FORM PRE 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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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 |
COMPUWARE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
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previous filing by registration statement number, or the Form or Schedule and the date of its
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
COMPUWARE CORPORATION
[COMPUWARE LOGO]
Corporate Headquarters
ONE CAMPUS MARTIUS
DETROIT, MICHIGAN 48226-5099
(313) 227-7300
July 15, 2009
Dear Compuware Shareholder:
You are cordially invited to attend the 2009 Annual Meeting of Shareholders of Compuware
Corporation at 3:00 p.m., Eastern time, on Tuesday, August 25, 2009. The meeting will be held at
Compuwares corporate offices, One Campus Martius, Detroit, Michigan 48226-5099.
We are pleased again this year to furnish our proxy materials to shareholders on the Internet
as permitted by Securities and Exchange Commission rules, which allow us to provide our
shareholders with the information they need in a more convenient manner while lowering cost of
delivery and reducing environmental impact. As a result, we are mailing our shareholders on or
about July 15, 2009 a Notice of Internet Availability of Proxy Materials. This notice contains
instructions for accessing our proxy statement and annual report, for voting over the Internet and
for requesting printed copies of the proxy materials. As in past years, shareholders who have
consented to do so will receive the proxy materials, including voting instructions and links to the
annual report and proxy statement on the Internet, by e-mail. We will mail printed copies of the
proxy materials to shareholders who request them or who have previously indicated their preference
for printed copies.
The following pages contain the formal Notice of the Annual Meeting and the Proxy Statement.
You may wish to review this material for information concerning the business to be conducted at the
meeting and the nominees for election as directors.
Please indicate in the space provided on the proxy card whether you plan to attend the
meeting, or press the appropriate key if voting by telephone or by Internet. If your shares are
currently held in the name of your broker, bank or other nominee and you wish to attend the
meeting, you must either bring your Important Notice Regarding the Availability of Proxy Material
to the meeting or you must bring a letter from your broker, bank or other nominee indicating that
you are the beneficial owner of a stated number of shares of stock as of the June 30, 2009 record
date. This will help us determine whether you are permitted to attend the meeting. You must be a
Compuware shareholder or the named representative of a Compuware shareholder to attend the meeting.
You must also obtain a legal proxy if you desire to vote at the meeting and your shares are held in
the name of your broker, bank or another nominee.
Your vote is important. Whether you plan to attend the meeting or not, we urge you to vote
your shares by completing, signing and returning your proxy card or by telephone or Internet, as
soon as possible. This will ensure that your shares are voted in the event you are unable to attend
the meeting. You may, of course, revoke your proxy and, if you are a shareholder of record, vote in
person at the meeting if you so desire.
Sincerely,
Peter Karmanos, Jr.
Chairman and Chief Executive Officer
1
TABLE OF CONTENTS
COMPUWARE CORPORATION
One Campus Martius
Detroit, Michigan 48226-5099
NOTICE OF THE 2009 ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 25, 2009
To the Shareholders:
This is our notice to you that the 2009 Annual Meeting of Shareholders of Compuware
Corporation will be held at our corporate offices, One Campus Martius, Detroit, Michigan
48226-5099, on Tuesday, August 25, 2009 at 3:00 p.m., Eastern time, to consider and act upon the
following matters:
(1) The election of nine directors to serve until the next Annual Meeting of Shareholders and
until their successors are elected and qualified;
(2) A non-binding resolution to ratify the appointment of Deloitte & Touche LLP, our independent
registered public accounting firm, to audit our consolidated financial statements for the fiscal
year ending March 31, 2010;
(3) A non-binding resolution to ratify the Rights Agreement, dated October 25, 2000, as amended
on February 2 2009; and
(4) Such other business as may properly come before the meeting.
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Only shareholders of record at the close of business on June 30, 2009 will be entitled to
vote at the meeting. |
We call your attention to the attached Proxy Statement. We request that you vote your shares
and indicate whether you plan to attend the meeting by either signing, dating and returning the
proxy card in the enclosed envelope or by using the other voting mechanisms described in the Proxy
Statement. If you attend the meeting and are a shareholder of record, you may vote your shares in
person at the meeting.
Due to space configurations at our headquarters, it may be necessary for us to use an
additional conference room at this years meeting to accommodate all shareholders who wish to
attend.
A copy of the 2009 Annual Report for the fiscal year ended March 31, 2009, accompanies this
notice. The Proxy Statement and the 2009 Annual Report of Compuware are also available at:
http://investor.compuware.com/annuals.cfm
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By Order of the Board of Directors,
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Daniel S. Follis, Jr., Secretary |
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Detroit, Michigan
July 15, 2009
2
COMPUWARE CORPORATION
PROXY STATEMENT
2009 Annual Meeting of Shareholders
INTRODUCTION
This Proxy Statement and the accompanying materials are furnished in connection with the
solicitation of proxies by the Board of Directors of Compuware Corporation. The proxies are being
solicited for use at the 2009 Annual Meeting of Shareholders to be held at 3:00 p.m., Eastern time,
on Tuesday, August 25, 2009, at the headquarters of Compuware Corporation, One Campus Martius,
Detroit, Michigan 48226-5099, and at any adjournment of that meeting. The proxies are being
solicited from holders of our common shares, par value $.01 per share. We expect this Proxy
Statement, the accompanying materials and a Notice of Internet Availability of Proxy Materials will
be first made available to shareholders on or about July 15, 2009.
We urge you to vote your shares promptly to make certain your vote will be counted at the
meeting. There are different ways you may cast your vote:
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If you received a Notice of Internet Availability of Proxy Materials, you may vote over
the Internet by following the instructions provided in that notice. |
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If you received printed copies of the proxy materials, you may vote by completing your
proxy card or voting information card and returning it by mail or by following the
instructions provided on the proxy card or voting information card about how to vote over
the Internet or by telephone. |
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If you are attending the annual meeting and you are a shareholder of record, you may
complete a ballot at the meeting. If your shares are held in street name (held for your
account by a broker, bank or other nominee), contact the broker, bank or other nominee that
holds your shares to obtain a legal proxy and bring it with you to the meeting. To be able
to vote shares you hold in street name at the meeting, you must have a legal proxy from
your broker, bank or other nominee issued in your name giving you the right to vote the
shares. You will not be able to use the Notice of Internet Availability of Proxy Materials
or the proxy card enclosed with printed copies of the proxy materials for this purpose. |
If you give a proxy, you may revoke it at any time before it is voted by:
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giving our Secretary a written notice of revocation that is dated later than the proxy
card; |
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signing a later-dated proxy card relating to the same shares and delivering it to the
transfer agent; |
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voting again by telephone or Internet (prior to August 24, 2009 at 11:59 p.m., Eastern
time), since only your latest vote will be counted; or |
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attending the Annual Meeting and voting in person, if you are a shareholder of record. |
Your attendance at the Annual Meeting of Shareholders will not in and of itself revoke your
proxy. A written notice of revocation must be sent to: Secretary, Compuware Corporation, One Campus
Martius, Detroit, Michigan 48226-5099.
References in this Proxy Statement to fiscal 2009 mean the 12 months ended March 31, 2009, and
references to we, us or the Company are to Compuware Corporation.
Holders of record of our common shares at the close of business on June 30, 2009 are entitled
to notice of the 2009 Annual Meeting of Shareholders and to vote at the meeting. On June 30, 2009,
we had 240,787,819 outstanding common shares, our only class of stock outstanding. Each of these
shares is entitled to one vote on each matter submitted for a vote at the meeting. The presence,
either in person or by proxy, of the holders of at least a majority of these outstanding common
shares is necessary to constitute a quorum at the 2009 Annual Meeting of Shareholders. Shares
relating to abstentions, broker non-votes and withheld votes will be counted for purposes of
determining the presence of a quorum.
3
All valid proxies that are properly executed and submitted in time for the meeting will be
voted as specified in the proxy. If no specification is made, the proxies will be voted FOR the
election as directors of the nominees listed, FOR the proposal to ratify the appointment of
Deloitte & Touche LLP and FOR the proposal to ratify the Rights Agreement, as amended.
If any other matters requiring a shareholder vote properly come before the meeting, the
persons appointed as proxies will vote on such matters in accordance with their best judgment to
the extent permitted by law.
(1) ELECTION OF DIRECTORS
Nominees
Our Board of Directors proposes that the nine director-nominees named in the following summary
be elected as our directors, each to hold office until the 2010 Annual Meeting of Shareholders and
until his or her successor is elected and qualified. If a quorum is present, the nine nominees
receiving the greatest number of votes cast at the meeting or its adjournment will be elected.
Withheld votes will not be deemed votes cast in determining which nominees receive the greatest
number of votes cast and will therefore have no effect on the election.
All nominees for election have indicated their willingness to serve, if elected. If any of
them is unable or declines to serve as a director, the proxy holders intend to vote the proxies in
accordance with their best judgment for the election of another person nominated in accordance with
our Bylaws.
A brief summary of each nominees principal occupation and other information follows:
Peter Karmanos, Jr.
Mr. Karmanos, age 66, one of our founders, has served as a director since our inception in
April 1973, as our Chairman of the Board since November 1978 and as our Chief Executive Officer
since July 1987. Mr. Karmanos was our President from October 2003 to March 2008. Mr. Karmanos is
also a director of Taubman Centers, Inc. and Worthington Industries, Inc., serving on the
Compensation Committees of both boards.
Dennis W. Archer
Mr. Archer, age 67, has served as one of our directors since January 2002. Mr. Archer has been
a partner and Chairman of the law firm of Dickinson Wright PLLC since January 2002. The law firm
serves as counsel to us. Mr. Archer served as Mayor of the city of Detroit, Michigan from January
1994 through December 2001 and as an Associate Justice of the Supreme Court of the State of
Michigan from 1986 to 1990. Mr. Archer is a past President of the National League of Cities and the
American Bar Association and the former Chairman of the Detroit Regional Chamber. He is currently a
director of Johnson Controls, Inc., serving on their Compensation Committee, and Masco Corporation,
serving on their Audit Committee.
Gurminder S. Bedi
Mr. Bedi, age 61, has served as one of our directors since October 2002. Mr. Bedi is a private
investor. He served as Vice President of Ford Motor Company from October 1998 through his
retirement in December 2001. Mr. Bedi served at Ford Motor Company in a variety of other managerial
positions for more than 30 years. Mr. Bedi is a director of KEMET Corporation, serving on their
Audit and Compensation Committees, and Actuant Corporation, serving on their Compensation
Committee.
William O. Grabe
Mr. Grabe, age 71, has served as one of our directors since April 1992. Mr. Grabe is a
Managing Director of General Atlantic LLC, a private equity firm that provides capital for global
growth companies, and has been affiliated with General Atlantic LLC and its predecessors since
April 1992. Mr. Grabe is also a director of Infotech Enterprises Limited, Lenovo Group Limited
(serving on their Compensation Committee), Patni Computer Systems, Gartner, Inc. and AKQA Holdings,
Inc.
4
William R. Halling
Mr. Halling, age 70, has served as one of our directors since October 1996. He is a private
investor. Mr. Halling is also a director of Detroit Legal News, serving on their Audit and
Compensation Committees. He served as the President of The Detroit Economic Club from May 1995
through March 2002. Mr. Halling is a certified public accountant and is the Companys audit
committee financial expert, as defined by the rules and regulations of the Securities and Exchange
Commission (the SEC). Mr. Halling served as a member of the board of directors for KPMG LLP from
October 1990 through June 1993 and as Managing Partner of its Michigan/Toledo business unit from
August 1986 through June 1993.
Faye Alexander Nelson
Ms. Nelson, age 56, has served as one of our directors since October 2002. Ms. Nelson is
President and Chief Executive Officer of the Detroit Riverfront Conservancy, Inc., a non-profit
organization formed to develop and maintain the public space along Detroits riverfront. Prior to
joining the Conservancy in November 2003, Ms. Nelson was the Vice President of Government Affairs
for Wayne State University. Prior to joining Wayne State in February 1996, Ms. Nelson was employed
by Kmart Corporation for 15 years where she served as Corporate Attorney and Director for
Government Affairs. Ms. Nelson serves on the board of several community, civic and economic
development organizations, including the Michigan Economic Growth Authority, University of Detroit
Mercy and TechTown.
Glenda D. Price
Dr. Price, age 69, has served as one of our directors since October 2002. Dr. Price served as
the President of Marygrove College from 1998 through June 2006 and is currently President Emeritus.
Prior to assuming her responsibilities at Marygrove, Dr. Price was the Provost at Spelman College
in Atlanta. Dr. Price has held positions as faculty and administrator at several academic
institutions, as well as practicing as a clinical laboratory scientist. Dr. Price currently serves
on the board of several community, civic and educational organizations, including the Detroit
Symphony Orchestra, Focus: HOPE and the Michigan Colleges Foundation.
W. James Prowse
Mr. Prowse, age 66, has served as one of our directors since December 1986. Mr. Prowse has
been a private investor since he left the Company in 1999. He began his employment with us in 1984
and served as our Executive Vice President from February 1998 until March 1999. From January 1992
through January 1998, Mr. Prowse served as our Senior Vice President. Since November 2008, Mr.
Prowse has performed consulting and advisory services for the Company under an independent
contractor agreement. Please see the section titled Compensation Committee Interlocks and Insider
Participation for further discussion of Mr. Prowses independent contractor agreement.
G. Scott Romney
Mr. Romney, age 68, has served as one of our directors since January 1996. Mr. Romney has been
a partner at Honigman Miller Schwartz and Cohn LLP, a law firm, since 1977. The law firm serves as
counsel to us.
The Board of Directors unanimously recommends a vote FOR these nominees.
(2) RATIFICATION OF APPOINTMENT OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP (Deloitte) has acted as our independent registered public accounting
firm since fiscal 1991, and audited our consolidated financial statements for fiscal 2009. Subject
to the shareholders ratification, the Audit Committee has selected Deloitte to be our independent
auditors for the fiscal year ending March 31, 2010. Before appointing Deloitte as our independent
auditors to audit our books and accounts for the fiscal year ending March 31, 2010, the Audit
Committee carefully considered the firms qualifications as our independent auditors.
Deloitte is registered by the Public Company Accounting Oversight Board as a registered public
accounting firm.
5
Representatives from Deloitte are expected to be present at the 2009 Annual Meeting of
Shareholders and will have the opportunity to make a statement at the meeting if they desire to do
so. Their representatives will also be available to respond to appropriate questions.
As a matter of good corporate practice, we are asking our shareholders to ratify the
appointment of Deloitte as the Companys independent registered public accounting firm for fiscal
2010. The affirmative vote of a majority of the votes cast by the holders of shares of the
Companys common stock entitled to vote is required to ratify the appointment of the independent
registered public accounting firm. Abstentions and broker non-votes will be disregarded for
purposes of determining the number of votes counted toward this vote.
If the shareholders fail to ratify the appointment of Deloitte, the Audit Committee would
reconsider its appointment. Even if the appointment is ratified, the Audit Committee, in its
discretion, may direct the appointment of a different independent accounting firm at any time
during the year if the Audit Committee determines such a change would be in our shareholders best
interests.
The Board of Directors unanimously recommends a vote FOR ratifying the appointment of Deloitte
& Touche LLP as the independent registered public accounting firm to audit the Companys fiscal
2010 consolidated financial statements.
Independent Auditor Fees
The following table sets forth the fees billed by Deloitte for services rendered to the
Company for the last two fiscal years.
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Fiscal 2009 Fees |
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Fiscal 2008 Fees |
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Audit fees |
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2,398,677 |
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$ |
2,276,568 |
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Audit-related
fees |
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204,000 |
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Tax fees |
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918,799 |
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1,503,601 |
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All other fees |
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9,000 |
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7,500 |
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Total fees |
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3,530,476 |
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$ |
3,787,669 |
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Audit Fees
The aggregate audit fees billed by Deloitte were for professional services rendered for the
audit of our annual financial statements and the reviews of the interim financial statements
included in our Forms 10-Q. The amounts in the table include $540,000 and $578,250 in fiscal 2009
and 2008, respectively, for services relating to Deloittes audits of the effectiveness of internal
controls over financial reporting.
Audit-Related Fees
Audit-related services are assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and are not reported under Audit
Fees. In fiscal 2009, these fees were for professional services rendered for the financial
statement audit of our Covisint subsidiary.
Tax Fees
The aggregate fees billed by Deloitte for tax-related services were for professional services
for international, federal, state and local tax compliance, tax advice and tax planning.
All Other Fees
The aggregate fees billed by Deloitte for services other than those covered under the captions
Audit Fees, Audit-Related Fees and Tax Fees were for a subscription to their accounting research
database.
