 2007 adjusted
pre-tax operating income, to be paid in a combination of cash
and equity as determined by the Committee. In calculating the
amount payable in 2008 under these awards, the following factors
played an important role:
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The amount payable under each award depends on the amount of
adjusted pre-tax operating income generated by the company.
Adjusted pre-tax operating income equals our total revenues less
our total expenses before income taxes, adjusted to eliminate
certain compensation and benefits expenses and certain other
expenses, losses, income or gains that are unusual in nature or
infrequent in occurrence. For 2007, adjustments included the
elimination of amounts expensed during the year under our
Management Committee and corporate support services annual
incentive programs, equity amortization expense incurred during
the year for our Management Committee members and corporate
support services employees, and expenses related to our cash
award program (described below under Cash
Award Program). In January 2008, the Committee certified
the companys adjusted pre-tax operating income for the
full year 2007 in accordance with the definition of adjusted
pre-tax operating income.
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Even though each of the named executive officers receives an
award of 5% of our 2007 adjusted pre-tax operating income, this
amount is subject to an aggregate limitation for our Management
Committee as a group, expressed as a designated percentage of
our adjusted pre-tax operating income. As a result of this
limitation, the Committee is required to decrease the amounts of
at least some of the awards, and these adjustments could apply
to the Management Committee as a group or individual members of
the Management Committee. With respect to the Management
Committee as a group, the Committee exercised its discretion in
2007 to reduce the percentage of adjusted pre-tax operating
income payable because firm-wide results were below
expectations. With respect to individual members of the
Management Committee, these adjustments were determined by the
Committee in its sole discretion and reflected individual
performance against enterprise-wide, line of business and
individual performance goals established for each member of the
Management Committee. Specific factors affecting the adjustments
for each Management Committee member have been described in more
detail below.
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Compensation
Determinations and Relevant Factors
When determining the amount of incentive compensation to be paid
for 2007, the Committee reviewed and considered the following
information:
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a self-evaluation and internal peer evaluation of the chief
executive officer, as well as feedback from the full Board of
Directors, gathered by the Committee chairperson, regarding the
performance of the chief executive officer for 2007;
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performance evaluations of each other member of the Management
Committee, prepared by the chief executive officer and the head
of our Human Resources department, reflecting the chief
executive officers review and peer reviews of each
executive, addressing individual goal achievement and
establishing a performance rating for each executive, which the
Committee discussed with the chief executive officer;
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the financial performance of the company and each business unit,
comparable public companies and other companies in the
securities industry with which we compete, including the total
relative shareholder return of the company and our competitors;
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market data provided by the companys Human Resources
department for each executive officer position reflecting the
median base salary, cash and long-term incentive compensation,
and total
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20
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compensation paid by companies in the compensation peer group
with comparable executive-level positions for which market data
was available;
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the recommendations of the chief executive officer regarding the
incentive compensation to be paid to each executive officer for
2007, which the Committee discussed with the chief executive
officer; and
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tally sheets specifying each element of compensation paid to the
executive officers for the current and prior year and reflecting
the total proposed compensation for 2007 based on the
recommendations of the chief executive officer, as well as the
potential compensation to be received by the executive officers
under various scenarios, including a change in control of the
company and terminations of employment under a variety of
circumstances.
|
Taking into account all of the information described above, and
in order to comply with the annual incentive program provision
that limits the aggregate amount payable to our Management
Committee under the qualified performance-based awards, the
Committee exercised its discretion to pay less than the maximum
amounts of annual incentive compensation payable under the
qualified performance-based awards granted to each of the named
executive officers. The following factors significantly
influenced the Committees exercise of discretion, and, as
a result, the total amount of annual incentive compensation
approved by the Committee for each named executive officer:
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The company achieved top-line financial results for 2007 that
were comparable to 2006, with lower year-over-year operating
margins. Operating margins were lower in 2007 due to increased
non-compensation expenses in 2007 driven by investments in the
business, including the completion of two acquisitions described
below and the implementation of a new back-office system. In a
competitive context, these results were solid, as a number of
peer firms posted losses or significantly deteriorated
performance due to the volatile capital markets in the last half
of 2007. Despite our solid results relative to competitors,
lower year-over-year margins reduced pre-profit provision
income. These factors caused us to reduce the incentive pool for
our named executive officers on a year-over-year basis. This
reduction in the overall incentive pool was the primary driver
in the reductions in year-over-year compensation for each of the
named executive officers.
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The reduced incentive pool was allocated among the executive
officers based on their performance relative to corporate,
business unit, and individual leadership objectives. The
following factors influenced the compensation for each named
executive officer:
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Mr. Duff, chairman and chief executive
officer:
His compensation was negatively impacted
by his accountability for overall annual financial performance
of the company, and positively impacted by (i) his
leadership in accomplishing the strategic acquisitions of both
Fiduciary Asset Management and Goldbond Capital Holdings Ltd.,
which provide growth platforms in asset management and in Asia,
respectively, (ii) his engagement with the Board of
Directors on strategic-planning issues and (iii) his focus
on strategic plan execution, overall brand stewardship and
balancing of short-term performance and long-term value.
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Mr. Schnettler, vice chairman and chief financial
officer
: His compensation was negatively impacted by his
accountability for overall annual financial performance of the
company similar to Mr. Duff, as well as the operating
performance of our U.K. business, for which he is responsible.
His compensation was positively impacted by (i) his
leadership in accomplishing the strategic acquisitions of both
Fiduciary Asset Management and Goldbond Capital Holdings Ltd.,
(ii) his efforts in elevating partnering across businesses,
and (iii) his focus on enhancing financial planning and
driving accountabilities across the organization.
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Mr. Salveson, head of our Investment Banking
business
: His compensation was negatively impacted by
lower-than-plan performance of the Investment Banking business
that he led, which contributed significantly to the lower firm
results. While equity underwriting performance was solid,
mergers and acquisitions performance was lower.
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21
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Mr. Peterson, head of our Equities
business:
His compensation was negatively
impacted by lower-than-plan firm revenue from the Equities
business that he led, and positively impacted by the
productivity gains achieved within this business.
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Mr. May, head of our High Yield and Structured Products
business:
His compensation was negatively
impacted by lower-than-plan performance of the High Yield and
Structured Products business that he led, and positively
impacted by the discipline he applied to managing principal
investments during a period of high capital markets volatility.
|
Based on this information, the Committee evaluated the
performance of the chief executive officer and determined his
annual incentive compensation, assessed relative levels of
responsibility and contribution during the year for each of the
other executive officers and approved 2007 annual incentive
compensation for the executive officers. The amount of annual
incentive compensation and the amount of total compensation, as
measured internally by the company, is included in the following
table. Please note, however, that the following table is not a
substitute for the information required by the rules of the
Securities and Exchange Commission, specifically the Summary
Compensation Table and the related tables that appear later in
this proxy statement.
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Base
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Annual Incentive
Compensation
(1)
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Salary
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Total
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All
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Name
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Earnings
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Cash
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Restricted
Stock
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Stock
Options
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Incentive
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Other
(2)
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Total
(3)
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Andrew S. Duff
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2007
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$
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396,667
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$
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1,123,777
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$
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786,644
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$
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505,700
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$
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2,416,121
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$
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14,313
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$
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2,827,101
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19,145 shares
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32,149 options
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2006
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$
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380,000
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$
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1,633,732
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$
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1,560,828
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$
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275,440
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$
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3,470,000
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$
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8,319
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$
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3,858,319
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22,257 shares
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9,641 options
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Thomas P. Schnettler
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2007
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$
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221,667
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$
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1,182,250
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$
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677,106
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$
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435,282
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$
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2,294,638
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$
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35,840
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$
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2,554,847
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16,479 shares
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27,673 options
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2006
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$
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205,000
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$
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1,687,105
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$
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1,173,305
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$
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207,054
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$
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3,067,464
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$
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18,554
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$
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3,291,017
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16,731 shares
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7,248 options
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Jon W. Salveson
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2007
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$
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221,667
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$
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1,034,598
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$
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592,542
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$
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380,920
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$
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2,008,060
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$
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46,687
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$
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2,276,414
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14,421 shares
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24,217 options
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2006
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$
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180,000
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$
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2,045,762
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(4)
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$
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1,111,754
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$
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196,192
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$
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3,353,708
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$
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8,295
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$
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3,542,003
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15,583 shares
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6,868 options
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Robert W. Peterson
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2007
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$
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221,667
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$
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725,483
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$
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415,504
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$
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267,110
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$
|
1,408,097
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$
|
10,070
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$
|
1,639,834
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10,113 shares
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16,981 options
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2006
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$
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205,000
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$
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1,039,144
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$
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722,678
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$
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127,531
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$
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1,889,353
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$
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10,669
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$
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2,105,022
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10,305 shares
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4,464 options
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Benjamin T. May
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2007
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$
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221,667
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$
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426,250
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$
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299,075
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$
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192,263
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$
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917,588
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$
|
9,099
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$
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1,148,354
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7,279 shares
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12,223 options
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2006
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$
|
201,875
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$
|
793,000
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$
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430,950
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$
|
76,050
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$
|
1,300,000
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|
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$
|
5,973
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$
|
1,507,848
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6,146 shares
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2,662 options
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(1)
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Restricted stock and
stock options amounts reflect the value of equity compensation
granted to the named executive officers for 2007 performance
(paid in 2008) and 2006 performance (paid in
2007) under our Amended and Restated 2003 Annual and
Long-Term Incentive Plan. Amounts shown in the Summary
Compensation Table appearing later in this proxy statement
reflect the respective dollar amounts of stock-based
compensation expense associated with equity awards for
performance prior to 2007 recognized for 2007 and 2006 financial
statement reporting purposes in accordance with FAS 123R.
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(2)
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For a description of
the components of all other compensation, refer to footnote 4 of
the Summary Compensation Table.
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(3)
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The
Total column consists of base salary earnings, total
incentive, and all other compensation paid in 2007 and 2006.
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(4)
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$742,520 of
Mr. Salvesons cash compensation amount for 2006 was
paid outside of the annual incentive program for named executive
officers because he did not become an executive officer until
August 11, 2006, and was not covered by the annual
incentive program for executive management prior to that date.
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22
Equity
Payment
Consistent with our philosophy regarding executive stock
ownership, the annual incentive compensation for the named
executive officers was paid out in a combination of cash and
equity. A large portion of the 2007 annual incentive
compensation to our named executive officers was paid in the
form of equity, representing from 42% to 46% of the 2007 total
compensation (as shown in the table above), and was paid out 61%
in restricted stock and 39% in stock options granted under our
Incentive Plan. We view the equity component of the annual
incentive award as a long-term incentive designed to provide
compensation opportunities based on the creation of shareholder
value and an increase in our stock price. The upside potential
of these equity awards will not be realized by the executive
officers unless our performance improves over the vesting period
and/or
the
term of the awards. While the restricted stock will lose value
if our performance declines, stock options will have no value to
our executives unless our performance improves in future years.
In light of this, a portion of the equity granted to our named
executive officers is in the form of stock options.
Consistent with prior years, the number of shares of restricted
stock granted to each officer was determined by dividing the
total dollar value designated to be paid out to the officer in
restricted stock by the closing price of our common stock on
February 15, 2008, and the number of shares underlying the
stock options was determined by dividing the total dollar value
designated to be paid out to the officer in stock options by the
Black-Scholes value of one option share on that same date. In
2007, we increased the proportion of stock options relative to
restricted stock compared to prior years as a way of enhancing
the connection between executive compensation and shareholder
value creation, and this increase is reflected in the table
above. Both the restricted stock and stock options have
three-year cliff vesting schedules, and the stock options have a
10-year
term, which is consistent with prior years. In compliance with
our equity grant timing policy, the stock options and restricted
stock were granted on February 15, 2008; the awards will
vest in full on February 15, 2011, subject to the terms and
conditions of the applicable award agreements.
Other
Compensation
Members of our Management Committee receive limited additional
compensation in the form of a monthly stipend to cover parking
expenses, reimbursement of dues for club memberships used for
business purposes, and certain insurance premiums. Our executive
officers who participate in our Retirement Plan, a 401(k) plan,
receive company matching contributions on 100% of their annual
contributions up to a maximum of 6% of their total pay, up to
the social security taxable wage base; their contributions are
matched on the same basis we match contributions by
non-executive employees. Some of our named executive officers
also receive payments from time to time related to historical
compensation programs, typically structured as investments made
by the company on behalf of certain employees. For example, our
named executive officers receive payments under the
U.S. Bancorp Piper Jaffray Inc. Second Century Growth
Deferred Compensation Plan (As Amended and Restated Effective
September 30, 1998) (the Second Century 1998
Plan) and the U.S. Bancorp Piper Jaffray Inc. Second
Century 2000 Deferred Compensation Plan (the Second
Century 2000 Plan). Certain key employees were eligible to
participate in these plans, under which participants were
granted one or more deferred bonus awards that were deemed
invested in certain measuring investments. Following a liquidity
event for a particular investment, the participant receives a
benefit payment based on the deemed return to the participant
and payment of the portion of the participants account
that was deemed invested. Participants may continue to receive
payments under the plans until a liquidity or bankruptcy event
has occurred with respect to each measuring investment.
Messrs. Peterson, Salveson and Schnettler were granted
deferred bonus awards under these plans in 1996, 1997, 1998
and/or
2000,
and received deferred bonus payouts in 2007 and 2006 as set
forth in the Summary Compensation Table. No new awards have been
granted under these plans since 2000, and participation in the
plans is frozen.
23
Cash Award
Program
In connection with our spin-off from U.S. Bancorp on
December 31, 2003, we established a cash award program
pursuant to which we granted cash awards to a large number of
our employees who were employed by us on December 15, 2003.
These awards were designed to aid in retention and to provide
fair treatment to our employees whose U.S. Bancorp stock
option and restricted stock awards expired or were forfeited as
a result of the spin-off. The cash award program, which is not a
part of our regular compensation program, was approved by both
our Board of Directors and by the Board of Directors of
U.S. Bancorp at the time of the spin-off. The allocation
and specific terms and conditions of these cash awards were
approved by the Committee following the spin-off.
Each of the named executive officers, other than Mr. May
due to his hire date of November 2005, entered into a letter
agreement with us setting forth the terms and conditions of
their cash award(s). Pursuant to these agreements, Mr. Duff
was granted a discretionary cash award of $500,000 payable in
four equal installments on each of March 31, 2004, 2005,
2006 and 2007, and Messrs. Duff, Schnettler, Salveson and
Peterson were also granted other cash awards replacing the lost
value of U.S. Bancorp options and restricted stock that
expired or were forfeited as a result of the spin-off. The
respective amounts of these other cash awards totaled
$4,567,096; $244,184; $82,500; and $559,622. Fifty percent of
each of these cash awards was paid on March 31, 2004, with
the remaining 50% payable in four equal installments on each of
March 31, 2005, 2006, 2007 and 2008. The payments are
conditioned on the award recipients continued employment
with Piper Jaffray on the payment date, except that Piper
Jaffray will continue to pay the benefits if the
recipients employment is terminated by reason of death,
disability or retirement, or is terminated without cause during
the
24-month
period following a change in control of Piper Jaffray. The
following table summarizes these cash award payments by year.
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Name
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2004
|
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2005
|
|
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2006
|
|
|
2007
|
|
|
2008
|
|
|
Andrew S. Duff
|
|
$
|
2,408,548
|
|
|
$
|
695,887
|
|
|
$
|
695,887
|
|
|
$
|
695,887
|
|
|
$
|
570,887
|
|
Thomas P. Schnettler
|
|
$
|
122,092
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
Jon Salveson
|
|
$
|
41,250
|
|
|
$
|
10,313
|
|
|
$
|
10,313
|
|
|
$
|
10,313
|
|
|
$
|
10,313
|
|
Robert W. Peterson
|
|
$
|
279,811
|
|
|
$
|
69,953
|
|
|
$
|
69,953
|
|
|
$
|
69,953
|
|
|
$
|
69,953
|
|
The full value of the cash awards granted to our named executive
officers was included in 2003 compensation reported in the
Summary Compensation Table in prior years, and therefore is not
included in the Summary Compensation Table as 2007 compensation.
Termination
and Change in Control Arrangements
Non-Qualified
Retirement Plan
Following our spin-off from U.S. Bancorp on
December 31, 2003, we assumed liability for the
non-qualified benefits accrued for our employees under the
defined benefit excess plan component of the U.S. Bancorp
Cash Balance Pension Plan. In 2004, we established the Piper
Jaffray Companies Non-Qualified Retirement Plan to maintain and
administer these benefits, which were transferred to us
following the spin-off. Thereafter, participation in the plan
was frozen. No new benefits may be earned by participants in
this plan, but participating employees will continue to receive
investment credits on their transferred plan balances until the
plan balance is paid out upon the employees retirement or
termination of employment. As of December 31, 2007, the
Non-Qualified Retirement Plan account balances for our named
executive officers were as follows: Mr. Duff, $489,863;
Mr. Schnettler, $856,311; Mr. Salveson, $432,686; and
Mr. Peterson, $472,691. Mr. May does not participate
in this plan because his employment began after the spin-off
from U.S. Bancorp.
Severance
Plans
All of our named executive officers are eligible to participate
in the Piper Jaffray Severance Plan, a broad-based plan in which
all of our full-time,
U.S.-based
employees generally are eligible to participate.
24
In the event of certain involuntary terminations of employment
resulting from an employer-determined severance event, employees
may receive severance pay up to a maximum of their weekly base
salary multiplied by 52, subject to a maximum dollar amount
equal to the limit in effect under Internal Revenue Code
section 401(a)(17) for the year in which the
employees employment involuntarily terminates. (For 2008,
this limit is $230,000.) Employer-determined severance events
may include, depending on the circumstances, closure of a
company facility, a permanent reduction in our workforce or
certain organizational changes that result in the elimination of
the employees position.
Other
Termination and
Change-in-Control
Provisions
Certain award agreements and plans under which compensation has
been awarded to our named executive officers include provisions
regarding the payment of the covered compensation in the event
of a termination of employment or a change in control of our
company, as follows:
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Under our Amended and Restated 2003 Annual and Long-Term
Incentive Plan, following a termination of employment (other
than as a result of a change in control), our stock option
awards granted in 2007 and 2008 and our restricted stock awards
will continue to vest so long as the termination was not for
cause and the employee does not violate certain post-termination
restrictions for the remaining vesting term of their awards. For
stock option awards granted prior to 2007, unvested stock
options are immediately canceled upon termination of employment
for any reason other than death, disability or qualifying
retirement, in which case the options will either vest
immediately (in the case of death or disability) or continue to
vest according to their original vesting schedule (in the case
of retirement) and may be exercised for a designated period or
the full term of the option, as set forth in the award
agreement. For pre-2007 stock option grants, vested stock
options may be exercised only while the optionee remains
employed by us, except that vested options may be exercised for
90 days after termination of employment for a reason other
than death, disability, qualifying retirement or termination for
cause. A qualifying retirement means any termination of
employment when an optionee is age 55 or older and has at
least five years of service with Piper Jaffray. None of the
named executive officers meets the qualifications for retirement
under the terms of the option award agreement.
