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
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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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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£
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Definitive
Proxy Statement
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£
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Definitive
Additional Materials
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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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Keith
S. Omsberg
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10780
Parkridge Boulevard
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Corporate
Secretary
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Reston,
Virginia 20191
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February
XX
,
2009
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Dear
Stockholder:
You are
invited to attend the Annual Meeting of Stockholders of Tier Technologies, Inc.
on March 11, 2009 at 10:00 a.m. Eastern Time at Tier’s headquarters located at
10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191.
We
consider the votes of all shareholders important, no matter how many or how few
shares you may own. Regardless of whether you plan to attend the annual meeting,
we encourage you to submit your proxy promptly, following the instructions on
the enclosed
GOLD
proxy card. You may submit your proxy by telephone, by Internet, or by
mail.
Discovery
Equity Partners (“Discovery”) has provided notice that it intends to nominate
and solicit proxies for an opposition slate of two nominees for election as
directors at the Meeting.
THE BOARD OF DIRECTORS URGES YOU NOT
TO SIGN OR RETURN ANY PROXY CARD SENT TO YOU BY DISCOVERY.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES ON THE ENCLOSED
GOLD
PROXY
CARD.
At the
annual meeting, stockholders will elect directors, vote on the ratification of
the selection of Tier's independent registered public accounting firm, and
consider a shareholder proposal described in the enclosed proxy
materials. 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 16, 2009 are
entitled to notice of, to attend, and to vote at the annual
meeting.
Your
vote is extremely important. If you have questions or require any assistance
with voting your shares, please call our proxy solicitor, Laurel Hill Advisory
Group, toll-free at (888) 742-1305.
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By
Order of the Board of Directors,
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Keith
S. Omsberg
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Secretary
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Reston,
Virginia
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February
XX
,
2009
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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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10:00
a.m. Eastern Time on Wednesday, March 11, 2009.
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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 nine directors;
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(2)
To ratify the selection of McGladrey & Pullen, LLP as our
independent
registered public accounting firm for the
fiscal
year ending September 30, 2009;
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(3)
To act on one shareholder proposal expected to come before the meeting;
and
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(4) 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 at the close of business on
January 16, 2009.
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Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting to Be Held on
March 11, 2009.
The proxy statement and Tier’s Annual
Report on Form 10-K for fiscal year 2008, as amended on January XX, 2009,
are available electronically at
http://materials.proxyvote.com/88650Q
.
Our
Board of Directors has nominated for election as directors the seven persons
named in Proposal One in the proxy statement accompanying this Notice, each
of whom is currently serving as a director of the Company. We believe
that these individuals have the independence, knowledge, and commitment to
deliver value for Tier and its shareholders. Please note that
Discovery Equity Partners (“Discovery”) has provided notice that it intends to
nominate two nominees for election as directors at the annual meeting and
solicit proxies for use at the annual meeting to vote in favor of its own
nominees. In addition, Giant Investment, LLC, an affiliate of
Parthenon Capital (collectively, “Parthenon”), has provided notice that it
intends to nominate two nominees for election as directors at the annual
meeting (although it does not intend to solicit proxies from any
shareholder). We do not endorse the election of any of Discovery’s or
Parthenon’s nominees as directors. You may receive proxy
solicitation materials from Discovery or other persons or entities
affiliated with them, including an opposition proxy statement and proxy
card.
Y
OUR BOARD OF DIRECTORS URGES YOU NOT
TO SIGN OR RETURN ANY PROXY CARD SENT TO YOU BY DISCOVERY OR ANY PERSON OTHER
THAN TI
ER.
THE
BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE BOARD'S NOMINEES ON THE ENCLOSED
GOLD
PROXY
CARD.
Even if
you have previously signed a proxy card sent by another party, you have the
right to change your vote by using the enclosed
GOLD
proxy card to submit your proxy by telephone, by Internet, or by signing,
dating, and returning the enclosed
GOLD
proxy card in the
postage-paid envelope provided. Only the latest dated proxy you
submit will be counted. We urge you to disregard any proxy card sent
to you by Discovery or any person other than Tier.
Keith
S. Omsberg
Corporate
Secretary
February
XX
,
2009
TABLE
OF CONTENTS
INFORMATION
ABOUT THE PROXY MATERIALS AND OUR 2009 ANNUAL MEETING OF
STOCKHOLDERS
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1
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GENERAL
INFORMATION
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1
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1.
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WHO
IS MAKING THIS SOLICITATION?
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1
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2.
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WHAT
INFORMATION IS CONTAINED IN THESE MATERIALS?
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1
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3.
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WHEN
AND WHERE IS THE ANNUAL MEETING?
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2
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4.
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WHAT
PROPOSALS ARE BEING PRESENTED FOR SHAREHOLDER VOTE AT THE ANNUAL
MEETING?
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2
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5.
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WHAT
OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING?
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3
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6.
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WHO
WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL
MEETING?
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3
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7.
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WHAT
DO I NEED FOR ADMISSION TO THE ANNUAL MEETING?
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3
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8.
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WHAT
SHOULD I DO IF I RECEIVE A PROXY CARD FROM DISCOVERY?
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3
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9.
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HOW
CAN I FIND TIER'S PROXY MATERIALS AND ANNUAL REPORT ON THE
INTERNET?
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3
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10.
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WHOM
SHOULD I CALL IF I HAVE QUESTIONS OR NEED ADDITIONAL COPIES OF THE PROXY
MATERIALS?
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3
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11.
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WHO
IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
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4
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12.
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WHAT
IS THE RECORD DATE AND WHAT DOES IT MEAN?
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4
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13.
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HOW
CAN I VOTE MY SHARES OF COMMON STOCK?
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4
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14.
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HOW
CAN I REVOKE A PROXY OR CHANGE MY VOTING INSTRUCTIONS?
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4
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15.
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WILL
MY SHARES BE VOTED IF I DO NOT PROVIDE INSTRUCTIONS TO MY
BROKER?
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5
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16.
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WHO
WILL COUNT THE VOTES?
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5
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17.
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WHAT
ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL ONE, THE ELECTION OF
DIRECTORS?
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6
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18.
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WHATE
VOTE IS NEEDED TO ELECT THE DIRECTORS?
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6
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19.
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WHAT
ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL TWO, THE RATIFICATION OF
THE SELECTION OF MCGLADREY & PULLEN, LLp AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM?
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6
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20.
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WHAT
VOTE IS NEEDED TO RATIFY THE SELECTION OF MCGLADREY & PULLEN, LLP AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM?
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7
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21.
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WHATE
ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL THREE, THE SHAREHOLDER
PROPOSAL?
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7
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22.
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WHAT
VOITE IS NEEDED TO APPROVE THE SHAREHOLDER PROPSAL?
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7
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23.
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HOW
MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
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7
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24.
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WHAT
IF A QUORUM IS NOT PRESENT AT THE MEETING?
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7
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25.
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WHAT
IF I RETURN BY GOLD PROXY CARD BUT DO NOT GIVE VOTING
INSTRUCTIONS?
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7
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26.
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WHAT
IF OTHER MATTERS ARE VOTED ON AT THE MEETING?
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7
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27.
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WHAT
DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION
CARD?
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8
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28.
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WHERE
CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
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8
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STOCK
OWNERSHIP
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9
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CORPORATE
GOVERNANCE MATTERS
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10
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MEETING
AND COMMITTEES OF THE BOARD OF DIRECTORS
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13
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PROPOSAL
ONE: ELECTION OF DIRECTORS
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15
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COMPENSATION
COMMITTEE REPORT
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17
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COMPENSATION
DISCUSSION AND ANALYSIS
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17
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EXECUTIVE
COMPENSATION
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27
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SUMMARY COMPENSATION
TABLE
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28
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FISCAL 2008 GRANTS OF
PLAN-BASED AWARDS
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31
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OUTSTANDING EQUITY AWARDS AT
2008 FISCAL YEAR-END
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32
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FISCAL 2008 OPTION EXERCISES
AND STOCK VESTED
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34
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DIRECTOR
COMPENSATION
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39
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REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
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41
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PRINCIPAL
ACCOUNTING FEES AND SERVICES
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41
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PROPOSAL
TWO: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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42
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PROPSAL
THREE: SHAREHOLDER PROPOSAL
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42
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OTHER
MATTERS
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46
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ADDITIONAL
INFORMATION
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46
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APPENDIX
A
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47
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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 MARCH 11, 2009
This
proxy statement is furnished in connection with the solicitation by the Board of
Directors of Tier Technologies, Inc., a Delaware corporation (“Tier,” the
“Company,” “we,” “us,” or “our”), of proxies for use in voting at the 2009
Annual Meeting of Stockholders to be held at Tier’s headquarters located at
10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191, on March 11, 2009,
at 10:00 a.m., local time, and any adjournment or postponement
thereof. On or about February XX, 2009, we began mailing this proxy
statement, the enclosed
GOLD
proxy card, and the
Company’s Annual Report on Form 10-K for the fiscal year ended September
30, 2008, as amended on January XX, 2009, to shareholders entitled to vote at
the annual meeting.
We have
received notice from Discovery Equity Partners (“Discovery”) of its intention to
nominate two nominees (collectively, the “Discovery Nominees”) for election to
the Company’s Board of Directors at the annual meeting. The Discovery
Nominees are not endorsed by our Board of Directors. We urge
shareholders NOT to vote any proxy card that you may receive from
Discovery.
The
Company has also received notice from Giant Investment, LLC, an affiliate of
Parthenon Capital (collectively, “Parthenon”), of its intention to nominate
two nominees (collectively, the “Parthenon Nominees”) for election to the
Company’s Board of Directors at the annual meeting. The Parthenon
Nominees are not endorsed by our Board of Directors. Parthenon has
represented that it does not intend to solicit proxies for its nominees, but in
the event that Parthenon does solicit proxies, we urge shareholders NOT to vote
any proxy card that you may receive from Parthenon.
Our
Board of Directors urges you to vote
FOR ALL
of our
nominees for director.
We are
not responsible for the accuracy of any information contained in any proxy
solicitation materials filed or disseminated by, or on behalf of, any other
party or any other statements that any other party may otherwise
make.
INFORMATION
ABOUT THE PROXY MATERIALS AND OUR 2009 ANNUAL MEETING OF
STOCKHOLDERS
GENERAL
INFORMATION
1
.
WHO IS MAKING THIS
SOLICITATION?
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.
2. WHAT
INFORMATION IS CONTAINED IN THESE MATERIALS?
The
information included in this proxy statement relates to the proposals to be
voted on at the annual meeting, the voting process, the compensation of
directors and our most highly paid executive officers, and certain other
required information. Our Annual Report on Form 10-K for the year
ended
September
30, 2008, as amended, which includes the Company’s audited consolidated
financial statements, is also enclosed.
3. WHEN
AND WHERE IS THE ANNUAL MEETING?
The
Annual Meeting of Stockholders of Tier Technologies, Inc. will be held on
March 11, 2009 at 10:00 a.m. Eastern Time, at Tier’s headquarters located
at 10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191.
4.
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WHAT
PROPOSALS ARE BEING PRESENTED FOR STOCKHOLDER VOTE AT THE ANNUAL
MEETING?
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Three
proposals are scheduled for voting at the annual meeting:
PROPOSAL
1. Election of Directors:
THE
BOARD RECOMMENDS THAT YOU VOTE FOR ITS NOMINEES: CHARLES W. BERGER,
SAMUEL CABOT III, JOHN J. DELUCCA, MORGAN P. GUENTHER, PHILIP G. HEASLEY, DAVID
A. POE, AND RONALD L. ROSSETTI, 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
13. Information regarding director compensation can be found
beginning on page 39.
PROPOSAL
2. Ratification of Selection of McGladrey & Pullen,
LLP:
THE
BOARD 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, 2009.
You can
find information about Tier's relationship with McGladrey & Pullen, LLP
beginning on page 41.
PROPOSAL
3. Shareholder Proposal:
THE
BOARD RECOMMENDS THAT YOU VOTE AGAINST A SHAREHOLDER PROPOSAL, WHICH REQUESTS
THAT THE BOARD TAKE TWO SEPARATE ACTIONS: (1) ELIMINATE OUR
SHAREHOLDER RIGHTS PLAN AND (2) REVISE OUR BYLAWS TO PERMIT THE HOLDERS OF 10%
OF OUR COMMON STOCK TO CALL SPECIAL MEETINGS OF SHAREHOLDERS.
You can
find information about the shareholder proposal beginning on page
42. Because the shareholder proposal presents a non-binding
resolution, we will not be required to take the requested action if the proposal
is approved. However, if shareholders approve the proposal, we will
reevaluate our shareholder rights plan and the bylaw regarding special meetings
in light of the vote.
For the
shareholder proposal to be properly presented at the annual meeting, the
shareholder that submitted the proposal (or a qualified representative of that
shareholder) must appear at the annual meeting to present the
proposal. For these purposes, to be considered a qualified
representative of a shareholder, a person must be a duly authorized officer,
manager, or partner of that shareholder or must be authorized by a writing
executed by the shareholder or an electronic transmission delivered by the
shareholder to act for the shareholder as proxy at the annual meeting, and such
person must produce the writing or electronic transmission, or a reliable
reproduction of the writing or electronic transmission, at the annual
meeting.
We will
also consider any other business that properly comes before the annual
meeting.
5. WHAT
OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING?
We do
not know of any other matters that will come before the shareholders at the
annual meeting. The Chairman of the annual meeting may refuse to
allow presentation of a proposal or a nomination for the Board if the proposal
or nomination was not properly submitted. The requirements for
properly submitting proposals and nominations for this year's annual meeting
were described in our proxy statement for the 2008 annual meeting and are
similar to those described on page 46 for next year's meeting.
6. WHO
WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING?
Tier is
making this solicitation of proxies and will bear all related
costs. We will conduct the solicitation by mail, personally,
telephonically, through the Internet, or by facsimile through our officers,
directors, and employees identified on Appendix A, none of whom will
receive additional compensation for assisting with the
solicitation. We may also solicit shareholders through press releases
issued by the Company, advertisements in periodicals, and postings on the
Company’s website. We have also retained Laurel Hill Advisory Group
to assist in the solicitation of proxies, for a fee estimated to be
approximately $8,500 plus out-of-pocket expenses. In addition, we
have agreed to indemnify Laurel Hill against certain liabilities arising out of
or in connection with the engagement. Laurel Hill has advised us that
approximately 20 of its employees will be involved in the proxy solicitation by
Laurel Hill on behalf of Tier.
