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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Definitive Proxy Statement
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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.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(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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Fee paid previously with preliminary materials.
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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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PRELIMINARY COPY
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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March [XX], 2010
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Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Tier Technologies, Inc. on April 8,
2010 at 10:00 a.m. Eastern Time at the Sheraton Reston Hotel, located at 11810 Sunrise Valley
Drive, Reston, VA 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 proxy card. You may submit your proxy by
telephone, by Internet, or by mail.
At the annual meeting, stockholders will elect directors, vote on the ratification of the selection
of Tiers independent registered public accounting firm, and consider a proposal to amend Tiers
Restated Certificate of Incorporation in order to change Tiers name to Official Payments Holdings,
Inc., in each case as described in the enclosed proxy materials. We will also report on Tiers
business. Stockholders will have an opportunity to ask relevant questions.
Only stockholders of record at the close of business on February 9, 2010 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, [
] at [
].
By Order of the Board of Directors,
Keith S. Omsberg
Secretary
Reston, Virginia
March [XX], 2010
TIER TECHNOLOGIES, INC.
10780 Parkridge Boulevard, Suite 400
Reston, Virginia 20191
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF TIER TECHNOLOGIES, INC.
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TIME:
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10:00 a.m. Eastern Time on Thursday, April 8, 2010.
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PLACE:
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Sheraton Reston Hotel, located at 11810 Sunrise Valley Drive,
Reston, Virginia 20191.
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ITEMS OF BUSINESS:
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(1) To elect seven 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, 2010
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(3) To act on a proposal to amend Tiers Restated Certificate of
Incorporation in order to change Tiers name to Official
Payments Holdings, Inc.; 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 February 9, 2010.
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Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be
Held on April 8, 2010.
The proxy statement and Tiers Annual Report on Form 10-K for fiscal year
2009, as amended, are available electronically at www.proxyvote.com. Directions to the meeting are
provided on page B-1 of this proxy statement.
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 Tier. We believe that these individuals have the independence, knowledge, and
commitment to deliver value for Tier and its shareholders.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE BOARDS NOMINEES ON THE ENCLOSED PROXY CARD.
Keith S. Omsberg
Corporate Secretary
March [XX], 2010
i
Table of Contents
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1
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1
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1
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2
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3
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3
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3
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3
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4
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4
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4
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5
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5
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5
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6
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6
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8
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11
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20
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20
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20
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30
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30
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33
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34
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36
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43
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45
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45
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45
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ii
PRELIMINARY COPY
TIER TECHNOLOGIES, INC.
10780 Parkridge Boulevard, Suite 400
Reston, Virginia 20191
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 8, 2010
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 2010 Annual Meeting of Stockholders to be held at the Sheraton
Reston Hotel, located at 11810 Sunrise Valley Dr., Reston, Virginia 20191, on April 8, 2010, at
10:00 a.m., local time, and any adjournment or postponement thereof. On or about March [XX], 2010,
we began mailing this proxy statement, the enclosed proxy card, and the Companys Annual Report on
Form 10-K for the fiscal year ended September 30, 2009, as amended, to shareholders entitled to
vote at the annual meeting.
INFORMATION ABOUT THE PROXY MATERIALS AND OUR 2010 ANNUAL MEETING OF
STOCKHOLDERS
GENERAL INFORMATION
1
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WHO IS MAKING THIS SOLICITATION?
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Tiers Board of Directors, or the Board, is soliciting your proxy for use at Tiers Annual
Meeting of Stockholders 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.
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2.
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WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
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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, 2009, as amended, which includes the Companys audited consolidated
financial statements, is also enclosed.
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3.
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WHEN AND WHERE IS THE ANNUAL MEETING?
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Our Annual Meeting of Stockholders will be held on April 8, 2010 at 10:00 a.m. Eastern Time, at
the Sheraton Reston Hotel, located at 11810 Sunrise Valley Dr. Reston, VA 20191.
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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:
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PROPOSAL ONE. Election of Directors:
THE BOARD RECOMMENDS THAT YOU VOTE FOR ITS NOMINEES, CHARLES W. BERGER, JOHN J. DELUCCA,
MORGAN P. GUENTHER, PHILIP G. HEASLEY, DAVID A. POE, RONALD L. ROSSETTI, AND ZACHARY F.
SADEK, FOR SERVICE UNTIL TIERS
1
NEXT ANNUAL MEETING AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED.
You can find information about the Boards nominees, as well as information about the Board, its
committees, and other related matters, beginning on page 17. Information regarding director
compensation can be found beginning on page 43.
PROPOSAL TWO. 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, 2010.
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You can find information about Tiers relationship with McGladrey & Pullen, LLP beginning on
page 45.
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PROPOSAL THREE. Company Name Change:
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT TO TIERS RESTATED CERTIFICATE OF
INCORPORATION IN ORDER TO CHANGE THE NAME OF THE COMPANY TO OFFICIAL PAYMENTS HOLDINGS,
INC.
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You can find information about the proposed change to
Tiers name beginning on page 46.
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We will also consider any other business that properly comes before the annual meeting.
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5.
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WHAT OTHER MATTERS MAY ARISE AT THE ANNUAL MEETING?
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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 years annual meeting
were described in our proxy statement for the 2009 annual meeting and are similar to those
described on page 46 for next years meeting.
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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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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, 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
Companys website. We have also retained [
] to assist in the
solicitation of proxies, for a fee estimated to be approximately [
] plus out-of-pocket
expenses. In addition, we have agreed to indemnify [
] against certain liabilities
arising out of or in connection with the engagement. [
] has advised us that
approximately [
] of its employees will be
involved in the proxy solicitation by [
]
on behalf of Tier.
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7.
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WHAT DO I NEED FOR ADMISSION TO THE ANNUAL MEETING?
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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 February 9, 2010, 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 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.
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2
8.
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HOW CAN I FIND TIERS PROXY MATERIALS AND ANNUAL REPORT ON THE INTERNET?
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Our proxy statement and Annual Report on Form 10-K for fiscal year 2009, as amended, are
available electronically at www.proxyvote.com.
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9.
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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,
[
] at [
].
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VOTING MECHANICS
10.
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WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
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Only holders of record of shares of our common stock at the close of business on February 9,
2010, 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 18,150,965 shares of our
common stock outstanding and entitled to vote.
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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 seven 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.
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11.
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WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?
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The record date is February 9, 2010. 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.
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12.
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HOW CAN I VOTE MY SHARES OF COMMON STOCK?
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There are four ways to vote for the Boards 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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Mail:
Mark, sign, and date your proxy card and return it to: Tier
Technologies, Inc., c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way,
Edgewood, NY 11717;
OR
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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 2010 Annual Meeting of
Stockholders on April 8, 2010, at 10:00 a.m. Eastern Time;
OR
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Internet
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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.
3
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. Please see question 18 below for additional
information on cumulative voting.
13.
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HOW CAN I REVOKE A PROXY OR CHANGE MY VOTING INSTRUCTIONS?
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If you are the stockholder of record, you can revoke a proxy before the close of voting at the
annual meeting by:
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Giving written notice to Tiers Corporate Secretary at (for notices mailed before
March 26, 2010) 10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191 or 11130
Sunrise Valley Drive, Suite 300, Reston, VA 20191 (for notices mailed on or after
March 26, 2010);
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Submitting a new proxy card bearing a date later than your last proxy card;
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Following the instructions for Internet proxy authorization that appear on the
proxy card;
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Following the instructions that appear on the proxy card for proxy authorization by
telephone; or
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Attending the annual meeting and voting in person. Attendance at the annual
meeting will not, by itself, revoke a proxy.
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If your shares are held in street name by a bank or broker, your bank or broker should provide
you with appropriate instructions for revoking your proxy.
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14.
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WILL MY SHARES BE VOTED IF I DO NOT PROVIDE INSTRUCTIONS TO MY BROKER?
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If you are the beneficial owner of shares held in street name by a bank or broker, the bank or
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 your bank or broker, it 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 referred to as
broker non-votes). Proposal One (the election of directors) and Proposal Three (the Company
name change proposal) are both non-discretionary proposals. Proposal Two (ratification of
auditors) is a discretionary proposal. As a result, if your shares are held in street name
and you do not provide instructions as to how your shares are to be voted in the election of
directors or with respect to the name change proposal, your bank or broker will not be able to
vote your shares in the election of directors or with respect to the name change proposal, and
your shares will not be voted for any of Tiers nominees or for the name change proposal. We
urge you to provide instructions to your bank or broker so that your votes may be counted on
these important matters. We urge you to vote your shares by following the instructions provided
on the enclosed proxy card and returning the proxy card to your bank or broker to ensure that
your shares will be voted on your behalf.
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WHO WILL COUNT THE VOTES?
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A representative of American Election Services, LLC will tabulate the votes and act as Inspector
of Elections.
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4
VOTING INFORMATION
16.
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WHAT ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL ONE, THE ELECTION OF DIRECTORS?
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Shareholders may use the enclosed proxy card to:
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Vote FOR (in favor of) all of the Boards nominees;
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WITHHOLD votes from all nominees; or
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WITHHOLD votes from specific Board nominees; or
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Provide instructions for cumulating votes for one or more specific
Board nominees.
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17.
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WHAT VOTE IS NEEDED TO ELECT THE DIRECTORS?
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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 seven director nominees with the highest
number of affirmative votes will be elected.
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Tiers 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 Boards 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.
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Unless you specify how your votes are to be cumulated among the Boards 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 proxyholders 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.
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Abstentions and broker non-votes will not be counted as votes for or against a nominee, and
therefore, will have no effect on the outcome of the election.
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18.
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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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Shareholders may:
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Vote FOR (in favor of) the ratification;
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Vote AGAINST the ratification; or
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ABSTAIN from voting on the ratification.
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19.
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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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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. Abstentions and shares not voted by brokers will not be counted as votes cast on Proposal Two and will have no
effect on the outcome of this proposal.
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20.
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WHAT ARE THE VOTING CHOICES WHEN VOTING ON PROPOSAL THREE, THE NAME CHANGE PROPOSAL?
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Shareholders may:
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Vote FOR (in favor of) the proposal;
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Vote AGAINST the proposal; or
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ABSTAIN from voting on the proposal.
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21.
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WHAT VOTE IS NEEDED TO APPROVE THE NAME CHANGE PROPOSAL?
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The name change proposal will be approved if a majority of the outstanding stock entitled to
vote thereon has been voted in favor of the proposal. Because Proposal Three will be approved
only if it receives the affirmative vote of a majority of the outstanding stock entitled to vote
on the matter, abstentions and broker non-votes have the effect of votes against this proposal.
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22.
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HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
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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 whether a quorum
is present.
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23.
|
|
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.
|
24.
|
|
WHAT IF I RETURN MY PROXY CARD BUT DO NOT GIVE VOTING INSTRUCTIONS?
|
|
|
|
If you sign your 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 Two, the ratification
of McGladrey & Pullen, LLP as our independent registered public accounting firm for 2010, and
FOR Proposal Three, the name change proposal. Unless you specify how your votes are to be
cumulated among the Boards nominees, the 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
Boards nominees in connection with the election of directors.
|
25.
|
|
WHAT IF OTHER MATTERS ARE VOTED ON AT THE MEETING?
|
|
|
|
If any other matters are properly presented at the annual meeting for consideration, the persons
named as proxies in the enclosed 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 annual meeting.
|
6
26.
|
|
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 proxy card or voting instruction card for each account. To ensure that all of your shares are
voted, please use all the proxy cards and voting instruction cards you receive to submit your
proxy for your shares by telephone or by Internet or complete, sign, date, and return a proxy
card or voting instruction card for each account.
|
27.
|
|
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
|
|
|
|
Tier will publish preliminary results of the voting, or final results of the voting (if such
final results are known), in a current report on Form 8-K within four business days of the
annual meeting. If we report preliminary results, we will file an amended report on Form 8-K to
disclose the final voting results within four business days after the final voting results are
known. You will be able to read and print a copy of the Form 8-K and, if applicable, the
amended 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
.
|
7
STOCK OWNERSHIP
Directors and Executive Officers
The following table sets forth certain information regarding the ownership of our common stock as
of February 23, 2010 by: (i) each director and director nominee; (ii) each of our CEO, CFO and our
three most highly compensated executive officers, other than our CEO and CFO, who were serving as
executive officers at the end of fiscal year 2009, whom we refer to collectively as our named
executive officers; 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)
|
|
|
*
|
|
John J. Delucca
|
|
|
50,000
|
(4)
|
|
|
*
|
|
Daniel Donohue
|
|
|
2,459,404
|
(5)
|
|
|
13.5
|
%
|
Morgan P. Guenther
|
|
|
140,000
|
(3)
|
|
|
*
|
|
Philip Heasley
|
|
|
20,002
|
(6)
|
|
|
*
|
|
Michael Murphy
|
|
|
2,459,404
|
(5)
|
|
|
13.5
|
%
|
David A. Poe
|
|
|
6,668
|
(3)
|
|
|
*
|
|
Zachary Sadek
|
|
|
1,799,321
|
(7)
|
|
|
9.9
|
%
|
Ronald W. Johnston
|
|
|
81,666
|
(8)
|
|
|
*
|
|
Keith Kendrick
|
|
|
30,000
|
(9)
|
|
|
*
|
|
Keith S. Omsberg
|
|
|
37,500
|
(10)
|
|
|
*
|
|
Ronald L. Rossetti
|
|
|
434,500
|
(11)
|
|
|
2.3
|
%
|
Nina K. Vellayan
|
|
|
53,564
|
(12)
|
|
|
*
|
|
All directors and executive officers
as a group (13 persons)
|
|
|
5,252,625
|
(13)
|
|
|
27.6
|
%
|
|
|
|
*
|
|
Less than 1%
|
|
(1)
|
|
Address: 10780 Parkridge Blvd, Suite 400, Reston, Virginia 20191, unless otherwise specified.
|
|
(2)
|
|
The percentages shown are based on 18,150,965 shares of common stock outstanding as of February
23, 2010.
|
|
(3)
|
|
Consists entirely of shares issuable upon the exercise of options exercisable on or before
April 24, 2010.
|
|
(4)
|
|
Includes 40,000 shares issuable upon the exercise of options exercisable on or before April 24,
2010.
|
|
(5)
|
|
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 March 2,
2010. Discovery Group I, LLC is the sole general partner of Discovery Equity Partners, L.P.
Discovery Equity Partners, L.P. beneficially owns 2,109,667 shares of common stock and Discovery
Group I, LLC beneficially owns 2,459,404 shares of common stock. Daniel J. Donoghue and Michael R.