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|
Executive officers who are terminated during the year (other
than as a result of a change in control) will receive cash and
equity compensation for that year under our annual incentive
program in the discretion of the Committee. If a payout is made
to the terminated executive, the amount will be based on
adjusted pre-tax operating income for the portion of the year
preceding the executives termination.
|
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|
Under our Amended and Restated 2003 Annual and Long-Term
Incentive Plan, following a termination of employment as a
result of a change in control, all outstanding stock options
will become fully vested and exercisable, all outstanding
restricted stock will vest and all restrictions on the
restricted stock will lapse, and all performance awards,
including qualified performance-based awards under the annual
incentive program for our Management Committee, will be
considered to be earned and payable in full, and such
performance awards will be settled in cash or shares, as
determined by the Committee, as promptly as practicable. Because
annual incentive award payouts are based on adjusted pre-tax
operating income, which varies from year to year, and because
the Committee must reduce the size of some awards to comply with
the limits on the aggregate amount of incentive compensation
that may be paid out to the Management Committee as a group
under the annual incentive program, the specific amounts that
would be payable to our Management Committee upon a change in
control are indeterminable.
|
|
|
|
Under the Non-Qualified Retirement Plan, employees are entitled
to a payout of their vested account balance upon any employment
termination other than termination for cause.
|
|
|
|
Participants in the Second Century 2000 Plan remain entitled to
receive full benefits under the plan if the participants
employment terminates following a change in control or if the
participants employment terminates for any other reason,
so long as the individual is not
|
25
|
|
|
|
|
terminated for cause and does not violate certain
post-termination restrictions; otherwise the amount of the
benefits may be limited to the lesser of (i) the amount of
the participants deferred bonus award plus simple interest
at 6.5% per annum from the effective date of the plan
(February 28, 2000) through the participants
termination date and (ii) the value of the
participants account under the plan.
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|
|
|
|
|
Participants in the Second Century 1998 Plan remain entitled to
receive full benefits under the plan if the participants
employment terminates following a change in control or if the
participants employment terminates for any other reason,
so long as the individual does not violate certain
post-termination restrictions and does not commit any act of
gross misconduct, as defined in the plan; otherwise
the benefits are forfeited.
|
|
|
|
Cash awards continue on their original payment schedule in the
event of termination due to death or disability, if the employee
is terminated within 24 months following a change in
control of Piper Jaffray, or if the employee meets the
retirement eligibility thresholds under the terms of the cash
awards (age 50 plus 10 years of service).
Messrs. Duff and Schnettler are the only named executive
officers who currently are retiree-eligible under these terms.
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|
|
|
Our employees who participate in a paid-time off
(PTO) program are entitled to be paid the value of
accrued but unpaid PTO at the time their employment terminates.
Under our PTO program, PTO is accrued in hours at a monthly rate
based on the employees tenure and position, and employees
may only carry over five earned days of PTO to be used by March
31 of the following year. After March 31, unused carry over
days are forfeited.
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|
|
|
Our employees who are at least 55 years old and have at
least five years of service with us at the time of their
employment termination are eligible to participate in our
retiree medical insurance program following their termination of
employment. Under this program, the employee pays premiums to
cover the cost of retiree medical insurance that is negotiated
by us at a group rate and therefore may be more economical than
what is available for employees purchasing insurance on their
own. Employees who meet certain eligibility requirements accrue
credits during their employment with us that may be applied to
offset two-thirds of the cost of the employees retiree
medical insurance premiums, until the credit balance is
depleted. Such credits begin to accrue to employees when the
employee first meets one of the following age and years of
service thresholds: age of 45 plus at least 15 years of
service with us, or age of 50 plus at least 10 years of
service with us. The credits are valued at $1,200 per year and
accrue annual interest of 5.5%. As of December 31, 2007,
our named executive officers had accrued credit balances as
follows: Mr. Duff, $8,266; and Mr. Schnettler, $9,920;
Messrs. Salveson, Peterson and May do not meet the
eligibility requirements to receive credits. None of the named
executive officers currently meets the eligibility requirements
to participate in our retiree medical insurance program.
|
Compensation
Policies
Executive
Stock Ownership
We have adopted stock ownership guidelines to ensure that each
member of the Management Committee maintains a meaningful equity
stake in the company, which aligns managements interests
with those of our shareholders. The guidelines, which help to
drive long-term performance and strengthen retention, provide
for our Management Committee members to hold Piper Jaffray
Companies stock with a value equal to seven times base salary
for the chief executive officer, and two to five times base
salary for the other members of our Management Committee,
depending on the individuals position, within five years
after becoming subject to the guidelines. As of
February 15, 2008, all of the named executive officers meet
the guidelines based on 2008 salary levels with the exception of
Mr. May, who joined the company in November 2005 and is not
required to meet the guidelines until 2013. We also have adopted
a share retention policy requiring members of our Management
Committee to hold at
26
least 50% of the shares awarded to them through our incentive
plans, or acquired upon exercise of stock options awarded to
them, net of taxes and transaction costs, for a minimum of five
years.
We have an employee trading policy providing that employees may
not sell our stock short and may not enter into any derivatives
transaction in our stock if the effect of the transaction would
be substantially equivalent to a short position in our stock or
any standardized options strategy other than a covered call or
protective put, and employees may not utilize any hedging
strategy with respect to non-transferable Piper Jaffray
securities, including restricted stock. Subject to these rules,
our employees are permitted to hedge investments in our stock so
long as they do not initiate any part of the hedge or unwind any
part of such a hedge during designated trading blackout periods.
Equity Grant
Timing Policy
In 2006, we established a policy pursuant to which equity grants
to employees will be made only once each quarter, on the
15th calendar day of the month following the public release
of earnings for the preceding quarter (or, if the
15th calendar day falls on a weekend or holiday, on the
first business day thereafter). This policy covers grants made
by the Committee as well as grants made by our chief executive
officer to employees other than executive officers pursuant to
authority delegated to him by the Committee. We established this
equity grant timing policy to provide a regular, fixed schedule
for equity grants that eliminates the exercise of discretion
with respect to the grant date of employee equity awards. The
grant dates under this policy are outside of the designated
trading blackout periods that apply to our employees generally
and fall within the regularly scheduled trading window periods
during which our executive officers generally are permitted to
trade in our securities.
Prior to the establishment of this policy, the Committee
typically approved the grant of equity in connection with annual
incentive or bonus compensation on the date of its first regular
meeting of the fiscal year, to be granted on the date of its
second regular meeting of the fiscal year. Mid-year grants made
in connection with recruiting, retention or significant
promotions to employees other than the executive officers were
granted by the chief executive officer pursuant to authority
delegated to him by the Committee and were granted on the later
of the employees hire date (in the case of a recruiting
award) or the date the award was approved by the chief executive
officer.
Policy on
Qualifying Compensation for Deductibility
Section 162(m) of the Internal Revenue Code limits
deductions for non-performance-based annual compensation in
excess of $1 million paid to our named executive officers
who served as executive officers at the end of the preceding
fiscal year. Our policy is to maximize the tax deductibility of
compensation paid to these officers. Accordingly, in 2004 we
sought and obtained shareholder approval for the Piper Jaffray
Companies Amended and Restated 2003 Annual and Long-Term
Incentive Plan, under which our annual incentive program is
administered and annual cash and equity incentives are paid. The
plan is designed and administered to qualify compensation
awarded under our annual incentive program as
performance-based to ensure that the tax deduction
is available to the company. From time to time the Committee may
authorize payments to the named executive officers that may not
be fully deductible, if they believe such payments are in the
interests of shareholders.
COMPENSATION
COMMITTEE REPORT
The Committee has reviewed and discussed the Compensation
Discussion and Analysis with management and has recommended to
the Board of Directors the inclusion of the Compensation
Discussion and Analysis in our year-end disclosure documents.
Compensation
Committee of the Board of Directors of Piper Jaffray
Companies
Michael R. Francis,
Chairperson
Lisa K. Polsky
Frank L. Sims
Jean M. Taylor
27
Summary
Compensation Table
The following table contains compensation information for the
years ended December 31, 2007 and December 31, 2006,
for our chief executive officer, our chief financial officer,
and our three other most highly compensated executive officers.
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|
|
|
|
|
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|
|
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|
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|
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|
|
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Non-Equity
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|
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|
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Stock
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Option
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|
Incentive Plan
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All Other
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Name &
Principal
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|
|
Salary
|
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|
Bonus
(1)
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Awards
(2)
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Awards
(2)
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Compensation
(3)
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Compensation
(4)
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Total
|
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Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
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|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Andrew S. Duff
|
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2007
|
|
|
|
396,667
|
|
|
|
|
|
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1,116,210
|
|
|
|
213,804
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|
|
|
1,123,777
|
|
|
|
14,313
|
|
|
|
2,864,771
|
|
Chairman and CEO
|
|
|
2006
|
|
|
|
380,000
|
|
|
|
|
|
|
|
802,605
|
|
|
|
286,840
|
|
|
|
1,633,732
|
|
|
|
8,319
|
|
|
|
3,111,496
|
|
Thomas P. Schnettler
|
|
|
2007
|
|
|
|
225,000
|
|
|
|
|
|
|
|
1,077,900
|
|
|
|
188,593
|
|
|
|
1,182,249
|
|
|
|
38,542
|
|
|
|
2,712,284
|
|
Vice Chairman and
Chief
|
|
|
2006
|
|
|
|
205,000
|
|
|
|
|
|
|
|
832,381
|
|
|
|
132,831
|
|
|
|
1,687,105
|
|
|
|
18,554
|
|
|
|
2,875,871
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon W. Salveson
|
|
|
2007
|
|
|
|
225,000
|
|
|
|
|
|
|
|
874,164
|
|
|
|
123,326
|
|
|
|
1,034,598
|
|
|
|
46,687
|
|
|
|
2,303,775
|
|
Head of Investment Banking
|
|
|
2006
|
|
|
|
180,000
|
|
|
|
742,520
|
|
|
|
648,822
|
|
|
|
102,835
|
|
|
|
1,303,242
|
|
|
|
8,295
|
|
|
|
2,823,133
|
|
Robert W. Peterson
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|
|
2007
|
|
|
|
225,000
|
|
|
|
|
|
|
|
605,543
|
|
|
|
106,332
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|
|
|
725,483
|
|
|
|
10,070
|
|
|
|
1,672,428
|
|
Head of Equities
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|
|
2006
|
|
|
|
205,000
|
|
|
|
|
|
|
|
462,140
|
|
|
|
76,968
|
|
|
|
1,039,144
|
|
|
|
10,669
|
|
|
|
1,793,921
|
|
Benjamin T. May
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|
2007
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|
|
|
225,000
|
|
|
|
|
|
|
|
132,811
|
|
|
|
22,182
|
|
|
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426,250
|
|
|
|
9,099
|
|
|
|
815,342
|
|
Head of High Yield and
|
|
|
2006
|
|
|
|
201,875
|
|
|
|
793,000
|
|
|
|
6,063
|
|
|
|
|
|
|
|
|
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5,973
|
|
|
|
1,006,911
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|
Structured Products
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(1)
|
The amounts in this
column reflect bonuses for 2006 performance that were paid to
Messrs. Salveson and May outside of the annual incentive
program established for the Management Committee. Certain of
Mr. Salvesons and Mr. Mays variable
compensation for 2006 was paid outside of the annual incentive
program because they did not become executive officers until
August 11, 2006, and were not covered by the annual
incentive program for the Management Committee prior to that
date.
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(2)
|
The entries in the
stock awards and option awards columns reflect the respective
dollar amounts of stock-based compensation recognized for 2006
and 2007 financial statement reporting purposes in accordance
with FAS 123R. The amounts associated with 2006 relate to
restricted stock and stock option awards granted to the named
executive officers in 2004, 2005 and 2006, and amounts
associated with 2007 relate to restricted stock and stock option
awards granted to the named executive officers in 2005, 2006 and
2007, as part of each officers annual incentive
compensation for the year preceding the year of grant. For each
named executive officer, the amounts in these columns reflect a
three-year amortization of each award, all of which cliff-vest
on the third anniversary of the grant date so long as the award
recipient complies with the terms and conditions of the
applicable award agreement. No equity forfeitures occurred
during the year. Refer to Note 22 in the Notes to
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
filed on February 28, 2008 for a discussion of the relevant
assumptions used to determine the valuation of our stock and
option awards for accounting purposes.
|
|
(3)
|
The amounts in this
column reflect the cash component of compensation paid out
pursuant to qualified performance-based awards granted to the
designated named executive officers under our annual incentive
program relating to performance during 2006 and 2007(other than
for Mr. Salveson, for whom the 2006 award relates to
performance only for the portion of 2006 during which he served
as an executive officer). The compensation paid out pursuant to
the qualified performance-based awards included both a cash
component and an equity component for each of the named
executive officers other than Mr. Salveson, whose 2006
award was paid out solely in cash. For each of the named
executive officers who received payouts under the annual
incentive program, the equity component was paid in the form of
restricted stock and stock options, granted on February 15,
2007 and February 15, 2008. Equity awards earned for 2007
performance but paid in 2008 are not reflected in the stock
awards and option awards columns of this Summary Compensation
Table and the awards are not reflected in the Grants of
Plan-Based Awards Table. The aggregate dollar value and number
of shares granted under these equity awards and the exercise
price of the option awards is set forth below:
|
28
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Exercise
|
|
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|
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Restricted
|
|
|
Option
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|
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Price of
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Grant Date
Fair
|
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|
|
Shares
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|
|
Shares
|
|
|
Option
|
|
|
Value of Stock
and
|
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|
Granted
|
|
|
Granted
|
|
|
Awards
|
|
|
Option Awards
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Andrew S. Duff
|
|
|
19,145
|
|
|
|
32,149
|
|
|
|
41.09
|
|
|
|
1,292,344
|
|
Thomas P. Schnettler
|
|
|
16,479
|
|
|
|
27,672
|
|
|
|
41.09
|
|
|
|
1,112,389
|
|
Jon Salveson
|
|
|
14,421
|
|
|
|
24,217
|
|
|
|
41.09
|
|
|
|
973,462
|
|
Robert W. Peterson
|
|
|
10,113
|
|
|
|
16,981
|
|
|
|
41.09
|
|
|
|
682,614
|
|
Benjamin T. May
|
|
|
7,279
|
|
|
|
12,223
|
|
|
|
41.09
|
|
|
|
491,338
|
|
|
|
(4)
|
All other
compensation for the year ended December 31, 2007 consists
of the following:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of All
Other
|
|
|
|
|
Andrew S.
|
|
|
Thomas P.
|
|
|
Jon W.
|
|
|
Robert W.
|
|
|
Benjamin
|
|
Compensation
|
|
Year
|
|
|
Duff
|
|
|
Schnettler
|
|
|
Salveson
|
|
|
Peterson
|
|
|
T. May
|
|
|
Parking stipend
|
|
|
2007
|
|
|
|
2,880
|
|
|
|
2,880
|
|
|
|
2,160
|
|
|
|
2,880
|
|
|
|
2,160
|
|
|
|
|
2006
|
|
|
|
2,880
|
|
|
|
2,880
|
|
|
|
2,160
|
|
|
|
2,880
|
|
|
|
1,260
|
|
Club membership dues
|
|
|
2007
|
|
|
|
4,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
4,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) matching contributions
|
|
|
2007
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
3,768
|
|
|
|
3,768
|
|
|
|
3,768
|
|
|
|
3,768
|
|
Life and long-term disability
|
|
|
2007
|
|
|
|
1,089
|
|
|
|
1,089
|
|
|
|
855
|
|
|
|
855
|
|
|
|
1089
|
|
insurance premiums
|
|
|
2006
|
|
|
|
945
|
|
|
|
1,089
|
|
|
|
855
|
|
|
|
837
|
|
|
|
945
|
|
Other
|
|
|
2007
|
|
|
|
|
|
|
|
28,723
|
|
|
|
37,822
|
|
|
|
485
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
10,817
|
|
|
|
1,512
|
|
|
|
3,184
|
|
|
|
|
|
The Other amounts identified in the table above
include:
|
|
|
|
|
For Messrs. Schnettler, Salveson and Peterson, amounts paid
out in 2006 and 2007 under the Second Century 1998 Plan and the
Second Century 2000 Plan.
|
|
|
|
For Mr. Schnettler, the amount also includes a $25,213 cash
payment in connection with a liquidity event for an investment
purchased by the company in 1996 with funds from a business line
incentive pool, and $2,702 in airfare provided for his spouse
who accompanied him to a strategic off-site meeting of the Board
of Directors at the companys invitation.
|
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|
For Mr. Salveson, the amount also includes a $37,499 cash
payment representing his proportionate share of a venture
capital fund carried interest held by the company as part of
compensation program implemented prior to our spin-off from
U.S. Bancorp.
|
Grants of
Plan-Based Awards
The following table provides information regarding the grants of
plan-based awards made to the named executive officers during
the year ended December 31, 2007.
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
Possible
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts
|
|
|
All Other
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
|
Stock
|
|
|
Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Awards:
|
|
|
Number of
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
|
|
|
|
Compensation
|
|
|
Plan
|
|
|
Number of
|
|
|
Securities
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
|
|
|
Committee
|
|
|
Awards
(2)
|
|
|
Shares of
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
|
|
|
Approval
|
|
|
Maximum
|
|
|
Stock
(3)(4)
|
|
|
Options
(3)(5)
|
|
|
Awards
(6)
|
|
|
Awards
(4)(5)
|
|
Name
|
|
Grant
Date
|
|
|
Date
(1)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Andrew S. Duff
|
|
|
2/15/2007
|
|
|
|
1/31/2007
|
|
|
|
4,902,184
|
|
|
|
22,257
|
|
|
|
9,641
|
|
|
|
70.13
|
|
|
|
1,836,327
|
|
Thomas P. Schnettler
|
|
|
2/15/2007
|
|
|
|
1/31/2007
|
|
|
|
4,902,184
|
|
|
|
16,731
|
|
|
|
7,248
|
|
|
|
70.13
|
|
|
|
1,380,420
|
|
Jon W. Salveson
|
|
|
2/15/2007
|
|
|
|
1/31/2007
|
|
|
|
4,902,184
|
|
|
|
15,853
|
|
|
|
6,868
|
|
|
|
70.13
|
|
|
|
1,307,990
|
|
Robert W. Peterson
|
|
|
2/15/2007
|
|
|
|
1/31/2007
|
|
|
|
4,902,184
|
|
|
|
10,305
|
|
|
|
4,464
|
|
|
|
70.13
|
|
|
|
850,226
|
|
Benjamin T. May
|
|
|
2/15/2007
|
|
|
|
1/31/2007
|
|
|
|
4,902,184
|
|
|
|
6,146
|
|
|
|
2,662
|
|
|
|
70.13
|
|
|
|
507,072
|
|
29
|
|
(1)
|
The Compensation
Committee approved the grant of the stock and option awards
identified in the all other stock awards and all other option
award columns of this table at a meeting on January 31,
2007. In accordance with the terms of this approval and our
equity grant timing policy, the awards were granted on
February 15, 2007.
|
|
|
(2)
|
The amounts in this
column reflect an estimate of the maximum combined value of the
cash and equity that would have been payable to the named
executive officers under qualified performance-based awards
granted to the named executive officers for 2007 under the
annual incentive program for our Management Committee, had we
achieved the same adjusted pre-tax operating income for 2007 as
was achieved for 2006. Because the amounts payable under the
qualified performance-based awards are stated in the annual
incentive program as a percentage of adjusted pre-tax operating
income that can only be decreased, and not increased, from that
maximum level, and because the actual amounts paid out below
this maximum level are within the full discretion of the
Committee, there are no identifiable threshold or target amounts
under the awards, and the maximum amounts actually payable to
the named executive officers pursuant to the awards for 2007
were indeterminable at the time the awards were granted.