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Policy for Pre-Approval of Audit and Non-Audit Services
All audit services and all non-audit services our independent auditors are permitted to
perform for us under applicable federal securities regulations must be approved by the Audit
Committee pursuant to its pre-approval policy. As permitted by the applicable regulations, the
Committees policy utilizes a combination of specific pre-approval on a case-by-case basis of
individual engagements of the independent auditors and pre-approval of specified categories of
engagements. The policy provides that the duty to pre-approve may be delegated to one or more
designated members of the Audit Committee, with any such pre-approval reported to the Audit
Committee at its next regularly scheduled meeting.
All engagements of the independent auditor to perform any audit services and non-audit
services have been approved by the Committee in accordance with the policy. The policy has not been
waived in any instance.
In its review of non-audit services and its appointment of Deloitte to serve as the Companys
independent registered public accounting firm for fiscal 2010, the Audit Committee considered
whether the provision of such services is compatible with maintaining Deloittes independence. The
Audit Committee reviewed and considered the nature of the non-audit services provided by Deloitte
to Compuware management and determined the services were permitted under the rules and regulations
concerning auditor independence issued by the SEC to implement the Sarbanes-Oxley Act of 2002, as
well as the rules issued by the American Institute of Certified Public Accountants, and does not
consider the provision of such services by Deloitte to be incompatible with the maintenance of
Deloittes independence.
(3) RATIFICATION OF RIGHTS AGREEMENT
Background
The Company is a party to a Rights Agreement with Computershare Trust Company N.A. (formerly
known as Equiserve Trust Company, N.A.), as rights agent, dated as of October 25, 2000 (as amended
and as ratified by shareholders on August 22, 2006, the Rights Agreement). On February 2, 2009,
the Company amended the Rights Agreement to change the Final Expiration Date, as defined in the
Rights Agreement, from May 9, 2009 to May 9, 2012 and to provide that the Rights Agent
(Computershare Trust Company) acts only as agent for the Company and not the holder of the Rights.
The Boards decision to amend the Rights Agreement was not made in response to, or in anticipation
of, any acquisition proposal, and is not intended to prevent a non-coercive takeover bid from being
made for the Company or to keep management or the directors in office.
Shareholders are being asked to vote to ratify the Rights Agreement in connection with the
recent extension of its term in an effort to determine the viewpoint of shareholders on the
advisability of the Rights Agreement. Ratification of the Rights Agreement requires the affirmative
vote of a majority of the votes cast on the matter by the shareholders entitled to vote at the
Annual Meeting. Abstentions and broker non-votes will be disregarded for purposes of determining
the number of votes cast and will have no effect on the outcome of the vote. If the Rights
Agreement is not ratified by shareholders as proposed, the Board intends to reevaluate the Rights
Agreement and determine whether it believes the Rights Agreement in its current form continues to
be in the shareholders best interests. The Board may, as a result of such reevaluation and
determination, terminate the Rights Agreement, modify the terms of the Rights Agreement or allow
the Rights Agreement to remain in place.
Over the last 25 years, hundreds of corporations have adopted similar agreements as an
anti-takeover device in an attempt to defend against abusive or otherwise undesirable attempts to
acquire control, such as:
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taking control through open-market purchases without giving the shareholders a control
premium for their shares or the protections of the federal tender offer rules; |
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attempting to acquire the company at a time when the companys common stock is
undervalued and at a price that is less than the stocks intrinsic value; and |
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attempting, through a partial tender offer, to acquire a majority interest in the
company and then forcing the remaining public shareholders to accept cash and/or securities
of lesser value. |
The Rights Agreement discourages such attempts by making an acquisition of the Company that is not
approved by the Companys Board prohibitively expensive for the acquiror by significantly diluting
the acquirors stock interest in the Company and increasing the number of shares of common stock
that would have to be acquired. If the acquiror accumulates 20 percent or more of the Companys
common stock, each right granted under the Rights Agreement (Right) would permit the Right holder
to acquire newly issued shares of common stock of the Company or, in certain circumstances, the
acquiror at a price equal to half the market value for the $40.00 exercise price of the Rights. For
example, a shareholder who owned 100 common shares (with 100 Rights attached) at the time an
acquiror acquired 21 percent of the outstanding common stock, assuming a market value of the common
stock at that time of $10.00 per share, the shareholders Rights would permit the shareholder to
acquire a total of 800 shares of common stock ($40 exercise price divided by $5 (50 percent of the
$10 market value) times 100 Rights equals 800 shares) for $5.00 per share or a total purchase price
of $4,000. Rights held by the acquiror and by certain related persons and transferees would become
void. However, before an acquiror acquires more than 20 percent of the outstanding common stock,
the Rights may be redeemed by the Board or, in certain circumstances by the shareholders, or the
terms of the Rights may be modified by the Board to, among other things, exempt a particular
acquiror from the dilutive effects of the Rights. These provisions have the effect of encouraging
potential acquirors to negotiate with the Board before acquiring 20 percent or more of the common
stock so that the Board may redeem or modify the Rights as part of an acquisition without
triggering the dilutive effects of the Rights.
The Board believes that the Rights Agreement is in the best interests of the Companys
shareholders because it:
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Provides a way for the Board to defend shareholders against abusive tactics used to gain
control of the Company without paying all shareholders a fair premium, and to ensure that
all Company shareholders are treated fairly and equally in an acquisition of the Company. |
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Encourages anyone seeking to acquire control of the Company to negotiate in good faith
with the Board and gives the Board significant negotiating power on behalf of the
shareholders. This enables the Board to negotiate a fair premium for shareholders that is
consistent with the intrinsic value of the Company and to block any transaction by an
acquiror who is unwilling to pay a fair price (subject to the shareholders right to redeem
the Rights under certain circumstances described below). |
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Slows the process by which a potential acquiror may gain control of the Company, thereby
affording the Board additional time to evaluate a proposed transaction and, if necessary,
seek alternative transactions or implement other courses of action to maximize shareholder
value. |
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Provides the Board with the ability to run an effective auction of the Company or other
sale process, where the Board has decided to sell the Company, and to protect a negotiated
transaction from interlopers once the auction or other sale process is completed. |
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Reduces the likelihood that a potential acquiror who is unwilling to pay a sufficient
premium will attempt to acquire the Company by means of an open market accumulation, a
partial bid for the Company, a front-end loaded tender offer or other coercive or unfair
takeover tactics, since it limits the size of the position the acquiror may take without
the concurrence of the Board. |
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Does not prevent the making of unsolicited offers or the acquisition of the Company at a
full and fair price since the existence of the Rights Agreement does not eliminate the
Boards responsibility to consider acquisition proposals in a manner consistent with the
directors fiduciary duties to shareholders. |
Summary of Rights Agreement
The following is a summary of the material terms of the Rights Agreement. The statements below
are only a summary, and we refer you to the full text of the Rights Agreement in its original form,
which was filed as an exhibit to Form 8-A filed with the SEC on October 26, 2000; Amendments No. 1
and 2 to the Rights Agreement,
which were filed with the SEC as exhibits to the Companys Form 8-K on May 11, 2006; and
Amendment No. 3 which was filed with the SEC as an exhibit to the Companys Form 8-K on February 3,
2009. Each statement in this summary is qualified in its entirety by reference to these documents.
8
General
Currently, under the terms of the Rights Agreement, each share of common stock outstanding has
one Right attached to it, so that the purchase of a share of common stock is also a purchase of the
attached Right. Certificates representing the Companys common stock also represent the attached
Rights. The Rights are not currently exercisable or separately tradable.
After the Distribution Date, which is described below, each Right will become separately
tradable and initially will entitle the holder to purchase from the Company one two-thousandth of a
share of Series A Junior Participating Preferred Stock (the Preferred Shares) at a price of
$40.00 (the Purchase Price), subject to adjustment. Each one two-thousandth of a Preferred Share
has rights that are roughly equivalent to one share of common stock. If certain circumstances occur
as discussed below, the Rights would instead entitle their holders to purchase common stock of the
Company or an acquiror. The Rights will expire at the close of business on May 9, 2012 (the Final
Expiration Date), unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed as described below.
Events Causing Exercisability and Separate Transferability
A Distribution Date will occur and the Rights will become exercisable and separately
tradable upon the earlier of:
(1) the first public announcement that a person or group (other than the Company, any
subsidiary, or a benefit plan of the Company or its subsidiaries), has acquired, or obtained the
right to acquire, except under limited circumstances, beneficial ownership of 20 percent or more of
the outstanding common stock; or
(2) the close of business on the tenth business day (or such later date as the Companys Board
of Directors may determine) after the commencement of, or a public announcement of an intention to
commence (which tender offer is not terminated within such ten business days), a tender or exchange
offer the consummation of which would result in a person or group becoming an Acquiring Person (as
defined in the following).
Generally, a person or group whose acquisition of common stock causes a Distribution Date
pursuant to clause (1) above (including pursuant to the completion of a tender or exchange offer
described in (2)) is an Acquiring Person. As soon as practicable following the Distribution Date,
separate Right certificates will be mailed to holders of record of the common stock as of the close
of business on the Distribution Date.
Events Causing Adjustment of the Shares Acquirable Upon Exercise or the Purchase Price
Generally, if any person becomes an Acquiring Person, each holder of a Right, other than the
Acquiring Person (and any affiliates and certain transferees), will then have the right to receive
upon exercise and payment to the Company of the Purchase Price, instead of one-two thousandth of a
Preferred Share, that number of shares of Company common stock having an average market value equal
to two times the Purchase Price. Any Rights that are beneficially owned by any Acquiring Person (or
any affiliate or certain transferees) will be null and void. In other words, the Rights holders,
other than the Acquiring Person and certain others, may at that time purchase Company common stock
at a 50 percent discount.
Alternatively, in the event that, after the first public announcement that a person or group
has become an Acquiring Person, the Company is a party to a merger, statutory share exchange or
sale of more than 50 percent of the Companys assets or earning power in a transaction with an
Acquiring Person or certain specified related parties or in which all holders of Company common
stock are not treated alike, then each holder of a Right (except Rights that have been voided as
set forth previously) shall have the right to receive upon exercise and payment to the Company of
the Purchase Price, instead of one-two thousandth of a Preferred Share, common shares of the
acquiring or surviving company having an average market value equal to two times the Purchase
Price. In other words, the
Rights holders, other than the Acquiring Person and certain others, may at that time purchase
the acquiring or surviving companys common shares at a 50 percent discount.
9
The Purchase Price payable and the number of shares issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution upon the occurrence of specified events
affecting the Preferred Shares. The number of outstanding Rights and the Purchase Price are also
subject to adjustment in the event of a stock dividend on the common stock payable in common stock
or subdivisions or combinations of the common stock occurring before the Distribution Date.
Redemption of the Rights
At any time before a person becomes an Acquiring Person, the Board may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (the Redemption Price), payable in cash or
common stock. The Board may also redeem the Rights for a limited time after 60 days after the later
of the date a person or group becomes an Acquiring Person and the effective date of a registration
statement under the Securities Act of 1933 with respect to securities issuable upon exercise of the
Rights.
In addition, if the Company receives a Qualified Offer (as defined in the following
paragraph), the Rights may be redeemed by the shareholders if approved by them at a special meeting
of shareholders called to vote on a resolution accepting the Qualified Offer and to authorize the
redemption of the Rights pursuant to the provisions of the Agreement. The special meeting must be
held within 90 business days after the Company receives a request from shareholders to hold such a
meeting. If a resolution to redeem the Rights is approved at the special meeting (or if the special
meeting is not held on or before the 90th business day after receipt of the request for a meeting),
it will become effective immediately prior to the consummation of any Qualified Offer consummated
within 60 days after the earlier of the special meeting or the 90th business day after receipt of a
request for a special meeting of shareholders.
A Qualified Offer is a tender offer for all outstanding common stock not already
beneficially owned by the person making the offer that meets all of the following conditions:
the same per share price is offered for all shares, and such price per share is greater than
the highest closing price for the common stock during the 365 calendar day period immediately
preceding the date on which the offer is commenced, represents a reasonable premium above the
average of the closing prices for the five trading days immediately preceding the date on which the
offer is commenced, is at least 70 percent cash (with any non-cash consideration consisting of
common stock of the offeror), and is to be paid upon consummation of the offer;
if the consideration offered includes shares of common stock of the offeror, the offeror is
a publicly owned United States corporation and its common stock is traded on either the New York
Stock Exchange or The NASDAQ National Market (NASDAQ), no further stockholder approval is
required to issue such common stock, no other class of voting stock of the offeror is outstanding,
and the offeror shall permit the Companys investment banking firm and legal counsel to have access
to such offerors books, records, management, accountants and other advisers for the purpose of
permitting such investment banking firm and such legal counsel to conduct a due diligence review to
permit such investment banking firm to be able to render a fairness opinion with respect to the
consideration being offered;
the offer is accompanied by written financing commitments and/or the offeror has on hand
cash or cash equivalents, for the full amount of all financing necessary to consummate the offer
and follow-on merger;
the offer is subject to a non-waivable condition that a minimum of 90 percent of the
outstanding common stock (other than those owned by the offeror) will be tendered and not withdrawn
as of the offers expiration date;
the offer by its terms remains open for at least 60 business days and at least 10 business
days after the date of any special meeting of shareholders called under the redemption provisions,
plus 15 business days after any change in price or after any bona fide alternative offer for a
higher consideration is made;
10
the offer is accompanied by a written opinion of a nationally recognized investment banking
firm stating that the price to be paid to holders pursuant to the offer is fair and including any
written presentation of such firm showing the analysis and range of values underlying such
conclusion;
on or before the date the offer is commenced, such person makes an irrevocable written
commitment to the Company (1) to acquire, within five business days following completion of the
offer, all shares of common stock not beneficially owned by such person at the same cash price per
share as paid in the offer, (2) not to amend its offer to reduce the price or otherwise change the
terms in a way that is adverse to tendering shareholders, and (3) if the offer is not consummated,
that such person will not make another offer for the common stock within one year if at least 85
percent of the common stock not owned by such person has not been tendered; and
the offer is subject only to the conditions specified in the definition and usual and
customary terms and conditions, and is not subject to any financing, funding or similar condition,
nor to any condition relating to completion of or satisfaction with any due diligence or similar
investigation.
Amendments
The Rights Agreement may be amended by the Board before the Distribution Date without the
consent of the Right holders. After the Distribution Date, the Rights Agreement may be amended by
the Board to cure any ambiguity, to correct or supplement any provision which may be defective or
inconsistent with any other provision, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person), or, subject to certain
limitations, to shorten or lengthen any time period under the Rights Agreement (other than a time
period governing redemption at a time when the Rights are not redeemable).
The Board of Directors unanimously recommends a vote FOR the proposal to ratify the Rights
Agreement.