7.
WHAT DO I NEED FOR ADMISSION TO THE ANNUAL MEETING?
You are
entitled to attend the annual meeting only if you are a shareholder of record or
a beneficial owner of Tier stock as of the close of business on January 16,
2009, or you hold a valid proxy for the annual meeting. If you are
the shareholder of record, your name will be verified against the list of
shareholders of record prior to your admittance to the annual
meeting. You should be prepared to present photo identification for
admission. If you hold your shares in street name, you should provide
proof of beneficial ownership on the record date, such as a brokerage account
statement showing that you owned Tier common stock as of the record date, a copy
of the
GOLD
voting instruction card provided by your broker, bank, or other nominee, or
other similar evidence of ownership as of the record date, as well as your photo
identification, for admission. If you do not provide photo
identification or comply with the other procedures outlined above upon request,
you will not be admitted to the annual meeting.
8. WHAT
SHOULD I DO IF I RECEIVE A PROXY CARD FROM DISCOVERY?
Discovery
has provided notice that it intends to nominate two nominees for election as
directors at the annual meeting and solicit proxies for use at the annual
meeting to vote in favor of its nominees. You may receive proxy
solicitation materials from Discovery, including an opposition proxy statement
and proxy card.
OUR
BOARD OF DIRECTORS URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD SENT TO YOU BY
DISCOVERY.
Even if you have previously signed a proxy card
sent by Discovery, you have the right to change your vote by following the
instructions on the
GOLD
proxy card to submit your proxy by telephone or by Internet or by signing,
dating, and mailing the enclosed
GOLD
proxy card in the postage-paid envelope provided. Only the latest
dated proxy you submit will be counted. We urge you to disregard any
proxy card sent to you by Discovery or any person other than Tier.
9. HOW
CAN I FIND TIER’S PROXY MATERIALS AND ANNUAL REPORT ON THE
INTERNET?
Our
proxy statement and Annual Report on Form 10-K for fiscal year 2008, as
amended on January XX, 2009, are available electronically at
http://materials.proxyvote.com/88650Q
.
10.
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WHOM
SHOULD I CALL IF I HAVE QUESTIONS OR NEED ADDITIONAL COPIES OF THE PROXY
MATERIALS?
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If you
have questions, require any assistance with voting your shares, or need
additional copies of this proxy statement, please call our proxy solicitor,
Laurel Hill Advisory Group, toll-free at (888) 742-1305.
VOTING
MECHANICS
11. 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 16, 2009, 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 19,734,863 shares of our
common stock outstanding and entitled to vote.
Except
in connection with Proposal One (the election of directors), each share of
common stock is entitled to one vote for each matter to be voted on at the
annual meeting. In connection with the election of directors, each
share is entitled to nine votes, one vote for each board seat that is being
elected. 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.
12. WHAT
IS THE RECORD DATE AND WHAT DOES IT MEAN?
The
record date is January 16, 2009. 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.
13. HOW
CAN I VOTE MY SHARES OF COMMON STOCK?
There
are four ways to vote for the Board's nominees and on the other matters as set
forth in this proxy statement:
·
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Telephone:
If your proxy
card or voting instruction card provides instructions for proxy
authorization by telephone, follow the instructions on your proxy card or
voting instruction card;
OR
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·
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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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·
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In-Person:
If you are a
record holder or have obtained a valid proxy from the record holder, mark,
sign and submit a ballot during the 2009 Annual Meeting of Stockholders on
March 11, 2009 at 10:00 a.m. Eastern Time;
OR
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·
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Interne
t:
Follow
the instructions for Internet proxy authorization on your proxy card or
voting instruction card.
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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 specify how your votes are cumulated you must do so in writing with a
proxy card or, if you are a record holder of Tier stock or have obtained a valid
proxy from the record holder, in person at the annual meeting.
14.
HOW CAN I REVOKE A PROXY OR CHANGE MY VOTING INSTRUCTIONS?
You can
revoke a proxy before the close of voting at the annual meeting by:
·
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Giving
written notice to Tier's Corporate Secretary located at 10780 Parkridge
Boulevard, Suite 400, Reston, Virginia
20191;
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·
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Submitting
a new proxy card bearing a date later than your last proxy
card;
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·
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Following
the instructions for Internet proxy authorization that appear on the proxy
card;
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·
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Following
the instructions that appear on the proxy card for proxy authorization by
telephone; or
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·
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If
you are a record holder of Tier stock or have obtained a valid proxy from
the record holder, attending the annual meeting and voting in
person. Attendance at the annual meeting will not, by itself,
revoke a proxy.
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15.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE INSTRUCTIONS TO MY
BROKER?
If you
are the beneficial owner of shares held in “street name” by a broker, the
broker, as the record holder of the shares, is required to vote those shares in
accordance with your instructions. If you do not give instructions to
the broker, the broker will be entitled to vote the shares with respect to
“discretionary” proposals but will not be permitted to vote the shares with
respect to “non-discretionary” proposals (those shares are treated as “broker
non-votes”). The shareholder proposal is a “non-discretionary”
proposal.
If
Discovery solicits proxies to elect Discovery’s nominees to the Board at the
annual meeting, then the election of directors will also be a
“non-discretionary” proposal for any brokerage accounts solicited by
Discovery. As a result, if your shares are held in “street name” and
Discovery provides you with proxy solicitation materials through your broker and
you do not provide instructions as to how your shares are to be voted in the
election of directors, your broker or other nominee will not be able to vote
your shares in the election of directors, and your shares will not be voted for
any of Tier’s nominees. We urge you to provide instructions to your
broker or nominee so that your votes may be counted on this important
matter. We urge you to vote your shares by following the instructions
provided on the enclosed
GOLD
proxy card and returning
the
GOLD
proxy card to your bank,
broker, or other nominee to ensure that your shares will be voted on your
behalf.
16.
WHO WILL COUNT THE VOTES?
A
representative of IVS Associates, Inc., an independent voting services company,
will tabulate the votes and act as Inspector of Elections.
VOTING
INFORMATION
17.
|
WHAT
ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL 1, THE ELECTION OF
DIRECTORS?
|
Shareholders
may use the enclosed
GOLD
proxy card to:
·
|
Vote
FOR (in favor of) all of the Board's
nominees;
|
·
|
WITHHOLD
votes from all nominees; or
|
·
|
WITHHOLD
votes from specific Board nominees;
or
|
·
|
Provide
instructions for cumulating votes for one or more specific Board
nominees.
|
18. WHAT
VOTE IS NEEDED TO ELECT THE DIRECTORS?
Directors
will be elected by the affirmative vote of a plurality of votes cast by
shareholders entitled to vote on the matter, which means that the nine director
nominees with the highest number of affirmative votes will be
elected.
Tier’s
certificate of incorporation gives shareholders the right to cumulate their
votes. This means that a shareholder has the right to give any one
nominee a number of votes equal to the number of directors to be elected
multiplied by the number of shares the shareholder would otherwise be entitled
to vote, or to distribute such votes among as many nominees (up to the number of
persons to be elected) as the shareholder may wish. Shareholders may
specify how their votes are to be cumulated with respect to the Board’s nominees
by giving instructions on the enclosed form of proxy as to how the votes are to
be cumulated or, if the shareholder is a record holder or has obtained a valid
proxy from the record holder, by voting in person at the annual
meeting.
Unless
you specify how your votes are to be cumulated among the Board’s nominees, the
proxy solicited by the Board authorizes the proxies named on the proxy card to
cumulate votes that you are entitled to cast at the annual meeting in connection
with the election of directors; provided that the proxies will not cumulate
votes for any nominee from whom you have withheld authority to
vote. To specify different directions with regard to cumulative
voting, including to direct that the proxy holders cumulate votes with respect
to a specific Board nominee or nominees, you must mark the appropriate box on
the front of the proxy card and write your instructions on the reverse
side.
19.
|
WHAT
ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL 2, THE RATIFICATION OF THE
SELECTION OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM?
|
Shareholders
may:
·
|
Vote
FOR (in favor of) the ratification;
|
·
|
Vote
AGAINST the ratification; or
|
·
|
ABSTAIN
from voting on the ratification.
|
20.
|
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
if it receives the affirmative vote of a majority of the shares voting on the
matter.
21.
|
WHAT
ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL 3, THE SHAREHOLDER
PROPOSAL?
|
Shareholders
may:
·
|
Vote
FOR (in favor of) the proposal;
|
·
|
Vote
AGAINST the proposal; or
|
·
|
ABSTAIN
from voting on the proposal.
|
22. WHAT
VOTE IS NEEDED TO APPROVE THE SHAREHOLDER PROPOSAL?
The
shareholder proposal will be approved if it receives the affirmative vote of a
majority of the shares voting on the
matter.
23.
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 are 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.
24. WHAT
IF A QUORUM IS NOT PRESENT AT THE MEETING?
If a
quorum is not present at the scheduled time of the annual meeting, we may
adjourn the meeting, either with or without the vote of the
shareholders. If we propose to have the shareholders vote whether to
adjourn the meeting, the proxyholders will exercise their discretion to vote all
shares for which they have authority in favor of the adjournment.
25.
WHAT IF I RETURN MY
GOLD
PROXY CARD BUT
DO NOT GIVE VOTING INSTRUCTIONS?
If you
sign your
GOLD
proxy card but do not give voting instructions, the shares represented by that
proxy will be voted as recommended by the Board. The Board recommends
a vote
FOR
the election
of the seven director nominees named in this Proxy Statement,
FOR
Proposal 2, the
ratification of McGladrey & Pullen, LLP as our independent registered public
accounting firm for 2009, and
AGAINST
the shareholder
proposal under Proposal 3. Unless you specify how your votes are to
be cumulated among the Board’s nominees, the
GOLD
proxy card authorizes the proxies named on the card to cumulate votes that you
are entitled to cast at the annual meeting at their discretion among the Board’s
nominees in connection with the election of directors.
26. WHAT
IF OTHER MATTERS ARE VOTED ON AT THE MEETING?
If any
other matters are properly presented at the Meeting for consideration, the
persons named as proxies in the enclosed
GOLD
proxy card will have discretion to vote on those matters for you. On
the date we filed this Proxy Statement with the Securities and Exchange
Commission, the Board did not know of any other matter to be raised at the
Meeting.
27.
|
WHAT
DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION
CARD?
|
If your
shares are registered differently or are held in more than one account, you will
receive a
GOLD
proxy card or
GOLD
voting instruction card
for each account. To ensure that all of your shares are voted, please
use all the
GOLD
proxy cards and
GOLD
voting instruction cards
you receive to submit your proxy for your shares by telephone or by Internet or
complete, sign, date, and return a
GOLD
proxy card or
GOLD
voting instruction card
for each account.
As
previously noted, Discovery has provided notice that it intends to nominate two
nominees for election as directors at the annual meeting and solicit proxies for
use at the annual meeting to vote in favor of its nominees. As a
result, you may receive proxy cards from both Discovery and the
Company. To ensure shareholders have the Company’s latest proxy
information and materials to vote, the Board of Directors expects to conduct
multiple mailings prior to the date of the annual meeting, each of which will
include a
GOLD
proxy card regardless of
whether or not you have previously submitted your proxy. Only the
latest dated proxy you submit will be counted.
OUR BOARD OF DIRECTORS URGES YOU NOT
TO SIGN OR RETURN ANY PROXY CARD SENT TO YOU BY
DISCOVERY.
Even if you have previously signed a proxy card
sent by Discovery, you have the right to change your vote by re-submitting your
proxy by telephone or by Internet or by signing, dating, and returning the
enclosed
GOLD
proxy card in the
postage-paid envelope provided. Only the latest dated proxy you
submit will be counted. We urge you to disregard any proxy card sent
to you by Discovery.
28. WHERE
CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
Tier
will publish final results of the voting in our quarterly report on
Form 10-Q for the second quarter of fiscal 2009, if we have not published a
current report on Form 8-K containing such information at an earlier
date. You will be able to read and print a copy of the Form 10-Q or
Form 8-K on our website,
http://www.tier.com
,
by choosing Investor Relations, Financial Information, and SEC Filings. You will
also be able find the report by searching the SEC EDGAR filings at
http://www.sec.gov
.
STOCK
OWNERSHIP
Directors
and Executive Officers
The
following table sets forth certain information regarding the ownership of our
common stock as of January 16, 2009 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.
|
|
Common
stock beneficially owned
|
|
Name
of beneficial owner
(1)
|
|
Total
number of shares
|
|
|
Percent
of class
(2)
|
|
Charles
W. Berger
|
|
|
140,000
|
(3)
|
|
|
*
|
|
Samuel
Cabot III
|
|
|
214,810
|
(4)
|
|
|
1.1
|
%
|
John
J. Delucca
|
|
|
40,000
|
(5)
|
|
|
*
|
|
Morgan
P. Guenther
|
|
|
151,000
|
(6)
|
|
|
*
|
|
Philip
G. Heasley
|
|
|
10,002
|
(7)
|
|
|
*
|
|
David
A. Poe
|
|
|
6,668
|
(8)
|
|
|
*
|
|
James
R. Stone
|
|
|
38,337
|
(9)
|
|
|
*
|
|
Steven
M. Beckerman
|
|
|
—
|
|
|
|
*
|
|
Kevin
C. Connell
|
|
|
77,400
|
(10)
|
|
|
*
|
|
David
E. Fountain
|
|
|
—
|
|
|
|
*
|
|
Ronald
W. Johnston
|
|
|
—
|
|
|
|
*
|
|
Michael
A. Lawler
|
|
|
131,704
|
|
|
|
*
|
|
Keith
S. Omsberg
|
|
|
21,900
|
(11)
|
|
|
*
|
|
Ronald
L. Rossetti
|
|
|
442,365
|
(12)
|
|
|
2.2
|
%
|
Deanne
M. Tully
|
|
|
—
|
|
|
|
*
|
|
All
directors and executive officers as a group (13 persons)
|
|
|
1,142,482
|
(13)
|
|
|
5.5
|
%
|
*
Less than 1%
|
|
(1)
Address: 10780 Parkridge Blvd, Suite 400, Reston, Virginia
20191.
|
|
(2)
The percentages shown are based on 19,734,863 shares of common stock
outstanding as of January 16, 2009.
|
|
(3)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(4)
Includes 195,000 shares issuable upon the exercise of options exercisable
on or before March 17, 2009.
|
|
(5)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(6)
Includes 150,000 shares issuable upon the exercise of options exercisable
on or before March 17, 2009.
|
|
(7)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(8)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(9)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(10)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(11)
Consists entirely of shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
(12)
Includes 415,000 shares issuable upon the exercise of options exercisable
on or before March 17, 2009.
|
|
(13)
Includes 1,094,307 shares issuable upon the exercise of options
exercisable on or before March 17, 2009.
|
|
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, 2008, our officers, directors and
greater than ten percent beneficial owners complied with all Section 16(a)
filing requirements, with the exception of Ronald L. Rossetti and Philip
G. Heasley. Mr. Rossetti filed one late Form 4, which related
to one transaction. Mr. Heasley filed one late Form 3 and one
late Form 4, which related to one
transaction.
|
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 16, 2009.
|
Name
of beneficial owner
|
|
Amount
and nature of beneficial ownership
|
|
|
Percent
of class
|
|
Wells
Fargo & Company
(1)
|
|
|
2,624,753
|
|
|
|
13.3
|
%
|
Discovery
Group I, LLC
(2)
|
|
|
1,957,563
|
|
|
|
9.9
|
%
|
Heartland
Advisors, Inc.