Accordingly, we estimated these amounts using our adjusted
pre-tax operating income for 2006. In addition, because the
Committee has full discretion to determine the total dollar
value of the respective amounts to be paid out under the awards
in the form of cash and equity, the amount of each form of
payment under the awards is indeterminable until after the
awards are paid. At the time the awards were paid out, the
Committee designated the total dollar value of the amounts to be
paid out in cash and the total dollar value to be paid out in
equity, with the number of shares to be calculated following the
same method described below in notes 4 and 5.
|
|
(3)
|
The amounts in these
columns reflect equity compensation paid out to the named
executive officers, pursuant to qualified performance-based
awards granted to these officers in 2006 under our annual
incentive program for the Management Committee. The shares of
restricted stock and stock options were granted to these
officers on February 15, 2007 following the Compensation
Committees certification of the attainment of 2006 annual
financial performance goals established by the Committee under
the annual incentive program. All of the restricted stock and
stock options were granted under our Amended and Restated 2003
Annual and Long-Term Incentive Plan and will vest in full on
February 15, 2010, assuming the award recipient complies
with the terms and conditions of the applicable award agreement,
as discussed in the Compensation Discussion and Analysis under
Compensation Program and Payouts Termination
and Change in Control Arrangements Severance
Plans.
|
|
(4)
|
The restricted stock
awards are subject to forfeiture prior to vesting in the event
the award recipient is terminated for cause or, following
certain terminations of employment, misappropriates confidential
company information, participates in or is employed by a
competitor of Piper Jaffray, or solicits employees, customers or
clients of Piper Jaffray, all as set forth in more detail in the
applicable award agreement. Recipients have the right to vote
the shares of Piper Jaffray restricted stock they hold and to
receive dividends (if any) on the restricted stock at the same
rate paid to our other shareholders. (We currently do not pay
dividends on our common stock.) The number of shares of
restricted stock awarded to each named executive officer was
determined by dividing specified dollar amounts representing a
percentage of the individuals total annual incentive
compensation by $70.13, the closing price of our common stock on
the February 15, 2007 grant date.
|
|
(5)
|
The stock option
awards expire on the tenth anniversary of the grant date if not
earlier exercised; they will continue to vest following a
termination of employment so long as the termination was not for
cause and the employee does not violate certain post-termination
restrictions for the remaining vesting term of the awards. The
number of shares of stock options awarded to each officer for
2007 was determined by dividing specified dollar amounts
representing a percentage of the individuals total annual
incentive compensation for that year by the Black-Scholes value
of one option share on the grant date.
|
|
|
(6)
|
The exercise price
equals the $70.13 closing sales price of one share of our common
stock on the grant date of the options (February 15, 2007).
|
30
Outstanding
Equity Awards at Fiscal Year End
The following table sets forth certain information concerning
equity awards held by the named executive officers that were
outstanding as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Awards
|
|
|
|
Option
Awards
|
|
|
Number of
|
|
|
|
|
|
|
Number of
Securities
|
|
|
Number of
Securities
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Market Value
of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Stock that
|
|
|
Shares of
Stock
|
|
|
|
Unexercised
Options
|
|
|
Unexercised
Options
|
|
|
Option
|
|
|
Option
|
|
|
Have Not
|
|
|
That Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Vested
(2)
|
|
|
Vested
(3)
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
(1)
|
|
|
(#)
|
|
|
($)
|
|
|
Andrew S. Duff
|
|
|
24,940
|
|
|
|
|
|
|
|
47.30
|
|
|
|
2/12/2014
|
|
|
|
67,208
|
|
|
|
3,113,075
|
|
|
|
|
|
|
|
|
11,719
|
|
|
|
39.62
|
|
|
|
2/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,098
|
|
|
|
47.85
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,641
|
|
|
|
70.13
|
|
|
|
2/15/2017
|
|
|
|
|
|
|
|
|
|
Thomas P. Schnettler
|
|
|
1,938
|
|
|
|
|
|
|
|
47.30
|
|
|
|
2/12/2014
|
|
|
|
67,094
|
|
|
|
3,107,794
|
|
|
|
|
|
|
|
|
12,696
|
|
|
|
39.62
|
|
|
|
2/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,241
|
|
|
|
47.85
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,248
|
|
|
|
70.13
|
|
|
|
2/15/2017
|
|
|
|
|
|
|
|
|
|
Jon W. Salveson
|
|
|
5,729
|
|
|
|
|
|
|
|
47.30
|
|
|
|
2/12/2014
|
|
|
|
52,062
|
|
|
|
2,411,512
|
|
|
|
|
|
|
|
|
10,639
|
|
|
|
39.62
|
|
|
|
2/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,868
|
|
|
|
70.13
|
|
|
|
2/15/2017
|
|
|
|
|
|
|
|
|
|
Robert W. Peterson
|
|
|
1,938
|
|
|
|
|
|
|
|
47.30
|
|
|
|
2/12/2014
|
|
|
|
36,944
|
|
|
|
1,711,246
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
39.62
|
|
|
|
2/22/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,269
|
|
|
|
47.85
|
|
|
|
2/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,646
|
|
|
|
70.13
|
|
|
|
2/15/2017
|
|
|
|
|
|
|
|
|
|
Benjamin T. May
|
|
|
|
|
|
|
2,662
|
|
|
|
70.13
|
|
|
|
2/15/2017
|
|
|
|
6,591
|
|
|
|
305,295
|
|
|
|
(1)
|
Option awards
expiring on February 22, 2015, will vest on
February 22, 2008; option awards expiring on
February 21, 2016, will vest on February 21, 2009; and
option awards expiring on February 15, 2017, will vest on
February 15, 2010; in each case so long as the award
recipient complies with the terms and conditions of the
applicable award agreement.
|
|
|
(2)
|
The shares of
restricted stock vest on the dates and in the amounts set forth
in the table below, so long as the award recipient complies with
the terms and conditions of the applicable award agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
Scheduled to Vest That Are Held
|
|
|
|
by Each Named
Executive Officer
|
|
|
|
Andrew S.
|
|
|
Thomas P.
|
|
|
Jon W.
|
|
|
Robert W.
|
|
|
Benjamin T.
|
|
Vesting
Date
|
|
Duff
|
|
|
Schnettler
|
|
|
Salveson
|
|
|
Peterson
|
|
|
May
|
|
|
February 22, 2008
|
|
|
28,963
|
|
|
|
31,377
|
|
|
|
16,941
|
|
|
|
15,447
|
|
|
|
|
|
February 21, 2009
|
|
|
15,988
|
|
|
|
18,986
|
|
|
|
19,268
|
|
|
|
11,192
|
|
|
|
455
|
|
February 15, 2010
|
|
|
22,257
|
|
|
|
16,731
|
|
|
|
15,853
|
|
|
|
10,305
|
|
|
|
6,146
|
|
|
|
(3)
|
The values in this
column are based on the $46.32 closing sales price of our common
stock on the New York Stock Exchange on December 31,
2007.
|
31
Option Exercises
and Stock Vested
The following table sets forth certain information concerning
options exercised and stock vested during the year ended
December 31, 2007. No stock options were exercised by any
of the named executive officers in 2007.
|
|
|
|
|
|
|
|
|
|
|
Stock
Awards
|
|
|
|
Number of
Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized
on
|
|
|
|
Vesting
|
|
|
Vesting
(1)
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
Andrew S. Duff
|
|
|
12,448
|
|
|
|
833,394
|
|
Thomas P. Schnettler
|
|
|
9,805
|
|
|
|
656,445
|
|
Jon W. Salveson
|
|
|
10,005
|
|
|
|
669,835
|
|
Robert W. Peterson
|
|
|
6,502
|
|
|
|
435,309
|
|
Benjamin T. May
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The value realized
upon vesting of the stock awards is based on the $66.95 closing
sales price of our common stock on the February 12, 2007
vesting date of the awards.
|
Non-Qualified
Deferred Compensation Plans
The following table provides information regarding amounts
accrued by the named executive officers in our Non-Qualified
Retirement Plan. As discussed in the Compensation Discussion and
Analysis, participation in this plan was frozen in 2004 and no
new benefits may be earned by participants in the plan. However,
participating employees will continue to receive investment
credits on their transferred plan balances in accordance with
the terms of the plan. The investment credits are paid in a
lump-sum on December 31 each year to employees who remain
employed by us on that date. Each employees plan balance
will be payable by us upon the employees retirement or
termination of employment. No amounts or portions of amounts
reported in the column reporting aggregate earnings in the last
fiscal year were included in the Summary Compensation Table
because the amounts earned were not earned at a preferential
rate. We previously have reported fiscal year-end balances in
our proxy statement but not in the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Earnings in
Last
|
|
|
Balance at
Last
|
|
|
|
Fiscal Year
|
|
|
Fiscal
Year-End
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Andrew S. Duff
|
|
|
37,083
|
|
|
|
489,863
|
|
Thomas P. Schnettler
|
|
|
62,328
|
|
|
|
856,311
|
|
Jon W. Salveson
|
|
|
29,212
|
|
|
|
432,686
|
|
Robert W. Peterson
|
|
|
34,405
|
|
|
|
472,691
|
|
Benjamin T. May
|
|
|
|
|
|
|
|
|
32
Under the Second Century 1998 Plan and the Second Century 2000
Plan described in the Compensation Discussion and Analysis,
certain key employees were granted one or more deferred bonus
awards that were deemed invested in certain measuring
investments. Following a liquidity event for a particular
investment, the participant receives a benefit payment based on
the deemed return to the participant and payment of the portion
of the participants account that was deemed invested.
Participants may continue to receive payments under the plans
until a liquidity or bankruptcy event has occurred with respect
to each measuring investment. No new awards have been granted
under these plans since 2000, and participation in the plans is
frozen. The following table identifies the amounts earned in
2007 and the deferred balances for each of the named executive
officers who received one or more deferred bonuses under the
plans. The amounts earned in 2007 are included in All
Other Compensation in the Summary Compensation Table. We
previously have not included fiscal year-end balances in the
Summary Compensation Table, but have included earnings paid out
in a given year in the Summary Compensation Table for that year.
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Earnings Paid
|
|
|
Deferred
Balance
|
|
|
|
Out in Last
|
|
|
(Deemed
Investment) at
|
|
|
|
Fiscal Year
|
|
|
Last Fiscal
Year-End
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Thomas P. Schnettler
|
|
|
808
|
|
|
|
550,000
|
|
Jon W. Salveson
|
|
|
323
|
|
|
|
100,000
|
|
Robert W. Peterson
|
|
|
485
|
|
|
|
200,000
|
|
33
Potential
Payments Upon Termination or
Change-in-Control
The following table sets forth quantitative information with
respect to potential payments to be made to each of the named
executive officers or their beneficiaries upon termination in
various circumstances, assuming termination on February 15,
2008. In the following table, unless indicated otherwise, all
equity is listed at its dollar value as of February 15,
2008, based on the closing sales price of our common stock on
that date. Options are shown at intrinsic value, which
represents the difference between the exercise price of the
option and the stock price on February 15, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of
Termination
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
Within 24
|
|
|
|
|
|
Involuntary
|
|
|
Other
|
|
|
|
|
|
|
Control Not
|
|
|
Months
|
|
|
|
|
|
Termination
|
|
|
Involuntary
|
|
|
|
|
|
|
Followed by
|
|
|
Following a
|
|
|
|
|
|
Under
|
|
|
Termination
|
|
|
Involuntary
|
|
|
|
Employment
|
|
|
Change in
|
|
|
Voluntary
|
|
|
Severance
|
|
|
Not for
|
|
|
Termination
|
|
Name
|
|
Termination
|
|
|
Control
|
|
|
Termination
|
|
|
Plan
|
|
|
Cause
|
|
|
for
Cause
|
|
|
Andrew S. Duff
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
230,000
|
|
|
|
|
|
|
|
|
|
Accrued but Unused
PTO
(2)
|
|
$
|
6,154
|
|
|
$
|
6,154
|
|
|
$
|
6,154
|
|
|
$
|
6,154
|
|
|
$
|
6,154
|
|
|
$
|
6,154
|
|
Cash
Awards
(3)
|
|
|
|
|
|
$
|
570,887
|
|
|
$
|
570,887
|
|
|
$
|
570,887
|
|
|
$
|
570,887
|
|
|
$
|
570,887
|
|
Restricted
Stock
(4)(5)
|
|
$
|
3,548,221
|
|
|
$
|
3,548,221
|
|
|
$
|
3,548,221
|
|
|
$
|
3,548,221
|
|
|
$
|
3,548,221
|
|
|
|
|
|
Stock
Options
(4)(5)
|
|
$
|
17,227
|
|
|
$
|
17,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
Award
(4)
|
|
|
Indeterminable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement
Plan
(6)
|
|
$
|
489,863
|
|
|
$
|
489,863
|
|
|
$
|
489,863
|
|
|
$
|
489,863
|
|
|
$
|
489,863
|
|
|
|
|
|
Thomas P. Schnettler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
186,748
|
|
|
|
|
|
|
|
|
|
Accrued but Unused
PTO
(2)
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
Cash
Awards
(3)
|
|
|
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
|
$
|
30,523
|
|
Restricted
Stock
(4)(5)
|
|
$
|
3,433,998
|
|
|
$
|
3,433,998
|
|
|
$
|
3,433,998
|
|
|
$
|
3,433,998
|
|
|
$
|
3,433,998
|
|
|
|
|
|
Stock
Options
(4)(5)
|
|
$
|
18,663
|
|
|
$
|
18,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
Award
(4)
|
|
|
Indeterminable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement
Plan
(6)
|
|
$
|
856,311
|
|
|
$
|
856,311
|
|
|
$
|
856,311
|
|
|
$
|
856,311
|
|
|
$
|
856,311
|
|
|
|
|
|
Second Century Deferred Compensation
Plans
(7)
|
|
|
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
$
|
1,776
|
|
Jon W. Salveson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
124,175
|
|
|
|
|
|
|
|
|
|
Accrued but Unused
PTO
(2)
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
Cash
Awards
(3)
|
|
|
|
|
|
$
|
10,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
(4)(5)
|
|
$
|
2,731,770
|
|
|
$
|
2,731,770
|
|
|
$
|
2,731,770
|
|
|
$
|
2,731,770
|
|
|
$
|
2,731,770
|
|
|
|
|
|
Stock
Options
(4)(5)
|
|
$
|
15,639
|
|
|
$
|
15,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
Award
(4)
|
|
|
Indeterminable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement
Plan
(6)
|
|
$
|
432,686
|
|
|
$
|
432,686
|
|
|
$
|
432,686
|
|
|
$
|
432,686
|
|
|
$
|
432,686
|
|
|
|
|
|
Second Century Deferred Compensation
Plans
(7)
|
|
|
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
|
|
Robert W. Peterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
121,734
|
|
|
|
|
|
|
|
|
|
Accrued but Unused
PTO
(2)
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
Cash
Awards
(3)
|
|
|
|
|
|
$
|
69,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
(4)(5)
|
|
$
|
1,933,533
|
|
|
$
|
1,933,533
|
|
|
$
|
1,933,533
|
|
|
$
|
1,933,533
|
|
|
$
|
1,933,533
|
|
|
|
|
|
Stock
Options
(4)(5)
|
|
$
|
9,188
|
|
|
$
|
9,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
Award
(4)
|
|
|
Indeterminable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Retirement
Plan
(6)
|
|
$
|
472,691
|
|
|
$
|
472,691
|
|
|
$
|
472,691
|
|
|
$
|
472,691
|
|
|
$
|
472,691
|
|
|
|
|
|
Second Century Deferred Compensation
Plans
(7)
|
|
|
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
Indeterminable
|
|
|
|
|
|
Benjamin T. May
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
112,500
|
|
|
|
|
|
|
|
|
|
Accrued but Unused
PTO
(2)
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
|
$
|
2,921
|
|
Restricted
Stock
(4)(5)
|
|
$
|
569,899
|
|
|
$
|
569,899
|
|
|
$
|
569,899
|
|
|
$
|
569,899
|
|
|
$
|
569,899
|
|
|
|
|
|
Stock
Options
(4)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
Award
(4)
|
|
|
Indeterminable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
(1)
|
Under our Severance
Plan, employees may be eligible for severance payments in the
event of employment termination by us due to a facility closure,
permanent work-force reduction, organizational change that
eliminates the employees position, or similar event as
determined by the company. The named executive officers
participate in the Severance Plan on the same basis as all other
employees. The amount in the table reflects salary continuation
payments calculated in accordance with the provisions of the
plan, except that salary continuation payments under the plan
are capped at $230,000. Also under this plan, the named
executive officers would be entitled to continue to participate
in our health and welfare benefits programs at employee rates
during the severance period.
|
|
|
(2)
|
Our employees who
participate in a PTO program are entitled to be paid the value
of accrued but unpaid PTO at the time their employment
terminates. Under our PTO program, PTO is accrued in hours at a
monthly rate based on the employees tenure and position.
The amount in the table reflects hours of PTO accrued to but
unused as of February 15, 2008. The value of the unused PTO
was calculated by dividing the employees base salary (as
of February 15, 2008) by 2080 hours (the standard
number of hours employees are deemed to work in a year),
multiplied by the number of accrued PTO hours.
|
|
(3)
|
The amount reflects
the total unpaid amounts of cash awards due. Under the terms of
the cash award agreement, the award will continue to be paid on
its original payment schedule in the event of an involuntary
termination within 24 months following a change in control
of Piper Jaffray, or in the event of termination by an employee
who meets the retirement eligibility threshold under the terms
of the cash award (age 50 plus 10 years of service).