Murphy are the sole managing members of Discovery Group I, LLC and may be deemed to beneficially
own 2,459,404 shares of common stock.
|
|
(6)
|
|
Includes 10,002 shares issuable upon the exercise of options exercisable on or before April 24,
2010.
|
|
(7)
|
|
Address: 265 Franklin Street, 18th Floor, Boston, Massachusetts 02110. Based solely on
information contained in a Schedule 13D/A filed with the SEC on January 15, 2010 by Giant
Investment, LLC, (Giant); Parthenon Investors II, L.P. (Parthenon); PCap Partners II, LLC
(PCap Partners); PCap II, LLC (PCap II); John C. Rutherford; and Ernest K. Jacquet
(collectively, the Parthenon Group). Parthenon is a managing member of Giant, PCap Partners is a
general partner of Parthenon, and PCap II is a managing member of PCap Partners. Giant directly
beneficially owns 1,799,321 shares of common stock. As parents of Giant, Parthenon, PCap Partners
and PCap II may be deemed to beneficially own their proportional interest in the shares of common
stock directly and beneficially owned by Giant, comprising 1,748,401 shares of common stock. John
C. Rutherford and Ernest K. Jacquet are control persons of various entities indirectly investing in
Giant and may be deemed to beneficially own a proportional interest in the shares of common stock
owned by Giant, comprising 1,799,321 shares of common stock. In addition, Exhibit 99.2 to a
Schedule 13D/A filed by the Parthenon Group on January 6, 2009 indicated that Mr. Sadek, as a Vice
President of PCap Managers LLC, an affiliate of Giant, may be deemed to indirectly beneficially own
all of the shares directly beneficially owned by Giant, but that Mr. Sadek disclaims any such
beneficial ownership.
|
8
|
|
|
(8)
|
|
Consists entirely of shares issuable upon the exercise of options exercisable on or before April 24,
2010.
|
|
(9)
|
|
Consists entirely of shares issuable upon the exercise of options exercisable on or before April 24,
2010.
|
|
(10)
|
|
Consists entirely of shares issuable upon the exercise of options exercisable on or before April
24, 2010.
|
|
(11)
|
|
Includes 385,000 shares issuable upon the exercise of options exercisable on or before April
24, 2010.
|
|
(12)
|
|
Includes 40,000 shares issuable upon the exercise of options exercisable on or before April
24, 2010.
|
|
(13)
|
|
Includes 910,836 shares issuable upon the exercise of options exercisable on or before April
24, 2010.
|
Equity Compensation Plan Information
The following table provides information about the securities authorized for issuance under our
equity compensation plan as of September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Number of
|
|
|
|
Number of securities
|
|
|
average exercise
|
|
|
securities
|
|
|
|
to be issued upon
|
|
|
price of
|
|
|
remaining available
|
|
|
|
exercise of
|
|
|
outstanding
|
|
|
for future issuance
|
|
|
|
outstanding options,
|
|
|
options,
|
|
|
under equity
|
|
|
|
warrant and rights (in
|
|
|
warrants and
|
|
|
compensation plans
|
|
Plan category
|
|
thousands)
|
|
|
rights ($)
|
|
|
(in thousands)
|
|
Equity compensation plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Approved by security holders
|
|
|
2,359
|
|
|
$
|
7.86
|
|
|
|
1,353
|
|
Not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,359
|
|
|
$
|
7.86
|
|
|
|
1,353
|
|
|
|
|
|
|
|
|
|
|
|
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, 2009, our officers, directors, and
greater than ten percent beneficial owners complied with all Section 16(a) filing requirements,
except that Messrs. Rossetti, Johnston, Kendrick and Omsberg, and Ms. Vellayan each filed two late
Forms 4 related to two transactions and Mr. Heasley filed one late Form 4, which related to one
transaction.
9
Significant Stockholders
The following table lists certain persons known by Tier to own beneficially more than five
percent of Tiers outstanding shares of common stock as of February 23, 2010.
|
|
|
|
|
|
|
|
|
|
|
Common stock beneficially owned
|
|
|
|
Total number of
|
|
|
Percent of
|
|
Name of beneficial owner
|
|
shares
|
|
|
class
(1)
|
|
Discovery Group I, LLC
(2)
|
|
|
2,459,404
|
|
|
|
13.5
|
%
|
Wells Fargo & Company
(3)
|
|
|
2,109,746
|
|
|
|
11.6
|
%
|
Giant Investment, LLC
(4)
|
|
|
1,799,321
|
|
|
|
9.9
|
%
|
Heartland Advisors, Inc.
(5)
|
|
|
1,717,474
|
|
|
|
9.5
|
%
|
Dimensional Fund Advisors
(6)
|
|
|
1,450,931
|
|
|
|
8.0
|
%
|
|
|
|
(1)
|
|
The percentages shown are based on 18,150,965 shares of common stock outstanding as of February 23, 2010.
|
|
(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 March 2, 2010. Discovery Group I, LLC is the
sole general partner of Discovery Equity Partners, L.P. Discovery Equity Partners, L.P. beneficially owns
2,109,667 shares of common stock and Discovery Group I, LLC beneficially owns 2,459,404 shares of common stock.
Daniel J. Donoghue and Michael R. Murphy, each of whom is a member of our Board of Directors, are the sole
managing members of Discovery Group I, LLC and may be deemed to beneficially own 2,459,404 shares of common
stock.
|
|
(3)
|
|
Address: For Wells Fargo & Company, 420 Montgomery Street, San Francisco, California 94104; for Wells
Capital Management Incorporated, 525 Market Street, 10
th
Floor, San Francisco, California 94105.
Based solely on information contained in a Schedule 13G/A filed with the SEC on January 26, 2009 by Wells Fargo
& Company and its subsidiary, Wells Capital Management Incorporated. This table reflects the shares of common
stock owned by Wells Fargo & Company and Wells Capital Management Incorporated as of December 31, 2009.
|
|
(4)
|
|
Address: 265 Franklin Street, 18th Floor, Boston, Massachusetts 02110. Based solely on information contained
in a Schedule 13D/A filed with the SEC on January 15, 2010 by Giant Investment, LLC, (Giant); Parthenon
Investors II, L.P. (Parthenon); PCap Partners II, LLC (PCap Partners); PCap II, LLC (PCap II); John C.
Rutherford; and Ernest K. Jacquet (collectively, the Parthenon Group). Parthenon is a managing member of
Giant, PCap Partners is a general partner of Parthenon, and PCap II is a managing member of PCap Partners.
Giant directly beneficially owns 1,799,321 shares of common stock. As parents of Giant, Parthenon, PCap Partners
and PCap II may be deemed to beneficially own their proportional interest in the shares of common stock directly
and beneficially owned by Giant, comprising 1,748,401 shares of common stock. John C. Rutherford and Ernest K.
Jacquet are control persons of various entities indirectly investing in Giant and may be deemed to beneficially
own a proportional interest in the shares of common stock owned by Giant, comprising 1,799,321 shares of common
stock. In addition, Exhibit 99.2 to a Schedule 13D/A filed by the Parthenon Group on January 6, 2009 indicated
that Mr. Sadek, who is a member of our Board of directors, may be deemed to indirectly beneficially own all of
the shares directly beneficially owned by Giant due to his position as a Vice President of PCap Managers LLC, an
affiliate of Giant, but that Mr. Sadek disclaims any such beneficial ownership.
|
|
(5)
|
|
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 10, 2010. This table reflects the
shares of common stock that may be deemed beneficially owned by (1) Heartland Advisors, Inc., by virtue of its
investment discretion and voting authority granted by certain clients, and (2) William J. Nasgovitz, by virtue
of his control of Heartland Advisors, Inc., in each case as of December 31, 2009. Mr. Nasgovitz disclaims
beneficial ownership of these shares.
|
|
(6)
|
|
Address: Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746. Based on information
contained in a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP on February 8, 2010. In its
role as an investment advisor, sub-adviser and/or manager to certain investment companies, trusts and accounts
(the Funds), Dimensional and/or its subsidiaries (collectively, Dimensional) possesses investment and/or
voting power over the shares shown in the table above, and may be deemed to be the beneficial owner of such
shares. However, all shares reported above are owned by the Funds, and Dimensional disclaims beneficial
ownership of such shares. This table reflects the shares of common stock deemed beneficially owned by
Dimensional as of December 31, 2009.
|
10
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 Chief Accounting Officer. Effective May 3, 2004, we also adopted a Business
Code of Conduct for all employees. On March 31, 2009, we adopted Corporate Governance Guidelines.
Our Code of Ethics, Business Code of Conduct, and Corporate Governance Guidelines, as well as the
charters for our Audit Committee, Compensation Committee, and Governance and Nominating Committee,
which are discussed in greater detail below under the heading
Meetings and Committees of our Board
of Directors
, are posted on our website at:
http://www.tier.com
.
Director Independence
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, John J.
Delucca, Daniel J. Donoghue, Morgan P. Guenther, Philip G. Heasley, Michael R. Murphy, David A.
Poe, and Zachary F. Sadek does not have a relationship which would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director and that each of these
directors is an independent director as defined under Rule 5605(a)(2) of the NASDAQ Stock Market,
Inc. Listing Rules. Samuel Cabot III and James R. Stone served on our Board of Directors during the
fiscal year ended September 30, 2009; their terms of office expired when their successors were
elected at the 2009 annual meeting. Our board previously determined that Messrs. Cabot and Stone
did not have a relationship which would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director and that each of these directors was an
independent director as defined under Rule 5605(a)(2) of the NASDAQ Stock Market, Inc. Listing
Rules.
Lead Director
Consistent with our Corporate Governance Guidelines, our Board has elected Philip G. Heasley as a
Lead Director in order to facilitate communication between management and the independent
directors. The principal responsibilities of the Lead Director are to consult with the CEO and
Chairman of the Board regarding the agenda for meetings of the Board, schedule and prepare agendas
for meetings of independent directors, communicate with the CEO and Chairman, act as principal
liaison between the independent directors and the CEO and Chairman on sensitive issues, and raise
issues with management on behalf of the independent directors when appropriate.
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. The Board has determined that Mr. Berger is independent under applicable SEC and NASDAQ
rules.
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. The Lead Director or, in his
absence, the Chair of the Governance and Nominating or Audit Committee, preside at these meetings.
Service on Other Boards
Our Corporate Governance Guidelines provide that no director may serve on the board of directors of
more than three public companies, in addition to our Board of Directors.
11
Board Evaluation
Our Corporate Governance Guidelines require our Board to conduct a self-evaluation at least
annually to determine whether it and its members are functioning effectively. The Governance and
Nominating Committee oversees these evaluations.
Communication with Directors
Stockholders may communicate directly with the Board members by writing to: Tier Technologies,
Inc., Board of Directors, c/o Corporate Secretary, at (for letters mailed before March 26, 2010)
10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191 or 11130 Sunrise Valley Drive, Suite
300, Reston, VA 20191 (for letters mailed on or after March 26, 2010). 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., at (for letters mailed
before March 26, 2010) 10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191 or 11130
Sunrise Valley Drive, Suite 300, Reston, VA 20191 (for letters mailed on or after March 26, 2010).
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, at (for notices mailed before March 26,
2010) 10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191 or 11130 Sunrise Valley Drive,
Suite 300, Reston, VA 20191 (for notices mailed on or after March 26, 2010). To be timely under
our bylaws, the notice must be received by us at our principal executive offices not less than 60
nor more than 90 days prior to the first anniversary of the preceding years 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 10th 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; the need for a particular expertise; a candidates
understanding of marketing, finance, sales, and technology, and of our business and technology; a
prospective nominees experience, judgment, diversity, independence, and skills; 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:
12
|
|
|
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 Tiers 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
We use the following policies and procedures in connection with the 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 Transactions
The Committee reviews, approves, or ratifies a related party transaction primarily based on the
following standards:
|
|
|
the related persons interest in the transaction, the dollar value of the amount
involved, and the dollar value of the amount of the related persons interest, without
regard to profit or loss;
|
|
|
|
|
whether the transaction was undertaken in the ordinary course of business;
|
13
|
|
|
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;
|
|
|
|
|
the purpose of, and potential benefits to us of, the transaction; and
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any other information regarding the related person transaction or the related person in
the context of the proposed transaction that would be material to investors in light of the
circumstances of the particular transaction.
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The Committee may approve or ratify the transaction only if the Committee determines that, under
all of the circumstances, the transaction is in Tiers best interests. The Committee may impose
any conditions on the related person transaction that it deems appropriate.
Transactions not covered by Related Person Transaction Policy
Our Board has determined that specific types of interests and transactions identified in the policy
do not create a material direct or indirect interest on behalf of related persons and, therefore,
are not related person transactions for purposes of the policy, including:
|
1.
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interests arising solely from the related persons position as an executive officer of
another entity (whether or not the person is also a director of such entity) that is a
participant in the transaction, where (a) the related person and all other related persons
own in the aggregate less than a 10% equity interest in such entity, (b) the related person
and his or her immediate family members are not involved in the negotiation of the terms of
the transaction with the Company and do not receive any special benefits as a result of the
transaction and (c) the amount involved in the transaction equals less than the greater of
$200,000 or 5% of the annual gross revenues of the company receiving payment under the
transaction;
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2.
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a transaction that is specifically contemplated by provisions of our charter or bylaws;
and
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3.
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transactions that do not constitute related person transactions pursuant to the
instructions to the SECs related person transaction disclosure rule.
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Tier paid Edgar, Dunn & Company, or EDC, approximately $158,000 for consulting services in fiscal
year 2009. David Poe, a director of the Company, is a director and officer of EDC and a holder of
less than 10% of EDCs outstanding shares. Mr. Poe was not involved in the negotiation of the terms
of the transaction with the Company and did not receive any special benefits as a result of the
transaction. The transaction with EDC during fiscal year 2009 was not reviewed under the related
person transaction policy because it met the criteria set forth in item 1 above, and accordingly
was not a related person transaction for purposes of the policy.
14
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal year 2009, the Board held 15 meetings. Each of our incumbent directors attended
at least 75% of the aggregate of the total number of meetings of the board of directors (held
during the period for which he has been a director) and the total number of meetings held by all
committees of the board on which he served (during the periods that he served). Directors may
attend the annual meeting of stockholders, but are not obligated to do so. Mr. Guenther and Mr.
Rossetti were the only directors who attended last years annual meeting. Committee members and a
summary of key committee functions are as follows:
Audit Committee
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Number of Members:
4
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Functions:
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Members:
Charles W. Berger
(Chair)
John J. Delucca
(Vice Chair)
Daniel J. Donoghue
Zachary F. Sadek (from March 2009)
Samuel Cabot III (through March 2009)
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Selects the independent registered
public accounting firm to Selects the
independent registered public accounting
firm to audit Tiers 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.
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Number of Meetings in Fiscal 2009: 7
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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.
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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.
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Discusses earnings releases and guidance
provided to the public.
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As appropriate, obtains advice and
assistance from outside legal,
accounting, or other advisors.
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Prepares a report of the Audit Committee
to be included in our proxy statement.
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Assesses annually the adequacy of the
Audit Committee Charter.
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Reports to the Board about these matters.
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15
Compensation Committee
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Number of Members:
3
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|
Functions:
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|
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|
Members:
Philip G. Heasley
(Chair)
Morgan P. Guenther
Michael R. Murphy (from March 2009)
Samuel Cabot III (through March 2009)
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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.
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|
Number of Meetings in Fiscal 2009:
8
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Oversees the administration of our
equity-based compensation and other
benefit plans.
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Approves grants of stock options and
stock awards to our officers and
employees.
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Governance and Nominating Committee
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Number of Members:
4
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|
Functions:
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|
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|
Members:
Morgan P. Guenther
(Chair)
John J. Delucca
Philip G. Heasley
Michael R. Murphy (from March 2009)
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|
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.
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Recommends guidelines and responsibilities relating to
corporate governance for adoption by the Board.
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|
Number of Meetings in Fiscal 2009:
9
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|
Reviews, approves, or ratifies related person transactions.
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Evaluates and recommends director compensation.
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Data Security Committee
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|
Number of Members:
3
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|
Functions:
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|
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|
Members:
David A. Poe
(Chair)
Philip G. Heasley
Zachary F. Sadek (from March 2009)
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|
Identifies and evaluates security risks.
Implements safeguards and programs on data security
integrity and migration of security risks.
Works with management to enhance current, and develop new,
technical policies and procedures.
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|
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Number of Meetings in Fiscal 2009:
3
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|
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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
.
16
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 Boards 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.
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, John J. Delucca, Morgan P. Guenther,
Philip G. Heasley, David A. Poe, and Zachary Sadek. 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:
57
Director since:
January 2002
Recent Business Experience:
Mr. Berger was Chief Executive Officer of DVDPlay, Inc., a manufacturer
and operator of DVD rental kiosks, from April 2006 through February 2009, and was
Chairman of the Board of DVDPlay from December 2001 through
December 2009. 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. Since December
2004, Mr. Berger has been a director of SonicWALL, Inc., a publicly traded company that
manufactures computer network security applications. Mr. Berger also serves on the Board of
Directors for the United States Naval Memorial and is a Trustee and member of the Investment
Committee for Bucknell University.