11
SECURITY OWNERSHIP OF MANAGEMENT AND MAJOR SHAREHOLDERS
The following table shows, as of the close of trading on June 30, 2009, the beneficial
ownership of our common shares by all directors and executive officers as a group who were serving
as such on that date, by each current director and nominee, by each executive officer and former
executive officer named in the Summary Compensation Table and by all persons known to us to
beneficially own more than five percent of our outstanding common shares. The number of shares
beneficially owned is determined according to SEC rules and is not necessarily indicative of
beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any
shares that the individual has sole or shared right to vote or dispose of and also any shares that
the individual has the right to acquire on June 30, 2009 or within 60 days thereafter through the
exercise of any stock option or other right. Except as otherwise noted, each beneficial owner
identified in the table below has sole voting and dispositive power for the shares shown in the
table.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of |
|
Percent |
Name of Beneficial Owner |
|
Beneficial Ownership(1) |
|
of Class |
Dennis W. Archer |
|
|
164,897 |
|
|
|
* |
|
Gurminder S. Bedi |
|
|
145,486 |
|
|
|
* |
|
Christian J. Bockhausen |
|
|
800,426 |
|
|
|
* |
|
Paul A. Czarnik |
|
|
112,195 |
|
|
|
* |
|
Laura L. Fournier |
|
|
926,642 |
(2) |
|
|
* |
|
William O. Grabe |
|
|
389,596 |
|
|
|
* |
|
William R. Halling |
|
|
253,883 |
|
|
|
* |
|
Peter Karmanos, Jr |
|
|
13,423,137 |
(3) |
|
|
5.4 |
% |
Denise A. Starr |
|
|
420,614 |
|
|
|
* |
|
Faye Alexander Nelson |
|
|
142,884 |
|
|
|
* |
|
Robert C. Paul |
|
|
549,389 |
(4) |
|
|
* |
|
Glenda D. Price |
|
|
140,141 |
|
|
|
* |
|
W. James Prowse |
|
|
232,922 |
|
|
|
* |
|
G. Scott Romney |
|
|
192,364 |
(5) |
|
|
* |
|
All current
executive officers and directors as a group (16 persons) |
|
|
17,309,207 |
(6) |
|
|
7.0 |
% |
BlackRock, Inc. |
|
|
18,207,774 |
(7) |
|
|
7.5 |
% |
Dodge & Cox |
|
|
47,393,677 |
(8) |
|
|
19.6 |
% |
The Vanguard Group, Inc. |
|
|
12,594,943 |
(9) |
|
|
5.2 |
% |
|
|
|
* |
|
Less than one percent |
|
(1) |
|
The column includes shares held for officers and directors through our Employee Stock
Ownership Plan and 401(k) Salary Reduction Arrangement (collectively, the ESOP) and shares
that the individual has the right to acquire on June 30, 2009 or within 60 days thereafter
pursuant to stock options or restricted stock unit (RSU) awards, as set forth below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP |
|
Option |
|
|
Name |
|
Shares |
|
Shares |
|
RSUs(a) |
Dennis W. Archer |
|
|
0 |
|
|
|
32,000 |
|
|
|
132,697 |
|
Gurminder S. Bedi |
|
|
0 |
|
|
|
10,000 |
|
|
|
109,401 |
|
Christian J. Bockhausen |
|
|
0 |
|
|
|
784,317 |
|
|
|
0 |
|
Paul A. Czarnik |
|
|
24,115 |
|
|
|
88,618 |
|
|
|
0 |
|
Laura L. Fournier |
|
|
20,442 |
|
|
|
824,450 |
|
|
|
0 |
|
William O. Grabe |
|
|
0 |
|
|
|
77,750 |
|
|
|
134,600 |
|
William R. Halling |
|
|
0 |
|
|
|
92,500 |
|
|
|
111,881 |
|
Peter Karmanos, Jr |
|
|
379,335 |
|
|
|
4,824,103 |
|
|
|
0 |
|
Denise A. Starr |
|
|
403 |
|
|
|
418,970 |
|
|
|
0 |
|
Faye Alexander Nelson |
|
|
0 |
|
|
|
10,000 |
|
|
|
125,154 |
|
Robert C. Paul |
|
|
69 |
|
|
|
543,880 |
|
|
|
0 |
|
Glenda D. Price |
|
|
0 |
|
|
|
7,500 |
|
|
|
115,470 |
|
W. James Prowse |
|
|
0 |
|
|
|
75,000 |
|
|
|
111,881 |
|
G. Scott Romney |
|
|
0 |
|
|
|
53,696 |
|
|
|
111,881 |
|
All current
executive officers and directors as a group |
|
|
425,351 |
|
|
|
7,271,990 |
|
|
|
952,965 |
|
12
|
|
|
(a) |
|
Restricted Stock Units awarded as a component of Director compensation are 100%
vested and, under Settlement Deferral Elections executed by each Director, will be payable
in common stock within 30 days after the date the Director ceases to be a member of the
Board. |
|
(2) |
|
Excludes 39,370 unvested RSUs awarded in November 6, 2008 to Ms. Fournier which vest over a
five year period as follows: 50 percent on November 6, 2011, 25 percent on November 6, 2012
and 25 percent on November 6, 2013, or immediately upon death, disability or change in
control. |
|
(3) |
|
Includes: (a) 2,000,000 shares held by Mr. Karmanos, for which Mr. Karmanos has no
dispositive power and which are pledged subject to a forward purchase contract maturing March
2011; (b) 210,721 shares owned by Mr. Karmanos trusts, for which Mr. Karmanos has shared
dispositive power for 47,272 of the 210,721 shares; and (c) 6,008,978 shares held by Mr.
Karmanos partnerships, for which Mr. Karmanos has shared voting power, 2,008,978 of the
6,008,978 shares for which Mr. Karmanos has shared dispositive power and 4,000,000 shares for
which Mr. Karmanos has no dispositive power and which are pledged subject to a forward
purchase contract maturing March 2011. Excludes: (a) 104,986 unvested RSUs awarded in November
6, 2008 to Mr. Karmanos which vest over a five year period as follows: 50 percent on November
6, 2011, 25 percent on November 6, 2012 and 25 percent on November 6, 2013, or immediately
upon death, disability or change in control and (b) 408,504 shares owned by Mr. Karmanos
wife, for which Mr. Karmanos has no voting or dispositive power and disclaims beneficial
ownership. Mr. Karmanos address is Compuware Corporation, One Campus Martius, Detroit,
Michigan 48226-5099. |
|
(4) |
|
Excludes 48,118 unvested RSUs awarded in November 6, 2008 to Mr. Paul which vest over a five
year period as follows: 50 percent on November 6, 2011, 25 percent on November 6, 2012 and 25
percent on November 6, 2013, or immediately upon death, disability or change in control. |
|
(5) |
|
Includes 3,000 shares owned by Mr. Romneys wife, for which Mr. Romney has no voting or
dispositive power. |
|
(6) |
|
See notes (2), (3), (4) and (5) for information on shares for which persons included in the
group do not currently have sole voting and dispositive power. |
|
(7) |
|
Based solely on a Schedule 13G filed by BlackRock, Inc. with the SEC on February 10, 2009 on
behalf of its investment advisory subsidiaries BlackRock Advisors LLC, BlackRock Asset
Management U.K. Limited, BlackRock Financial Management, Inc., BlackRock Investment
Management, LLC, BlackRock (Channel Islands) Ltd, BlackRock (Netherlands) B.V., BlackRock Fund
Managers Ltd and BlackRock Investment Management UK Ltd, disclosing ownership as of December
31, 2008. The address of BlackRock and such subsidiaries is 40 East 52nd Street, New York, New
York 10022. According to the Schedule 13G, BlackRock, Inc. has shared voting and shared
dispositive power for 18,207,774 shares. BlackRock Inc. is a parent holding company for these
investment advisory subsidiaries and disclaims ownership of all 18,207,774 shares held by
these subsidiaries. |
|
(8) |
|
Based solely on a Schedule 13G/A, filed by Dodge & Cox with the SEC on February 11, 2009
disclosing ownership as of December 31, 2008. Dodge & Coxs address is 555 California Street,
40th Floor, San Francisco, California 94104. According to the Schedule 13G/A, Dodge & Cox has
sole voting power for 43,749,677 shares, shared voting power for 134,400 shares and sole
dispositive power for 47,393,677 shares. |
|
(9) |
|
Based solely on a Schedule 13G, filed by The Vanguard Group, Inc. with the SEC on February
13, 2009 disclosing ownership as of December 31, 2008. The Vanguard Group, Inc.s address is
100 Vanguard Boulevard, Malvern, Pennsylvania 19355. The Vanguard Group, Inc. has sole voting
power for 283,452 shares and sole dispositive power for 12,594,943 shares. Vanguard Fiduciary
Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner
of 283,452 shares of the common stock as a result of serving as investment manager of
collective trust accounts in which these shares are held and directing the voting of these
shares. |
13
CORPORATE GOVERNANCE
We are committed to sound corporate governance principles. Having such principles is essential
to maintaining our integrity in the marketplace and ensuring that we are managed for the long-term
benefit of our shareholders. Our business affairs are overseen by our Board of Directors. Our Board
strives to promote the success and continuity of our business through the selection of a qualified
management team. It is also responsible to make certain that our activities are conducted
responsibly and ethically.
The Boards committee charters provide the framework under which the committees are governed.
The Board has adopted charters for each of its standing committees, including the Audit Committee,
the Compensation Committee, the Nominating/Governance Committee and the Diversity/Community and
Shareholder Relations Committee. The Board has also adopted a Code of Conduct that applies to all
of our employees, including our chief executive officer and chief financial officer/chief
accounting officer, and a similar Code of Conduct for non-employee directors. The Codes of Conduct
identify those areas in which we must act in accordance with law or regulation, and also establish
the responsibilities, policies and guiding principles that will assist us in our commitment to
adhere to the highest ethical standards and to conduct our business with the highest level of
integrity. Our Codes of Conduct and Board committee charters are posted in the Corporate Governance
section of the Investor Relations page at www.compuware.com. To the extent any amendment is made
to the Codes of Conduct that requires disclosure under applicable SEC rules, information regarding
such amendment will be posted on the Companys website.
Board of Directors
Director Independence
Our Board has determined that Dennis W. Archer, Gurminder S. Bedi, William O. Grabe, William
R. Halling, Dr. Glenda D. Price and G. Scott Romney meet the independence requirements of NASDAQ.
The Company has made charitable contributions in amounts the Company deems immaterial to
organizations with which certain of our directors have affiliations. The Company also engages
occasionally in immaterial transactions in the ordinary course of business for the sale of the
Companys products and services to, or the purchase of services from, entities affiliated with the
directors on the same terms offered to other customers or clients. In addition, the Company employs
the adult son of Mr. Romney in a position that is consistent with the normal course of conducting
business and at a salary that is competitive and commensurate with his responsibilities. The Board
determined that none of these transactions or relationships would interfere with the exercise of
independent judgment by these directors in carrying out their responsibilities.
Meetings; Presiding Director
Our Board of Directors met four times in fiscal 2009. The Board strongly encourages all
directors to attend our Annual Meeting of Shareholders. All of our directors attended last years
Annual Meeting of Shareholders. The independent directors have selected Mr. Bedi to preside over
executive sessions of the Board (without the CEO or other employees present).
Communications With the Board
Shareholders may communicate with the Board of Directors or any individual director by sending
a letter to Compuware Corporation, One Campus Martius, Detroit, Michigan 48226-5099, Attn:
Secretary (or any individual director). The Secretary will receive the correspondence and forward
it to the presiding director or to any individual director or directors to whom the communication
is addressed. The Secretary is authorized to review, sort and summarize all communications received
prior to their presentation to the presiding director or to whichever director(s) the communication
is addressed. If such communications are not a proper matter for Board attention, the Secretary is
authorized to direct such communication to the appropriate department. For example, shareholder
requests for materials or information will be directed to investor relations personnel.
14
Board Committees and Their Functions
Standing committees of the Board include an Audit Committee, a Compensation Committee, a
Nominating/Governance Committee, a Diversity/Community/Shareholder Relations Committee and an
Executive Committee.
Board Committee Configuration
The table below illustrates board committee membership, meeting frequency and attendance for
fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board and |
|
|
|
|
|
|
|
|
|
Diversity/ |
|
|
|
|
|
|
Committee |
|
|
|
|
|
|
|
|
|
Community/ |
|
|
|
|
|
|
Meeting |
|
|
|
|
|
|
|
|
|
Shareholder |
|
Nominating/ |
|
|
Name |
|
Attendance |
|
Audit |
|
Compensation |
|
Relations |
|
Governance |
|
Executive |
Peter Karmanos, Jr. |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ü |
|
Dennis W. Archer |
|
|
100 |
% |
|
|
|
|
|
|
ü |
|
|
Chair |
|
|
|
|
|
|
ü |
|
Gurminder S. Bedi |
|
|
100 |
% |
|
|
ü |
|
|
|
|
|
|
|
|
|
|
Chair |
|
|
ü |
|
William O. Grabe |
|
|
90 |
% |
|
|
|
|
|
Chair |
|
|
|
|
|
|
ü |
|
|
|
|
|
William R. Halling |
|
|
100 |
% |
|
Chair |
|
|
|
|
|
|
|
|
|
|
ü |
|
|
|
|
|
Faye Alexander Nelson |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
ü |
|
|
|
|
|
|
|
|
|
Glenda D. Price, PhD |
|
|
100 |
% |
|
|
ü |
|
|
|
|
|
|
|
ü |
|
|
|
|
|
|
|
|
|
W. James Prowse |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ü |
|
|
|
ü |
|
G. Scott Romney |
|
|
100 |
% |
|
|
|
|
|
|
ü |
|
|
|
ü |
|
|
|
|
|
|
|
|
|
Number of Committee
Meetings held in
2009 |
|
|
|
|
|
|
4 |
|
|
|
5 |
|
|
|
3 |
|
|
|
3 |
|
|
|
0 |
|
Audit Committee
From April to November 2008, the Audit Committee consisted of Mr. Halling, Dr. Price and Mr.
Prowse. Mr. Prowse resigned from the Committee in November 2008 (see Compensation Committee
Interlocks and Insider Participation) and was replaced by Mr. Bedi. The Board determined that all
the current members of our Audit Committee are independent as required by the rules of the SEC and
the listing standards of NASDAQ for purposes of Audit Committee membership. In addition, the Board
of Directors has determined that all members of the Audit Committee are financially literate, and
that Mr. Halling qualifies as an audit committee financial expert, as defined by the rules and
regulations of the SEC.
The Audit Committee is organized and conducts its business pursuant to a written charter
adopted by the Board of Directors. The Audit Committees principal responsibilities include: (a)
selection of our independent registered public accounting firm; (b) overseeing our accounting and
financial reporting processes and the audit of our financial statements; and (c) assisting the
Board in overseeing: (i) the integrity of our financial statements, (ii) our compliance with legal
and regulatory requirements, (iii) the independent auditors qualifications and independence, (iv)
the performance of our internal audit function and independent auditor, and (v) our system of
disclosure controls and procedures as well as our system of internal controls regarding finance,
accounting, legal compliance and ethics. The Audit Committee also provides an avenue for
communication between internal auditors, the independent registered public accountants and the
Board. See the Report of the Audit Committee below.
Report of the Audit Committee
The information contained in this report shall not be deemed to be soliciting material or
filed with the SEC or subject to the liabilities of Section 18 of the Securities and Exchange Act
of 1934, as amended (the Exchange Act), except to the extent that we specifically incorporate it
by reference into a document filed under the Securities Act of 1933, as amended (the Securities
Act) or the Exchange Act.
Our management is responsible for the preparation, presentation and integrity of our financial
statements. Management selects the accounting and financial reporting principles used to prepare
the financial statements. Management also designs the internal controls and procedures to assure
compliance with accounting and reporting standards and applicable laws and regulations. The
independent registered public accountants are responsible for auditing our financial statements,
expressing an opinion as to their conformity with generally accepted accounting principles,
examining the Companys system of internal controls and expressing an opinion on those controls.
The Committees responsibility is generally to monitor and oversee these processes.
15
In performance of its oversight function, our Audit Committee has:
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reviewed and discussed our audited financial statements for the fiscal year ended March
31, 2009 with our management and our independent registered public accountants; |
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discussed with our independent registered public accountants the matters required to be
discussed by SAS 114 (Codification of Statements on Auditing Standards, AU 380), as it has
been modified or supplemented; |
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received the written disclosures and the letter from our independent registered public
accountants required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountants communications with the audit committee
concerning independence; and |
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discussed with our independent registered public accountants their independence. |
Based on the review and discussions described above in this section, our Audit Committee
recommended to our Board of Directors that the audited financial statements for the fiscal year
ended March 31, 2009 be included in our Annual Report on Form 10-K for the fiscal year ended March
31, 2009 for filing with the SEC.
By the Audit Committee,
William R. Halling
Glenda D. Price
Gurminder S. Bedi
Compensation Committee
From April 2008 through November 2008, the Compensation Committee consisted of Messrs. Grabe,
Bedi and Prowse. In November 2008, Messrs. Bedi and Prowse resigned from the Committee and were
replaced by Messrs. Archer and Romney. The Board determined that the current members of our
Compensation Committee are independent as required by the rules of the listing standards of NASDAQ.
The Compensation Committee is organized and conducts its business pursuant to a written charter
adopted by the Board of Directors. The Compensation Committees principal responsibilities include
determining and recommending to the full Board for its approval compensation programs that are
effective in attracting and retaining key executives, link pay to performance and are administered
fairly and in the shareholders interests. This includes making recommendations regarding executive
compensation policy, administering Board- and shareholder-approved plans, approving benefit
programs and making decisions for the Board with respect to the compensation of officers and key
executives. The Compensation Committee is also responsible for reviewing and making recommendations
to the Board regarding director compensation. The Committee periodically reviews market data and
evaluates director compensation based on industry analyses. The Committee also analyzes whether
director compensation should include a long-term incentive component based on a number of factors
including the Companys performance, a comparison of similar awards to directors at comparable
companies, and awards made to directors in prior years. Please see section titled Compensation
Discussion and Analysis for a further discussion of the Committees activities and
responsibilities.
Nominating/Governance Committee
For fiscal 2009, the Nominating/Governance Committee consisted of Messrs. Bedi, Grabe, Halling
and Prowse. The Board determined that members Messrs. Bedi, Grabe and Halling of our
Nominating/Governance Committee are independent under the listing standards of NASDAQ. The
Nominating/Governance Committee is organized and conducts its business pursuant to a written
charter adopted by the Board of Directors. The Committee makes recommendations to the independent
members of the Board of Directors on nominees to the Board, including nominees submitted by
shareholders. The Committee is also responsible for determining that adequate information is
available to the Board to determine whether the Companys business is managed with propriety and in
the best interest of shareholders, and for implementing a board structure that is adequate to
process and respond to this information. The members of the Nominating/Governance Committee are
also designated as the Qualified Legal Compliance Committee prescribed by the Standards of
Professional Conduct for Attorneys Appearing and Practicing Before the SEC in the Representation of
an Issuer.