(3)
|
|
|
1,891,430
|
|
|
|
9.6
|
%
|
Giant
Investment, LLC
(4)
|
|
|
1,799,322
|
|
|
|
9.1
|
%
|
Dimensional
Fund Advisors
(5)
|
|
|
1,764,020
|
|
|
|
8.9
|
%
|
Peninsula
Capital Management, LP
(6)
|
|
|
998,524
|
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
(1) Based
solely on information contained in a Schedule 13G filed with the SEC on
January 24, 2008 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 December 31,
2007.
|
(2) Address:
191 North Wacker Drive, Suite 1685, Chicago, Illinois
60606. Based solely on information contained in a Schedule
13D/A filed with the SEC by Discovery Group I, LLC on December 4,
2008. Discovery Group I, LLC is the general partner of
Discovery Equity Partners, L.P. Discovery Equity Partners, L.P.
beneficially owns 1,684,608 shares of common stock and Discovery Group I,
LLC beneficially owns 1,957,563 shares of common stock. In
addition, Daniel J. Donoghue and Michael R. Murphy are the managing
members of Discovery Group I, LLC and may be deemed to beneficially own
1,957,563 shares of common stock.
|
(3) Address: 789
North Water Street, Milwaukee, Wisconsin 53202. Based solely on
information contained in a Schedule 13G/A filed with the SEC by Heartland
Advisors, Inc. on February 8, 2008. This table reflects
the shares of common stock that may be deemed beneficially
owned by Heartland Advisors, Inc. as of December 31,
2007.
|
(4) Address: 265
Franklin Street, 18th Floor, Boston, Massachusetts 02110. Based
solely on information contained in a Schedule 13D/A filed with the SEC by
Giant Investments, LLC on December 30, 2008. 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 1,748,401 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 1,799,322 shares of common stock.
|
(5) 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 6, 2008. This table
reflects the shares of common stock owned by Dimensional Fund Advisors
Inc. on December 31, 2007.
|
(6) Address: 235
Pine Street, Suite 1600, 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 April 2,
2008. This table reflects the shares of common stock that may
be deemed beneficially owned by Peninsula Capital Management, LP and Scott
Bedford as of March 13, 2008. Scott Bedford is President of
Peninsula Capital Management, Inc., which is the general partner of
Peninsula Capital Management, LP.
|
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 each of its
current directors other than Mr. Rossetti – that is, each of Charles W. Berger,
Samuel Cabot III, John J. Delucca, Morgan P. Guenther, Philip G. Heasley, David
A. Poe, and James R. Stone – does 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. T. Michael Scott and Bruce Spector served on our Board of
Directors during the fiscal year ended September 30, 2008 but did not stand for
re-election at our 2008 annual meeting. Our board previously
determined that each of Messrs.
Scott and Spector did 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 was 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 our bylaws, the notice 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 stockholder 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 a 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
|
·
|
an
appropriate professional background providing an 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.
|
During
fiscal year 2008, we purchased $627,000 of telecom services from ITC Deltacom,
Inc., a company for which our director John J. Delucca serves as a member of the
board of directors. We also paid $185,000 for consultancy services to
Edgar, Dunn & Company, for which our director David A. Poe serves as
consultant and director.
MEETING AND COMMITTEES OF THE BOARD OF DIRECTORS
During
fiscal year 2008, the Board held 14 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.
|
Charles
W. Berger
(Chair)
|
Samuel
Cabot III
(thru
9/30/08)
|
Morgan
P. Guenther
|
James
R. Stone
(effective
10/01/08)
|
Number of Meetings in Fiscal
2008:
10
|
|
|
|
|
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.
|
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
(thru
9/30/08)
|
Morgan
P. Guenther
|
Philip
G. Heasley
(effective
10/01/08)
|
Number of Meetings in Fiscal
2008:
11
|
|
|
|
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)
|
John
J. Delucca
(effective
4/23/08)
|
Samuel
Cabot
(effective
10/1/08)
|
James
R. Stone
(7/22/08 –
9/30/08)
|
T.
Michael Scott
(thru
2/28/08)
|
Bruce
R. Spector
(thru
2/28/08)
|
Number of Meetings in Fiscal
2008:
5
|
|
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
The
Board of Directors has nominated the seven individuals named below for election
to the Board at the annual meeting. Each of the Board's nominees is
currently serving as a director; each was recommended for election by the
Governance and Nominating Committee; and each was approved by the
Board. 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.
In
January 2009, the Board of Directors increased the size of the Board to nine
(with such increase effective at the 2009 annual meeting) and determined to
nominate the seven candidates named below. The Board's action
followed our receipt of separate notices from both Parthenon and Discovery that
each intended to nominate two individuals for election to the
Board. The Board had several reasons for its
decision. Among other things, the Board was aware that some
shareholders believed that the Board did not sufficiently appreciate these
shareholders' perspective, and the Board's decision to increase the size of the
Board to nine and nominate only seven candidates ensures that two candidates
proposed by the shareholders will be added to the Board at the 2009 annual
meeting (assuming these candidates are properly nominated, in compliance with
our bylaws, and votes are validly cast for these candidates).
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, Philip G.
Heasley, and David A. Poe. 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.
Nominees
The
names and certain biographical information of each director nominee are set
forth below.
Charles
W. Berger
Age:
56—
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:
68—
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. Mr. Cabot also serves on the board of BC/BS of
Massachusetts, a non-profit health insurance
provider,
Plasticolors, Inc., an employee-owned company providing custom color and
chemical dispersion, Fiduciary Trust Co., a financial services firm, and Reed
& Barton, a flatware manufacturer.
John
J. Delucca
Age:
65—
Director
since:
February 2007
Recent Business
Experience:
Since April 2003 Mr. Delucca has served as
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; and ITC
Deltacom, Inc., a publicly traded provider of integrated communication
services.
Morgan
P. Guenther
Age:
55—
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. Mr. Guenther also serves as a board member for Integral
Development Corp., a provider of electronic capital markets trading
solutions.
Philip
G. Heasley
Age:
59—
Director
since:
August 2008
Recent Business
Experience:
Since March 2005, Mr. Heasley has served as
President and Chief Executive Officer of ACI Worldwide, Inc., a developer of
electronic payment software products. From October 2003 to March
2005, Mr. Heasley served as Chairman and Chief Executive Officer of PayPower
LLC, an acquisition and consulting firm specializing in financial services and
payment services. From October 2000 to November 2003, Mr. Heasley
served as Chairman and Chief Executive Officer of First USA
Bank. From 1996 until November 2003, Mr. Heasley served as Chairman
of the Board of Visa and a member of the board of Visa
International. Mr. Heasley also serves on the boards of directors of
ACI Worldwide, Inc., a publicly traded company that develops electronic payment
software products, Fidelity National Financial, Inc., a publicly traded company
providing property inspections, preservation services and title insurance
services, and Public Radio International, a media company.
David
A. Poe
Age:
60—
Director
since:
October 2008
Recent Business
Experience:
From March 1980, Mr. Poe has served as a
consultant and director of Edgar, Dunn & Company, or EDC, an independent
global financial services and payments consultancy. From March 1998
to May 2008, Mr. Poe served as Chief Executive Officer of EDC. Mr.
Poe also serves as a board member for Bank of San Francisco and the University
of Idaho.
Ronald
L. Rossetti
Age:
65—
Director
since:
November 1995
Recent Business
Experience:
Mr. Rossetti has served as our 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.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
EACH
NOMINEE NAMED ABOVE.
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), Morgan P. Guenther, and Philip
G. Heasley.
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 with the interests of our
shareholders. 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 interests of shareholders 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
shareholders, 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
shareholders and our clients. In addition, we provide long-term
incentives to our executives through stock options and restricted stock units
(RSUs). This further aligns the interests of our executives with our
shareholders 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. We believe that a combination of market-based
competitive salaries and cash bonuses combined with performance-based short-and
long-term incentives awarded to our executives through cash incentives and stock
options promotes long-term tenure within our organization and sustainable
shareholder value.
Implementing
Our Objectives
Determining
Compensation
The
Compensation Committee relies heavily on its professional judgment and prior
experience and on 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 packages 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 2008, the Compensation Committee used market peer group studies from John
F. Reda & Associates to provide market-based compensation information for
the position of Chief Executive Officer; Chief Financial Officer; Chief
Operating Officer; Senior Vice President, Strategic Marketing; Senior Vice
President Sales and Marketing; Senior Vice President EPP Operations; Chief
Technical Officer; General Counsel; Controller; and Vice President Human
Resources. 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 2008, the Compensation Committee used the following peer group for
determining our executive level compensation packages:
ACI
Worldwide Inc.
|
Intersections
Inc.
|
S1
Corp
|
Alliance
Data Systems Corp
|
Inx
Inc.
|
Techteam
Global Inc.
|
ASTA
Funding Inc.
|
Metvante
Technologies Inc.
|
TNS
Inc.
|
Bottomline
Technologies Inc.
|
NIC
Inc.
|
Total
System Services Inc.
|
CSG
Systems International Inc.
|
Online
Resources Inc.
|
TRX
|
CyberSource
Corp.
|
Quality
Systems Inc.
|
Tyler
Technologies Inc.
|
Fiserv
Inc.
|
Radiant
Systems Inc.
|
Wright
Express Corp
|
Global
Payments 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 these 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 salaries 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. 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 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 the following
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.
On
April 30, 2008, the Compensation Committee of the Board of Directors approved a
new employment agreement with Mr. Ronald L. Rossetti as Chief Executive Officer.
Under the new agreement Mr. Rossetti’s base salary was set at $400,000 per
annum. Mr. Rossetti was also awarded 550,000 RSUs pursuant to his
employment agreement. As such, the Compensation Committee reduced Mr.
Rossetti's salary from $600,000 to $400,000 to provide Mr. Rossetti with a total
compensation package that was in line with our compensation
strategy.
Pursuant
to an employment agreement executed on January 9, 2008, Mr. Omsberg’s base
salary was increased to $190,000 per annum.
On July
1, 2008 we entered into an employment agreement with Mr. Johnston pursuant to
which he receives a base salary of $275,000 per annum.
The
following table sets forth the rates of base salaries of our named executive
officers active as of October 1, 2008 and included in this proxy statement,
for the fiscal years 2007, 2008, and 2009:
|
|
Base
salary rate by fiscal year
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
%
change 2007 to 2008
|
|
|
%
change 2008 to 2009
|
|
Ronald
L. Rossetti
Chief
Executive Officer and Chairman of the Board
|
|
$
|
600,000
|
|
|
$
|
(1
|
)
|
|
$
|
400,000
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Ronald
W. Johnston
(2)
Senior
Vice President, Chief Financial Officer
|
|
|
N/A
|
|
|
|
275,000
|
|
|
|
272,000
|
|
|
|
N/A
|
|
|
|
-1
|
%
|
Kevin
C. Connell
Senior
Vice President, Sales & Marketing
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
0
|
%
|
|
|
0
|
%
|
Keith
Omsberg
Vice
President, General Counsel and Corporate Secretary
|
|
|
N/A
|
|
|
|
190,000
|
|
|
|
190,000
|
|
|
|
N/A
|
|
|
|
0
|
%
|
|
|
(1) Pursuant
to Mr. Rossetti's employment agreement signed April 30, 2008, Mr.
Rossetti's base salary was reduced from $600,000 to $400,000 per annum, a
reduction of 33%, effective May 1, 2008.
|
|
(2) Mr.
Johnston voluntarily reduced his base salary from $275,000 to $272,000 for
fiscal 2009 effective January 2009.
|
|
Fiscal
year 2008 base salary rates for Messrs. Fountain, Lawler, and Beckerman and Ms.
Tully remained consistent with fiscal year 2007 base rates.
Cash
Incentive Compensation
Our
cash incentive compensation plans are designed to:
·
|
align
the management team's financial interests with those of our
shareholders;
|
·
|
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 for
the achievement of specific and measurable company, business 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 business unit performance targets. Throughout the year,
the Compensation Committee reviews the cash incentive plans for executives for
reasonableness and potential for meeting company or business unit defined
performance metrics. If performance targets for the fiscal year are
not met, the Compensation Committee may still elect to pay bonus 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 payment 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.
Bonus Incentive
On
May 26, 2006, we entered into a one-year employment agreement with Mr.
Rossetti, our 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 bonus equal to that which he
would have received had his original employment agreement been extended through
December 14, 2007. On April 30, 2008, the Compensation Committee
entered into a new three year agreement with Mr. Rossetti that provides for
a bonus incentive payment of up to 100% of base compensation. In May 2008, the
Compensation Committee approved and provided Mr. Rossetti with a bonus of
$223,846, which is equal to that which he would have received, had his original
employment agreement been extended through April 29, 2008. In
addition, in December 2008, the Compensation Committee approved and paid a bonus
to Mr. Rossetti in the amount of $166,667, which is 100% of his pro-rated base
salary for the fiscal year ending September 30, 2008. The
Compensation Committee believes these bonuses to Mr. Rossetti will help
provide stability to the critical position of Chief Executive
Officer.