John J. Delucca
Age:
66
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 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:
56
Director since:
August 1999
Recent Business Experience:
Since April 2009, Mr. Guenther has served as a private consultant to
technology companies. Mr. Guenther served as Chairman and Chief Executive Officer of Airplay
Network, Inc., a wireless entertainment services company, from May 2005 through April 2009. 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
17
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:
60
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:
61
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 an advisory council member for the Bank of San Francisco and the University of Idaho College of
Letters, Arts and Social Sciences.
Ronald L. Rossetti
Age:
66
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.
Zachary F. Sadek
Age
: 30
Director since:
March 2009
Recent Business Experience:
Mr. Sadek serves as Vice President of PCap Managers LLC, an affiliate
of Parthenon Capital, LLC, a private equity fund, and since June 2004 has been employed as an
investment professional by affiliates of Parthenon Capital. From June 2002 to June 2004, Mr. Sadek
was an investment banker with Dresdner Kleinwort Wasserstein, an investment banking firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
EACH NOMINEE NAMED ABOVE.
18
Arrangements or understandings related to the selection of directors
Parthenon Capital nominated Mr. Sadek for election to the Companys Board of Directors at our 2009
annual meeting of stockholders in March 2009, and Mr. Sadek was elected at that meeting. In
January 2010, we and Parthenon Capital agreed that the Company would nominate Mr. Sadek for
reelection as a director of the Company at the 2010 annual meeting and would use its reasonable
best efforts to ensure that Mr. Sadek is elected at that annual meeting, and Parthenon Capital gave
the Company a proxy for the shares of the Companys capital stock owned by Parthenon Capital and
authorized the proxyholders designated by the Board to cast the votes entitled to be cast pursuant
to the proxy and to cumulate such votes in the proxyholders discretion in favor of the election of
any person (i) nominated by the Board and serving on the Board as of the date of the agreement
and/or (ii) nominated by the Board in accordance with the Boards nomination procedures in effect
on the date of the agreement and for whom the members of the Parthenon Group have specifically
authorized the proxyholders to vote. The agreement between the Company and Parthenon Capital was
described in and filed as an exhibit to a current report on Form 8-K filed January 11, 2010, and
the preceding sentence is a summary of the agreement, does not purport to be complete, and is
qualified in its entirety by reference to the agreement. We have agreed to pay Parthenon Capital
$48,072 to reimburse it for expenses incurred in connection with our 2009 annual meeting.
Discovery Equity Partners, L.P. and Discovery Group I, LLC, which we refer to as Discovery Group,
nominated Mr. Donoghue and Mr. Murphy for election to the Companys Board of Directors at our 2009
annual meeting of stockholders in March 2009, and Mr. Donoghue and Mr. Murphy were elected at that
meeting. In February 2010, the Company and Discovery Group reached an agreement with respect to
the Companys 2010 annual meeting and other matters. Discovery Group agreed, among other things,
that (i) it would not nominate any person for election to the Board at the 2010 annual meeting,
(ii) it would not conduct any solicitation of proxies in connection with the 2010 annual meeting,
and (iii) it would vote all shares of the Companys common stock it beneficially owned for the
election of each of the Boards nominees at the 2010 annual meeting. The Company agreed, among
other things, to (i) reduce the size of the Board from nine to seven members, effective as of the
date of the 2010 annual meeting, (ii) separate the roles of Chairman and Chief Executive Officer of
the Company following the 2010 annual meeting, (iii) pay Discovery Group $175,000 to reimburse
Discovery Group for fees and expenses incurred in connection with the Companys 2009 annual meeting
of stockholders, and (iv) accelerate the vesting of unvested restricted stock units issued to Mr.
Donoghue and Mr. Murphy. The Company and Discovery Group also agreed that Messrs. Berger, Delucca,
Guenther, Heasley, Poe, Rossetti, and Sadek would be the Boards nominees for election at the 2010
annual meeting. The agreement between the Company and Discovery Group was described in and filed
as an exhibit to a current report on Form 8-K filed March 1, 2010. The foregoing is a summary of
that agreement, does not purport to be complete, and is qualified in its entirety by reference to
the agreement.
REMOVAL OF DIRECTORS
Under Delaware law, shareholders have the right to remove any director, or the entire board of
directors. Delaware law also provides that, where a corporation has cumulative voting, if less
than the entire board is to be removed, no director may be removed without cause if the votes cast
against such directors removal would be sufficient to elect such director if then cumulatively
voted at an election of the entire board of directors. Tier has cumulative voting, and Tiers
bylaws are consistent with this provision of Delaware law.
The following are two examples of how the statute and bylaw would be applied, if shareholders
sought to remove one director from Tiers seven-member Board, if Tier had 20,000,000 shares of
stock outstanding and entitled to vote in the election of directors at the time of the vote on the
removal proposal, and if the holders of all 20,000,000 shares cast votes on the removal proposal:
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|
If the holders of 17,499,999 shares voted in favor of the directors
removal, and the holders of 2,500,001 shares voted against removal,
then the director would not be removed. The director would not be
removed because the total number of possible votes that could be cast
in the election of a seven member Board would be 140,000,000, with the
top seven vote recipients being elected to the Board, meaning that
17,500,001 would be the threshold number of votes necessary to secure
a seat on the Board in a contested election (and, therefore, to defeat
a proposal to remove a director). Since the holders of 2,500,001
shares would be entitled to cast 17,500,007 votes, the director would
remain on the Board.
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19
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|
If the holders of 17,500,001 shares voted in favor of the directors
removal, and the holders of 2,499,999 shares voted against removal,
then the director would be removed. The director would be removed
because the holders of 2,499,999 shares would be entitled to cast
17,499,993 votes, falling 8 votes short of the number of votes that
would be required to secure a seat on the Board in a contested
election (and, therefore, to defeat a proposal to remove a director).
|
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis
that appears below 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 our annual report on Form 10-K, as amended, and in this
proxy statement.
The foregoing report is given by the members of the Compensation Committee: Philip G. Heasley
(Chair), Morgan P. Guenther, and Michael R. Murphy.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2009, the members of the Compensation Committee were Messrs. Cabot (through
March 2009), Guenther, Heasley, and Murphy (from March 2009), none of whom was a current or former
officer or employee of Tier and none of whom had any related person transaction involving Tier. No
interlocking relationships exist between the Board of Directors or the Compensation Committee and
the board of directors or the compensation committee of any other entity.
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 Chief
Executive Officer, Chief Financial Officer and our other three most highly compensated executive
officers who were serving as executive officers at the end of fiscal year 2009, as we rely on their
leadership, management skills, and experience for Tiers continued growth and development. We refer
to these executive officers as our named executive officers.
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:
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attract, retain, and motivate talented employees;
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support business strategies that promote sustained growth and development;
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reward the achievement of business results through the delivery of competitive pay
and performance-based incentive programs; and
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link executives goals with the interests of shareholders by tying a portion of
compensation to our stock.
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We design our compensation strategy and packages for our executive officers to further these goals.
20
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 consolidated
Company and business unit targets for the executives 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. Cash incentive compensation
is based in part on Tiers achieving specific goals or targets for the fiscal year. By linking
individual incentive compensation to Tiers goals, we align the interests of our executives with
those of our shareholders. In addition, we provide long-term incentives to our executives through
stock options, restricted stock units (RSUs) and performance stock units (PSUs). This further
aligns the interests of our executives with our shareholders as contributors to Tiers 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 and other equity-based awards 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 Tiers goals, as well as
each executives roles and responsibilities; level and type of skills, training, experience and
leadership qualities; current compensation; and contributions to the achievement of Tiers 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 Committees primary responsibility is to discharge the Boards 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
21
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approving grants of stock options and other 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 also provides input and makes
recommendations concerning the terms of his own compensation package.
The other named executive officers do not determine their own compensation or the compensation of
other executives, although they may discuss with the Chief Executive Officer the performance
objectives and results that are utilized in establishing performance metrics used in cash incentive
compensation calculations and determining amounts to be awarded.
Use of Compensation Consultants and 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 from time to time
in accordance with market best practices. These consultants, which are engaged directly by the
Compensation Committee, provide 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, which we refer to as peer groups.
We typically conduct peer group studies when we are filling a new or vacant position within the
Company or when the Compensation Committee requests such a study in order to determine whether our
executive compensation levels are appropriately aligned with the peer group. We did not conduct a
peer group study for fiscal year 2009.
In prior fiscal years, the Compensation Committee has used peer group studies from John F. Reda &
Associates to provide market-based compensation information for the positions 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. Studies of peer
group companies included a review of base salary, cash incentive compensation, and long-term equity
incentive compensation.
During the peer group review for fiscal year 2008, the Compensation Committee used the following
peer group for determining our executive level compensation packages:
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|
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ACI Worldwide Inc.
|
|
Intersections Inc.
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|
S1 Corp
|
ASTA Funding Inc.
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|
Inx Inc.
|
|
Techteam Global Inc.
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Bottomline Technologies Inc.
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|
NIC Inc.
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|
TNS Inc.
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CSG Systems International Inc.
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|
Online Resources Inc.
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|
TRX Inc.
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CyberSource Corp.
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|
Quality Systems Inc.
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|
Tyler Technologies Inc.
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Radiant Systems Inc.
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|
Wright Express Corp
|
Companies in this peer group were selected because they operated in an industry similar to Tier and
were generally comparable to Tier in terms of annual sales, net income, market capitalization and
number of employees.
We do not target specific medians, quartiles or measurements from the peer group to determine
compensation packages for our executives; instead, we make a qualitative assessment of the
competitiveness of our packages based on the totality of the available peer group information.
In fiscal year 2009, we also used John F. Reda & Associates to advise us on the adoption of our
Executive Performance Stock Unit Plan, or the PSU Plan, which is further discussed below under
Long-term Incentives
, and on grants of RSUs to Mr. Rossetti. Reda & Associates was asked to prepare
a summary of the accounting and expense impact of the PSU Plan and to make recommendations
concerning the number of PSUs to be granted pursuant to the PSU Plan and the number of RSUs to be
granted to Mr. Rossetti.
22
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 executives
compensation package.
Base salary is intended to reflect each executives 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 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.
We typically conduct salary reviews for all employees, including our named executive officers, in
November of each fiscal year. At that time, the Compensation Committee considers base salaries of
our executive officers and determines whether to approve base salary increases. Any base salary
increases that are approved in November typically become effective in December. Base salary
increases for our named executive officers are determined by evaluating base salary currently in
place; the performance and achievements of the individual for the review period;
individual-specific and overall contributions to Tier; and the current hiring market for executive
talent. The Compensation Committee also considers the performance of the applicable executives
strategic business area, if applicable, and cost of living adjustments.
The following table sets forth the base salaries of our named executive officers for fiscal years
2008 and 2009:
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Base salary rate by fiscal year
|
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% change
|
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2008
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2009
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2008 to 2009
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Ronald L. Rossetti
Chief Executive Officer and Chairman of the Board
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$
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(1
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)
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$
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400,000
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(1
|
)
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Nina K. Vellayan (2)
Executive Vice President, Chief Operating Officer
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275,000
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N/A
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Ronald W. Johnston
Senior Vice President, Chief Financial Officer
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|
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275,000
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|
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272,000
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(3)
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|
|
-1
|
%
|
Keith S. Kendrick
Senior Vice President, Strategic Marketing
|
|
|
265,000
|
|
|
|
265,000
|
|
|
|
0
|
%
|
Keith S. Omsberg
Vice President, General Counsel and Corporate Secretary
|
|
|
190,000
|
|
|
|
190,000
|
|
|
|
0
|
%
|
|
|
|
(1)
|
|
Pursuant to Mr. Rossettis employment agreement signed April 30, 2008, Mr. Rossettis base salary was reduced from
$600,000 to $400,000 per annum, a reduction of 33%, effective May 1, 2008.
|
|
(2)
|
|
Ms. Vellayan joined Tier in October 2008.
|
|
(3)
|
|
Mr. Johnston voluntarily reduced his base salary from $275,000 to $272,000 for fiscal year 2009, effective January 2009.
|
23
Cash Incentive Compensation
Our cash incentive compensation plans are designed to:
|
|
|
align the management teams financial interests with those of our shareholders;
|
|
|
|
|
support a performance-oriented environment that rewards business unit and Tiers overall results;
|
|
|
|
|
attract, motivate, and retain key management critical to Tiers long-term success; and
|
|
|
|
|
align compensation with Tiers 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 reward performance against defined financial metrics established as part
of Tiers 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 and/or
business unit performance metrics on an annualized basis.
Our cash incentive compensation plans are linked to Tiers financial performance goals established
annually within our business plan, which is reviewed and approved by our Board. This link allows a
component of our executive compensation to be an 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.
For fiscal year 2010, Tier plans to use individual performance goals in addition to Company
performance goals in determining cash incentive compensation for our executives.
For fiscal year 2009, we had one formal cash incentive compensation plan, our management incentive
plan, or MIP. We use the term Executive Incentive Plan, or EIP, to refer to the portion of the MIP
that applied to our named executive officers in fiscal year 2009. The EIP is discussed in more
detail below.
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.
Sign-on and Retention Incentives
Consistent with the employment agreement effective October 1, 2008, Ms. Vellayan, our Chief
Operating Officer, received a sign-on bonus of $75,000. This bonus was paid in October 2008. Ms.
Vellayan would have been obligated to repay this bonus on a pro-rata basis had she completed fewer
than twelve consecutive months of service with Tier due to her termination for cause by Tier or her
voluntary resignation. The Compensation Committee believes this bonus to Ms. Vellayan incentivized
Ms. Vellayan to accept employment with Tier and helped provide stability to the critical position
of Chief Operating Officer.
Consistent with the employment agreement entered into June 30, 2008, Mr. Kendrick, our Senior Vice
President, Strategic Marketing, received a guaranteed bonus of 50% of his base salary, or a bonus
of $132,500, following the one year anniversary of his employment. This bonus was paid in August
2009. The Compensation Committee believes this bonus to Mr. Kendrick incentivized Mr. Kendrick to
accept employment with Tier and helped provide stability to the critical position of Senior Vice
President, Strategic Marketing.
24
Executive Incentive Plan
In the first quarter of fiscal year 2009, our Board approved performance targets under the EIP. All
of our named executive officers participate in the EIP. The EIP was designed to reward eligible
employees for the achievement of performance targets by our Continuing Operations business segment
on a fiscal year basis. Our Continuing Operations business segment consists of our electronic
payments solutions operations and our wind-down operations, which consist of certain operations we
intend to wind down over the next three years. The Continuing Operations targets, including
threshold, target, and stretch performance targets with associated levels of payout, were approved
by the Compensation Committee based upon Tiers strategic plan and budget process and the
formulation of specific Continuing Operations performance targets.
The following tables illustrate the performance metric and related potential threshold, target, and
maximum payouts for fiscal 2009 under the EIP for Messrs. Rossetti, Johnston, Kendrick, and Omsberg
and Ms. Vellayan. For each officer, the performance metric was net income from continuing
operations before interest, tax, depreciation and amortization and stock based equity compensation
(EBITDA) as outlined below.
