UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
Filed
by the Registrant
S
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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£
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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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S
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Definitive
Proxy Statement
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£
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Definitive
Additional Materials
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£
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Soliciting
Material Pursuant to §240.14a-12
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Tier
Technologies, Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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No
fee required.
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£
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Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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£
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Fee
paid previously with preliminary materials.
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£
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Check
box if any part of the fee is offset as provided by Exchange
Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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TIER
TECHNOLOGIES, INC.
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Deanne
M. Tully
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10780
Parkridge Boulevard
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Corporate
Secretary
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Reston,
Virginia 20191
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January
15, 2008
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Dear
Stockholder:
You
are
invited to attend the Annual Meeting of Stockholders of Tier Technologies,
Inc.
on February 28, 2008 at 2:00 p.m. Eastern Time at Tier’s headquarters located at
10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191.
At
the
annual meeting, stockholders will elect directors and vote on the ratification
of the selection of Tier's independent registered public accounting
firm. We will also report on Tier's business. Stockholders
will have an opportunity to ask relevant questions.
Only
stockholders of record at the close of business on January 3, 2008 are
entitled to notice of, to attend, and to vote at the annual
meeting.
Your
vote is important to us. I encourage you to sign and return the
accompanying proxy card in the postage-paid envelope or vote by telephone or
via
the Internet prior to the annual meeting, so that your shares of common stock
will be represented and voted at the annual meeting even if you cannot
attend.
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By
Order of the Board of Directors,
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Deanne
M. Tully
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Secretary
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Reston,
Virginia
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January
15, 2008
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TIER
TECHNOLOGIES, INC.
10780
Parkridge Boulevard, Suite 400
Reston,
Virginia 20191
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
OF
TIER TECHNOLOGIES, INC.
TIME:
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2:00
p.m. Eastern Time on Thursday, February 28, 2008.
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PLACE:
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Tier
Technologies, Inc. corporate headquarters, 10780 Parkridge Boulevard,
Suite 400, Reston, Virginia 20191.
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ITEMS
OF BUSINESS:
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(1) To
elect six directors;
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(2)
To ratify the selection of McGladrey & Pullen, LLP as our independent
registered public accounting firm for fiscal year ending
September 30, 2008; and
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(3) To
transact other business properly coming before the
meeting.
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WHO
CAN VOTE:
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You
can vote if you were a stockholder of record on January 3,
2008.
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2007
ANNUAL REPORT:
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We
are making available a copy of the 2007 annual report to stockholders
at
www.investorEconnect.com. To view the material, enter the
12-digit control number, which appears on the notice of Internet
availability of proxy materials.
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DATE
OF AVAILABILITY:
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We
are first making available this notice, the proxy statement, and
the
accompanying proxy card to stockholders on or about January 15, 2008
at www.investorEconnect.com. To view the material, enter the
12-digit control number, which appears on the notice of Internet
availability of proxy materials.
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Deanne
M. Tully
Corporate
Secretary
January
15, 2008
Table
of Contents
GENERAL
INFORMATION
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1
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1.
WHEN AND WHERE IS THE ANNUAL MEETING?
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1
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2.
WHY AM I BEING PROVIDED THESE MATERIALS?
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1
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3.
WHAT PROPOSALS ARE BEING PRESENTED FOR STOCKHOLDER VOTE AT THE ANNUAL
MEETING?
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1
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4.
WHAT OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING?
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1
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5.
WHO WILL BEAR THE COST OF HTE SOLICITING VOTES FOR THE ANNUAL
MEETING?
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2
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VOTING
MECHANICS
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2
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6.
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
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2
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7.
WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?
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2
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8.
HOW CAN I VOTE MY SHARES OF COMMON STOCK
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2
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9.
HOW CAN I REVOKE A PROXY OR CHANGE MY VOTING INSTRUCTIONS?
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2
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10.
WHAT IF I DO NOT SPECIFY A VOTE FOR A PROPOSAL WHEN RETURNING A
PROXY?
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3
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VOTING
INFORMATION
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3
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11.
WHAT ARE THE VOTING CHOICES WHEN VOTING ON ITEM 1, THE ELECTION OF
DIRECTORS?
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3
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12.
WHAT VOTE IS NEEDED TO ELECT THE DIRECTORS?
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3
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13.
WHAT ARE THE VOTING CHOICES WHEN VOTING ON ITEM 2, THE RATIFICATION
OF
THE SELECTION OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM?
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3
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14.
WHAT VOTE IS NEEDED TO RATIFY THE SELECTION OF MCGLADREY & PULLEN, LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM?
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3
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15.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
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3
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STOCK
OWNERSHIP
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4
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CORPORATE
GOVERNANCE MATTERS
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5
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MEETING
AND
COMMITTEES OF THE BOARD OF DIRECTORS
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7
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PROPOSAL
ONE:
ELECTION OF DIRECTORS
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8
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COMPENSATION
COMMITTEE REPORT
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10
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COMPENSATION
DISCUSSION AND ANALYSIS
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10
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EXECUTIVE
COMPENSATION
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19
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SUMMARY
COMPENSATION TABLE
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20
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FISCAL
2007 GRANTS OF PLAN-BASED AWARDS
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21
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OUTSTANDING
EQUITY AWARDS AT 2007 FISCAL YEAR-END
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22
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FISCAL
2007 OPTION EXERCISES AND STOCK VESTED
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24
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DIRECTOR
COMPENSATION
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27
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REPORT
OF THE
AUDIT COMMITTTEE OF THE BOARD OF DIRECTORS
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28
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PRINCIPAL
ACCOUNTING FEES AND SERVICES
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29
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PROPOSAL
TWO:
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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29
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THE
BOARD OF
DIRECTORS RECOMMENDS A VOTE IN FAVOR TO PROPOSAL TWO
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29
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OTHER
MATTERS
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30
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ADDITIONAL
INFORMATION
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30
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TIER
TECHNOLOGIES, INC.
10780
Parkridge Boulevard, Suite 400
Reston,
Virginia 20191
PROXY
STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON FEBRUARY 28, 2008
GENERAL
INFORMATION
1
.
WHEN
AND WHERE IS THE ANNUAL MEETING?
The
Annual Meeting of Stockholders of Tier Technologies, Inc. will be held on
February 28, 2008 at 2:00 p.m. Eastern Time, at Tier’s headquarters located at
10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191.
2. WHY
AM I BEING PROVIDED THESE MATERIALS?
The
Board of Directors, or Board, is soliciting your proxy for use at the Annual
Meeting of Stockholders of Tier Technologies, Inc. or at any adjournment or
postponement of the annual meeting. The Board is providing these
proxy solicitation materials to give you information for use in determining
how
to vote in connection with the annual meeting.
We
are
making this proxy statement and related proxy materials available on the
Internet. We mailed a notice of Internet availability of proxy
materials on or about January 15, 2008, to all stockholders of record
entitled to vote at the annual meeting.
We
first made available the proxy solicitation materials at
www.proxyvote.com
on or around January 15, 2008 to all stockholders
entitled to vote at the annual meeting. You may also request a
printed copy of the proxy solicitation materials by any of the following
methods: via Internet at
www.investorEconnect.com
; by telephone at
1-800-579-1639; or by sending an e-mail to
sendmaterial@investorEconnect.com
. Our 2007 annual report to
stockholders was made available at the same time and by the same
methods.
3. WHAT
PROPOSALS ARE BEING PRESENTED FOR STOCKHOLDER VOTE AT THE ANNUAL
MEETING?
Two
proposals are scheduled for voting at the annual meeting:
ITEM
1. Election of Directors:
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ITS NOMINEES: CHARLES
W. BERGER, SAMUEL CABOT III, JOHN J. DELUCCA, MORGAN P. GUENTHER, RONALD L.
ROSSETTI, AND JAMES R. STONE, FOR SERVICE IN THE ENSUING YEAR AND UNTIL
SUCCESSORS ARE ELECTED.
You
can
find information about the Board's nominees, as well as information about the
Board, its committees, and other related matters, beginning on page
7. Information regarding director compensation can be found on page
27.
ITEM
2. Ratification of Selection of McGladrey & Pullen,
LLP:
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO RATIFY THE SELECTION OF MCGLADREY
& PULLEN, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 2008.
You
can
find information about Tier's relationship with McGladrey & Pullen, LLP
beginning on page 29.
4. WHAT
OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING?
We
do
not know of any other matters that will come before the stockholders at the
annual meeting. The Chairman of the annual meeting may refuse to
allow presentation of a proposal or a nomination for the Board from the floor
of
the annual meeting if the proposal or nomination was not properly
submitted. The requirements for properly submitting proposals and
nominations from the floor of the annual meeting were described in our proxy
statement for fiscal year 2006 and are similar to those described on
page 30 for next year's meeting.
5. WHO
WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL
MEETING?
We
will
bear the entire cost of the solicitations of proxies, including preparation,
assembly, printing and mailing of the notice of Internet availability of proxy
materials, this proxy statement, the proxy card and any additional information
furnished to stockholders. In addition to the use of mail, some of
our directors, officers and regular employees may solicit proxies by telephone
and will request banks, brokerage houses, fiduciaries and custodians to forward
soliciting material to the beneficial owners of common stock held of record
by
such persons. We will reimburse persons representing beneficial
owners of common stock for their costs of forwarding solicitation material
to
such beneficial owners. No additional compensation will be paid to
our directors, officers or regular employees for such services.
VOTING
MECHANICS
6. WHO
IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
Only
holders of record of shares of our common stock at the close of business on
January 3, 2008, or the record date, are entitled to vote at the annual
meeting, or at adjournments or postponements of the annual
meeting. As of the record date there were 19,544,454 shares of our
common stock outstanding and entitled to vote.
Each
share of common stock is entitled to one vote for each matter to be voted on
at
the annual meeting. The holders of a majority of the shares of common
stock outstanding and entitled to vote at the annual meeting will constitute
a
quorum for the transaction of business at the annual
meeting. Abstentions and broker non-votes will be counted towards a
quorum, but will not be counted in determining whether a proposal is
approved.
7. WHAT
IS THE RECORD DATE AND WHAT DOES IT MEAN?
The
record date is January 3, 2008. Holders of common stock at the
close of business on the record date are entitled to receive notice of the
meeting and to vote at the meeting and any adjournments or postponements of
the
meeting.
8. HOW
CAN I VOTE MY SHARES OF COMMON STOCK?
There
are four ways to vote:
·
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Telephone:
Call
1-800-690-6903 from any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day before the
cut-off
or meeting date. Have your 12-digit control number, which
appears on your proxy card, available when you call, then follow
the
instructions;
OR
|
·
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Mail:
Mark,
sign and date your proxy card and return it to: Tier Technologies,
Inc.,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717;
OR
|
·
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In-Person:
Mark,
sign and date your proxy card and submit it during the 2008 Annual
Meeting
of Stockholders on February 28, 2008 at 2:00 p.m. Eastern Time;
OR
|
·
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Interne
t:
Go
to
www.proxyvote.com
to use the Internet to transmit your voting
instructions and for electronic delivery of information up until
11:59
P.M. Eastern Time the day before the cut-off date or meeting
date. Have your 12-digit control number, which appears on your
proxy card, available when you access the web site and follow the
instructions to vote.
|
If
you
deliver a properly executed written proxy, or submit a properly completed proxy
by telephone or by Internet, that proxy will be voted at the annual meeting
in
accordance with the directions given in the proxy, unless you revoke the proxy
before the annual meeting. The proxies also may be voted at any
adjournments or postponements of the annual meeting.
If
you
want to cumulate your votes you must do so in writing with a proxy card or
in
person at the annual meeting. To receive a proxy card you may request
one in accordance with the notice of Internet availability of proxy materials
at
www.investorEconnect.com
.
9. HOW
CAN I REVOKE A PROXY OR CHANGE MY VOTING INSTRUCTIONS?
You
can
revoke a proxy before the close of voting at the annual meting by:
·
|
Giving
written notice to Tier's Corporate Secretary located at 10780 Parkridge
Boulevard, Suite 400, Reston, Virginia
20191;
|
·
|
Submitting
a new proxy card bearing a date later than your last proxy
card;
|
·
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Following
the instructions for Internet proxy authorization that appear on
the proxy
card;
|
·
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Following
the instructions that appear on the proxy card for proxy authorization
by
telephone; or
|
·
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Attending
the annual meeting and voting in person. Attendance at the
annual meeting will not, by itself, revoke a
proxy.
|
10. WHAT
IF I DO NOT SPECIFY A VOTE FOR A PROPOSAL WHEN RETURNING A
PROXY?
You
should specify your vote for each proposal on the proxy
card. However, if you give no specific
instructions, but sign and return the proxy card, your shares will be voted
for all proposals.
VOTING
INFORMATION
11. WHAT
ARE THE VOTING CHOICES WHEN VOTING ON ITEM 1, THE ELECTION OF
DIRECTORS?
Stockholders
may:
·
|
Vote
FOR (in favor of) all nominees;
|
·
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WITHHOLD
votes from all nominees; or
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·
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WITHHOLD
votes from specific nominees.
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12. WHAT
VOTE IS NEEDED TO ELECT THE DIRECTORS?
Directors
will be elected by the affirmative vote of a plurality of votes cast by
stockholders entitled to vote on
the
matter, which means that the six director nominees with the
highest number of affirmative votes will be
elected. As
a result, if you WITHHOLD authority to vote for a nominee, your vote will not
be
counted in
determining
the outcome of the election of directors.
Stockholders
have the right to cumulate their votes and give one nominee the number of votes
equal to the
number
of directors to be elected (six) multiplied by the number of votes entitled
to
be cast by such
stockholder
at the annual meeting or to distribute such votes among the nominees as they
see
fit. Stockholders
may cumulate their votes by giving instructions on the enclosed form of proxy
as
to how the
votes
are to be cumulated or by voting in person at the annual
meeting. Proxies (including but not limited to
proxies
that indicate no voting instructions) will grant the persons named in the
enclosed proxy card
discretionary
authority to cumulate votes in connection with the election of directors, except
that votes may
not
be cast for the election of any individual to the extent that authority to
vote
has been withheld as to such
individual
and except to the extent that specific instructions have been given as to
cumulative voting. If and to
the
extent that voting authority is withheld with regard to a particular nominee
or
nominees, the proxy holders
may,
in their discretion, cumulate the withheld votes in favor of other nominees,
and
if different specific
instructions
are given, the specific instructions will be followed.
If
you want to cumulate your votes you must do so in writing with a proxy card
or
in person at the annual
meeting. To
receive a proxy card you may request one in accordance with the notice of
Internet availability of
proxy
materials at www.investorEconnect.com.
