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.
)
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Filed
by the Registrant
x
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Filed
by a Party other than the Registrant
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Check
the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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WORLD
ACCEPTANCE 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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x
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee
was paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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Schedule or Registration Statement No.:
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Party:
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June
30,
2008
To
the
Shareholders of
World
Acceptance Corporation:
In
connection with the Annual Meeting of Shareholders of your Company to be held
on
August 6, 2008, we enclose a Notice of the Meeting, this Proxy Statement
containing information about the matters to be considered at the Meeting, and
a
form of proxy relating to those matters.
In
addition, we enclose our 2008 Annual Report
,
which
provides information relating to the Company’s activities and operating
performance during the most recent fiscal year.
You
are
cordially invited to attend the Annual Meeting of Shareholders. We would
appreciate your signing and returning the form of proxy so that your shares
can
be voted in the event that you are unable to attend the Meeting. A postage-paid
return envelope for that purpose is provided for your convenience. Your proxy
will, of course, be returned to you if you are present at the Meeting and elect
to vote in person. It may also be revoked in the manner set forth in the Proxy
Statement. We look forward to seeing you at the Annual Meeting.
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Sincerely
yours,
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A.A.
McLean
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Chairman
of the Board and
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Chief
Executive Officer
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WORLD
ACCEPTANCE CORPORATION
108
Frederick Street
Greenville,
South Carolina 29607
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Our
Shareholders:
Notice
is
hereby given that the Annual Meeting of Shareholders of World Acceptance
Corporation will be held at the Company’s main office at 108 Frederick Street,
Greenville, South Carolina, on Wednesday, August 6, 2008, at 11:00 a.m., local
time, for the following purposes:
| 1. |
To
elect seven (7) directors to hold office until the next annual meeting of
shareholders or until their successors have been duly elected and
qualified; and
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| 2. |
To
consider and act upon a proposal to approve the 2008 Stock Option
Plan
authorizing the grant of stock purchase options and restricted stock
awards for a maximum of 1,000,000 shares of Common Stock of the Company
in
the aggregate; and
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| 3. |
To
consider and act upon a proposal to ratify the action of the
Audit
Committee
in
selecting KPMG LLP as the independent registered public accounting
firm to
audit the consolidated financial statements of the Company and its
subsidiaries for the fiscal year ending March 31, 2009; and
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| 4. |
To
transact such other business as may properly come before the Meeting
or
any adjournment or adjournments
thereof.
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The
Board
of Directors has fixed the close of business on June 27, 2008 as the record
date
for determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment or adjournments thereof.
The
Board
of Directors of the Company would appreciate your signing and returning the
accompanying form of proxy promptly so that, if you are unable to attend, your
shares can nevertheless be voted at the Annual Meeting.
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Chief
Executive Officer
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June
30,
2008
IMPORTANT
NOTICE
Please
Sign and Mail Your Proxy Promptly
WORLD
ACCEPTANCE CORPORATION
108
Frederick Street
Greenville,
South Carolina 29607
PROXY
STATEMENT
The
following statement, first mailed on or about June 30, 2008, is furnished in
connection with the solicitation by the Board of Directors (the “Board”) of
World Acceptance Corporation (the “Company”) of proxies to be used at the Annual
Meeting of Shareholders of the Company (the “Meeting”) to be held on August 6,
2008, at 11:00 a.m., local time, at the Company’s main office at 108 Frederick
Street, Greenville, South Carolina, and at any adjournment or adjournments
thereof.
The
accompanying form of proxy is for use at the Meeting if a shareholder is unable
to attend in person or plans to attend but prefers to vote by proxy. The proxy
may be revoked by the shareholder at any time before it is exercised by
submitting to the Secretary of the Company written notice of revocation, or
a
properly executed proxy of a later date, or by attending the Meeting and
electing to vote in person. All shares represented by valid proxies received
pursuant to this solicitation, and not revoked before they are exercised, will
be voted in the manner specified therein. If no specification is made, the
proxies will be voted in
favor
of:
| 1. |
The
election to the Board of the seven (7) nominees named in this Proxy
Statement; and
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| 2. |
The
approval of the 2008 Stock Option Plan;
and
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| 3. |
The
ratification of the
Audit
Committee
’s
selection of KPMG LLP as the independent registered public accounting
firm
to audit the consolidated financial statements of the Company and
its
subsidiaries for the fiscal year ending March 31,
2009.
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The
entire cost of soliciting these proxies will be borne by the Company. In
addition to the solicitation of the proxies by mail, the Company will request
banks, brokers, and other record holders to send proxies and proxy materials
to
the beneficial owners of the Company’s common stock, no par value (the “Common
Stock”), and secure the beneficial owners’ voting instructions, if necessary.
The Company will reimburse them for their reasonable expenses in so doing.
If
necessary, the Company may use several of its regular employees, who will not
be
specially compensated, to solicit proxies from shareholders, either personally
or by other forms of communication.
Pursuant
to the provisions of the South Carolina Business Corporation Act, the Board
of
Directors has fixed June 27, 2008 as the record date for the determination
of
shareholders entitled to notice of and to vote at the Meeting and, accordingly,
only holders of record of outstanding shares (the “Shares”) of the Common Stock
at the close of business on that date will be entitled to notice of and to
vote
at the Meeting.
The
number of outstanding Shares entitled to vote as of the record date was
16,360,543
.
Each
Share is entitled to one vote. In accordance with South Carolina law and the
Company’s bylaws, a majority of the outstanding Shares entitled to vote,
represented in person or by proxy, will constitute a quorum for the election
of
directors, the approval of the 2008 Stock Option Plan and the ratification
of
the selection of auditors. Abstentions and broker non-votes (if any) will be
counted for purposes of determining the presence or absence of a
quorum.
With
regard to the election of directors, votes may either be cast in favor of or
withheld, and directors will be elected by a plurality of the votes cast. Votes
that are withheld will be excluded entirely from the vote and will have no
effect on the outcome of the election of directors. Approval of the 2008 Stock
Option Plan and the selection of the independent registered public accounting
firm will be ratified if more votes are cast in favor of such proposal than
are
cast against it. Accordingly, abstentions will have no effect on the outcome
of
the vote on these proposals. Broker non-votes (if any), will not be counted
as
votes cast and will have no effect on the outcome of the vote on any proposals.
Cumulative voting is not permitted under the Company’s articles of
incorporation.
On
June
27, 2008, the only class of voting securities the Company had issued and
outstanding was its Common Stock. The following table sets forth the names
and
addresses of, and the numbers and percentages of Shares beneficially owned
by,
persons known to the Company to beneficially own five percent or more of the
outstanding Shares. Except as noted otherwise, each shareholder listed below
possesses sole voting and investment power with respect to the Shares listed
opposite the shareholder’s name.
Ownership
of Shares by Certain
Beneficial
Owners as of June 27, 2008
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Name
and Address of Beneficial Owner
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Amount and Nature
of Beneficial Ownership
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Percent
of Class
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Columbia
Wanger Asset Management L.P. (1)
Columbia
Acorn Trust
227
West Monroe Street, Suite 3000
Chicago,
Illinois 60606
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2,593,900
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15.39
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%
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Thomas
W. Smith (2)
Scott
J. Vassalluzzo
Idoya
Partners
323
Railroad Avenue
Greenwich,
Connecticut 06830
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2,564,641
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15.10
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%
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Wellington
Management Company, LLP (3)
75
State Street
Boston,
MA 02109
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1,179,400
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7.00
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%
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NorthPointe
Capital, LLC (4)
101
W. Big Beaver, Suite 745
Troy,
MI 48084
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947,308
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5.62
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%
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Barclays
Global Investors, N.A. (5)
Barclays
Global Fund Advisors
et
al.
45
Fremont Street
San
Francisco, California 94105
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919,042
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5.45
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%
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| (1) |
Based
on an Amended Schedule 13G filed January 29, 2008. Columbia Wanger
Asset
Management, L.P. reported sole voting power over 2,337,700 Shares
listed
and shared voting power over 256,200 Shares listed.
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| (2) |
Based
on an amended Schedule 13G filed February 14, 2008.
Mr.
Thomas W. Smith has the sole power to vote or to direct the vote
of
413,490 Shares and the sole power to dispose or to direct the disposition
of 597,900 Shares. Mr. Scott J. Vassalluzzo has the sole power and
direct
the vote of 11,700 Shares and the sole power to dispose or to direct
the
disposition of 47,700 Shares. Messrs. Smith and Vassalluzzo have
the
shared power to vote or dispose or to direct the vote or the disposal
of
1,966,741 Shares. Idoya Partners has the sole power to vote or direct
the
vote and dispose or to direct the disposition of 976,917 Shares.
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| (3) |
Based
on a Schedule 13G filed February14, 2008, Wellington Management Company,
LLP reported shared power to vote over 644,600 Shares listed and
shared
voting power to dispose over 1,179,400 Shares listed.
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| (4) |
Based
on a Schedule 13G filed January 14, 2008 NorthPointe Capital, LLC
reported
sole power over 880,783 Shares listed and sole dispositive power
over
947,308 Shares listed.
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| (5) |
Based
on a Schedule 13G filed February 5, 2008 Barclays Global Investors,
N.A.
reported sole voting power over 336,729 Shares listed and sole dispositive
power over 403,855 Shares listed. Barclays Global Fund Advisors reported
sole voting power over 357,135 and dispositive power over 497,899
Shares
listed. Barclays Global Investors, LTD reported sole dispositive
power
over 17,288 Shares listed. Barclays Global Investors Japan Trust
and
Banking Company Limited, Barclays Global Investors Japan Limited,
Barclays
Global Investors Canada Limited, Barclays Global Investors Australia
Limited, and Barclays Global Investors (Deutschland) AG reported
no sole
or dispositive power over listed
Shares.
|
ELECTION
OF DIRECTORS
The
Company’s bylaws provide for seven directors
.