As of February 15, 2008, Messrs. Duff and Schnettler
are the only named executive officers who meet the retirement
eligibility threshold. Mr. May was not employed by Piper
Jaffray at the time of our spin-off from U.S. Bancorp and, as a
result, he did not receive a cash award.
|
|
(4)
|
Under our Amended
and Restated 2003 Annual and Long-Term Incentive Plan, in the
event of a change in control of Piper Jaffray, regardless
whether an employees employment is terminated, all
outstanding stock options will become fully vested and
exercisable, all outstanding restricted stock will vest and all
restrictions on the restricted stock will lapse, and all
performance awards, including qualified performance-based awards
granted under the annual incentive program for the Management
Committee members, will be considered to be earned and payable
in full, and such performance awards will be settled in cash or
shares, as determined by the Compensation Committee, as promptly
as practicable. Because the Compensation Committee has
discretion to determine the specific amounts of the cash and
equity compensation to be paid out under the qualified
performance-based awards granted under the annual incentive
program, the amounts that would be payable to the named
executive officers upon a change in control are indeterminable.
|
|
(5)
|
Under the applicable
award agreements, the stock options granted since 2007 and all
the restricted stock awards will continue to vest following a
termination of employment so long as the termination was not for
cause and the employee does not violate certain post-termination
restrictions; the stock options granted prior to 2007 will
continue to vest upon a qualifying retirement, and vesting of
these stock option awards and all the restricted stock awards
will accelerate in the event of termination due to death or
disability. The restricted stock and stock option awards granted
since 2007 will continue to vest following a termination of
employment under the Severance Plan. Under the terms of the
stock option awards granted prior to 2007, vested stock options
may be exercised only while the optionee remains employed by us,
except that vested options may be exercised for 90 days
after termination of employment for a reason other than death,
disability, qualifying retirement or termination for cause, and
may be exercised for up to three years following a termination
due to death or disability. A qualifying retirement means any
termination of employment when an optionee is age 55 or
older and has at least five years of service with us. If an
optionee meets these requirements at the time of termination and
the termination is not for cause, the options granted prior to
2007 will continue to vest and may be exercised for the full
term of the option. As of February 15, 2008, none of the
named executive officers met the requirements for a qualifying
retirement. The amounts in the table reflect these terms and
|
35
|
|
|
conditions and
assume compliance with any post-termination vesting requirements
that are within the named executive officers control.
|
|
|
(6)
|
The amounts reflect
account balances under the Non-Qualified Retirement Plan as of
February 15, 2008. Under the plan, employees are entitled
to receive their account balances following a termination of
employment for any reason other than cause.
|
|
|
(7)
|
The amounts shown
reflect potential payouts under the Second Century 1998 Plan and
the Second Century 2000 Plan. Under the plans, participants were
granted one or more deferred bonus awards, which were deemed
invested in certain measuring investments. Following a liquidity
event (as defined in the plan) for a particular measuring
investment, the participant receives a benefit payment based on
the deemed return to the participant with respect to the
measuring investment as well as payment of that portion of the
participants account that was deemed invested.
Participants may continue to receive payments under the plans
until a liquidity or bankruptcy event has occurred with respect
to each measuring investment in which deferred bonus awards are
deemed to be invested. Individuals remain entitled to receive
full benefits under the plans following a termination of
employment, so long as the individual does not violate certain
post-termination restrictions and is not terminated for cause
(under the 2000 plan) or as the result of an act of gross
misconduct (under the 1998 plan). If the employee fails to
comply with these provisions, under the 1998 plan the employee
will lose his benefits, and under the 2000 plan the participant
will receive the amount originally deferred with interest at
6.5% per annum. The benefits that would be payable under these
plans in every event other than a termination for cause are
indeterminable because they are based on the value to investors
of liquidity events, the timing and value of which are not
ascertainable in advance. The following is a table of deferred
bonuses for the 1998 Plan and 2000 Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Bonus
|
|
|
|
Deferred Bonus
Award Amounts under 1998 Plan
|
|
|
Award Amounts
Under 2000 Plan
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Thomas P. Schnettler
|
|
|
1996
|
|
|
$
|
250,000
|
|
|
|
1997
|
|
|
$
|
125,000
|
|
|
|
1998
|
|
|
$
|
75,000
|
|
|
|
2000
|
|
|
$
|
100,000
|
|
Jon W. Salveson
|
|
|
1996
|
|
|
$
|
25,000
|
|
|
|
1997
|
|
|
$
|
50,000
|
|
|
|
1998
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
Robert W. Peterson
|
|
|
1996
|
|
|
$
|
50,000
|
|
|
|
1997
|
|
|
$
|
75,000
|
|
|
|
1998
|
|
|
$
|
75,000
|
|
|
|
|
|
|
|
|
|
SECURITY
OWNERSHIP
Stock Ownership
Guidelines
We believe it is important for our directors and executive
officers to maintain a meaningful equity interest in our
company, to ensure that their interests are aligned with the
interests of our shareholders. Our Board of Directors has
adopted stock ownership guidelines to establish its minimum
expectations for our directors and executive officers with
respect to this equity stake. As discussed above in the
Compensation Discussion and Analysis, our executive officers are
subject to stock ownership guidelines that provide for equity
ownership in an amount having a market value ranging from two to
seven times the individuals annual base salary, depending
upon the individuals position, to be achieved within five
years of the date the individual became subject to the
guidelines. Both common stock and restricted stock count towards
these guidelines. The table below under Beneficial
Ownership of Directors, Nominees and Executive Officers
shows how many shares of stock were owned as of March 10,
2008, by each of our named executive officers for purposes of
measuring compliance with the guidelines.
Effective in 2007, our Board increased our stock ownership
guidelines applicable to non-employee directors to provide for
equity ownership by our non-employee directors in an amount
equal to four times the directors annual cash retainer, to
be achieved within four years after the directors initial
election to the Board, except that non-employee directors
elected prior to January 31, 2007, have a total of five
years to achieve these ownership levels. Accordingly, each of
our current non-employee directors other than Ms. Polsky
has five years to achieve these ownership levels. Both common
stock and phantom stock (acquired through deferral of cash or
stock under our Deferred Compensation Plan for
36
Non-Employee Directors) are counted towards these ownership
guidelines. The table below under Beneficial Ownership of
Directors, Nominees and Executive Officers includes the
number of shares of our common stock and phantom stock that were
deemed owned as of March 10, 2008, by each of our
non-employee directors for purposes of measuring compliance with
the guidelines.
Beneficial
Ownership of Directors, Nominees and Executive
Officers
The following table shows how many shares of our common stock
were beneficially owned as of March 10, 2008 by each of our
directors, director nominees and executive officers named in the
Summary Compensation Table contained in this proxy statement,
and by all of our directors and executive officers as a group.
Unless otherwise noted, the shareholders listed in the table
have sole voting and investment power with respect to the shares
owned by them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phantom Shares
|
|
|
|
Shares of
|
|
|
Counted
Towards
|
|
|
|
Piper Jaffray
|
|
|
Director Stock
|
|
Name of
Beneficial Owner
|
|
Common
Stock*
|
|
|
Ownership
Guidelines**
|
|
|
Andrew S. Duff
|
|
|
131,703
(1
|
)
|
|
|
|
|
Michael R. Francis
|
|
|
13,880
(2
|
)
|
|
|
1,584
|
|
B. Kristine Johnson
|
|
|
13,080
(3
|
)
|
|
|
1,743
|
|
Samuel L. Kaplan
|
|
|
20,923
(4
|
)
|
|
|
6,132
|
|
Benjamin T. May
|
|
|
14,007
(5
|
)
|
|
|
|
|
Robert W. Peterson
|
|
|
56,069
(6
|
)
|
|
|
|
|
Addison L. Piper
|
|
|
20,663
(7
|
)
|
|
|
1,743
|
|
Lisa K. Polsky
|
|
|
7,500
(8
|
)
|
|
|
2,794
|
|
Jon W. Salveson
|
|
|
84,441
(9
|
)
|
|
|
|
|
Thomas P. Schnettler
|
|
|
94,249
(10
|
)
|
|
|
|
|
Frank L. Sims
|
|
|
19,380
(11
|
)
|
|
|
1,000
|
|
Jean M. Taylor
|
|
|
6,463
(12
|
)
|
|
|
2,857
|
|
All directors, director nominees, named executive officers and
other executive officers as a group (16 persons)
|
|
|
536,461
(13
|
)
|
|
|
17,853
|
|
|
|
*
|
None of the
individual beneficial owners identified in this table owns more
than 1% of Piper Jaffray common stock outstanding as of
March 10, 2008. As a group, our directors, director
nominees and executive officers hold 2.84% of Piper Jaffray
common stock as of March 10, 2008. The holders of
restricted stock identified in the footnotes below have no
investment power with respect to the restricted stock.
|
|
|
**
|
The directors have
no voting or investment power with respect to the shares of
phantom stock. All shares of phantom stock have been deferred
pursuant to the Non-Employee Director Compensation Plan for
Non-Employee Directors, as described above under
Compensation Program for Non-Employee Directors.
|
|
(1)
|
Includes
15,988 shares of restricted stock that vest in full on
February 21, 2009, 22,257 shares of restricted stock
that vest in full on February 15, 2010, 19,145 shares
of restricted stock that will vest in full on February 15,
2011, 36,559 shares of common stock held directly,
10 shares of common stock held by his two minor children,
1,299 shares of common stock held in the Piper Jaffray
Companies Retirement Plan, and 36,659 shares of common
stock covered by options that are currently exercisable.
|
|
|
(2)
|
Includes
2,000 shares of common stock held directly and
11,880 shares of common stock covered by options that are
currently exercisable.
|
|
(3)
|
Includes
1,200 shares of common stock held in an individual
retirement account and 11,880 shares of common stock
covered by options that are currently exercisable.
|
37
|
|
(4)
|
Includes
9,043 shares of common stock held in the Kaplan,
Strangis & Kaplan profit-sharing trust for the benefit
of Mr. Kaplan and 11,880 shares of common stock
covered by options that are currently exercisable.
|
|
(5)
|
445 shares of
restricted stock that vest in full on February 21, 2009,
6,146 shares of restricted stock that vest in full on
February 15, 2010, 7,279 shares of restricted stock
that will vest in full on February 15, 2011 and
136 shares of common stock held in the Piper Jaffray
Companies Retirement Plan.
|
|
|
(6)
|
Includes
11,192 shares of restricted stock that vest in full on
February 21, 2009, 10,305 shares of restricted stock
that vest in full on February 15, 2010, 10,113 shares
of restricted stock that will vest in full on February 15,
2011, 15,782 shares of common stock held directly,
473 shares of common stock held in the Piper Jaffray
Companies Retirement Plan, 14 shares of common stock held
in an individual retirement account, and 8,188 shares of
common stock covered by options that are currently exercisable.
|
|
|
(7)
|
Includes
4,441 shares of restricted stock that vest in full on
February 21, 2009, 5,080 shares of common stock held
directly, 172 shares of common stock held in the Piper
Jaffray Companies Retirement Plan, 1,000 shares of common
stock held in an individual retirement account, 50 shares
of common stock held by Mr. Pipers spouse as to which
he shares voting and investment power with his spouse, and
9,920 shares of common stock covered by options that are
currently exercisable.
|
|
(8)
|
All shares
beneficially owned by Ms. Polsky are held directly.
|
|
|
(9)
|
Includes
19,268 shares of restricted stock that vest in full on
February 21, 2009, 15,853 shares of restricted stock
that vest in full on February 15, 2010, 14,421 shares
of restricted stock that will vest in full on February 15,
2011, 18,056 shares of common stock held directly,
473 shares of common stock held in the Piper Jaffray
Companies Retirement Plan, and 16,368 shares of common
stock covered by options that are currently exercisable.
|
|
|
(10)
|
Includes
18,986 shares of restricted stock that vest in full on
February 21, 2009, 16,731 shares of restricted stock
that vest in full on February 15, 2010, 16,479 shares
of restricted stock that will vest in full on February 15,
2011, 26,944 shares of common stock held directly,
473 shares of common stock held in the Piper Jaffray
Companies Retirement Plan, and 14,634 shares of common
stock covered by options that are currently exercisable.
|
|
|
(11)
|
Includes
7,500 shares of common stock held directly and
11,880 shares of common stock covered by options that are
currently exercisable.
|
|
|
(12)
|
Includes
500 shares of common stock held directly and
5,963 shares of common stock covered by options that are
currently exercisable.
|
|
(13)
|
Includes
79,773 shares of restricted stock that vest in full on
February 21, 2009, 82,745 shares of restricted stock
that vest in full on February 15, 2010, 78,466 shares
of restricted stock that will vest in full on February 15,
2011, 4,709 shares of common stock held in the Piper
Jaffray Companies Retirement Plan, 11,261 shares held in a
retirement or profit-sharing plan or account other than the
Piper Jaffray Companies Retirement Plan, 130,930 shares of
common stock held directly or by family members, and
148,777 shares covered by options that are currently
exercisable.
|
38
Beneficial Owners
of More than Five Percent of Our Common Stock
Based on filings made under Section 13(d) and
Section 13(g) of the Securities Exchange Act of 1934, as of
March 10, 2008, the persons known by us to be beneficial
owners of more than 5% of our common stock were as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
Piper Jaffray
|
|
|
|
|
Name of
Beneficial Owner
|
|
Common
Stock
|
|
|
Percent of
Class
|
|
|
BlackRock, Inc.
|
|
|
2,192,545
|
(1)
|
|
|
12.53
|
%
|
40 East 52nd Street
New York, NY 10022
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.
|
|
|
1,371,305
|
(2)
|
|
|
7.80
|
%
|
100 E. Pratt Street
Baltimore, MD 21202
|
|
|
|
|
|
|
|
|
Advisory Research, Inc.
|
|
|
1,203,020
|
(3)
|
|
|
6.88
|
%
|
180 North Stetson Street, Suite 5500
Chicago, IL 60601
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP
|
|
|
1,004,607
|
(4)
|
|
|
5.74
|
%
|
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
|
|
|
|
|
|
|
|
|
Barclays Global Investors, N.A.
|
|
|
950,946
|
(5)
|
|
|
5.44
|
%
|
45 Fremont Street
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This information is
based on a Schedule 13G filed with the Securities and
Exchange Commission on February 8, 2008, by BlackRock, Inc.
The beneficial ownership indicated above represents the
aggregate beneficial ownership of the following subsidiaries of
BlackRock, Inc.: BlackRock Advisors LLC, BlackRock Capital
Management, Inc., BlackRock Financial Management, Inc.,
BlackRock Investment Management LLC, and State Street
Research & Management Co. Shared dispositive and
shared voting power has been reported for all shares.
|
|
|
(2)
|
This information is
based on a Schedule 13G filed with the Securities and
Exchange Commission on February 12, 2008, by T. Rowe Price
Associates, Inc. T. Rowe Price Associates, Inc. reported that it
has sole voting power as to 272,740 shares and sole
dispositive power as to 1,371,305 shares. T. Rowe Price
Associates, Inc. serves as investment adviser to certain
individual and institutional clients holding the shares listed
above, and as an investment adviser, may be deemed to have
beneficial ownership of the shares owned by its advisory
clients. T. Rowe Price Associates, Inc. disclaims beneficial
ownership of these shares. T. Rowe Price Associates, Inc. is a
wholly-owned subsidiary of T. Rowe Price Group, Inc., which is a
publicly traded financial services holding company.
|
|
(3)
|
This information is
based on a Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2008, by Advisory
Research, Inc. Advisory Research reported that it has sole
voting and dispositive power with respect to all
1,203,020 shares reflected in the table.
|
|
(4)
|
This information is
based on a Schedule 13G filed with the Securities and
Exchange Commission on February 6, 2008, by Dimensional
Fund Advisors LP. Dimensional reported that it has sole
voting and dispositive power with respect to all
1,004,607 shares reflected in the table. As an investment
advisor, Dimensional may be deemed to have beneficial ownership
of the shares owned by its advisory clients, but it disclaims
beneficial ownership of these shares. Dimensional reported that
none of its advisory clients was known by it to own more than 5%
of our common stock.
|
|
(5)
|
This information is
based on a Schedule 13G filed with the Securities and
Exchange Commission on February 6, 2008, 2008, by Barclays
Global Investors, N.A. and a group of affiliated entities, which
reported sole voting and dispositive power as follows: Barclays
Global Investors, N.A., sole voting and dispositive power as to
350,127 shares; Barclays Global Fund Advisors, sole
voting power as to 436,875 shares and sole dispositive
power as to 582,898 shares; and Barclays Global Investors,
Ltd., sole voting and dispositive power as to 17,921 shares.
|
39
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors to file initial
reports of ownership of our securities and reports of changes in
ownership of our securities with the Securities and Exchange
Commission. Based on our knowledge and on written
representations from our executive officers and directors, we
believe that all Section 16(a) filing and disclosure
requirements applicable to our executive officers and directors
for 2007 have been satisfied, except for a late report by
Mr. Piper with respect to the purchase of 48 shares by
his spouse on October 28, 2004 that was discovered and then
promptly reported during 2007.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Compensation
Committee Interlocks and Insider Participation
The Compensation Committee, comprised entirely of independent,
non-employee directors, is responsible for establishing and
administering our policies involving the compensation of our
executive officers. No employee of the company serves on the
Compensation Committee. The Committee members have no
interlocking relationships as defined by the Securities and
Exchange Commission.
Transactions with
Related Persons
Client accounts managed by the investment advisory subsidiaries
of BlackRock, Inc., own greater than 5% of the shares of our
common stock, and we received institutional brokerage revenue of
approximately $1.0 million from transactions placed by
BlackRocks investment advisory subsidiaries for these
client accounts during 2007. T. Rowe Price Associates, Inc. acts
as investment advisor to client accounts that own greater than
5% of the shares of our common stock, and we received
institutional brokerage revenue of approximately $850,000 from
transactions placed by T. Rowe Price Associates, Inc. on behalf
of client accounts during 2007. Client accounts managed by
Barclays Global Investors, N.A. and its affiliates own greater
than 5% of the shares of our common stock and we received
institutional brokerage revenue of approximately $160,000 from
transactions involving Barclays Global Investors, N.A.
From time to time in the ordinary course of business, Piper
Jaffray, through our subsidiaries, engages in transactions with
other corporations or entities whose executive officers or
directors also are directors or executive officers of Piper
Jaffray or have an affiliation with our directors or executive
officers. Such transactions are conducted on an
arms-length basis and may not come to the attention of our
directors or executive officers or those of the other
corporations or entities involved. In addition, from time to
time our executive officers and directors and their affiliates
may engage in transactions in the ordinary course of business
involving goods and services provided by Piper Jaffray, such as
investment and financial advisory services. With respect to our
executive officers and employee directors, such goods and
services are provided on terms comparable to those extended to
employees of our company generally. With respect to our
non-employee directors and their affiliates, such goods and
services are provided on substantially the same terms as those
prevailing at the time for comparable transactions with
non-employees. In 2007, Piper Jaffray was engaged to structure
and arrange debt financing for entities in which
Mr. Kaplan, a non-employee director, owns a
greater-than-10% interest. The terms of the transaction are
substantially the same as those for comparable transactions with
non-affiliated individuals. Piper Jaffray will receive a fee as
percentage of the financing amount, which is expected to exceed
$120,000, if the transaction is consummated. As of
March 10, 2008, the transaction had not yet been completed.
During 2007, we paid approximately $2.1 million to
Faegre & Benson LLP for legal services provided to us
and our subsidiaries. The spouse of James L. Chosy, our general
counsel and secretary, is a partner with Faegre &
Benson. Mr. Chosys spouse has not personally provided
any legal services to us or our subsidiaries.