13. WHAT
ARE THE VOTING CHOICES WHEN VOTING ON ITEM 2, THE RATIFICATION OF THE
SELECTION OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM?
Stockholders may:
·
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Vote
FOR (in favor of) the ratification;
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·
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Vote
AGAINST the ratification; or
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·
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ABSTAIN
from voting on the ratification.
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14. WHAT
VOTE IS NEEDED TO RATIFY THE SELECTION OF MCGLADREY & PULLEN, LLP AS
OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM?
The
selection of the independent registered public accounting firm will be ratified
by the affirmative vote of a majority of the shares voting on the
matter.
15. HOW
MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
A
majority of the shares of common stock outstanding and entitled to vote at
the
annual meeting that either present in person or represented by proxy will
constitute a quorum for the annual meeting. Abstentions and broker
non-votes are included in determining the number of votes present, but will
not
be counted in determining whether a proposal is approved.
STOCK
OWNERSHIP
Directors
and Executive Officers
The
following table sets forth certain information regarding the ownership of our
common stock as of January 3, 2008 by: (i) each director and director
nominee; (ii) each of the named executive officers (as set forth in the Summary
Compensation Table); and (iii) all executive officers and directors of Tier
as a
group. Unless otherwise indicated, beneficial ownership is direct and
the person indicated has sole voting and investment power.
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Common
stock beneficially owned
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Name
of beneficial owner
(1)
|
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Number
of shares
|
|
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Number
of shares exercisable within
60
days
(2)
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Percent
of class
(3)
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Ronald
L. Rossetti
|
|
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435,024
|
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420,000
|
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2.2
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%
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Samuel
Cabot III
|
|
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199,810
|
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180,000
|
|
|
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1.0
|
%
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Michael
A. Lawler
|
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169,704
|
|
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38,000
|
|
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*
|
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Morgan
P. Guenther
|
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131,000
|
|
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130,000
|
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*
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Charles
W. Berger
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120,000
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120,000
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*
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T.
Michael Scott
|
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104,000
|
|
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100,000
|
|
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*
|
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Bruce
R. Spector
|
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83,333
|
|
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83,333
|
|
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*
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Kevin
Connell
|
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60,800
|
|
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60,800
|
|
|
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*
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David
E. Fountain
|
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38,000
|
|
|
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38,000
|
|
|
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*
|
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Deanne
M. Tully
|
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37,000
|
|
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35,000
|
|
|
|
*
|
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John
J. Delucca
|
|
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20,000
|
|
|
|
20,000
|
|
|
|
*
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James
R. Stone
|
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18,337
|
|
|
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18,337
|
|
|
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*
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Todd
F. Vucovich
|
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18,001
|
|
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18,001
|
|
|
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*
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Steven
M. Beckerman
|
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18,000
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|
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18,000
|
|
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*
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All
directors, nominees and executive officers as a group (13 persons)
(4)
|
|
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1,435,008
|
|
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1,261,470
|
|
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7.3
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%
|
*
Less than 1%
|
|
(1)
Address: 10780 Parkridge Blvd, Suite 400, Reston, Virginia
20191.
|
|
(2)
Number
of
shares underlying options exercisable on or before March 3,
2008.
|
|
(3
)
Percent of ownership calculated
by dividing number of shares owned by directors, nominees and executive
officers by 19,544,454 shares outstanding on January 3,
2008.
|
|
(4)
Mr.
Vucovich's employment with us
terminated on January 2, 2008. As such, he is not included in the
calculation of the "All directors, nominees and executive officers
as a
group" line.
|
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, or the Exchange Act, requires
our
directors and executive officers, and persons who beneficially own more than
ten
percent of our common stock, to file with the Securities and Exchange
Commission, or the SEC, initial reports of beneficial ownership and reports
of
changes in beneficial ownership of our common stock. Officers,
directors and holders of greater than ten percent of our common stock are
required by SEC regulations to furnish us with copies of all Section 16(a)
forms
they file. To our knowledge, based solely on a review of copies of
such reports furnished to us and written representations that no other reports
were required, during the fiscal year ended September 30, 2007, our
officers, directors and greater than ten percent beneficial owners complied
with
all Section 16(a) filing requirements.
The
following table lists certain persons known by Tier to own beneficially more
than five percent of Tier's outstanding shares of common stock as of
January 3, 2008.
Name
of beneficial owner
|
|
Amount
and nature of beneficial ownership
|
|
|
Percent
of class
|
|
Heartland
Advisors, Inc.
(1)
|
|
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2,863,630
|
|
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14.7
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%
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Wells
Fargo & Company
(2)
|
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2,085,452
|
|
|
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10.7
|
%
|
Dimensional
Fund Advisors
(3)
|
|
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1,790,220
|
|
|
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9.2
|
%
|
Potomac
Capital Management LLC
(4)
|
|
|
1,718,965
|
|
|
|
8.8
|
%
|
Giant
Investment, LLC
(5)
|
|
|
1,548,712
|
|
|
|
7.9
|
%
|
Peninsula
Capital Management
(6)
|
|
|
1,087,800
|
|
|
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
(1)
Address: 789
North Water Street, Milwaukee, Wisconsin 53202. Based solely on
information contained in a Schedule 13G filed with the SEC by
Heartland Advisors, Inc. on February 9, 2007. This table
reflects the shares of common stock owned by Heartland Adivsors,
Inc. as
of December 31, 2006.
|
(2)
Based
solely on information contained in a Schedule 13G filed with the
SEC on
September 10, 2007 by Wells Fargo & Company and its subsidiary, Wells
Capital Management Incorporated. The address for Wells Fargo
& Company is 420 Montgomery Street, San Francisco, California
94104. The address for
Wells Capital Management Incorporated is 525 Market Street, San Francisco,
California 94105. This table reflects the shares of common
stock owned by
Wells Fargo & Company and Wells Capital Management Incorporated as of
September 10, 2007.
|
(3)
Address: 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401. Based solely on information contained
in a Schedule 13G filed with the SEC by
Dimensional Fund Advisors Inc. on February 1, 2006. This table
reflects the shares of common stock owned by Dimensional Fund Advisors
Inc. on
December 31, 2006.
|
(4)
Address: 825
Third Avenue, 33
rd
Floor, New
York, New York 10022. Based solely on information contained in
a Schedule 13G filed with the SEC by Potomac
Capital Management LLC, Potomac Capital Management Inc. and Paul
J.
Solit on February 15, 2007. This table reflects the shares of
common stock owned
by Potomac Capital Management LLC, Potomac Capital Management Inc.
and
Paul J. Solit as of February 15, 2007.
|
(5)
Address: 265
Franklin Street, 18
th
Floor,
Boston, Massachusetts 02110. Based solely on information
contained in a Schedule 13D filed with the SEC by Giant
Investments, LLC on October 3, 2007. Parthenon Investors II,
LP, is a managing member of Giant Investment, LLC, PCap
Partners II, LLC is a general
partner of Parthenon Investors II, LP, and PCap II, LLC is a managing
member of PCap Partners II, LLC. As parents of Giant Investment,
LLC,
Parthenon
Investors II, LP, PCap Partners II, LLC, and PCap II, LLC may be
deemed to
beneficially own their proportional interest in the shares of common
stock
directly and beneficially owned by Giant Investment, LLC, comprising
1,504,883 shares of common stock. In addition, John C.
Rutherford and Ernest K.
Jacquet are control persons of various entities indirectly investing
in
Giant Investment, LLC and may be deemed to beneficially own a proportional
interest in
the shares of common stock owned by Giant Investment, LLC, comprising
1,548,712 shares of common stock.
|
(6)
Address: 235 Pine Street, Suite 1818, San
Francisco, California 94104. Based solely on information
contained in a Schedule 13G filed with the SEC by
Peninsula Capital Management, LP and Scott Bedford on March 6,
2007. This table reflects the shares of common stock owned by
Peninsula Capital
Management, LP and Scott Bedford as of February 28,
2007.
|
CORPORATE
GOVERNANCE MATTERS
Corporate
Governance Documents
In
November 2003, the Board adopted a Code of Ethics for our Chief Executive
Officer, Chief Financial Officer and persons performing similar
functions. Effective May 3, 2004, we also adopted a Business
Code of Conduct for all employees. Our Code of Ethics and our
Business Code of Conduct are posted on our website at:
http://www.tier.com
.
Under
NASDAQ rules, a director will only qualify as an "independent director" if,
in
the opinion of our Board, the person does not have a relationship that would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director. Our Board determined that Messrs.
Berger, Cabot, Delucca, Guenther, Scott, Spector or Stone do not have a
relationship which would interfere with the exercise of independent judgment
in
carrying the responsibilities of a director and that each of these directors
is
an "independent director" as defined under Rule 4200(a)(15) of the NASDAQ Stock
Market, Inc. Marketplace Rules.
Audit
Committee Financial Expert
The
Board determined that at least one member of the Audit Committee, Charles.
W.
Berger, is an "audit committee financial expert" as defined in Item 407(d)(5)
of
Regulation S-K, promulgated by the SEC.
Executive
Sessions of Non-Management Directors
At
each
regularly scheduled meeting of the Board, time is set aside for the
non-management directors to meet in an executive session without management
present.
Communication
with Directors
Stockholders
may communicate directly with the Board members by writing to: Tier
Technologies, Inc., Board of Directors, c/o Corporate Secretary, 10780 Parkridge
Boulevard, Suite 400, Reston, Virginia 20191. Each communication
should specify the individual or group to be contacted. We will
receive and review the communications before distributing them to the specified
individual or group. Generally, we will not forward stockholder
communications to directors that relate to an improper or irrelevant topic,
or
which request general information about Tier. All other stockholder
communications will be forwarded to the director or directors to whom they
are
addressed.
Nomination
of Director Candidates
The
Governance and Nominating Committee will consider director nominees proposed
by
stockholders by following the same process, and applying the same criteria,
as
it follows for candidates submitted by others. Stockholders can
recommend an individual for directorship consideration by submitting the name
of
the individual for consideration together with appropriate biographical
information and background materials and a statement as to whether the
stockholder or group of stockholders making the recommendation has beneficially
owned more than 5% of our common stock for at least a year as of the date such
recommendation is made. The information should be submitted to the
Governance and
Nominating
Committee, c/o Corporate Secretary, Tier Technologies, Inc., 10780 Parkridge
Boulevard, Suite 400, Reston, Virginia 20191.
Pursuant
to our bylaws, stockholders of record on the date of the notice described in
this section and on the record date for the determination of stockholders
entitled to vote at the meeting have the right to nominate director candidates,
without any action or recommendation on the part of the Governance and
Nominating Committee or the Board, only if timely written notice in proper
form
of the intent to make a nomination at a meeting of stockholders is received
by
our corporate secretary at: Tier Technologies, Inc., c/o Corporate
Secretary, 10780 Parkridge Boulevard, Suite 400, Reston, Virginia
20191. To be timely under the bylaws, the notice generally must be
delivered not less than 60 nor more than 90 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that less than 70 days notice or prior public disclosure of the date of the
annual meeting is given or made to stockholders, notice by the stockholders
in
order to be timely must be so received not later than the close of business
on
the 10
th
day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs. To be in proper form, the notice must contain
prescribed information about the proponent and each nominee, including such
information about each nominee and proponent as would be required to be included
in a proxy statement made in connection with solicitation of proxies for
elections of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder.
In
evaluating director candidates, including current members of the Board eligible
for re-election, the Governance and Nominating Committee considers many factors,
including the current size and composition of the Board and its committees;
a
candidate's understanding of marketing, finance, sales and technology, and
of
our business and technology; and such other factors as the Governance and
Nominating Committee may deem appropriate. The Governance and
Nominating Committee requires that any director candidate satisfy the following
minimum qualifications:
·
|
financial
literacy, demonstrated reputation for integrity, and the ability
to
exercise sound business judgment;
|
·
|
high
personal and professional ethics;
|
·
|
understanding
of the fiduciary responsibilities required as a member of the Board
and
the commitment, time and ability to meet these responsibilities;
and
|
·
|
expansive
professional background providing a comprehensive understanding of
our
technology, technology development, finance, sales and
marketing.
|
Certain
Relationships and Related Transactions
Related
Person Transaction Policy
The
Board has adopted a written policy and procedures for review, approval and
ratification of transactions involving Tier and "related
persons". Related persons include Tier's executive officers,
directors, 5% or more beneficial owners of our common stock, immediate family
members of these persons and entities in which one of these persons has a direct
or indirect material interest. The policy covers any related person
transaction exceeding $50,000 in which a related person had or will have a
direct or indirect material interest.
Policies
and Procedures for Review, Approval or Ratification of Related Person
Transactions
·
|
Any
related person transaction proposed to be entered into by Tier must
be
reported to our General Counsel.
|
·
|
The
Governance and Nominating Committee shall review and approve all
related
person transactions, prior to effectiveness or consummation of the
transaction, whenever practicable.
|
·
|
If
the General Counsel determines that advance approval of a related
person
transaction is not practicable under the circumstances, the Governance
and
Nominating Committee shall review and, in its discretion, may ratify
the
related person transaction at the next Governance and Nominating
Committee
meeting, or at the next meeting following the date that the related
person
transaction comes to the attention of the General Counsel; provided,
however, that the General Counsel may present a related person transaction
arising in the time period between meetings of the Governance and
Nominating Committee to the Chair of the Governance and Nominating
Committee, who shall review and may approve the related person
transaction, subject to ratification by the Governance and Nominating
Committee at the next meeting.
|
·
|
Previously
approved transactions of an ongoing nature shall be reviewed by the
Governance and Nominating Committee annually to ensure that such
transactions have been conducted in accordance with the previous
approval
granted by the Governance and Nominating Committee, if any, and that
all
required disclosures regarding the related person transaction are
made.
|
Standards
for Review, Approval or Ratification of Related Person
Transaction
The
Committee reviews, approves or ratifies a related party transaction primarily
based on the following standards:
·
|
the
related person's interest in the transaction, the dollar value of
the
amount involved and the dollar value of the amount of the related
person's
interest, without regard to profit or
loss;
|
·
|
whether
the transaction was undertaken in the ordinary course of
business;
|
·
|
whether
the transaction with the related person is proposed to be, or was,
entered
into on terms no less favorable to us than terms that could have
been
reached with an unrelated third party;
and
|
·
|
the
purpose of, and potential benefits to us of, the
transaction.
|
MEETING
AND COMMITTEES OF THE BOARD OF
DIRECTORS
During
fiscal year 2007, the Board held eleven meetings. Each director
attended at least 75% of the meetings of the Board and any committees on which
he served, held during the period in which he was a director or committee
member. Directors may attend the annual meeting, but are not
obligated to do so. Mr. Rossetti was the only director who attended
last year's annual meeting. Committee functions and members are as
follows:
Audit
Committee
|
Number
of Members:
3
|
Functions:
|
Members:
|
Selects
the independent registered public accounting firm to audit Tier's
books
and records, subject to stockholder ratification, and determines
the
compensation of the independent registered public accounting
firm.