The
Board
of Directors
,
upon
the recommendation of the
Nominating and Corporate Governance Committee, has nominated
the
director candidates described below. It is intended that the persons named
in
the accompanying proxy will vote only for the seven nominees for director named
on the following pages, except to the extent authority to so vote is withheld
with respect to one or more nominees. Each director will be elected to serve
until the next annual meeting of shareholders or until a successor is elected
and qualified. Directors will be elected by a plurality of the votes
cast.
Although
the Board does not expect that any of the nominees named will be unavailable
for
election, in the event of a vacancy in the slate of nominees occasioned by
death
or any other unexpected occurrence, it is intended that Shares represented
by
proxies in the accompanying form will be voted for the election of a substitute
nominee selected by the Nominating and Corporate Governance
Committee.
During
the most recent fiscal year, the Board of Directors held four regularly
scheduled meetings and took a number of actions by written consent. Each
director attended all meetings of the Board of Directors and all meetings of
each committee on which he served, except Mr. Hummers who did not attend one
audit committee meeting and Mr. Whitaker, who was appointed to the Board of
Directors to fill a vacancy on May 19, 2008.
The
Board typically schedules a meeting in conjunction with the Company’s annual
meeting of shareholders and expects that all directors will attend the annual
meeting absent a schedule conflict or other valid reason. All of our directors
attended the Company’s 2007 Annual Meeting, except Mr. Whitaker, who was not
appointed to the Board of Directors until May 19, 2008.
The
Board
of Directors maintains an Audit Committee on which Messrs. Way (Chairman),
Bramlett, and Mr. Whitaker serve effective May 19, 2008. Prior to May 19, 2008,
when the Board made committee reassignments, Messrs. Way (Chairman), Bramlett
and Hummers served on this committee. The Audit Committee reviews the results
and scope of each audit, the service provided by the Company’s independent
registered public accounting firm
and all
related-party transactions. The Board has determined, in accordance with NASDAQ
independence requirements, that each member of the Audit Committee is an
independent director. In addition, the Board has determined that each member
of
the Audit Committee meets the heightened standards of independence for audit
committee members under the Securities Exchange Act of 1934.
The
Audit
Committee met four times during fiscal 2008 and once in fiscal 2009 prior to
the
filing of this Proxy. This included quarterly conference call meetings with
management and the Company’s independent auditors to review interim financial
information prior to its public release. Additional information regarding the
Audit Committee is set forth below under “Appointment of Independent Registered
Public Accountants.”
The
Company’s Audit Committee, consistent with its established practice,
reviews
and considers any “related person” transactions, within the meaning of Item
404(a) of Regulation S-K under the Securities Act of 1933, as well as any
matters regarding the Company’s outside directors, that the Committee believes
may present a conflict of interest or potentially impair the independence of
one
of the Company’s outside directors. The Committee typically conducts this review
in conjunction with the preparation of materials for the Company’s annual
meeting of shareholders, or on any such other occasion when such transactions
are brought to the attention of the Committee, and applies its own judgment,
in
conjunction with SEC disclosure and NASDAQ independence rules, in assessing
such
transactions and determining the impact of such transactions on the independence
of an outside director.
The
Board
also maintains a Compensation and Stock Option Committee on which Messrs.
Bramlett (Chairman), Hummers and Way serve effective May 19, 2008. Prior to
May
19, 2008, Messrs. Gilreath (Chairman), Bramlett, Hummers and Way served on
this
committee. This Committee establishes and reviews the compensation criteria
and
policies of the Company, reviews the performance of selected officers of the
Company and recommends appropriate compensation levels to the Board of
Directors. Additionally, this Committee administers the Company’s 1992, 1994,
2002 and 2005 Stock Option Plans.
The
Board
has determined, in accordance with NASDAQ independence requirements, that each
member of the Compensation and Stock Option Committee is an independent
director.
The
Compensation and Stock Option Committee met twice during the most recent fiscal
year and twice in fiscal 2009 prior to the filing of this proxy. Additional
information regarding the Compensation and Stock Option Committee is set forth
below under “Executive Compensation - Compensation Discussion and
Analysis.”
The
Board
also maintains a Nominating and Corporate Governance Committee on which Messrs.
Gilreath (Chairman), Hummers and Whitaker serve effective May 19, 2008. Prior
to
May 19, 2008, Messrs. Bramlett (Chairman), Gilreath, Hummers and Way served.
This committee
makes
recommendations to the Board regarding
nominations for director and senior executive candidates,
makes
recommendations regarding membership
of
Board
Committees and
reviews
issues
with respect to the structure of Board meetings. This Committee meets at the
discretion of the Board or at the call of any two directors.
The
Board
has determined, in accordance with NASDAQ independence requirements, that each
member of the Nominating and Corporate Governance Committee is an independent
director.
This
Committee
met
twice
in fiscal 2008. Additional information regarding the Nominating and Corporate
Governance Committee is set forth below under “Corporate Governance Matters -
Director Nominations.”
Below
is
a list of nominees for election to the Board of Directors. Each nominee’s name,
age, current principal occupation (which has continued for at least five years
unless otherwise indicated) and the name and principal business of the
organization in which that occupation is carried on, the year each incumbent
was
first elected to the Board, all positions and offices presently held with the
Company, and directorships in other public companies are set forth below. Except
for Mr. Whitaker, each of the nominees served on the Board of Directors during
the Company’s last fiscal year. None of the following nominees or current
directors is related (as first cousin or closer) by blood, marriage, or adoption
to any other nominee, director, or person who may be deemed to be an executive
officer of the Company.
The
Board
unanimously recommends a vote FOR the election of these nominees for Director.
A.
ALEXANDER McLEAN, III (57), Chairman of the Board of Directors and Chief
Executive Officer, World Acceptance Corporation
.
Mr.
McLean has served as Chairman of the Board since August 2007 and as chief
executive officer since March 2006, as executive vice president from August
1996
to March 2006, as senior vice president from 1992 to August 1996, as vice
president from 1989 to 1992, and as chief financial officer from June 1989
until
March 2006. Mr. McLean has served as a director of the Company since June 1989.
JAMES
R. GILREATH
(
66)
,
Attorney, The Gilreath Law Firm, P. A.
,
Greenville, South Carolina, a law firm. Mr. Gilreath has practiced law in
Greenville, South Carolina since 1968 and in addition to his law degree also
has
a LLM in taxation. Mr. Gilreath has served as a director of the Company
since April 1989.
WILLIAM
S. HUMMERS, III (62), Retired
.
Mr.
Hummers served as Vice Chairman and Executive Vice President of The South
Financial Group, Inc., formerly Carolina First Corporation, from 1988 until
December 2006. Mr. Hummers currently serves as a director of The South Financial
Group, Inc. Mr. Hummers has served as a director of the Company since April
1989.
CHARLES
D. WAY (55), Retired.
From
1989
until 2006, Mr. Way served as chief executive officer of Ryan’s Restaurant
Group, Inc., and as its chairman from 1992 until 2006. From 1988 to 2004, Mr.
Way served as President of Ryan’s Family Steak House, Inc. From 1986 until 1988,
Mr. Way served as executive vice president, treasurer and secretary of Ryan’s
Family Steak House, Inc. Mr. Way has served as a director of the Company since
September 1991.
KEN
R. BRAMLETT, JR. (48),
Senior
Vice President and General Counsel, COMSYS IT Partners, Inc.
a
public
IT Services Company (NASDAQ: CITP) from January
1,
2006
to present. From 2005 to 2006, Mr. Bramlett was a
partner
of Kennedy Covington Lobdell & Hickman, LLP,
a
Charlotte
,
North
Carolina law firm. From 1996 to 2004, Mr. Bramlett served as Senior Vice
President and General Counsel of Venturi Partners, Inc., (formerly known as
Personnel Group of America, Inc.)
,
Charlotte, North Carolina, an information technology and personnel staffing
services company. Mr. Bramlett also served as chief financial officer of Venturi
from October 1999 to January 2001, and as a director of that company from August
1997 to January 2001. Prior to October 1996, Mr. Bramlett was an attorney with
Robinson, Bradshaw & Hinson, P.A., a Charlotte, North Carolina, law firm,
for 12 years. Mr. Bramlett also serves as a director of Raptor Networks
Technology, Inc. Mr. Bramlett has served as a director of the Company since
October 1993.
MARK
C. ROLAND (51), President and Chief Operating Officer, World Acceptance
Corporation.
Mr.
Roland has served as president since March 2006 and chief operating officer
since April 2005. Mr. Roland served as executive vice president from April
2002
to March 2006, and senior vice president from January 1996 to April 2002. Mr.
Roland served as senior vice president - operations support of Fleet Finance
in
Atlanta, Georgia from January 1993 to January 1996. Mr. Roland has served as
a
director of the Company since August 2007.
DARRELL
E. WHITAKER (50), President and Chief Operating Officer of IMI Resort Holdings,
Inc.
a
sales
and marketing company of luxury real estate.