Estimated Payout Levels (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold:
|
|
|
Target:
|
|
|
Maximum:
|
|
Name
|
|
EBITDA of $0.75 million
|
|
|
EBITDA of $1.0 million
|
|
|
EBITDA of $1.25 million
|
|
|
Ronald L. Rossetti
|
|
$
|
300,000
|
|
|
$
|
400,000
|
|
|
$
|
500,000
|
|
Nina K. Vellayan
|
|
|
137,500
|
|
|
|
206,250
|
|
|
|
275,000
|
|
Ronald W. Johnston
|
|
|
137,500
|
|
|
|
165,000
|
|
|
|
206,250
|
|
Keith S. Kendrick
|
|
|
132,500
|
|
|
|
159,000
|
|
|
|
198,750
|
|
Keith S. Omsberg
|
|
|
19,000
|
|
|
|
28,500
|
|
|
|
38,000
|
|
|
|
|
(1)
|
|
The following table provides detail on the basis of the estimated payout levels:
|
Percentage of base salary
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Ronald L. Rossetti
|
|
|
75
|
%
|
|
|
100
|
%
|
|
|
125
|
%
|
Nina K. Vellayan
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
100
|
%
|
Ronald W. Johnston (a)
|
|
|
50
|
%
|
|
|
60
|
%
|
|
|
75
|
%
|
Keith S. Kendrick
|
|
|
50
|
%
|
|
|
60
|
%
|
|
|
75
|
%
|
Keith S. Omsberg
|
|
|
10
|
%
|
|
|
15
|
%
|
|
|
20
|
%
|
|
|
|
(a)
|
|
Mr. Johnstons estimated payout amounts were calculated on a base
salary of $275,000, which represented his base salary per his
employment agreement.
|
During fiscal year 2009, Tier exceeded the maximum EBITDA goal of $1.25 million. However, the
Compensation Committee, on managements recommendation, determined that EIP payouts for fiscal year
2009 would be determined as if the target EBITDA, rather than the maximum EBITDA, had been
achieved, in order to make additional funds available for bonuses payable to individuals other than
our executive officers. The following table provides a summary of the actual cash incentive and/or
bonus payments made to our named executive officers for fiscal year 2009:
|
|
|
|
|
|
|
|
|
|
|
2009 Payout
|
Named executive officer
|
|
EIP
|
|
|
Bonus
|
|
|
Ronald L. Rossetti
|
|
$
|
400,000
|
|
|
$
|
|
|
Nina K. Vellayan
|
|
|
206,250
|
|
|
|
75,000
|
|
Ronald W. Johnston
|
|
|
165,000
|
|
|
|
|
|
Keith S. Kendrick (1)
|
|
|
59,625
|
|
|
|
132,500
|
|
Keith S. Omsberg
|
|
|
28,500
|
|
|
|
|
|
|
|
|
Total incentive payout
|
|
$
|
859,375
|
|
|
$
|
207,500
|
|
|
|
|
|
|
|
(1)
|
|
In accordance with the terms of his employment agreement,
Mr. Kendricks EIP award was reduced by $99,375, the amount of his
guaranteed bonus that was attributed to fiscal year 2009, from his
target level of $159,000.
|
25
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 2004 Plan
and the PSU Plan. These incentives are designed to motivate employees through equity ownership or
compensation tied to stock appreciation and provide a pay-at-risk element to our compensation
package. Under the 2004 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. We issue stock options and RSUs
under the 2004 Plan as a method for providing long-term equity incentives to our executives. Since
the options are granted with an exercise price equal to the closing 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 have granted RSUs to Mr. Rossetti pursuant to his Enterprise Value Award Plan, or EVA
Plan.
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. 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 2004 Plan requirements
as to the number of awards that may be awarded to executives throughout a fiscal year, taking into
account an executives performance, level of responsibility and future contributions to Tier. Under
the terms of the 2004 Plan, the maximum number of shares with respect to which awards may be
granted to any individual is 300,000 shares per fiscal year. The maximum number of RSUs that may be
awarded under the terms of the 2004 Plan is 500,000 units. We reached this maximum number of RSUs
during fiscal year 2008. As such, all future RSU awards will be made outside of the 2004 Plan and
settled in cash. Subject to provisions relating to vesting acceleration that apply under certain
circumstances, options typically vest over five years, with 20% of the underlying shares vesting on
each of the first five anniversaries of the grant date, and have a maximum ten year term, and RSUs
typically vest three years after they are earned. Options and RSUs that are unvested upon an
executives 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
on
page 36 for additional information.
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 PSU Plan
on December 4, 2008, or the effective date. Under the PSU Plan, a maximum of 800,000 units may be
issued for awards 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, that, for the initial participants in the PSU Plan, are $8.00, $9.50, $11.00,
and $13.00 per share. 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 of 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 stock in an amount equivalent to the value of the PSUs. An
executive will be entitled to receive a
26
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 PSU Plans change of control provision, if we experience a change of 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 of 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 of
control event, not to exceed $15.00 per share. If the executive continues to be employed by the
surviving entity following the change of control event, the award will vest and be paid at the
earlier of two years after the change of control event or three years after the effective date of
the PSU Plan. Payment of the award may be accelerated following a change of control event for a
termination without cause, death or disability, or resignation for good reason that occurs within
24 months of the change of control event. The PSU 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.
|
The following table provides information on long-term incentives issued to our named executive
officers during fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
Performance
|
|
|
Stock
|
|
Named executive officer
|
|
stock units (1)
|
|
|
stock units (2)
|
|
|
options (3)
|
|
|
Ronald L. Rossetti
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Nina K. Vellayan
|
|
|
|
|
|
|
180,000
|
|
|
|
200,000
|
|
Ronald W. Johnston
|
|
|
|
|
|
|
150,000
|
|
|
|
75,000
|
|
Keith S. Kendrick
|
|
|
|
|
|
|
100,000
|
|
|
|
50,000
|
|
Keith S. Omsberg
|
|
|
|
|
|
|
50,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
(1)
|
|
Granted to Mr. Rossetti under his EVA Plan. These RSUs will be
earned upon Tiers achievement and maintenance for a period of
60 days of a Share Price Performance Target of $8.00 per share.
Unless vesting is accelerated under the circumstances discussed
under
Potential Payments Upon Termination or Change in Control
,
any RSUs that are earned due to the achievement and maintenance of
Share Price Performance Targets will vest on April 30, 2011. RSUs
are payable in shares unless no shares are available under a
shareholder approved plan, in which case they are payable in cash.
|
|
(2)
|
|
Unless vesting is accelerated under the circumstances discussed
under
Potential Payments Upon Termination or Change in Control
,
any PSUs that are awarded due to the achievement and maintenance
of Share Price Performance Targets will vest on December 4, 2011.
PSUs are payable in cash unless shares are available under a
shareholder approved plan, in which case they may be payable in
the form of shares at the option of the Company.
|
|
(3)
|
|
Unless vesting is accelerated under the circumstances discussed
under
Potential Payments Upon Termination or Change in Control
,
options vest over five years, with 20% of the underlying shares
vesting on each of the first five anniversaries of the grant date.
|
Equity Ownership Guidelines
Members of Tiers Board of Directors are required to hold shares of Tier common stock with a value
equal to three times the amount of the annual retainer paid to directors, calculated using the
annual retainer in effect as of the later of March 31, 2009 and the date the director is elected to
the Board. Directors are required to achieve the guideline within three years of joining the Board,
or, in the case of directors serving at March 31, 2009, within three years of
27
that date. These guidelines may be waived, at the discretion of Tiers Corporate Governance and
Nominating Committee, if compliance would create severe hardship or prevent a director from
complying with a court order. Please see
Director Compensation
for additional information
concerning director retainers.
Tier currently does not have equity ownership guidelines for its executive officers.
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 and Senior Vice President, Strategic
Marketing, as discussed below. We believe these perquisites benefit us and our shareholders by
ensuring that these individuals are able to maintain a regular presence at our headquarters to meet
their duties and responsibilities in full.
Chief Executive Officer Perquisites
Pursuant to his 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 also 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.
Tiers Compensation Committee has expressed the intent not to include a tax gross-up provision in
any new employment contract.
Senior Vice President, Strategic Marketing Perquisites
Pursuant to his June 30, 2008 employment agreement, we provide Mr. Kendrick with a fully-furnished
corporate apartment located near our corporate headquarters in Reston, Virginia. We also provide
Mr. Kendrick with local transportation for travel while he is located in Reston, Virginia. In
addition, we reimburse Mr. Kendrick for travel to and from his current residence to our corporate
headquarters. Travel reimbursement includes airfare, ground transportation, parking, and meals.
Mr. Kendrick 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. Kendrick 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. Kendrick based upon the
additional tax liability.
Tiers Compensation Committee has expressed the intent not to include a tax gross-up provision in
any new employment contract.
Change of Control
Our named executive officers have change of control arrangements through their employment
agreements. 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.
28
Executives are entitled to change of control payments upon termination within one year of a change
of control event. In addition, under the terms of his employment agreement, Mr. Rossetti is also
entitled to full vesting of certain equity awards effective immediately prior to a change of
control during the term of his employment agreement, regardless of whether his employment is
terminated. Payments are generally due to the executive within thirty days of his or her
termination (or such later date as is required for compliance with tax laws governing deferred
compensation). For a change of control provision to be triggered (other than, in the case of
Mr. Rossetti, the vesting acceleration discussed above), the change of control event, as defined
below, must occur and the executives employment must terminate.
A change of control is defined in our employment agreements, other than Mr. Rossettis, 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;
|
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|
|
the dissolution or liquidation of Tier; or
|
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|
|
the date on which we (i) 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. Rossettis employment 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.
|
For potential payments upon a change of control arrangements for our named executive officers, see
Potential Payments Upon Termination or Change in Control
on
page 36.
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, generally, to the Chief
Executive Officer and the next three highly paid officers, other than the Chief Financial Officer.
Compensation that is performance-based within
29
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
We value share-based compensation based on the grant date fair value using the Black-Scholes model
for options and the Monte Carlo simulation option pricing model for RSUs and PSUs. We recognize
compensation expense over the vesting period of the option, RSU or PSU grants, which ranges from
three to five years. Additional information about the valuation of our options and RSUs can be
found in Note 14Share-Based Payment of our Annual Report on Form 10-K for fiscal year ended
September 30, 2009.
EXECUTIVE COMPENSATION
This section provides certain tabular and narrative information regarding the compensation of our
named executive officers. Johnston, Kendrick and Omsberg became executive officers during the
fiscal year ended September 30, 2008 and Ms. Vellayan became an executive officer during fiscal
year 2009; therefore, only fiscal year 2008 and 2009 information is reported for Messrs. Johnston,
Kendrick and Omsberg, and only fiscal year 2009 information is reported for Ms. Vellayan. For
additional information regarding compensation of the named executive officers, see
Compensation
Discussion and Analysis
beginning on page 20.
Summary Compensation Table
The following table sets forth information regarding compensation of our named executive officers
during the fiscal years ended September 30, 2009, 2008 and 2007. References to years in the
tables in this section are to our fiscal years ended September 30, 2009, September 30, 2008 and
September 30, 2007.
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Non-equity
|
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incentive plan
|
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|
All other
|
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|
Name and principal
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock awards
|
|
|
Option awards
|
|
|
compensation
|
|
|
compensation
|
|
|
Total
|
|
position
|
|
|
Year
|
|
|
($)
|
|
|
($) (1)
|
|
|
($) (2)
|
|
|
($) (2)
|
|
|
($) (3)
|
|
|
($) (4)
|
|
|
($)
|
|
|
Ronald L. Rossetti
|
|
|
2009
|
|
|
$
|
400,000
|
|
|
$
|
|
|
|
$
|
513,497
|
|
|
$
|
|
|
|
$
|
400,000
|
|
|
$
|
228,061
|
|
|
$
|
1,541,558
|
|
Chief Executive
Officer,
|
|
|
2008
|
|
|
|
589,231
|
|
|
|
390,513
|
|
|
|
264,583
|
|
|
|
|
|
|
|
|
|
|
|
278,363
|
|
|
|
1,522,690
|
|
Chairman
of the Board
|
|
|
2007
|
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
119,375
|
|
|
|
|
|
|
|
230,710
|
|
|
|
1,550,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nina K. Vellayan
|
|
|
2009
|
|
|
|
267,596
|
|
|
|
75,000
|
|
|
|
219,180
|
|
|
|
47,215
|
|
|
|
206,250
|
|
|
|
8,028
|
|
|
|
823,269
|
|
Executive Vice
President, Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald W. Johnston (5)
|
|
|
2009
|
|
|
|
272,692
|
|
|
|
|
|
|
|
182,650
|
|
|
|
232,971
|
|
|
|
165,000
|
|
|
|
8,180
|
|
|
|
861,493
|
|
Senior Vice President,
Chief Financial Officer
|
|
|
2008
|
|
|
|
172,158
|
|
|
|
68,750
|
|
|
|
|
|
|
|
58,326
|
|
|
|
|
|
|
|
4,943
|
|
|
|
304,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Kendrick
|
|
|
2009
|
|
|
|
265,000
|
|
|
|
132,500
|
|
|
|
121,767
|
|
|
|
72,783
|
|
|
|
59,625
|
|
|
|
95,405
|
|
|
|
747,080
|
|
Senior Vice President,
Strategic Marketing
|
|
|
2008
|
|
|
|
68,288
|
|
|
|
|
|
|
|
|
|
|
|
18,018
|
|
|
|
|
|
|
|
42,953
|
|
|
|
129,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Omsberg
|
|
|
2009
|
|
|
|
190,000
|
|
|
|
|
|
|
|
60,883
|
|
|
|
47,845
|
|
|
|
28,500
|
|
|
|
4,385
|
|
|
|
331,613
|
|
Vice President,
General Counsel
and Secretary
|
|
|
2008
|
|
|
|
188,000
|
|
|
|
92,500
|
|
|
|
|
|
|
|
50,706
|
|
|
|
|
|
|
|
5,585
|
|
|
|
336,791
|
|
|
|
|
(1)
|
|
Reflects the following bonus payouts for fiscal years 2009, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
|
|
|
|
|
|
|
|
Name
|
|
|
Year
|
|
|
agreement
|
|
|
Discretionary
|
|
|
Total bonus payout
|
|
|
Ronald L. Rossetti
|
|
|
2008
|
|
|
$
|
166,667
|
|
|
$
|
223,846
|
|
|
$
|
390,513
|
|
|
|
|
2007
|
|
|
|
600,000
|
|
|
|
|
|
|
|
600,000
|
|
Nina K. Vellayan
|
|
|
2009
|
|
|
|
75,000
|
|
|
|
|
|
|
|
75,000
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
|
|
|
|
|
|
|
|
Name
|
|
|
Year
|
|
|
agreement
|
|
|
Discretionary
|
|
|
Total bonus payout
|
|
|
Ronald W. Johnston
|
|
|
2008
|
|
|
|
68,750
|
|
|
|
|
|
|
|
68,750
|
|
Keith S. Kendrick
|
|
|
2009
|
|
|
|
132,500
|
|
|
|
|
|
|
|
132,500
|
|
Keith S. Omsberg
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
92,500
|
|
|
|
92,500
|
|
See pages 24 through 25 for additional information on bonus payments.
|
|
|
(2)
|
|
The amounts included in these columns reflect the dollar amount recognized as an expense for
financial statement reporting purposes in fiscal years 2009, 2008 and 2007 for stock awards
(consisting of RSUs in the case of Mr. Rossetti and PSUs in the case of the other named
executives) and stock option awards, calculated in accordance with U.S. GAAP, 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 year 2009. Assumptions used in the calculation of these amounts and the amounts for
fiscal year 2009 are included in footnote 14 to the audited consolidated financial statements
included in our annual report on Form 10-K for fiscal year 2009, as amended.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
|
|
|
|
|
Total number of
|
|
|
|
|
|
|
|
|
|
|
Total number of
|
|
|
|
|
|
|
|
|
|
|
shares underlying
|
|
|
Amount included in
|
|
|
|
|
|
|
shares underlying
|
|
|
Amount included in
|
|
Name
|
|
Date of award
|
|
|
stock awards (#)
|
|
|
fiscal 2009 ($)
|
|
|
Date of award
|
|
|
options awarded (#)
|
|
|
fiscal 2009 ($)
|
|
|
Ronald L. Rossetti
|
|
|
12/4/08
|
|
|
|
150,000
|
|
|
$
|
102,222
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
4/30/08
|
|
|
|
550,000
|
|
|
|
411,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
513,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nina K. Vellayan
|
|
|
12/4/08
|
|
|
|
180,000
|
|
|
|
219,180
|
|
|
|
12/4/08
|
|
|
|
200,000
|
|
|
|
47,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald W. Johnston
|
|
|
12/4/08
|
|
|
|
150,000
|
|
|
|
182,650
|
|
|
|
12/4/08
|
|
|
|
75,000
|
|
|
|
17,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/1/08
|
|
|
|
200,000
|
|
|
|
215,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Kendrick
|
|
|
12/4/08
|
|
|
|
100,000
|
|
|
|
121,767
|
|
|
|
12/30/08
|
|
|
|
50,000
|
|
|
|
11,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/08
|
|
|
|
100,000
|
|
|
|
61,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Omsberg
|
|
|
12/4/08
|
|
|
|
50,000
|
|
|
|
60,883
|
|
|
|
12/4/08
|
|
|
|
15,000
|
|
|
|
3,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/10/07
|
|
|
|
20,000
|
|
|
|
13,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/07
|
|
|
|
30,000
|
|
|
|
21,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/13/06
|
|
|
|
10,000
|
|
|
|
5,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/1/04
|
|
|
|
3,000
|
|
|
|
2,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/03
|
|
|
|
3,000
|
|
|
|
572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Reflects cash payouts for fiscal year 2009 under the Executive Incentive Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-equity incentive
|
|
Name
|
|
Year
|
|
|
Incentive plan
|
|
|
payout
|
|
|
Ronald L. Rossetti
|
|
|
2009
|
|
|
EIP
|
|
$
|
400,000
|
|
Nina K. Vellayan
|
|
|
2009
|
|
|
EIP
|
|
|
206,250
|
|
Ronald W. Johnston
|
|
|
2009
|
|
|
EIP
|
|
|
165,000
|
|
Keith S. Kendrick
|
|
|
2009
|
|
|
EIP
|
|
|
59,625
|
|
Keith S. Omsberg
|
|
|
2009
|
|
|
EIP
|
|
|
28,500
|
|
See
page 25 for additional information on the Executive Incentive Plan.