At
least annually, reviews a report by the independent registered
public
accounting firm describing: internal quality control
procedures, any issues raised by an internal or peer quality control
review and any investigations by regulatory authorities.
Consults
with the independent registered public accounting firm, reviews
and
approves the scope of their audit, and reviews independence and
performance. Also reviews any proposed engagement between Tier
and the independent registered public accounting firm and approves
in
advance any such engagement, if appropriate.
Reviews
internal controls, accounting practices and financial reporting,
including
the results of the annual audit and the review of the interim financial
statements, with management and the independent registered public
accounting firm.
Discusses
earnings releases and guidance provided to the public.
As
appropriate, obtains advice and assistance from outside legal,
accounting
or other advisors.
Prepares
a report of the Audit Committee to be included in our proxy
statement.
Assesses
annually the adequacy of the Audit Committee Charter.
Reports
to the Board about these matters.
|
Charles
W. Berger
(Chair)
|
Samuel
Cabot III
|
Morgan
P. Guenther
|
|
Number
of Meetings in Fiscal 2007:
9
|
|
|
|
Compensation
Committee
|
Number
of Members:
3
|
Functions:
|
Members:
|
Reviews
and approves the compensation of our Chief Executive Officer and
other
executive officers.
Reviews
executive bonus plan allocations.
Oversees
and advises the Board on the adoption of policies that govern our
compensation programs.
Oversees
the administration of our equity-based compensation and other benefit
plans.
Approves
grants of stock options and stock awards to our officers and
employees.
|
Samuel
Cabot III
(Chair)
|
Charles
W. Berger
|
Morgan
P. Guenther
|
|
Number
of Meetings in Fiscal 2007:
7
|
|
|
|
Governance
and Nominating Committee
|
Number
of Members:
3
|
Functions:
|
Members:
|
Interviews,
evaluates and recommends individuals for membership on the Board
and its
committees.
Evaluates
and recommends, where appropriate, whether a member of the Board
qualifies
as independent within the meaning of the applicable NASDAQ
rules.
Recommends
guidelines and responsibilities relating to corporate governance
for
adoption by the Board.
Reviews,
approves or ratifies related person transactions.
Evaluates
and recommends director compensation.
|
Morgan
P. Guenther
(Chair)
|
T.
Michael Scott
|
Bruce
R. Spector
|
|
Number
of Meetings in Fiscal 2007:
6
|
|
|
|
The
charters for the Audit Committee, Compensation Committee and Governance and
Nominating Committee are available for review on our website at
http://www.tier.com
.
PROPOSAL
ONE: ELECTION
OF
DIRECTORS
Six
directors are standing for re-election at the annual meeting. Two of
our directors, T. Michael Scott and Bruce R. Spector, are not standing
for re-election. Each director elected will serve until the next
annual meeting and until his successor is elected and qualified, or until his
earlier death, resignation or removal. The Governance and Nominating
Committee has recommended to the Board, and the Board has approved, the persons
named. Each nominee has consented to serve if elected and our Board
has no reason to believe that any nominee will be unable to serve, if
elected. Subject to the discussion of cumulative voting and
discretionary voting above, shares represented by proxies will be voted, if
authority to do so is not withheld, for the election of the nominees named
below. In the event that any nominee should be unavailable for
election as a result of an unexpected occurrence, such shares will be voted
for
the election of such substitute nominee as the Governance and Nominating
Committee may propose. Proxies cannot be voted for a greater number
of persons than the number of nominees named. All of the nominees
currently serve as a director.
The
Board has determined that each of the following nominees for director is
independent under the rules of the NASDAQ Stock Market, Inc.: Charles
W. Berger, Samuel Cabot III, John J. Delucca, Morgan P. Guenther and James
R.
Stone.
Nominees
The
names and certain biographical information of each director nominee are set
forth below.
Charles
W. Berger
Age:
54—
Director
since:
January 2002
Recent
Business Experience:
In April 2006, Mr. Berger became Chief
Executive Officer of DVDPlay, Inc., a manufacturer and operator of DVD rental
kiosks. He has been Chairman of the Board of DVDPlay, Inc. since
December 2001. From March 2003 through September 2005, Mr. Berger
served as President, Chief Executive Officer and a director of Nuance
Communications, Inc., a publicly traded company that developed and marketed
speech recognition software. In September 2005, Nuance Communications
merged with Scansoft, Inc. Mr. Berger is a director of the surviving
company
of
this
merger, Nuance Communications, Inc., a publicly traded company that develops
and
markets speech recognition and imaging software. Mr. Berger has also
served as the managing director of Volatilis, LLC, a private investment and
aviation services firm, since its founding in June 2001. Since
December 2004, Mr. Berger has been a director of SonicWall, Inc., a publicly
traded company that manufactures computer network security
applications.
Samuel
Cabot III
Age:
67—
Director
since:
January 1997
Recent
Business Experience:
Mr. Cabot served as Chief Executive Officer
of Samuel Cabot, Inc., a manufacturing and marketer of premium quality exterior
stains and architectural coatings, from 1969 until December 2005. He
also served as Chairman of its board of directors from February 2000 until
January 2006.
John
J. Delucca
Age:
64—
Director
since:
February 2007
Recent
Business Experience:
Since April 2003, Mr. Delucca has been the
President of Atlantic & Gulf, Limited, LLC, an investment and consulting
group. He was Executive Vice President and Chief Financial Officer of
REL Consultancy Group, a provider of financial consulting services to
businesses, from April 2003 until March 2004. From 1999 until
February 2002, he was Executive Vice President, Finance and Administration,
and
Chief Financial Officer of Coty, Inc., a manufacturer and marketer of personal
fragrances. Mr. Delucca is a director of British Energy, PLC, a
publicly traded electric utility company; Endo Pharmaceuticals Holding, Inc.,
a
publicly traded developer and reseller of prescription pharmaceuticals; Enzo
Biochem, Inc., a publicly traded manufacturer and reseller of biomedical
products; and ITC Deltacom, Inc., a publicly traded provider of integrated
communication services.
Morgan
P. Guenther
Age:
54—
Director
since:
August 1999
Recent
Business Experience:
Mr. Guenther has been Chairman and Chief
Executive Officer of Airplay Network, Inc., a wireless entertainment services
company, since May 2005. From February 2003 to April 2005, he served
as a private consultant to technology companies. From October 2001
through January 2003, Mr. Guenther served as President of TiVo, Inc., a creator
of digital video recording services. From June 1999 through October
2001, Mr. Guenther served as Vice President of Business Development and Senior
Vice President of Business Development and Revenue Operations at
TiVo.
Ronald
L. Rossetti
Age:
64—
Director
since:
November 1995
Recent
Business Experience:
Mr. Rossetti has served as Chairman of the
Board and Chief Executive Officer since May 2006 and has served as a director
of
Tier since November 1995. Mr. Rossetti has served as President of
Riverside Capital Partners, Inc., a venture capital investment firm, and as
general partner in several real estate general partnerships, all commonly
controlled by Riverside Capital Holdings, since 1997.
James
R. Stone
Age:
44—
Director
since:
March 2007
Recent
Business Experience:
Mr. Stone has served as Managing Director
of USBX, Inc., an advisory firm, since November 2006. In November
2001, he founded Converge Capital Inc., an advisory firm that focuses on
technology and business services deals, and has served as its Chief Executive
Officer since inception. He was the Managing Director for Updata
Capital, Inc., a mergers and acquisitions firm, from September 1999 through
October 2001.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE NAMED
ABOVE.
Biographical
Information on Directors Not Standing For Re-election
The
names and certain biographical information for two incumbent directors who
are
not standing for re-election are set forth below.
T.
Michael Scott
Age:
49—
Director
since:
January 2004
Recent
Business Experience:
Mr. Scott has been a partner in Cambridge
Property Group, LP, a commercial real estate acquisition and management firm,
since 1986, and it's Managing Partner since 1987. Since 1992 he has
served as Vice Chairman and President of Cambridge Holdings., a developer,
owner
and manager of office buildings. Mr. Scott serves on the Board of
Trustees of American Community Properties Trust, a publicly traded real estate
development and management company. Mr. Scott currently serves as
Chapter Chairman for the Washington DC/Baltimore Chapter of Young Presidents
Organization, and has held several other positions throughout his 14 years
with
the organization.
Bruce
R. Spector
Age:
55—
Director
since:
October 2004
Recent
Business Experience:
Mr. Spector has been the Chairman of
Pinnacle Care International, Inc., a provider of personal and comprehensive
healthcare management services, since March 2002. Since 1997, he has
also been the Chairman and Benchmark Holding, Inc., a private investment
firm.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the following Compensation
Discussion and Analysis with management. Based on its review and
discussions with management, the Compensation Committee recommended to the
Board, and the Board approved, that the Compensation Discussion and Analysis
be
included in this proxy statement.
The
foregoing report is given by the members of the Compensation
Committee: Samuel Cabot, III (Chair), Charles W. Berger, and Morgan
P. Guenther.
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation
Philosophy, Objectives and Design
Compensation
Philosophy
Our
compensation philosophy for all our employees is to create an overall
compensation package that provides fair and competitive cash compensation and
aligns performance-based incentives in the interests of our
stockholders. This compensation philosophy is particularly true for
our named executive officers, as we rely on their leadership, management skills
and experience for Tier's continued growth and development.
Compensation
Objectives
Our
Compensation Committee establishes and reviews our overall executive
compensation philosophy and objectives and oversees our executive compensation
programs. The primary goals of our compensation program are
to:
·
|
attract,
retain and motivate talented
employees;
|
·
|
support
business strategies that promote sustained growth and
development;
|
·
|
reward
the achievement of business results through the delivery of competitive
pay and performance-based incentive programs;
and
|
·
|
link
executives' goals with the interest of stockholders by tying a portion
of
compensation to our stock.
|
We
design our compensation strategy and packages for our executive officers to
further these goals.
Performance
Our
goal is to encourage and sustain high-quality performance by our
executives. To achieve this goal, we compensate our executives for
their individual skills, talents, leadership qualities and responsibilities,
primarily through base salary. To encourage our executives to meet
and exceed current performance levels, enhance their skill levels and maximize
their
contributions
to our company, we also provide performance-based cash incentive compensation,
framed around both consolidated company and individual targets for the
executive's area of responsibility. The combination of guaranteed
cash compensation in the form of base salary and the potential for additional
performance-based compensation through our incentive compensation programs
allow
us to reward our executives for the value they add to our company.
Alignment
To
align the interests of our executives with those of our company and our
stockholders, we provide performance-based cash incentive and long-term
incentive compensation. As discussed above, cash incentive
compensation is based in part on Tier achieving specific goals or targets for
the fiscal year. By linking individual incentive compensation to
Tier's goals, we align the interests of our executives with those of our
stockholders and our clients. In addition, we provide long-term
incentives to our executives through stock options. This further
aligns the interests of our executives with our stockholders as contributors
to
Tier's growth and value based upon stock performance. Through our
long-term incentive program, executives only receive a benefit through a
sustained increase in our stock price.
Retention
We
operate in a competitive work environment in which executives are presented
with
many opportunities outside of Tier. It is important to retain and
grow our current leadership to provide stability within our organization and
allow for sustained focus and effort to grow and develop the company for
continued success. A combination of market-based competitive salaries
combined with performance-based short-and long-term incentives awarded to our
executives through cash incentives and stock options, we believe, promotes
long-term tenure within our organization and sustainable stockholder
value.
Implementing
Our Objectives
Determining
Compensation
The
Compensation Committee relies heavily on professional judgment, prior experience
and recommendations by our Chief Executive Officer when making compensation
decisions. The Compensation Committee does not have a formulaic
approach to determining executive compensation. The Compensation
Committee uses broad compensation bands (i.e., salary bands that have a minimum,
mid-point and maximum salary level by function and career level), which are
reviewed and updated regularly, as a tool for determining competitive
compensation. In determining the appropriate compensation level and
structure, the Compensation Committee focuses on Tier’s goals, as well as each
executive’s: roles and responsibilities; level and type of skills,
training, experience and leadership qualities; current compensation; and
contributions to the achievement of Tier’s goals. To establish fair
and equitable compensation packages for our executives, the Compensation
Committee also considers current market employment conditions and
trends.
Role
of the Compensation Committee and Chief Executive Officer
The
Compensation Committee's primary responsibility is to discharge the Board's
responsibilities relating to compensation of our executives. It
carries out these responsibilities by:
·
|
reviewing
and approving the compensation for our Chief Executive Officer and
other
executive officers;
|
·
|
reviewing
executive bonus plan allocations;
|
·
|
overseeing
and advising the Board on the adoption of policies that govern our
compensation programs; and
|
·
|
approving
grants of stock options and stock awards to our executive
officers.
|
Our
Chief Executive Officer assists the Compensation Committee by recommending
and
reviewing compensation packages for all other executive officers. The
Chief Executive Officer discusses company and individual performance objectives
and results with the Compensation Committee in connection with establishing
cash
incentive and long-term incentive compensation metrics and determining amounts
to be awarded. The Chief Executive Officer is also involved in
recommending and negotiating the terms of his own compensation
package.
The
other named executive officers do not have a role in determining their own
compensation or the compensation of other executives, other than discussing
with
the Chief Executive Officer their annual individual performance objectives
and
results, which are utilized in establishing performance metrics used in cash
incentive compensation calculations and determining amounts to be
awarded.
Peer
Groups
To
align our executives’ compensation with the market, our Compensation Committee
typically uses outside consulting services when hiring a new executive, entering
into an employment agreement with a key executive, and reviewing and
determining
compensation levels and practices in accordance with market best
practices. The consultant primarily provides market data from
comparable companies. The Compensation Committee uses this data to
determine whether the compensation package prepared for our executives are
reasonable and competitive with those of similar companies in the
marketplace. We do not target specific medians or measurements from
the peer groups to determine compensation packages for our
executives.
During
fiscal 2007, the Compensation Committee used market peer group studies from
Mercer LLC and John F. Reda & Associates to provide market-based
compensation information for the position of Chief Executive
Officer. The firm of John F. Reda & Associates also provided
similar market data for our Chief Financial Officer and our other named
executives. Peer groups were selected based upon industries of
similar nature, capital investment, revenues and headcount (full time
employees). Studies of peer group companies included a review of base
salary, cash incentive compensation, and long-term equity incentive
compensation.