Before
joining IMI in January of 2004, Mr. Whitaker served as the Chief Operating
Officer and VP of Finance and Corporate Secretary of The Cliffs Communities,
Inc., a developer of high end resort communities. He joined the Cliffs
Communities, Inc. in July 1998 as Chief Financial Officer, a position he held
until becoming COO in August 2001. In addition, he has held executive management
positions with leading corporations such as Ryan’s Family Steak House, Inc. from
the hospitality industry, Baby Superstores, Inc. from the retail industry and
Food Lion, Inc. from the supermarket industry. Mr. Whitaker has served as a
director of the Company since May 2008.
The
following table sets forth the sole (unless otherwise indicated) beneficial
ownership, as defined by Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, of Shares as of June 27, 2008, for each director, nominee, or
executive officer identified in the Summary Compensation Table and all directors
and executive officers as a group.
OWNERSHIP
OF COMMON STOCK OF MANAGEMENT AS OF JUNE 27, 2008
|
Shares Beneficially Owned
|
|||||||
|
Name of
Individual or Number in Group
|
Amount
(1)
|
Percent of Class
|
|||||
|
A.
Alexander McLean, III
|
227,112
|
(2)
|
1.4
|
%
|
|||
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James
R. Gilreath
|
102,500
|
(3)
|
*
|
||||
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Ken
R. Bramlett, Jr.
|
54,280
|
*
|
|||||
|
Mark
C. Roland
|
42,459
|
*
|
|||||
|
Charles
D. Way
|
39,000
|
*
|
|||||
|
William
S. Hummers, III
|
23,780
|
*
|
|||||
|
Kelly
M. Malson
|
23,486
|
*
|
|||||
|
James
Daniel Walters
|
11,300
|
(4)
|
*
|
||||
|
Jeff
Tinney
|
3,800
|
*
|
|||||
|
Darrell
E. Whitaker
|
2,000
|
*
|
|||||
|
Directors
and all executive
officers
as a group (12 persons)
|
538,800
|
3.2
|
%
|
||||
*Less
than 1%.
| (1) |
Includes
the following Shares subject to options exercisable within 60 days
of June
27, 2008: Mr. McLean – 104,500; Mr. Gilreath
–
36,000; Mr. Bramlett – 42,000; Mr. Roland – 27,500; Mr. Way – 30,000; Mr.
Hummers – 13,500; Ms. Malson – 10,600; Mr. Walters – 8,400; Mr.
Tinney – 3,800. Directors and Executive Officers as a group –
279,900.
|
| (2) |
Includes
51,000 Shares in a self-directed retirement account maintained for
the
benefit of Mr. McLean. Also includes 45,271 Shares which are pledged
as
security.
|
| (3) |
Includes
7,500 Shares held in a profit-sharing trust for which Mr. Gilreath
serves
as trustee. Also includes 53,000 Shares in a limited partnership
in which
Mr. Gilreath is a partner.
|
| (4) |
Includes
900 Shares held by Mr. Walters’ spouse. Mr. Walters disclaims beneficial
ownership of these Shares.
|
CORPORATE
GOVERNANCE MATTERS
Corporate
Governance Policy and Committee Charters
In
furtherance of its goal of providing effective governance of the Company’s
business and affairs for the benefit of shareholders, the Board of Directors
of
the Company has adopted a corporate governance policy. Copies of the governance
policy and the committee charters for the Company’s Audit Committee,
Compensation and Stock Option Committee and Nominating and Corporate Governance
Committee are available on the Company’s website, at
www.worldacceptance.com
as well
as by mail to any shareholder who requests a copy by writing to the Company’s
Corporate Secretary at P.O. Box 6429, Greenville, SC 29606.
Director
Independenc
e
The
Board
of Directors has determined that a majority of its members, specifically, Mr.
James R. Gilreath, Mr. William S. Hummers, III, Mr. Charles D. Way, Mr. Ken
R.
Bramlett, Jr. and Mr. Darrell E. Whitaker, are independent within the meaning
of
the independence requirements of NASDAQ. In considering its independence
determination with respect to Mr. Hummers, the Board considered Mr. Hummers’
position, a director of the parent corporation of one of the lenders under
the
Company’s revolving credit facility, and determined that this relationship did
not impair Mr. Hummers’ independence. Mr. A. Alexander McLean, Chairman and
Chief Executive Officer, and Mr. Mark C. Roland, President and Chief Operating
Officer, do not meet the independence requirements of NASDAQ.
Audit
Committee Financial Experts
The
Board
of Directors has determined that each member of the Audit Committee who served
as such during the last fiscal year, Mr. Way, Mr. Bramlett and Mr. Hummers,
is
an audit committee financial expert. As of May 19, 2008, Mr. Whitaker replaced
Mr. Hummers on the Audit Committee. The Board of Directors has determined that
Mr. Whitaker also is an audit committee financial expert. Each of these four
directors is also “independent” as that term is defined in accordance with the
independence requirements of NASDAQ.
Executive
Sessions of Non-Management Directors
Non-management
Board members meet without management present at regularly scheduled executive
sessions. In addition, to the extent that the group of non-management directors
include directors that are not independent directors, at least once a year
an
executive session including only independent directors will be scheduled. Mr.
Gilreath, effective May 19, 2008, or any successor Chairman of the Nominating
and Corporate Governance Committee, will preside over meetings of the
non-management or independent directors.
Prior to
May 19, 2008, Mr. Bramlett served as the Chairman of the Nominating and
Corporate Governance Committee.
Code
of Ethics and Code of Business Conduct and Ethics
The
Company has adopted a written Code of Business Conduct and Ethics (the “Code of
Ethics”) that applies to all directors, employees and officers of the Company
(including the Company’s Chief Executive Officer (principal executive officer)
and Vice President and Chief Financial Officer (principal financial and
accounting officer)). The Code of Ethics has been filed as an exhibit to the
Company’s Annual Report on Form 10-K for the year ended March 31, 2008. A copy
of the Code of Ethics is also available on the Company’s website at
www.worldacceptance.com
,
and to
any shareholder who requests a copy by writing to the Company’s Corporate
Secretary at P.O. Box 6429, Greenville, South Carolina 29606.
Shareholder
Communications with Directors
Any
shareholder who wishes to communicate with the board of directors, or one or
more individual directors, may do so by writing to this address:
World
Acceptance Corporation
Board
Administration
c/o
Corporate Secretary
P.
O. Box
6429
Greenville,
South Carolina 29606
Your
letter should indicate that you are a shareholder. Depending on the subject
matter, management will:
|
·
|
Forward
the communication to the director or directors to whom it is
addressed;
|
|
·
|
Attempt
to address the communication directly, for example, where it is a
request
for information about the Company or a stock-related matter;
or
|
|
·
|
Not
forward the communication if it is primarily commercial in nature
or if it
relates to an improper or irrelevant
topic.
|
At
each
meeting of the Board, a member of management will present a summary of all
communications received since the last meeting that were not forwarded. Those
communications are available to the directors on request.
Director
Nominations
The
Board
of Directors is responsible for nominating members of the Board and for filling
vacancies on the Board that may exist between annual meetings of shareholders,
except to the extent that the Company’s bylaws or applicable South Carolina law
require otherwise. The Board of Directors has delegated the screening process
for director nominees to the Nominating and Corporate Governance Committee
(the
“Governance Committee”). The Company’s Governance Committee consists of three
“independent” directors, as determined by the Board in accordance with
applicable NASDAQ standards.
The
Company’s corporate governance policy outlines certain minimum criteria for
Board membership. These criteria reflect the Board’s belief that all directors
should have the highest personal and professional integrity and, as a general
rule, should be persons who have demonstrated exceptional ability, diligence
and
judgment. In addition, the policy requires that at least a majority of the
Board
consist of independent directors. The Governance Committee has not developed
or
recommended to the Board any specific criteria for Board membership to
complement these general criteria. However, the Governance Committee believes
that directors should, at a minimum, have expertise that may be useful to the
Company. Directors should also be willing and able to devote the required amount
of time to Company business.
The
Governance Committee applies these criteria when evaluating all nominee
candidates. When current Board members are considered for nomination for
re-election, the Governance Committee also considers their prior Board
contributions and meeting attendance records.
When
seeking director candidates, the Governance Committee may solicit suggestions
from incumbent directors, management or others. Consistent with the Company’s
corporate governance policy, the Governance Committee will also consider
candidates recommended by shareholders, provided that such nominations are
made
in writing and are received by the Company at its executive offices not later
than, in the case of nominees to be considered for election at the 2009 Annual
Meeting of Shareholders, March 2, 2009 (which is the business day closest to,
but not greater than, 120 days prior to the anniversary of this Proxy
Statement). Any nomination should be sent to the attention of the Company
Secretary and must include, concerning the director nominee, the following
information: full name, age, date of birth, educational background and business
experience, including positions held for at least the preceding five years.
The
nomination must also include the nominee’s home and business addresses and
telephone numbers and include a signed representation by the nominee to timely
provide all information requested by the Company as part of its disclosure
in
regard to the solicitation of proxies for the election of directors. The name
of
each such candidate for director must be placed in nomination at the Annual
Meeting by a shareholder present in person. The nominee must also be present
in
person at the meeting. A vote for a person who has not been duly nominated
pursuant to these requirements is void.
The
Governance Committee’s process for recommending nominees begins with a
preliminary assessment of each candidate based on the individual’s resume and
biographical information, willingness to serve and other background information.
This information is evaluated against the criteria stated above and the specific
needs of the Company at that time. After these preliminary assessments, the
candidates who appear best suited to meet the Company’s needs may be invited to
participate in a series of interviews to continue the evaluative process.
Incumbent directors, however, generally are not required to interview again.
On
the basis of the information learned during this process, the Governance
Committee determines which nominees to recommend to the Board for
nomination.
Mr.
Whitaker was recommended by one of the Company’s non-management directors as a
potential nominee.