Consistent
with the employment agreement entered into July 1, 2008, Mr. Johnston, our Chief
Financial Officer, received a guaranteed bonus of 50% of base compensation for
the service period from April 1, 2008 through September 30, 2008 which was paid
in the amount of $68,750 in December 2008. The Compensation Committee
believes these bonuses to Mr. Johnston will help provide stability to the
critical position of Chief Financial Officer.
Management Incentive Plan
On
December 10, 2007, our Compensation Committee adopted the Fiscal Year 2008
Management Incentive Plan, or MIP. Participants in the MIP included
David E. Fountain, who was then our Senior Vice President and Chief Financial
Officer, as well as Michael A. Lawler, Senior Vice President, Electronic Payment
Processing; Kevin C. Connell, Senior Vice President, Sales & Marketing; and
Keith S. Omsberg, Vice President, General Counsel &
Secretary. Steven M. Beckerman, Senior Vice President, Government
Business Process Outsourcing, and Deanne S. Tully, who served for a portion of
fiscal year 2008 as our Vice President, General Counsel and Corporate Secretary,
did not participate in the MIP. The MIP was designed to reward eligible
employees for the achievement of electronic payment processing (EPP) business
unit performance targets on a fiscal year basis. The EPP targets, including
threshold, target, and stretch performance targets with associated 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 EPP performance targets.
The
following tables illustrate the performance metrics and related potential
threshold, target, and maximum payouts for fiscal 2008 under the MIP for Messrs.
Fountain, Lawler, Connell, and Omsberg. For each officer, the
performance metric was Company earnings before interest, tax, depreciation and
amortization (EBITDA) of $11.8 million. On July 22,
2008, the Compensation Committee determined that the Company would not
achieve the performance targets, and no awards were made under the
MIP. Any bonuses awarded to the officers listed (as disclosed in
other tables) were awarded from a pool of $0.2 million at the discretion of
the Chief Executive Officer and the Compensation Committee, based on individual
performance and contributions throughout the year.
Estimated
Payout Levels
|
|
|
|
Threshold:
|
|
|
Target:
|
|
|
Maximum:
|
|
Name
|
|
92%
of Performance metric
|
|
|
100%
of Performance metric
|
|
|
107%
of Performance metric
|
|
David
E. Fountain
|
|
$
|
47,923
|
|
|
$
|
79,872
|
|
|
$
|
159,744
|
|
Michael
A. Lawler
|
|
|
32,451
|
|
|
|
54,085
|
|
|
|
108,170
|
|
Kevin
C. Connell
|
|
|
34,321
|
|
|
|
57,051
|
|
|
|
114,103
|
|
Keith
S. Omsberg
|
|
|
9,870
|
|
|
|
16,450
|
|
|
|
32,900
|
|
The
following table provides a summary of the actual cash incentive or bonus
payments made to our named executive officers for fiscal year 2008:
Named
executive officer
|
|
2008
payment
|
|
Ronald
L. Rossetti
|
|
$
|
390,513
|
|
Ronald
W. Johnston
|
|
|
68,750
|
|
Kevin
Connell
|
|
|
50,000
|
|
Keith
Kendrick
|
|
|
—
|
|
Keith
S. Omsberg
|
|
|
7,500
|
|
David
E. Fountain
|
|
|
—
|
|
Michael
A. Lawler
|
|
|
—
|
|
Deanne
M. Tully
|
|
|
—
|
|
Steven
M. Beckerman
|
|
|
—
|
|
Total
incentive payout
|
|
$
|
516,763
|
|
Long-term
Incentives
To
further align our executives' financial interests with those of our
shareholders, 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
and RSUs 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, and RSUs are earned based upon share value performance over a defined
measurement period, executives receive a benefit only if the stock price
appreciates over the term of the option or RSU. 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 or RSU grants. Options and RSUs are
considered granted on the date the Compensation Committee approves the granting
of the options and/or the RSUs, with the closing price on the business day
preceding the option grant date as the exercise price of the award. RSUs, while
awarded at the time of grant by the Compensation Committee, are earned upon the
achievement of defined and sustained share value performance
targets. The Compensation Committee awards options and RSUs 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 is 300,000 shares per fiscal year under the terms of the
Plan. The maximum number of RSUs that could be awarded under the
terms of the Plan is 500,000 units. We reached this maximum number
during fiscal 2008. As such, all future RSU awards will be made
outside of the Plan and settled in cash. Typically options vest as to
20% of the underlying shares on the anniversary of the grant date and have a
maximum ten year term, while restricted stock units vest upon a three year cliff
schedule Options and RSUs that are unvested upon an executive's
termination are generally forfeited, unless otherwise provided in an option
agreement or employment agreement. 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 and RSUs under certain circumstances,
including a change of control. See
Potential Payments Upon Termination
or Change in Control
section on page 34 for additional
information.
In
fiscal year 2008, Mr. Rossetti was granted 550,000 RSUs on April 30, 2008 in
connection with the enterprise value award under his employment agreement as
approved by the Compensation Committee.
Pursuant
to the Plan, 500,000 units can be payable in shares of our common
stock. The remaining 50,000 units may be payable in
cash.
The
Compensation Committee granted Mr. Omsberg options to purchase 30,000 shares of
our common stock on October 1, 2007 and options to purchase 20,000 shares
of our common stock on December 10, 2007.
The
Compensation Committee granted Mr. Johnston options to purchase 200,000 shares
of our common stock on July 1, 2008.
The
Compensation Committee did not award any options to Messrs. Fountain, Lawler,
Connell, or Beckerman or Ms. Tully in fiscal year 2008.
Executive
Performance Stock Unit Plan
In an
effort to further align our executives' financial interests with those of our
shareholders and promote stability in key executive positions, the Compensation
Committee adopted the Executive Performance Stock Unit Plan, or PSU Plan, on
December 4, 2008, or the effective date. Under the PSU Plan a
maximum of 800,000 units may be issued for award to eligible
executives. The units will be awarded only upon the achievement and
maintenance for a period of 60 days of specific share performance targets, or
Share Price Performance Targets, of $8.00, $9.50, $11.00, and $13.00 per share
for approved participants as the effective date. For participants
hired after the effective date, the Committee will establish Share Price
Performance Targets based on 25%, 50%, 75%, and 100% increases in the share
price. The PSUs will be awarded in four equal tranches at those Share Price
Performance Targets; any PSUs awarded will vest on December 4, 2011, the third
anniversary of the effective date, unless they vest earlier upon a change in
control event as described below.
We
intend to pay PSUs in cash in the pay period in which the grant becomes fully
vested. However, if we have shares available for such issuance under,
if required, a shareholder approved plan, we may instead issue shares of our
common or restricted stock in an amount equivalent to the value of the
PSUs. An executive will be entitled to receive a payment equal to (x)
the price of a share of our common stock as of the close of market on the date
of vesting, but not more than $15.00, multiplied by (y) the number of PSUs that
have been awarded to the executive.
Under
the Plan’s change in control provision, if we experience a change in control
event, the units that have been awarded or would be awarded based upon the per
share value realized by our stockholders in the change in control event will be
immediately awarded, and the payment due to the executive will be based on such
per share value realized by our stockholders in the change in control event, not
to exceed a $15.00 per share. If the executive continues to be
employed by the surviving entity following the change in control event, the
award will be paid at the earlier of two years after the change in control event
or three years after the effective date of the Plan. Payment of the
award may be accelerated following a change in control event for termination
without cause; death or disability, or resignation for good
reason. The Plan defines a change of control event 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; or
|
·
|
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.
|
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.
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 as discussed
below. We believe these perquisites benefit us and our shareholders
by ensuring that our Chief Executive Officer is able to maintain a regular
presence at our headquarters to meet his duties and responsibilities in
full.
Chief
Executive Officer Perquisites
|
Pursuant
to his April 30, 2008 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 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.
Change of Control
Messrs.
Rossetti, Johnston, Connell, and Omsberg have change of control arrangements
through their employment agreements. Messrs. Fountain, Lawler, and
Beckerman and Ms. Tully had change of control arrangements through their
employment agreements or a separate change of control agreement. 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 shareholder
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 securities registered under the Exchange Act
.
|
Under
Mr. Beckerman's change of control agreement, the following also constituted a
change of control:
·
|
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 was
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 of directors or
of the business unit or practice unit's board of
directors.
|
Under
Mr. Rossetti’s change of control agreement, each of the following would
constitute a "change of control":
·
|
any
person, entity or affiliated group becoming the beneficial owner or owners
of more than 35% of the outstanding equity securities of Tier, or
otherwise becoming entitled to vote shares representing more than 35% 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 related
transactions would not be the holders immediately after such transaction
or series of related transactions of at least 65% of the securities
eligible to elect members of the board of directors of the entity
surviving such transaction or series of related transactions;
or
|
·
|
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.
|
In
fiscal year 2008, specific pay-outs under change of control provisions were
determined through negotiations of each individual's employment
agreement. For actual and potential payments upon a change of control
arrangements for our named executive officers, see
Potential Payments Upon Termination
or Change in Control
section of Executive Compensation on page
34.
Payouts
to Named Executive Officers in Connection with Termination of
Employment
On
December 12, 2007, we entered into a transition agreement with Ms. Tully
for employment separation effective March 31, 2008 for the payment of one
year’s base salary in a single lump sum payment at $220,000, the provision of
COBRA benefit reimbursement for a period of 12 months, and the reimbursement of
out-placement services not to exceed $7,500. In addition, we entered
into a consulting agreement with Ms. Tully for a period of April 2008 through
September 2008, pursuant to which we compensated her $18,333 per
month.
Mr.
Lawler's employment with Tier terminated on September 26,
2008. Pursuant to his employment agreement dated October 29,
2007, Mr. Lawler was entitled to a lump sum payment equal to one times his
annual base salary of $237,000 and the reimbursement of COBRA benefits for a
period of up to 12 months.
Mr.
Beckerman's employment with Tier terminated on September 30,
2008. Pursuant to his employment agreement dated October 29,
2007, Mr. Beckerman was entitled to a lump sum payment of two times his annual
base compensation of $220,000, and reimbursement of COBRA benefits for a period
of 18 months. In addition, we entered into a consulting agreement
with Mr. Beckerman for a period of October and November 2008, pursuant to which
we compensated him $19,866 per month.
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 $1.0 million limit. We
believe it is in our best interest, to the extent practicable, to have executive
compensation be fully deductible under the Code. However, the
Compensation Committee has full discretion to provide compensation that
potentially may not be fully deductible.
Accounting
for Share-Based Compensation
Effective
October 1, 2005, we began accounting for share-based payments in accordance
with the requirements of Statement of Financial Accounting Standard No.
123(R)—
Share-Based
Payment
. As such, we value the options granted based on the
grant date fair value using the Black-Scholes model. We value RSUs
using a Monte Carlo simulation option pricing model. We recognize
compensation expense over the vesting period of the option or RSU grants, which
ranges from three to five years. Additional information about the
valuation of our options and RSUs can be found in Note 13—Share-Based Payment of
our Annual Report on Form 10-K for fiscal year ended September 30,
2008.
EXECUTIVE
COMPENSATION
This
section provides certain tabular and narrative information regarding the
compensation of our principal executive and financial officers and our other
most highly compensated executive officers for the fiscal year ended
September 30, 2008. Messrs. Johnston and Omsberg became named
executive officers during fiscal 2008; therefore only fiscal 2008 information is
reported for these individuals. For additional information
regarding compensation of the named executive officers, see
Compensation Discussion and Analysis
beginning on page 17.
Summary Compensation Table
The
following table sets forth information regarding compensation of our named
executive officers during the fiscal years ended September 30, 2008 and
2007:
Name
and principal position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
(1)
|
|
|
|
|
|
Option
awards
($)
(2)
|
|
|
Non-equity
incentive plan compensation
($)
(3)
|
|
|
All
other
compensation
($)
(4)
|
|
|
Total
($)
|
|
Ronald
L. Rossetti
Chief
Executive Officer,
Chairman
of the Board
|
2008
|
|
$
|
589,231
|
|
|
$
|
390,513
|
|
|
$
|
264,583
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
278,363
|
|
|
$
|
1,522,690
|
|
2007
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
—
|
|
|
|
119,375
|
|
|
|
—
|
|
|
|
230,710
|
|
|
|
1,550,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston(5)
Senior
Vice President,
Chief
Financial Officer
|
2008
|
|
|
172,158
|
|
|
|
68,750
|
|
|
|
—
|
|
|
|
58,326
|
|
|
|
—
|
|
|
|
4,943
|
|
|
|
304,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
Senior
Vice President
Sales
and Marketing
|
2008
|
|
|
251,923
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
62,270
|
|
|
|
—
|
|
|
|
6,685
|
|
|
|
370,878
|
|
2007
|
|
|
245,796
|
|
|
|
—
|
|
|
|
—
|
|
|
|
121,177
|
|
|
|
167,808
|
|
|
|
19,482
|
|
|
|
554,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
Vice
President,
General
Counsel
and
Secretary
|
2008
|
|
|
188,000
|
|
|
|
92,500
|
|
|
|
—
|
|
|
|
50,706
|
|
|
|
—
|
|
|
|
5,585
|
|
|
|
336,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Fountain(6)
Senior
Vice President,
Chief
Financial Officer and Treasurer
|
2008
|
|
|
181,731
|
|
|
|
—
|
|
|
|
—
|
|
|
|
52,969
|
|
|
|
—
|
|
|
|
147,987
|
|
|
|
382,687
|
|
2007
|
|
|
338,942
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
67,313
|
|
|
|
175,000
|
|
|
|
137,174
|
|
|
|
768,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
A. Lawler(7)
Senior
Vice President
Electronic
Payment
Processing
|
2008
|
|
|
232,442
|
|
|
|
—
|
|
|
|
—
|
|
|
|
71,313
|
|
|
|
—
|
|
|
|
272,008
|
|
|
|
575,763
|
|
2007
|
|
|
234,402
|
|
|
|
—
|
|
|
|
—
|
|
|
|
67,845
|
|
|
|
21,000
|
|
|
|
5,606
|
|
|
|
328,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deanne
M. Tully (8)
Vice
President,
General
Counsel and
Corporate
Secretary
|
2008
|
|
|
110,846
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,507
|
|
|
|
—
|
|
|
|
255,696
|
|
|
|
388,049
|
|
2007
|
|
|
219,117
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,805
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
273,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
M. Beckerman(9)
Senior
Vice President,
Government
Business
Process
Outsourcing
|
2008
|
|
|
221,692
|
|
|
|
—
|
|
|
|
—
|
|
|
|
106,356
|
|
|
|
—
|
|
|
|
464,947
|
|
|
|
792,995
|
|
2007
|
|
|
220,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61,071
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
286,275
|
|
(1) Reflects
bonus payouts for fiscal years 2008 and 2007:
Name
|
Year
|
|
Employment
agreement
|
|
|
Discretionary
|
|
|
Total
bonus payout
|
|
Ronald
L. Rossetti
|
2008
|
|
$
|
166,667
|
|
|
$
|
223,846
|
|
|
$
|
390,513
|
|
2007
|
|
|
600,000
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
2008
|
|
|
68,750
|
|
|
|
—
|
|
|
|
68,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
2008
|
|
|
—
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
2008
|
|
|
—
|
|
|
|
92,500
|
|
|
|
92,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
2007
|
|
|
—
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
See
page 22 for additional information on bonus
payments.