For
fiscal 2007, the Compensation Committee used the following peer group for
determining our Chief Executive Officer's compensation package:
Computer
Task Group, Inc.
|
INX
Inc.
|
SM&A
Corp.
|
Cybersource
Corp.
|
NIC
Inc.
|
Techteam
Global Inc.
|
Dynamics
Research Corp.
|
NCI
Inc.
|
TRX
Inc.
|
Edgewater
Technology Inc.
|
SI
International Inc.
|
Tyler
Technologies Inc.
|
Infocrossing
Inc.
|
|
|
For
fiscal 2007, our peer group used to determine our other named executives'
compensation packages consisted of:
Advent
Software, Inc.
|
Dynamics
Research Corp.
|
Quality
Systems Inc.
|
Cogent
Inc.
|
Merge
Technologies
|
Radiant
Systems Inc.
|
Computer
Horizons Corp.
|
NCI
Inc.
|
Talx
Corp.
|
Computer
Task Group, Inc.
|
Netscout
Systems Inc.
|
TNS
Inc.
|
Datalink
Corp.
|
Network
Engines Inc.
|
Transaction
Systems Architects Inc.
|
Digimarc
Corp.
|
Packeteer
Inc.
|
Tyler
Technologies, Inc.
|
Elements
Used to Achieve Compensation Objectives
Our
compensation packages are composed of five main elements: base
salary; cash incentive compensation; long-term incentives; perquisites and
benefits; and change of control provisions. We do not have a specific
method of allocating the above mentioned elements when determining overall
compensation.
Base
Salary
The
purpose of the base salary is to attract and retain talented employees, as
well
as compensate individuals for services rendered. Base salary is a
material component of an executive's compensation package.
Base
salary is intended to reflect each executive's role and responsibility within
the company, as well as the skills, experience and leadership qualities the
individual brings to the respective position. The Compensation
Committee compares our executives’ base salary with the results of the peer
group study to ensure competitiveness; however, the Compensation Committee
does
not target specific quartiles or medians in the comparison. In
establishing base salaries for executives, the Compensation Committee does
not
assume that executives are automatically entitled to cash incentive
compensation; instead, they consider the possible award of cash incentive
compensation for the achievement of specific performance goals. The
Compensation Committee does not assign relative weights or rankings to the
factors used to determine base salary; rather, a qualitative determination
is
made based upon all the factors under consideration.
Each
year we conduct salary reviews for all employees, including our named executive
officers in October or November and apply base compensation increases in
December. At that time, base salary increases, if applicable, for our
executive officers are determined and approved by the Compensation Committee
and
put into effect for the upcoming year. Base salary increases for our
named executive officers are determined by evaluating: base salary currently
in
place; the achievements of the individual for the review period; individual
specific and overall contributions to Tier; and the current market
environment. The Compensation Committee considers a number of factors
when evaluating base salary increases for executives: their individual
performance and achievements throughout the year; the performance of their
strategic business area, if applicable; and cost of living
adjustments.
Upon
the expiration of Mr. Rossetti's employment agreement in May 2007, the
Compensation Committee did not provide Mr. Rossetti with a salary increase,
pending negotiations of a new employment agreement. For fiscal 2007,
salary increases were awarded to Messrs. Fountain and Lawler and Ms. Tully
to
compensate for cost of living increases and to reward these executives for
their
positive contributions to Tier during the year. Mr. Connell was
promoted to Senior Vice President, Sales & Marketing in November 2006, at
which time he received a salary increase reflecting the increased
responsibilities associated with his new position. Mr. Beckerman
did not receive a salary increase in fiscal 2007 given his
mid-year
hire date of March 2006. Mr. Vucovich did not receive a base salary
increase due to ongoing negotiations for his severance agreement, which was
finalized in February 2007.
The
following table sets forth the base salaries of our named executive officers
for
the fiscal years 2006, 2007 and 2008:
|
|
Fiscal
year
|
|
|
|
|
|
|
Name
of executive
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
%
change 2006 to 2007
|
|
|
%
change 2007 to 2008
|
|
Ronald
L. Rossetti
Chief
Executive Officer and Chairman of the Board
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
|
—
|
|
|
|
—
|
|
David
E. Fountain
Senior
Vice President, Chief Financial Officer and Treasurer
|
|
|
325,000
|
|
|
|
350,000
|
|
|
|
350,000
|
|
|
|
7.7
|
%
|
|
|
—
|
|
Michael
A. Lawler
Senior
Vice President, Electronic Payment Processing
|
|
|
221,987
|
|
|
|
237,000
|
|
|
|
237,000
|
|
|
|
6.8
|
%
|
|
|
—
|
|
Deanne
M. Tully
Vice
President, General Counsel and Corporate Secretary
|
|
|
214,900
|
|
|
|
220,000
|
|
|
|
220,000
|
|
|
|
2.4
|
%
|
|
|
—
|
|
Steven
M. Beckerman
Senior
Vice President, Business Process Outsourcing
|
|
|
220,000
|
|
|
|
220,000
|
|
|
|
220,000
|
|
|
|
—
|
|
|
|
—
|
|
Kevin
C. Connell
Senior
Vice President, Sales & Marketing
|
|
|
210,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
19.0
|
%
|
|
|
—
|
|
Todd
F. Vucovich
Senior
Vice President, Packaged Software and Systems Integration
|
|
|
220,000
|
|
|
|
220,000
|
|
|
|
220,000
|
|
|
|
—
|
|
|
|
—
|
|
Cash
Incentive Compensation
Our
cash incentive compensation plans are designed to:
·
|
align
the management team's financial interests with those of our
stockholders;
|
·
|
support
a performance-oriented environment that rewards business unit and
Tier's
overall results;
|
·
|
attract,
motivate and retain key management critical to Tier's long-term success;
and
|
·
|
align
compensation with Tier's business strategy, values and management
initiatives.
|
A
combination of base salary, cash incentive compensation and long-term incentives
are used to attract, motivate and retain our executive officers and other key
contributors. Cash incentives are used in particular to drive
performance against defined financial and other performance metrics established
as part of Tier's annual budgeting and strategic planning process, such that
our
executive officers and other key contributors are recognized against the
achievement of specific and measurable company, practice unit and individual
performance metrics on an annualized basis.
Our
cash incentive compensation plans and individual performance goals under these
plans are linked to Tier's financial performance goals established annually
within our business plan, which is reviewed and approved by our
Board. This link allows us to combine payment for individual
performance with at-risk payment for achieving threshold, target and maximum
company and practice unit performance targets. Throughout the year,
the Compensation Committee reviews the cash incentive plans for executives
for
reasonableness and potential for meeting company or practice unit defined
performance metrics. If performance targets for the fiscal year are
not met, the Compensation Committee may still elect to pay incentive
compensation on a discretionary basis. The Compensation Committee may
also cancel or amend a cash incentive plan based on the outcome of its periodic
reviews.
In
addition to our formal incentive plans, we may, at the discretion of the Chief
Executive Officer or at the discretion of the Compensation Committee, award
a
cash incentive to our executive officers, in recognition of achievements outside
of performance metrics established under formal cash incentive plans or award
cash incentives under other agreements we enter into with an
executive.
Chief
Executive Officer Cash
Incentive
On
May 26, 2006, we entered into a one-year employment agreement with Mr.
Rossetti, our current Chief Executive Officer. Under the terms of
this agreement, Mr. Rossetti received a guaranteed bonus of $50,000 per month,
as negotiated and agreed upon by the Compensation Committee and
Mr. Rossetti. This contract expired on May 25,
2007. On December 21, 2007, the Compensation Committee passed a
resolution, which provided Mr. Rossetti with a cash incentive equal to that
which he would have received had his original employment agreement been extended
through
December 14,
2007 . The Compensation Committee believes this bonus to
Mr. Rossetti will provide stability to the critical position of Chief
Executive Officer.
Executive
Incentive Plan—Chief Financial Officer
For
fiscal 2007, our Chief Financial Officer, Mr. Fountain, participated in our
Fiscal Year 2007 Executive Incentive Plan, or EIP. The EIP is
designed to reward executives for improvements in Tier's
performance. Pursuant to the terms of Mr. Fountain's employment
agreement, in no event shall the minimum annual incentive opportunity be less
than 50% of that year's base salary, assuming satisfaction of applicable
performance metrics. As such, Mr. Fountain's fiscal year 2007
bonus threshold was zero and the target bonus was $175,000. No
maximum threshold is established by the EIP or his employment
agreement. The performance metrics under Mr. Fountain's EIP were
recommended by Mr. Rossetti and Mr. Fountain and reviewed and approved by
the Compensation Committee. The metrics, which are described in more
detail below, related to establishing and carrying out a strategic business
evaluation for Tier and promoting stability and optimal performance within
certain corporate departments under the management of the Chief Financial
Officer.
Upon
Mr. Rossetti and Mr. Fountain's review of the performance metrics and the
determination that the goals had been sufficiently met, Mr. Rossetti recommended
and the Compensation Committee approved a cash incentive payout of $175,000
under the fiscal year 2007 EIP to Mr. Fountain.
Performance
metrics surrounding Mr. Fountain's EIP were:
Performance
metric
|
|
Weighting
|
|
|
Threshold
payout
|
|
|
Target
payout
|
|
|
Maximum
payout
|
|
Strategic
responsibilities
|
|
|
80
|
%
|
|
$
|
—
|
|
|
$
|
140,000
|
|
|
$
|
*
|
|
Organizational
leadership
|
|
|
15
|
%
|
|
|
—
|
|
|
|
26,250
|
|
|
|
*
|
|
Other
activities
|
|
|
5
|
%
|
|
|
—
|
|
|
|
8,750
|
|
|
|
*
|
|
Total
target payout
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
175,000
|
|
|
$
|
*
|
|
*No
maximum bonus payout was established under the EIP or in Mr. Fountain's
employment agreement.
|
|
Strategic
Responsibilities
The
strategic responsibilities metrics included the completion of the strategic
business evaluation process Tier began in December 2006, the development
and execution of restructuring plans that resulted from the strategic business
evaluation and the re-listing of our common stock on NASDAQ.
Organizational
Leadership
The
organizational leadership performance metrics included retaining employees
in
key positions and enhancing operational standards and performance within the
accounting and finance departments, timely filing of all quarterly and annual
or
period reports with the Securities and Exchange Commission and managing positive
and proactive relationships with external auditors.
Other
Activities
The
other activities performance metrics included the centralization of corporate
functions in-line with the strategic business evaluation, policy and procedural
development, and managing the requirements and reporting for our compliance
with
Sarbanes-Oxley Act of 2002.
Other
Incentive Compensation—Chief Financial Officer
In
February 2006, the Board of Directors approved a one-time cash bonus of $50,000
that would be paid upon the filing of all past-due Form 10-K's and Form 10-Q's
with the Securities and Exchange Commission, as well as timely filing of any
necessary restatements to historical financial statements. This bonus
was paid to Mr. Fountain in fiscal 2007.
Management
Incentive Plan
For
fiscal 2007, Mr. Lawler, Senior Vice President, Electronic Payment Processing,
Mr. Beckerman, Senior Vice President, Government Business Process Outsourcing,
and Ms. Tully, Vice President, General Counsel and Corporate Secretary,
participated in our Fiscal Year 2007 Management Incentive Plan. The
MIP was designed to reward eligible employees for the achievement of both
overall corporate and practice unit performance targets on a fiscal year
basis. Corporate and practice unit performance targets, including
threshold, target and maximum levels of payout, were determined by executive
management at the beginning of the plan year based upon Tier's strategic plan
and budget process and the formulation of specific corporate level and
divisional performance metrics.
Based
upon projected fiscal year 2007 results, in June 2007 the Compensation
Committee determined the corporate and practice unit performance metrics for
the
MIP would not be met, with the exception of the performance metrics of our
Electronic Payment Processing, or EPP, practice. At that time, the
Compensation Committee abandoned the original MIP and introduced
a
revised MIP for EPP MIP participants in the last quarter of the 2007 fiscal
year, in which Mr. Lawler participated. The revised EPP MIP
eliminated the corporate net operating income performance metric, leaving only
the EPP performance metric as the basis for incentive payout. In
addition, the Compensation Committee having evaluated the circumstances around
the MIP performance metrics not being met and taking into account the
substantial activities undertaken in fiscal year 2007 relating to the strategic
evaluation process, our successful re-listing on NASDAQ and the development
and
execution of a divestiture strategy for certain business assets, determined
that
the original MIP would be terminated and a pool of $375,000 would be made
available to the Chief Executive Officer to award incentive compensation, at
his
sole discretion, based on individual performance and contributions throughout
the year. Mr. Beckerman and Ms. Tully were eligible for incentive
compensation consideration from this pool. Based on the Chief
Executive Officer's determination, as well as overall company performance,
Mr.
Beckerman and Ms. Tully did not receive incentive compensation for fiscal
2007. Specific bonus payments can be found in the
Summary
Compensation Table
in the
Executive Compensation
section on page
20.