31
|
|
|
the aggregate incremental cost to Tier of providing perquisites and other personal
benefits;
|
|
|
|
|
Company matching contributions under 401(k) plans; and
|
|
|
|
|
tax reimbursement payments relating to income tax liability incurred by the applicable
executive as a result of the Companys payment for the perquisites described below.
|
The following table summarizes the amounts shown in the All Other Compensation column:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
Total all other
|
|
Name
|
|
|
Year
|
|
|
Perquisites(a)
|
|
|
401(k)
|
|
|
reimbursement
|
|
|
compensation
|
|
|
Ronald L. Rossetti
|
|
|
2009
|
|
|
$
|
116,802
|
|
|
$
|
7,350
|
|
|
$
|
103,909
|
|
|
$
|
228,061
|
|
|
|
|
2008
|
|
|
|
183,338
|
|
|
|
6,900
|
|
|
|
88,125
|
|
|
|
278,363
|
|
|
|
|
2007
|
|
|
|
191,435
|
|
|
|
6,750
|
|
|
|
32,525
|
|
|
|
230,710
|
|
Nina K. Vellayan
|
|
|
2009
|
|
|
|
|
|
|
|
8,028
|
|
|
|
|
|
|
|
8,028
|
|
Ronald W. Johnston
|
|
|
2009
|
|
|
|
|
|
|
|
8,180
|
|
|
|
|
|
|
|
8,180
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
4,943
|
|
|
|
|
|
|
|
4,943
|
|
Keith S. Kendrick
|
|
|
2009
|
|
|
|
87,455
|
|
|
|
7,950
|
|
|
|
|
|
|
|
95,405
|
|
|
|
|
2008
|
|
|
|
35,986
|
|
|
|
1,835
|
|
|
|
5,132
|
|
|
|
42,953
|
|
Keith S. Omsberg
|
|
|
2009
|
|
|
|
|
|
|
|
4,385
|
|
|
|
|
|
|
|
4,385
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
5,585
|
|
|
|
|
|
|
|
5,585
|
|
|
|
|
(a)
|
|
See
Perquisites and Benefits
in
Compensation
Discussion and Analysis
beginning on page 28 for a discussion of perquisites provided to executives.
|
Perquisites include:
|
|
|
expenses for corporate apartments located near our corporate headquarters in Reston,
Virginia, including utilities;
|
|
|
|
|
expenses for local transportation while the executive is located in Reston and air and
ground transportation, meals and lodging for travel by the executive to and from his home
to our corporate headquarters in Reston; and
|
|
|
|
|
legal consultation fees relating to negotiation and review of the executives
employment agreement.
|
The following table summarizes the amounts shown in the Perquisites column:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Year
|
|
|
Corporate apartment*
|
|
|
Travel*
|
|
|
Legal consultation*
|
|
|
Total
|
|
|
Ronald L. Rossetti
|
|
|
2009
|
|
|
$
|
52,459
|
|
|
$
|
64,343
|
|
|
$
|
|
|
|
$
|
116,802
|
|
|
|
|
2008
|
|
|
|
39,096
|
|
|
|
113,431
|
|
|
|
30,811
|
|
|
|
183,338
|
|
|
|
|
2007
|
|
|
|
41,232
|
|
|
|
130,375
|
**
|
|
|
19,828
|
|
|
|
191,435
|
|
Keith S. Kendrick
|
|
|
2009
|
|
|
|
28,221
|
|
|
|
59,234
|
|
|
|
|
|
|
|
87,455
|
|
|
|
|
2008
|
|
|
|
8,310
|
|
|
|
19,371
|
|
|
|
8,305
|
|
|
|
35,986
|
|
|
|
|
*
|
|
Amounts reflect aggregate incremental cost to the Company, which is equal to the Companys
out-of-pocket costs for these perquisites.
|
|
**
|
|
Includes travel by chartered private jet for business meeting which Mr. Rossetti attended.
Total cost was $27,295 and is split equally between Mr. Rossetti and a former executive who
attended the meeting.
|
|
(5)
|
|
Mr. Johnston served as interim Chief Financial Officer from April 2008 to June 2008.
|
32
Fiscal 2009 Grants of Plan-Based Awards
The following table sets forth information regarding grants of plan-based awards made to the named
executive officers during the fiscal year ended September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other
|
|
|
|
|
|
|
market
|
|
|
Grant date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
option
|
|
|
Exercise or
|
|
|
price
|
|
|
fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards:
|
|
|
base price
|
|
|
of common
|
|
|
value of
|
|
|
|
|
|
|
|
Estimated possible payouts under
|
|
|
Estimated future payouts under
|
|
|
number of
|
|
|
of
|
|
|
stock
|
|
|
stock
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards (1)
|
|
|
Equity Incentive Plan Awards (1)
|
|
|
securities
|
|
|
option
|
|
|
on date of
|
|
|
and option
|
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
underlying
|
|
|
awards
|
|
|
grant
|
|
|
awards ($)
|
|
Name
|
|
Grant date
|
|
|
($) (2)
|
|
|
($) (3)
|
|
|
($) (4)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
options (#)
|
|
|
($/s h) (5)
|
|
|
($/s h) (5)
|
|
|
(6)
|
|
|
Ronald L. Rossetti
|
|
|
|
|
|
$
|
300,000
|
|
|
$
|
400,000
|
|
|
$
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
12/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(7)
|
|
|
(9
|
)
|
|
|
700,000
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nina K. Vellayan
|
|
|
|
|
|
|
137,500
|
|
|
|
206,250
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(8)
|
|
|
(9
|
)
|
|
|
180,000
|
(11)
|
|
|
200,000
|
(12)
|
|
|
4.25
|
|
|
|
4.34
|
|
|
|
850,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald W. Johnston
|
|
|
|
|
|
|
137,500
|
|
|
|
165,000
|
|
|
|
206,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(8)
|
|
|
(9
|
)
|
|
|
150,000
|
(11)
|
|
|
75,000
|
(13)
|
|
|
4.25
|
|
|
|
4.34
|
|
|
|
318,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Kendrick
|
|
|
|
|
|
|
132,500
|
|
|
|
159,000
|
|
|
|
198,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(8)
|
|
|
(9
|
)
|
|
|
100,000
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(13)
|
|
|
4.73
|
|
|
|
4.93
|
|
|
|
236,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Omsberg
|
|
|
|
|
|
|
19,000
|
|
|
|
28,500
|
|
|
|
38,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(8)
|
|
|
(9
|
)
|
|
|
50,000
|
(11)
|
|
|
15,000
|
(13)
|
|
|
4.25
|
|
|
|
4.34
|
|
|
|
63,750
|
|
|
|
|
(1)
|
|
For additional information concerning performance metrics and payouts under non-equity and equity incentive
plan awards, see pages 24 through 25.
|
|
(2)
|
|
The threshold amount represents the amounts payable to the executive if we met our corporate performance
threshold goal of EBITDA of $750,000 for fiscal 2009 under the Executive Incentive Plan.
|
|
(3)
|
|
The target amount represents the amounts payable to the executive if we met our corporate performance
target goal of EBITDA of $1.0 million for fiscal 2009 under the Executive Incentive Plan.
|
|
(4)
|
|
The maximum amount represents the amounts payable to the executive if we met our corporate performance
stretch goal of EBITDA of $1.25 million for fiscal 2009 under the Executive Incentive Plan. During fiscal
year 2009, we exceeded this stretch goal. However, the Compensation Committee, on managements
recommendation, determined that EIP payouts for fiscal year 2009 would be determined as if the target
EBITDA, rather than the maximum EBITDA, had been achieved, in order to make additional funds available for
bonuses payable to individuals other than our executive officers.
|
|
(5)
|
|
The exercise price of the options granted to the individuals shown above was the closing price of Tiers
common stock on the day prior to the grant date.
|
|
(6)
|
|
Represents the full grant date fair value of each equity-based award, computed in accordance with U.S. GAAP.
|
|
(7)
|
|
The threshold amount represents the number of RSUs that would be issuable to Mr. Rossetti under his EVA
Plan if we achieved and maintained a Share Price Performance Target of $8.00 per share, which is the lowest
Share Price Performance Target under the EVA Plan, for a period of 60 days, subject to vesting
requirements. RSUs that are earned vest on April 30, 2011. Vesting may be accelerated under certain
circumstances described in
Potential Payments upon Termination or Change of Control
. RSUs are payable in
shares unless no shares are available under a shareholder approved plan, in which case they are payable in
cash.
|
|
(8)
|
|
The threshold amount represents the number of PSUs that would be issuable to the applicable executive under
the PSU Plan if we achieved and maintained a Share Price Performance Target of $8.00 per share, which is
the lowest Share Price Performance Target under the PSU Plan, for a period of 60 days, subject to vesting
requirements. If the applicable Share Price Performance Targets are met, PSUs vest on December 4, 2011.
Vesting may be accelerated under certain circumstances described in
Potential Payments upon Termination or
Change of Control
. PSUs are payable in cash unless shares are available under a shareholder approved plan,
in which case they may be payable in the form of shares at the option of Tier.
|
|
(9)
|
|
As discussed on page 35, each of Mr. Rossettis EVA Plan and the PSU Plan has four payout
levels, each of which is associated with a Share Price Performance Target. The threshold payout level,
which is associated with the lowest Share Price Performance Target, is discussed in notes (7) and
(8) above. The maximum payout level, which is associated with the highest Share Price Performance Target,
is discussed in notes (10) and (11) below. The middle two payout levels are the target payout levels. If
Tier achieves either of the two middle
|
33
|
|
|
|
|
Share Price Performance Targets, Mr. Rossetti will earn the number
of RSUs associated with that Share Price Performance Target, and the other named executive officers will
earn the number of PSUs associated with that Share Price Performance Target, in each case subject to the
vesting requirements noted in footnotes (7) and (8) above.
|
|
(10)
|
|
The maximum amount represents the number of RSUs that would be issuable to Mr. Rossetti under his EVA Plan
if Tier achieved and maintained a Share Price Performance Target of $15.00 per share, which is the highest
Share Price Performance Target under the EVA Plan, for a period of 60 days, subject to the vesting
requirements noted in footnote (7) above.
|
|
(11)
|
|
The maximum amount represents the number of PSUs that would be issuable to the applicable executive under
the PSU Plan if Tier achieved and maintained a Share Price Performance Target of $13.00 per share, which is
the highest Share Price Performance Target under the PSU Plan, for a period of 60 days, subject to the
vesting requirements noted in footnote (8) above.
|
|
(12)
|
|
Ms. Vellayan was awarded an option to purchase 200,000 shares of Tier stock pursuant to her employment
agreement. These options, which were granted under the 2004 Plan, vest as to 20% of the underlying shares
on each of the first five anniversaries of the date granted and expire in ten years. Vesting may be
accelerated under certain circumstances described in Potential Payments upon Termination or Change of
Control.
|
|
(13)
|
|
These options were granted under the 2004 Plan, vest as to 20% of the underlying shares on each of the
first five anniversaries of the date granted and expire in ten years. Vesting may be accelerated under
certain circumstances described in Potential Payments upon Termination or Change of Control.