|
|
(2) The
amounts included in these columns reflect the value of stock awards and
stock option awards that were recognized as an expense for financial
statement reporting purposes in fiscal 2008 and 2007, calculated pursuant
to Statement of Financial Accounting Standards 123R—
Share-Based Payment
,
excluding any estimate of forfeitures. Accordingly, the columns
include amounts relating to awards granted during and prior to the year
indicated. The following table summarizes the amounts shown in
the "Stock Awards" and "Option Awards" columns and the amount included for
each such award for fiscal 2008. Assumptions used in the
calculation of these amounts and the amounts for fiscal 2007 are included
in footnote 13 to the audited consolidated financial statements included
in our annual report on Form 10-K for the fiscal year ended
September 30, 2008.
|
|
Stock
Awards
|
|
Option
Awards
|
Name
|
Date
of award
|
Total
number of shares underlying shares awarded (#)
|
Amount
included in fiscal 2008 ($)
|
|
Date
of award
|
Total
number of shares underlying options awarded (#)
|
Amount
included in fiscal 2008 ($)
|
Ronald
L. Rossetti
|
4/30/08
|
550,000
|
$ 264,583
|
|
—
|
—
|
$ —
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
—
|
—
|
—
|
|
7/1/08
|
200,000
|
58,326
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
—
|
—
|
—
|
|
10/4/02
|
25,000
|
608
|
|
|
|
|
|
7/3/03
|
25,000
|
19,265
|
|
|
|
|
|
12/1/03
|
5,000
|
5,122
|
|
|
|
|
|
11/1/04
|
3,000
|
2,891
|
|
|
|
|
|
9/13/06
|
10,000
|
6,851
|
|
|
|
|
|
11/28/06
|
40,000
|
27,533
|
|
|
|
|
|
|
|
62,270
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
—
|
—
|
—
|
|
12/1/03
|
3,000
|
3,073
|
|
|
|
|
|
11/1/04
|
3,000
|
2,891
|
|
|
|
|
|
9/13/06
|
10,000
|
6,582
|
|
|
|
|
|
10/1/07
|
30,000
|
24,453
|
|
|
|
|
|
12/10/07
|
20,000
|
12,437
|
|
|
|
|
|
|
|
50,706
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
—
|
—
|
—
|
|
8/12/05
|
75,000
|
35,655
|
|
|
|
|
|
8/24/06
|
40,000
|
17,314
|
|
|
|
|
|
|
|
52,969
|
|
|
|
|
|
|
|
|
Michael
A. Lawler
|
—
|
—
|
—
|
|
11/1/04
|
50,000
|
48,179
|
|
|
|
|
|
8/24/06
|
40,000
|
23,134
|
|
|
|
|
|
|
|
71,313
|
|
|
|
|
|
|
|
|
Deanne
M. Tully
|
—
|
—
|
—
|
|
12/1/03
|
10,000
|
5,124
|
|
|
|
|
|
11/1/04
|
10,000
|
4,819
|
|
|
|
|
|
8/24/06
|
40,000
|
11,564
|
|
|
|
|
|
|
|
21,507
|
|
|
|
|
|
|
|
|
Steven
M. Beckerman
|
—
|
—
|
—
|
|
4/7/06
|
50,000
|
62,439
|
|
|
|
|
|
8/24/06
|
40,000
|
43,917
|
|
|
|
|
|
|
|
106,356
|
(3) Reflects
cash incentive payouts for fiscal year 2007 under various non-equity incentive
plans.
Name
|
Year
|
Incentive
plan
|
Total
non-equity incentive payout
|
Kevin
C. Connell
|
2007
|
167,808
|
167,808
|
|
|
|
|
Michael
A. Lawler
|
2007
|
21,000
|
21,000
|
See page
22
for additional information on 2008
performance metrics and payouts.
(4) Consists of:
·
the
aggregate incremental cost to Tier of providing perquisites and other
personal benefits;
·
company
matching contributions under 401(k) plans;
·
tax
reimbursement payments relating to certain business and non-business
travel; and
·
severance
expenses.
The following table summarizes the amounts shown in the "All Other
Compensation" column:
|
Name
|
Year
|
|
Perquisites
(a)
|
|
|
|
401(k)
|
|
|
Tax
reimbursement
|
|
|
Severance
(b)
|
|
|
Total
all other compensation
|
|
Ronald
L. Rossetti
|
2008
|
|
$
|
183,338
|
|
|
$
|
6,900
|
|
|
$
|
88,125
|
|
|
$
|
—
|
|
|
$
|
278,363
|
|
Ronald
L. Rossetti
|
2007
|
|
|
191,435
|
|
|
|
6,750
|
|
|
|
32,525
|
|
|
|
—
|
|
|
|
230,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
2008
|
|
|
—
|
|
|
|
4,943
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
2008
|
|
|
—
|
|
|
|
6,685
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,685
|
|
Kevin
C. Connell
|
2007
|
|
|
13,648
|
|
|
|
5,834
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
2008
|
|
|
—
|
|
|
|
5,585
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
2008
|
|
|
40,371
|
|
|
|
5,574
|
|
|
|
23,921
|
|
|
|
78,121
|
|
|
|
147,987
|
|
David
E. Fountain
|
2007
|
|
|
88,310
|
|
|
|
6,750
|
|
|
|
42,114
|
|
|
|
—
|
|
|
|
137,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
A. Lawler
|
2008
|
|
|
—
|
|
|
|
6,750
|
|
|
|
—
|
|
|
|
265,258
|
|
|
|
272,008
|
|
Michael
A. Lawler
|
2007
|
|
|
—
|
|
|
|
5,606
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deanne
M. Tully
|
2008
|
|
|
—
|
|
|
|
4,173
|
|
|
|
—
|
|
|
|
251,523
|
|
|
|
255,696
|
|
Deanne
M. Tully
|
2007
|
|
|
—
|
|
|
|
5,204
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
M. Beckerman
|
2008
|
|
|
—
|
|
|
|
6,600
|
|
|
|
—
|
|
|
|
458,347
|
|
|
|
464,947
|
|
Steven
M. Beckerman
|
2007
|
|
|
—
|
|
|
|
5,204
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,204
|
|
(a) See
Perquisites and
Benefits
in the Compensation Discussion and Analysis on
page 25 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
|
2008
|
|
$
|
39,096
|
|
|
$
|
113,431
|
|
|
$
|
30,811
|
|
|
$
|
—
|
|
Ronald
L. Rossetti *
|
2007
|
|
|
41,232
|
|
|
|
130,375
|
|
|
|
19,828
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell *
|
2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
2007
|
|
|
—
|
|
|
|
13,648
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
2008
|
|
|
20,420
|
|
|
|
19,951
|
|
|
|
—
|
|
|
|
—
|
|
David
E. Fountain
|
2007
|
|
|
34,166
|
|
|
|
32,144
|
|
|
|
22,000
|
|
|
|
—
|
|
|
|
* Includes
travel by chartered private jet for business meeting which Mr. Connell and
Mr. Rossetti attended. Total cost was $27,295 and is split equally
between Mr. Connell and Mr. Rossetti.
|
|
|
|
(b)
The amount in the severance column consists of severance payments and
reimbursement for personal time off accrued but not used as of termination
date.
|
|
(5)
Mr. Johnston
served as interim Chief Financial Officer from April 2008 to June
2008.
(6)
Mr.
Fountain's employment with us terminated April 4, 2008.
(7)
Mr. Lawler's
employment with us terminated September 26, 2008.
(8)
Ms. Tully's
employment with us terminated March 31, 2008. From April 2008 to September
2008, Ms. Tully served as an indedendent consultant to Tier and was compensated
$18,333 per month.
(9)
Mr. Beckerman's
employment with us terminated September 30, 2008.
Fiscal
2008 Grants of Plan-Based Awards
The
following table sets forth information regarding grants of plan-based awards
made to the named executive officers during the fiscal year ended
September 30, 2008:
|
|
Estimated
future payouts under
Non-Equity
Incentive Plan Awards
(1)
|
All
other stock awards: Number of shares of stock(#)
(5)
|
All
other option awards: Number of Securities Underlying
Options(#)
|
|
|
Name
|
Grant
date
|
Threshold
($)
(2)
|
Target
($)
(3)
|
Maximum
($)(4)
|
Exercise
or base price of option awards ($)
(6)
|
Grant
date fair value of stock and option awards ($)
(7)
|
Ronald
L. Rossetti
|
04/30/08
(8)
|
$
—
|
$
—
|
$
—
|
550,000
|
—
|
$
—
|
$
—
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
07/
01
/08
(9)
|
—
|
68,750
|
103,125
|
—
|
200,000
|
8.01
|
701,840
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
12/10/07(10)
|
34,321
|
57,051
|
114,103
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
12/10/07(11)
|
9,870
|
16,450
|
32,900
|
—
|
—
|
—
|
—
|
10/01/07(12)
|
—
|
—
|
—
|
—
|
30,000
|
10.20
|
127,614
|
12/10/07(12)
|
—
|
—
|
—
|
—
|
20,000
|
9.25
|
77,152
|
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
12/10/07(13)
|
47,923
|
79,872
|
159,744
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Michael
A. Lawler
|
12/10/07(14)
|
32,451
|
54,085
|
108,170
|
—
|
—
|
—
|
—
|
Deanne
M. Tully
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Steven
M. Beckerman
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
For additional information concerning performance metrics and payouts of
non-equity incentive plan awards see page 21.
|
(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, for fiscal 2008 under the
applicable plans.
|
(3)
The target amount represents the amounts payable to the executive if we
met our corporate performance goal and, if applicable, practice
unit performance goal for fiscal 2008 under the applicable
plans.
|
(4)
The maximum estimated future payout for Mr. Johnston was 75% of his base
salary from April 2008 – September 2008. The maximum estimated
future payout for Messrs. Connell, Fountain and Lawler represent the
amounts payable to the executive if we met 107% of our corporate
performance goal, and , if applicable, practice unit performance
goal.
|
(5)
The shares vest April 30, 2011 provided the following share price
performance targets are met and maintained for 60 consecutive days:
180,000 shares at share target price of $11, 185,000 shares at share
target price of $13, and 185,000 shares at target price of
$15. Of the 185,000 shares at target price of $15, 50,000
shares are intended to be settled in cash.
|
(6)
The exercise price of the options granted to the individuals shown above
was the closing price of Tier's common stock on the day prior to the grant
date.
|
(7)
Represents the full grant date fair value of each equity-based award,
computed in accordance with SFAS 123R.
|
(8)
Awarded under the terms of Mr. Rossetti’s employment
agreement.
|
(9)
Awarded under the terms of Mr. Johnston’s employment
agreement.
|
(10) Awarded
under the MIP, adopted by the Compensation Committee on December 10,
2007. On July 22, 2008, the Committee determined the
performance metrics would not be met and no awards were made
under the MIP.
|
(11) Awarded
under the MIP, adopted by the Compensation Committee on December 10,
2007. On July 22, 2008, the Committee determined the
performance metrics would not be met and no awards were made under the
MIP.
|
(12) Award
under the Company’s Amended and Restated 2004 Stock Incentive
Plan.
|
(13) Awarded
under the MIP, adopted by the Compensation Committee on December 10,
2007. On July 22, 2008, the Committee determined the
performance metrics would not be met and no awards were made under the
MIP.
|
(14) Awarded
under the MIP, adopted by the Compensation Committee on December 10,
2007. On July 22, 2008, the Committee determined the
performance metrics would not be met and no awards were made under the
MIP.
|
(15) These
options were awarded to Mr. Johnston upon his hire. These
options vest as to 34% of the underlying shares the first year and 33%
each subsequent year on the anniversary of the date granted and expire in
ten years.
|
(16) Of
the 50,000 total options awarded to Mr. Omsberg, 20,000 were merit based
and 30,000 were awarded in connection with his promotion to Corporate
Secretary. These options vest as to 20% on the anniversary of
the date granted and expire in ten
years.