The
following tables illustrate the performance metrics and related threshold,
target and maximum payouts for fiscal 2007 under the MIP for Messrs. Lawler
and
Beckerman and Ms. Tully:
Michael
A. Lawler—MIP Performance Metrics, Targets and Actual
Payouts
|
|
|
|
2007
MIP Goals
|
|
|
|
|
|
|
Initial
|
|
|
Revised
(1)
|
|
|
Actual
|
|
Performance
Metrics
|
|
|
|
|
|
|
|
|
|
Corporate
net operating income
|
|
$
|
5,814,000
|
|
|
$
|
—
|
|
|
|
|
EPP
segment net operating income
(2)
|
|
|
10,929,000
|
|
|
|
10,929,000
|
|
|
|
|
Estimated
Payout
|
|
|
|
|
|
|
|
|
|
|
|
At
80% of Performance Metric
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
At
100% of Performance Metric
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
|
Maximum
at 120% of Performance Metric
|
|
|
60,000
|
|
|
|
60,000
|
|
|
|
|
Basis
for Payout Under MIP Plan
|
|
|
|
|
|
|
|
|
|
|
|
Actual
EPP Operating income for Fiscal 2007
|
|
|
|
|
|
|
|
|
|
$
|
9,844,000
|
|
Percentage
of Metric Achieved
|
|
|
|
|
|
|
|
|
|
|
90
|
%
|
Payout
Under MIP Plan
|
|
|
|
|
|
|
|
|
|
$
|
21,000
|
|
(1)
Effective
June 2007, the
Compensation Committee revised Mr. Lawler's incentive agreement to
exclude
the corporate net operating income performance metric, and base his
potential cash incentive payout only on EPP
performance.
|
|
(2)
Excludes
the allocation of certain
direct corporate overhead costs.
|
|
Steven
M. Beckerman—MIP Performance Metrics, Targets and Actual
Payouts
|
|
|
|
2007
MIP Goals
|
|
|
|
|
|
|
|
Initial
|
|
|
Revised
|
|
|
Actual
|
|
Performance
Metrics
|
|
|
|
|
|
|
|
|
|
|
Corporate
net operating income
|
|
$
|
5,814,000
|
|
|
$
|
—
|
|
|
|
|
|
GBPO
segment net operating income
|
|
|
11,894,000
|
|
|
|
—
|
|
|
|
|
|
Estimated
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
at
80% of Performance Metric
|
|
$
|
15,000
|
|
|
$
|
—
|
|
|
|
|
|
At
100% of Performance Metric
|
|
|
30,000
|
|
|
|
—
|
|
|
|
|
|
Maximum
at 120% of Performance Metric
|
|
|
60,000
|
|
|
|
—
|
|
|
|
|
|
Payout
Under MIP Plan
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
(1)
Effective
June 2007, Mr. Beckerman's MIP was terminated by the Compensation
Committee due to projected fiscal year 2007 results. Any bonus
awarded to Mr. Beckerman would have been at the discretion of the
Chief
Executive Officer and the Compensation Committee. Mr. Beckerman did
not receive a bonus for fiscal year 2007.
|
Deanne
M. Tully—MIP Performance Metrics, Targets and Actual
Payouts
|
|
|
|
2007
MIP Goals
|
|
|
|
|
|
|
|
Initial
|
|
|
Revised
|
|
|
Actual
|
|
Performance
Metrics
|
|
|
|
|
|
|
|
|
|
|
Corporate
net operating income
|
|
$
|
5,814,000
|
|
|
$
|
—
|
|
|
|
|
|
Estimated
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
at
80% of Performance Metric
|
|
$
|
7,500
|
|
|
$
|
—
|
|
|
|
|
|
At
100% of Performance Metric
|
|
|
15,000
|
|
|
|
—
|
|
|
|
|
|
Maximum
at 120% of Performance Metric
|
|
|
30,000
|
|
|
|
—
|
|
|
|
|
|
Payout
Under MIP Plan
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
(1)
Effective June 2007, Ms. Tully's MIP was terminated by
the Compensation Committee due to projected fiscal year 2007
results. Any bonus awarded to Ms. Tully would have been at the
discretion of the Chief Executive Officer and the Compensation
Committee. Ms. Tully did not receive a bonus for fiscal year
2007.
|
Official
Payments Corporation Fiscal Year 2007 SVP Sales & Business Development
Plan
During
fiscal year 2007, Mr. Connell participated in the Official Payments
Corporation’s Fiscal Year 2007
SVP Sales & Business Development
Plan
. Pursuant to this plan, Mr. Connell's cash incentive was
based on two performance measurements—revenue growth and new business
development agreements—established at the beginning of fiscal year 2007 by our
executive management. The following tables illustrate the performance
metrics under the plan, as well as the related threshold, target and maximum
payouts.
Measurement
1—Revenue Growth
The
EPP
segment must achieve a revenue growth of $16.0 million during fiscal 2007,
excluding revenue from our largest customer.
|
|
From
|
|
|
To
|
|
Percent
|
For
each percent point under quota
|
|
|
100
|
%
|
|
|
80
|
%
|
Payout
decreases by 1.50%
|
For
each percent point under quota
|
|
|
80
|
%
|
|
|
45
|
%
|
Payout
decreases by 1.75%
|
|
|
|
|
|
|
|
|
|
|
For
each percent point over quota
|
|
|
100
|
%
|
|
|
120
|
%
|
Payout
increases by 1.50%
|
For
each percent point over quota
|
|
|
120
|
%
|
|
|
140
|
%
|
Payout
increases by 1.75%
|
Measurement
2—New Business Development Agreements
For
each new business development agreement signed during fiscal 2007, Mr. Connell
was compensated $7,500 per agreement. For fiscal 2007, our executive
management established a target of five new agreements to be signed, however,
under the plan Mr. Connell would have been compensated for each agreement
signed, even if the target of five new agreements had not been met.
Potential
Payout
The
following table provides the threshold, target and maximum cash incentives
Mr.
Connell could have earned under the Official Payments Corporation’s Fiscal Year
2007 SVP Sales & Business Development Plan. Since
Measurement 2 is a per-agreement metric, there is no maximum to the amount
that can be earned and, therefore, the maximum payout that could have been
made
to Mr. Connell for this metric could not be quantified.
Performance
metric
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Measurement
1—Revenue growth
|
|
$
|
10,500
|
|
|
$
|
120,000
|
|
|
$
|
198,000
|
|
Measurement
2—Business development agreements
|
|
|
—
|
|
|
|
37,500
|
|
|
|
*
|
|
Total
potential payout
|
|
$
|
10,500
|
|
|
$
|
157,500
|
|
|
|
*
|
|
*
Payout
made on a per agreement
basis. The plan does not provide a maximum number of new agreements
that will be included in the calculation of the
incentive.
|
|
Achievement
of fiscal year 2007 performance metrics for Mr. Connell was as
follows:
Performance
metric
|
Metric
met
|
|
Calculation
used for incentive
|
|
|
Payout
|
|
Measurement
1—Revenue growth
|
1.057%
of quota
|
|
$
|
16,916,156
|
|
|
$
|
130,308
|
|
Measurement
2—Business development agreements
|
5
new agreements
|
|
$7,500
per agreement
|
|
|
|
37,500
|
|
Total
payout
|
|
|
|
|
|
|
$
|
167,808
|
|
Effective
October 1, 2007, Mr. Connell participates in the MIP
only. Pursuant to his employment agreement, after October 1,
2007, at no time shall his annual incentive compensation be more than 75% of
his
base salary.
Fiscal
Year 2007 Earned Incentive
Payouts
The
following table provides a summary of the actual cash incentive payments made
to
our named executive officers for fiscal year 2007:
Named
executive officer
|
|
2007
Incentive payment
|
|
Ronald
L. Rossetti
|
|
$
|
600,000
|
|
David
E. Fountain
|
|
|
225,000
|
|
Kevin
Connell
|
|
|
167,808
|
|
Michael
A. Lawler
|
|
|
21,000
|
|
Steven
M. Beckerman
|
|
|
—
|
|
Deanne
M. Tully
|
|
|
—
|
|
Todd
F. Vucovich
(1)
|
|
|
—
|
|
Total
incentive payout
|
|
$
|
1,013,808
|
|
(1)
Mr.
Vucovich did not participate
in a cash incentive plan during fiscal 2007.
|
|
Long-term
Incentives
To
further align our executives' financial interests with those of our
stockholders, we provide long-term incentives through our
Amended and
Restated 2004 Stock Incentive Plan
, or the Plan. These
incentives are designed to motivate employees through equity ownership and
provide a pay-at-risk element to our compensation package. Under the
Plan, the Compensation Committee has the authority to issue stock options,
stock
appreciation rights, restricted stock or other stock-based awards to all
employees, officers, directors, consultants and advisors at its
discretion. Currently, stock options are our preferred method for
providing long-term equity incentives to our executives. Since the
options are granted with an exercise price equal to the close price of our
common stock on the day preceding the grant date, executives receive a benefit
only if the stock price appreciates over the option term. We believe
these long-term incentives motivate all eligible employees to meet and/or exceed
performance goals and contribute to the overall growth and value of
Tier. We do not have agreements with any of our executive officers
that entitle them to stock option grants or restricted stock
awards.
The
Compensation Committee meets at least four times per year. At these
meetings the Compensation Committee reviews among other things: new hire status;
promotions; and achievements of current executives, in determining whether
to
make stock option grants. Options are considered granted on the date
the Compensation Committee approves the granting of options, and the closing
price on the business day preceding the grant date is the exercise price of
the
award. The Compensation Committee awards options at its discretion
and in accordance with the Plan requirements as to the amount of options that
may be awarded to executives throughout a fiscal year, taking into account
an
executive's performance, level of responsibility and future contributions to
Tier. The maximum amount of options that may be awarded to an
executive in a fiscal year is 300,000 shares under the terms of the
Plan. Typically these options vest as to 20% of the underlying shares
on the anniversary of the grant date and have a maximum ten year
term. Options that are unvested upon an executive's termination are
generally forfeited. We believe this encourages executive
performance, tenure and the promotion of sustained growth with
Tier. However, our named executive officers may be entitled to
accelerated vesting of their options under certain circumstances, including
a
change of control. See
Potential Payments Upon Termination of
Employment or Change in Control
section on page 24 for additional
information.
Under
Mr. Rossetti's original employment agreement, during fiscal year 2006 he was
awarded options to purchase 300,000 shares of common stock, which fully vested
on March 31, 2007. Mr. Rossetti did not receive any stock option
grants or restricted stock awards during fiscal year 2007.
The
Compensation Committee awarded options to purchase 40,000 shares of common
stock
to Mr. Connell in November 2006 upon his promotion to Senior Vice President
Sales and Marketing. The Compensation Committee did not award any
options to Messrs. Fountain, Lawler or Beckerman or Ms. Tully in fiscal year
2007.
Perquisites
and Benefits
All
of
our full-time employees, including our named executive officers, are eligible
to
participate in our benefits programs. Our benefits programs include:
paid time off; medical, dental and vision insurance; 401(k) safe harbor
contribution; group term life insurance; short term disability; long term
disability; and a range of voluntary or elective benefits. Other than
our 401(k) program, in which all eligible employees may participate, we do
not
have any retirement, pension or deferred compensation plans in effect for our
named executive officers.
Under
the terms of his May 25, 2006 employment agreement, Mr. Rossetti was
ineligible for employee benefits. On June 12, 2007, the
Compensation Committee determined that Mr. Rossetti would be eligible to
participate in our benefits programs.
We
do
not have an established executive benefits program or an executive perquisite
program. Typically, we do not provide perquisites to our named
executive officers at the senior vice president level.
We
provide limited perquisites to our Chief Executive Officer and Chief Financial
Officer as discussed below. We believe providing these perquisites
benefits us and our stockholders by ensuring that our Chief Executive Officer
and Chief Financial Officer are able to maintain a regular presence at our
headquarters to meet their duties and responsibilities in full.
Chief
Executive Officer Perquisites
Pursuant
to his May 25, 2006 employment agreement, we provide Mr. Rossetti with a
fully-furnished corporate apartment located near our corporate headquarters
in
Reston, Virginia. We also provide Mr. Rossetti with local
transportation for travel while he is located in Reston, Virginia. In
addition, we reimburse Mr. Rossetti for travel to and from his current residence
to our corporate headquarters. Travel reimbursement includes airfare,
ground transportation, parking and meals. Mr. Rossetti is provided
home office equipment and a cellular phone to assist him in executing his
responsibilities, while he is absent from our headquarters.
In
addition, if the Mr. Rossetti recognizes income for income tax purposes as
a
result of our payment of certain expenses, we are obligated to make a tax
gross-up payment to Mr. Rossetti based upon the additional tax
liability.
Chief
Financial Officer Perquisites
Pursuant
to the employment agreement with Mr. Fountain dated December 11, 2006, we
provide Mr. Fountain with a furnished corporate apartment located near our
corporate headquarters in Reston, Virginia. In addition, we reimburse
Mr. Fountain for travel for him and his spouse to and from his current
residence to his company-provided residence in Reston,
Virginia. Travel reimbursement includes airfare, ground
transportation, parking and meals.
In
addition, if Mr. Fountain recognizes income for income tax purposes as a result
of our payment of certain expenses, we are obligated to make a tax gross-up
payment to Mr. Fountain based upon the additional tax liability.
Other
Perquisites
Pursuant
to the terms of Mr. Vucovich's Separation Agreement and Release, dated
Feburary12, 2007, we reimbursed Mr. Vucovich $25,000 for certain relocation
expenses incurred in connection with the sale of his residence in Northern
Virginia.
In
August 2007 a private jet was chartered at Tier's expense to transport Mr.
Connell and Mr. Rossetti to a business meeting in Georgia, in the amount of
$27,295. Since our corporate travel policy
only allows for our employees
to travel via commercial
transportation, the charter of a private jet for transportation to a business
meeting is being considered a perquisite to Mr. Connell and
Mr. Rossetti.
Change
of Control
Messrs.
Fountain, Lawler, Beckerman and Connell and Ms. Tully have change of control
arrangements through either their employment agreements or a separate change
of
control agreement. We do not have change of control arrangements in
effect with either Mr. Rossetti or Mr. Vucovich as of September 30,
2007. We provide change of control arrangements to our executives to
promote stability and continuity at a time when the departure of executive
officers would be detrimental to our growth and development and stockholder
value. Executives are entitled to change of control payments upon
termination within one year of a change of control event. Payments
are due to the executive within thirty days of such termination. For
a change of control provision to be triggered, the change of control event,
as
defined below, must occur and the executive's employment must
terminate.
A
change of control is defined in our employment agreements as:
·
|
any
person, entity or affiliated group becoming the beneficial owner
or owners
of more than 50% of the outstanding equity securities of Tier, or
otherwise becoming entitled to vote shares representing more than
50% of
the undiluted total voting power of our then-outstanding securities
eligible to vote to elect members of the
Board;
|
·
|
a
consolidation or merger (in one transaction or a series of related
transactions) of Tier pursuant to which the holders of our equity
securities immediately prior to such transaction or series of transactions
would not be the holders immediately after such transaction or series
of
related transactions of more than 50% of the securities eligible
to vote
to elect members of the Board of the entity surviving such transaction
or
series of related transactions;
|
·
|
the
sale, lease, exchange or other transfer (in one transaction or a
series of
related transactions) of all or substantially all of the assets of
Tier;
|
·
|
the
dissolution or liquidation of Tier;
or
|
·
|
the
date on which (i) we consummate a "going private" transaction pursuant
to
Section 13 and Rule 13e-3 of the Exchange Act, or (ii) no longer
have a
class of equity security registered under the Exchange
Act.
|
In
addition, Mr. Beckerman's change of control agreement includes the following
change of control situation:
·
|
any
person, entity or affiliated group becoming the beneficial owner
or owners
of more than 50% of the outstanding equity securities of Tier, or
of a
subsidiary that holds substantial assets or is the primary location
of the
strategic business unit or practice unit in which Mr. Beckerman is
engaged
or otherwise becoming entitled to vote shares representing more than
50%
of the undiluted total voting power of the then-outstanding securities
eligible to vote to elect members of the Board or of the business
unit or
practice unit's board of directors.
|
The
specific pay-outs under change of control provisions were determined through
negotiations of each individuals employment agreement. For potential
payments upon a change of control arrangements for our named executive officers
see
Potential Payments Upon Termination of Employment or Change in
Control
section of Executive Compensation on page 24.