|
Outstanding Equity Awards at 2009 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, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Equity incentive
|
|
|
Equity incentive
|
|
|
|
Number of
|
|
|
securities
|
|
|
|
|
|
|
|
|
|
|
plan awards:
|
|
|
plan awards:
|
|
|
|
securities
|
|
|
underlying
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market or payout
|
|
|
|
underlying
|
|
|
unexercised
|
|
|
|
|
|
|
|
|
|
|
unearned
|
|
|
value of unearned
|
|
|
|
unexercised
|
|
|
options
|
|
|
Option
|
|
|
|
|
|
|
shares, units, or
|
|
|
shares, units or
|
|
|
|
options
|
|
|
(#)
|
|
|
exercise
|
|
|
Option
|
|
|
other rights that
|
|
|
other rights that
|
|
|
|
(#)
|
|
|
Unexercisable
|
|
|
price
|
|
|
expiration
|
|
|
have not vested
|
|
|
have not vested
|
|
Name
|
|
Exercisable
|
|
|
(a)
|
|
|
($)
|
|
|
date
|
|
|
(#)
|
|
|
($) (d)
|
|
|
Ronald L. Rossetti
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(b)
|
|
$
|
1,272,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
385,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nina K. Vellayan
|
|
|
|
|
|
|
200,000
|
(1)
|
|
|
4.25
|
|
|
|
12/03/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(c)
|
|
|
381,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald W. Johnston
|
|
|
66,666
|
|
|
|
133,334
|
(2)
|
|
|
8.01
|
|
|
|
06/30/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
(3)
|
|
|
4.25
|
|
|
|
12/04/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(c)
|
|
|
318,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,666
|
|
|
|
208,334
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Kendrick
|
|
|
20,000
|
|
|
|
80,000
|
(4)
|
|
|
7.80
|
|
|
|
06/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(5)
|
|
|
4.73
|
|
|
|
12/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(c)
|
|
|
212,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith Omsberg
|
|
|
2,500
|
|
|
|
|
|
|
|
16.04
|
|
|
|
07/04/12
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
7.81
|
|
|
|
11/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
600
|
(6)
|
|
|
8.60
|
|
|
|
10/31/14
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
4,000
|
(7)
|
|
|
7.05
|
|
|
|
09/12/16
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Equity incentive
|
|
|
Equity incentive
|
|
|
|
Number of
|
|
|
securities
|
|
|
|
|
|
|
|
|
|
|
plan awards:
|
|
|
plan awards:
|
|
|
|
securities
|
|
|
underlying
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market or payout
|
|
|
|
underlying
|
|
|
unexercised
|
|
|
|
|
|
|
|
|
|
|
unearned
|
|
|
value of unearned
|
|
|
|
unexercised
|
|
|
options
|
|
|
Option
|
|
|
|
|
|
|
shares, units, or
|
|
|
shares, units or
|
|
|
|
options
|
|
|
(#)
|
|
|
exercise
|
|
|
Option
|
|
|
other rights that
|
|
|
other rights that
|
|
|
|
(#)
|
|
|
Unexercisable
|
|
|
price
|
|
|
expiration
|
|
|
have not vested
|
|
|
have not vested
|
|
Name
|
|
Exercisable
|
|
|
(a)
|
|
|
($)
|
|
|
date
|
|
|
(#)
|
|
|
($) (d)
|
|
|
|
|
|
6,000
|
|
|
|
24,000
|
(8)
|
|
|
10.20
|
|
|
|
09/30/17
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
16,000
|
(9)
|
|
|
9.25
|
|
|
|
12/09/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(10)
|
|
|
4.25
|
|
|
|
12/03/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(c)
|
|
|
106,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,900
|
|
|
|
59,600
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Vesting schedules of the unexercisable option awards are set forth below. Vesting may be
accelerated under certain circumstances described in
Potential Payments upon Termination or
Change of Control
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnote
|
|
|
|
|
|
|
|
Name
|
|
reference
|
|
|
Vesting date
|
|
|
Number vesting
|
|
|
Nina K. Vellayan
|
|
|
(1
|
)
|
|
|
12/04/09
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
12/04/10
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
12/04/11
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
12/04/12
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
12/04/13
|
|
|
|
40,000
|
|
Ronald W. Johnston
|
|
|
(2
|
)
|
|
|
07/01/10
|
|
|
|
66,667
|
|
|
|
|
|
|
|
|
07/01/11
|
|
|
|
66,667
|
|
|
|
|
(3
|
)
|
|
|
12/04/09
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
12/04/10
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
12/04/11
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
12/04/12
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
12/04/13
|
|
|
|
15,000
|
|
Keith S. Kendrick
|
|
|
(4
|
)
|
|
|
06/29/10
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
06/29/11
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
06/29/12
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
06/29/13
|
|
|
|
20,000
|
|
|
|
|
(5
|
)
|
|
|
12/30/09
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
12/30/10
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
12/30/11
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
12/30/12
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
12/30/13
|
|
|
|
10,000
|
|
Keith S. Omsberg
|
|
|
(6
|
)
|
|
|
11/01/09
|
|
|
|
600
|
|
|
|
|
(7
|
)
|
|
|
09/13/10
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
09/13/11
|
|
|
|
2,000
|
|
|
|
|
(8
|
)
|
|
|
10/01/09
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
10/01/10
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
10/01/11
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
10/01/12
|
|
|
|
6,000
|
|
|
|
|
(9
|
)
|
|
|
12/10/09
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
12/10/10
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
12/10/11
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
12/10/12
|
|
|
|
4,000
|
|
|
|
|
(10
|
)
|
|
|
12/04/09
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
12/04/10
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
12/04/11
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
12/04/12
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
12/04/13
|
|
|
|
3,000
|
|
|
|
|
(b)
|
|
The table above shows the number of RSUs that would be earned by Mr. Rossetti upon
achievement and maintenance of the threshold Share Price Performance Target, or $8.00 per
share, for the required 60 day period. Mr. Rossetti has been granted a total of 700,000 RSUs
(including the 150,000 RSUs show in the table above) under his EVA Plan. These RSUs are earned
when the Share Price Performance Targets shown below are met and maintained for 60 consecutive
days, and RSUs that are earned vest on April 30, 2011. Vesting may be accelerated under
certain circumstances described in
Potential Payments upon Termination or Change of Control
.
|
|
|
|
|
|
|
|
|
|
|
|
Share Price Performance Target
|
|
|
Number of RSUs
|
|
|
|
$
|
8.00
|
|
|
|
150,000
|
|
|
|
|
11.00
|
|
|
|
180,000
|
|
|
|
|
13.00
|
|
|
|
185,000
|
|
|
|
|
15.00
|
|
|
|
185,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000
|
|
35
|
|
|
(c)
|
|
The table above shows the number of PSUs that would be earned by the named executive officers
upon achievement and maintenance of the threshold Share Price Performance Target, or $8.00 per
share, for the required 60 day period. The named executive officers have been granted the
total number of PSUs shown in the table below (which includes the PSUs shown in the table
above) under the PSU Plan. These PSUs are earned when the Share Price Performance Targets
shown below are met and maintained for 60 consecutive days. PSUs that have been earned vest
December 4, 2011. Please see
Compensation Discussion and Analysis Long-term Incentives
for
additional detail. Vesting may be accelerated under certain circumstances described in
Potential Payments upon Termination or Change of Control
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Units at Share Price Performance Target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total units that
|
|
|
|
$8.00
|
|
|
$9.50
|
|
|
$11.00
|
|
|
$13.00
|
|
|
could be awarded
|
|
Nina K. Vellayan
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
180,000
|
|
Ronald W. Johnston
|
|
|
37,500
|
|
|
|
37,500
|
|
|
|
37,500
|
|
|
|
37,500
|
|
|
|
150,000
|
|
Keith S. Kendrick
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
100,000
|
|
Keith S. Omsberg
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
480,000
|
|
|
|
|
(d)
|
|
Represents the market value of RSUs or PSUs, as applicable, issuable to the applicable
executive upon achievement and maintenance of the $8.00 threshold Share Price Performance
Target for the required 60 day period, subject to the vesting requirements noted in footnotes
(b) and (c) above. The market value was determined by multiplying $8.48 (the closing price of
Tiers stock at September 30, 2009) by the number of RSUs or PSUs, as applicable.
|
Fiscal 2009 Option Exercises and Stock Vested
The following table sets forth for each named executive officer certain information about stock
options that were exercised during the fiscal year ended September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
|
Number of shares
|
|
|
|
|
|
|
acquired on exercise
|
|
|
Value realized on
|
|
Name
|
|
(#)
|
|
|
exercise ($) (1)
|
|
|
Ronald L. Rossetti
|
|
|
20,000
|
|
|
$
|
12,350
|
|
|
|
|
|
|
|
|
|
|
Nina K. Vellayan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald W. Johnston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Kendrick
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith S. Omsberg
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amount realized on exercise was determined by multiplying $7.43
(the closing price of Tiers common stock at July 14, 2009, the
date of exercise) by the number of shares exercised and
subtracting the aggregate exercise price paid for such shares.
|
Potential Payments Upon Termination or Change of Control
This section provides information regarding payments and benefits to the named executive officers
that would be triggered by termination of the officers employment (including voluntary
termination, involuntary termination, resignation for good reason and termination due to death or
disability) or a change of control of Tier. The term change of control is defined in the
Change
of Control
section of the Compensation Discussion and Analysis on
page 28. Other key terms in our
employment agreements with our named executive officers are cause and good
36
reason. Summaries of these definitions, which are qualified by reference to the full definitions
and related provisions in the employment agreements, are 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, in the case of Mr. Rossetti and Mr. Johnston, our Code of
Ethics for Chief Executive, Chief Financial and Chief Accounting Officers (or successor
policies on similar topics) or any other applicable policies in place;
|
|
|
|
|
a violation by the named executive officer of any provision of his or her Proprietary and
Confidential Information, Developments, Noncompetition and Nonsolicitation Agreement with
us; or
|
|
|
|
|
fraud, embezzlement, theft or dishonesty by the named executive officer against Tier.
|
Good reason shall mean, without the named executive officers prior written consent, the occurrence
of any of the following:
|
|
|
any reduction in the named executive officers base salary, or in the case of
Mr. Rossetti, a reduction in his maximum bonus opportunity below 100% of base
salary, and in the case of each of Mr. Kendrick and Ms. Vellayan, a reduction
in the minimum bonus opportunity below 50% of base salary;
|
|
|
|
|
in the case of Mr. Rossetti, a material change in the applicable performance
goals used to determine his bonus that makes it materially less likely for the
goals to be achieved and which change is not reasonable in light of the
Companys business, is designed to make it materially less likely for
Mr. Rossetti to obtain the bonus opportunity or is applied solely to
Mr. Rossetti (except to the extent relating only to the functions of a Chief
Executive Officer);
|
|
|
|
|
in the case of Mr. Rossetti, any reduction in his title, position or reporting
status, unless he is provided with a comparable title, position or reporting
status, or any material diminution of his duties, responsibilities, powers or
authorities;
|
|
|
|
|
in the case of Mr. Kendrick and Ms. Vellayan, any material reduction in
position and reporting status (defined as reporting directly to the Chief
Executive Officer of Tier or an equivalent position), or any material
diminution in the nature and scope of duties, responsibilities, powers or
authorities consistent with those immediately following commencement of
employment by Mr. Kendrick or Ms. Vellayan, as applicable, with Tier, or the
assignment of duties and responsibilities materially inconsistent with
Mr. Kendricks position of Senior Vice President, Strategic Marketing or
Ms. Vellayans position as Executive Vice President, Chief Operating Officer;
|
|
|
|
|
in the case of Mr. Johnston and Mr. Omsberg, any material diminution of the
named executive officers duties, responsibilities, powers, or authorities;
|
|
|
|
|
in the case of Mr. Kendrick, any requirement imposed upon Mr. Kendrick to
relocate his principal residence to any other location than Reston, Virginia or
Atlanta, Georgia or a similar metropolitan area;
|
37
|
|
|
in the case of Mr. Omsberg, any relocation of his principal place of employment
by more than 50 miles or a requirement that Mr. Omsberg relocate his 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.
Potential Payments Due under our Employment Agreement with our Chief Executive Officer
On April 30, 2008, we entered into an employment agreement with our Chief Executive Officer, Ronald
L. Rossetti, which provides that Mr. Rossetti will continue to serve as Tiers Chief Executive
Officer for a three year term ending on April 30, 2011. Pursuant to the terms of this agreement,
Mr. Rossetti is entitled to certain compensation and benefits upon termination of his employment
and/or a change of control of Tier, payable in a lump sum (with the exception of health benefits,
which would be reimbursed monthly) within 30 days of the applicable event (or such later date as is
required for compliance with tax laws governing deferred compensation) and provided, in the case of
a termination other than for death, disability, or cause or a voluntary termination by Mr.
Rossetti, that Mr. Rossetti signs a separation agreement and release. The following table describes
the maximum potential payments that would have been due to Mr. Rossetti as of September 30, 2009,
upon designated situations outlined in his employment agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
Involuntary
|
|
|
termination
|
|
|
|
|
|
|
|
|
Benefits and payments
|
|
Voluntary
|
|
|
cause
|
|
|
not for cause
|
|
|
with good
|
|
|
|
|
|
|
Change of
|
|
upon termination
|
|
termination(1)
|
|
|
termination(1)
|
|
|
termination(2)
|
|
|
reason(2)
|
|
|
Death (3)
|
|
|
control(4)
|
|
|
Salary
|
|
$
|
12,308
|
|
|
$
|
12,308
|
|
|
$
|
412,308
|
|
|
$
|
412,308
|
|
|
$
|
412,308
|
|
|
$
|
812,308
|
|
Bonus
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
1,161,881
|
|
|
|
1,161,881
|
|
|
|
780,940
|
|
|
|
1,161,881
|
|
Restricted stock units(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
|
|
|
|
12,000
|
|
Tax gross-up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,038,234
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued PTO (6)
|
|
|
(10,025
|
)
|
|
|
(10,025
|
)
|
|
|
(10,025
|
)
|
|
|
(10,025
|
)
|
|
|
(10,025
|
)
|
|
|
(10,025
|
)
|
|
|
|
Total company obligation
|
|
|
402,283
|
|
|
|
402,283
|
|
|
|
1,576,164
|
|
|
|
1,576,164
|
|
|
|
1,183,223
|
|
|
|
3,014,398
|
|
|
|
|
Stock options (7)
|
|
|
936,150
|
|
|
|
936,150
|
|
|
|
936,150
|
|
|
|
936,150
|
|
|
|
936,150
|
|
|
|
936,150
|
|
|
|
|
Total benefit to employee
|
|
$
|
1,338,433
|
|
|
$
|
1,338,433
|
|
|
$
|
2,512,314
|
|
|
$
|
2,512,314
|
|
|
$
|
2,119,373
|
|
|
$
|
3,950,548
|
|
|
|
|
|
|
|
(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 and personal time off accrued through September 30, 2009.
|
|
(2)
|
|
Amounts reflect maximum salary earned and prior year bonus accrued but not paid prior to date of termination, one years base salary, bonus equal to the average annual bonus paid to Mr. Rossetti (or for the most recent year, accrued for
Mr. Rossetti) for the previous three years, or the Average Historic Bonus, prorated for number of months worked prior to occurrence, bonus equal to the Average Historic Bonus, immediate vesting of all stock options, restricted stock grants and
restricted stock units already issued under the EVA Plan (and an extension of the measurement period under the EVA Plan to nine months after the date of termination, with full vesting of awards that become earned because of performance during
that nine month period), twelve months continuation of health benefits and personal time off accrued through September 30, 2009. In addition, in this scenario, all stock options will be exercisable for a period of one year after the date of
Mr. Rossettis termination, other than a stock option for 300,000 shares granted to Mr. Rossetti on July 26, 2006, which will be exercisable until the later of five years after the date of his termination or three months following the date he
is no longer serving in a capacity that would enable him to be eligible to receive option grants under the 2004 Plan, but in no event later than July 25, 2016.
|
|
(3)
|
|
Amounts reflect maximum salary earned and prior year bonus accrued but not paid prior to date of termination, one years base salary and bonus equal to the Average Historic Bonus, immediate vesting of all stock options, restricted stock grants
and restricted stock units already issued under the EVA plan (and an extension of the measurement period under the EVA Plan to nine months after the date of termination, with full vesting of awards that become earned because of performance
during that nine month period) and personal time off accrued through September 30, 2009. In addition, in this scenario, all stock options will be exercisable for a period of one year after the date of Mr. Rossettis termination due to death,
other than a stock option for 300,000 shares granted to Mr. Rossetti on July 26, 2006, which will be exercisable until the date that is five years after the date of his death, but in no event later than July 25, 2016. Amounts payable in the
event of a termination due to disability are the same as the foregoing, except that Mr. Rossetti would not be entitled to one years base salary and bonus equal to the Average Historic Bonus in the event of a termination for disability.
|
38
|
|
|
(4)
|
|
The amounts payable to Mr. Rossetti upon a change of control vary depending on the relevant facts. The amounts shown in this column assume that Mr. Rossetti remains employed by Tier for the shorter of (i) 180 days after a change in control (the
CIC Transition Period) and (ii) the period required by the Board in connection with the change of control, and assists in the transition during such period of employment. In this scenario, Mr. Rossetti is entitled to a payment of two times
(a) his base salary in effect on the date of his termination plus (b) a bonus equal to the Average Historic Bonus, immediate vesting of all stock options, restricted stock grants and restricted stock units already issued under the EVA Plan (and
an extension of the measurement period under the EVA Plan to nine months after the date of termination, with full vesting of awards that become earned because of performance during that nine month period), gross-ups on payments that are subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, twelve months continuation of health benefits and personal time off accrued through September 30, 2009. In another potential scenario, if Tier
terminates Mr. Rossettis employment without cause during the CIC Transition Period (or within the 60 days preceding a change of control) or he resigns because Tier does not treat him during that period as a senior executive or senior adviser,
he will receive the benefits described in the previous sentence, and will also receive the benefits he would have been entitled to had he been terminated without cause by Tier in the absence of a change of control, other than one years base
salary and a bonus equal to the Average Historic Bonus. In a third scenario, if Mr. Rossetti is terminated or resigns for good reason after the CIC Transition Period (or a shorter period under certain circumstances), such termination would be
governed by the applicable provisions of Mr. Rossettis employment agreement, depending on the circumstances of the cessation, provided that he would not be entitled to any further cash severance in the form of one years base salary or a bonus
equal to the Average Historic Bonus. Mr. Rossetti is entitled to immediate vesting of his equity awards and a nine-month extension of the EVA Plan measurement period if he is employed by Tier immediately prior to a change of control, regardless
of whether or when his employment is subsequently terminated.
|
|
(5)
|
|
As of September 30, 2009, the stock price performance targets that trigger the award of RSUs had not been met; therefore, no units were considered awarded or vested for purposes of the table above.
|
|
(6)
|
|
As of September 30, 2009, Mr. Rossettis PTO days taken were in excess of his accrued amount.
|
|
(7)
|
|
The amount represents the value of vested options as of September 30, 2009 at a closing price of $8.48 less the cost to the employee to exercise the options at their exercise price.
|
Potential Payments Due under our Employment Agreement with our Chief Operating Officer
Effective October 1, 2008, we entered into an employment agreement with our Chief Operating
Officer, Nina K. Vellayan. Pursuant to the terms of this agreement, Ms. Vellayan 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 (or such later date as is
required for compliance with tax laws governing deferred compensation) and provided, in the case of
a termination other than for death, disability, or cause or a voluntary termination by Ms.