The
Company’s Governance Committee does not currently use the services of any third
party search firm to assist in identifying or evaluating board candidates.
However, the Committee may engage a third party to provide these services in
the
future, as it deems appropriate at the time.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who own more than 10 percent of a registered
class of the Company’s equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive
officers, directors, and greater-than-10-percent shareholders are required
by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company’s knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all of the Company’s executive officers, directors, and
greater-than-10-percent beneficial owners have complied with such reporting
requirements during the fiscal year ended March 31, 2008.
Executive
Compensation
Compensation
Discussion and Analysis
Process
Overview
The
Company’s Compensation and Stock Option Committee (sometimes referred to below
as the Compensation Committee or the Committee) is empowered to review and
approve, or in some cases recommend for approval by the full Board of Directors,
the annual compensation paid to, and the compensation practices and procedures
regarding, the five executive officers of the Company identified below in the
Summary Compansation Table, who are also sometimes referred to in this Proxy
Statement as the Company’s Named Executive Officers, (“NEOs”); Chief Executive
Officer (“CEO”); President and Chief Operating Officer (“COO”); Vice President
and Chief Financial Officer (“CFO”); Senior Vice President - Western Division;
and Senior Vice President - Southern Division. The Company’s Compensation
Committee is also empowered to review and approve, or in some cases recommend
for approval by the full Board of Directors, the annual compensation and
compensation practices and procedures regarding the 2 executive officers who
are
not NEOs, and the 23 non-executive officers of the Company.
Role
of Executives in Establishing Compensation
The
Company’s CEO plays a role in the assessment and recommendation of compensation
award decisions for his direct reports, including the assessment and
recommendation of compensation for the Company’s CFO. He provides information to
the Committee regarding compensation matters and, in such instances, helps
set
the agenda for compensation discussions. He does not play a role in
recommendations regarding his own compensation, the compensation of the
Company’s directors or the compensation of employees other than his direct
reports.
Compensation
Committee Activity
The
Compensation Committee meets as often as it determines necessary to carry out
its duties and responsibilities. This includes regularly scheduled meetings
and,
if necessary, special meetings. The regular meeting schedule is established
in
consultation with management. The Committee members review and approve the
minutes of each meeting. Any special meetings of the Committee are initiated
by
the Chairman of the Committee. Generally, the agenda for each meeting includes
regular administrative items to be considered by the Committee and any specific
topics the Chairman or any other Committee member may want to discuss. The
Committee from time to time seeks input from the CEO in setting the agenda.
Members of management provide information to the Committee that management
believes will be helpful to the Committee in discussing agenda topics.
Management also provides materials that the Committee specifically
requests.
The
Company’s CEO is typically invited to attend general sessions of the
Compensation Committee, and, depending upon the topic to be discussed, may
be
invited to attend executive sessions of the Committee. The Committee believes
that the CEO’s insight into particular compensation matters is an important
factor when discussing and making such decisions regarding such matters. The
Company’s CEO is not present during Committee discussions concerning his own
compensation. Other members of management attend meetings and executive sessions
upon invitation by the Committee if and when the Committee believes their advice
and input regarding specific matters before the Committee would be useful and
appropriate.
The
Committee met twice since the beginning of the last fiscal year and twice in
fiscal 2009 prior to the filing of this Proxy Statement. The Committee acted
by
written consent five times in fiscal 2008. The authority and responsibilities
of
the Compensation Committee are set forth in more detail in the Committee’s
charter, which is available on the Company’s website, at
www.worldacceptance.com.
Objectives
of the Compensation Program
The
primary objectives of the Company’s compensation program, including the
executive compensation program, are (i) to attract and retain highly capable
and
well-qualified executives and other employees, (ii) to focus executive on
driving specified operating results and (iii) to focus executives’ efforts on
increasing shareholder value. A further objective of the compensation program
is
to provide incentives and rewards to executives and other employees for their
contribution to the Company. In addition, the Company strives to promote an
ownership mentality among executives, other employees and the Board of Directors
and to structure compensation programs and make compensation decisions that
are
based on performance.
What
the Company’s Compensation Program is Designated to Reward
The
Company’s compensation program is designed to create a collegial atmosphere that
encourages executives to cooperate toward the achievement of goals that benefit
the Company and shareholders as a whole, while at the same time rewarding each
executive’s and other employee’s individual contribution to the Company. The
Committee has established a compensation package consisting of base salary,
short-term incentive compensation in the form of annual cash bonuses based
on
the performance of the Company during the prior fiscal year, and long-term
incentive compensation primarily in the form of discretionary stock options
and
restricted stock awards that historically have vested over a period of time.
The
Compensation Committee believes that it is desirable to tie a significant
percentage of the executive officer’s overall compensation to the achievement of
performance goals designed to maximize shareholder value. Accordingly, executive
employment agreements and Executive Incentive Plan provide for minimum base
salary levels, subject to adjustment at the discretion of the Compensation
Committee, and potentially significant annual cash bonus awards based on the
achievement of objective annual Company performance goals. The Committee intends
to use stock options and restricted stock, with appropriate vesting criteria,
as
further means of attracting and retaining qualified and highly talented
executive officers with a market competitive compensation program that
supplements the base salary and bonus elements with longer-term incentives.
The
Committee also believes that these equity-based awards serve the useful purpose
of fostering an ownership mentality in executives and fairly link the value
of a
significant component of executive compensation to the value realized by the
Company’s shareholders. The same key components and compensation philosophy, at
differing amounts, are applied to exempt employees at all levels within the
Company.
The
Executive Incentive Plan is based on the Company’s achievement of
pre-established annual goals related to (1) increases in earnings per share,
(2)
growth in loan receivables, (3) expense control, and (4) charge-off control.
The
Compensation Committee selected these goals to motivate and reward the
maximization of shareholder value based on its belief that earnings per share
is
the most direct measure of shareholder value and that growth in loans receivable
combined with expense control and charge-off control are the three most
significant determinants of earnings per share. In fiscal 2008, incentive
compensation averaged approximately 75.8% of the total compensation earned
by
the NEOs.
Stock
price performance has not been a factor in determining annual compensation
because the price of the Company’s stock is subject to a variety of factors
outside management’s control such as low float and trading volumes. The Company
has not historically used a rigid formula for allocating between cash and
non-cash compensation.
Peer
Group
The
Committee commissioned a compensation consultant to perform an analysis of
the
compensation package of certain executive officers, and to review comparative
compensation data in an effort to ensure that the executive compensation
packages in fiscal 2008 were competitive. In addition the Committee uses a
peer
group to benchmark future compensation. This analysis was provided to the
committee in order to benchmark the fiscal 2009 and future compensation for
certain executives. The Committee considered the peer group data and the
consultant’s recommendations when considering the compensation packages of
certain executive officers. Based on these considerations, Mr. McLean, Mr.
Roland’s and Ms. Malson’s base salaries for fiscal 2009 were increased to
$400,000, $300,000 and $175,000, respectively.
The
Role of Employment Agreements
The
Company maintains employment agreements with Mr. McLean, Mr. Roland and Ms.
Malson, which are described below in more detail under “Executive Compensation -
Retention Agreements.” The Committee believes that the employment contracts are
necessary to secure the services of those individuals on the terms and
conditions stated in the agreements, and to provide management stability should
there occur a significant corporate change-of-control event. The employment
agreements with these executives run for three-year terms expiring on May 20,
2010, May 20, 2010, and August 26, 2010, respectively. These agreements
generally provide for the payment of severance benefits above and beyond
compensation accrued through the date of separation only in cases in which
the
executive is terminated without cause or is constructively discharged. In cases
of a change in control of the Company (as generally defined under the agreements
in accordance with Section 409A of the Internal Revenue Code), these additional
severance benefits are triggered only in the event there is both a change in
control and the executive is terminated without cause or constructively
discharged within two years following the change in control. The Company and
the
Committee believe that the change in control severance triggers in these
agreements strike an appropriate balance between Company and shareholder
concerns about executive retention in the event of a change of control versus
the executives’ legitimate concerns regarding termination or diminution of
duties in such an event.
Elements
of Company’s Compensation Program
Base
Salary and Executive Incentive Plan
Annual
executive officer cash compensation consists of a base salary component and
the
Executive Incentive Plan discussed above. It is the Compensation Committee’s
intention to set total executive cash compensation high enough to attract and
retain highly capable and well-qualified executives, but at levels that fairly
balance the goals of compensation relative to the interests of the Company’s
shareholders and are dependent to a significant extent on Company performance.
The Compensation Committee targets base salary at the median of comparative
market data, and normally provides bonus opportunities that are directly in
line
with Company’s performance. The Executive Incentive Plan is based on the
Company’s achievement of pre-established annual goals related to (1) increases
in earnings per share, (2) growth in loan receivables, (3) expense control,
and
(4) charge-off control. The Compensation Committee selected these goals to
motivate and reward the maximization of shareholder value based on its belief
that earnings per share is the most direct measure of shareholder value and
that
growth in loans receivable combined with expense control and charge-off control
are the three most significant determinants of earnings per share.
Stock
Option Grants and Restricted Stock Grants
Each
of
the Company’s executive officers receives stock option grants or restricted
stock under the Company’s stock option plans. All of the Company’s full time
employees are eligible for stock option grants through the Company’s stock
option plans. Approximately 89% and 9% of the stock options and restricted
stock, respectively, granted under the plan in fiscal 2008 were granted to
employees who are not executive officers. Approximately 90% and 28% of the
stock
options and restricted stock, respectively, granted under the plan in fiscal
2007 were granted to employees who are not executive officers.