16
Consideration of Director Nominees. In evaluating and determining whether to recommend a
person as a candidate for election as a director, the Board considers qualifications, such
as relevant management and/or industry experience; high personal and professional ethics,
integrity and values; ability to vigorously support the Companys diversity initiatives; a
commitment to representing the long-term interests of our shareholders as a whole;
independence under the rules of the SEC and the listing standards of NASDAQ; and an ability
and willingness to devote the required amount of time to carry out the duties and
responsibilities of directors.
Identifying Director Nominees. The Board may employ a variety of methods for identifying and
evaluating director nominees. The Board regularly assesses the size of the Board, the need
for particular expertise on the Board and whether any vacancies are expected due to
retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise,
the Board would consider various potential candidates for director that may come to the
Boards attention through current Board members, professional search firms, shareholders or
other persons. These candidates would be evaluated at regular or special meetings of the
Board, and may be considered at any point during the year.
Consideration of Candidates Recommended by Shareholders. The Committee will consider
candidates recommended by the shareholders, when nominations are properly submitted, under
the criteria summarized above in Consideration of Director Nominees. The deadlines and
procedures for shareholder submissions of director-nominees are described below under
Shareholder Proposals and Director Nominations for 2010 Annual Meeting of Shareholders.
These include, without limitation, submission to the Company of specified information
relating to such candidate including information required to be disclosed in solicitations
of proxies for election of directors, such candidates written consent to being named in the
proxy statement as a nominee and to serving as a director of the Company if elected, as well
as specified information about the shareholder making the submission. Following verification
of the shareholder status of persons recommending candidates, the Committee will make an
initial analysis of the qualifications of any candidate recommended by shareholders or
others according to the criteria summarized above to determine whether the candidate is
qualified for service on the Board before deciding to undertake a complete evaluation of the
candidate. If a shareholder or professional search firm in connection with the nomination of
a director candidate provides any materials, such materials would be forwarded to the Board
as part of its review. Other than the verification of compliance with procedures and
shareholder status, and the initial analysis performed by the Board, the Board would treat a
potential candidate nominated by a shareholder in the same fashion as any other potential
candidate during the review process.
Diversity/Community/Shareholder Relations Committee
During fiscal 2009, the Diversity/Community/Shareholder Relations Committee consisted of Mr.
Archer, Ms. Nelson, Dr. Price and Mr. Romney. The Diversity/Community/Shareholder Relations
Committee makes recommendations to assist the Company in achieving its initiatives regarding
diversity, community and shareholder relations. The major objectives of the diversity initiatives
are to: (a) create an inclusive environment that recognizes, understands, utilizes and values the
contributions of all employees; (b) advance efforts that will attract, develop and retain a diverse
slate of employees and candidates; (c) enhance affirmative opportunities to attract diverse
vendors; (d) build relationships with organizations that are diverse; and (e) develop strategies to
assist with the diversity initiatives.
The shareholder relations objectives of the Committee are to oversee the Companys shareholder
relations policies and programs so that the Companys communications with shareholders are timely,
relevant, accurate and, with the advice of legal counsel, meet all legal obligations to investors.
The Committee provides strategic oversight for shareholder communications and related processes so
that investors and potential investors have access to relevant information about the Companys
vision, mission and operating results.
Executive Committee
During fiscal 2009, the Executive Committee consisted of Messrs. Archer, Bedi, Karmanos and
Prowse. The
Executive Committee undertakes certain tasks as may be directed by the Board from time to
time, according to a written charter adopted by the Board.
17
Compensation of Directors
Standard Compensation Arrangement
For fiscal 2009, each of the non-employee directors received an annual retainer of $40,000. In
addition, each non-employee director who is serving as the chairperson of a Board committee other
than the Audit Committee receives an additional annual retainer of $5,000. The annual retainer for
the chair of the Audit Committee was $10,000. Non-employee directors receive $2,500 for attending
each Board meeting and $1,500 for attending each committee meeting. We also reimburse non-employee
directors for out-of-pocket expenses they incur for education and for attending Board and committee
meetings.
Directors were also permitted to defer the receipt of all or a portion of their cash
compensation if they had made a written election to do so prior to the end of the previous calendar
year pursuant to the 2005 Non-Employee Directors Deferred Compensation Plan (the Deferred
Compensation Plan). Deferrals were made in the form of cash or deferred compensation units
(DCUs), with each DCU representing one share of common stock. The number of DCUs allocated to a
directors account was calculated by dividing the amount of fees the director elected to defer into
DCUs by the fair market value of a share of Company common stock on the date the fees otherwise
would have been paid. The value of DCUs in a directors account (each DCU having a value equal to
the fair market value of one share of the Companys common stock at the time of distribution), plus
interest accrued on the cash in the account at the U.S. federal funds rate, would be distributed to
the director in a lump sum or according to a schedule, as elected by the director, beginning on the
earliest of the directors death, the directors disability, a change in control of the Company,
the directors separation from service or a specified date elected by the director. Participating
directors were also permitted to make withdrawals in the event of an unforeseeable emergency that
qualifies as a permissible distribution event for purposes of Section 409A of the Internal Revenue
Code (the Code).
In addition to the cash compensation described above, directors also received automatic
quarterly phantom stock unit grants valued at $35,000 each under the 2002 Directors Phantom Stock
Plan (the Phantom Plan). The number of phantom stock units (PSUs) allocated to a directors
Phantom Plan account was calculated by dividing the value of the award by the fair market value of
a share of Company common stock on the date the award was granted. A PSU gave the non-employee
director the right to receive the fair market value of a share of the Companys common stock in
cash upon vesting, which would occur on the date the non-employee director ceased to be a member of
the Board, unless removed from the Board for cause.
Revised Standard Compensation Arrangement
On November 6, 2008, the Board revised the standard compensation arrangement for non-employee
directors to eliminate the need for liability accounting treatment associated with DCUs and PSUs
by:
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Replacing automatic quarterly grants of PSUs under the Phantom Plan payable in cash with
an automatic grant on each April 1 of $140,000 of RSUs (Annual RSUs) under the 2007
Long-Term Incentive Plan (LTIP) which may be settled only in common shares; |
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Replacing the final $35,000 phantom stock unit award that would have been granted for
the fourth quarter of fiscal 2009 with a one-time grant of RSUs (Q4 RSU) under the LTIP
with equivalent value and which may be settled only in common shares; |
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Exchanging and cancelling all outstanding DCUs and PSUs on January 1, 2009 which were
payable in cash or common stock for RSUs under the LTIP with equivalent value and which may
be settled only in common shares; and |
18
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|
Modifying the Deferred Compensation Plan to provide that deferrals of cash compensation
beginning January 1, 2009 may be made only in the form of RSUs (Deferred Compensation
RSUs) under the LTIP which may be settled only in common shares. |
The Q4 RSU and each Annual RSU will vest and become payable at the rate of one common share
per unit on the earliest of (i) the date before the first annual shareholders meeting following the
grant date, (ii) the date the director ceases to be a member of the Board due to death or
disability, or (iii) a change in control of the Company, in each case unless the director has
previously elected to defer receipt of the shares until the director ceases to be a member of the
Board. The holder is entitled to receive additional RSUs with a value equal to any dividends
declared and paid by the Company prior to issuance of the related shares upon settlement (Dividend
Equivalent Rights). RSUs that are not vested when the director ceases to be a member of the Board
for any other reason immediately terminate and are forfeited.
The RSUs awarded on January 1, 2009 to replace the prior DCUs and PSUs were 100% vested on the
award date and will be payable at the rate of one common share per unit on the date the director
ceases to be a member of the Board (unless removed for cause).
Deferred Compensation RSUs are 100% vested on the award date and will be payable at the rate
of one common share per unit on the date the director ceases to be a member of the Board (unless
removed for cause) or upon a change in control of the Company. If approved by the Compensation
Committee, participating directors may continue to receive an earlier settlement in the event of an
unforeseeable emergency that qualifies as a permissible distribution event for purposes of
Section 409A of the Code. These RSUs also have Dividend Equivalent Rights.
RSUs are not transferable and holders do not have voting or other rights of shareholders until
the underlying shares are issued.
Director Compensation Table
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Fees Earned or |
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All Other |
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Paid in Cash |
|
Stock Awards |
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Option Awards |
|
Compensation |
|
Total |
Name |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($) |
Dennis W. Archer |
|
|
61,000 |
|
|
|
49,891 |
|
|
|
9,502 |
|
|
|
|
|
|
|
120,393 |
|
Gurminder S. Bedi |
|
|
62,500 |
|
|
|
51,355 |
|
|
|
9,502 |
|
|
|
|
|
|
|
123,357 |
|
William O. Grabe |
|
|
63,000 |
|
|
|
49,891 |
|
|
|
9,502 |
|
|
|
|
|
|
|
122,393 |
|
William R. Halling |
|
|
70,500 |
|
|
|
49,891 |
|
|
|
9,502 |
|
|
|
|
|
|
|
129,893 |
|
Faye Alexander Nelson |
|
|
54,500 |
|
|
|
51,355 |
|
|
|
9,502 |
|
|
|
|
|
|
|
115,357 |
|
Glenda D. Price |
|
|
60,500 |
|
|
|
51,355 |
|
|
|
9,502 |
|
|
|
|
|
|
|
121,357 |
|
W. James Prowse |
|
|
70,000 |
|
|
|
49,891 |
|
|
|
9,502 |
|
|
|
151,250 |
|
|
|
280,643 |
|
G. Scott Romney |
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|
56,000 |
|
|
|
49,891 |
|
|
|
9,502 |
|
|
|
|
|
|
|
115,393 |
|
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(1) |
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Includes amounts converted to DCUs and RSUs pursuant to the Deferred Compensation Plan.
The table below shows, for each director who has deferred compensation under this
arrangement, the number of DCUs at the beginning of the fiscal year, the number of DCUs and
RSUs issued during the fiscal year, the number of DCUs forfeited during the fiscal year,
the amount of compensation deferred, and the number and value of RSUs held at fiscal
year-end. |
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|
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DCUs |
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Deferred |
|
Deferred |
|
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|
|
DCU |
|
DCUs |
|
Exchanged |
|
RSUs |
|
Compensation |
|
Compensation |
|
RSU |
|
|
Balance |
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Issued in |
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for RSUs |
|
Issued |
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Value at |
|
RSU Balance |
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Value |
|
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as of |
|
Q1 to Q3 |
|
as of |
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in Q4 |
|
Issuance in |
|
as of |
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as of |
|
|
3/31/2008 |
|
Fiscal 2009 |
|
1/1/2009 |
|
Fiscal 2009 |
|
Fiscal 2009 |
|
3/31/2009 |
|
03/31/2009 |
Name |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
(#) |
|
($) |
Dennis W. Archer |
|
|
9,298 |
|
|
|
5,449 |
|
|
|
14,747 |
|
|
|
|
|
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|
40,000 |
|
|
|
14,747 |
|
|
|
97,183 |
|
William O. Grabe |
|
|
7,431 |
|
|
|
7,683 |
|
|
|
15,114 |
|
|
|
778 |
|
|
|
63,000 |
|
|
|
15,892 |
|
|
|
104,728 |
|
Faye Alexander Nelson |
|
|
4,235 |
|
|
|
5,449 |
|
|
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9,684 |
|
|
|
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40,000 |
|
|
|
9,684 |
|
|
|
63,818 |
|
19
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(2) |
|
Amounts shown are the expense incurred by the Company during fiscal 2009 relating to
the PSU awards granted in fiscal 2009 and in previous fiscal years and the Q4 RSU award
granted on January 1, 2009, determined in accordance with the Statement of Financial
Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R). The
assumptions we used to calculate these amounts are
discussed in Notes 1, 14 and 15 to our audited consolidated financial statements included
in our Annual Report on Form 10-K for the year ended March 31, 2009. The table below shows
the number of PSUs held by each director at the end of fiscal 2008, the number of PSUs and
RSUs awarded during fiscal 2009, the grant date fair value of awards made during fiscal
2009, and the number and value of RSUs held at year-end by each director. (Some rows do not
total due to fractional shares.) |
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|
|
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|
|
PSUs |
|
PSUs |
|
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|
|
Grant Date |
|
|
|
|
|
|
PSU |
|
awarded |
|
Exchanged |
|
|
|
|
|
Fair Value |
|
RSU |
|
RSU |
|
|
Balance |
|
in Q1 to |
|
For RSUs |
|
Q4 RSU |
|
of Units |
|
Balance |
|
Value |
|
|
as of |
|
Q3 Fiscal |
|
as of |
|
issued on |
|
awarded in |
|
as of |
|
as of |
|
|
3/31/08 |
|
2009 |
|
1/1/2009 |
|
1/1/09 |
|
FY09 |
|
3/31/09 |
|
3/31/09 |
Name |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
(#) |
|
($) |
Dennis W. Archer |
|
|
73,475 |
|
|
|
11,977 |
|
|
|
85,452 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
90,637 |
|
|
|
597,298 |
|
Gurminder S. Bedi |
|
|
70,994 |
|
|
|
11,977 |
|
|
|
82,972 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
88,157 |
|
|
|
580,955 |
|
William O. Grabe |
|
|
73,475 |
|
|
|
11,977 |
|
|
|
85,452 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
90,637 |
|
|
|
597,298 |
|
William R. Halling |
|
|
73,475 |
|
|
|
11,977 |
|
|
|
85,452 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
90,637 |
|
|
|
597,298 |
|
Faye Alexander
Nelson |
|
|
70,994 |
|
|
|
11,977 |
|
|
|
82,972 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
88,157 |
|
|
|
580,955 |
|
Glenda D. Price |
|
|
70,994 |
|
|
|
11,977 |
|
|
|
82,972 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
88,157 |
|
|
|
580,955 |
|
W. James Prowse |
|
|
73,475 |
|
|
|
11,977 |
|
|
|
85,452 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
90,637 |
|
|
|
597,298 |
|
G. Scott Romney |
|
|
73,475 |
|
|
|
11,977 |
|
|
|
85,452 |
|
|
|
5,185 |
|
|
|
140,000 |
|
|
|
90,637 |
|
|
|
597,298 |
|
|
|
|
(3) |
|
This column reflects the amount expensed by the Company in fiscal 2009 under SFAS 123R
with respect to options. There were no options granted to non-employee directors during
fiscal 2009. The amount expensed is based on assumptions set forth in Note 1 to our audited
consolidated financial statements included in our Annual Report on Form 10-K for the fiscal
year ended March 31, 2009. The directors have no assurance that they will realize the
amounts reflected in this table. Actual gains, if any, on stock option exercises will
depend on overall market conditions and the future performance of the Company and its
common stock. The table below shows the number of shares underlying the options held by
each director at March 31, 2009. |
|
|
|
|
|
|
|
Aggregate Number of |
|
|
Stock Options |
|
|
Outstanding at 3/31/09 |
Name |
|
(#) |
Dennis W. Archer |
|
|
32,000 |
|
Gurminder S. Bedi |
|
|
10,000 |
|
William O. Grabe |
|
|
121,250 |
|
William R. Halling |
|
|
138,500 |
|
Faye Alexander Nelson |
|
|
10,000 |
|
Glenda D. Price |
|
|
7,500 |
|
W. James Prowse |
|
|
265,670 |
|
G. Scott Romney |
|
|
97,696 |
|
|
|
|
(4) |
|
For Mr. Prowse, the amount represents the fees paid to Mr. Prowse for consulting and
advisory services provided to the Company under an independent contractor agreement dated
November 17, 2008. See the section titled Compensation Committee Interlocks and Insider
Participation for further discussion of Mr. Prowses independent contractor agreement. |
Equity Ownership Guidelines
Beginning in fiscal 2006, the Board determined that it would be in the best interest of the
Companys shareholders for the non-employee directors to have a substantial investment in our
common stock. As a result, the non-employee directors are required to hold or purchase a minimum
value of our common stock as follows: $40,000 in fiscal 2006; $80,000 in 2007; $120,000 in 2008;
$160,000 in 2009; and $200,000 in 2010. Non-employee directors would be expected to hold such
shares during the remainder of their term of office. RSUs are taken into account in determining
whether the director satisfies the above minimum ownership requirements. The date for determining
compliance with the policy would be the last day of the trading window under the Companys insider
trading policy that precedes the end of the first fiscal quarter of the subsequent fiscal year (for
fiscal 2009, this determination date is June 16, 2009). The units are valued for this purpose based
on the market value of the common stock on the determination date. As of the determination date for
fiscal 2009, all of the directors exceeded the $160,000 minimum ownership requirement.