|
Outstanding
Equity Awards at 2008 Fiscal Year-End
The
following table sets forth for each named executive officer certain information
about stock options and unvested and unearned equity incentive plan awards held
at the end of the fiscal year ended September 30, 2008:
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of securities underlying unexercised options
(#)
Exercisable
|
|
|
Number
of securities underlying unexercised options
(#)
Unexercisable
(a)
|
|
|
Option
exercise price
($)
|
|
|
Option
expiration date
|
|
|
Number
of shares or units of stock that have not vested (#)
|
|
|
Market
value of shares or units of stock that have not vested ($)
|
|
|
Equity
incentive plan awards: Number of unearned shares, units, or other rights
that have not vested (#)
(b)
|
|
|
Equity
incentive plan awards: Market or payout value of unearned shares, units or
other rights that have not vested ($)
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
L. Rossetti
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000
|
|
|
$
|
1,324,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,000
|
|
|
|
1,361,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(d)
|
|
$
|
368,000
|
|
|
|
135,000
|
(d)
|
|
|
993,600
|
|
|
|
|
415,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
|
|
—
|
|
|
|
200,000
|
(1)
|
|
|
8.01
|
|
|
06/30/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
|
|
25,000
|
|
|
|
—
|
|
|
|
16.90
|
|
|
10/03/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
7.86
|
|
|
07/02/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
1,000
|
(2)
|
|
|
7.81
|
|
|
11/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,800
|
|
|
|
1,200
|
(3)
|
|
|
8.60
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
6,000
|
(3)
|
|
|
7.05
|
|
|
09/12/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
32,000
|
(5)
|
|
|
7.10
|
|
|
11/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,800
|
|
|
|
40,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
Omsberg
|
|
|
2,500
|
|
|
|
—
|
|
|
|
16.04
|
|
|
07/04/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
600
|
(6)
|
|
|
7.81
|
|
|
11/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,800
|
|
|
|
1,200
|
(7)
|
|
|
8.60
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
6,000
|
(8)
|
|
|
7.05
|
|
|
09/12/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
30,000
|
(9)
|
|
|
10.20
|
|
|
09/30/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
20,000
|
(10)
|
|
|
9.25
|
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,900
|
|
|
|
57,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
A. Lawler
(e)
|
|
|
30,000
|
|
|
|
—
|
|
|
|
8.60
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
—
|
|
|
|
5.95
|
|
|
08/23/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deanne
M. Tully
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
M. Beckerman
(f)
|
|
|
30,000
|
|
|
|
—
|
|
|
|
8.70
|
|
|
04/06/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
—
|
|
|
|
5.95
|
|
|
08/23/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Vesting of the unexercisable option awards are set forth below:
Name
|
|
Footnote
reference
|
|
Vesting
date
|
|
Number
|
|
Ronald
W. Johnston
|
|
|
(1)
|
|
07/01/09
|
|
|
66,666
|
|
|
|
|
|
|
07/01/10
|
|
|
66,667
|
|
|
|
|
|
|
07/01/11
|
|
|
66,667
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
|
|
(2)
|
|
12/01/08
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
11/01/08
|
|
|
600
|
|
|
|
|
|
|
11/01/09
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
09/13/09
|
|
|
2,000
|
|
|
|
|
|
|
09/13/10
|
|
|
2,000
|
|
|
|
|
|
|
09/13/11
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
11/28/08
|
|
|
8,000
|
|
|
|
|
|
|
11/28/09
|
|
|
8,000
|
|
|
|
|
|
|
11/28/10
|
|
|
8,000
|
|
|
|
|
|
|
11/28/11
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
|
|
(6)
|
|
12/01/08
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7)
|
|
11/01/08
|
|
|
600
|
|
|
|
|
|
|
11/01/09
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
09/13/09
|
|
|
2,000
|
|
|
|
|
|
|
09/13/10
|
|
|
2,000
|
|
|
|
|
|
|
09/13/11
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9)
|
|
10/01/08
|
|
|
6,000
|
|
|
|
|
|
|
10/01/09
|
|
|
6,000
|
|
|
|
|
|
|
10/01/10
|
|
|
6,000
|
|
|
|
|
|
|
10/01/11
|
|
|
6,000
|
|
|
|
|
|
|
10/01/12
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)
|
|
12/10/08
|
|
|
4,000
|
|
|
|
|
|
|
12/10/09
|
|
|
4,000
|
|
|
|
|
|
|
12/10/10
|
|
|
4,000
|
|
|
|
|
|
|
12/10/11
|
|
|
4,000
|
|
|
|
|
|
|
12/10/12
|
|
|
4,000
|
|
(b) The
shares vest April 30, 2011 provided the following share price performance
targets are met and maintained for 60 consecutive days.
Share
price performance target
|
Number
of units
|
$ 11
|
180,000
|
13
|
185,000
|
15
|
185,000
(c)
|
(c) The
market value was determined by multiplying $7.36 (the closing price of Tier's
stock at September 30, 2008) by the number of shares.
(d)
Of the 185,000 shares at the $15 share price performance target, 50,000 shares
are payable in cash.
(e)
Mr. Lawler's employment with us terminated September 26, 2008; as such, all
options ceased vesting on that date.
(f) Mr.
Beckerman's employment with us terminated September 30, 2008; as such, all
options ceased vesting on that date.
Fiscal
2008 Option Exercises and Stock Vested
The
following table sets forth for each named executive officer certain information
about stock options that were exercised during the fiscal year ended
September 30, 2008:
|
|
Option
awards
|
|
Name
|
|
Number
of shares acquired on exercise (#)
|
|
|
Value
realized on exercise ($)
|
|
Ronald
L. Rossetti
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
David
E. Fountain
|
|
|
150
|
|
|
|
323
|
|
|
|
|
200
|
|
|
|
462
|
|
|
|
|
1,349
|
|
|
|
2,765
|
|
|
|
|
4,900
|
|
|
|
10,633
|
|
|
|
|
1,400
|
|
|
|
3,220
|
|
|
|
|
7,999
|
|
|
|
17,403
|
|
|
|
|
|
|
|
|
|
|
Michael
A. Lawler
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Deanne
M. Tully
|
|
|
8,000
|
|
|
|
15,600
|
|
|
|
|
|
|
|
|
|
|
Steven
M. Beckerman
|
|
|
—
|
|
|
|
—
|
|
Potential
Payments Upon Termination or Change of Control
This
section provides information regarding payments and benefits to the named
executive officers that were or 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 25.
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 Executive Officer
On
April 30, 2008, we entered into an employment agreement with our Chief
Executive Officer, Ronald L. Rossetti. Pursuant to the terms of this
agreement, Mr. Rossetti is entitled to certain compensation and benefits,
payable in a lump sum (with the exception of health benefits, which would be
reimbursed monthly) within 30 days of the applicable event and provided Mr.
Rossetti signs a separation release. The following table describes
the maximum potential payments that would have been due to Mr. Rossetti as of
September 30, 2008, upon designated situations outlined in his employment
agreement.
Benefits
and payments upon termination
|
|
Voluntary
termination
(1)
|
|
|
Involuntary
for cause termination
(1)
|
|
|
Involuntary
not for cause termination
(2)
|
|
|
Voluntary
termination with good reason
(2)
|
|
|
Death
or disability
(3)
|
|
|
Change
of control
(4)
|
|
Salary
|
|
$
|
10,769
|
|
|
$
|
10,769
|
|
|
$
|
410,769
|
|
|
$
|
410,769
|
|
|
$
|
410,769
|
|
|
$
|
810,769
|
|
Bonus
|
|
|
166,667
|
|
|
|
166,667
|
|
|
|
949,743
|
|
|
|
949,743
|
|
|
|
558,205
|
|
|
|
783,076
|
|
Stock
options(5)
|
|
|
579,500
|
|
|
|
579,500
|
|
|
|
579,500
|
|
|
|
579,500
|
|
|
|
579,500
|
|
|
|
579,500
|
|
Restricted
stock units
(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Health
benefits
|
|
|
—
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
—
|
|
|
|
12,000
|
|
Perquisites
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued
PTO
|
|
|
(13,729
|
)
|
|
|
(13,729
|
)
|
|
|
(13,729
|
)
|
|
|
(13,729
|
)
|
|
|
(13,729
|
)
|
|
|
(13,729
|
)
|
Total
|
|
$
|
743,207
|
|
|
$
|
743,207
|
|
|
$
|
1,938,283
|
|
|
$
|
1,938,283
|
|
|
$
|
1,534,745
|
|
|
$
|
2,171,616
|
|
|
(1)
Amounts reflect maximum salary
earned and prior year bonus accrued but not paid prior to date of
termination and personal time off accrued through date of
occurrence.
|
(2)
Amounts reflect maximum salary earned and prior year bonus accrued 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
all stock options, restricted stock grants and restricted stock units
already issued under Mr. Rossetti’s Enterprise Value Award, or the EVA
plan, twelve months continuation of health benefits and personal time off
accrued through September 30, 2008.
|
(3)
Amounts reflect maximum salary earned and prior year bonus accrued 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 and immediate vesting of all stock options, restricted
stock grants, restricted stock units already issued under the EVA plan and
personal time off accrued through September 30, 2008.
|
(4)
Amounts reflect two times (a) the base salary plus (b) bonus equal to
average historic bonus, immediate vesting of any stock options, restricted
stock grants and restricted stock units already issued under the EVA plan,
twelve months continuation of health benefits and personal time off
accrued through September 30, 2008.
|
(5)
The amount represents the value of vested options as of September 30,
2008 at a closing price of $7.36.
|
(6)
As of September 30, 2008, the target price for the vesting of the
restricted stock units had not been met, therefore all units were
considered unvested.
|
Employment
Agreement—Chief Financial Officer
On
July 1, 2008, we entered into an employment agreement with our Chief
Financial Officer, Ronald W. Johnston. Pursuant to the terms of this
agreement, Mr. Johnston is entitled to certain compensation and benefits,
payable in a lump sum (with the exception of health benefits, which would be
reimbursed monthly) within 30 days of the applicable event and provided Mr.
Johnston signs a separation release. The following table describes
the maximum potential payments that would have been due to Mr. Johnston as of
September 30, 2008, upon designated situations outlined in his employment
agreement.
Benefits
and payments upon termination
|
|
Voluntary
termination
(1)
|
|
|
Involuntary
for cause termination
(1)
|
|
|
Involuntary
not for cause termination
(2)
|
|
|
Voluntary
termination with good reason
(2)
|
|
|
Death
or disability
(2)
|
|
|
Change
of control
(3)
|
|
Salary
|
|
$
|
7,404
|
|
|
$
|
7,404
|
|
|
$
|
282,404
|
|
|
$
|
282,404
|
|
|
$
|
282,404
|
|
|
$
|
557,404
|
|
Bonus
|
|
|
68,750
|
|
|
|
68,750
|
|
|
|
68,750
|
|
|
|
68,750
|
|
|
|
68,750
|
|
|
|
68,750
|
|
Stock
options(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Health
benefits
|
|
|
—
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
18,000
|
|
Perquisites
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued
PTO
|
|
|
12,684
|
|
|
|
12,684
|
|
|
|
12,684
|
|
|
|
12,684
|
|
|
|
12,684
|
|
|
|
12,684
|
|
Total
|
|
$
|
88,838
|
|
|
$
|
88,838
|
|
|
$
|
375,838
|
|
|
$
|
375,838
|
|
|
$
|
375,838
|
|
|
$
|
656,838
|
|
|
(1)
Amounts reflect maximum salary
earned but not paid prior to date of termination, accrued prior year bonus
not paid prior to date of termination date and personal time off accrued
through date of occurrence.
|
(2)
Amounts reflect maximum salary earned but not paid prior to date of
termination, accrued prior year bonus not paid prior to date of
termination, one year base salary, twelve months continuation of health
benefits and personal time off accrued through September 30,
2008.
|
(3)
Amounts reflect maximum salary earned but not paid prior to date of
termination, accrued prior year bonus not paid prior to date of
termination, two times (a) base salary and (b) 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, eighteen
months continuation of health benefits and personal time off accrued
through September 30, 2008.
|
(4) The
amount represents the value of vested options as of September 30,
2008 at a closing price of $7.36.
|
Employment
Agreement—Senior Vice President, Sales and Marketing
We have
an employment agreement with Mr. Connell. Pursuant to the terms of
this agreement, if his employment is terminated for reasons other than for
cause, Mr. Connell is entitled to certain compensation and benefits, payable in
a lump sum (with the exception of health benefits, which would be reimbursed
monthly) within 30 days of the applicable event provided he signs a separation
release. The following table describes the maximum potential payments
that would have been due to Mr. Connell as of September 30, 2008, upon
designated situations outlined in his employment agreement.
Benefits
and payments upon termination
|
|
Voluntary
termination
(1)
|
|
|
Involuntary
for cause termination
(1)
|
|
|
Involuntary
not for cause termination
(2)
|
|
|
Voluntary
termination with good reason
(2)
|
|
|
Death
or disability
(2)
|
|
|
Change
of control
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
6,731
|
|
|
$
|
6,731
|
|
|
$
|
256,731
|
|
|
$
|
256,731
|
|
|
$
|
256,731
|
|
|
$
|
506,731
|
|
Bonus
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
335,616
|
|
Stock
options
(4)
|
|
|
3,320
|
|
|
|
3,320
|
|
|
|
3,320
|
|
|
|
3,320
|
|
|
|
3,320
|
|
|
|
8,100
|
|
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
|
|
$
|
52,118
|
|
|
$
|
52,118
|
|
|
$
|
314,118
|
|
|
$
|
314,118
|
|
|
$
|
314,118
|
|
|
$
|
910,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Amounts reflect maximum salary earned but not yet paid prior to date of
termination, accrued prior year bonus not yet paid prior to date of
termination and personal time off accrued through September 30,
2008.
|
(2)
Amounts reflect maximum salary earned but not yet paid prior to date of
termination, accrued prior year bonus 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,
2008.
|
(3)
Mr. Connell's change of control amounts reflect maximum salary earned but
not yet paid prior to date of termination, accrued prior year bonus not
yet paid prior to date of termination, two times (a) base salary and (b)
bonus equal to the average bonus paid over the last three years, immediate
vesting of options that would have vested within eighteen months of
September 30, 2008, eighteen months continued health benefits and
personal time off accrued through September 30,
2008.
|
(4)
The amount represents the value of vested options as of September 30,
2008 at a closing price of $7.36.
|
Vice
President, General Counsel and Corporate Secretary
We have
an employment agreement with Mr. Omsberg, whereby, if his employment is
terminated for reasons other than for cause, he is entitled to certain
compensation and benefits, payable in a lump sum (with the exception of health
benefits, which would be reimbursed monthly) within 30 days of the applicable
event provided he signs a separation release. The following table
describes the maximum potential payments that would have been due to Mr. Omsberg
as of September 30, 2008, upon designated situations outlined in his
employment agreement.