The
Compensation Committee believes that through the Company’s broad-based plan, the
economic interest of employees, including executives, are more closely aligned
to those of the Company’s shareholders. The decision on the number of stock
options or shares of restricted stock granted to each executive officer is
made
by the Compensation Committee on a discretionary rather than formula basis.
The
Compensation Committee believes it is appropriate to position executive officer
compensation at or around the median of the market for a comparable position.
This results in the package remaining competitive enough to attract and retain
top talent while not over rewarding average performance. Compensation is set
higher for exceptional business performance, for key skills in critical demand,
and for positions that are of particularly high internal value. The Company
is
willing to pay above the industry median to motivate, reward and retain
performers that significantly exceed the Company and individual goals.
The
Company grants all equity incentive awards based on the fair market value as
of
the date of grant. The value of restricted stock grants and the exercise price
for stock option grants are determined by reference to the last quoted price
per
share on the NASDAQ at the close of business on the date of grant.
Option
and restricted stock awards under the compensation programs are made at
regularly scheduled Compensation Committee meetings or, as may be needed in
the
case of new hires, promotions, or inadvertent omissions of employees from the
regularly scheduled annual grants, at properly noticed special meetings.
Post-Employment
Compensation
The
Company has instituted a Supplemental Executive Retirement Plan (“SERP”), which
is a non-qualified executive benefit plan in which the Company agrees to pay
the
participating executive additional benefits in the future, usually at
retirement, in return for continued employment by the executive. The Company
selects the key executives who participate in the SERP. The SERP is an unfunded
plan, which means there are no specific assets set aside by the Company in
connection with the establishment of the plan. The executive has no rights
under
the plan beyond those of a general creditor of the Company. There are currently
nine senior level managers, including all the executive officers, except the
Senior Vice President - Mexico, who participate in the SERP. The SERP contracts
provide for a retirement benefit of 45% of the participant’s final base salary,
multiplied by a “Days of Service Fraction” should the participant elect early
retirement, for a period of 15 years. No participant will be granted early
retirement until the participant has reached age 57, has been a participant
of
the plan for at least 8 years and obtains permission from the Board of
Directors. More information regarding the SERP is set forth below under
“Executive Compensation - Supplemental Executive Retirement Plan.”
Stock
Ownership/Retention Guidelines
Currently,
the Company does not maintain stock ownership guidelines or have a stock
retention policy applicable to its executive officers, and is not considering
any such guidelines or policy at this time.
Other
Elements of Compensation and Perquisites:
In
order
to attract and retain top caliber executives and to pay them market levels
of
compensation, the Company provides NEOs and certain other employees the
following benefits and perquisites:
| · |
Medical
Insurance.
The Company makes available to each NEO, the NEO’s spouse and dependents
such health and dental insurance coverage as the Company may from
time to
time make available to its other employees, officers and executives.
The
Company pays the same portion of the premiums for these insurances
for its
NEOs as it does for all of its employees.
|
| · |
Life
and Disability Insurance.
The Company provides each NEO long term disability and life insurance
as
the Company in its sole discretion may from time to time make available
to
its other officers and employees.
|
| · |
Deferred
Compensation.
The Company maintains for its senior and executive officers a
Non-Qualified Deferred Compensation Plan. No executive officers currently
participate in this plan and the plan is unfunded.
|
| · |
Defined
Contribution Plan.
The Company offers the Section 401(k) Retirement Plan (the “401(k) Plan”),
a tax qualified retirement plan, to its eligible employees. The 401(k)
Plan permits eligible employees to defer up to 15% of their annual
eligible compensation, subject to certain limitations imposed by
the
Internal Revenue Code. The employees’ elective deferrals are immediately
vested and non-forfeitable in the 401(k) Plan. The Company makes
a
matching contribution equal to 50% of the employees’ contributions for the
first 6% of annual eligible deferred compensation, which vest over
a 6
year period
|
| · |
Company
Car.
The Company provides each NEO and each of its other officer level
employees the unrestricted use of a Company car at no expense to
the
officer employee.
|
| · |
Company
Aircraft.
The Company allows the NEOs and their spouses or family members to
fly on
the Company aircraft when used concurrently with another official
Company
function. No other personal use of the Company aircraft is allowed.
|
| · |
Other.
The Company makes available certain perquisites or fringe benefits
to
executive officers and other employees, such as professional society
dues,
food, and recreational fees incidental to official Company functions.
|
How
the Company Chose Amounts and/or Formulas for Each Element
Base
Compensation
As
discussed above, the Company provides its NEOs with a base salary that is
determined by reference to the comparative market data, but will vary from
such
levels based on:
|
·
|
The
NEO’s industry experience, knowledge and qualification;
and
|
|
·
|
The
salary levels in effect for comparable positions within the Company’s
principal industry marketplace
competitors.
|
Annual
Bonus
It
is the
Compensation Committee’s objective to have a substantial portion of each
officer’s compensation contingent on the Company’s performance as well as upon
his or her own level of performance and contribution towards the Company’s
performance. Executive officers, as well as non-executive officers and other
employees, receive bonus compensation in the event certain specified corporate
performance measures are achieved. As an officer’s level of responsibility
increases, it is the Compensation Committee’s intent to have a greater portion
of the officer’s total compensation be dependent upon the Company’s performance
rather than on base salary.
The
table
below shows the maximum incentive compensation payable to NEOs for fiscal 2008
as a percentage of base salary and the particular targets, as a percentage
of
the executive’s overall incentive opportunity, on which the incentive
compensation opportunity is based.
|
Name
|
Maximum
Incentive
Compensation
as a % of Base
Salary
|
% of
Incentive
Opportunity
tied to EPS
Increase
|
% of Incentive
Opportunity
tied to Loan
Receivable
Growth
|
% of
Incentive
Opportunity
tied to
Expense
Control
|
% of Incentive
Opportunity
tied to Charge-
off
Control
|
|||||||||||
|
A. A. McLean
III
|
150
%
|
|
40%
|
|
30%
|
|
20%
|
|
10%
|
|
||||||
|
Kelly
M. Malson
|
120%
|
|
40%
|
|
30%
|
|
20%
|
|
10%
|
|
||||||
|
Mark
C. Roland
|
135%
|
|
40%
|
|
30%
|
|
20%
|
|
10%
|
|
||||||
|
James
D. Walters
|
50%
|
|
40%
|
|
35%
|
|
25%
|
|
0%
|
|
||||||
|
Jeff
Tinney
|
50%
|
|
40%
|
|
35%
|
|
25%
|
|
0%
|
|
||||||
In
addition to the incentive compensation above, Messrs. Tinney and Walters are
eligible for an additional incentive compensation amount equal to 50% of their
base salary based on the achievement of business unit performance goals, which
are as follows:
|
Name
|
Maximum
Incentive
Compensation
as a
%
of Base Salary
|
%
of
Incentive
Opportunity
tied
to
Profit
|
%
of Incentive
Opportunity
tied
to
Net
Bad
Debt
|
%
of
Incentive
Opportunity
tied
to
Delinquency
|
%
of
Incentive
Opportunity
tied
to Loan
Receivable
Growth
|
|||||||||||
|
Jeff
Tinney
|
50%
|
|
20%
|
|
30%
|
|
20%
|
|
30%
|
|
||||||
|
James
D. Walters
|
50%
|
|
20%
|
|
30%
|
|
20%
|
|
30%
|
|
||||||
Approximately
65.4% of the aggregate amount of annual bonus earned by Company employees in
fiscal 2008 was awarded to employees who are not NEOs.
Timing
of Compensation Decisions
All
elements of executive officer and non-executive officer compensation are
reviewed in May or June after a review of the financial statements, operating
objectives and personal objectives for the prior fiscal year has been completed.
The
Compensation Committee may, however, review salaries or grant stock options
at
other times as a result of new appointments or promotions during the year.
The
following table summarizes the approximate timing of the more significant
compensation events:
|
Event
|
Timing
|
|
|
Set
Board and Committee meeting dates
|
At
least 1 year prior to meeting dates.
Board
meetings have historically been
held
in February, May, August and
November.
Compensation
Committee meeting dates
have
historically been in May and
November.
|
|
|
Establish
executive and non-executive officer financial and personal
objectives
|
May
or June of each fiscal year for the current year.
|
|
|
Review
and approve base salary
for
executive and non-executive officers
|
May
of each fiscal year for the current
year.
|
|
|
Determine
stock option grants and
restricted
stock grants for executive
officers,
non-executive officers,
and
other
employees
|
October
or November of each fiscal year
for
the current year.
|
Summary
Compensation Table
The
following table includes information concerning compensation for the full fiscal
year ended March 31, 2008 to the five NEOs, including the CEO, CFO and three
other most highly compensated executive officers of the Company who were serving
as such as of March 31, 2008.
|
Name
and
Principal
Position
|
Year
|
Salary
($)
(1)
|
Bonus
($)
|
Stock
Awards
($)
(2)
|
Option
Awards
($)
(3)
|
Non-
Equity
Incentive Plan Compen
-sation
($)
(4)
|
Change
in Pension Value and Non-
qualified
Deferred
Compensation Earnings
($)
(5)
|
All
Other
Compensation
($)
(6)
|
Total
($)
|
|||||||||||||||||||
|
A.A.