20
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Overview of Compensation Philosophy and Programs
Our compensation programs are designed to support the Companys business goals, to promote
short- and long-term growth, and to attract, retain, and motivate key talent. This section of the
proxy statement explains how our compensation programs are established and how they work with
respect to our CEO, CFO and the other executive officers named in the Summary Compensation Table
and the other tables that follow, whom we refer to collectively as our Named Executive Officers
or NEOs. Unless otherwise noted, references to our NEOs exclude Mr. Bockhausen, the former CTO,
who passed away in December 2008. Compensation paid to the NEOs has four components:
|
1. |
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base salary; |
|
|
2. |
|
annual performance cash bonus awards; |
|
|
3. |
|
long-term performance incentives; and |
|
|
4. |
|
employee benefits and perquisites. |
Our compensation philosophy emphasizes performance-based compensation. This approach spans all
of our employees, but is especially applicable to the NEOs. We believe that our NEOs and other key
employees should have a significant portion of their potential annual cash compensation tied to our
profitability, sales and revenue goals. Additionally, we seek to align the ability to earn
long-term incentives directly with that of our shareholders through the use of equity-based
incentives. Our approach to executive base salaries is to ensure they are not only competitive with
those found at companies similar to Compuware, but also are effective in attracting and retaining
high-performing employees capable of leading us to higher levels of profitability and shareholder
returns.
How Executive Compensation Is Determined
The Compensation Committee is responsible for determining and recommending to the full Board
for approval compensation programs that attract and retain quality executives, that link pay to
performance and that are administered fairly and in the shareholders interests. The Compensation
Committee carries out this responsibility in several ways.
The Compensation Committee periodically reviews the Companys philosophy regarding
compensation for key employees, including the NEOs. The Compensation Committee reviews and
considers each element of compensation in making compensation determinations. Each year, the CEO
evaluates the performance of the NEOs and other company officers. Based on his evaluation, the CEO
may recommend adjustments in base salary, the structure of the cash incentive plans and the
magnitude of the equity grants. The Compensation Committee considers these recommendations when
making compensation decisions regarding compensation for executive officers other than the CEO. The
Compensation Committee independently assesses the performance of the CEO, analyzes relevant
competitive data (recognized industry surveys and peer group information) and presents its
recommendation regarding compensation for the CEO to the independent directors on the Board for
their review and approval.
The Committee reviews all elements of compensation as a whole in measuring total compensation
packages against the objectives of the compensation program. The proportion of variable or
incentive compensation varies with the level of an executives responsibility within the Company.
Since the NEOs have the highest level of responsibility in the Company, the proportion of their
potential incentive compensation is higher in relation to their base salaries than other employees.
The Compensation Committee also reviews market data and evaluates the competitiveness of pay levels
for the NEOs based on a combination of recognized industry executive compensation surveys and data
gathered from annual reports and proxy statements of companies identified and approved by the
Committee as the peer group. Executive compensation surveys used included the Top Management
Compensation Survey Wyatt Data Services, Executive Survey Mercer Benchmark, and Executive
Survey Radford.
21
For fiscal 2009, the Compensation Committee selected Watson Wyatt to assist with its
evaluation of compensation for our executives. Watson Wyatt helped define our peer group, provided
data on executive compensation of peer group companies, reviewed and made recommendations for the
overall compensation philosophy, and provided an evaluation of total compensation for NEOs. In
fiscal 2009, our industry peers included: Adobe Systems Inc., Autodesk Inc., BMC Software Inc.,
Cadence Design Systems Inc., CIBER Inc., Citrix Systems Inc., Cognizant Technology Solutions
Corporation, Intuit Inc., McAfee Inc., ModusLink Global Solutions, Inc., Novell Inc., SRA
International Inc., Sybase, Inc., Synopsys Inc., and VeriSign Inc. These companies were chosen
because they are comparable to us with regard to revenue size, maturity level as established
businesses, operating in the software industry and in some instances they are our competitors. The
expertise and skills needed for executives at such companies are very similar to the skills
required for our executives.
The peer group data and Watson Wyatts analyses and findings were given to the CEO and the
Compensation Committee, which the Committee used to evaluate compensation recommendations. Such
peer data provides the Committee with the proper perspective on the magnitude and components of
compensation provided to named executive officers at comparable companies. This helps the Committee
to set compensation at levels that support our attraction/retention objectives, and ensures that
the resulting costs are reasonable based on our financial plan and that equity awards are fair and
not unreasonably dilutive.
Base Salary
We believe that competitive base salaries play an important role in helping us to attract and
retain high-performing executive officers. When reviewing base salaries for officers, including the
NEOs other than the CEO, the Compensation Committee takes into account a number of related factors
including, but not limited to, the CEOs assessment of their individual performance and his
recommendation for salary level changes, the performance of the NEOs particular business unit(s),
the NEOs experience, level of responsibility and unique contributions to the Company and the
Companys need for certain types of expertise. These factors, along with the competitive market
data provided by the Committees independent compensation consultants, are used to determine
appropriate base salaries. The Compensation Committee generally targets base salaries for the NEOs
to be between the market median and the 75th percentile of the peer group. However, deviations from
that range may occur in individual cases due to an NEOs individual contributions to the Company,
his or her experience and other competitive factors.
The Compensation Committee independently assesses the CEOs performance utilizing an approach
similar to that used to evaluate our other NEOs, i.e., overall company performance, accomplishment
of strategic objectives, development of subordinates and other relevant measures of performance, as
well as market data. Based upon its assessment, the Committee makes a recommendation to the
independent directors regarding any adjustments to the CEOs base salary.
Executive Incentive Plan
Annual and long-term incentive opportunities are provided under the Executive Incentive Plan,
or EIP. The Compensation Committee, in consultation with the CEO, annually approves performance
criteria and goals for measuring corporate performance for use under the EIP.
The EIP is structured to: (1) align the financial interests of the participants with that of
the Company and the shareholders; and (2) encourage the NEOs and other key employees to work
together as a team to achieve specific annual financial goals. To further reinforce teamwork among
the NEOs, our President and Chief Operating Officer, Chief Financial Officer, Chief Technology
Officer, and Chief Administrative Officer work closely together and with the Chairman and Chief
Executive Officer to formulate the Companys growth strategy and oversee the implementation of that
strategy. The members of this executive team share a common set of performance goals, comprised of
earnings per share (EPS) and total sales commitments (Total Sales Commitments) as defined
below, and an EIP target that is based on a percentage of base salary, which we refer to as their
Annual EIP Target. Compared to other employees, our NEOs have the highest percentage of their
total cash compensation tied to achieving the EIP performance targets due to their higher level of
responsibility, consistent with our overall philosophy of paying for performance.
22
Under the EIP, cash bonuses are paid only if the Companys performance meets or exceeds the
minimum threshold levels of the performance targets established at the beginning of the fiscal
year. Typically, the performance targets in the EIP are aggressive, so that NEOs have rarely earned
bonuses at the targeted levels and have not earned the target bonus amount in recent fiscal years,
as illustrated by the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
2008 |
|
2007 |
|
2006 |
Percent of EPS target achieved |
|
|
89 |
% |
|
|
89 |
% |
|
|
96 |
% |
|
|
106 |
% |
Percent of NEO award earned |
|
|
0 |
% |
|
|
61 |
% |
|
|
80 |
% |
|
|
120 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of revenue/Total Sales
Commitments target achieved |
|
|
84 |
% |
|
|
98 |
% |
|
|
90 |
% |
|
|
89 |
% |
Percent of NEO award earned |
|
|
0 |
% |
|
|
80 |
% |
|
|
0 |
% |
|
|
0 |
% |
If we meet or exceed the minimum thresholds, a portion of the bonus, referred to as Annual
Cash Award, is paid shortly after the fiscal year-end results of operations are final. In
addition, an amount equal to one-half of the Annual Cash Award, referred to as Long-Term Cash
Bonus, is deferred and is paid only if the NEO remains employed by the Company for two years after
the Annual Cash Award is earned.
An NEO whose employment terminates due to disability or death prior to the end of the fiscal
year is entitled to a pro-rated payment of the Annual Cash Award, based on the number of full
months of employment during the fiscal year, if the applicable performance goal(s) are otherwise
satisfied for the fiscal year. Any such prorated Annual Cash Award would be paid to the NEO or to
the NEOs designated beneficiary or legal representative at the same time as all other Annual Cash
Awards payments. Unless the Compensation Committee determines otherwise, an Annual Cash Award is
forfeited if the NEOs employment terminates for any reason other than disability or death before
the payment date.
The Long-Term Cash Bonus is forfeited if the NEOs employment is terminated voluntarily or
involuntarily after the two-year period referenced above and before payout of the bonus unless the
Compensation Committee determines otherwise or the termination is caused by retirement, death,
total disability or reduction in force. We adopted this mandatory deferral as a long-term incentive
strategy to enhance retention of skilled executives in our extremely competitive environment for
experienced, executive talent.
In April 2008, at the suggestion of management, the Compensation Committee evaluated and
recommended adopting the following performance measures for fiscal 2009:
|
|
|
EPS before unusual items (such as restructuring and related costs and impairment of
intangible assets) defined as net income, before the impact of unusual items, divided by
the weighted average diluted shares outstanding for the year. |
|
|
|
|
Total Sales Commitments defined as the sum of product license and maintenance
arrangements closed during the fiscal year plus professional services revenue (which
includes application services revenue). Product license and maintenance arrangements closed
during the year are calculated by taking GAAP software license fees and maintenance fees
and adding or subtracting the net change in deferred license and deferred maintenance
revenue. |
The Compensation Committee believes that EPS before unusual items is an appropriate component of
the EIP as it is a measure of profitability and key component of enhancing shareholder value. The
Committee believes Total Sales Commitments is also an appropriate component of the EIP (and a
better measure of sales performance for compensation purposes than total revenues) because it
measures the total value of transactions closed during the fiscal year and eliminates the effect of
the Companys revenue recognition policy that results in the inclusion of some revenue from
transactions closed before the fiscal year and the deferral of some revenue from transactions
closed during the fiscal year.
23
Options
To further align executive and shareholder interests, the Compensation Committee may grant
options to purchase our common stock to our NEOs. The Committee believes options are an excellent
way to motivate key
employees to improve our financial performance and the price of our stock because the options
will have value only if the price of Compuware stock increases over the fair market value of the
stock on the grant date. The Committee grants options to the NEOs based on each NEOs contribution
to the Company, the desire to promote teamwork across the entire company, and the need to remain
competitive within our industry. Additionally, our approach to vesting is intended to enhance
retention of key talent.
The Compensation Committee typically approves the grant of option awards mid-year to
executives based on a formula in the EIP. These options have an exercise price equal to the fair
market value of our stock on the date of grant and vest over a five-year period as follows: zero
percent on the first anniversary of the grant date, zero percent on the second anniversary, 50
percent on the third anniversary, 25 percent on the fourth anniversary, and the remaining 25
percent on the fifth anniversary. Under the EIP, the number of options granted is determined by
dividing an NEOs Annual EIP Target percentage in half, multiplying that percentage by the NEOs
base salary and then dividing that number by five. This formula was chosen because it produces a
number of options that the Committee believes bears an appropriate relationship to the amount of
cash incentive compensation and total compensation, enhances retention of key talent, and aligns
with shareholder interests. The following table provides hypothetical examples of the option
calculation and vesting schedule under the EIP for an NEO with an Annual EIP Target of 200 percent
and 100 percent, respectively:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
|
|
|
|
|
|
|
|
|
Base |
|
Annual |
|
Option Calculation |
|
Shares |
|
Year 1 |
|
Year 2 |
|
Year 3 |
|
Year 4 |
|
Year 5 |
Salary |
|
EIP |
|
(EIP Target / 2 |
|
Granted |
|
Vest |
|
Vest |
|
Vest |
|
Vest |
|
Vest |
($) |
|
Target |
|
* Base Salary) / 5 |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
$500,000 |
|
|
200 |
% |
|
|
(200% / 2 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
50,000 |
|
|
|
25,000 |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
* $500,000) / 5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$500,000 |
|
|
100 |
% |
|
|
(100% / 2 |
|
|
|
50,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
12,500 |
|
|
|
12,500 |
|
|
|
|
|
|
|
|
* $500,000) / 5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If options are granted in fiscal 2010, the Compensation Committee has decided, based on market
data gathered by our independent compensation consultants, that any such options would vest in
equal annual installments over a four-year period beginning on the first anniversary of the grant
date.
Components of Fiscal 2009 Named Executive Officer Compensation
Base Salary
Base salaries for fiscal 2009 were determined based on the process described above. The
executive compensation consultant (Watson Wyatt) compiled peer group compensation data from fiscal
2008. Base salaries for the President/COO, CFO and former CTO are between the 60th and
75th percentiles in comparison to the previously discussed peer group. We relied on
internal benchmarks to set the CAOs base salary due to the positions unique structure and role
within our organization and the lack of comparable data in the peer group study. The CAO received a
salary increase of 1.2% for fiscal 2009 based on this assessment. The CFO and former CTO did not
receive salary increases in fiscal 2009. Their base compensation remained at fiscal 2008 levels and
within the targeted peer group percentiles. Upon appointment as acting CTO in August 2008, Mr.
Czarnik received a 9.3% salary adjustment and, upon formal promotion to CTO in December 2008, an
additional 8.5% salary increase based on relevant market data and internal benchmarks. Effective
April 1, 2008, Mr. Paul was promoted from President/COO of the Covisint Division to President/COO
of the Company. Based on this promotion and the increase in responsibilities, upon recommendation
of the CEO, the Committee and the Board approved a $75,000 salary increase for Mr. Paul for fiscal
2009, resulting in a 15.8% adjustment.
For fiscal 2009, the Compensation Committee recommended and the Board approved a 14.2% salary
increase for the CEO to $1,200,000. This increase was based on the Committee and Boards assessment
of the CEOs performance, including, but not limited to, his contributions to the Companys
performance as measured by the increase in EPS before unusual items, total revenues and Total Sales
Commitments, his role in developing and implementing the Companys strategy, and the development
and management of the executive team as a whole for which he is responsible. The CEOs base salary is the highest
in the peer group. We believe the CEOs salary is appropriate based on his significant experience and contribution
to the company. For Fiscal 2009, in comparison to the updated data from the peer group, the CEOs targeted total compensation (base salary, cash incentives and SFAS 123R equity award expense)
positioned him in the
78th
percentile, however, his actual total compensation placed him in the 33rd percentile.
24
Executive Incentive Plan
Our philosophy of connecting compensation to performance and aligning the interests of
executives with the interests of shareholders is reflected in how the performance thresholds and
levels were set under the EIP for fiscal 2009. There were three performance levels of attainment
established for the EPS and Total Sales Commitments components (see chart below), with bonus
amounts prorated based on actual results between each performance level. If the Company met 100
percent of its EPS target and 100 percent of its Total Sales Commitments target, the NEO would
receive an Annual Cash Award equal to a multiple of his or her base salary, half for meeting the
EPS target and half for meeting the Total Sales Commitments target. At target, the CEO, the
President/COO and the CFO are eligible to earn an Annual Cash Award equal to 200 percent of their
base salary and the CTO and CAO are eligible to earn an Annual Cash Award equal to 100 percent of
their base salary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS Performance |
|
Total Sales Commitments Performance |
|
|
Performance |
|
% of |
|
Performance |
|
% of |
|
|
Levels ($) |
|
NEO Award |
|
Levels ($) |
|
NEO Award |
Threshold |
|
|
.60 |
|
|
|
50 |
% |
|
|
1,250,000,000 |
|
|
|
50 |
% |
Target |
|
|
.65 |
|
|
|
100 |
% |
|
|
1,300,000,000 |
|
|
|
100 |
% |
Maximum |
|
|
.70 |
|
|
|
150 |
% |
|
|
1,350,000,000 |
|
|
|
150 |
% |
The EPS and Total Sales Commitments targets were proposed by the CEO and reviewed and approved
by the Compensation Committee. As in prior years, the targets were considered difficult to achieve.
In fiscal 2009, the Companys performance did not meet the minimum thresholds for either EPS
or Total Sales Commitments. We achieved an EPS of $.58 (before restructuring charges totaling $10
million or $.03 per share) and $1.087 billion in Total Sales Commitments. Since these numbers are
below the lowest performance levels in both measurement categories, no bonuses were earned or paid
based on fiscal 2009 performance.