Vellayan, that Ms. Vellayan signs a separation agreement and release. The following table describes
the maximum potential payments that would have been due to Ms. Vellayan as of September 30, 2009,
upon designated situations outlined in her employment agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
Involuntary not for
|
|
|
Termination
|
|
|
|
|
|
|
|
Benefits and payments
|
|
Voluntary
|
|
|
cause
|
|
|
Cause
|
|
|
with good
|
|
|
Death or
|
|
|
Change of
|
|
upon termination
|
|
termination(1)
|
|
|
termination(1)
|
|
|
termination(2)
|
|
|
reason (2)
|
|
|
disability(2)
|
|
|
control(3)
|
|
|
Salary
|
|
$
|
8,462
|
|
|
$
|
8,462
|
|
|
$
|
283,462
|
|
|
$
|
283,462
|
|
|
$
|
283,462
|
|
|
$
|
558,462
|
|
Bonus
|
|
|
206,250
|
|
|
|
206,250
|
|
|
|
206,250
|
|
|
|
206,250
|
|
|
|
206,250
|
|
|
|
431,250
|
|
Performance stock units (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
18,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued PTO
|
|
|
12,594
|
|
|
|
12,594
|
|
|
|
12,594
|
|
|
|
12,594
|
|
|
|
12,594
|
|
|
|
12,594
|
|
|
|
|
Total company obligation
|
|
|
227,306
|
|
|
|
227,306
|
|
|
|
514,306
|
|
|
|
514,306
|
|
|
|
514,306
|
|
|
|
1,020,306
|
|
Stock options (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefit to employee
|
|
$
|
227,306
|
|
|
$
|
227,306
|
|
|
$
|
514,306
|
|
|
$
|
514,306
|
|
|
$
|
514,306
|
|
|
$
|
1,020,306
|
|
|
|
|
|
|
|
(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 and personal time off accrued through September 30,
2009.
|
|
(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 years base salary, twelve months continuation
of health benefits and personal time off accrued through
September 30, 2009.
|
|
(3)
|
|
Amounts shown are payable in the event of a termination of
Ms. Vellayans employment by Tier without cause, or a resignation
by Ms. Vellayan for good reason, within one year after a change of
control, and reflect maximum salary earned but not paid prior to
date of
|
39
|
|
|
|
|
termination, accrued prior year bonus not paid prior to
date of termination, two times (a) base salary and (b) bonus equal
to the average annual bonus paid to Ms. Vellayan (or for the most
recent year, accrued for Ms. Vellayan) for the previous three
years (or such shorter period during which Ms. Vellayan was
employed), immediate vesting of any stock options, eighteen
months continuation of health benefits and personal time off
accrued through September 30, 2009.
|
|
(4)
|
|
As of September 30, 2009, the stock price performance targets that
trigger the award of performance stock units had not been met;
therefore, no units were considered awarded or vested for purposes
of the table above. In the event Ms. Vellayans employment
terminates within 24 months of a change of control due to her
death, disability, termination by Tier without cause, or
resignation by Ms. Vellayan for good reason, all PSUs previously
awarded (if any) will vest in full.
|
|
(5)
|
|
The amount represents the value of vested options as of
September 30, 2009 at a closing price of $8.48 less the cost to
the employee to exercise the options at their exercise price.
|
Potential Payments Due under our Employment Agreement with our 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 (or such later date as is
required for compliance with tax laws governing deferred compensation) and provided in the case of
a termination other than for death, disability, or cause or a voluntary termination by Mr.
Johnston, Mr. Johnston signs a separation agreement and release. The following table describes the
maximum potential payments that would have been due to Mr. Johnston as of September 30, 2009, upon
designated situations outlined in his employment agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
Involuntary not
|
|
|
termination
|
|
|
|
|
|
|
|
Benefits and payments
|
|
Voluntary
|
|
|
cause
|
|
|
for cause
|
|
|
with good
|
|
|
Death or
|
|
|
Change of
|
|
upon termination
|
|
termination(1)
|
|
|
termination(1)
|
|
|
termination(2)
|
|
|
reason (2)
|
|
|
disability(2)
|
|
|
control(3)
|
|
|
Salary
|
|
$
|
8,369
|
|
|
$
|
8,369
|
|
|
$
|
280,369
|
|
|
$
|
280,369
|
|
|
$
|
280,369
|
|
|
$
|
552,369
|
|
Bonus
|
|
|
165,000
|
|
|
|
165,000
|
|
|
|
165,000
|
|
|
|
165,000
|
|
|
|
165,000
|
|
|
|
371,250
|
|
Performance stock units (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
18,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued PTO
|
|
|
26,049
|
|
|
|
26,049
|
|
|
|
26,049
|
|
|
|
26,049
|
|
|
|
26,049
|
|
|
|
26,049
|
|
|
|
|
Total company obligation
|
|
|
199,418
|
|
|
|
199,418
|
|
|
|
483,418
|
|
|
|
483,418
|
|
|
|
483,418
|
|
|
|
967,668
|
|
Stock options (5)
|
|
|
31,333
|
|
|
|
31,333
|
|
|
|
31,333
|
|
|
|
31,333
|
|
|
|
31,333
|
|
|
|
31,333
|
|
|
|
|
Total benefit to employee
|
|
$
|
230,751
|
|
|
$
|
230,751
|
|
|
$
|
514,751
|
|
|
$
|
514,751
|
|
|
$
|
514,751
|
|
|
$
|
999,001
|
|
|
|
|
|
|
|
(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 and personal time off accrued through September 30,
2009.
|
|
(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 years base salary, twelve months continuation
of health benefits and personal time off accrued through
September 30, 2009.
|
|
(3)
|
|
Amounts shown are payable in the event of a termination of
Mr. Johnstons employment by Tier without cause, or a resignation
by Mr. Johnston for good reason, within one year after a change of
control, and 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 the average annual bonus paid to Mr. Johnston (or for the most
recent year, accrued for Mr. Johnston) for the previous three
years (or such shorter period during which Mr. Johnston was
employed), immediate vesting of any stock options, eighteen
months continuation of health benefits and personal time off
accrued through September 30, 2009.
|
|
(4)
|
|
As of September 30, 2009, the stock price performance targets that
trigger the award of performance stock units had not been met,
therefore no units were considered awarded or vested for purposes
of the table above. In the event Mr. Johnstons employment
terminates within 24 months of a change of control due to his
death, disability, termination by Tier without cause, or
resignation by Mr. Johnston for good reason, all PSUs previously
awarded (if any) will vest in full.
|
|
(5)
|
|
The amount represents the value of vested options as of
September 30, 2009 at a closing price of $8.48 less the cost to
the employee to exercise the options at their exercise price.
|
40
Potential Payments Due under our Employment Agreement with our Senior Vice President, Strategic Marketing
On June 30, 2008, we entered into an employment agreement with our Senior Vice President, Strategic
Marketing, Keith S. Kendrick. Pursuant to the terms of this agreement, Mr. Kendrick 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 (or such later date as is
required for compliance with tax laws governing deferred compensation) and provided in the case of
a termination other than for death, disability, or cause or a voluntary termination by Mr.
Kendrick, Mr. Kendrick signs a separation agreement and release. The following table describes the
maximum potential payments that would have been due to Mr. Kendrick as of September 30, 2009, upon
designated situations outlined in his employment agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
Involuntary not
|
|
|
termination
|
|
|
|
|
|
|
|
Benefits and payments
|
|
Voluntary
|
|
|
cause
|
|
|
for cause
|
|
|
with good
|
|
|
Death or
|
|
|
Change of
|
|
upon termination
|
|
termination (1)
|
|
|
termination (1)
|
|
|
termination (2)
|
|
|
reason (2)
|
|
|
disability (2)
|
|
|
control (3)
|
|
|
Salary
|
|
$
|
8,154
|
|
|
$
|
8,154
|
|
|
$
|
273,154
|
|
|
$
|
273,154
|
|
|
$
|
273,154
|
|
|
$
|
538,154
|
|
Bonus
|
|
|
21,500
|
|
|
|
21,500
|
|
|
|
21,500
|
|
|
|
21,500
|
|
|
|
21,500
|
|
|
|
419,000
|
|
Performance stock units (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
18,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued PTO
|
|
|
14,593
|
|
|
|
14,593
|
|
|
|
14,593
|
|
|
|
14,593
|
|
|
|
14,593
|
|
|
|
14,593
|
|
|
|
|
Total company obligation
|
|
|
44,247
|
|
|
|
44,247
|
|
|
|
321,247
|
|
|
|
321,247
|
|
|
|
321,247
|
|
|
|
989,747
|
|
Stock options (5)
|
|
|
13,600
|
|
|
|
13,600
|
|
|
|
13,600
|
|
|
|
13,600
|
|
|
|
13,600
|
|
|
|
13,600
|
|
|
|
|
Total benefit to employee
|
|
$
|
57,847
|
|
|
$
|
57,847
|
|
|
$
|
334,847
|
|
|
$
|
334,847
|
|
|
$
|
334,847
|
|
|
$
|
1,003,347
|
|
|
|
|
|
|
|
(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 and personal time off accrued through September 30,
2009.
|
|
(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 years base salary, twelve months continuation
of health benefits and personal time off accrued through
September 30, 2009.
|
|
(3)
|
|
Amounts shown are payable in the event of a termination of
Mr. Kendricks employment by Tier without cause, or a resignation
by Mr. Kendrick for good reason, within one year after a change of
control, and 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 the average annual bonus paid to Mr. Kendrick (or for the most
recent year, accrued for Mr. Kendrick) for the previous three
years (or such shorter period during which Mr. Kendrick was
employed), immediate vesting of options, eighteen months
continuation of health benefits and personal time off accrued
through September 30, 2009.
|
|
(4)
|
|
As of September 30, 2009, the stock price performance targets that
trigger the award of performance stock units had not been met,
therefore no units were considered awarded or vested for purposes
of the table above. In the event Mr. Kendricks employment
terminates within 24 months of a change of control due to his
death, disability, termination by Tier without cause, or
resignation by Mr. Kendrick for good reason, all PSUs previously
awarded (if any) will vest in full.
|
|
(5)
|
|
The amount represents the value of vested options as of
September 30, 2009 at a closing price of $8.48 less the cost to
the employee to exercise the options at their exercise price.
|
Potential Payments Due under our Employment Agreement with our Vice President, General Counsel and Corporate Secretary
On May 6, 2009, we entered into an employment agreement with our Vice President, General Counsel
and Corporate Secretary, Keith S. Omsberg. Pursuant to the terms of this agreement, Mr. Omsberg 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 (or such later
date as is required for compliance with tax laws governing deferred compensation) and provided in
the case of a termination other than for death, disability, or cause or a voluntary termination by
Mr. Omsberg, Mr. Omsberg signs a separation agreement and release. The following table describes
the maximum potential payments that would have been due to Mr. Omsberg as of September 30, 2009,
upon designated situations outlined in his employment agreement.
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary for
|
|
|
Involuntary not
|
|
|
termination
|
|
|
|
|
|
|
|
Benefits and payments upon
|
|
Voluntary
|
|
|
cause
|
|
|
for cause
|
|
|
with good
|
|
|
Death or
|
|
|
Change of
|
|
termination
|
|
termination(1)
|
|
|
termination(1)
|
|
|
termination(2)
|
|
|
reason(2)
|
|
|
disability(2)
|
|
|
control(3)
|
|
|
Salary
|
|
$
|
5,846
|
|
|
$
|
5,846
|
|
|
$
|
195,846
|
|
|
$
|
195,846
|
|
|
$
|
195,846
|
|
|
$
|
385,846
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,833
|
|
Performance stock units (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
18,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued PTO
|
|
|
19,026
|
|
|
|
19,026
|
|
|
|
19,026
|
|
|
|
19,026
|
|
|
|
19,026
|
|
|
|
19,026
|
|
|
|
|
Total company obligation
|
|
|
24,872
|
|
|
|
24,872
|
|
|
|
226,872
|
|
|
|
226,872
|
|
|
|
226,872
|
|
|
|
519,705
|
|
Stock options (5)
|
|
|
10,590
|
|
|
|
10,590
|
|
|
|
10,590
|
|
|
|
10,590
|
|
|
|
10,590
|
|
|
|
10,590
|
|
|
|
|
Total employee benefit
|
|
$
|
35,462
|
|
|
$
|
35,462
|
|
|
$
|
237,462
|
|
|
$
|
237,462
|
|
|
$
|
237,462
|
|
|
$
|
530,295
|
|
|
|
|
|
|
|
(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 and personal time off accrued through September 30,
2009.
|
|
(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 years base salary, twelve months continuation
of health benefits and personal time off accrued through
September 30, 2009.
|
|
(3)
|
|
Amounts shown are payable in the event of a termination of
Mr. Omsbergs employment by Tier without cause, or a resignation
by Mr. Omsberg for good reason, within one year after a change of
control, and 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 the average bonus paid over the preceding three years (which
average would include the retention payment in the amount of
$85,000 pursuant to the February 5, 2007 retention agreement
between Mr. Omsberg and Tier), immediate vesting of options that
would have vested within eighteen months of the termination of
Mr. Omsbergs employment, full vesting of all performance stock
units awarded in accordance with the PSU Plan (if any), eighteen
months continuation of health benefits and personal time off
accrued through September 30, 2009.
|
|
(4)
|
|
As of September 30, 2009, the stock price performance targets that
trigger the award of performance stock units had not been met,
therefore no units were considered awarded or vested for purposes
of the table above. In the event Mr. Omsbergs employment
terminates within 24 months of a change of control due to his
death, disability, termination by Tier without cause, or
resignation by Mr. Omsberg for good reason, all PSUs previously
awarded (if any) will vest in full.
|
|
(5)
|
|
The amount represents the value of vested options as of
September 30, 2009 at a closing price of $8.48 less the cost to
the employee to exercise the options at their exercise price.
|
42
DIRECTOR COMPENSATION
The Governance and Nominating Committee of the Board determines the compensation of our
non-employee Board members. Compensation is generally reviewed annually, and more frequently when
the Governance and Nominating Committee deems necessary, and is compared with companies in the same
peer group that is used for evaluating executive compensation. In addition to the results of peer
group studies, 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:
|
|
|
|
|
|
|
Fiscal
|
|
Pay component
|
|
2009
|
|
Board retainer (payable quarterly in arrears)
|
|
$
|
20,000
|
|
|
|
|
|
|
Board member fee (per meeting)
|
|
|
|
|
In-person meeting
|
|
|
1,000
|
|
Telephonic meeting
|
|
|
500
|
|
|
|
|
|
|
Committee chair retainer (payable quarterly in arrears)
|
|
|
|
|
Audit committee
|
|
|
5,000
|
|
All other committees
|
|
|
2,500
|
|
|
|
|
|
|
Committee meeting fee (per meeting)
|
|
|
|
|
In-person meeting
|
|
|
1,000
|
|
Telephonic meeting
|
|
|
500
|
|
|
|
|
|
|
Lead director retainer (payable quarterly in arrears)
|
|
|
5,000
|
|
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 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, subject to full vesting
acceleration in the event of a change of control. The vesting and payout provisions of the
restricted stock units under the circumstances described below are as follows:
|
|
|
Death and disabilityPro rata vesting through the date of death or disability; immediate payout
|
|
|
|
|
Voluntary resignationPro rata vesting through the date of resignation; payable at end of
3-year vesting period
|
|
|
|
|
Termination for causeForfeit entire award
|
|
|
|
|
Change of control100% vesting, payable on date of change of control
|
As
described under
Arrangements or understandings related to the selection of directors
on page 19 above, in February 2010, Tier and Discovery Group reached an agreement with respect to the
Companys 2010 annual meeting and other matters. As part of that agreement, we accelerated the
vesting of unvested restricted stock units issued to Mr. Donoghue and Mr. Murphy, such acceleration
to be effective upon the expiration of the term of Mr. Murphy and Mr. Donoghue as a director.