40
From time to time, certain of our directors, executive officers
and other employees who are accredited investors may invest
their personal funds directly in funds managed by Piper Jaffray,
through our subsidiaries, on the same terms and with the same
conditions as the other investors in these funds, who may not be
our directors, executive officers or employees.
Messrs. Schnettler and Piper each committed to invest
$150,000 in one such fund in 2007.
Review and
Approval of Transactions with Related Persons
To minimize actual and perceived conflicts of interests, our
Board of Directors has adopted a written policy governing our
companys transactions where the aggregate amount involved
is reasonably expected to exceed $120,000 and any of the
following persons has or may have a direct or indirect interest:
(a) our executive officers or directors (including
nominees), (b) shareholders who own more than 5% of our
common stock, (c) any child, stepchild, parent, stepparent,
spouse, sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law
or person (other than a tenant or employee) sharing the same
household of any person described in (a) or (b), and
(d) the primary business affiliation of any person
described in (a), (b) or (c). These transactions are
considered related person transactions. Unless
exempted from the policy as described below, related person
transactions must be submitted for review by our Nominating and
Governance Committee. The Nominating and Governance Committee
considers the available, relevant facts and circumstances and
will approve or ratify only those related person transactions
that it determines are in, or are not inconsistent with, the
best interests of our company and its shareholders. The
chairperson of the Nominating and Governance Committee may
approve and ratify transactions if it is not practicable to wait
until the next committee meeting, but the chairperson is
required to report to the committee at its next meeting any
approval or ratification pursuant to this delegated authority.
The Board of Directors also may exercise the powers and duties
of the Nominating and Governance Committee under our policy
governing related person transactions. Certain transactions that
would not be required to be disclosed under applicable rules and
regulations of the Securities and Exchange Commission are
exempted from the definition of related person transactions
under our policy and therefore do not require review and
approval by the Nominating and Governance Committee.
AUDIT COMMITTEE
REPORT AND PAYMENT OF FEES TO OUR INDEPENDENT AUDITOR
Audit Committee
Report
The primary function of our Audit Committee is oversight of our
financial reporting process, publicly filed financial reports,
internal accounting and financial controls, and the independent
audit of the consolidated financial statements. The consolidated
financial statements of Piper Jaffray Companies for the year
ended December 31, 2007, were audited by Ernst &
Young LLP, independent auditor for the company.
As part of its activities, the Committee has:
|
|
|
|
1.
|
Reviewed and discussed with management and the independent
auditor the companys audited financial statements;
|
|
|
2.
|
Discussed with the independent auditor the matters required to
be communicated under
Statement on Auditing Standards
No. 61 (Communications with Audit Committees)
;
|
|
|
3.
|
Received the written disclosures and letter from the independent
auditor required by
Independence Standards Board Standard
No. 1 (Independence Discussions with Audit
Committees)
; and
|
|
|
4.
|
Discussed with the independent auditor its independence.
|
Management is responsible for the companys system of
internal controls and the financial reporting process.
Ernst & Young LLP is responsible for performing an
independent audit of the consolidated financial statements in
accordance with the standards of the Public Company Accounting
Oversight Board and issuing a report thereon. Our
Committees responsibility is to monitor and oversee these
41
processes. Based on the foregoing review and discussions and a
review of the report of Ernst & Young LLP with respect
to the consolidated financial statements, and relying thereon,
we have recommended to the Board of Directors of Piper Jaffray
Companies the inclusion of the audited consolidated financial
statements in Piper Jaffrays Annual Report on
Form 10-K
for the year ended December 31, 2007, for filing with the
Securities and Exchange Commission.
Audit Committee
of the Board of Directors of Piper Jaffray Companies
Frank L. Sims,
Chairperson
Samuel L. Kaplan
Lisa K. Polsky
Auditor
Fees
Ernst & Young LLP served as our independent auditor
for 2007 and 2006. The following table presents fees for
professional audit services for the audit of our annual
consolidated financial statements for 2007 and 2006 as well as
fees for the review of our interim consolidated financial
statements for each quarter in 2007 and 2006 and for all other
services performed for 2007 and 2006 by Ernst & Young
LLP.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
949,328
|
|
|
$
|
884,200
|
|
Audit-Related
Fees
(1)
|
|
|
107,150
|
|
|
|
99,350
|
|
Tax Fees
|
|
|
0
|
|
|
|
0
|
|
All Other
Fees
(2)
|
|
|
5,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,061,478
|
|
|
$
|
983,550
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Audit-related
services are assurance and related services that are reasonably
related to the performance of the audit or review of our
financial statements. Specifically, the services provided for
2007 and 2006 included services relating to IRA Keogh
agreed-upon
procedures, employee benefit plan audits and the issuance of an
independent auditors report on controls placed in
operation and tests of operating effectiveness.
|
|
|
(2)
|
Services for all
other fees in 2007 consist of capital markets accounting
consultations.
|
Auditor Services
Pre-Approval Policy
The Audit Committee has adopted an auditor services pre-approval
policy applicable to services performed for us by our
independent auditor. In accordance with this policy, the Audit
Committees practice is to approve annually all audit,
audit-related and permissible non-audit services to be provided
by the independent auditor during the year. If a service to be
provided is not pre-approved as part of the annual process or if
it may exceed pre-approved fee levels, the service must receive
a specific and separate pre-approval by the Audit Committee,
which has delegated authority to grant such pre-approvals during
the year to the chairperson of the Audit Committee. Any
pre-approvals granted pursuant to this delegated authority are
reported to the Audit Committee at its next regular meeting.
Our Audit Committee has determined that the provision of the
non-audit services described in the table above was compatible
with maintaining the independence of our independent auditor.
The Audit Committee reviews each non-audit service to be
provided and assesses the impact of the service on the
auditors independence. On February 20, 2007, the
Audit Committee pre-approved certain services to be provided by
our independent auditor relating to engagements occurring on or
after February 20, 2007. The Audit Committee supplemented
this pre-approval on July 31 and November 6, 2007 by
pre-approving additional services principally relating to
acquisitions that closed during 2007.
42
ITEM 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
The Audit Committee of our Board of Directors has selected
Ernst & Young LLP to serve as our independent auditor
for the year ending December 31, 2008. While it is not
required to do so, our Board of Directors is submitting the
selection of Ernst & Young LLP for ratification in
order to ascertain the views of our shareholders with respect to
the choice of audit firm. If the selection is not ratified, the
Audit Committee will reconsider its selection. Representatives
of Ernst & Young LLP are expected to be present at the
annual meeting, will be available to answer shareholder
questions and will have the opportunity to make a statement if
they desire to do so.
The Board of Directors recommends that you vote FOR
ratification of the selection of Ernst & Young LLP as
the independent auditor of Piper Jaffray Companies and our
subsidiaries for the year ending December 31, 2008. Proxies
will be voted FOR ratification of this selection unless
otherwise specified.
ITEM 3
APPROVAL OF THE PIPER JAFFRAY COMPANIES
AMENDED AND RESTATED 2003 ANNUAL AND LONG-TERM INCENTIVE
PLAN
Our Board of Directors has unanimously approved, upon the
recommendation of the Compensation Committee, an amended and
restated version of our Amended and Restated 2003 Annual and
Long-Term Incentive Plan (the Incentive Plan),
subject to obtaining approval of the amendment and restatement
from our shareholders at the 2008 annual meeting. The principal
purpose for amending and restating the Incentive Plan is to
increase the number of shares of our common stock that may be
issued under the Incentive Plan by 1,000,000. The Incentive Plan
as originally adopted at the time of our spin-off from
U.S. Bancorp in December 2003 authorized the issuance of
2,000,000 shares, and we obtained shareholder approval for
a 2,100,000-share increase at our 2004 annual meeting and a
400,000-share increase at our 2006 annual meeting. The
currently-proposed 1,000,000-share increase will become
effective when and if approved by our shareholders.
The Board of Directors recommends that you vote FOR this
proposal.
Our Board of Directors believes that this proposal
is critical to Piper Jaffrays future success for the
following reasons:
|
|
|
|
|
Equity awards foster an employee ownership culture and
motivate employees to create shareholder value.
|
|
|
|
Equity awards are a critical recruitment and retention
tool.
|
|
|
|
Our annual equity awards are granted in lieu of
not in addition to annual cash incentive
compensation, and constitute on average 87% of the total of our
shares granted each year.
|
|
|
|
We grant equity awards to a broad group of employees and such
awards constitute a significant component of our employees
total compensation.
|
|
|
|
If our shareholders do not approve the Incentive Plan, we
would need to increase significantly the cash component of
employee compensation.
|
|
|
|
We have sought to address shareholder concerns about dilution
through share repurchases.
|
|
|
|
The terms of our annual equity awards are designed to protect
shareholder interests.
|
|
|
|
Our share retention policy and stock ownership guidelines
further protect shareholder interests.
|
Equity awards foster an employee ownership culture and
motivate employees to create shareholder value.
We believe
that equity ownership fosters a partnership culture within the
company that motivates employees to think and act like owners.
By acting like owners, we believe that our employees will focus
on shareholder value creation and the long-term success of the
company. At the time of our spin-off from U.S. Bancorp in
December 2003, our employees had no ownership of our stock,
putting us at a competitive disadvantage with other investment
banks with meaningful levels of employee ownership. We have been
working since the spin-off to increase employee ownership
levels, primarily through the
43
use of equity as part of our annual incentive awards. While our
employee ownership has increased from nothing at the time of the
spin-off to approximately 18% as of February 29, 2008, it
still significantly lags the employee ownership of our peer
competitors. Similarly, the share ownership of our Management
Committee (currently approximately 2%) also significantly lags
the executive share ownership of our peer competitors. As a
result, we presently intend to grant an incremental
performance-based award to each member of our Management
Committee in 2008 (together expected to aggregate approximately
375,000 shares). This incremental grant will improve our
executive share ownership to more meaningful levels, will
further link executive performance with shareholder value, and
will function as a significant retention tool for our Management
Committee. As currently contemplated, this award would cliff
vest if the company met a pre-established return on equity
target (return on adjusted common equity) over a fixed period of
time (twelve months), assuming the Management Committee member
remains an employee. This award would be forfeited, however, if
the performance metric for the company is not met within five
years. We will not have the ability to make this proposed
incremental performance-based award, however, if the proposal to
amend and restate the Incentive Plan is not approved by
shareholders.
Equity awards are a critical recruitment and retention
tool.
We would be at a severe competitive disadvantage if we
could not compensate our employees using equity awards,
especially in the context of the intensely competitive
environment in which we operate. Our success is closely
correlated with recruiting and retaining talented employees and
a strong management team and, as a result, a competitive
compensation program is essential to our long-term performance.
Firms in our industry typically replace equity that is canceled
by the employees prior employer, and our recruiting
efforts would be compromised due to the loss of equity as a form
of compensation available to attract new employees. Further,
equity functions as a retention tool because competitors seeking
to hire our employees will incur a significant cost in
connection with the replacement of equity. We presently intend
to increase our use of incremental equity for recruiting and
retention purposes in 2008 in order to attract top talent and to
help maintain the continuity of our employee base and thus
improve our overall productivity. These incremental recruiting-
and retention-based grants and the incremental grant for
Management Committee members described above would be
discretionary; the determination of whether and when to make
these incremental grants will depend on a variety of factors,
including market conditions. For example, these incremental
grants could be reduced or postponed if we expect these awards
to negatively impact our ability to make annual incentive grants
in February 2009 consistent with our historical equity
compensation grant practices.
Our annual equity awards are granted in lieu of
not in addition to annual cash incentive
compensation, and constitute on average 87% of the total of our
shares granted each year.
Under our performance-based
compensation program, employees receive a percentage of their
annual incentive compensation in the form of equity awards in
lieu of receiving all annual incentive compensation in cash. An
employees annual performance-based bonus is first
determined as a dollar amount, then that amount is divided into
a cash component and an equity component. Following our spin-off
from U.S. Bancorp in December 2003, annual equity awards
comprised on average approximately 87% of the total of our
shares granted each year. These annual equity awards are in lieu
of not in addition to annual cash
incentive compensation.
We grant equity awards to a broad group of employees and such
awards constitute a significant component of our employees
total compensation.
Annual equity awards are a significant
component of our employees total compensation. As an
employees total compensation increases, the percentage of
his or her compensation paid in equity generally increases. With
respect to 2007 incentive compensation, approximately
500 employees (40% of our 1,238 employees) received
equity awards as part of their annual compensation and these
equity awards constituted between 15% and 50% of annual
incentive compensation.
If our shareholders do not approve the Incentive Plan, we
would need to increase significantly the cash component of
employee compensation.
We do not have a sufficient number of
shares available under the existing Incentive Plan to maintain
our historical equity compensation grant practices.
44
Approximately 1,365,183 shares underlying annual equity
awards were granted as part of 2007 incentive compensation.
There are approximately 634,108 shares available for grant
under our existing Incentive Plan as of February 29, 2008.
If shareholders do not approve the amendment and restatement of
the Incentive Plan, we will be compelled to increase the cash
component of total compensation in 2008. By doing so, we will
significantly increase the companys compensation expense
for 2008 because the expense associated with cash compensation
is realized in the year in which it is earned, as compared to
equity expense, which generally is realized over the three-year
vesting following the grant date.
We have sought to address shareholder concerns about dilution
through share repurchases.
We are cognizant of and sensitive
to shareholder concerns about dilution and, in an effort to
reduce dilution, we have repurchased shares of our common stock
over the past three years. Although we awarded approximately
3,941,646 shares (including shares subject to stock
options) to employees over the last four years under the
Incentive Plan, we repurchased 4,539,004 shares during this
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Issued
and
|
|
|
Shares Granted
Under
|
|
Shares
Repurchased
|
|
Outstanding
|
Year
|
|
Incentive
Plan
|
|
During Fiscal
Year
|
|
at Fiscal Year
End
|
|
2004
|
|
872,664
|
|
-0-
|
|
19,865,146
|
2005
|
|
1,420,271
|
|
1,300,000
|
|
19,782,621
|
2006
|
|
898,229
|
|
1,648,527
|
|
18,544,719
|
2007
|
|
750,482
|
|
1,590,477
|
|
17,483,635
|
|
|
|
|
|
|
|
Total
|
|
3,941,646
|
|
4,539,004
|
|
N/A
|
The terms of our annual equity awards are designed to protect
shareholder interests.
The Compensation Committee determines
the vesting, payment and cancellation provisions of annual
equity awards. Our annual awards generally do not vest until
after three years, at which time they vest in full. These terms
are designed to encourage employees to focus on the long-term
success of the company because employees typically cannot
monetize annual equity awards for at least three years after
grant. Furthermore, these awards generally are subject to
cancellation for, among other things, termination for cause or
failing to comply with certain post-termination restrictions.
Our share retention policy and stock ownership guidelines
further protect shareholder interests.
Management Committee
members are subject to our share retention policy that requires
Management Committee members to retain at least 50% of the
shares awarded to them through our incentive plans, or acquired
by them upon exercise of stock options awarded to them, net of
taxes and transaction costs, for at least five years. This
commitment ties a portion of their net worth to the
companys stock price and provides a continuing incentive
for them to work towards superior long-term stock performance.
Currently, our Management Committee members hold 100% of all
shares that have been awarded to them. In addition, all
Management Committee members are subject to stock ownership
guidelines that provide for each to hold company stock with a
value equal to seven times base salary for the chief executive
officer, and two to five times base salary for the other
executive officers, depending on the individuals position,
within five years after becoming subject to the guidelines.
Description of
the Incentive Plan.
A copy of the Incentive Plan as proposed to be amended and
restated is attached as Appendix A, marked to show changes
from the current version of the Incentive Plan. The following
information summarizes the proposed amended and restated
Incentive Plan and is qualified in its entirety by reference to
Appendix A.
Summary of Key
Terms
|
|
|
Shares Currently Authorized
|
|
4,500,000 shares.
|
|
|
|
Amendment to Increase Shares
|
|
Increase of 1,000,000 shares.
|
45
|
|
|
Shares Available for Grant
|
|
There are approximately 634,108 shares available for grant
under our existing Incentive Plan as of February 29, 2008.
|
|
|
|
Expected Share Usage
|
|
All shares that currently remain available for grant are
expected to be used in the next 12 months in connection
with 2008 recruiting, retention, director compensation and
annual incentive compensation, and
we will need additional
shares to complete our annual incentive grants to employees in
February 2009
.
|
|
|
|
Additional Amendments
|
|
The only other amendments being proposed to the Incentive Plan
are minor technical revisions that relate to the grant of awards
to employees located internationally.
|
|
|
|
Vesting
|
|
Vesting is determined by the Compensation Committee, but
historically all employee awards have had three-year cliff
vesting.
|
|
|
|
Prohibitions
|
|
The Incentive Plan prohibits the grant of stock options at a
price below fair market value as well as the repricing of stock
options without shareholder approval.
|
|
|
|
No Other Equity Plans
|
|
The Incentive Plan is our only equity plan that permits us to
grant equity awards.
|
Purpose
The purpose of the Incentive Plan is to promote the interests of
our company and our shareholders by making us competitive in
attracting, retaining and motivating officers, employees,
directors and consultants, to offer these persons incentives
directly linked to the profitability of our businesses and
increases in shareholder value, and to provide these persons an
opportunity to acquire a proprietary interest in Piper Jaffray.
Eligibility
Our current and prospective directors, officers, employees and
consultants, as well as those of our affiliates, are eligible to
participate in the Incentive Plan. As of February 1, 2008,
approximately 1,255 persons were eligible to participate in
the Incentive Plan.
Administration
The Incentive Plan is administered by the Compensation Committee
of our Board of Directors, which has broad authority to
administer the plan. This authority includes the power to
(1) delegate certain administrative responsibilities with
respect to the Incentive Plan to directors and certain officers
selected in the Committees discretion, and
(2) determine the eligible individuals to whom and the time
or times at which awards will be granted, the number of shares
subject to awards to be granted to any eligible individual, the
life of any award and any terms and conditions of the grant that
are not contained in the Incentive Plan. Each grant under the
Incentive Plan is confirmed by and subject to the terms of an
award agreement.
Authorized
Shares
The Incentive Plan was originally adopted in December 2003 in
connection with our spin-off from U.S. Bancorp and
authorized the issuance of 2,000,000 shares of our common
stock. We amended the Incentive Plan at our 2004 and 2006 annual
meetings of shareholders to add 2,100,000 shares and
46
400,000 shares, respectively. There are approximately
634,108 shares available for grant under the companys
existing Incentive Plan as of February 29, 2008. We
currently expect that shares remaining available for grant will
be used in the next 12 months in connection with 2008
recruiting, retention, director compensation and annual
incentive compensation and, as a result, we are requesting a
1,000,000-share increase expected to cover our equity grants to
employees through 2009. We typically grant awards to employees
(including officers) based on performance and retention
objectives, in addition to any other objectives that our
Compensation Committee may determine to be relevant. With
respect to our directors, our grants are compensatory and will
be in the amounts described above under Information
Regarding the Board of Directors and Corporate
Governance Compensation Program for Non-Employee
Directors.