In April 2009, the NEOs and other key employees who were eligible to participate in the EIP in
fiscal 2007 and remained employed by the Company through April 15, 2009 received Long-Term Cash
Bonuses that were awarded for fiscal 2007 performance. Under the provisions of the EIP, the
Long-Term Cash Bonuses awarded for fiscal 2007 and 2008 performance were paid to Mr. Bockhausens
estate, for which a payment of $334,812 was issued in December 2008.
For fiscal 2010, the Annual EIP Target for the CEO, President/COO, and the CFO will remain at
200 percent of salary and for the CTO and CAO will remain at 100 percent.
Options
In April 2008, the Committee approved grants independent of the EIP to the NEOs and certain
other management and key personnel. The purpose of this special grant was to add a significant
equity-based incentive for the Companys executives to drive the transformation of our business as
set out in our Compuware 2.0 strategy, exceed corporate performance expectations by sustaining
long-term growth, and increase shareholder value. The CEO, President/COO and the CFO received
500,000 options each. The former CTO and CAO received 200,000 options each. The CTO received 50,000
options. The amounts were recommended by the CEO based on the level of responsibility and influence
individuals are expected to contribute to the business transformation and strategy initiatives.
These options were granted on April 17, 2008 under the Companys LTIP, have an exercise price equal
to the fair market value of the common stock on that date as determined under the LTIP and vest as
follows: 30 percent on the first anniversary of the grant date, 30 percent on the second
anniversary, and 40 percent on the third anniversary. This three-year vesting schedule retains the
long-term element of equity-based incentives, while enabling earlier rewards if achievements result
in increased share price. The options will become immediately exercisable if the Company is
acquired or if the NEO dies or becomes disabled. The options expire ten years after grant or
earlier if the NEOs employment is terminated.
25
In addition, on September 2, 2008 options were granted to the CAO, CTO and Mr. Bockhausen. The
number of option shares was determined according to the formula set forth in the EIP and approved
by the Compensation Committee. The options vest as follows: zero percent on the first anniversary
of the grant date, zero percent on the second anniversary, 50 percent on the third anniversary, 25
percent on the fourth anniversary, and the remaining 25 percent on the fifth anniversary. The
options will become immediately exercisable if the Company is acquired or if the NEO dies or
becomes disabled. The options expire ten years after grant or earlier if the NEOs employment is
terminated. The CEO, President/COO, and the CFO did not receive option grants under the EIP for
fiscal 2009 due to the option grants they received in April 2008 and limits in the LTIP on the
number of options that may be granted to an individual in any one fiscal year.
Restricted Stock Unit Awards
On November 6, 2008, the Compensation Committee proposed and the Board approved the award of
RSUs under the LTIP to the CEO, President/COO and CFO in lieu of an option grant pursuant to the
EIP. The number of RSUs was calculated based on the amount of annual salary (100%) that would
otherwise have been used to determine the number of option shares under the EIP, divided by the
share price on the date of the EIP option grant made to other employees (September 2, 2008), which
was higher than the fair market value on the RSU award date (November 6, 2008). The decision to use
the higher price was made so that the officers would not benefit from the downturn in the market
during the period between the award dates. The RSUs vest as follows: zero percent on the first
anniversary of the grant date, zero percent on the second anniversary, 50 percent on the third
anniversary, 25 percent on the fourth anniversary, and the remaining 25 percent on the fifth
anniversary, as long as the recipient continues to be employed by the Company. The RSUs will become
immediately vested if the Company is acquired or if the recipient dies or becomes disabled. If the
recipients employment ceases for any other reason, the recipients right to shares of common stock
subject to unvested RSUs will be automatically terminated. Once vested, the Company will issue one
common share for each vested RSU. In the event the Company pays cash dividends prior to vesting,
each RSU will have the right to receive additional RSUs with a value equal to the dividend that
would have been received had the RSU been vested and the related share issued.
Employee Benefits and Other Perquisites
Benefit Programs
The Company provides customary benefits such as medical, dental and life insurance and
disability coverage to each NEO, which are also provided to all other eligible employees. The
Company also provides vacation and other paid holidays to all employees, including the NEOs, which
are comparable to those provided at similar companies.
Qualified Plans
Since 1986, the Company has maintained a qualified defined contribution plan known as the
Employee Stock Ownership Plan, or ESOP, and 401(k) Salary Reduction Arrangement, or 401(k). All
employees are eligible to participate immediately upon hire in the 401(k). The NEOs are eligible to
contribute a portion of their salaries on a pre-tax basis to the 401(k). The Company does not
provide any 401(k) match.
The Company occasionally makes discretionary contributions of Company stock to the ESOP. While
the Company no longer contributes shares of Company stock to the accounts of the executive
officers, the NEOs continue to hold shares in their ESOP accounts and from time to time receive a
pro rata allocation of the value of partial shares and interest earnings accumulated by the plan
administrator in the form of common shares. There have been no such allocations since November 26,
2007.
NEOs, other than Mr. Karmanos, and other employees are also permitted to participate in the
Companys employee stock purchase plan under which employees can elect to have up to 10 percent of
their compensation withheld to purchase Company stock at the close of the offering period selected
from time to time by the Board. The value of the stock purchased in any calendar year cannot exceed
$25,000 per employee. The purchase price is 95 percent of the fair market value on the last day of
each offering period. The fair market value is determined as the closing market sales price on the
market date immediately preceding the last day of the offering period. Mr. Karmanos has been
permitted to purchase shares from the Company on the same terms, except for the tax benefit
afforded to other employees, although he does not participate directly in the plan due to
eligibility restrictions. During fiscal 2009, Mr. Karmanos purchased 6,124 shares under this
arrangement.
26
Use of Automobile
Through January 31, 2009, the Company provided each NEO with the use of an automobile leased
by the Company and also paid the cost of insurance and maintenance. Income is imputed to NEOs based
on the cost of the vehicle. The Company does not provide the NEO with any salary gross up to cover
the taxes payable by the NEO for this or any other perquisite. The auto lease benefit was
terminated as of January 31, 2009 as part of corporate cost-cutting initiatives. Each NEO was
provided the opportunity to buy the remaining lease contract directly from the leasing agent at
fair market value. As of February 1, 2009, NEOs are responsible for the cost of their own vehicles.
Other Perquisites
The NEOs are provided a limited number of perquisites in addition to benefits provided to our
other employees. The purpose of these perquisites is to facilitate their access to work functions
and personnel and encourage interactions among NEOs and others within professional, business and
local communities. NEOs are provided perquisites such as tickets to the Company suite for sporting
and special events and travel expenses for spouses to certain Company conferences. In addition the
Company provides security personnel at the CEOs residence. These perquisites are further discussed
in footnote 5 to the Summary Compensation Table.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code), restricts the
deductibility of executive compensation paid to the Companys CEO and certain other NEOs to not
more than $1 million in annual compensation (including gains from the exercise of certain stock
option grants). Certain performance-based compensation is exempt from this limitation if it
complies with the various conditions described in Section 162(m). The LTIP and some of the
Companys other option plans contain a shareholder-approved restriction on the number of options
that may be granted which is intended to cause compensation realized in connection with the
exercise of options granted under these plans to be exempt from the restriction on deductibility.
In addition, the LTIP contains provisions that permit us to pay other performance-based
compensation that would be exempt from restrictions on deductibility under Section 162(m) if
properly structured. Some components of our compensation program result in payments that are
subject to these restrictions on deductibility. However, the Compensation Committee has concluded
that the effect on the Companys results of operations from the limit on deductibility is not
material and that it is appropriate to exceed the restrictions on deductibility under Section
162(m) to ensure that executive officers are compensated in a manner that it believes to be
consistent with the best interests of the Company and its shareholders. The Committee is likely to
continue to approve non-deductible compensation in appropriate circumstances.
Termination of Employment
Employment or Severance Arrangements
We have from time to time entered into severance arrangements with executives leaving the
Company. None of the NEOs are employed pursuant to an employment contract, nor do we currently have
a formal policy of providing salary and/or benefits continuation associated with either a change in
control or termination of employment, with the exception of the provisions in our outstanding stock
option grants that accelerate vesting upon death, disability or a change in control and the
provisions of our EIP (which is subject to the LTIP) that provide prorated payment of Annual Cash
Awards and accelerated payment of earned Long-Term Cash bonuses upon death or disability. Instead,
such arrangements are made and structured based on circumstances prevailing at the time. We do not
provide any tax gross-ups if the value of accelerated stock options exceed the limits in the Code
relating to golden parachute payments.
27
Post-Retirement Consulting Agreement
On March 1, 2007, the Company entered into a post-retirement consulting agreement with its
Chairman and Chief Executive Officer, Peter Karmanos, Jr. The purpose of this agreement is to
effect a smooth transition of leadership upon Mr. Karmanos retirement and to allow the Company to
take advantage of Mr. Karmanos special knowledge of the industry, the Company and our customers.
The agreement with Mr. Karmanos is described below under Potential Payments Upon Termination or
Change in Control Post-Retirement Consulting Agreement. The agreement was reviewed and approved
by the Compensation Committee and subsequently approved by the full Board.
Compensation Committee Report
The information contained in this report shall not be deemed to be soliciting material or
filed with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the
extent that we specifically incorporate it by reference into a document filed under the Securities
Act or the Exchange Act.
In accordance with its written charter adopted by the Board of Directors, the Compensation
Committee assists the Board of Directors in determining and implementing compensation and benefit
programs for executive officers and other employees of the Company.
The Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis (CD&A) section of this proxy statement for the fiscal year ended March
31, 2009. Based on such review and discussion, the Compensation Committee recommended to the Board
that the CD&A be included in this proxy statement and incorporated by reference in the Companys
Annual Report on Form 10-K for the fiscal year ended March 31,
2009.
By the Compensation Committee,
William O. Grabe
Dennis W. Archer
G. Scott Romney
Compensation Committee Interlocks and Insider Participation
Messrs Bedi, Grabe and Prowse served as the Compensation Committee until November 14, 2008.
Mr. Prowse was an officer of the Company from 1992 to 1999. On November 18, 2008, Mr. Prowse
entered into an Independent Contractor Agreement with the Company under which he is paid a fee at a
daily rate of $2,500 to consult and advise the Company as needed on special projects, including but
not limited to pricing strategies and other business and financial projects. The arrangement will
continue until terminated by either party. The Company believes that Mr. Prowses long-standing
association with our organization and culture, together with his strong financial background, allow
him to provide substantial beneficial services to the Company as a dedicated resource that are
greater than the services that his time commitment as a board member would permit. The Company paid
Mr. Prowse $151,250 under this arrangement for services rendered during fiscal 2009.
As a result of this relationship, the Board determined that Mr. Prowse is no longer an
independent director as defined under applicable NASDAQ rules. Consequently, Mr. Prowse resigned
his position on the Compensation and Audit committees, as well as his chairmanship of the
Nominating/Governance committee on November 14, 2008. Messrs. Archer, Grabe and Romney currently
serve as the Compensation Committee of the Board and have served as such since November 14, 2008.
The Company employs the adult son of Mr. Romney as a sales executive. This individual, who
does not reside with and is not supported financially by Mr. Romney, earned compensation for fiscal
2009 of $162,606, which is commensurate with his peers. Mr. Romneys son is employed on an at
will basis and compensated on the same basis as the Companys other employees of similar function,
seniority and responsibility without regard to his relationship with Mr. Romney.
28
Summary Compensation Table
The following table sets forth information concerning the compensation of (1) our Chief
Executive Officer, (2) our Chief Financial Officer, (3) each of our three other most highly
compensated executive officers for services rendered in fiscal 2009 who were serving as executive
officers on March 31, 2009 and (4) one executive whose death
occurred during fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Plan |
|
Other |
|
|
Name and |
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Compensation |
|
Total |
Principal Position |
|
Year |
|
($) |
|
($)(1) |
|
($) (2) |
|
($) (3) |
|
($) (4) |
|
($) (5) |
|
($) |
Peter Karmanos, Jr. |
|
|
2009 |
|
|
|
1,200,000 |
|
|
|
|
|
|
|
49,270 |
|
|
|
1,367,320 |
|
|
|
0 |
|
|
|
205,078 |
|
|
|
2,821,668 |
|
Chairman of the Board |
|
|
2008 |
|
|
|
1,050,000 |
|
|
|
1,200,000 |
|
|
|
|
|
|
|
669,280 |
|
|
|
2,220,750 |
|
|
|
169,177 |
|
|
|
5,309,207 |
|
and Chief
Executive Officer |
|
|
2007 |
|
|
|
999,475 |
|
|
|
|
|
|
|
|
|
|
|
1,001,837 |
|
|
|
1,200,000 |
|
|
|
70,846 |
|
|
|
3,272,158 |
|
Laura L. Fournier |
|
|
2009 |
|
|
|
450,000 |
|
|
|
|
|
|
|
18,477 |
|
|
|
970,832 |
|
|
|
0 |
|
|
|
10,675 |
|
|
|
1,449,984 |
|
Chief Financial Officer |
|
|
2008 |
|
|
|
450,000 |
|
|
|
600,000 |
|
|
|
|
|
|
|
260,528 |
|
|
|
951,750 |
|
|
|
24,252 |
|
|
|
2,286,530 |
|
|
|
|
2007 |
|
|
|
441,667 |
|
|
|
|
|
|
|
|
|
|
|
289,637 |
|
|
|
540,000 |
|
|
|
22,051 |
|
|
|
1,293,355 |
|
Robert C. Paul |
|
|
2009 |
|
|
|
550,000 |
|
|
|
|
|
|
|
22,582 |
|
|
|
1,145,272 |
|
|
|
0 |
|
|
|
13,595 |
|
|
|
1,731,449 |
|
President
& Chief Operating |
|
|
2008 |
|
|
|
437,500 |
|
|
|
600,000 |
|
|
|
|
|
|
|
421,619 |
|
|
|
898,875 |
|
|
|
25,372 |
|
|
|
2,383,366 |
|
Officer, Compuware |
|
|
2007 |
|
|
|
422,367 |
|
|
|
|
|
|
|
|
|
|
|
347,928 |
|
|
|
510,000 |
|
|
|
25,892 |
|
|
|
1,306,187 |
|
Denise A. Starr |
|
|
2009 |
|
|
|
425,000 |
|
|
|
|
|
|
|
|
|
|
|
437,673 |
|
|
|
0 |
|
|
|
10,352 |
|
|
|
873,025 |
|
Chief Administrative |
|
|
2008 |
|
|
|
405,000 |
|
|
|
225,000 |
|
|
|
|
|
|
|
133,435 |
|
|
|
423,000 |
|
|
|
24,570 |
|
|
|
1,211,005 |
|
Officer |
|
|
2007 |
|
|
|
400,000 |
|
|
|
|
|
|
|
|
|
|
|
216,696 |
|
|
|
240,000 |
|
|
|
12,374 |
|
|
|
869,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul A. Czarnik |
|
|
2009 |
|
|
|
297,083 |
|
|
|
|
|
|
|
|
|
|
|
124,577 |
|
|
|
0 |
|
|
|
10,675 |
|
|
|
432,335 |
|
Chief Technology Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian J. Bockhausen (6) |
|
|
2009 |
|
|
|
302,517 |
|
|
|
|
|
|
|
|
|
|
|
1,573,073 |
|
|
|
0 |
|
|
|
10,675 |
|
|
|
1,886,265 |
|
Chief Technology Officer |
|
|
2008 |
|
|
|
425,000 |
|
|
|
300,000 |
|
|
|
|
|
|
|
129,895 |
|
|
|
449,438 |
|
|
|
21,643 |
|
|
|
1,325,976 |
|
|
|
|
2007 |
|
|
|
406,250 |
|
|
|
|
|
|
|
|
|
|
|
199,657 |
|
|
|
255,000 |
|
|
|
14,747 |
|
|
|
875,654 |
|
|
|
|
(1) |
|
Represents amounts paid and accrued to the NEOs as discretionary cash bonuses for
fiscal 2008 performance. Two-thirds of these amounts were paid in May 2008. The remainder
is deferred until April 2010 and will be paid only if the recipient meets the continuing
employment condition for Long-Term Cash Bonuses described above. |
|
(2) |
|
Represents the compensation cost incurred by the Company during the fiscal year
associated with RSU awards, calculated in accordance with SFAS 123R, excluding any
forfeiture adjustments. The assumptions we used to calculate these amounts are discussed in
Notes 1 and 15 to our audited consolidated financial statements included in our Annual