Mclean, III
Chief
Executive
Officer
|
2008
2007
|
$
|
323,863
268,180
|
-
-
|
$
|
325,600
225,274
|
$
|
132,886
237,230
|
$
|
485,750
375,452
|
$
|
134,620
72,791
|
$
|
29,546
33,725
|
$
|
1,432,265
1,212,652
|
||||||||||||
|
Kelly
Malson
|
2008
|
151,667
|
-
|
229,686
|
88,127
|
179,800
|
26,293
|
24,406
|
699,980
|
|||||||||||||||||||
|
Vice-President
and
Chief
Financial
Officer
|
2007
|
135,000
|
-
|
225,274
|
156,304
|
151,200
|
-
|
20,637
|
688,415
|
|||||||||||||||||||
|
Mark
C. Roland
|
2008
|
263,867
|
-
|
291,631
|
146,109
|
352,350
|
76,001
|
24,991
|
1,154,949
|
|||||||||||||||||||
|
President
and
Chief
Operating
Officer
|
2007
|
233,200
|
-
|
225,274
|
259,212
|
293,832
|
53,143
|
27,085
|
1,091,746
|
|||||||||||||||||||
|
James
D. Walters
Senior
Vice
President
–
Southern
Division
|
2008
2007
|
121,916
113,940
|
-
-
|
-
-
|
143,970
94,225
|
103,392
99,416
|
20,065
17,940
|
13,386
9,947
|
402,729
335,468
|
|||||||||||||||||||
|
Jeff
Tinney
|
2008
|
110,000
|
-
|
-
|
72,897
|
92,644
|
34,764
|
4,535
|
314,840
|
|||||||||||||||||||
|
Senior
Vice
President
–
Western
Division
|
2007
|
93,049
|
-
|
-
|
43,431
|
59,888
|
-
|
4,026
|
200,394
|
|||||||||||||||||||
| (1) |
Base
salary for the named executive officers is based upon experience,
overall
qualifications, and information about compensation offered to executive
officers of similar qualifications and experience at similar companies
as
discussed further above in “Executive Compensation – Compensation
Discussion and Analysis.”
|
| (2) |
The
amounts in this column reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended March 31, 2008
and 2007, in accordance with SFAS No. 123(R) and thus include
amounts from awards granted in and prior to the respective fiscal
years.
Assumptions used in the calculation of these amounts are included
in
footnote 13 to the Company’s audited financial statements for the fiscal
year ended March 31, 2008, included in the Company’s Annual Report on
Form 10-K filed with the Securities and Exchange Commission on
May 30, 2008.
|
| (3) |
The
amounts in this column reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended March 31, 2008
and 2007, in accordance with SFAS No. 123(R) and thus include
amounts from awards granted in and prior to fiscal 2008. Assumptions
used
in the calculation of these amounts for fiscal years ended March 31,
2006, 2007 and 2008 are included in footnote 13 to the Company’s audited
financial statements for the fiscal year ended March 31, 2008,
included in the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on May 30,
2008.
|
| (4) |
The
bonus payment is based on the Company’s achievement of pre-established
annual goals related to increases in earnings per share, growth in
receivables, expense control and charge-off
control.
|
| (5) |
These
amounts consist of the increase in the present value of the NEOs
benefit
under the Company’s SERP.
|
| (6) |
Components
of All Other Compensation are included in a separate table
below.
|
Components
of All Other Compensation
|
Benefits
and Perquisites
|
McLean
|
Malson
|
Roland
|
Walters
|
Tinney
|
|||||||||||
|
Company
car
|
$
|
12,497
|
$
|
15,113
|
$
|
10,557
|
$
|
2,311
|
$
|
1,304
|
||||||
|
Company
contributions to 401(k) Plan
|
12,766
|
8,915
|
12,279
|
7,464
|
3,164
|
|||||||||||
|
Term
life insurance premiums
|
500
|
378
|
500
|
301
|
67
|
|||||||||||
|
Personal
use of
corporate
plane
|
2,355
|
-
|
1,655
|
3,310
|
-
|
|||||||||||
|
Club
dues
|
1,428
|
-
|
-
|
-
|
-
|
|||||||||||
|
Total
|
$
|
29,546
|
$
|
24,406
|
$
|
24,991
|
$
|
13,386
|
$
|
4,535
|
||||||
Supplemental
Executive Retirement Plan
As
discussed above under “Executive Compensation - Compensation Discussion and
Analysis - Elements of the Company’s Compensation Program – Post-Employment
Compensation” the Company has a SERP.
The
expected benefits associated with the retirement of any of the NEOs at March
31,
2008 assuming retirement at projected base salary at the number of years of
credited service, are indicated in the table below.
In
the
event of a participant’s death, the SERP is payable to the participant’s
beneficiary or estate as if the participant had retired at 65 years of
age.
|
Name
|
Number of
Years
Credited Service
(#)
|
Present
Value
of
Accumulated
Benefit at Retirement
($)
(1)
|
Payments
During
Last Fiscal
Year
($)
|
Present Value of
Accumulated
Benefit at Death ($)
(2)
|
|||||||||
|
A.
A. McLean
|
18
|
$
|
941,221
|
-
|
$
|
1,464,122
|
|||||||
|
K.
M. Malson
|
2
|
45,162
|
-
|
764,840
|
|||||||||
|
M.
C. Roland
|
12
|
499,247
|
-
|
1,180,038
|
|||||||||
|
J.
D. Walters
|
11
|
168,264
|
-
|
532,835
|
|||||||||
|
J.
Tinney
|
11
|
388,303
|
-
|
497,583
|
|||||||||
|
(1)
|
Based
on the assumptions disclosed in footnote 13 of the March 31, 2008
Form
10-K filed May 30, 2008 and based on the assumption the NEO retires
at age
65.
|
|
(2)
|
Present
value of SERP benefits payable at death was calculated as 45% of
the
executive’s base salary for 15 years assuming a 6% interest rate.
|
Retention
Agreements
Effective
May 21, 2007, the Company entered into new employment agreements with Mr. A.
Alexander McLean, III, its Chief Executive Officer, and Mr. Mark C. Roland,
its
President and Chief Operating Officer. Effective August 28, 2007, the Company
entered into an employment agreement with Ms. Kelly M. Malson, its Vice
President and Chief Financial Officer. These new agreements run for an initial
three-year term that expires on May 20, 2010, May 20, 2010 and August 27, 2010,
respectively, but are subject to automatic extension for successive one-year
periods thereafter unless either the Company or the executive gives notice
of
termination not less than 90 days prior to the date on which the agreement
would
otherwise be automatically extended. The agreements provide for annual base
salaries of not less than $335,000, $270,000, and $155,000 for Mr. McLean,
Mr.
Roland and Ms. Malson, respectively, subject to annual adjustment as determined
by the Compensation and Stock Option Committee (the “Committee”). In conjunction
with the Company’s annual performance review, performed in June, the fiscal 2009
base salaries for Mr. McLean, Mr. Roland and Ms. Malson were increased to
$400,000, $300,000, and $175,000 respectively. In addition Ms. Malson’s maximum
annual bonus was increased from 120% to 125%. These increases were effective
June 1, 2008.
The
agreements further provide for payment, at the Company’s discretion, of annual
cash incentive payments and equity or cash based long-term incentive
compensation awards in accordance with criteria established by the Board or
the
Committee, including participation in the Company’s Executive Incentive Plan, as
described above under “—Compensation Discussion and Analysis.” Each executive is
also entitled to the use of a Company automobile (including maintenance and
insurance) of a value commensurate with the executive’s position in accordance
with the Company’s car policy and to participate in all other compensation
benefits and programs and to receive such other benefits and perquisites as
provided under any existing or future program for salaried employees. These
benefits include the right to participate in the Company’s SERP in accordance
with that plan, as described above.
Under
the
agreements, the Company has agreed to provide these executives with long-term
disability insurance benefits equal to 60% of the executive’s base salary at the
time of disability. These agreements also provide for severance payments and
the
continuation of certain benefits if the executive is terminated without cause
or
constructively discharged (as defined in the agreement). In the event of such
termination without cause or constructive discharge, including any such
termination or discharge that occurs within two years after a change of control
of the Company, the executive is generally entitled to receive (i) a lump sum
cash payment of accrued salary, unused vacation pay and any unpaid bonus earned
for the year prior to the fiscal year in which termination occurs, (ii) a
prorated bonus for the portion of the fiscal year in which the termination
occurs, calculated based on the average of the executive’s bonus payments for
the preceding three years, (iii) severance pay equal to two years’ base salary
and two years’ bonus (calculated as the average of the bonus paid to the
executive over the three years prior to termination), payable over 24 months
and
(iv) the continuation of all other welfare and fringe benefits until the earlier
of 24 months from the date of termination or such time as the executive becomes
employed and eligible for similar benefits from another company. In the event
the executive is terminated without cause or is constructively discharged
following a change in control, the severance payments described in item (iii)
of
the preceding sentence shall be payable in a lump sum, unless the termination
occurs between the first and second anniversary of the change in control. In
the
event the executive’s employment is terminated for reasons other than a without
cause termination or constructive discharge, the Company is generally obligated
to pay to the employee or his estate the amount of accrued and unpaid
compensation due the employee through the date of termination.
Under
these agreements, Messrs. McLean and Roland and Ms. Malson have agreed to
observe certain confidentiality and non-compete obligations during the term
of
employment and for 24 months thereafter.
The
following table provides estimates of the amounts payable to Messrs. McLean
and
Roland and Ms. Malson under their employment agreements, assuming each was
terminated without cause or constructively discharged on March 31, 2008. Note
that the table excludes unpaid salary accrued through the termination date
and
reimbursement of any unpaid business expenses.
|
Name
|
Salary
Continuation
($)
|
Bonus
Continuation
($)
|
Benefits
Continuation
($)
(1)
|
Benefits from
Accelerated
Equity Vesting
($)
(2)
|
Total
($)
|
|||||||||||
|
A.