Grants of shares that may be issued under the Incentive Plan may
be authorized but unissued shares or shares reacquired and held
in our treasury. In general, we use treasury shares to the
extent available before issuing new shares in connection with
awards. No more than 250,000 shares of common stock may be
subject to qualified performance-based awards
granted to any eligible individual in any fiscal year of the
company.
If an award entitles the holder to receive or purchase shares,
the number of shares covered by the award or to which the award
relates will be counted on the date of grant of the award
against the aggregate number of shares available for granting
awards under the Incentive Plan. Any shares that are used by a
participant as full or partial payment to us of the purchase
price relating to an award, including in connection with the
satisfaction of tax obligations relating to an award, will again
be available for granting awards under the Incentive Plan. In
addition, if any shares covered by an award or to which an award
relates are not purchased or are forfeited, or if an award
otherwise terminates without delivery of any shares, then the
number of shares counted against the aggregate number of shares
available under the Incentive Plan to the extent of any such
forfeiture or termination will again be available for granting
awards under the Incentive Plan.
Adjustments
In the event of certain types of corporate transactions or
restructurings, such as stock splits, mergers, consolidations,
separations, spin-offs, liquidations, reorganizations or other
distributions of stock or property of our company, including an
extraordinary stock or cash dividend, the Committee or our Board
may make adjustments to the aggregate number and kind of shares
reserved for issuance under the Incentive Plan, in the maximum
share limitations upon stock options, stock appreciation rights
and other awards to be granted to any individual, in the number,
kind and exercise price of outstanding stock options and stock
appreciation rights, in the number and kind of shares subject to
other outstanding awards granted under the Incentive Plan and
any other equitable substitutions or adjustments that the
Committee or Board determines to be appropriate; however, any
adjustments made to an award that is considered to be deferred
compensation under Section 409A of the Internal Revenue
Code must comply with Section 409A.
Restricted
Stock and Restricted Stock Units
Shares of restricted stock and restricted stock units (RSUs)
will be subject to restrictions as the Committee may impose,
which may lapse separately or in combination at such time or
times, in installments or otherwise as the Committee may deem
appropriate. The grant or vesting of restricted stock and RSUs
may be performance-based, time-based or both. Restricted stock
and RSUs may be qualified performance-based awards,
in which event the grant or vesting of such restricted stock or
RSUs will be conditioned upon the attainment of performance
goals. Except as otherwise determined by the Committee, upon a
participants termination of employment (as determined
under criteria established by the Committee) during the
restriction period, all shares of restricted stock and RSUs
subject to restriction will be forfeited and reacquired by the
company, except that the Committee may waive in whole or in part
any or all remaining restrictions with respect to shares of
restricted stock or RSUs.
47
If the grant is intended to be a qualified
performance-based award, the applicable performance goals
must be based on the attainment of specified levels of one or
more of the following measures:
|
|
|
|
|
revenue growth;
|
|
|
|
earnings before interest, taxes, depreciation, and amortization;
|
|
|
|
earnings before interest and taxes;
|
|
|
|
operating income;
|
|
|
|
pre- or after-tax income;
|
|
|
|
earnings per share;
|
|
|
|
cash flow;
|
|
|
|
cash flow per share;
|
|
|
|
return on equity;
|
|
|
|
return on tangible equity;
|
|
|
|
return on invested capital;
|
|
|
|
return on assets;
|
|
|
|
economic value added (or an equivalent metric);
|
|
|
|
share price performance;
|
|
|
|
total shareholder return;
|
|
|
|
improvement in or attainment of expense levels; or
|
|
|
|
improvement in or attainment of working capital levels.
|
These goals are established by the Committee and may be
established on a company-wide basis or with respect to one or
more business units, divisions or subsidiaries and can be on an
absolute or relative basis. A qualified performance-based
award is a grant of restricted stock or RSUs designated as
such by the Committee at the time of grant based upon a
determination that (a) the recipient is or may be a
covered employee within the meaning of
Section 162(m) of the Internal Revenue Code in the year in
which we would expect to be able to claim a tax deduction with
respect to such award and (b) the Committee wishes such
grant to qualify for the exemption from the limitation on
deductibility of compensation with respect to any covered
employee imposed by Section 162(m) of the Internal Revenue
Code.
The provisions of restricted stock and RSUs, including any
applicable performance goals, need not be the same with respect
to each participant. During the restriction period, the
Committee may require that any stock certificates evidencing
restricted shares be held by us. With respect to restricted
stock awards, other than restrictions on transfer and any other
restrictions the Committee may impose, the participant will have
all the rights of a shareholder holding the class or series of
stock that is the subject of the award.
Performance
Awards
The Committee may grant performance awards to eligible
individuals. A performance award may be denominated or payable
in cash, shares, other securities, other awards or other
property and will provide the holder with the right to receive
payments, in whole or in part, upon the achievement of specified
performance goals. Subject to the terms of the Incentive Plan,
the performance goals to be achieved, the length of any
performance period, the amount of any performance award granted,
the amount of any payment or transfer to be made pursuant to any
performance award and any other terms and conditions of any
performance award will be determined by the Committee. The
Committee may,
48
prior to or at the time of the grant, designate performance
awards as qualified performance-based awards, in
which event it will condition the settlement of the awards upon
the attainment of one or more of the performance goals described
above under Restricted Stock and Restricted
Stock Units. Performance awards denominated in cash that
are payable to any individual participant with respect to any
calendar year are limited to a maximum of $7.5 million.
Stock
Options
The Committee may grant stock options to eligible individuals.
Only non-qualified stock options are permitted to be granted
under the Incentive Plan. The exercise price per share
purchasable under a stock option will be determined by the
Committee, but cannot be less than 100% of the fair market value
of a share of our common stock on the date of grant of the
option. The term of each stock option will be fixed by the
Committee at the time of grant, but in no event may it be more
than ten years from the grant date. The Committee will determine
the time or times at which a stock option may be exercised in
whole or in part and the method or methods by which, and the
form or forms in which, payment of the exercise price may be
made.
Stock
Appreciation Rights
The Committee may grant stock appreciation rights to eligible
individuals. Each stock appreciation right will confer on the
holder upon exercise the right to receive, as determined by the
Committee, cash or a number of shares equal to the excess of
(a) the fair market value of one share of our common stock
on the date of exercise (or, if the Committee determines, at any
time during a specified period before or after the date of
exercise) over (b) the grant price of the stock
appreciation right as determined by the Committee. The grant
price may not be less than 100% of the fair market value of one
share on the date of grant of the stock appreciation right.
Subject to the terms of the Incentive Plan, the grant price,
term, methods of exercise, dates of exercise, methods of
settlement and any other terms and conditions (including
conditions or restrictions on the exercise thereof) of any stock
appreciation right will be as determined by the Committee, but
in no event may the term of a stock appreciation right be longer
than ten years.
Other
Stock-Based Awards
Other awards of common stock and other awards that are valued by
reference to, or otherwise based upon, common stock, including
without limitation dividend equivalents and convertible
debentures, may also be granted under the Incentive Plan, either
alone or in conjunction with other awards.
Transferability
of Awards
Awards are non-transferable other than by will or the laws of
descent and distribution. However, in the discretion of the
Committee, non-qualified stock options may be transferred to the
holders immediate family members, directly or indirectly
or by means of a trust, partnership or otherwise. Stock options
and stock appreciation rights may be exercised only by the
initial holder, a permitted transferee or a guardian, legal
representative or beneficiary.
Change in
Control
Notwithstanding any other provision of the Incentive Plan,
unless otherwise provided by the Committee in any award
agreement, in the event of a change in control of Piper Jaffray
any stock options and stock appreciation rights outstanding as
of the date of such change in control, and which are not then
exercisable and vested, will become fully exercisable and
vested; the restrictions and deferral limitations applicable to
any restricted stock and RSUs will lapse, and such restricted
stock and RSUs will become free of all restrictions and become
fully vested; all performance awards will be considered to be
earned and payable in full; and any deferral or other
restriction will lapse and such performance awards will be
settled in cash or shares, as determined by the Committee, as
promptly as is
49
practicable. All restrictions on other awards will lapse and
such awards will become free of all restrictions and fully
vested.
Amendments and
Termination
Our Board of Directors may at any time amend, alter or
discontinue the Incentive Plan, but shareholder approval is
required for any amendment that could increase the number of
shares granted under the Incentive Plan and as otherwise may be
required by applicable law or stock exchange rules.
The Committee generally may amend the terms of any outstanding
stock option or other award but may not decrease the exercise
price of an outstanding stock option or take any action that
would constitute a repricing of an outstanding stock
option unless the amendment is approved by shareholders as
required by applicable law or stock exchange rules. Further, the
Committee may not amend an award in a way that causes a
qualified performance-based award to cease to
qualify for the Section 162(m) exemption or that impairs
the rights of any holder without the holders consent.
In the event an award is granted to an individual who is
employed outside the United States and is not compensated from a
payroll maintained in the United States, the Committee may, in
its sole discretion, modify the provisions of the grant as they
pertain to such individual to achieve the purposes of the
Incentive Plan.
Term of the
Incentive Plan
If the amendment and restatement of the Incentive Plan is
approved by shareholders, the Incentive Plan will terminate on
May 7, 2018, which is the tenth anniversary of the approval
date of the Incentive Plan, or on any earlier date determined by
our Board of Directors.
Registration
We have registered shares of common stock that currently may be
issued under the Incentive Plan on four registration statements
on
Form S-8.
The amount of shares registered includes shares of common stock
currently available for issuance under the Incentive Plan as
well as shares of the common stock forfeited by plan
participants or used to satisfy tax obligations of plan
participants and again available for issuance pursuant to the
terms of the Plan. If this proposal is approved, we intend to
register on
Form S-8
the additional 1,000,000 shares to be issued under the
Incentive Plan as well as shares that are again available for
grant due to forfeitures and tax withholdings.
Tax
Consequences of Awards
The tax consequences of options granted under the Incentive Plan
are complex and depend, in large part, on the surrounding facts
and circumstances. This section provides a brief summary of
certain significant federal income tax consequences of the
Incentive Plan under existing U.S. law. This summary is not
a complete statement of applicable law and is based upon the
Internal Revenue Code, as well as administrative and judicial
interpretations of the Internal Revenue Code, as in effect on
the date of this description. If federal tax laws, or
interpretations of such laws, change in the future, the
information provided here may no longer be accurate. This
section does not consider state, local or foreign tax
consequences, nor does it discuss the effect of gift, estate or
inheritance taxes.
No later than the date as of which an amount first becomes
includible in the gross income of a participant for federal
income tax purposes with respect to any award under the
Incentive Plan, the participant must pay us, or make
arrangements satisfactory to us regarding the payment of, any
federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Our obligations
under the Incentive Plan are conditional on such payment or
arrangements, and we will, to the extent permitted by law, be
entitled to take such action and establish such procedures as we
deem appropriate to withhold or collect all applicable payroll,
withholding, income or other taxes from a participant. In order
to assist a participant in paying all or a portion of the
federal, state, local and
50
foreign taxes to be withheld or collected upon exercise or
receipt of (or the lapse of restrictions relating to) an award,
the Committee may permit a participant to satisfy tax
obligations by (a) electing to have us withhold a portion
of the shares or other property otherwise to be delivered upon
exercise or receipt of (or the lapse of restrictions relating
to) an award with a fair market value equal to the amount of
such taxes or (b) delivering to us shares or other property
other than shares issuable upon exercise or receipt of (or the
lapse of restrictions relating to) such award with a fair market
value equal to the amount of such taxes. Any such election must
be made on or before the date that the amount of tax to be
withheld is determined.
A participant will not recognize any taxable income and we will
not be entitled to a deduction at the time a non-qualified stock
option is granted. When a non-qualified stock option is
exercised, the excess of the fair market value of the shares
acquired on the exercise of the option over the exercise price
will be taxable to a participant as ordinary income. We, in
computing our U.S. federal income tax, will generally be
entitled to a deduction in an amount equal to the compensation
taxable to the participant, subject to certain limitations. When
a participant sells his or her shares of stock, the participant
generally will have a capital gain (or loss), depending on the
difference between the sale price and the fair market value of
the stock on the date the participant exercised his or her
option. The capital gain (or loss) is considered long
term or short term depending on how long the
participant has held the stock.
Unless a participant files an election to be taxed under
Section 83(b) of the Internal Revenue Code, the participant
will not realize income upon the grant of restricted stock. The
participant will realize ordinary income and Piper Jaffray will
be entitled to a corresponding deduction when the restrictions
lapse, and the amount of such ordinary income and deduction will
be the fair market value of the restricted stock on the date the
restrictions lapse. If the recipient files an election to be
taxed under Section 83(b) of the Internal Revenue Code, the
tax consequences to the participant and Piper Jaffray will be
determined as of the date the restricted stock is granted rather
than as of the date the restrictions lapse.
When a participant disposes of restricted stock, the difference
between the amount received upon disposition and the fair market
value of the shares on the date the recipient realizes ordinary
income will be treated as a capital gain or loss. The capital
gain (or loss) is considered long term or
short term depending on how long the participant has
held such stock after the date the restrictions are removed or
expire, or, if an election under Section 83(b) is filed,
after the date the restricted stock is granted.
New Plan
Benefits
Future plan awards to be received by or allocated to particular
participants are not presently determinable.
Outstanding
Equity Awards
The only equity plan we have established is our Amended and
Restated 2003 Annual and Long-Term Incentive Plan. The following
table summarizes, as of December 31, 2007, the number of
shares of our common stock to be issued upon exercise of
outstanding options granted under the plan, the
51
weighted-average exercise price of such options, and the number
of shares remaining available for future issuance under the plan
for all awards as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
|
Number of Shares
to
|
|
|
|
|
|
Remaining
Available
|
|
|
|
be Issued Upon
|
|
|
Weighted-Average
|
|
|
for Future
Issuance
|
|
|
|
Exercise of
|
|
|
Exercise Price
of
|
|
|
Under Equity
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Compensation
Plans
|
|
|
|
Options,
Warrants
|
|
|
Options,
Warrants
|
|
|
(Excluding
Shares
|
|
Plan
Category
|
|
and
Rights
|
|
|
and
Rights
|
|
|
in First
Column)
|
|
|
Equity compensation
plans approved by shareholders
|
|
|
553,447
|
|
|
$
|
44.99
|
|
|
|
1,941,864
|
(1)
|
Equity compensation
plans not approved by shareholders
|
|
|
None
|
|
|
|
N/A
|
|
|
|
None
|
|
|
|
(1)
|
Based on the
4,500,000 shares currently authorized for issuance under
the plan and does not reflect our proposal included in this
proxy statement to increase the number of authorized shares. In
addition to the 553,447 shares to be issued upon the
exercise of outstanding options to purchase our common stock,
1,996,520 shares of restricted stock issued under the plan
were outstanding as of December 31, 2007. All of the
1,941,864 shares available for future issuance under the
plan as of December 31, 2007, may be granted in the form of
restricted stock, RSUs, options or another equity-based award
authorized under the plan.
|
SHAREHOLDER
PROPOSALS FOR THE 2009 ANNUAL MEETING
In order for a shareholder proposal, including a director
nomination, to be considered for inclusion in our proxy
statement for the 2009 annual meeting of shareholders, the
written proposal must be received at our principal executive
offices on or before November 14, 2008. The proposal should
be addressed to Piper Jaffray Companies, Attention: James L.
Chosy, Secretary, 800 Nicollet Mall, Suite 800, Mail Stop
J09N05, Minneapolis, Minnesota 55402. The proposal must comply
with Securities and Exchange Commission regulations regarding
the inclusion of shareholder proposals in company-sponsored
proxy materials.
In accordance with our bylaws, in order to be properly brought
before the 2009 annual meeting, a shareholders notice of
the matter the shareholder wishes to present must be delivered
to our principal executive offices in Minneapolis, Minnesota, at
the address identified in the preceding paragraph, not less than
90 nor more than 120 days prior to the first anniversary of
the date of this years annual meeting. As a result, any
notice given by or on behalf of a shareholder pursuant to these
provisions of our bylaws (and not pursuant to
Rule 14a-8
of the Securities and Exchange Commission) must be received no
earlier than January 7, 2009, and no later than
February 6, 2009.
ANNUAL REPORT TO
SHAREHOLDERS AND
FORM 10-K
Our 2007 Annual Report to Shareholders, including financial
statements for the year ended December 31, 2007,
accompanies this proxy statement.
Shareholders may obtain
this proxy statement, our Annual Report
and/or
a
copy of our
Form 10-K
filed with the Securities and Exchange Commission for the year
ended December 31, 2007, without charge by viewing these
documents on our Web site at
www.piperjaffray.com/proxymaterials
, or by writing to
Piper Jaffray Companies, Attention: Investor Relations, 800
Nicollet Mall, Suite 800, Mail Stop J09N05, Minneapolis,
Minnesota 55402.
HOUSEHOLDING
The Securities and Exchange Commission has adopted rules that
permit companies and intermediaries such as brokers to satisfy
delivery requirements for proxy statements and annual reports
with respect to two or more shareholders sharing the same
address by delivering a single proxy statement or annual report,
as applicable, addressed to those shareholders. This process,
which is commonly referred
52
to as householding, potentially provides extra
convenience for shareholders and cost savings for companies.
Currently, only brokers household our proxy materials and annual
reports, delivering a single proxy statement and annual report
to multiple shareholders sharing an address unless contrary
instructions have been received from the affected shareholders.
If, at any time, you no longer wish to participate in
householding and would prefer to receive a separate proxy
statement or annual report, or if you are receiving multiple
copies of either document and wish to receive only one, please
contact us in writing or by telephone at Piper Jaffray
Companies, Attention: Investor Relations, 800 Nicollet Mall,
Suite 800, Mail Stop J09N05, Minneapolis, Minnesota 55402,
(612) 303-6277.
We will deliver promptly upon written or oral request a separate
copy of our annual report
and/or
proxy
statement to a shareholder at a shared address to which a single
copy of either document was delivered.
OTHER
MATTERS
We do not know of any other matters that may be presented for
consideration at the annual meeting. If any other business does
properly come before the meeting, the persons named as proxies
on the enclosed proxy card will vote as they deem in the best
interests of Piper Jaffray.
James L. Chosy
Secretary
Dated: March 14, 2008
53
APPENDIX A
PIPER JAFFRAY
COMPANIES
AMENDED AND RESTATED
2003 ANNUAL AND LONG-TERM INCENTIVE PLAN
(as amended and
restated effective May
2
7
,
200
6
8
)
Section 1.
Purpose
The purpose of the Plan is to promote the interests of the
Company and its stockholders by giving the Company a competitive
advantage in attracting, retaining and motivating employees,
officers, consultants and Directors capable of assuring the
future success of the Company, to offer such persons incentives
that are directly linked to the profitability of the
Companys businesses and increases in stockholder value,
and to afford such persons an opportunity to acquire a
proprietary interest in the Company.
Section 2.
Definitions
As used in the Plan, the following terms shall have the meanings
set forth below.
(a)
Affiliate
means any entity that,
directly or indirectly through one or more intermediaries, is
controlled by, controlling or under common control with the
Company.
(b)
Award
means any Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit,
Performance Award, Dividend Equivalent, Other Stock Grant, Other
Stock-Based Award or Tax Offset Bonus granted under the Plan.