Tax
and Accounting Implications
Deductibility
of Compensation
Section
162(m) of the Internal Revenue Code of 1986, as amended, or the Code, generally
disallows federal tax deductions for compensation in excess of $1.0 million
paid to the Chief Executive Officer and the next four highly paid
officers. Compensation that is "performance-based" within the meaning
of the Code does not count toward the $1.0 million limit. We
believe it is in our best interest, to the extent practicable, to have executive
compensation be fully deductible under the Code. However, the
Compensation Committee has full discretion to provide compensation that
potentially may not be fully deductible.
Accounting
for Share-Based Compensation
Effective
October 1, 2005, we began accounting for share-based payments in accordance
with the requirements of Statement of Financial Accounting Standard No.
123(R)—
Share-Based Payment
. As such, we value the options
granted based on the grant date fair value using the Black-Scholes
model. We recognize the compensation expense over the vesting period
of the option grants, which is typically five years.
EXECUTIVE
COMPENSATION
This
section provides certain tabular and narrative information regarding the
compensation of our principal executive and financial officers and our four
other most highly compensated executive officers for the fiscal year ended
September 30, 2007. For additional information regarding
compensation of the named executive officers, see
Compensation Discussion
and Analysis
beginning on page 10.
Summary
Compensation Table
The
following table sets forth information regarding compensation of our named
executive officers during the fiscal year ended September 30,
2007:
Name
and principal position
|
|
Year
|
|
Salary
($)
|
|
|
Option
awards
($)
(1)
|
|
|
Non-equity
incentive plan
compensation
($)
(2)
|
|
|
All
other
compensation
($)
(3)
|
|
|
Total
($)
|
Ronald
L. Rossetti
Chief
Executive Officer,
Chairman
of the Board
|
|
2007
|
|
$
|
600,000
|
|
|
$
|
119,375
|
|
|
$
|
600,000
|
|
|
$
|
230,710
|
|
|
$
|
1,550,085
|
David
E. Fountain
Senior
Vice President,
Chief
Financial Officer and Treasurer
|
|
2007
|
|
|
338,942
|
|
|
|
67,313
|
|
|
|
225,000
|
|
|
|
137,174
|
|
|
|
768,429
|
Michael
A. Lawler
Senior
Vice President
Electronic
Payment Processing
|
|
2007
|
|
|
234,402
|
|
|
|
67,845
|
|
|
|
21,000
|
|
|
|
5,606
|
|
|
|
328,853
|
Deanne
M. Tully
Vice
President, General Counsel and Corporate Secretary
|
|
2007
|
|
|
219,117
|
|
|
|
48,805
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
273,126
|
Steven
M. Beckerman
Senior
Vice President
Government
Business Process Outsourcing
|
|
2007
|
|
|
220,000
|
|
|
|
61,071
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
286,275
|
Kevin
C. Connell
Senior
Vice President
Sales
and Marketing
|
|
2007
|
|
|
245,796
|
|
|
|
121,177
|
|
|
|
167,808
|
|
|
|
19,482
|
|
|
|
554,263
|
Todd
F. Vucovich
(4)
Senior
Vice President
Packaged
Software and Systems Integration
|
|
2007
|
|
|
220,000
|
|
|
|
14,040
|
|
|
|
—
|
|
|
|
30,210
|
|
|
|
264,250
|
(1)
The amounts included in this column reflect the value of stock option
awards that were recognized as an expense for financial statement
reporting purposes in fiscal 2007, calculated pursuant to Statement
of
Financial Accounting Standards 123R—
Share-Based Payment
,
excluding any estimate of forfeitures. Accordingly, the column
includes amounts relating to awards granted during and prior to fiscal
2007. The following table summarizes the amounts shown in the
"Option Awards" column and the amount included for each such
award. Assumptions used in the calculation of these amounts are
included in footnote 10 to the audited consolidated financial statements
included in our annual report on Form 10-K for the fiscal year ended
September 30, 2007.
|
|
Option
awards
|
|
Name
|
Date
of award
|
|
Total
number of shares underlying options awarded (#)
|
|
|
Amount
included in fiscal 2007
|
|
Ronald
L. Rossetti
|
7/26/06
|
|
|
300,000
|
|
|
$
|
119,375
|
|
David
E. Fountain
|
8/12/05
|
|
|
75,000
|
|
|
|
45,309
|
|
David
E. Fountain
|
8/24/06
|
|
|
40,000
|
|
|
|
22,004
|
|
Michael
A. Lawler
|
11/1/04
|
|
|
50,000
|
|
|
|
45,841
|
|
Michael
A. Lawler
|
8/24/06
|
|
|
40,000
|
|
|
|
22,004
|
|
Deanne
M. Tully
|
7/5/02
|
|
|
5,000
|
|
|
|
7,889
|
|
Deanne
M. Tully
|
12/1/03
|
|
|
10,000
|
|
|
|
9,744
|
|
Deanne
M. Tully
|
11/1/04
|
|
|
10,000
|
|
|
|
9,168
|
|
Deanne
M. Tully
|
8/24/06
|
|
|
40,000
|
|
|
|
22,004
|
|
Steven
M. Beckerman
|
4/7/06
|
|
|
50,000
|
|
|
|
39,067
|
|
Steven
M. Beckerman
|
8/24/06
|
|
|
40,000
|
|
|
|
22,004
|
|
Kevin
C. Connell
|
10/4/02
|
|
|
25,000
|
|
|
|
52,799
|
|
Kevin
C. Connell
|
7/3/03
|
|
|
25,000
|
|
|
|
24,209
|
|
Kevin
C. Connell
|
12/1/03
|
|
|
5,000
|
|
|
|
5,605
|
|
Kevin
C. Connell
|
11/1/04
|
|
|
3,000
|
|
|
|
3,268
|
|
Kevin
C. Connell
|
9/13/06
|
|
|
10,000
|
|
|
|
8,971
|
|
Kevin
C. Connell
|
11/28/06
|
|
|
40,000
|
|
|
|
26,324
|
|
Todd
F. Vucovich
|
12/1/03
|
|
|
5,000
|
|
|
|
4,872
|
|
Todd
F. Vucovich
|
11/1/04
|
|
|
10,000
|
|
|
|
9,168
|
|
(2)
Fiscal
year 2007
non-equity incentive plan compensation is described below:
Ronald
L. Rossetti
—Mr. Rossetti was awarded $50,000 per month, or $600,000 per
annum, per his employment agreement.
David
E. Fountain
—Mr. Fountain was awarded $175,000 as a result of meeting
the target performance metrics established by his fiscal year 2007
EIP. In addition, pursuant to a February 21, 2006 agreement,
Mr. Fountain received a $50,000 bonus as a result of successful efforts to
bring current our filings with the Securities and Exchange
Commission.
Michael
A. Lawler
—Mr. Lawler was awarded $21,000 pursuant to the terms of the
fiscal year 2007 EPP MIP.
Kevin
C. Connell
—Mr. Connell was awarded $167,808 pursuant to the terms of
the Official Payments Corporation Fiscal Year 2007 SVP Sales & Business
Development Plan.
See
pages 13-17
for additional information on performance metrics and payouts.
(3)
Includes:
·
the
aggregate incremental cost to Tier of providing perquisites and other
personal benefits;
·
insurance
premiums paid on the executive's behalf;
·
company
matching contributions under 401(k) plans;
·
tax
reimbursement payments relating to certain business and non-business
travel; and
·
relocation
expenses.
The
following table summarizes the amounts shown in the "All Other
Compensation" column:
|
Name
|
Year
|
|
Perquisites
(a)
|
|
|
Insurance
|
|
|
|
401(k)
|
|
|
Tax
reimbursement
|
|
|
Relocation
|
|
|
Total
all other compensation
|
|
Ronald
L. Rossetti
|
2007
|
|
$
|
191,435
|
|
|
$
|
—
|
|
|
$
|
6,750
|
|
|
$
|
32,525
|
|
|
$
|
—
|
|
|
$
|
230,710
|
|
David
E. Fountain
|
2007
|
|
|
88,310
|
|
|
|
—
|
|
|
|
6,750
|
|
|
|
42,114
|
|
|
|
—
|
|
|
|
137,174
|
|
Michael
A. Lawler
|
2007
|
|
|
—
|
|
|
|
—
|
|
|
|
5,606
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,606
|
|
Deanne
M. Tully
|
2007
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
Steven
M. Beckerman
|
2007
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
Kevin
C. Connell
|
2007
|
|
|
13,648
|
|
|
|
—
|
|
|
|
5,834
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,482
|
|
Todd
F. Vucovich
|
2007
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
6
|
|
|
|
25,000
|
|
|
|
30,210
|
|
(a)
See
Perquisites and Benefits
in the Compensation Discussion and
Analysis on page 18 for a discussion on perquisites provided to
executives. Perquisites
include:
·
expenses
for corporate apartments, including utilities;
·
air
and ground transportation, meals and lodging for personal travel;
and
·
legal
consultation fees relating to negotiation and review of employment
agreement.
The
following table summarizes the amounts shown in the "Perquisites"
column:
|
Name
|
Year
|
|
Corporate
apartment
|
|
|
Travel
|
|
|
Legal
consultation
|
|
|
Other
|
|
Ronald
L. Rossetti
|
2007
|
|
$
|
41,232
|
|
|
$
|
130,375
|
|
|
$
|
19,828
|
|
|
$
|
—
|
|
David
E. Fountain
|
2007
|
|
|
34,166
|
|
|
|
32,144
|
|
|
|
22,000
|
|
|
|
—
|
|
Kevin
C. Connell
(a)
|
2007
|
|
|
—
|
|
|
|
13,648
|
|
|
|
—
|
|
|
|
—
|
|
(a)
Represents travel by chartered private jet for business meeting in
which
Mr. Connell and Mr. Rossetti attended. Total cost was $27,295 and is
split equally between Mr. Connell and Mr. Rossetti.
|
|
(4)
Mr. Vucovich's
employment with us terminated January 2, 2008.
Fiscal
2007 Grants of Plan-Based Awards
The
following table sets forth information regarding grants of plan-based awards
made to the named executive officers during the fiscal year ended
September 30, 2007:
|
|
|
|
Estimated
future payouts under
Non-Equity
Incentive Plan Awards
(1)
|
|
|
|
|
|
|
|
|
|
|
Name
|
Type
of plan/award
|
Grant
date
|
|
Threshold
($)
(2)
|
|
|
Target
($)
(3)
|
|
|
Maximum
($)
(4)
|
|
|
All
other option awards: Number of securities underlying options
(#)
|
|
|
Exercise
or base price of option awards ($)
(5)
|
|
|
Grant
date fair value of stock and option awards ($)
(6)
|
|
Ronald
L. Rossetti
|
Employment
Agreement
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
David
E. Fountain
|
FY07
EIP
|
|
|
|
—
|
|
|
|
175,000
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Michael
A. Lawler
|
FY07
MIP
(7)
|
|
|
|
15,000
|
|
|
|
30,000
|
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Deanne
M. Tully
|
FY07
MIP
(8)
|
|
|
|
7,500
|
|
|
|
15,000
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Steven
M. Beckerman
|
FY07
MIP
(8)
|
|
|
|
15,000
|
|
|
|
30,000
|
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Kevin
C. Connell
|
Stock
option
|
11/28/06
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
(9)
|
|
$
|
7.10
|
|
|
$
|
137,604
|
|
|
OPC
FY07 SVP Sales and Business Development Plan
|
|
|
|
10,500
|
|
|
|
157,500
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Todd
F. Vucovich
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
*
No maximum set forth in plan.
|
|
(1)
For
additional information concerning performance metrics and payouts
of
non-equity incentive plan awards see pages 13-17.
|
(2)
The
threshold amount represents the amounts payable to the executive
if we met
a specific percentage of our corporate performance goal and practice
unit
performance goal, if applicable, fiscal 2007 under the applicable
plans.
|
(3)
The
target amount represents the amounts payable to the executive if
we met
our corporate performance goal and practice unit performance goal,
if
applicable, for fiscal 2007 under the applicable plans.
|
(4)
The
maximum estimated future payout for Messrs. Lawler and Beckerman
and Ms.
Tully represent the amounts payable to the executive if we met 200%
of our
corporate performance goal, and practice unit performance goal, if
applicable. No maximum payout was established for Messrs.
Fountain and Connell under their applicable plans.
|
(5)
The exercise
price of the options granted to the individual shown above was the
closing
price of Tier's common stock on the day prior to the grant
date.
|
(6)
Represents
the full grant date fair value of each equity-based award, computed
in
accordance with SFAS 123R.
|
(7)
In
June 2007, the Compensation Committee terminated the FY 2007
MIP. At that time Mr. Lawler's incentive compensation
consideration would be made under the FY 2007 EPP MIP. See
page 14 for additional information.
|
(8)
In
June 2007, the Compensation Committee terminated the FY 2007
MIP.
|
(9)
These
options were awarded to Mr. Connell in connection with his promotion
to
Senior Vice President, Sales and Marketing. These options
|
vest
as
to 20% of the underlying shares each year on the anniversary of the
date
granted and expire in ten years.