A. McLean III
|
$
|
670,000
|
$
|
731,467
|
$
|
10,750
|
$
|
680,720
|
$
|
2,092,937
|
||||||
|
Kelly
M. Malson
|
310,000
|
331,000
|
10,478
|
394,423
|
1,045,901
|
|||||||||||
|
Mark
C. Roland
|
540,000
|
584,700
|
10,750
|
615,055
|
1,750,505
|
|||||||||||
|
(1)
|
The
benefits continuation payment represent 24 months of health and dental
insurance based on the executive’s current insurance
cost.
|
|
(2)
|
Benefits
from accelerated equity vesting represent the difference between
the
Company’s March 31, 2008 closing stock price and the option exercise price
for any unvested shares.
|
These
executives are also entitled to benefits discussed in the sections entitled
“-Supplemental Executive Retirement Plan,” “-Death Benefits,” and “-Disability
Benefits.”
Death
Benefits
The
Company also provides death benefits to the NEOs, which are payable to each
participant’s designated beneficiary or estate. The participant’s designated
beneficiary will be entitled to receive the proceeds of any life or other
insurance or other death benefit programs. In addition, the beneficiaries will
be eligible for SERP benefits according to the terms and conditions of that
plan
as if the executive had retired at age 65. Had any of the NEOs become deceased
on March 31, 2008, the Company would have paid the following:
|
Name
|
Life insurance
proceeds
($)
(1)
|
Present Value of
SERP
benefits
($)
(2)
|
Benefits
from Accelerated Equity Vesting
($)
(3)
|
Total
($)
|
|||||||||
|
A.
A. McLean III
|
$
|
500,000
|
$
|
1,464,122
|
$
|
680,720
|
$
|
2,644,842
|
|||||
|
Kelly
Malson
|
310,000
|
764,840
|
394,423
|
1,469,263
|
|||||||||
|
Mark
C. Roland
|
500,000
|
1,180,038
|
615,055
|
2,295,093
|
|||||||||
|
James
D. Walters
|
243,832
|
532,835
|
77,124
|
853,791
|
|||||||||
|
Jeff
Tinney
|
220,000
|
497,583
|
62,172
|
779,755
|
|||||||||
|
(1)
|
Life
insurance proceeds represent two times the participant’s base pay not to
exceed $500,000.
|
|
(2)
|
Present
value of SERP benefits payable at death was calculated as 45% of
the
executive’s base salary for 15 years assuming a 6% interest rate.
|
|
(3)
|
Benefits
from accelerated equity vesting represent the difference between
the
Company’s March 31, 2008 closing stock price and the option exercise price
for any unvested shares.
|
Disability
Benefits
In
the
event of disability, the Company will continue to pay the NEO his or her salary
for a period of 90 days. After the 90 days, the Company may terminate his or
her
employment, at which time the Company will provide long-term disability payments
of 60% of the base salary at the time of disability until the NEO reaches age
65. At age 65, the NEO will begin to receive payments under the SERP
plan.
Had
any
of the NEOs become disabled on March 31, 2008 his or her benefits would have
been as follows:
|
Name
|
90
day
continuation
pay
($)
(1)
|
Long
term
disability pay
($)
(2)
|
Present Value
of
SERP
benefits
($)
(3)
|
Total
($)
|
|||||||||
|
A.
A. McLean III
|
$
|
83,750
|
$
|
1,367,140
|
$
|
702,158
|
$
|
2,153,048
|
|||||
|
Kelly
M. Malson
|
38,750
|
1,280,129
|
14,963
|
1,333,842
|
|||||||||
|
Mark
C. Roland
|
67,500
|
1,573,384
|
267,657
|
1,908,541
|
|||||||||
|
James
D. Walters
|
30,479
|
966,345
|
43,959
|
1,040,783
|
|||||||||
|
Jeff
Tinney
|
27,500
|
663,444
|
131,280
|
822,224
|
|||||||||
| (1) |
Represents
3 months of the Executive’s current base salary.
|
|
(2)
|
Long
term disability pay was calculated as the present value of 60% of
the
executive’s base pay from March 31, 2008 until the executive reaches age
65. The present value calculation assumed a 6% interest
rate.
|
|
(3)
|
SERP
benefits if the executive was disabled were calculated as the present
value of 45% of the executive’s base pay, at the time the executive was
disabled, for 15 years beginning when the executive reaches age 65.
The
present value calculation assumes an interest rate of
6%.
|
Stock
Options and Restricted Stock
The
Company currently has a 1992 Stock Option Plan, a 1994 Stock Option Plan, a
2002
Stock Option Plan a 2005 Stock Option Plan for the benefit of certain officers
and employees. Under these plans 5,010,000 shares of authorized Common Stock
have been reserved for issuance pursuant to grants of options, or in some cases,
restricted stock, approved by the Compensation and Stock Option Committee of
the
Board of Directors. The authorized options have a maximum duration of 10 years,
may be subject to certain vesting requirements, and are priced at the market
value of the Company’s Common Stock on the date of the grant of the option.
As
of
March 31, 2008, options to purchase an aggregate of 4,923,592 shares of Common
Stock (net of options canceled) had been granted pursuant to the plans, options
to purchase 3,649,375 shares have been exercised, and restricted stock awards
of
78,423 shares have been granted (net of cancellations). Options to purchase
1,274,217 shares remained outstanding under the plans as of such date, and
234,123 shares of Common Stock remained available under the plans for future
grants. Of this remaining capacity, the entire amount may be granted as options,
and up to 234,123 shares of the remaining capacity may be granted as restricted
stock.
In
addition, Board of Directors has approved, subject to shareholder approval,
a
new 2008 Stock Option Plan that would make available an additional 1,000,000
shares of Common Stock for awards under options. For more information regarding
the proposed 2008 Stock Option Plan, see “Proposal to Approve the 2008 Stock
Option Plan.”
Grants
of Plan-Based Awards Table
The
following table sets forth certain information with respect to the restricted
stock and options granted during or for the fiscal year ended March 31, 2008
to
each of the NEOs.
|
Name
|
Grant
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
Estimated Future Payouts
Under Equity
Incentive
Plan
Awards (1)
|
All Other
Stock
Awards:
Number
of
Shares of
Stock or Units
(#)
|
All Other
Option Awards: Number of Securities Underlying
Options
(#)
|
Exercise or
Base Price of
Stock and Option Awards
($)
|
Grant
Date Fair Value of Stock and
Option
Awards
($)
|
|||||||||||||||||||||
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||||||||||||||||||||||||
|
A.
A. McLean
|
11/28/07
|
-
|
2,225
|
4,450
|
6,675
|
9,100
|
-
|
$
|
30.94
|
$
|
281,554
|
|||||||||||||||||
|
K.
M. Malson
|
11/28/07
|
-
|
1,025
|
2,050
|
3,075
|
4,300
|
-
|
30.94
|
133,042
|
|||||||||||||||||||
|
M.
C. Roland
|
11/28/07
|
-
|
1,813
|
3,627
|
5,400
|
7,400
|
-
|
30.94
|
228,956
|
|||||||||||||||||||
|
J.
D. Walters
|
11/12/07
|
-
|
-
|
-
|
-
|
-
|
10,000
|
14.21
|
(2)
|
142,100
|
||||||||||||||||||
|
J.
Tinney
|
11/12/07
|
-
|
-
|
-
|
-
|
-
|
10,000
|
14.21
|
(2)
|
142,100
|
||||||||||||||||||
|
(1)
|
Represent
total potential future payouts of the 2009-2011 performance awards.
Payout
of performance share awards at the end of the 2009-2011 plan period
will
be dictated by the Company’s performance against pre-determined measures
of EPS growth. The shares will vest in 3 years based on the Company’s
compounded EPS growth according to the following:
|
|
Vesting
Percentage
|
Compounded Annual EPS Growth
|
|||
|
100%
|
15%
or higher
|
|||
|
67%
|
12%
to 14.99
|
%
|
||
|
33%
|
10%
to 11.99
|
%
|
||
|
0%
|
less
than 10
|
%
|
||
|
(2)
|
Based
on the Black Scholes model, options granted on November 12, 2007
had a
fair value of $14.21.
|
Outstanding
Equity Awards Value at Fiscal Year-End Table
The
following table includes certain information with respect to the value at March
31, 2008 of all unexercised options and restricted shares previously awarded
to
the NEOs. The number of options held at March 31, 2008 includes options granted
under the stock option plans discussed above.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexerc-
isable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares or
Units of
Stock
That
Have
Not
Vested
($)
(9)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units, or
Other
Rights
That
Have
Not
Vested (#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
($)
|
|||||||||||||||||||
|
A.
A. McLean
|
50,000
|
-
|
-
|
5.375
|
04/01/09
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
A.
A. McLean
|
20,000
|
-
|
-
|
8.39
|
10/17/11
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
A.
A. McLean
|
7,500
|
-
|
-
|
8.29
|
10/24/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
A.
A. McLean
|
8,000
|
2,000
|
(1)
|
-
|
16.55
|
10/24/13
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
A.
A. McLean
|
3,000
|
2,000
|
(2)
|
-
|
23.53
|
10/28/14
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
A.
A. McLean
|
6,000
|
9,000
|
(3)
|
-
|
28.29
|
11/09/15
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
A.
A. McLean
|
10,000
|
15,000
|
(4)
|
-
|
25.05
|
03/23/16
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
A.