(c)
Award Agreement
means any written
agreement, contract or other instrument or document evidencing
any Award granted under the Plan. Each Award Agreement shall be
subject to the applicable terms and conditions of the Plan and
any other terms and conditions (not inconsistent with the Plan)
determined by the Committee.
(d)
Board
means the Board of Directors
of the Company.
(e)
Code
means the Internal Revenue Code
of 1986, as amended from time to time, and any regulations
promulgated thereunder.
(f)
Change in Control
has the meaning
set forth in Section 7.
(g)
Committee
means a committee of
Directors designated by the Board to administer the Plan, which
initially shall be the Compensation Committee of the Board. The
Committee shall be comprised of not less than such number of
Directors as shall be required to permit Awards granted under
the Plan to qualify under
Rule 16b-3
and Section 162(m) of the Code, and each member of the
Committee shall be an Outside Director.
(h)
Company
means Piper Jaffray
Companies, a Delaware corporation.
(i)
Covered Employee
means a Participant
designated prior to the grant of Restricted Stock, Restricted
Stock Units or Performance Awards by the Committee who is or may
be a covered employee within the meaning of
Section 162(m)(3) of the Code in the year in which any such
Award is expected to be taxable to such Participant.
(j)
Director
means a member of the
Board, including any Outside Director.
(k)
Dividend Equivalent
means any right
granted under Section 6(e) of the Plan.
(l)
Effective Date
has the meaning set
forth in Section 11 of the Plan.
(m)
Eligible Individual
means any
employee, officer, Director or consultant providing services to
the Company or any Affiliate, and prospective employees and
consultants who have accepted offers of
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employment or consultancy from the Company or any Affiliate,
whom the Committee determines to be an Eligible Individual.
(n)
Exchange Act
means the Securities
Exchange Act of 1934, as amended from time to time.
(o)
Exercise Price
has the meaning set
forth in Section 6(a) of the Plan.
(p)
Fair Market Value
means, with
respect to any property (including, without limitation, any
Shares or other securities), the fair market value of such
property determined by such methods or procedures as shall be
established from time to time by the Committee. Notwithstanding
the foregoing and except as otherwise provided by the Committee,
the Fair Market Value of a Share as of a given date shall be the
closing sales price for one Share on the New York Stock Exchange
or such other national securities market or exchange as may at
the time be the principal market for the Shares, or if the
Shares were not traded on such national securities market or
exchange on such date, then on the next preceding date on which
the Shares are traded, all as reported by such source as the
Committee may select.
(q)
Non-Qualified Stock Option
means any
Stock Option that is not designated as, or is not intended to
qualify as, an incentive stock option within the
meaning of Section 422 of the Code.
(r)
Outside Director
means any Director
who qualifies as an outside director within the
meaning of Section 162(m) of the Code and as a
non-employee director within the meaning of
Rule 16b-3.
(s)
Participant
means an Eligible
Individual designated to be granted an Award under the Plan.
(t)
Performance Award
means any right
granted under Section 6(d) of the Plan.
(u)
Performance Goals
means the
performance goals established by the Committee in connection
with the grant of an Award. In the case of Qualified
Performance-Based Awards, (i) such goals shall be based on
the attainment of specified levels of one or more of the
following measures with respect to the Company or such
subsidiary, division or department of the Company for or within
which the Participant performances services: revenue growth;
earnings before interest, taxes, depreciation, and amortization;
earnings before interest and taxes; operating income; pre- or
after- tax income; earnings per share; cash flow; cash flow per
share; return on equity; return on tangible equity; return on
invested capital; return on assets; economic value added (or an
equivalent metric); share price performance; total shareholder
return; improvement in or attainment of expense levels;
improvement in or attainment of working capital levels and
(ii) such Performance Goals shall be set by the Committee
within the time period prescribed by Section 162(m) of the
Code and related regulations. Such Performance Goals also may be
based upon the attaining of specified levels of Company
performance under one or more of the measures described above
relative to the performance of other companies.
(v)
Plan
means this Piper Jaffray
Companies Amended and Restated 2003 Annual and Long-Term
Incentive Plan, as set forth herein and as hereinafter amended
from time to time.
(w)
Qualified Performance-Based Award
means an Award of Restricted Stock, Restricted Stock Units or
Performance Awards designated as such by the Committee at the
time of grant, based upon a determination that (i) the
recipient is or may be a Covered Employee in the year in which
the Company would expect to be able to claim a tax deduction
with respect to such Restricted Stock or Performance Awards and
(ii) the Committee wishes such Award to qualify for the
Section 162(m) Exemption.
(x)
Restricted Stock
means any Share
granted under Section 6(c) of the Plan.
(y)
Restricted Stock Unit
means any unit
granted under Section 6(c) of the Plan evidencing the right
to receive a Share (or a cash payment equal to the Fair Market
Value of a Share) at some future date.
(z)
Rule 16b-3
means
Rule 16b-3,
as promulgated by the Securities and Exchange Commission under
Section 16(b) of the Exchange Act, as amended from time to
time.
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(aa)
Section 162(m) Exemption
means
the exemption from the limitation on deductibility imposed by
Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.
(bb)
Share
or
Shares
means a share or shares of common stock, par value $.01 per
share, of the Company.
(cc)
Stock Appreciation Right
means any
right granted under Section 6(b) of the Plan.
(dd)
Stock Option
means a Non-Qualified
Stock Option granted under Section 6(a) of the Plan.
Section 3.
Administration
(a)
Power and Authority of the
Committee.
The Plan shall be administered by the
Committee. Subject to the terms of the Plan and to applicable
law, the Committee shall have full power and authority to:
(i) designate Participants;
(ii) determine whether and to what extent any type (or
types) of Award is to be granted hereunder;
(iii) determine the number of Shares to be covered by (or
the method by which payments or other rights are to be
determined in connection with) each Award;
(iv) determine the terms and conditions of any Award or
Award Agreement;
(v) subject to Section 9 hereof, amend the terms and
conditions of any Award or Award Agreement and accelerate the
vesting
and/or
exercisability of any Stock Option or waive any restrictions
relating to any Award; provided
,
however
,
that
(A) except for adjustments pursuant to Section 4(c) of
the Plan, in no event may any Stock Option granted under this
Plan be (x) amended to decrease the Exercise Price thereof,
(y) cancelled in conjunction with the grant of any new
Stock Option with a lower Exercise Price, or (z) otherwise
subject to any action that would be treated, for accounting
purposes, as a repricing of such Stock Option,
unless such amendment, cancellation, or action is approved by
the stockholders of the Company to the extent required by
applicable law and stock exchange rules and (B) the
Committee may not adjust upwards the amount payable to a Covered
Employee with respect to a Qualified Performance-Based Award or
waive or alter the Performance Goals associated therewith in a
manner that would violate Section 162(m) of the Code.
(vi) determine whether, to what extent and under what
circumstances the exercise price of Awards may be paid in cash,
Shares, other securities, other Awards or other property, or
canceled, forfeited or suspended;
(vii) determine whether, to what extent and under what
circumstances cash, Shares, other securities, other Awards,
other property and other amounts payable with respect to an
Award under the Plan shall be deferred either automatically or
at the election of the holder thereof or the Committee;
(viii) interpret and administer the Plan and any instrument
or agreement, including an Award Agreement, relating to the Plan;
(ix) adopt, alter, suspend, waive or repeal such rules,
guidelines and practices and appoint such agents as it shall
deem advisable or appropriate for the proper administration of
the Plan; and
(x) make any other determination and take any other action
that the Committee deems necessary or desirable for the
administration of the Plan.
Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award or
Award Agreement shall be within the sole discretion of the
Committee, may be made at any time and shall be final,
conclusive and binding
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upon all persons, including without limitation, the Company, its
Affiliates, subsidiaries, shareholders, Eligible Individuals and
any holder or beneficiary of any Award.
(b)
Action by the Committee;
Delegation.
Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the
Committee may delegate all or any part of its duties and powers
under the Plan to one or more persons, including Directors or a
committee of Directors, subject to such terms, conditions and
limitations as the Committee may establish in its sole
discretion; provided, however, that the Committee shall not
delegate its powers and duties under the Plan (i) with
regard to officers or directors of the Company or any Affiliate
who are subject to Section 16 of the Exchange Act or
(ii) in a manner that would cause an Award designated as a
Qualified Performance-Based Award not to qualify for, or to
cease to qualify for, the Section 162(m) Exemption; and
provided, further, that any such delegation may be revoked by
the Committee at any time.
(c)
Power and Authority of the
Board.
Notwithstanding anything to the contrary
contained herein, except to the extent that the grant or
exercise of such authority would cause any Award or transaction
to become subject to (or lose an exemption under) the
short-swing profit recovery provisions of Section 16 of the
Exchange Act or cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to
qualify for, the Section 162(m) Exemption, the Board may,
at any time and from time to time, without any further action of
the Committee, exercise the powers and duties of the Committee
under the Plan. To the extent that any permitted action taken by
the Board conflicts with action taken by the Committee, the
Board action shall control.
Section 4.
Shares
Available for Awards
(a)
Shares Available.
Subject to
adjustment as provided in Section 4(c) of the Plan, the
aggregate number of Shares that may be issued under the Plan
shall be
4,500,000
5,500,000
. Shares that
may be issued under the Plan may be authorized but unissued
Shares or Shares re-acquired and held in treasury.
(b)
Accounting for Awards.
For purposes
of this Section 4, if an Award entitles the holder thereof
to receive or purchase Shares, the number of Shares covered by
such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan. Any Shares
that are used by a Participant as full or partial payment to the
Company of the purchase price relating to an Award, including in
connection with the satisfaction of tax obligations relating to
an Award, shall again be available for granting Awards under the
Plan. In addition, if any Shares covered by an Award or to which
an Award relates are not purchased or are forfeited, or if an
Award otherwise terminates without delivery of any Shares, then
the number of Shares counted against the aggregate number of
Shares available under the Plan with respect to such Award, to
the extent of any such forfeiture or termination, shall again be
available for granting Awards under the Plan.
(c)
Adjustments.
In the event of any
change in corporate capitalization (including, but not limited
to, a change in the number of Shares outstanding), such as a
stock split or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company (including any
extraordinary cash or stock dividend), any reorganization
(whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or
complete liquidation of the Company, the Committee or Board may
make such substitution or adjustments in the aggregate number
and kind of shares reserved for issuance under the Plan, and the
maximum limitation upon Stock Options and Stock Appreciation
Rights and other Awards to be granted to any Participant, in the
number, kind and Exercise Price of shares subject to outstanding
Stock Options and Stock Appreciation Rights, in the number and
kind of shares subject to other outstanding Awards granted under
the Plan
and/or
such
other equitable substitution or adjustments as it may determine
to be appropriate in its sole discretion (including, without
limitation, the provision of an amount in cash in consideration
for any such Awards); provided, however, that the number of
shares subject to any Award shall always be a whole number.
Without limiting the generality of the foregoing, in connection
with any Disaffiliation of a subsidiary of the Company, the
Committee shall have the authority to arrange for the assumption
or replacement of Awards with new awards based on shares of
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the affected subsidiary or by an affiliate of an entity that
controls the subsidiary following the Disaffiliation. For
purposes hereof, Disaffiliation of a subsidiary
shall mean the subsidiarys ceasing to be a subsidiary of
the Company for any reason (including, without limitation, as a
result of a public offering, spin-off, sale or other
distribution or transfer by the Company of the stock of the
subsidiary). Notwithstanding the foregoing, to the extent that
any Award is otherwise considered to be deferred compensation
under Section 409A of the Code, any adjustment to such
Award will comply with Section 409A of the Code (including
current and future guidance issued by the Department of Treasury
and or the Internal Revenue Service).
(d)
Award Limitations.
No more than
250,000 shares of Common Stock may be subject to Qualified
Performance-Based Awards granted to any Eligible Individual in
any fiscal year of the Company.
Section 5.
Eligibility
Any Eligible Individual shall be eligible to be designated a
Participant. In determining which Eligible Individuals shall
receive an Award and the terms of any Award, the Committee may
take into account the nature of the services rendered by the
respective Eligible Individuals, their present and potential
contributions to the success of the Company or such other
factors as the Committee, in its discretion, shall deem relevant.
Section 6.
Awards
(a)
Stock Options.
The Committee is
hereby authorized to grant Stock Options (which may only be
Non-Qualified Stock Options) to Eligible Individuals with the
following terms and conditions and with such additional terms
and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(i)
Exercise Price.
The purchase price
per Share purchasable under a Stock Option (the Exercise
Price) shall be determined by the Committee; provided,
however, that such Exercise Price shall not be less than 100% of
the Fair Market Value of a Share on the date of grant of such
Stock Option.
(ii)
Option Term.
The term of each Stock
Option shall be fixed by the Committee at the time of grant, but
in no event shall be more than 10 years from the date of
grant.
(iii)
Time and Method of Exercise.
The
Committee shall determine the time or times at which a Stock
Option may be exercised in whole or in part and the method or
methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or
other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the applicable Exercise
Price) in which, payment of the Exercise Price with respect
thereto may be made or deemed to have been made.
(b)
Stock Appreciation Rights.
The
Committee is hereby authorized to grant Stock Appreciation
Rights to Eligible Individuals subject to the terms of the Plan.
Each Stock Appreciation Right granted under the Plan shall
confer on the holder upon exercise the right to receive, as
determined by the Committee, cash or a number of Shares equal to
the excess of (A) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at
any time during a specified period before or after the date of
exercise) over (B) the grant price of the Stock
Appreciation Right as determined by the Committee, which grant
price shall not be less than 100% of the Fair Market Value of
one Share on the date of grant of the Stock Appreciation Right.
Subject to the terms of the Plan, the grant price, term, methods
of exercise, dates of exercise, methods of settlement and any
other terms and conditions (including conditions or restrictions
on the exercise thereof) of any Stock Appreciation Right shall
be as determined by the Committee, provided that in no event
shall the term of a Stock Appreciation Right be longer than ten
years.
(c)
Restricted Stock and Restricted Stock
Units.
The Committee is hereby authorized to
grant Restricted Stock and Restricted Stock Units to Eligible
Individuals with the following terms and
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conditions and with such additional terms and conditions not
inconsistent with the provisions of the Plan as the Committee
shall determine:
(i)
Restrictions.
Shares of Restricted
Stock and Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including, without
limitation, limitation on transfer, forfeiture conditions,
limitation on the right to vote a Share of Restricted Stock or
the right to receive any dividend or other right or property
with respect thereto), which restrictions may lapse separately
or in combination at such time or times, in such installments or
otherwise as the Committee may deem appropriate. The grant or
vesting of Restricted Stock and Restricted Stock Units may be
performance-based or time-based or both. Restricted Stock and
Restricted Stock Units may be Qualified Performance-Based
Awards, in which event the grant or vesting, as applicable, of
such Restricted Stock or Restricted Stock Units shall be
conditioned upon the attainment of Performance Goals.
(ii)
Stock Certificates; Delivery of Shares.
(A) Any Restricted Stock granted under the Plan shall be
evidenced in such manner as the Committee may deem appropriate,
including book-entry registration or issuance of one or more
stock certificates. Any certificate issued in respect of shares
of Restricted Stock shall be registered in the name of such
Participant and shall bear an appropriate legend referring to
the applicable Award Agreement and possible forfeiture of such
shares of Restricted Stock. The Committee may require that the
certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the
Participant shall have delivered a stock power, endorsed in
blank, relating to the Shares covered by such Award.
(B) In the case of Restricted Stock Units, no Shares or
other property shall be issued at the time such Awards are
granted. Upon the lapse or waiver of restrictions and the
restricted period relating to Restricted Stock Units (or at such
later time as may be determined by the Committee), Shares or
other cash or property shall be issued to the holder of the
Restricted Stock Units and evidenced in such manner as the
Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates.
(iii)
Forfeiture.
Except as otherwise
determined by the Committee, upon a Participants
termination of employment (as determined under criteria
established by the Committee) during the applicable restriction
period, all applicable Shares of Restricted Stock and Restricted
Stock Units at such time subject to restriction shall be
forfeited and reacquired by the Company; provided, however, that
the Committee may, when it finds that a waiver would be in the
best interest of the Company, waive in whole or in part any or
all remaining restrictions with respect to Shares of Restricted
Stock or Restricted Stock Units.
(d)
Performance Awards.
The Committee is
hereby authorized to grant Performance Awards to Eligible
Individuals subject to the terms of the Plan. A Performance
Award granted under the Plan (i) may be denominated or
payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities,
other Awards or other property and (ii) shall confer on the
holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. Subject to
the terms of the Plan, the performance goals to be achieved
during any performance period, the length of any performance
period, the amount of any Performance Award granted, the amount
of any payment or transfer to be made pursuant to any
Performance Award and any other terms and conditions of any
Performance Award shall be determined by the Committee. The
Committee may, prior to or at the time of the grant, designate
Performance Awards as Qualified Performance-Based Awards, in
which event it shall condition the settlement thereof upon the
attainment of Performance Goals. Performance Awards denominated
in cash that are payable to any individual Participant with
respect to any calendar year will be limited to a maximum of
$7,500,000.
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(e)
Dividend Equivalents.
The Committee
is hereby authorized to grant Dividend Equivalents to Eligible
Individuals under which the Participant shall be entitled to
receive payments (in cash, Shares, other securities, other
Awards or other property as determined in the discretion of the
Committee) equivalent to the amount of cash dividends paid by
the Company to holders of Shares with respect to a number of
Shares determined by the Committee. Subject to the terms of the
Plan, such Dividend Equivalents may have such terms and
conditions as the Committee shall determine.
(f)
Other Stock Grants.
The Committee is
hereby authorized, subject to the terms of the Plan, to grant to
Eligible Individuals Shares without restrictions thereon as are
deemed by the Committee to be consistent with the purpose of the
Plan.
(g)
Other Stock-Based Awards.
The
Committee is hereby authorized to grant to Eligible Individuals,
subject to the terms of the Plan, such other Awards that are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into
Shares), as are deemed by the Committee to be consistent with
the purpose of the Plan. Shares or other securities delivered
pursuant to a purchase right granted under this
Section 6(g) shall be purchased for such consideration,
which may be paid by such method or methods and in such form or
forms (including, without limitation, cash, Shares, other
securities, other Awards or other property or any combination
thereof), as the Committee shall determine, the value of which
consideration, as established by the Committee, shall not be
less than 100% of the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted.
(h)
Tax Offset Bonus.
The Committee may
grant to a Participant, at the time of granting an Award or at
any time thereafter, the right to receive a cash payment in an
amount specified by the Committee, to be paid at such time or
times (if ever) as the Award results in compensation income to
the Participant, for the purpose of assisting the Participant to
pay the resulting taxes, all as determined by the Committee and
on such other terms and conditions as the Committee shall
determine (a Tax Offset Bonus).
(i)
General.
(i)
Consideration for Awards.
Awards may
be granted for no cash consideration or for any cash or other
consideration as determined by the Committee and required by
applicable law.
(ii)
Awards May Be Granted Separately or
Together.