Report on Form 10-K for the year ended March 31, 2009. |
|
(3) |
|
Represents the compensation cost incurred by the Company during the fiscal year
associated with stock options calculated in accordance with SFAS 123R, excluding any
forfeiture adjustments. The SFAS 123R amounts do not represent the amount of the benefit,
if any, that the option holder may realize from the exercise of options. The assumptions we
used to calculate these amounts are discussed in Notes 1 and 15 to our audited consolidated
financial statements included in our Annual Report on Form 10-K for the year ended March
31, 2009. |
29
|
|
|
(4) |
|
The table below shows the component amounts of non-equity incentive payments made to
the current NEOs and Mr. Bockhausen under the EIP based on fiscal 2009, 2008 and 2007
performance results. No Annual Cash Awards were paid for fiscal 2009 and no fiscal 2009
Long-Term Cash Bonuses were credited for deferred payment. The fiscal 2008 Annual Cash
Award was paid in May 2008 to the current NEOs and payment of the fiscal 2008 Long-Term
Cash Bonus is deferred until April 2010 and will be paid only if the recipient meets the
continuing employment condition described above. The fiscal 2007 Annual Cash Award was paid
in May 2007 and payment of the fiscal 2007 Long-Term Cash Bonus was paid in April 2009 to
current NEO recipients who met the continuing employment condition described above. Under
the provisions of the EIP, the Long-Term Cash Bonuses awarded for fiscal 2007 and 2008
performance were paid to Mr. Bockhausens estate, for which a payment of $334,812 was
issued in December 2008. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EIP Annual |
|
EIP Long-Term |
|
|
|
|
|
|
|
|
Cash Award |
|
Cash Bonus |
|
Total |
Name |
|
Year |
|
($) |
|
($) |
|
($) |
Peter Karmanos, Jr. |
|
|
2009 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
2008 |
|
|
|
1,480,500 |
|
|
|
740,250 |
|
|
|
2,220,750 |
|
|
|
|
2007 |
|
|
|
800,000 |
|
|
|
400,000 |
|
|
|
1,200,000 |
|
Laura L. Fournier |
|
|
2009 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
2008 |
|
|
|
634,500 |
|
|
|
317,250 |
|
|
|
951,750 |
|
|
|
|
2007 |
|
|
|
360,000 |
|
|
|
180,000 |
|
|
|
540,000 |
|
Robert C. Paul |
|
|
2009 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
2008 |
|
|
|
599,250 |
|
|
|
299,625 |
|
|
|
898,875 |
|
|
|
|
2007 |
|
|
|
340,000 |
|
|
|
170,000 |
|
|
|
510,000 |
|
Denise A. Starr |
|
|
2009 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
2008 |
|
|
|
282,000 |
|
|
|
141,000 |
|
|
|
423,000 |
|
|
|
|
2007 |
|
|
|
160,000 |
|
|
|
80,000 |
|
|
|
240,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul A. Czarnik |
|
|
2009 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian J. |
|
|
2009 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Bockhausen |
|
|
|
|
|
|
299,625 |
|
|
|
149,813 |
|
|
|
449,438 |
|
|
|
|
|
|
|
|
170,000 |
|
|
|
85,000 |
|
|
|
255,000 |
|
|
|
|
(5) |
|
All Other Compensation includes amounts for perquisites such as auto leases, insurance
and maintenance; tickets to the Company suite for sporting and special events; travel
expenses for spouses to certain Company conferences and events; personal security services
for the CEO; and for other benefits, such as pro rata interest allocation in the Company
ESOP and discount purchases of common stock under the terms of the employee stock purchase
plan, or ESPP. Perquisites have been valued for purposes of these tables on the basis of
100 percent of the aggregate incremental cost to the Company or, where applicable, the cost
determined under SFAS 123R. |
|
|
|
All Other Compensation in fiscal 2009 for Mr. Karmanos includes $176,356 for security
services at his residence. |
|
(6) |
|
Mr. Bockhausen passed away on December 16, 2008. Mr. Czarnik replaced Mr. Bockhausen as
Chief Technology Officer. |
30
Grants of Plan-Based Awards
The following table shows both the range of cash awards that could have been earned and the
actual equity awards granted to the Named Executive Officers and Mr. Bockhausen during fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other |
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Number of |
|
Exercise |
|
Closing |
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Securities |
|
or base |
|
Market |
|
Date Fair |
|
|
|
|
|
|
Estimated Future Payouts Under Non- |
|
Shares of |
|
Under- |
|
price of |
|
Price on |
|
Value of |
|
|
|
|
|
|
Equity Incentive Plan Awards(1) |
|
Stock or |
|
lying |
|
option |
|
Grant |
|
Stock and |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Units |
|
Options |
|
awards |
|
Date |
|
Option |
Name |
|
Grant Date |
|
($) |
|
($) |
|
($) |
|
(#)(2) |
|
(#)(3) |
|
($/Sh)(4) |
|
($/Sh) |
|
Awards(5) |
Peter Karmanos, Jr. |
|
|
04-17-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
|
7.85 |
|
|
|
7.69 |
|
|
|
2,142,000 |
|
|
|
|
11-06-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,986 |
|
|
|
|
|
|
|
|
|
|
|
6.03 |
|
|
|
620,467 |
|
|
|
|
|
|
|
|
900,000 |
|
|
|
3,600,000 |
|
|
|
5,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laura L. Fournier |
|
|
04-17-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
|
7.85 |
|
|
|
7.69 |
|
|
|
2,142,000 |
|
|
|
|
11-06-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,370 |
|
|
|
|
|
|
|
|
|
|
|
6.03 |
|
|
|
232,677 |
|
|
|
|
|
|
|
|
337,500 |
|
|
|
1,350,000 |
|
|
|
2,025,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Paul |
|
|
04-17-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
|
7.85 |
|
|
|
7.69 |
|
|
|
2,142,000 |
|
|
|
|
11-06-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,118 |
|
|
|
|
|
|
|
|
|
|
|
6.03 |
|
|
|
284,377 |
|
|
|
|
|
|
|
|
412,500 |
|
|
|
1,650,000 |
|
|
|
2,475,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise A. Starr |
|
|
04-17-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
7.85 |
|
|
|
7.69 |
|
|
|
856,800 |
|
|
|
|
09-02-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,500 |
|
|
|
11.43 |
|
|
|
11.56 |
|
|
|
274,108 |
|
|
|
|
|
|
|
|
159,375 |
|
|
|
637,500 |
|
|
|
956,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul A. Czarnik |
|
|
04-17-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
7.85 |
|
|
|
7.69 |
|
|
|
214,200 |
|
|
|
|
09-02-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,500 |
|
|
|
11.43 |
|
|
|
11.56 |
|
|
|
192,175 |
|
|
|
|
|
|
|
|
110,625 |
|
|
|
442,500 |
|
|
|
663,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian J. |
|
|
04-17-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
7.85 |
|
|
|
7.69 |
|
|
|
856,800 |
|
Bockhausen |
|
|
09-02-2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,500 |
|
|
|
11.43 |
|
|
|
11.56 |
|
|
|
276,862 |
|
|
|
|
|
|
|
|
159,375 |
|
|
|
637,500 |
|
|
|
956,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts shown in the table represent potential amounts that could have been earned
under the EIP for performance in fiscal 2009. There were no bonuses paid under the EIP for
fiscal 2009. For more information regarding the corporate goals for 2009, see Compensation
Discussion and Analysis. |
|
(2) |
|
These RSUs vest as follows: zero percent on the first anniversary of the grant date,
zero percent on the second anniversary, 50 percent on the third anniversary, 25 percent on
the fourth anniversary, and the remaining 25 percent on the fifth anniversary, as long as
the recipient continues to be employed by the Company. The RSUs will become immediately
vested if the Company is acquired or if the NEO recipient dies or becomes disabled. If the
recipients employment ceases for any other reason, the recipients right to shares of
common stock subject to unvested RSUs will be automatically terminated. Once vested, the
Company will issue one common share for each vested RSU. In the event the Company pays cash
dividends prior to vesting, each RSU will have the right to receive additional RSUs with a
value equal to the dividend that would have been received had the RSU been vested and the
related share issued. |
|
(3) |
|
For the options granted on April 17, 2008, thirty percent of the options become
exercisable on each of the first and second anniversary of the date of grant, and 40
percent of the options vest on the third anniversary of the date of grant. |
|
|
|
For the options granted on September 2, 2008, fifty percent of the options become
exercisable on the third anniversary of the date of grant, and 25 percent of the options
vest on each of the fourth and fifth anniversaries of the date of grant. |
|
|
|
The options expire ten years after the date of grant and become 100 percent exercisable in
the event of death, disability or a change in control. |
|
(4) |
|
All options granted in fiscal 2009 have an exercise price equal to the grant date fair
market value, as defined in the LTIP (the closing sale price on the trading date
immediately preceding the grant date). |
|
(5) |
|
The assumptions we used to calculate the amounts shown are in accordance with SFAS 123R
as discussed in Notes 1 and 15 to our audited consolidated financial statements included in
our Annual Report on Form 10-K for the fiscal year ended March 31, 2009. |
|
|
|
The fair value for each RSU is calculated based on the grant date fair market value, as
defined in the LTIP (the closing sale price on the trading date immediately preceding the
grant date). |
31
Outstanding Equity Awards at Fiscal Year End
The following table shows all outstanding equity awards held by the Named Executive Officers
and Mr. Bockhausen as of March 31, 2009. Due to his death on December 16, 2008, the option
expiration dates for Mr. Bockhausen have been adjusted in accordance with the terms of his option
agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
Stock Awards |
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
Number of |
|
Market Value |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
Shares or |
|
of Shares or |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
|
Units of Stock |
|
Units of Stock |
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
That Have |
|
That Have Not |
|
|
(#) |
|
(#) |
|
Price |
|
Expiration |
|
Not Vested |
|
Vested |
Name |
|
Exercisable(1) |
|
Unexercisable(1) |
|
($) |
|
Date |
|
(#) |
|
($) |
Peter Karmanos, Jr. |
|
|
640,000 |
|
|
|
|
|
|
|
17.8130 |
|
|
|
04-08-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
280,000 |
|
|
|
|
|
|
|
9.5000 |
|
|
|
05-26-2010 |
|
|
|
|
|
|
|
|
|
|
|
|
6,140 |
(2) |
|
|
|
|
|
|
9.0000 |
|
|
|
03-16-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
3,000,000 |
(3) |
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
380,000 |
|
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
570,000 |
|
|
|
|
|
|
|
6.9600 |
|
|
|
05-22-2012 |
|
|
|
|
|
|
|
|
|
|
|
|
95,000 |
|
|
|
|
|
|
|
3.4250 |
|
|
|
04-02-2013 |
|
|
|
|
|
|
|
|
|
|
|
|
72,889 |
|
|
|
24,296 |
|
|
|
7.4700 |
|
|
|
04-01-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
97,186 |
|
|
|
97,184 |
|
|
|
7.2450 |
|
|
|
06-22-2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
7.2800 |
|
|
|
08-22-2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,000 |
|
|
|
9.4000 |
|
|
|
11-08-2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
(4) |
|
|
7.8500 |
|
|
|
04-17-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,986 |
|
|
|
691,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laura L. Fournier |
|
|
112,000 |
|
|
|
|
|
|
|
17.8130 |
|
|
|
04-08-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
52,500 |
|
|
|
|
|
|
|
9.5000 |
|
|
|
05-26-2010 |
|
|
|
|
|
|
|
|
|
|
|
|
691 |
(2) |
|
|
|
|
|
|
9.0000 |
|
|
|
03-16-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
275,000 |
(3) |
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
55,000 |
|
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
|
|
|
|
6.9600 |
|
|
|
05-22-2012 |
|
|
|
|
|
|
|
|
|
|
|
|
32,500 |
|
|
|
|
|
|
|
3.4250 |
|
|
|
04-02-2013 |
|
|
|
|
|
|
|
|
|
|
|
|
25,320 |
|
|
|
8,439 |
|
|
|
7.4700 |
|
|
|
04-01-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
7.2450 |
|
|
|
06-22-2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
|
7.2800 |
|
|
|
08-22-2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
|
9.4000 |
|
|
|
11-08-2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
(4) |
|
|
7.8500 |
|
|
|
04-17-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,370 |
|
|
|
259,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Paul |
|
|
250,000 |
|
|
|
|
|
|
|
7.7300 |
|
|
|
03-01-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
10,000 |
|
|
|
7.4700 |
|
|
|
04-01-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
40,920 |
|
|
|
40,920 |
|
|
|
7.2450 |
|
|
|
06-22-2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000 |
|
|
|
7.2800 |
|
|
|
08-22-2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000 |
|
|
|
9.4000 |
|
|
|
11-08-2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
(4) |
|
|
7.8500 |
|
|
|
04-17-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,118 |
|
|
|
317,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise A. Starr |
|
|
146,670 |
|
|
|
|
|
|
|
17.8130 |
|
|
|
04-08-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
579 |
(2) |
|
|
|
|
|
|
9.0000 |
|
|
|
03-16-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
(3) |
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
61,000 |
|
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
13,044 |
|
|
|
4,347 |
|
|
|
7.4700 |
|
|
|
04-01-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
7.2450 |
|
|
|
06-22-2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
7.2800 |
|
|
|
08-22-2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
9.4000 |
|
|
|
11-08-2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
(4) |
|
|
7.8500 |
|
|
|
04-17-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,500 |
|
|
|
11.4300 |
|
|
|
09-02-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul A. Czarnik |
|
|
10,700 |
|
|
|
|
|
|
|
17.8130 |
|
|
|
04-08-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
5,225 |
|
|
|
|
|
|
|
9.5000 |
|
|
|
05-26-2010 |
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
(3) |
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
5,745 |
|
|
|
|
|
|
|
9.2100 |
|
|
|
04-09-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
6,437 |
|
|
|
|
|
|
|
6.9600 |
|
|
|
05-22-2012 |
|
|
|
|
|
|
|
|
|
|
|
|
4,304 |
|
|
|
|
|
|
|
3.4250 |
|
|
|
04-02-2013 |
|
|
|
|
|
|
|
|
|
|
|
|
3,303 |
|
|
|
1,101 |
|
|
|
7.4700 |
|
|
|
04-01-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
4,809 |
|
|
|
4,808 |
|
|
|
7.2450 |
|
|
|
06-22-2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.579 |
|
|
|
7.2800 |
|
|
|
08-22-2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.579 |
|
|
|
9.4000 |
|
|
|
11-08-2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
(4) |
|
|
7.8500 |
|
|
|
04-17-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,500 |
|
|
|
11.4300 |
|
|
|
09-02-2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian J. |
|
|
44,800 |
|
|
|
|
|
|
|
17.8130 |
|
|
|
04-08-2009 |
|
|
|
|
|
|
|
|
|
Bockhausen |
|
|
20,000 |
|
|
|
|
|
|
|
9.5000 |
|
|
|
04-15-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
2,193 |
(2) |
|
|
|
|
|
|
9.0000 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
(3) |
|
|
|
|
|
|
9.2100 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
|
|
|
|
|
|
|
9.2100 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
|
|
|
|
6.9600 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
16,250 |
|
|
|
|
|
|
|
3.4250 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
16,624 |
|
|
|
|
|
|
|
7.4700 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
|
|
|
|
|
7.2450 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
42,500 |
|
|
|
|
|
|
|
7.2800 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
42,500 |
|
|
|
|
|
|
|
9.4000 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
7.8500 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
|
|
|
42,500 |
|
|
|
|
|
|
|
11.4300 |
|
|
|
12-16-2009 |
|
|
|
|
|
|
|
|
|
32
|
|
|
(1) |
|
Unless otherwise noted, 50 percent of the options become exercisable on the third
anniversary of the date of grant, and 25 percent of the options vest on each of the fourth
and fifth anniversaries of the date of grant. The options become 100 percent exercisable in
the event of death, disability or a change in control. The options expire ten years after
the date of grant. |
|
(2) |
|
100 percent of the options became exercisable on June 30, 2001. |
|
(3) |
|
12.5 percent of the options became exercisable every six months for a period of four
years. |
|
(4) |
|
Thirty percent of the options become exercisable on each of the first and second
anniversary of the date of grant, and 40 percent of the options vest on the third
anniversary of the date of grant. The options become 100 percent exercisable in the event
of death, disability or a change in control. The options expire ten years after the date of
grant. |
Option Exercises
The following table sets forth information concerning stock options exercised during fiscal
2009 by each of the Named Executive Officers and Mr. Bockhausen.
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Number of Shares |
|
Value Realized |
|
|
Acquired on Exercise |
|
on Exercise |
Name |
|
(#) |
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Peter Karmanos, Jr. |
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Laura L. Fournier |
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Robert C. Paul |
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Denise A. Starr |
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29,250 |
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136,192 |
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Paul A. Czarnik |
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Christian J. Bockhausen |
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Potential Payments Upon Termination or Change in Control
Option Acceleration
We have not entered into employment or severance agreements with any of the current NEOs.