|
Outstanding
Equity Awards at 2007 Fiscal Year-End
The
following table sets forth for each named executive officer certain information
about stock options and unvested held at the end of the fiscal year ended
September 30, 2007:
|
Option
awards
|
|
Number
of securities underlying unexercised
options
(#)
|
|
|
Option
exercise
price
($)
|
|
Option
expiration
date
|
Name
|
Exercisable
|
Unexercisable
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
L. Rossetti
|
5,000
|
—
|
|
$
|
14.25
|
|
09/01/08
|
|
10,000
|
—
|
|
$
|
17.75
|
|
01/27/09
|
|
20,000
|
—
|
|
$
|
6.81
|
|
07/25/09
|
|
25,000
|
—
|
|
$
|
6.94
|
|
01/21/11
|
|
10,000
|
—
|
|
$
|
19.56
|
|
01/22/12
|
|
10,000
|
—
|
|
$
|
13.75
|
|
01/30/13
|
|
15,000
|
—
|
|
$
|
8.62
|
|
01/27/14
|
|
5,000
|
—
|
|
$
|
9.77
|
|
10/07/14
|
|
20,000
|
—
|
|
$
|
8.30
|
|
06/29/15
|
|
300,000
|
—
|
|
$
|
5.50
|
|
07/25/16
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
30,000
|
45,000
(1)
|
|
$
|
7.85
|
|
08/11/15
|
|
8,000
|
32,000
(2)
|
|
$
|
5.95
|
|
08/23/16
|
|
|
|
|
|
|
|
|
Michael
A. Lawler
|
20,000
|
30,000
(3)
|
|
$
|
8.60
|
|
10/31/14
|
|
8,000
|
32,000
(4)
|
|
$
|
5.95
|
|
08/23/16
|
|
|
|
|
|
|
|
|
Deanne
M. Tully
|
8,000
|
—
|
|
$
|
11.44
|
|
04/05/11
|
|
5,000
|
—
|
|
$
|
16.04
|
|
07/04/12
|
|
6,000
|
4,000
(5)
|
|
$
|
7.81
|
|
11/30/13
|
|
4,000
|
6,000
(6)
|
|
$
|
8.60
|
|
10/31/14
|
|
8,000
|
32,000
(7)
|
|
$
|
5.95
|
|
08/23/16
|
|
|
|
|
|
|
|
|
Steven
M. Beckerman
|
10,000
|
40,000
(8)
|
|
$
|
8.70
|
|
04/06/16
|
|
8,000
|
32,000
(9)
|
|
$
|
5.95
|
|
08/23/16
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
20,000
|
5,000
(10)
|
|
$
|
16.90
|
|
10/03/12
|
|
20,000
|
5,000
(11)
|
|
$
|
7.86
|
|
07/02/13
|
|
3,000
|
2,000
(12)
|
|
$
|
7.81
|
|
11/30/13
|
|
1,200
|
1,800
(13)
|
|
$
|
8.60
|
|
10/31/14
|
|
2,000
|
8,000
(14)
|
|
$
|
7.05
|
|
09/12/16
|
|
—
|
40,000
(15)
|
|
$
|
7.10
|
|
11/27/16
|
|
|
|
|
|
|
|
|
Todd
F. Vucovich
|
2,813
|
—
|
|
$
|
6.00
|
|
05/02/09
|
|
188
|
—
|
|
$
|
6.81
|
|
07/25/09
|
|
5,000
|
—
|
|
$
|
7.41
|
|
02/15/10
|
|
3,000
|
2,000
(16)
|
|
$
|
7.81
|
|
11/30/13
|
|
4,000
|
6,000
(17)
|
|
$
|
8.60
|
|
10/31/14
|
(a)
Vesting of the unexercisable option awards are set forth
below:
Name
|
Footnote
reference
|
Vesting
date
|
Number
|
David
E. Fountain
|
(1)
|
08/12/08
|
15,000
|
|
|
08/12/09
|
15,000
|
|
|
08/12/10
|
15,000
|
|
|
|
|
|
(2)
|
08/24/08
|
8,000
|
|
|
08/24/09
|
8,000
|
|
|
08/24/10
|
8,000
|
|
|
08/24/11
|
8,000
|
Name
|
Footnote
reference
|
Vesting
date
|
Number
|
Michael
A. Lawler
|
(3)
|
11/01/07
|
10,000
|
|
|
11/01/08
|
10,000
|
|
|
11/01/09
|
10,000
|
|
|
|
|
|
(4)
|
08/24/08
|
8,000
|
|
|
08/24/09
|
8,000
|
|
|
08/24/10
|
8,000
|
|
|
08/24/11
|
8,000
|
|
|
|
|
Deanne
M. Tully
|
(5)
|
12/01/07
|
2,000
|
|
|
12/01/08
|
2,000
|
|
|
|
|
|
(6)
|
11/01/07
|
2,000
|
|
|
11/01/08
|
2,000
|
|
|
11/01/09
|
2,000
|
|
|
|
|
|
(7)
|
08/24/08
|
8,000
|
|
|
08/24/09
|
8,000
|
|
|
08/24/10
|
8,000
|
|
|
08/24/11
|
8,000
|
|
|
|
|
Steven
M. Beckerman
|
(8)
|
04/07/08
|
10,000
|
|
|
04/07/09
|
10,000
|
|
|
04/07/10
|
10,000
|
|
|
04/07/11
|
10,000
|
|
|
|
|
|
(9)
|
08/24/08
|
8,000
|
|
|
08/24/09
|
8,000
|
|
|
08/24/10
|
8,000
|
|
|
08/24/11
|
8,000
|
|
|
|
|
Kevin
C. Connell
|
(10)
|
10/04/07
|
5,000
|
|
|
|
|
|
(11)
|
07/03/08
|
5,000
|
|
|
|
|
|
(12)
|
12/01/07
|
1,000
|
|
|
12/01/08
|
1,000
|
|
|
|
|
|
(13)
|
11/01/07
|
600
|
|
|
11/01/08
|
600
|
|
|
11/01/09
|
600
|
|
|
|
|
|
(14)
|
09/13/08
|
2,000
|
|
|
09/13/09
|
2,000
|
|
|
09/13/10
|
2,000
|
|
|
09/13/11
|
2,000
|
|
|
|
|
|
(15)
|
11/28/07
|
8,000
|
|
|
11/28/08
|
8,000
|
|
|
11/28/09
|
8,000
|
|
|
11/28/10
|
8,000
|
|
|
11/28/11
|
8,000
|
|
|
|
|
Todd
F. Vucovich
|
(16)
|
12/01/07
|
1,000
|
|
|
12/01/08
|
1,000
|
|
|
|
|
|
(17)
|
11/01/07
|
2,000
|
|
|
11/01/08
|
2,000
|
|
|
11/01/09
|
2,000
|
Fiscal
2007 Option Exercises and Stock Vested
The
following table sets forth for each named executive officer certain information
about stock options that were exercised during the fiscal year ended
September 30, 2007:
|
|
Option
awards
|
|
Name
|
|
Number
of shares acquired on exercise (#)
|
|
|
Value
realized on exercise ($)
|
|
Ronald
L. Rossetti
(1)
|
|
|
15,000
|
|
|
$
|
64,500
|
|
David
E. Fountain
|
|
|
—
|
|
|
|
—
|
|
Michael
A. Lawler
|
|
|
—
|
|
|
|
—
|
|
Deanne
M. Tully
|
|
|
—
|
|
|
|
—
|
|
Steven
M. Beckerman
|
|
|
—
|
|
|
|
—
|
|
Kevin
Connell
|
|
|
—
|
|
|
|
—
|
|
Todd
F. Vucovich
|
|
|
—
|
|
|
|
—
|
|
(1)
Mr.
Rossetti exercised options to purchase 5,000 shares on February 26,
2007
for a realized value on exercise of $24,500 and options to purchase
10,000
shares on August 1, 2007 for a realized value on exercise of
$40,000.
|
|
Potential
Payments under Termination or Change of
Control
This
section provides information regarding payments and benefits to the named
executive officers that would be triggered by termination of the officer's
employment (including resignation, voluntary termination or involuntary
termination) or a change of control of Tier. A change of control has
been defined in the
Change of Control
section of the Compensation
Discussion and Analysis on page 18.
Other
key terms within our employment agreements with our named executive officers
are
"cause" and "good reason". They are defined as follows:
Cause
shall mean a finding by Tier of:
·
|
a
conviction of the named executive officer of, or a plea of guilty
or
nolo contendere
by the named executive officer to, any
felony;
|
·
|
an
intentional violation by the named executive officer of federal or
state
securities laws;
|
·
|
willful
misconduct or gross negligence by the named executive officer that
has or
is reasonably likely to have a material adverse effect on
Tier;
|
·
|
a
failure of the named executive officer to perform his or her reasonably
assigned duties for Tier that has or is reasonably likely to have
a
material adverse effect on Tier;
|
·
|
a
material violation by the named executive officer of any material
provision of our Business Code of Conduct (or successor policies
on
similar topics) or any other applicable policies in
place;
|
·
|
a
violation by the named executive officer of any provision of our
Proprietary and Confidential Information, Developments, Noncompetition
and
Nonsolicitation Agreement with the named executive officers;
or
|
·
|
fraud,
embezzlement, theft or dishonesty by the named executive officer
against
Tier.
|
Good
reason shall mean, without the named executive officer's prior written consent,
the occurrence of any of the following:
·
|
any
reduction in the named executive officer's base
salary;
|
·
|
any
material diminution of the named executive officer's duties,
responsibilities, powers or
authorities;
|
·
|
any
relocation of his or her principal place of employment by more than
50
miles or requirement that the executive relocate his or her principal
place of residence by more than 50 miles;
or
|
·
|
a
material breach by Tier of any material provision of the employment
agreement.
|
Under
our corporate policy, all employees, including our named executive officers,
are
entitled to payments for base salary and payout of any accrued personal time
off, or PTO, accrued through the termination date, but not yet
paid.
Employment
Agreement—Chief Financial Officer
On
December 11, 2006, we entered into an employment agreement with our Chief
Financial Officer, David E. Fountain. Pursuant to the terms
of this agreement, Mr. Fountain is entitled to certain compensation and
benefits, payable in a lump sum within 30 days of the applicable event and
provided Mr. Fountain signs a separation release. The following table
describes the maximum potential payments that would have been due to Mr.
Fountain as of September 30, 2007, upon designated situations outlined in
his employment agreement.
Benefits
and payments upon termination
|
|
Voluntary
termination
(1)
|
|
|
Involuntary
for cause termination
(1)
|
|
|
Death
or disability
(2)
|
|
|
Involuntary
not for cause termination
(3)
|
|
|
Change
of control
(4)
|
Salary
|
|
$
|
13,462
|
|
|
$
|
13,462
|
|
|
$
|
363,462
|
|
|
$
|
363,462
|
|
|
$
|
1,063,462
|
Bonus
|
|
|
—
|
|
|
|
—
|
|
|
|
504,517
|
|
|
|
504,517
|
|
|
|
1,009,726
|
Stock
options
|
|
|
—
|
|
|
|
—
|
|
|
|
70,740
|
|
|
|
84,694
|
|
|
|
225,831
|
Health
benefits
|
|
|
—
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
36,000
|
Perquisites
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Tax
gross-up
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,035,668
|
Accrued
PTO
|
|
|
71,504
|
|
|
|
71,504
|
|
|
|
71,504
|
|
|
|
71,504
|
|
|
|
71,504
|
Total
|
|
$
|
84,966
|
|
|
$
|
84,966
|
|
|
$
|
1,022,223
|
|
|
$
|
1,036,177
|
|
|
$
|
3,442,191
|
(1)
Amounts
reflect maximum salary
earned but not paid prior to date of termination and personal time
off
accrued through date of occurrence.
|
(2)
Amounts
reflect maximum salary earned but not paid prior to date of termination,
one year base salary and bonus equal to average annual bonus paid
for the
previous three years, or average historic bonus, prorated for number
of
months worked prior to occurrence, bonus equal to average historic
bonus,
immediate vesting of one additional year on all stock options,
twelve
months continuation of health benefits and personal time off accrued
through September 30, 2007.
|
(3)
Amounts
reflect maximum salary earned but not yet paid prior to date of
termination, one year base salary, bonus equal to average historic
bonus
prorated for number of months worked prior to occurrence, bonus
equal to
average historic bonus, immediate vesting of options that would
have
vested before the end of the term of the employment agreement,
twelve
months continuation of health benefits and personal time off accrued
through September 30, 2007.
|
(4)
Amounts
reflect three years base salary and bonus equal to average historic
bonus,
bonus equal to average historic bonus prorated for the number of
months
worked, immediate vesting of any stock options, three years continuation
of health benefits and personal time off accrued through
September 30, 2007.
|
Employment
Agreement—Senior Vice Presidents
We
have
employment agreements with Messrs. Lawler, Beckerman and
Connell. Pursuant to the terms of these agreements each executive is
entitled to certain compensation and benefits, payable in a lump sum within
30
days of event provided the executive signs the separation release, if his
employment is terminated for reasons other than for cause. The
following table describes the maximum potential payments that would have been
due to each of Messrs. Lawler, Beckerman and Connell as of September 30,
2007, upon designated situations outlined in their respective employment
agreements.
Benefits
and payments upon
termination
|
|
Voluntary
termination
(1)
|
|
Voluntary
termination with good reason
(2)
|
|
Involuntary
for
cause
termination
(1)
|
|
Death
or
disability
(3)
|
|
Involuntary
not
for cause termination
(2)
|
|
Change
of
control
(4)
|
Michael
A. Lawler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
9,115
|
|
$
|
246,115
|
|
$
|
9,115
|
|
$
|
246,115
|
|
$
|
246,115
|
|
$
|
483,115
|
Bonus
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,620
|
Stock
options
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
162,283
|
Health
benefits
|
|
|
—
|
|
|
12,000
|
|
|
—
|
|
|
12,000
|
|
|
12,000
|
|
|
18,000
|
Perquisites
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Accrued
PTO
|
|
|
27,802
|
|
|
27,802
|
|
|
27,802
|
|
|
27,802
|
|
|
27,802
|
|
|
27,802
|
Total
|
|
$
|
36,917
|
|
$
|
285,917
|
|
$
|
36,917
|
|
$
|
285,917
|
|
$
|
285,917
|
|
$
|
748,820
|
Steven
M. Beckerman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
8,462
|
|
$
|
228,462
|
|
$
|
8,462
|
|
$
|
228,462
|
|
$
|
228,462
|
|
$
|
448,462
|
Bonus
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Stock
options
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
151,693
|
Health
benefits
|
|
|
—
|
|
|
12,000
|
|
|
—
|
|
|
12,000
|
|
|
12,000
|
|
|
18,000
|
Perquisites
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Accrued
PTO
|
|
|
9,158
|
|
|
9,158
|
|
|
9,158
|
|
|
9,158
|
|
|
9,158
|
|
|
9,158
|
Total
|
|
$
|
17,620
|
|
$
|
249,620
|
|
$
|
17,620
|
|
$
|
249,620
|
|
$
|
249,620
|
|
$
|
627,313
|
Benefits
and payments upon
termination
|
|
|
Voluntary
termination
(1)
|
|
|
Voluntary
termination with good reason
(2)
|
|
|
Involuntary
for cause
termination
(1)
|
|
|
Death or
disability
(2)
|
|
|
Involuntary
not
for cause
termination
(2)
|
|
|
Change
of
control
(4)
|
Kevin
C. Connell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
9,615
|
|
$
|
259,615
|
|
$
|
9,615
|
|
$
|
259,615
|
|
$
|
259,615
|
|
$
|
509,615
|
Bonus
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
335,616
|
Stock
options
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63,646
|
Health
benefits
|
|
|
—
|
|
|
12,000
|
|
|
—
|
|
|
12,000
|
|
|
12,000
|
|
|
18,000
|
Perquisites
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Accrued
PTO
|
|
|
42,067
|
|
|
42,067
|
|
|
42,067
|
|
|
42,067
|
|
|
42,067
|
|
|
42,067
|
Total
|
|
$
|
51,682
|
|
$
|
313,682
|
|
$
|
51,682
|
|
$
|
313,682
|
|
$
|
313,682
|
|
$
|
968,944
|
(1)
Amounts
reflect
maximum salary earned but not yet paid prior to date of termination
and
personal time off accrued through September 30,
2007.
|
(2)
Amounts
reflect maximum salary
earned but not yet paid prior to date of termination, one year base
salary, twelve months continued health
benefits
and
personal time off accrued through September 30,
2007
.
|
(3)
Amounts
reflect
one year base salary, twelve months continued health benefits and
personal
time off accrued through September 30,
2007.
|
(4)
Amounts
reflect
two years base salary and bonus equal to the average bonus paid over
the
last three years, immediate vesting of options
granted
August 24, 2006, immediate vesting of options that would have vested
within eighteen months of date of occurrence, eighteen
months
continued health benefits and personal time off accrued through
September 30, 2007.
|
Effective
February 12, 2007, we entered into a Separation Agreement and Release with
Mr. Todd F. Vucovich, Senior Vice President, Packaged Software and Systems
Integration. Pursuant to this agreement, upon his termination,
Mr. Vucovich was entitled to receive a lump-sum payment of $122,000, which
represents six months of his base compensation plus twelve months of COBRA
expenses. In addition, we agreed to pay Mr. Vucovich up to $75,000 of
relocation expenses, up to $7,500 for executive out-placement services, and
$25,000 for costs incurred with the sale of this residence in Northern
Virginia. Mr. Vucovich's employment with Tier was terminated on
January 2, 2008, at which time he became eligible for these
payouts.