Benefits
and payments upon termination
|
|
Voluntary
termination
(1)
|
|
|
Involuntary
for cause termination(1)
|
|
|
Involuntary
not for cause termination
(2)
|
|
|
Voluntary
termination with good reason
(2)
|
|
|
Death
or disability (2)
|
|
|
Change
of control
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
5,115
|
|
|
$
|
5,115
|
|
|
$
|
195,115
|
|
|
$
|
195,115
|
|
|
$
|
195,115
|
|
|
$
|
385,115
|
|
Bonus
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
67,466
|
|
Stock
options
(4)
|
|
|
1,240
|
|
|
|
1,240
|
|
|
|
1,240
|
|
|
|
1,240
|
|
|
|
1,240
|
|
|
|
1,860
|
|
Health
benefits
|
|
|
—
|
|
|
|
—
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
18,000
|
|
Perquisites
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued
PTO
|
|
|
17,717
|
|
|
|
17,717
|
|
|
|
17,717
|
|
|
|
17,717
|
|
|
|
17,717
|
|
|
|
17,717
|
|
Total
|
|
$
|
24,072
|
|
|
$
|
24,072
|
|
|
$
|
226,072
|
|
|
$
|
226,072
|
|
|
$
|
226,072
|
|
|
$
|
490,158
|
|
(1)
Amounts reflect maximum salary earned but not yet paid prior to date of
termination, accrued prior year bonus not yet paid prior to date of
termination and personal time off accrued through September 30,
2008.
|
(2)
Amounts reflect maximum salary earned but not yet paid prior to date of
termination, accrued prior year bonus 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,
2008.
|
(3)
Amounts reflect maximum salary earned but not yet paid prior to date of
termination, accrued prior year bonus not yet paid prior to date of
termination, two times (a) base salary and (b) bonus equal to the average
bonus paid over the preceding three years, immediate vesting of options
that would have vested within eighteen months of September 30, 2008,
eighteen months continued health benefits and personal time off accrued
through September 30, 2008.
|
(4)
The amount represents the value of vested options as of September 30,
2008 at a closing price of $7.36.
|
Payouts
to Named Executive Officers in Connection with Termination of
Employment
On
December 12, 2007, we entered into a transition agreement with Ms. Tully
for employment separation effective March 31, 2008 for the payment of one
year’s base salary in a single lump sum payment at $220,000, COBRA benefit
reimbursement for a period of 12 months, and the reimbursement of out-placement
services not to exceed $7,500. In addition, we entered into a
consulting agreement with Ms. Tully for a period of April 2008 through September
2008, pursuant to which we compensated her $18,333 per month.
Mr.
Lawler's employment with Tier terminated on September 26,
2008. Pursuant to his employment agreement dated October 29,
2007, Mr. Lawler was entitled to a lump sum payment equal to one times his
annual base salary of $237,000 and the reimbursement of COBRA benefits for a
period of up to 12 months.
Mr.
Beckerman's employment with Tier terminated on September 30,
2008. Pursuant to his employment agreement dated October 29,
2007, Mr. Beckerman was entitled to a lump sum payment of two times his annual
base compensation of $220,000, and reimbursement of COBRA benefits for the
period of 18 months. In addition, we entered into a consulting
agreement with Mr. Beckerman for a period of October and November 2008, pursuant
to which we compensated him $19,866 per month.
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.
The
following table describes the compensation program for our non-employee
directors:
Pay
component
|
|
Fiscal
2008
|
|
|
Effective
October
1, 2008
|
|
Board
retainer (payable quarterly in arrears)
|
|
$
|
15,000
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
Board
member fee (per meeting)
|
|
|
|
|
|
|
|
|
In-person
meeting
|
|
|
1,000
|
|
|
|
1,000
|
|
Telephonic
meeting
|
|
|
1,000
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
Committee
chair retainer (payable quarterly in arrears)
|
|
|
|
|
|
|
|
|
Audit
committee
|
|
|
5,000
|
|
|
|
5,000
|
|
All
other committees
|
|
|
—
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
Committee
meeting fee (per meeting)
|
|
|
|
|
|
|
|
|
In-person
meeting
|
|
|
1,000
|
|
|
|
1,000
|
|
Telephonic
meeting
|
|
|
1,000
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
Lead
director retainer (payable quarterly in arrears)
|
|
|
5,000
|
|
|
|
5,000
|
|
Effective
as of March 6, 2007, a Special Committee for Divestments was
created. The Special Committee for Divestments advised management in
the divestment process and assisted in evaluating offers for certain business
units. The Special Committee for Divestments consisted of Morgan P.
Guenther (Chair), Bruce R. Spector, John J. Delucca, and
Ronald L. Rossetti. The chair of the Special Committee for
Divestments was paid an annual retainer of $20,000, payable quarterly in
arrears. The Board dissolved the Special Committee for Divestments
effective October 1, 2008, because we had substantially completed our divestment
program.
In
addition, we reimburse our Board members for reasonable expenses, including
travel related expenses, incurred to attend Board and/or committee
meetings.
Effective
October 1, 2008, the Governance and Nominating Committee has authorized an
annual equity award, granted on the date of the annual stockholder meeting, of
9,000 restricted stock units payable in cash and vesting in full three years
from the date of grant. The vesting and payout provisions of the
restricted stock units are as follows:
·
|
Death
and disability—Pro rata vesting; immediate
payout
|
·
|
Voluntary
resignation—Pro rata vesting; payable at end of 3-year vesting
period
|
·
|
Termination
for cause—Forfeit entire award
|
·
|
Change-in-control—100%
vesting, payable on date of
change-in-control
|
Prior
to October 1, 2008, each non-employee director was granted options to
purchase 20,000 shares of common stock upon the election to the Board by the
stockholders at each Annual Meeting of Stockholders, which options were fully
vested upon grant. Prior to October 1, 2008, each non-employee
director elected by the Board, and not by the stockholders in conjunction with
an annual meeting, was
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 was
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
2008 Director Compensation
For our
fiscal year ended September 30, 2008, our directors were compensated in the
manner described above. The following table sets forth information
regarding the compensation of our non-employee directors for the fiscal year
ended September 30, 2008. David A. Poe joined our Board of Directors
on October 1, 2008, and therefore is not included in the following
table.
Name
|
|
Fees
earned or paid in cash ($)
|
|
|
Option
awards ($)
(1)
(2)
|
|
|
Total
($)
|
|
Charles
W. Berger
(Chair Audit
Committee)
|
|
$
|
54,000
|
|
|
$
|
153,497
|
|
|
$
|
207,497
|
|
Samuel
Cabot III
(Chair
Compensation Committee and Lead Director)
|
|
|
56,000
|
|
|
|
153,497
|
|
|
|
209,497
|
|
John
J. Delucca
|
|
|
35,750
|
|
|
|
63,326
|
|
|
|
99,076
|
|
Morgan
P. Guenther
(Chair
Special Committee for Divestitures and Chair Governance and Nominating
Committee)
|
|
|
67,000
|
|
|
|
153,497
|
|
|
|
220,497
|
|
Philip
G. Heasley
|
|
|
3,750
|
|
|
|
35,422
|
|
|
|
39,172
|
|
T.
Michael Scott
(3)
|
|
|
21,250
|
|
|
|
90,171
|
|
|
|
111,421
|
|
Bruce
R. Spector
(3)
|
|
|
21,250
|
|
|
|
90,171
|
|
|
|
111,421
|
|
James
R. Stone
(4)
|
|
|
31,750
|
|
|
|
63,326
|
|
|
|
95,076
|
|
|
(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 2008, calculated pursuant to SFAS
123R. Assumptions used in the calculation of these amounts are
included in footnote 13 to the audited consolidated financial statements
included in our annual report on Form 10-K for the fiscal year ended
September 30, 2008. 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 2008 ($)
|
|
Charles
W. Berger
|
08/24/06
|
|
|
40,000
|
*
|
|
$
|
90,171
|
|
|
02/28/08
|
|
|
20,000
|
|
|
|
63,326
|
|
|
|
|
|
|
|
|
|
|
|
Samuel
Cabot III
|
08/24/06
|
|
|
40,000
|
*
|
|
|
90,171
|
|
|
02/28/08
|
|
|
20,000
|
|
|
|
63,326
|
|
|
|
|
|
|
|
|
|
|
|
John
J. Delucca
|
02/28/08
|
|
|
20,000
|
|
|
|
63,326
|
|
|
|
|
|
|
|
|
|
|
|
Morgan
P. Guenther
|
08/24/06
|
|
|
40,000
|
*
|
|
|
90,171
|
|
|
02/28/08
|
|
|
20,000
|
|
|
|
63,326
|
|
|
|
|
|
|
|
|
|
|
|
Philip
G. Heasley
|
08/01/08
|
|
|
10,002
|
|
|
|
35,422
|
|
|
|
|
|
|
|
|
|
|
|
T.
Michael Scott
|
08/24/06
|
|
|
40,000
|
*
|
|
|
90,171
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
R. Spector
|
08/24/06
|
|
|
40,000
|
*
|
|
|
90,171
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Stone
|
02/28/08
|
|
|
20,000
|
|
|
|
63,326
|
|
*
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, 2008:
Name
|
|
Options
outstanding (#)
|
|
Charles
W. Berger
|
|
|
140,000
|
|
Samuel
Cabot III
|
|
|
200,000
|
|
John
J. Delucca
|
|
|
40,000
|
|
Morgan
P. Guenther
|
|
|
150,000
|
|
Philip
G. Heasley
|
|
|
10,002
|
|
James
R. Stone
|
|
|
38,337
|
|
(3) Mr.
Scott and Mr. Spector did not stand for re-election at our 2008 Annual
Meeting.
(4) Mr.
Stone was a director during fiscal year 2008 but has not been nominated for
re-election at our 2009 Annual Meeting.
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, 2008 with management and McGladrey
& Pullen, LLP, Tier Technologies, Inc.'s registered public accounting firm
for fiscal year 2008. 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,
2008.
The
foregoing report is given by the members of the Audit
Committee: Charles W. Berger (Chair), and Morgan P. Guenther, and
James R. Stone.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The
aggregate fees billed by McGladrey & Pullen, LLP, or McGladrey, to us for
the fiscal years ended September 30, 2008 and 2007 are as follows (in
thousands):
|
|
2008
|
|
|
2007
|
|
Audit
Fees
(1)
|
|
$
|
251
|
|
|
$
|
346
|
|
Audit
Related Fees
(2)
|
|
|
272
|
|
|
|
230
|
|
Tax
Fees
|
|
|
—
|
|
|
|
—
|
|
All
Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
523
|
|
|
$
|
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, 2008, 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
Our
Audit Committee selected McGladrey as our independent registered public
accounting firm for fiscal year 2009, 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.
Shareholder
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 shareholders for
ratification as a matter of good corporate practice. If the shareholders
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
shareholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
PROPOSAL
TWO.
PROPOSAL
THREE: SHAREHOLDER PROPOSAL
We have
been advised that the following non-binding shareholder proposal will be
presented at the Annual Meeting. The proposal will be voted on at the Annual
Meeting if the proponent, or a qualified representative, is present at the
meeting and submits the proposal for a vote. The text of the
shareholder proposal and supporting statement appear below as received by us,
and we assume no responsibility for its content or
accuracy. Following the shareholder proposal is our statement in
opposition.
FOR
THE REASONS SET FORTH BELOW IN THE BOARD'S STATEMENT IN OPPOSITION TO THE
SHAREHOLDER PROPOSAL, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
PROPOSAL
THREE.
—
Beginning of Shareholder Proposal
Stockholder
Proposal
RESOLVED,
that the stockholders of Tier Technologies, Inc. (“Tier”) request that Tier’s
Board of Directors restore to stockholders their rights to directly influence
the strategic direction and possible sale of Tier by (i) terminating Tier’s
“poison pill” rights plan and (ii) reinstating the ability of stockholders
owning at least 10% of the voting power to call special meetings of
stockholders.
Supporting
Statement
In
January 2006, the Board of Tier stripped its stockholders, without their
consent, of their ability to directly receive offers for Tier by implementing a
poison pill that effectively prevents any person from acquiring 15% or more of
the outstanding common stock without the Board’s consent. Further, the
Board eliminated the ability of stockholders to pursue value-creation proposals
between annual meetings by denying stockholders the right to call special
meetings. These actions appear to have been taken in response to Tier’s
widely reported operating and accounting problems.
Nearly
three years have passed since these events and Tier is no longer the poorly
integrated collection of weak performing businesses with inadequate financial
controls that it then was. The Board should now have the confidence to
reverse the defensive mechanisms then adopted, since they no longer serve the
best
interests of Tier and its stockholders and represent a de facto transfer of
voting rights away from stockholders to management.
Poison
pills reduce accountability and entrench management, prevent investors from
making financially meaningful investments in small capitalization companies like
Tier, and allow a Board unilaterally to block offers for a company that are in
the best interests of stockholders. If a company’s Board and management
have no meaningful equity stake (as is the case with Tier), this creates a
significant conflict of interest between the Board and stockholders.
Recently, in response to stockholder complaints, numerous companies have
terminated or not renewed their poison pills. Tier’s Board should remove
its obsolete poison pill that currently acts as an impediment to realizing
shareholder value.
The
elimination of the right of stockholders to call special meetings limits the
direct voice of stockholders in Tier’s strategic direction by allowing
management to unilaterally decide if a proposal may be presented to stockholders
between annual meetings. Tier is rapidly changing its Board composition, its
management team, its operations, and its overall strategic direction.
Annual meetings do not provide the access necessary for shareholders to bring
forward and vote on critical and timely matters while the company is undergoing
such transformations.
By
supporting this proposal, stockholders can advise the Board of their concerns
regarding Tier’s continued maintenance of defenses against offers and proposals
that may maximize shareholder value, and express their desire that the Board be
open to all strategic alternatives for Tier, including its sale. While the
adoption of this proposal will not legally bind the Board, we trust that given
its fiduciary responsibilities, the Board will honor the stockholders’ wishes as
reflected in the vote on the proposal.
Discovery,
one of Tier’s largest shareholders, strongly urges you to vote FOR this
proposal.