Awards may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem
with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate. Awards granted
in addition to or in tandem with other Awards or in addition to
or in tandem with awards granted under any such other plan of
the Company or any Affiliate may be granted either at the same
time as or at a different time from the grant of such other
Awards or awards.
(iii)
Forms of Payment Under
Awards.
Subject to the terms of the Plan,
payments or transfers to be made by the Company or an Affiliate
upon the grant, exercise or settlement of an Award may be made
in such form or forms as the Committee shall determine
(including cash, Shares, other securities, other Awards or other
property or any combination thereof); provided, however, that
such payments or transfers shall not be in the form of
promissory notes. Such payments or transfers may be made in a
single payment or transfer, in installments or on a deferred
basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may
include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents with
respect to installment or deferred payments.
(iv)
Limits on Transfer of Awards.
No
Award (other than Other Stock Grants) and no right under any
such Award shall be transferable by a Participant otherwise than
by will or by the laws of descent and distribution and the
Company shall not be required to recognize any attempted
assignment of such rights by any Participant; provided, however,
that, if so determined by the Committee, a Participant may, in
the manner established by the Committee, designate a beneficiary
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or beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award
upon the death of the Participant; and provided, further, that,
if so determined by the Committee, a Participant may transfer a
Non-Qualified Stock Option to any Family Member (as such term is
defined in the General Instructions to
Form S-8
(or successor to such Instructions or such Form)) at any time
that such Participant holds such Stock Option, whether directly
or indirectly or by means of a trust or partnership or
otherwise, provided that the Participant may not receive any
consideration for such transfer, the Family Member may not make
any subsequent transfers other than by will or by the laws of
descent and distribution and the Company receives written notice
of such transfer. Except as otherwise determined by the
Committee, each Award or right under any such Award shall be
exercisable during the Participants lifetime only by the
Participant or, if permissible under applicable law, by the
Participants guardian or legal representative. Except as
otherwise determined by the Committee, no Award or right under
any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or
other encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.
(v)
Term of Awards.
Subject to
Section 6(a)(ii) of the Plan, the term of each Award shall
be for such period as may be determined by the Committee.
(vi)
Restrictions.
All Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under
the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may direct
appropriate stop transfer orders and cause other legends to be
placed on the certificates for such Shares or other securities
to reflect such restrictions.
Section 7.
Change
in Control
(a)
Impact of Event.
Notwithstanding any
other provision of the Plan to the contrary, unless otherwise
provided by the Committee in any Award Agreement, in the event
of a Change in Control:
(i) Any Stock Options and Stock Appreciation Rights
outstanding as of the date of such Change in Control, and which
are not then exercisable and vested, shall become fully
exercisable and vested.
(ii) The restrictions and deferral limitations applicable
to any Restricted Stock and Restricted Stock Units shall lapse,
and such Restricted Stock and Restricted Stock Units shall
become free of all restrictions and become fully vested.
(iii) All Performance Awards shall be considered to be
earned and payable in full, and any deferral or other
restriction shall lapse and such Performance Awards shall be
settled in cash or Shares, as determined by the Committee, as
promptly as is practicable.
(iv) All restrictions on other Awards shall lapse and such
Awards shall become free of all restrictions and become fully
vested.
(b)
Definition of Change in Control.
For
purposes of the Plan, a Change in Control shall mean
the happening of any of the following events:
(i) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a Person) of beneficial ownership
(within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(1) the then outstanding shares of common stock of the
Company (the Outstanding Company Common Stock) or
(2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the Outstanding Company Voting
Securities); excluding, however, the following:
(1) Any acquisition directly from the Company, other than
an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself
acquired directly from the Company, (2) Any acquisition by
the Company,
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(3) Any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
entity controlled by the Company, or (4) Any acquisition
pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this
Section 7(b); or
(ii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board
(such Board shall be hereinafter referred to as the
Incumbent Board) cease for any reason to constitute
at least a majority of the Board; provided, however, for
purposes of this Section 7(b), that any individual who
becomes a member of the Board subsequent to the Effective Date,
whose election, or nomination for election by the Companys
shareholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, provided, further, that
any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (Corporate
Transaction); excluding, however, such a Corporate
Transaction pursuant to which (1) all or substantially all
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the Companys assets either directly or through one or
more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(2) no Person (other than the Company, any employee benefit
plan (or related trust) of the Company or such corporation
resulting from such Corporate Transaction) will beneficially
own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting
from such Corporate Transaction or the combined voting power of
the outstanding voting securities of such corporation entitled
to vote generally in the election of directors except to the
extent that such ownership existed prior to the Corporate
Transaction, and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting
from such Corporate Transaction; or
(iv) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Section 8.
Income
Tax Withholding
No later than the date as of which an amount first becomes
includible in the gross income of a Participant for federal
or foreign
income tax purposes with respect to any Award
under the Plan, the Participant shall pay to the Company, or
make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount.
The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and
its Affiliates shall, to the extent permitted by law, be
entitled to take such action and establish such procedures as it
deems appropriate to withhold or collect all applicable payroll,
withholding, income or other taxes from such Participant,
including without limitation withholding applicable tax from
Participants cash compensation paid by the Company or an
Affiliate.
In order to assist a Participant in paying all or
a portion of the federal, state, local and foreign taxes to be
withheld or collected upon exercise or receipt of (or the lapse
of restrictions relating to) an
A-9
Award, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the
Participant to satisfy such tax obligation by (i) electing
to have the Company withhold a portion of the Shares or other
property otherwise to be delivered upon exercise or receipt of
(or the lapse of restrictions relating to) such Award with a
Fair Market Value equal to the amount of such taxes or
(ii) delivering to the Company Shares or other property
other than Shares issuable upon exercise or receipt of (or the
lapse of restrictions relating to) such Award with a Fair Market
Value equal to the amount of such taxes, provided that, in
either case, not more than the legally required minimum
withholding may be settled with Shares. Any such election must
be made on or before the date that the amount of tax to be
withheld is determined.
Section 9.
Amendment
and Termination
(a)
Amendments to the Plan.
The Board may
amend, alter, suspend, discontinue or terminate the Plan at any
time; provided, however, that, notwithstanding any other
provision of the Plan or any Award Agreement, without the
approval of the stockholders of the Company, no amendment,
alteration, suspension, discontinuation or termination shall be
made that, absent such approval:
(i) requires stockholder approval under the rules or
regulations of the New York Stock Exchange, any other securities
exchange or the National Association of Securities Dealers, Inc.
that are applicable to the Company; or
(ii) increases the number of Shares authorized under the
Plan as specified in Section 4(a) of the Plan.
(b)
Amendments to Awards.
The Committee
may waive any conditions of or rights of the Company under any
outstanding Award, prospectively or retroactively. Except as
otherwise provided herein or in an Award Agreement, the
Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively,
if such action would adversely affect the rights of the holder
of such Award, without the consent of the Participant or holder
or beneficiary thereof or such amendment would cause a Qualified
Performance-Based Award to cease to qualify for the
Section 162(m) Exemption.
(c)
Correction of Defects, Omissions and
Inconsistencies.
The Committee may correct any
defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
Section 10.
General
Provisions
(a)
No Rights to Awards.
No Eligible
Individual or other person shall have any claim to be granted
any Award under the Plan, and there is no obligation for
uniformity of treatment of Eligible Individuals or holders or
beneficiaries of Awards under the Plan. The terms and conditions
of Awards need not be the same with respect to any Participant
or with respect to different Participants.
(b)
Award Agreements.
No Participant will
have rights under an Award granted to such Participant unless
and until an Award Agreement shall have been duly executed on
behalf of the Company and, if requested by the Company, signed
by the Participant. In the event that any provision of an Award
Agreement conflicts with or is inconsistent in any respect with
the terms of the Plan as set forth herein or subsequently
amended, the terms of the Plan shall control.
(c)
No Rights of Stockholders.
Except
with respect to Shares of Restricted Stock as to which the
Participant has been granted the right to vote, neither a
Participant nor the Participants legal representative
shall be, or have any of the rights and privileges of, a
stockholder of the Company with respect to any Shares issuable
to such Participant upon the exercise or payment of any Award,
in whole or in part, unless and until such Shares have been
issued in the name of such Participant or such
Participants legal representative without restrictions
thereto.
(d)
No Limit on Other Compensation Plans or
Arrangements.
Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing
in effect other or additional
A-10
compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
(e)
No Right to Employment.
The Plan
shall not constitute a contract of employment, and adoption of
the Plan or the grant of an Award shall not be construed as
giving a Participant the right to be retained as an employee of
the Company or an Affiliate, or a non-employee Director to be
retained as a Director, nor shall it affect in any way the right
of the Company or an Affiliate to terminate such employment at
any time, with or without cause. In addition, the Company or an
Affiliate may at any time dismiss a Participant from employment
free from any liability or any claim under the Plan or any
Award, unless otherwise expressly provided in the Plan or in any
Award Agreement.
(f)
Governing Law.
The Plan and all
Awards granted and actions taken thereunder shall be governed by
and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws
thereof.
(g)
Severability.
If any provision of the
Plan or any Award is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction or would disqualify
the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the
Committee, materially altering the purpose or intent of the Plan
or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Plan or any such
Award shall remain in full force and effect.
(h)
Application to Participants Outside the United
States.
In the event an Award is granted to a
Participant who is employed or providing services outside the
United States and who is not compensated from a payroll
maintained in the United States, the Committee may, in its sole
discretion, modify the provisions of the Plan as they pertain to
such individual to comply with applicable foreign law.
(i)
No Trust or
Fund Created.
Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or
any Affiliate and an Eligible Individual or any other person. To
the extent that any person acquires a right to receive payments
from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured
general creditor of the Company or any Affiliate.
(j)
Other Benefits.
No compensation or
benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such
Participants compensation under any compensation-based
retirement, disability, or similar plan of the Company unless
required by law or otherwise provided by such other plan.
(k)
No Fractional Shares.
No fractional
Shares shall be issued or delivered pursuant to the Plan or any
Award, and the Committee shall determine whether cash shall be
paid in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(l)
Headings.
Headings are given to the
Sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
(m)
Section 16 Compliance; Section 162(m)
Administration.
The Plan is intended to comply in
all respects with
Rule 16b-3
or any successor provision, as in effect from time to time, and
in all events the Plan shall be construed in accordance with the
requirements of
Rule 16b-3.
If any Plan provision does not comply with
Rule 16b-3
as hereafter amended or interpreted, the provision shall be
deemed inoperative. The Board, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan with respect to persons who are
officers or directors subject to Section 16 of the Exchange
Act without so restricting, limiting or conditioning the Plan
with respect to other Eligible Individuals. The Company intends
that all Stock Options and Stock Appreciation Rights granted
under the Plan to individuals who are or who the Committee
believes will be
A-11
Covered Employees will constitute qualified
performance-based compensation within the meaning of
Section 162(m) of the Code.
(n)
Conditions Precedent to Issuance of
Shares.
Shares shall not be issued pursuant to
the exercise or payment of the Exercise Price or purchase price
relating to an Award unless such exercise or payment and the
issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended from time to
time, the Exchange Act, the rules and regulations promulgated
thereunder, the requirements of any applicable stock exchange
and the Delaware General Corporation Law. As a condition to the
exercise or payment of the Exercise Price or purchase price
relating to such Award, the Company may require that the person
exercising or paying the Exercise Price or purchase price
represent and warrant that the Shares are being purchased only
for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the
Company, such a representation and warranty is required by law.
(o)
Conformance to Section 409A of the
Code.
To the extent that any Performance Awards
otherwise constitute deferred compensation subject to
Section 409A of the Code, the acceleration of the payment
of such awards upon a Change in Control of the Company as
provided under the Plan shall occur only if the Change in
Control satisfies the definition in effect under
Section 409A of the Code, as determined in the good-faith
opinion of the Committee. Furthermore, to the extent that any
other payment under the Plan is considered to be deferred
compensation subject to Section 409A of the Code, if the
provisions of the plan fail to satisfy the requirements of
Section 409A(2), (3) or (4) of the Code with
respect to such payment, such provisions shall be applied in
operation in a manner that, in the good-faith opinion of the
Committee, bring the provision into compliance with those
requirements while preserving as closely as possible the
original intent of the provision. The Company (including any
successor) shall provide subsequent amendments to the Plan if
and as necessary to conform the terms of the Plan to any such
operational modifications with the intent being to adopt all
necessary amendments by December 31, 2006, or such other
date required under guidance issued under Section 409A of
the Code.
Section 11.
Effective
Date of Plan
Upon its adoption by the Board, the Plan shall be submitted for
approval by the stockholders of the Company and shall be
effective as of the date of such approval (the Effective
Date).
Section 12.
Term
of the Plan
The Plan will terminate on the tenth anniversary of the
Effective Date or any earlier date of discontinuation or
termination established pursuant to Section 9 of the Plan.
However, unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award theretofore granted may
extend beyond such date, and the authority of the Committee
provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board to amend the Plan, shall extend
beyond the termination of the Plan.
A-12
LOCATION
OF PIPER JAFFRAY COMPANIES ANNUAL MEETING OF SHAREHOLDERS
Wednesday,
May 7, 2008, at 3:30 p.m.
The Huber Room in our Minneapolis Headquarters
12th Floor, U.S. Bancorp Center
800 Nicollet Mall
Minneapolis, MN 55402
Beneficial owners of common stock held in street name by a
broker, bank, trust or other nominee may need proof of ownership
to be admitted to the meeting. A brokerage statement or letter
from the broker, bank, trust or other nominee are examples of
proof of ownership.
ANNUAL MEETING OF
SHAREHOLDERS
Wednesday,
May 7, 2008
3:30 p.m.
(Central Daylight Time)
Piper Jaffray Companies
The Huber Room in our Minneapolis Headquarters
12th Floor, U.S. Bancorp Center
800 Nicollet Mall
Minneapolis, MN 55402
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting to be held on May 7, 2008:
The Notice and Proxy Statement and Annual Report are available at www.piperjaffray.com/proxymaterials.
PIPER JAFFRAY
COMPANIES
PROXY FOR THE 2008
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I appoint James L.
Chosy and Thomas P. Schnettler, together and separately, as proxies to vote all
shares of common stock that I have power to vote at the annual meeting of
shareholders to be held on May 7, 2008 in Minneapolis, Minnesota, and at
any adjournment or postponement thereof, in accordance with the instructions on
the reverse side of this card and with the same effect as though I were present
in person and voting such shares. The proxies are authorized in their discretion
to vote upon such other business as may properly come before the meeting and
they may name others to take their place.
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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 and dated on reverse side)
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800 NICOLLET MALL, SUITE 800
MAIL STOP J09N05
MINNEAPOLIS,
MN 55402
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VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions
and for electronic delivery of information until 11:59 p.m. Eastern
Daylight Time on Tuesday, May 6, 2008. 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.
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ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER
COMMUNICATIONS
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If you would like to reduce the costs incurred by Piper
Jaffray Companies 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 shareholder
communications electronically in future years.
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VOTE BY PHONE - 1-800-690-6903 (from the U.S.
and Canada)
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Use any touch-tone telephone to transmit your voting
instructions until 11:59 p.m. Eastern Daylight Time on Tuesday, May 6,
2008. Have your proxy card in hand when you call and then follow the
instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy card and return it in
the postage-paid envelope we have provided or return it to Piper Jaffray
Companies, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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IF YOU VOTE BY PHONE OR INTERNET,
PLEASE
DO NOT MAIL YOUR PROXY CARD
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS:
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PIPER1
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND
RETURN THIS PORTION ONLY
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THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED.
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PIPER JAFFRAY COMPANIES
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For
All
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Withhold
All
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For
All
Except
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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 A
VOTE
FOR
PROPOSALS 1, 2 AND 3.
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Vote on Directors
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1.
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Election of
Directors:
01) Michael R. Francis
02) Addison L. Piper
03)
Lisa K. Polsky
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Vote on
Proposals
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For
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Against
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Abstain
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2. Ratification of
the selection of Ernst & Young LLP as the independent auditor for the
year ended December 31, 2008.
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3. Approval of the Amended and Restated 2003 Annual and Long-Term Incentive Plan.
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This proxy will be
voted as directed. If no direction is made, it will be voted
"
FOR
" Proposals 1, 2 and 3.
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PLEASE SIGN
exactly as name appears hereon. Joint owners each should sign. Executors,
administrators, trustees, etc. should so indicate when signing. If signer
is a corporation, please sign full name by duly authorized
officer.
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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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Yes
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No
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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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Date
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[E-mail notice regarding electronic delivery of proxy materials sent by Broadridge Financial
Solutions, Inc. to Piper Jaffray Companies employee-shareholders and to non-employee shareholders
who have elected to receive proxy materials by electronic delivery]
PROXYVOTE.COM
You are receiving this e-mail because you are either an employee- shareholder of Piper Jaffray
Companies, with access to company e-mail, or you are a non-employee shareholder who previously
elected to receive your proxy card and other proxy materials by
electronic delivery. You will not receive a proxy card or other proxy
materials by mail. Instead, this e-mail
contains instructions on how to access the 2007 Annual Report to Shareholders and the 2008 Proxy
Statement for Piper Jaffray Companies and how to vote shares via the Internet.
Please read the instructions carefully before proceeding.
This is a NOTIFICATION of the:
Piper Jaffray Companies 2008 Annual Meeting of Shareholders
RECORD DATE: March 10, 2008
MEETING DATE: May 7, 2008
CUSIP NUMBER:
CONTROL NUMBER:
This e-mail represents all shares in the following account(s):
Please review the Piper Jaffray Companies 2007 Annual Report to Shareholders and 2008 Proxy
Statement before voting. The Proxy Statement discusses the proposals to be voted on, information
about the annual meeting and voting, and other information about the company. You can view the
Piper Jaffray Companies 2007 Annual Report to Shareholders and 2008 Proxy Statement and enter your
voting instructions at the following site. If your browser supports secure transactions you will be
automatically directed to a secure site.
www.proxyvote.com
Note: If your e-mail software supports it, you can simply click on the above link.
To view the documents below, you may need the Adobe Acrobat Reader. To download the Adobe Acrobat
Reader, click the URL address below:
http://www.adobe.com/products/acrobat/readstep2.html
The relevant supporting documentations can also be found at the following Internet site(s):
Annual Report
Notice of Proxy Statement
To access ProxyVote.com, you will need your four digit PIN:
-
Your PIN is the last four digits of your Social Security number
- If you have forgotten your PIN number, please follow the instructions on www.proxyvote.com
Internet voting is accepted up to 11:59 p.m. (EDT) the day before the meeting.
If you would like to cancel your enrollment, or change your e-mail address or PIN, please go to
http://www.InvestorDelivery.com. You will need the enrollment number below, and your four-digit
PIN. If you have forgotten your PIN, you can have it sent to your enrolled e-mail address by going
to http://www.InvestorDelivery.com
Your InvestorDelivery Enrollment Number is:
There are no charges for this service. There may be costs associated with electronic access, such
as usage charges from Internet access providers and telephone companies, which must be borne by the
shareholder.
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