Vice
President, General Counsel and Corporate Secretary
On
July 30, 2003, we entered into an executive severance and change of control
agreement with Ms. Deanne Tully, Vice President, General Counsel and Corporate
Secretary. Pursuant to this agreement, Ms. Tully is entitled to one
year's salary plus one year's health benefits upon involuntary termination
without cause or if a change of control event occurs, payable in a lump-sum
within 30 days of event provided she signs a separation release. The
following table describes the maximum payouts that would have been due at
September 30, 2007 if either of these events had occurred:
Benefits
and payments upon
termination
|
|
Voluntary
termination
with
good
reason
(1)
|
|
Involuntary
for cause termination
(1)
|
|
Death
or
disability
(1)
|
|
Involuntary
not
for
cause
termination
(2)
|
|
Change
of
control
(2)
|
Salary
|
|
$
|
8,462
|
|
$
|
8,462
|
|
$
|
8,462
|
|
$
|
228,462
|
|
$
|
228,462
|
Bonus
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Stock
Options
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Health
Benefits
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,000
|
|
|
12,000
|
Perquisites
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Accrued
PTO
|
|
|
34,619
|
|
|
34,619
|
|
|
34,619
|
|
|
34,619
|
|
|
34,619
|
Total
|
|
$
|
43,081
|
|
$
|
43,081
|
|
$
|
43,081
|
|
$
|
275,081
|
|
$
|
275,081
|
(1)
Amounts reflect maximum salary earned but not yet paid
prior
to date of termination and personal time off accrued through
September 30,
2007.
|
(2)
Amounts
reflect one year base salary, twelve months continued health benefits
and
personal time off accrued through September 30,
2007.
|
DIRECTOR
COMPENSATION
The
Governance and Nominating Committee of the Board determines the compensation
of
our non-employee Board members. Compensation is reviewed annually and
when the Governance and Nominating Committee deems necessary, and is compared
with companies of similar nature, capital investment, revenues and
headcount. In addition to the results of a peer study, prior annual
retainers and per-meeting fees are taken into account to determine overall
compensation.
From
October 1, 2006 through our annual meeting in February 2007, we paid our
non-employee directors as follows:
·
|
an
annual retainer of $20,000, payable quarterly in arrears, for the
chairman
of the Audit Committee and for the lead
director;
|
·
|
an
annual retainer of $15,000, payable quarterly in arrears, for all
other
non-employee directors;
|
·
|
$1,000
for each Board meeting attended;
|
·
|
$1,000
for each Audit Committee meeting attended;
and
|
·
|
$500
for all other committee meetings
attended.
|
Effective
as of our last annual meeting the pay for non-employee directors for attendance
at any committee meeting was increased to $1,000 from $500
previously.
Effective
as of March 6, 2007, a Special Committee for Divestments was
created. The purpose of the Special Committee for Divestments is to
advise management in the divestment process and assist in evaluating offers
for
certain business units. The Special Committee for Divestments is
temporary until such time as the Board determines it is no longer
necessary. The Special Committee for Divestments consists of Morgan
P. Guenther (Chair), Bruce R. Spector, John J. Delucca and
Ronald L. Rossetti. The chair of the Special Committee for
Divestments is paid an annual retainer of $20,000 payable quarterly in
arrears.
In
addition, we reimburse our Board members for reasonable expenses, including
travel related expenses, incurred to attend Board and/or committee
meetings.
The
Governance and Nominating Committee has authorized the grant to each
non-employee director of fully vested options to purchase 20,000 shares of
common stock upon the election to the Board by the stockholders at each annual
meeting of stockholders. Each non-employee director elected by the
Board, and not by the stockholders in conjunction with an annual meeting, is
granted an option on the date of his or her election to purchase a number of
shares of common stock calculated by multiplying 1,677 by the number of full
calendar months remaining from the date of his or her initial election to the
Board until the first anniversary of the prior year's annual
meeting. The closing sale price of a share of our common stock on the
date of the option grant is the exercise price of the option, consistent with
the way we determine exercise prices on other option grants.
Mr.
Rossetti, the only director who is also a Tier employee, receives no
compensation for serving as a director.
Fiscal
2007 Director Compensation
As
described above, our directors were each compensated the annual retainer plus
$1,000 for each meeting attended. The following table sets forth
information regarding the compensation of our non-employee directors for the
fiscal year ended September 30, 2007.
Name
|
|
Fees
earned or paid in cash ($)
|
|
|
Option
awards
($)
(1)
(2)
|
|
|
Total
($)
|
|
Charles
W. Berger
(Chair Audit Committee)
|
|
$
|
38,500
|
|
|
$
|
95,115
|
|
|
$
|
133,615
|
|
Samuel
Cabot III
(Chair Compensation Committee and Lead
Director)
|
|
|
36,000
|
|
|
|
95,115
|
|
|
|
131,115
|
|
John
J. Delucca
|
|
|
11,500
|
|
|
|
70,798
|
|
|
|
82,298
|
|
Morgan
P. Guenther
(Chair Special Committee for Divestitures and Chair
Governance and Nominating Committee)
|
|
|
40,500
|
|
|
|
95,115
|
|
|
|
135,615
|
|
T.
Michael Scott
|
|
|
29,000
|
|
|
|
95,115
|
|
|
|
124,115
|
|
Bruce
R. Spector
|
|
|
26,000
|
|
|
|
95,115
|
|
|
|
121,115
|
|
James
R. Stone
|
|
|
5,750
|
|
|
|
67,926
|
|
|
|
73,676
|
|
(1)
The
amounts included in this column reflect the value of option awards that were
recognized as an expense for financial statement reporting purposes in fiscal
2007, calculated pursuant to SFAS 123R. Assumptions used in the
calculation of these amounts are included in footnote 10 to the audited
consolidated financial statements included in our annual report on Form 10-K
for
the fiscal year ended September 30, 2007. The following table sets
forth each option award represented in the column and the amount included
for
each such award:
Name
|
Date
of award
|
Number
of shares
underlying
options (#)
|
|
Amount
included in
fiscal
2007 ($)
|
Charles
W. Berger
|
08/24/06
|
40,000*
|
$
|
22,004
|
|
02/28/07
|
20,000
|
|
73,111
|
|
|
|
|
|
Samuel
Cabot III
|
08/24/06
|
40,000*
|
|
22,004
|
|
02/28/07
|
20,000
|
|
73,111
|
|
|
|
|
|
John
J. Delucca
|
03/05/07
|
20,000
|
|
70,798
|
|
|
|
|
|
Morgan
P. Guenther
|
08/24/06
|
40,000*
|
|
22,004
|
|
02/28/07
|
20,000
|
|
73,111
|
|
|
|
|
|
T.
Michael Scott
|
08/24/06
|
40,000*
|
|
22,004
|
|
02/28/07
|
20,000
|
|
73,111
|
|
|
|
|
|
Bruce
R. Spector
|
08/24/06
|
40,000*
|
|
22,004
|
|
02/28/07
|
20,000
|
|
73,111
|
|
|
|
|
|
James
R. Stone
|
03/26/07
|
18,337
|
|
67,926
|
*
On August 24, 2006, our non-employee Board members were granted options
to
purchase 40,000 shares of common stock, which vest as to 20% of the
underlying shares granted on the anniversary of the grant
date. On December 10, 2007, the Compensation Committee
passed a resolution to accelerate the vesting of these options effective
December 7, 2007.
|
(2)
The
following table sets forth the outstanding options held by each of our
non-employee directors as of September 30, 2007:
Name
|
|
Options
outstanding (#)
|
|
Charles
W. Berger
|
|
|
120,000
|
|
Samuel
Cabot III
|
|
|
180,000
|
|
John
J. Delucca
|
|
|
20,000
|
|
Morgan
P. Guenther
|
|
|
130,000
|
|
T.
Michael Scott
|
|
|
100,000
|
|
Bruce
R. Spector
|
|
|
83,333
|
|
James
R. Stone
|
|
|
18,337
|
|
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The
Audit Committee has reviewed and discussed the consolidated financial statements
for the fiscal year ended September 30, 2007 with management and McGladrey
& Pullen, LLP, Tier Technologies, Inc.'s registered public accounting firm
for fiscal year 2007. The Audit Committee also reviewed and discussed
with the registered public accounting firm the matters required to be discussed
by Statement of Auditing Standards No. 61, as amended.
The
Audit Committee discussed with the registered public accounting firm its
independence from Tier. The Audit Committee also received from and
discussed with the registered public accounting firm its written disclosures
and
the letter required by Independence Standards Board Standard No. 1.
Based
upon the reviews and discussions noted above, the Audit Committee recommended
to
the Board that the audited financial statements be included in Tier's Annual
Report on Form 10-K for the fiscal year ended September 30,
2007.
The
foregoing report is given by the members of the Audit
Committee: Charles W. Berger (Chair), Samuel Cabot, III and Morgan P.
Guenther.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
The
aggregate fees billed by McGladrey & Pullen, LLP, or McGladrey, to us for
the years ended September 30, 2006 and 2007 are as follows:
(in
thousands)
|
|
2006
|
|
|
2007
|
|
Audit
Fees
(1)
|
|
$
|
307
|
|
|
$
|
346
|
|
Audit
Related Fees
(2)
|
|
|
278
|
|
|
|
230
|
|
Tax
Fees
|
|
|
—
|
|
|
|
|
|
All
Other Fees
|
|
|
—
|
|
|
|
|
|
Total
|
|
$
|
585
|
|
|
$
|
576
|
|
(1)
Represents
fees for the audit of our financial statements, review of our quarterly
financial statements and advice on accounting matters
directly
related to the audit and audit services provided in connection with
other
statutory and regulatory filings.
(2)
Represents
fees associated with the audit of our internal controls over financial
reporting to comply with Section 404 of the Sarbanes-
Oxley
Act
of 2002.
|
|
The
Audit Committee has a policy requiring that it approve the scope, extent and
associated fees of any audit services provided by our independent registered
public accounting firm and that it pre-approve all non-audit related services
performed by the independent registered public accounting firm. For
the fiscal year ended September 30, 2007, the Audit Committee pre-approved
100% of the services performed by McGladrey and did not rely on the
de
minimis
exception under Rule 2-01(c)(7)(i)(C) of Regulation S-X under the
Exchange Act.
PROPOSAL
TWO: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Independent
Accountants
Our
Audit Committee selected McGladrey as our independent registered public
accounting firm for fiscal year 2008, subject to ratification by our
stockholders at the annual meeting. Representatives of McGladrey are
expected to be present at the annual meeting, will have an opportunity to make
a
statement if they so desire and will be available to respond to appropriate
questions.
Stockholder
ratification of the selection of McGladrey as our independent registered public
accounting firm is not required by our Bylaws or otherwise. However, the Audit
Committee is submitting the selection of McGladrey to the stockholders for
ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection of McGladrey, the Audit Committee will reconsider
whether to retain that firm. Even if the selection of McGladrey is
ratified, the Audit Committee in its discretion may select a different
independent registered public accounting firm at any time during the year if
it
determines that such a change would be in the best interests of Tier and our
stockholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL
TWO.
OTHER
MATTERS
The
Board knows of no other matters that will be presented for consideration at
the
annual meeting. If any other matters are properly brought before the annual
meeting, it is the intention of the persons named in the accompanying proxy
to
vote on such matters in accordance with their best judgment.
ADDITIONAL
INFORMATION
Stockholder
Proposals for our next Annual
Meeting
If
a
stockholder intends to present a proposal for inclusion in the proxy statement
for our next annual meeting, they must follow the procedures outlined in Rule
14a-8 under the Exchange Act. Such proposals must be addressed to
Tier Technologies, Inc., Attention: Corporate Secretary, 10780 Parkridge
Boulevard, Suite 400, Reston, Virginia, 20191, and received no later than
September 17, 2008.
Proposals
not intended to be included in next year's proxy statement, but that are instead
sought to be presented directly at the 2009 annual meeting, including
nominations of director candidates, must be received by us at the above
mentioned address no later than 60 days nor more than 90 days prior to the
date
of such meeting, but if we give less than 70 days advance notice or prior public
disclosure of the date of such meeting, we must receive such proposals and
director nominations by the close of business on the tenth day following the
mailing of notice of the date of such annual meeting or public disclosure of
the
date of such annual meeting, whichever comes first.
If
you and other residents at your mailing address own shares of our common stock
in street name, your broker, bank or other nominee record holder may have
notified you that your household will receive only one notice of Internet
availability of proxy materials, annual report and proxy statement for each
company in which you hold stock through that broker or bank. Each
stockholder will continue to receive a separate proxy card or voting instruction
card. If you would like to receive additional copies of the notice of
Internet availability of proxy materials, annual report and proxy statement,
or
if you are receiving multiple copies and would like to receive only one copy
for
your household, you should contact your broker, bank or other nominee holder,
or
you may contact us by mail or phone at Tier Technologies, Inc., 10780 Parkridge
Boulevard, Suite 400, Reston, Virginia 20191, attention Corporate Secretary,
(571) 382-1000.
A
copy of the our Annual Report on Form 10-K for the fiscal year ended September
30, 2007 is available without charge upon written request to Corporate
Secretary, Tier Technologies, Inc., 10780 Parkridge Boulevard, Suite 400,
Reston, Virginia 20191.
By
Order of the Board of Directors
|
|
|
|
|
Deanne
M. Tully
|
|
Secretary
|
|
|
January 15,
2008
|
|
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