—
End of Shareholder Proposal
Board’s
Statement in Opposition
This
shareholder proposal requests that your Board of Directors take two separate
actions. First, it requests that we eliminate our shareholder rights
plan, and second, it requests that we amend our bylaws to permit any holder (or
group of holders) of ten percent or more of our common stock to call a special
meeting of shareholders for any reason, at any time, and as frequently as it (or
they) desire. Your Board recommends that you vote against the
proposal, because neither part of the proposal is advisable or in the best
interest of the company or its shareholders. Among other
things:
·
|
The
rights plan is intended to enhance shareholder value and protect all the
company’s shareholders from an unfair or coercive offer to acquire the
company.
|
·
|
The
bylaw amendment that has been requested would permit the holders of a
small minority of Tier stock to impose their own agenda, and the costs and
disruptions of a special meeting, on all
shareholders.
|
Shareholder
Rights Plan
Your
Board of Directors adopted Tier’s shareholder rights plan in January
2006. (A rights plan is sometimes called a “poison
pill.”) We amended the plan in July 2007 to increase the number of
shares that could be acquired without triggering the plan. Your
directors are fiduciaries for all shareholders and must consider the interests
of all shareholders when acting. Tier’s rights plan was designed to
strengthen the Board’s ability to maximize value for all shareholders and to
protect shareholders from abusive or opportunistic takeover tactics by
encouraging negotiations with the Board.
Tier’s
shareholder rights plan allows the Board to protect Tier and all shareholders
from unfair and coercive takeover tactics, such as a partial offer, a two-tier
tender offer, a “creeping acquisition,” or other
tactics
that the Board believes would be unfair to the company’s
shareholders. The plan does so by causing substantial dilution to any
person or group that attempts to acquire the company without conditioning the
offer on the redemption of the rights. The shareholder rights plan
should not affect any prospective offeror willing to make an offer at a fair
price and otherwise in the best interests of the company and its shareholders,
as determined by the Board. Similar plans are in effect at
approximately 1,200 public companies.
The
objective of the Board in adopting the shareholder rights plan was, and
continues to be, the preservation and maximization of Tier’s value for all
shareholders. The rights plan is not designed or intended to prevent
an unsolicited, non-abusive offer to acquire the company at a fair
price. Rather, it is designed to enable the Board to protect
shareholders against inadequate offers and abusive or opportunistic takeover
tactics. Such plans have been used to increase the bargaining power
of targeted companies and their shareholders by encouraging negotiations between
the potential acquirer and the board of directors of the targeted company,
resulting in higher value for shareholders.
Merger
and acquisition activity over the last 15 years shows that plans similar to
Tier’s shareholder rights plan neither prevent unsolicited offers from occurring
nor prevent companies from being acquired at prices that are fair and adequate
to shareholders:
·
|
A
study by J.P. Morgan published in 2001, analyzing 397 acquisitions of U.S.
public companies from 1997 to 2000, found that companies with rights plans
in place received a median premium of 35.9% compared to 31.9% for
companies without a rights plan.
|
·
|
A
more recent study, based upon data from transactions in the period from
January 1, 2002 to June 30, 2005, concluded that companies with
rights plans on average commanded higher takeover premiums than companies
without such plans.
|
·
|
A
2004 report by the Investor Responsibility Research Center (“IRRC”)
concluded that “evidence is increasingly strong that, in general,
companies with poison pills receive higher premiums in takeover situations
than do those that do not.”
|
·
|
A
1997 study published by Georgeson & Company of takeover premiums
during the period from 1992 to 1996 also concluded that premiums paid to
acquire target companies with rights plans were higher than premiums paid
for target companies that did not have such
plans.
|
Thus,
empirical evidence suggests that rights plans serve their principal
objectives: protection against inadequate offers and abusive tactics
and increased bargaining power, resulting in higher value for
shareholders.
Special
Shareholder Meetings
Tier’s
shareholders currently have significant rights under our charter and
bylaws:
·
|
Each
of your directors is elected
annually.
|
·
|
Shareholders
may propose business to be conducted at the annual
meeting.
|
·
|
Shareholders
may act by written consent at any
time.
|
We also
communicate regularly with all shareholders:
·
|
We
hold conference calls, which are open to all shareholders, after we file
our quarterly and annual reports with the
SEC.
|
·
|
We
receive letters from shareholders, and letters raising issues of general
concern are promptly forwarded to all of the
directors.
|
·
|
Where
appropriate, we take other actions to ensure that shareholders are able to
communicate directly with the
Board.
|
There
is no shortage of opportunities for communication between shareholders and
Tier. Because shareholders may act by written consent at any time,
there is no shortage of opportunities for shareholders to act.
By
contrast, special meetings are costly and can be disruptive. Proxy
materials must be prepared and sent to each shareholder for each special meeting
called. This imposes significant legal, printing, and distribution
costs on your company. Preparing for special meetings also requires
considerable attention of your Board and senior management, diverting them from
managing our operations and executing on our business strategy. If
holders of ten percent of our stock had an unlimited ability to call special
meetings at any time and for any purpose, they could use the costly mechanism of
a special meeting to serve their narrow interests and impose their own agenda on
the majority. Frequent shareholder solicitation would require us to
incur significant expense without a corresponding benefit to Tier and our
shareholders as a whole.
Our
current bylaws permit the Board, the Chairman of the Board, the Chief Executive
Officer, or the President to call a special meeting. The current
bylaw provision is appropriate because it requires the directors and senior
management, rather than a single minority shareholder, to determine, after
thoughtful and complete analysis and evaluation of the issue consistent with
their fiduciary duties, when it is in the best interests of our shareholders to
convene a special meeting. For example, Delaware law provides that
matters such as entering into merger agreements or charter amendments (the
primary means of effecting acquisitions and restructurings) must first be
approved by the Board and then submitted to shareholders for
approval. NASDAQ rules require the company’s shareholders to approve
certain issuances of stock equaling 20 percent or more of the number of
outstanding shares of stock, a change of control of the company, and certain
equity compensation plans or material amendments to existing
plans. In addition to these specific actions that require shareholder
approval, the Board has a fiduciary duty to the
shareholders. Pursuant to this duty, the Board manages the affairs of
the company in accordance with its sound business judgment, a responsibility
that includes determining when a matter is appropriate for shareholder
consideration.
Our
Board believes our current system minimizes the costs associated with holding
special meetings and ensures that such meetings are called only when they are in
the best interests of Tier and our shareholders as a whole.
Conclusion
For the
reasons stated above, your Board opposes both elements of the shareholder
proposal.
ACCORDINGLY,
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT
YOU VOTE
AGAINST
PROPOSAL
THREE.
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, the stockholder 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 October 5, 2009.
Proposals
not intended to be included in next year's proxy statement, but that are instead
sought to be presented directly at the 2010 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
first anniversary of the date of this year's 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) and must otherwise comply with the requirements of our
bylaws.
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, 2008 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
|
|
|
|
|
Keith
S. Omsberg
|
|
Secretary
|
|
|
February
XX
,
2009
|
|
APPENDIX
A
INFORMATION
CONCERNING PARTICIPANTS IN THE COMPANY’S SOLICITATION OF PROXIES
The
following tables (“Directors and Nominees” and “Officers and Employees”) set
forth the name, principal business address, and the present principal occupation
or employment, and the name, principal business, and address of any corporation
or other organization in which their employment is carried on, of our directors,
nominees, officers, and employees who, under the rules of the Securities and
Exchange Commission, are considered to be “participants” in our solicitation of
proxies from our stockholders in connection with our 2008 Annual Meeting of
Stockholders.
Directors
and Nominees
The
principal occupations of our directors and nominees who are considered
“participants” in our solicitation are set forth under the section above titled
“Proposal One: Election of Directors” of this proxy
statement. The name and business addresses of the organization of
employment of our directors and nominees are as follows:
Name
|
Business
Address
|
Charles
W. Berger
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
Samuel
Cabot III
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
John
J. Delucca
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
Morgan
P. Guenther
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
Philip
G. Heasley
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
David
A. Poe
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
Ronald
L. Rossetti
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
James
R. Stone
|
c/o
Tier Technologies, Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191
|
Officers
and Employees
The
principal occupations of our executive officers and employees who are considered
“participants” in our solicitation of proxies are set forth
below. The principal occupation refers to such person’s position with
our company, and the business address for each person is Tier Technologies,
Inc., 10780 Parkridge Blvd., Suite 400, Reston,
VA 20191.
Name
|
Principal
Occupation
|
Ronald
L. Rossetti
|
Chairman
and Chief Executive Officer
|
Ronald
W. Johnston
|
Chief
Financial Officer
|
Nina
K. Vellayan
|
Chief
Operating Officer
|
Kevin
C. Connell
|
Senior
Vice President, Sales and Marketing
|
Keith
S. Kendrick
|
Senior
Vice President, Strategic Marketing
|
Keith
S. Omsberg
|
Vice
President, General Counsel, and
Secretary
|
Information
Regarding Ownership of the Company’s Securities by Participants
The
shares of our common stock beneficially owned or held as of January 16, 2009 by
the persons listed above under “Directors and Nominees” and “Officers and
Employees,” other than Nina K. Vellayan and Keith S. Kendrick, are set forth in
the section entitled “Stock Ownership – Directors and Executive Officers” of
this proxy statement. As of January 16, 2009, neither Nina K.
Vellayan nor Keith Kendrick is a beneficial owner of our common
stock.
Information
Regarding Transactions in the Company’s Securities by Participants
The
following table sets forth all transactions that may be deemed purchases and
sales of shares of our common stock by the individuals who are considered
“participants” between January 16, 2007 and January 16, 2009. Except
as described in this proxy statement, shares of our common stock owned of record
by each participant are also beneficially owned by such
participant. Unless otherwise indicated, all transactions were in the
public market or pursuant to our equity compensation plans, and none of the
purchase price or market value of those shares is represented by funds
borrowed or otherwise obtained for the purpose of acquiring or holding such
securities.
Name
|
|
Date
|
|
|
Number
of Shares
|
|
|
Transaction
Type
|
|
Charles
W. Berger
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samuel
Cabot III
|
|
02/27/07
|
|
|
|
5,000
|
|
|
|
(1
|
)
|
|
|
07/31/07
|
|
|
|
10,000
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
J. Delucca
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morgan
P. Guenther
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip
G. Heasley
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
A. Poe
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
L. Rossetti
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/07
|
|
|
|
5,000
|
|
|
|
(1
|
)
|
|
|
07/31/07
|
|
|
|
10,000
|
|
|
|
(1
|
)
|
|
|
09/05/08
|
|
|
|
2,900
|
|
|
|
(2
|
)
|
|
|
09/08/08
|
|
|
|
50
|
|
|
|
(2
|
)
|
|
|
09/09/08
|
|
|
|
1,115
|
|
|
|
(2
|
)
|
|
|
09/10/08
|
|
|
|
3,000
|
|
|
|
(2
|
)
|
|
|
09/11/08
|
|
|
|
2,600
|
|
|
|
(2
|
)
|
|
|
09/12/08
|
|
|
|
2,200
|
|
|
|
(2
|
)
|
|
|
09/15/08
|
|
|
|
500
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Stone
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
W. Johnston
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nina
K. Vellayan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
C. Connell
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Kendrick
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
S. Omsberg
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquired
— Option exercise
|
|
(2) Acquired
— Open market purchase
|
|
Termination
or Change of Control Arrangements with Participants
In
addition to the termination or change of control arrangements described in the
proxy statement, the following participants are party to termination or change
of control arrangements with us: Nina K. Vellayan and Keith S.
Kendrick. A brief description of the principal terms of the
arrangements is as follows:
·
|
upon
termination of employment by Tier for disability or termination of
employment by death, each of Ms. Vellayan and Mr. Kendrick will be
entitled to one times the base salary in effect on the date of
termination, payment of any accrued prior year bonus and twelve months
continuation of health benefits;
|
·
|
upon
termination of employment by Tier without cause or by the individual with
good reason, each of Ms. Vellayan and Mr. Kendrick will be entitled to one
times the base salary in effect on the date of termination, payment of any
accrued prior year bonus and twelve months continuation of health
benefits; and
|
·
|
upon
termination of employment by Tier after a change in control, each of Ms.
Vellayan and Mr. Kendrick will be entitled to two times the base salary in
effect on the date of termination, two times the average annual bonus paid
to the individual, payment of any accrued prior year bonus, immediate
vesting of all options or stock awards and eighteen months
continuation of health benefits.
|
“Change
of control” is defined as set forth in the
Change of
Control
section of the
Compensation Discussion and Analysis section of the proxy
statement.
Miscellaneous
Information Regarding Participants
In
addition to the employment arrangements described in the proxy statement, the
following participants are party to employment agreements with us:
·
|
Nina
K. Vellayan, our Chief Operating Officer, is employed pursuant to an
employment agreement, which was filed as Exhibit 10.34 to our Annual
Report on Form 10-K filed on December 10, 2008;
and
|
·
|
Keith
S. Kendrick, our Senior Vice President – Strategic Marketing, is employed
pursuant to an employment agreement, which was filed as Exhibit 10.2 to a
Current Report on Form 8-K filed on July 7,
2008.
|
Except
as described in this Appendix A or the proxy statement, none of the
participants (i) beneficially owns (within the meaning of Rule 13d-3
under the Exchange Act), directly or indirectly, any shares or other securities
of our company or any of our subsidiaries, (ii) has purchased or sold any
of such securities within the past two years, or (iii) is, or within the
past year was, a party to any contract, arrangement or understanding with any
person with respect to any such securities. Except as disclosed in
this Appendix A or the proxy statement, none of the participants’
associates beneficially owns, directly or indirectly, any of our
securities. Other than as disclosed in this Appendix A or the
proxy statement, neither we nor any of the participants has any substantial
interests, direct or indirect, by security holding or otherwise, in any matter
to be acted upon at the annual meeting or is or has been within the past year a
party to any contract, arrangement, or understanding with any person with
respect to any of our securities, including, but not limited to, joint ventures,
loan or option agreements, puts or calls, guarantees against loss or guarantees
of profit, division of losses or profits, or the giving or withholding of
proxies. Except as disclosed in this Appendix A or the proxy statement,
none of us, the participants, or any of their associates has had or will have a
direct or indirect material interest in any transaction or series of similar
transactions since the beginning of our last fiscal year or any currently
proposed transactions, or series of
similar
transactions, to which we or any of our subsidiaries was or is to be a party in
which the amount involved exceeds $120,000.
Other
than as set forth in this Appendix A or the proxy statement, none of the
Company, any of the participants or any of their associates has any arrangements
or understandings with any person with respect to any future employment by us or
our affiliates or with respect to any future transactions to which we or any of
our affiliates will or may be a party.
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