Mr. Rossetti, the only director who is also a Tier employee, receives no compensation for serving
as a director.
43
Fiscal 2009 Director Compensation
For our fiscal year ended September 30, 2009, 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, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees earned or paid
|
|
|
|
|
|
|
|
Name
|
|
in cash ($)
|
|
|
Stock awards ($) (1)
|
|
|
Total ($)
|
|
Charles W. Berger
(Chair Audit Committee)
|
|
$
|
41,000
|
|
|
$
|
12,720
|
|
|
$
|
53,720
|
|
Samuel Cabot III (2)
|
|
|
25,750
|
|
|
|
|
|
|
|
25,750
|
|
John J. Delucca
(Vice Chair Audit Committee)
|
|
|
37,500
|
|
|
|
12,720
|
|
|
|
50,220
|
|
Daniel J. Donoghue (3)
|
|
|
17,000
|
|
|
|
12,720
|
|
|
|
29,720
|
|
Morgan P. Guenther
(Chair Governance and Nominating Committee)
|
|
|
52,500
|
|
|
|
12,720
|
|
|
|
65,220
|
|
Philip G. Heasley
(Chair Compensation Committee and Lead Director)
|
|
|
46,500
|
|
|
|
12,720
|
|
|
|
59,220
|
|
Michael R. Murphy (3)
|
|
|
19,500
|
|
|
|
12,720
|
|
|
|
32,220
|
|
David A. Poe
(Chair Data Security Committee)
|
|
|
31,875
|
|
|
|
12,720
|
|
|
|
44,595
|
|
Zachary F. Sadek (3)
|
|
|
16,500
|
|
|
|
12,720
|
|
|
|
29,220
|
|
James R. Stone (4)
|
|
|
18,500
|
|
|
|
|
|
|
|
18,500
|
|
|
|
|
(1)
|
|
The amounts included in this column reflect the
dollar amount recognized as an expense for financial
statement reporting purposes in fiscal 2009 for
restricted stock unit awards, calculated in
accordance with US GAAP. Assumptions used in the
calculation of these amounts are included in footnote
14 to the audited consolidated financial statements
included in our annual report on Form 10-K for the
fiscal year ended September 30, 2009, as amended. The
expense per member has been calculated as total
expense to be recognized on the date of valuation per
month multiplied by the number of months in
measurement period, based on the following:
|
|
|
|
|
|
Number of RSUs awarded
|
|
|
9,000
|
|
Fair value of award (closing price on day of valuation)
|
|
$
|
8.48
|
|
Total fair value
|
|
$
|
76,320
|
|
Total months to recognize expense
|
|
|
36
|
|
Number of months in measurement period
|
|
|
6
|
|
The following table shows the aggregate number of stock awards and option awards outstanding at the
end of fiscal year 2009 for each director:
|
|
|
|
|
|
|
|
|
Name
|
|
Stock awards outstanding
|
|
|
Options outstanding
|
|
Charles W. Berger
|
|
|
9,000
|
|
|
|
140,000
|
|
John J. Delucca
|
|
|
9,000
|
|
|
|
40,000
|
|
Daniel J. Donoghue
|
|
|
9,000
|
|
|
|
|
|
Morgan P. Guenther
|
|
|
9,000
|
|
|
|
150,000
|
|
Philip G. Heasley
|
|
|
9,000
|
|
|
|
10,002
|
|
Michael R. Murphy
|
|
|
9,000
|
|
|
|
|
|
David A. Poe
|
|
|
9,000
|
|
|
|
6,668
|
|
Zachary F. Sadek
|
|
|
9,000
|
|
|
|
|
|
|
|
|
(2)
|
|
Mr. Cabots term of office expired when his successor was elected at our 2009 annual meeting.
|
|
(3)
|
|
Messrs. Donoghue, Murphy and Sadek joined our Board in March 2009.
|
|
(4)
|
|
Mr. Stone did not stand for re-election at our 2009 annual meeting.
|
44
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, 2009 with management and McGladrey & Pullen, LLP, or McGladrey, Tier
Technologies, Inc.s registered public accounting firm for fiscal year 2009. The Audit Committee
also reviewed and discussed with McGladrey the matters required to be discussed by Statement of
Auditing Standards No. 61, as amended.
The Audit Committee received the written disclosures and letter from McGladrey required by
applicable requirements of the Public Company Accounting Oversight Board regarding McGladreys
communications with the Audit Committee concerning independence, and has discussed with McGladrey
its independence from Tier.
Based upon the review and discussions noted above, the Audit Committee recommended to the Board
that the audited financial statements be included in Tiers Annual Report on Form 10-K for the
fiscal year ended September 30, 2009.
The foregoing report is given by the members of the Audit Committee: Charles W. Berger (Chair),
John J. Delucca (Vice Chair), Daniel J. Donoghue, and Zachary F. Sadek.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed by McGladrey to us for the fiscal years ended September 30, 2009 and 2008
are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
(1)
|
|
$
|
539
|
|
|
$
|
540
|
|
Audit Related Fees
(2)
|
|
|
52
|
|
|
|
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
591
|
|
|
$
|
540
|
|
|
|
|
|
(1)
|
|
Represents fees for the audit of our financial statements, review of our
quarterly financial statements, audit of our internal controls, 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 review of ChoicePay financial statements, as
a result of the acquisition of ChoicePay in January 2009.
|
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, 2009, 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 2010, 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.
45
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
PROPOSAL TWO.
PROPOSAL THREE: AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO
CHANGE THE NAME OF THE COMPANY
The Board of Directors has approved, subject to stockholder approval, an amendment to our restated
certificate of incorporation that changes the name of the Company from Tier Technologies, Inc. to
Official Payments Holdings, Inc.. The form of amendment to our restated certificate of
incorporation to effect the name change is attached as
Annex A
to this Proxy Statement.
We are proposing to change our name in order to more closely align our formal corporate name with
our brand and our focus on electronic payments. We conduct substantially all of our business
activities through our wholly owned subsidiary, Official Payments Corporation. We believe that
changing our corporate name to Official Payments Holdings, Inc. would clarify our corporate
identity and more closely associate our Company with our brand and business focus.
If our stockholders approve the name change amendment at the annual meeting, we intend to apply to
change our NASDAQ Global Select Market trading symbol from TIER to OPAY. Stockholders will not
be required to submit their stock certificates for exchange if the proposed name change is
approved. Following the effective date of the name change, all new stock certificates issued by us
will reflect our new name.
If the proposal to amend our restated certificate of incorporation to change our name to Official
Payments Holdings, Inc. is approved by our stockholders at the annual meeting, an amendment to our
restated certificate of incorporation in the form attached as
Annex A
will be filed with the
Secretary of State of the State of Delaware to effect the name change as soon as practicable after
the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
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, 11130 Sunrise Valley Drive, Suite 300, Reston, VA 20191 (for proposals mailed on or
after March 26, 2010), and received no later than November
[XX], 2010.
Proposals not intended to be included in next years proxy statement, but that are instead sought
to be presented directly at the 2011 annual meeting, including nominations of director candidates,
must be received by us at the above-mentioned address not less than 60 days nor more than 90 days
prior to the first anniversary of the date of this years meeting (but if we give less than 70 days
advance notice or prior public disclosure of the date of the 2011 annual 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.
46
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 at Tier Technologies, Inc., attention Corporate Secretary, at (for letters
mailed before March 26, 2010) 10780 Parkridge Boulevard, Suite 400, Reston, Virginia 20191 or 11130
Sunrise Valley Drive, Suite 300, Reston, VA 20191 (for letters mailed on or after March 26, 2010),
or by phone at (571) 382-1000.
A copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2009, as amended,
is available without charge upon written request to Corporate Secretary, Tier Technologies, Inc.,
at (for requests mailed before March 26, 2010) 10780 Parkridge Boulevard, Suite 400, Reston,
Virginia 20191 or 11130 Sunrise Valley Drive, Suite 300, Reston, VA 20191 (for requests mailed on
or after March 26, 2010).
By Order of the Board of Directors
Keith S. Omsberg
Secretary
March [XX], 2010
47
Annex A
CERTIFICATE OF AMENDMENT OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
TIER TECHNOLOGIES, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Tier Technologies, Inc. (hereinafter called the Corporation), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby certify as
follows:
At a meeting of the Board of Directors of the Corporation, a resolution was duly adopted
pursuant to Section 242 of the General Corporation Law of the State of Delaware setting forth an
amendment to the Restated Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The stockholders of the Corporation duly approved said amendment in
accordance with Section 242 of the General Corporation Law of the State of Delaware. The resolution
setting forth the amendment is as follows:
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RESOLVED:
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That, subject to the approval of the stockholders of the Corporation,
Article FIRST of the Restated Certificate of Incorporation of the
Corporation be and hereby is amended and restated in its entirety so
that the same shall read in full as follows:
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FIRST: The name of the Corporation is: Official Payments Holdings, Inc.
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IN WITNESS WHEREOF, this Certificate of Amendment of Restated Certificate of Incorporation has
been executed by a duly authorized officer of the Corporation this
day of
, 2010.
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TIER TECHNOLOGIES, INC.
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By:
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Name:
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Title:
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A-1
Directions to the Annual Meeting
Sheraton Reston Hotel
11810 Sunrise Valley Drive, Reston, Virginia 20191
Phone: (703) 620-9000
From Reston Town Center
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Take Reston Parkway west to Sunrise Valley Drive.
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Continue for one-quarter mile; the hotel will be on your left.
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From Washington D.C.
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Take Interstate 66 West and follow the exit signs for Washington/Dulles Airport 267 Toll
Road.
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Proceed on 267 West to Reston Parkway, Exit 12.
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Turn left on Reston Parkway. At the second light turn left again onto Sunrise Valley
Drive.
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Continue for a quarter mile; the hotel will be on your left.
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From Washington Reagan International Airport (DCA)
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Take Washington Parkway to Capital Beltway Interstate 495 into Virginia.
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Merge onto the Dulles access Toll Road 267 East.
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Take Exit 12 to Reston Parkway and turn left.
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Proceed to the first light and turn left on Sunrise Valley Drive.
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Continue for a quarter mile; the hotel will be on the left.
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From South (Virginia)
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Follow Capitol Beltway Interstate 495 North.
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Take the exit for Washington/Dulles Airport 267 Toll Road West.
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Proceed on 267 West to Reston Parkway, Exit 12.
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Turn left on Reston Parkway to the second light, then turn left again on Sunrise Valley
Drive.
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Continue for a quarter mile; the hotel will be on your left.
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From North (Maryland)
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Follow Capitol Beltway Interstate 495 to Virginia.
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Take the exit for Washington/Dulles Airport 267 Toll Road West.
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Follow 267 West to Reston Parkway, Exit 12.
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Turn left on Reston Parkway. At the second light turn left again onto Sunrise Valley
Drive.
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Continue for a quarter mile; the hotel will be on your left.
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From Washington Dulles International Airport (IAD)
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Follow Dulles access Toll Road 267 East.
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Take Exit 12 to Reston Parkway and turn right.
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Go to the first light and turn left on Sunrise Valley Drive.
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Continue for a quarter mile; the hotel will be on the left.
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B-1
VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time on April 7, 2010. Have your
proxy TIER TECHNOLOGIES, INC. card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form.
10780 PARKRIDGE BLVD., SUITE 400 RESTON, VA 20191 VOTE BY PHONE 1-800-690-6903 Use any
touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April
7, 2010. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Vote Processing, Tier Technologies, Inc, c/o Broadridge Financial Solutions, Inc., 51
Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M20789-P88628 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED. TIER TECHNOLOGIES, INC. For Withhold For All To
withhold authority to vote for any individual All All Except nominee(s), mark For All Except and
write the THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR number(s) of the nominee(s) on the line
below. PROPOSALS 1, 2 AND 3. 1. PROPOSAL NO. 1: 0 0 0 Nominees for Directors for
election by the holders of common stock: 01) Charles W. Berger 05) David A. Poe 02) John J. Delucca
06) Ronald L. Rossetti 03) Morgan P. Guenther 07) Zachary F. Sadek 04) Philip G. Heasley For
Against Abstain The Board of Directors recommends you vote FOR the following proposals: 2. PROPOSAL
NO. 2: To ratify the selection of McGladrey & Pullen, LLP as the Companys independent registered
public accounting firm for the fiscal year 0 0 0 ending September 30, 2010. 3. PROPOSAL
NO. 3: To amend the Companys Restated Certificate of Incorporation to change the Companys name to
Official Payments Holdings, Inc. 0 0 0 Unless otherwise specified on the reverse side,
this proxy authorizes the proxies named on the reverse side to cumulate votes that the undersigned
is entitled to cast at the annual meeting in connection with the election of directors; provided
that the proxies will not cumulate votes for any nominees from whom the undersigned has 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
as explained in the proxy statement, mark the box below and write your instructions on the reverse
side. (If you wish to direct that the proxy holders cumulate votes with respect to a specific Board
nominee or nominees, please indicate the name(s) and the number of 0 votes to be given
to such Board nominee(s)). Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners
should each sign personally. All holders must sign. If a corporation or partnership, please sign in
full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
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T TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE T M20790-P88628
TIER TECHNOLOGIES, INC. PROXY ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 8,
2010 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder
of Tier Technologies, Inc., hereby constitutes and appoints Ronald W. Johnston and Keith S. Omsberg
and each of them, with full power of substitution, as proxy or proxies of the undersigned to vote
the number of shares of common stock which the undersigned would be entitled to vote if personally
present at Tiers Annual Meeting of Stockholders, to be held at the P Sheraton Reston
located at 11810 Sunrise Valley Drive, Reston, Virginia at 10:00 a.m. local time on April 8, 2010,
and at any adjournments or postponements thereof, with respect to the proposals described in the
Notice of Annual Meeting of Stockholders and R proxy statement, in the manner
specified on the reverse side. The proxies are further authorized to vote, in their discretion,
upon such other business as may properly come before the meeting or any postponements or
adjournments thereof. O THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AMONG THE
BOARDS NOMINEES AS DIRECTED BY THE X STOCKHOLDER, WHERE NO CONTRARY DIRECTION IS
GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED CUMULATIVELY IN THE
DISCRETION OF THE PROXY HOLDERS AMONG THE BOARDS NOMINEES Y NAMED IN PROPOSAL NO. 1
(EXCEPT FOR ANY NOMINEES FOR WHOM THE UNDERSIGNED HAS WITHHELD AUTHORITY TO VOTE), FOR PROPOSAL NO.
2, AND FOR PROPOSAL NO. 3. If the undersigned hold(s) any of the shares of common stock in a
fiduciary, custodial, or joint capacity or capacities, this proxy is signed by the undersigned in
every such capacity as well as individually. Cumulative Voting Instructions (Mark the Corresponding
box on the reverse side) (If you noted cumulative voting instructions above, please check the
corresponding box on the reverse side.)
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