However, each of the NEOs have unvested options that would immediately become exercisable due to
their death or permanent disability or if we were acquired by a third party. Mr. Bockhausen held
349,156 options at the time of his death that accelerated pursuant to this provision. All of the
unvested options held by the other NEOs have an exercise price exceeding $6.59, the closing market
price on March 31, 2009.
Post-Retirement Consulting Agreement
On March 1, 2007, we entered into a post-retirement consulting agreement with our Chairman and
Chief Executive Officer, Peter Karmanos, Jr. Upon retirement as Chairman and Chief Executive
Officer on a date to be determined by the Company and Mr. Karmanos, Mr. Karmanos will continue to
be employed by the Company in a consulting role and will be entitled to receive: (i) one years
salary at the amount in effect on his retirement date, payable over a four-year period, or $300,000
each year for four years, whichever is greater, referred to as the Salary Payment; and (ii)
earned bonuses under the Companys EIP. In addition, his existing stock options will continue to
vest in accordance with their terms. During the four-year term of the agreement, Mr. Karmanos will
also be eligible to continue to participate in all the Companys benefit plans and will continue to
receive an office, administrative support, use of an automobile and reimbursement for all
business-related expenses. If Mr. Karmanos employment had terminated on March 31, 2009, he would
have been entitled to an annual salary of $300,000 for four years, payable in equal monthly
installments, beginning April 30, 2009; and earned bonuses of $400,000 in April 2010 (Discretionary
Cash Bonus from fiscal 2008) and $740,250 in April 2010 (Long-Term Cash Bonus from fiscal 2008). In
addition, we estimate the cost of allowing his continued participation in our benefit plans,
providing an office and the other additional benefits listed above during the four-year period to
be approximately $29,526 per year.
33
The agreement also provides for similar benefits if the agreement is terminated under certain
circumstances as follows:
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Termination Event |
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Benefits To Be Paid |
By the Company
without cause or by
Karmanos with cause
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Remaining Salary Payment due over the remaining
term, payable in equal monthly installments (as if
termination has not occurred) |
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Bonuses earned through termination date |
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Other benefits provided in the Agreement through the
remaining term |
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Previously granted unvested stock options become
immediately exercisable |
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Termination by
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Salary Payment due through the date of termination |
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Bonuses earned through termination date
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Previously granted vested stock options are
exercisable in accordance with the Companys stock option
plans and related option agreements |
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Termination due to
death or
dis-ability of Mr.
Karmanos
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Remaining Salary Payment due over the remaining
term, paid in a lump sum |
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Participation by his spouse for 24 months at Company
expense in the Companys medical, dental, vision and
hospitalization plans |
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Previously granted unvested stock options become
immediately exercisable in accordance with the Companys
stock option plan and related option agreements |
The Companys obligations terminate if the Company terminates the agreement due to Mr.
Karmanos illegal conduct or gross misconduct that is materially damaging to the Company. Mr.
Karmanos may terminate the agreement (1) upon the Companys breach of any material provision of the
agreement that remains uncured for 10 days following notice of the breach; (2) if the Companys
principal office is relocated outside the Detroit, Michigan metropolitan area; or (3) if the
Company fails to pay any amounts due under the agreement. Mr. Karmanos is required during the term
of the agreement to continue to comply with the provisions of our standard employee agreement,
which requires that he keep the Companys confidential information confidential and that he comply
with the Companys employee Code of Conduct. He will also be prohibited under the standard employee
agreement, during the term of the consulting agreement and for one year thereafter, from competing
with the Company, soliciting the Companys clients and soliciting or recruiting our employees.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive
officers, and persons who own more than 10 percent of a registered class of our equity securities,
to file with the SEC initial reports of ownership and reports of changes in ownership of our common
shares and other equity securities. Officers, directors and greater-than-10 percent shareholders
are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on our review of the copies of such reports furnished to us
during or with respect to fiscal 2009, or written representations that no Form 5 was required, we
believe that all Section 16(a) filing requirements applicable to our officers, directors and
greater than 10 percent beneficial owners were met during fiscal 2009, with the exception of the
following late filings: (1) one late Form 4 filed by Mr. Grabe to report the grant of Deferred
Compensation Units and (2) one late Form 5 filed by Mr. Karmanos to report the correction of two
erroneously reported 1999 transactions.
Related-Party Transactions
The approval of transactions between the Company and its executive officers and directors,
such transactions are subject to the limitations on conflicts of interest contained in the
Companys Codes of Conduct. To the extent any such transactions are proposed, they are subject to
approval by the Audit Committee of the Board of Directors in accordance with the Audit Committees
charter, applicable law and applicable NASDAQ rules, which require that any such transactions
required to be disclosed in the Companys proxy statement be approved by a committee of independent
directors of the Companys Board of Directors.
34
In fiscal 2009, we paid a total of $1,429,906 in ticket, advertising and suite license fees to
certain major and minor league sports venues, including arenas and teams located in Raleigh, North
Carolina; Plymouth, Michigan and Ft. Myers, Florida. These arenas and teams are owned, managed or
controlled by entities owned and controlled by
interests of Peter Karmanos, Jr., our Chairman of the Board and CEO, namely Compuware Sports
Corporation (CSC), the Carolina Hurricanes and Gale Force Sports & Entertainment, LLC (GFSE).
This amount includes approximately $840,000 we paid to CSC under a Promotion Agreement dated
September 8, 1992, which requires CSC to undertake certain promotional activities on behalf of the
Company. The Promotion Agreement automatically renews for successive one-year terms, unless
terminated by either party with 60 days notice. The total amount also includes approximately
$250,000 we paid to GFSE under an Advertising Agreement, dated December 1, 1996, which includes the
right to name the Plymouth, Michigan arena Compuware Arena and the placement of fixed advertising
in and about the arena. The Advertising Agreement will terminate on November 30, 2016.
Expense of Soliciting Proxies
We will bear the expense of Internet web site hosting and soliciting proxies, including the
cost of preparing, printing and mailing the Notice of Internet Availability of Proxy Materials, the
Notice of the 2009 Annual Meeting of Shareholders, the Proxy Statement, the 2009 Annual Report and
the accompanying proxy card. These materials are being sent to brokers, nominees and other
shareholders of record by U.S. mail or by electronic mail if so requested, and to employees who are
shareholders by internal electronic mail. The Notice of the 2009 Annual Meeting of Shareholders,
the Proxy Statement and the 2009 Annual Report will be available to view on the Internet web site.
Each shareholder may request that copies of these materials and an accompanying proxy card be
distributed to them directly either by U.S. mail or by electronic mail.
We may supplement our solicitation of proxies by mail with personal interview, telephone or
facsimile solicitation by our directors, officers and other regular employees. We will not pay any
special compensation to them for these services. We have also retained Georgeson Shareholder
Communications, Inc. to assist in our solicitation of proxies, at an approximate cost of $8,500,
plus reasonable expenses. We will request that brokers, nominees and other similar record-holders
forward proxy material to the beneficial owners of our common shares, and we will reimburse them
upon request for their reasonable expenses incurred in forwarding such material.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2010 ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders that are intended to be presented at our 2010 Annual Meeting of
Shareholders must be received by our Secretary at our offices, One Campus Martius, Detroit,
Michigan 48226, no later than March 18, 2010 to be considered for inclusion in our Proxy Statement
and proxy card relating to that meeting. In addition, our bylaws provide that, in order for a
shareholder proposal or nomination to be properly brought before the 2010 Annual Meeting, we must
receive written notice of such proposal or nomination and the information required by the bylaws on
or before May 26, 2010. If the date for the 2010 Annual Meeting of Shareholders is significantly
different than the first anniversary of the 2009 Annual Meeting of Shareholders, the bylaws and SEC
rules provide for an adjustment to the notice periods described above. All proposals for
director-nominees or matters to be considered and voted upon by shareholders at the meeting,
whether intended to be included in the Companys proxy or not, should be sent by certified mail,
return receipt requested and should satisfy the applicable informational requirements contained in
the Companys bylaws and the rules of the SEC. We expect the persons named as proxies for the 2010
Annual Meeting of Shareholders to use their discretionary voting authority, to the extent permitted
by law, with respect to any proposal presented at that meeting by a shareholder who does not
provide us with written notice of such proposal complying with the applicable requirements on or
before such date.
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C 1234567890
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MR ANDREW SAMPLE
1234 AMERICA DRIVE
ANYWHERE, IL 60661
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IMPORTANT ANNUAL SHAREHOLDERS MEETING
INFORMATION YOUR VOTE COUNTS!
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Compuware Annual Meeting Notice & Admission Ticket |
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C0123456789 |
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Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be Held on August 25, 2009
Under Securities and Exchange Commission rules, you are receiving this notice that the proxy
materials for the annual
shareholders meeting are available on the Internet. Follow the instructions below to view the
materials and vote online or
request a copy. The items to be voted on and location of the annual meeting are on the reverse
side. Your vote is important!
This communication presents only an overview of the more complete proxy materials that are
available to you on the
Internet. We encourage you to access and review all of the important information contained in the
proxy materials
before voting. The proxy statement and annual report to shareholders are available at:
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www.investorvote.com/CPWR |
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Easy Online Access A Convenient Way to View Proxy Materials and Vote
When you go online to view materials, you can also vote your shares.
Step 1: Go to www.investorvote.com/CPWR.
Step 2: Click the View button(s) to access the proxy materials.
Step 3: Return to the investorvote.com window and follow the instructions on the screen to log in.
Step 4: Make your selection as instructed on each screen to select delivery preferences and vote. |
<STOCK#>
012I5B
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Compuware Annual Meeting Notice & Admission Ticket |
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This is a notice to you that Compuwares Annual Meeting of Shareholders will be held on August 25,
2009, at Compuware headquarters, One Campus Martius, Detroit, MI 48226, at 3:00 p.m. Eastern time
to consider and act upon the following matters:
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1. |
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Election of Directors.
Dennis W. Archer
Gurminder S. Bedi
William O. Grabe
William R. Halling
Peter Karmanos, Jr.
Faye Alexander
Nelson
Glenda D. Price
W. James Prowse
G. Scott Romney |
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The ratification of the appointment of Deloitte & Touche LLP, our independent
registered public accounting firm, to audit our consolidated financial statements for
the fiscal year ending March 31, 2010. |
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A non-binding resolution to ratify the Rights Agreement, dated October 25, 2000, as amended.
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Such other business as may properly come before the meeting. |
The Board of Directors recommends that you vote FOR the listed nominees and the proposals.
PLEASE NOTE YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or
request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote
at the meeting, please bring this notice with you.
Directions to the Compuware 2009 Annual Meeting
The entrance for Compuware visitor parking is on Farmer Street between Monroe Street and Gratiot
Avenue. Once you have parked, please take the elevator down to Farmer Street (ground) level. Cross
the street to the Farmer Street entrance of the Compuware building, and make your way to the
registration desk.
For directions to Compuwares headquarters, go to www.compuware.com/hqdirections.
Due to space configurations at our headquarters, it may be necessary for us to use an additional
conference room to accommodate all shareholders who wish to attend.
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Obtaining a Copy of the Proxy Materials If you want to receive a paper or e-mail copy of these
documents, you must request one. There is no charge to you for requesting a copy. Please make
your request for a copy as instructed below on or before August 15, 2009, to facilitate
timely delivery. |
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Heres how to order a copy of the proxy materials: |
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Paper copies: Current and future paper delivery requests can be submitted via the
telephone, Internet or e-mail options below. |
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E-mail copies: Current and future e-mail delivery requests must be submitted via the
Internet following the instructions below. If you request
an e-mail copy of current
materials, you will receive an e-mail with a link to the materials. |
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PLEASE NOTE: You must use the numbers in the shaded bar on the reverse side when
requesting a set of proxy materials. |
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→
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Internet Go to www.investorvote.com/CPWR. Follow the
instructions to log in and order a paper or
e-mail copy of the current meeting
materials. |
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→
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Telephone Call us free of charge at 1-866-641-4276 using a touch-tone
phone and follow the instructions
to log in and order a paper copy of the materials
by mail for the current meeting. |
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→
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E-mail Send e-mail to investorvote@computershare.com with
Proxy Materials Compuware in the subject line. Include in the message
your full name and address, plus the three numbers located in the shaded bar on the
reverse, and state in the e-mail that you want a paper copy of current meeting
materials. |
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MR A SAMPLE | | | | |
| DESIGNATION (IF ANY) | | | | |
| ADD 1 | | | | |
| ADD 2 | | | | |
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | | x | | |
Admission Ticket
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, seven days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to voteyour proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern time, on August 24, 2009.
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Vote by Internet |
| | | Log on to the Internet and go to www.investorvote.com/CPWR |
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Follow the steps outlined on the secured
website. |
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Vote by telephone |
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Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any time on a touch tone
telephone. There is NO CHARGE to you for the call. |
| | | Follow the instructions provided by the recorded message. |
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Annual Meeting Proxy Card
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C0123456789
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6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
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Proposals The Board of
Directors recommends a vote FOR all the nominees listed and FOR Proposal 2 and 3. |
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The election of nine directors to serve until the next Annual Meeting of Shareholders and until their successors are elected and qualified. | + |
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| For |
| Withhold | | | | For | | Withhold | | |
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For | | Withhold | |
| | 01 - Dennis W. Archer | | o |
| o | | 02 - Gurminder S. Bedi | | o | | o | |
03 - William O. Grabe | | o | | o | |
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04 - William R. Halling | | o | | o | | 05 - Peter Karmanos, Jr. | | o | | o | | 06 -
Faye Alexander Nelson | | o | | o | | |
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07 - Glenda D. Price | | o | | o | | 08 - W. James Prowse | |
o | | o | | 09 - G. Scott Romney | | o | | o | | |
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2. The ratification of the appointment of Deloitte & Touche LLP as the
independent registered public accounting firm, to audit our consolidated
financial statements for the fiscal year ending March 31, 2010.
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3. A non-binding resolution to ratify the Rights Agreement,
dated October 25, 2000, as amended.
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In their discretion, the Proxy is also authorized, to the extent permitted by law, to vote on any
and all other matters as may properly come before the meeting, including the authority to vote to
adjourn the meeting. The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to said stock, and hereby ratifies and confirms all that the Proxy named
herein and their substitutes, or any of them, may lawfully do by virtue hereof. The undersigned
acknowledges receipt of the Notice of the Annual Meeting and the Proxy Statement, both dated July
16, 2009, and the 2009 Annual Report.
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Change of Address Please print your new address below. |
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Comments Please print your comments below. |
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Meeting Attendance |
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Mark the box to the right if you plan to attend the Annual Meeting. |
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IF VOTING BY MAIL, YOU MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
<STOCK #> 01213B
2009 Annual Meeting Admission Ticket
Compuware Corporation Shareholders
August 25, 2009, 3:00 p.m. Eastern time
Compuware Headquarters
One Campus Martius
Detroit, MI 48226
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
This ticket admits only the shareholder listed
on the reverse side of this card and is not transferable.
The entrance for Compuware visitor parking is on Farmer Street between Monroe Street and Gratiot
Avenue. Once you have parked, please take the elevator down to the Farmer Street (ground) level.
Cross the street to the Farmer Street entrance of the Compuware building, and make your way to the
registration desk.
Dear Shareholder:
This proxy card relates to the 2009 Annual Meeting of Shareholders of Compuware Corporation. Also
enclosed are Compuware Corporations Notice of the Annual Meeting, Proxy Statement and 2009 Annual
Report.
Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark the box on this proxy card to indicate how your shares should be voted. Then sign the
card and return it in the enclosed postage-paid envelope. You may also vote your shares by
Internet or telephone by following the instructions on the reverse side of this card, or in person
by attending the meeting.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Compuware Corporation
6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
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Proxy Compuware Corporation
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PROXY SOLICITED BY BOARD OF DIRECTORS
The Signatory hereby appoints as Proxy Daniel S. Follis, Jr. or Laura L. Fournier, and either of
them, with power of substitution, to vote the shares of Common Stock that the Signatory is entitled
to vote at the Annual Meeting of Shareholders of Compuware Corporation, to be held on August 25,
2009 and at any adjournment(s) thereof.
The Proxies will vote your shares in accordance with your directions on this card. If you do not
indicate your choice on this card, by Internet or telephone, this proxy card, when properly
executed, will be voted (a) FOR all the nominees for director as listed in Proposal 1, (b) FOR
ratification of the appointment of the independent registered public accounting firm, and (c) FOR
the non-binding resolution to ratify the Rights Agreement, dated October 25, 2000, as amended. The
proxy will also vote in their discretion with respect to any and all other matters brought before
the meeting to the extent permitted by applicable law.
PLEASE VOTE, DATE AND SIGN, AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
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Date (mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. |
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