A. McLean
|
-
|
-
|
-
|
-
|
-
|
3,000
|
(5)
|
95,550
|
-
|
-
|
||||||||||||||||||
|
A.
A. McLean
|
-
|
-
|
-
|
-
|
-
|
6,006
|
(8)
|
191,291
|
6,675
|
(10)
|
212,599
|
|||||||||||||||||
|
K.
M. Malson
|
1,600
|
2,400
|
(3)
|
-
|
28.29
|
11/09/15
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
K.
M. Malson
|
10,000
|
15,000
|
(4)
|
-
|
25.05
|
03/23/16
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
K.
M. Malson
|
-
|
-
|
-
|
-
|
-
|
3,000
|
(5)
|
95,550
|
-
|
-
|
||||||||||||||||||
|
K.
M. Malson
|
-
|
-
|
-
|
-
|
-
|
2,838
|
(8)
|
90,390
|
3,075
|
(10)
|
97,939
|
|||||||||||||||||
|
M.
C. Roland
|
2,000
|
-
|
-
|
9.00
|
05/14/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
M.
C. Roland
|
1,500
|
-
|
-
|
8.29
|
10/24/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
M.
C. Roland
|
4,000
|
2,000
|
(1)
|
-
|
16.55
|
10/24/13
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
M.
C. Roland
|
2,000
|
2,000
|
(2)
|
-
|
23.53
|
10/28/14
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
M.
C. Roland
|
8,000
|
12,000
|
(3)
|
-
|
28.29
|
11/09/15
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
M.
C. Roland
|
10,000
|
15,000
|
(4)
|
-
|
25.05
|
03/23/16
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
M.
C. Roland
|
-
|
-
|
-
|
-
|
-
|
3,000
|
(5)
|
95,550
|
-
|
-
|
||||||||||||||||||
|
M.
C. Roland
|
-
|
-
|
-
|
-
|
-
|
4,884
|
(8)
|
155,555
|
5,400
|
(10)
|
171,990
|
|||||||||||||||||
|
J.
D. Walters
|
600
|
-
|
-
|
8.39
|
10/17/11
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
D. Walters
|
800
|
-
|
-
|
8.29
|
10/24/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
D. Walters
|
1,200
|
600
|
(1)
|
-
|
16.55
|
10/24/13
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
D. Walters
|
1,200
|
1,200
|
(2)
|
-
|
23.53
|
10/28/14
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
D. Walters
|
4,000
|
6,000
|
(3)
|
-
|
28.29
|
11/09/15
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
D. Walters
|
2,000
|
8,000
|
(7)
|
-
|
46.21
|
11/24/16
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
D. Walters
|
-
|
10,000
|
(11)
|
-
|
28.19
|
11/12/17
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
Tinney
|
600
|
-
|
-
|
8.39
|
10/17/11
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
Tinney
|
800
|
-
|
-
|
8.29
|
10/24/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
Tinney
|
1,200
|
600
|
(1)
|
-
|
16.55
|
10/24/13
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
Tinney
|
1,800
|
1,200
|
(2)
|
-
|
23.53
|
10/28/14
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
Tinney
|
1,200
|
1,800
|
(3)
|
-
|
28.29
|
11/9/15
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
Tinney
|
800
|
3,200
|
(6)
|
-
|
49.00
|
11/08/16
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
J.
Tinney
|
-
|
10,000
|
(11)
|
-
|
28.19
|
11/12/17
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
(1)
|
Stock
options vest at a rate of 20% per year, with vesting dates of 10/24/04,
10/24/05, 10/24/06, 10/24/07 and
10/24/08.
|
|
(2)
|
Stock
options vest at a rate of 20% per year, with vesting dates of 10/28/05,
10/28/06, 10/28/07, 10/28/08 and
10/28/09.
|
|
(3)
|
Stock
options vest at a rate of 20% per year, with vesting dates of 11/09/06,
11/09/07, 11/09/08, 11/09/09 and
11/09/10.
|
|
(4)
|
Stock
options vest at a rate of 20% per year, with vesting dates of 3/23/07,
3/23/08, 3/23/09, 3/23/10 and
3/23/11.
|
|
(5)
|
Restricted
shares vest at a rate of 33 1/3% immediately and 33 1/3% per year,
with
vesting dates of 11/24/06, 11/24/07 and
11/24/08.
|
|
(6)
|
Stock
options vest at a rate of 20% per year, with vesting dates of 11/08/07,
11/08/08, 11/08/09, 11/08/10 and
11/08/11.
|
|
(7)
|
Stock
options vest at a rate of 20% per year, with vesting dates of 11/24/06,
11/24/07, 11/24/08, 11/24/09 and
11/24/10.
|
|
(8)
|
Restricted
shares vest at a rate of 34% immediately and 33% per year with vesting
dates of 11/28/07, 11/28/08 and
11/28/09.
|
| (9) |
Represents
the market value of the Company’s stock at the close of business on March
31, 2008.
|
|
(10)
|
Represent
total potential future payouts of the 2009-2011 performance awards.
Pay
out of performance share awards at the end of the 2009-2011 plan
period
will be dictated by the Company’s performance against pre-determined
measures of EPS growth. The shares will vest in 3 years based on
the
Company’s compounded EPS growth according to the following:
|
|
Compounded Annual EPS Growth
|
||||
|
100%
|
15%
or higher
|
|||
|
67%
|
12%
to 14.99
|
%
|
||
|
10%
to 11.99
|
%
|
|||
|
0%
|
less
than 10
|
%
|
||
|
(11)
|
Stock
options vest at a rate of 20% per year with vesting dates of 11/12/08,
11/12/09, 11/12/10, 11/12/11 and
11/12/12.
|
Option
Exercises and Stock Vested Table
The
following table includes certain information with respect to the options
exercised by the NEOs during the fiscal year ended March 31, 2008.
|
Option
Awards
|
Stock
Awards
|
||||||||||||
|
Name
|
Number of
Shares
Acquired on
Exercise
(#)
|
Value
Realized
on Exercise
($)
|
Number of
Shares
Acquired on
Vesting (#)
|
Value
Realized
on
Vesting
($)
|
|||||||||
|
A. A.
McLean
|
20,182(1)
|
|
$
|
511,929
|
3,094
|
$
|
95,728
|
||||||
|
Kelly
M. Malson
|
-
|
-
|
1,462
|
45,234
|
|||||||||
|
Mark
C. Roland
|
-
|
-
|
2,516
|
77,845
|
|||||||||
|
James
D. Walters
|
-
|
-
|
-
|
-
|
|||||||||
|
Jeff
Tinney
|
-
|
-
|
-
|
-
|
|||||||||
| (1) |
All
of these exercised options were due to the options expiring during
the
fiscal year.
|
Director
Compensation for Fiscal 2008
The
following table summarizes the compensation the Company paid to members of
the
Board of Directors for the fiscal year ended March 31, 2008:
|
Name
|
Fees
Earned
or Cash
Paid
|
Stock
Awards ($)
(1)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Changes in Pension
Value and Non-qualified
Deferred
Compensation
Earnings ($) (2)
|
All Other
Compensation
($)
|
Total ($)
|
|||||||||||||||
|
K.
R. Bramlett
|
$
|
26,500
|
$
|
82,283
|
-
|
-
|
$
|
(76,969
)
|
|
-
|
$
|
31,814
|
||||||||||
|
J.
R. Gilreath
|
25,500
|
82,283
|
-
|
-
|
-
|
|
|
-
|
|
|
107,783
|
|
||||||||||
|
W.
S. Hummers
|
|
|
25,500
|
|
|
82,283
|
|
|
-
|
|
-
|
-
|
-
|
107,783
|
||||||||
|
C.
D. Way
|
28,000
|
82,283
|
-
|
-
|
-
|
-
|
110,283
|
|||||||||||||||
|
(1)
|
Reflects
the dollar amount recognized for financial statement reporting purposes
for the fiscal year ended March 31, 2008 in accordance with SFAS
No. 123(R) and thus includes amounts from awards granted in and
prior to fiscal 2008. See the table below for information regarding
the
number of stock awards and option awards outstanding for these directors
as of March 31, 2008. The fair value of restricted shares granted
on May
1, 2006 was $28.96 per share.
|
|
(2)
|
Reflects
the change in the fair value of the stock units held in the Deferred
Fee
Plan as of March 31, 2008.
|
Each
director who is not an employee of the Company currently is paid a $4,500
quarterly retainer, plus $1,000 for each meeting of the Board of Directors
attended and $500 for attendance at each meeting of a committee on which he
serves. The Chairman of each committee receives an additional $500 for each
committee meeting attended. The Company offers a deferred fee plan for its
non-employee directors under which participating directors may defer any or
all
of their retainer and meeting fees for specified time periods. The deferred
fee
plan is non-qualified for tax purposes. Deferred fees under the plan earn
interest at the prime rate or, at each participating director’s option, a return
based on the Company’s stock price performance over time. During fiscal 2008,
none of the directors elected to defer any fees under this plan. All directors
are reimbursed for ordinary and necessary out-of-pocket expenses incurred in
attending meetings of the Board of Directors and its committees. On May 19,
2008
and April 30, 2007 each outside director received 2,000 shares of restricted
stock. One half of these shares vested immediately upon issuance with the other
half vesting one year from the date of grant. The fair value of the restricted
shares granted on May 19, 2008 and April 30, 2007 was $43.67 and $42.93 per
share, respectively. At the time of grant, the total fair value of the 2,000
shares granted to each director was $87,340 and $85,860, respectively. These
shares were issued pursuant to the terms of the 2005 Stock Option
Plan.
The
table
below sets forth information with respect to the value at March 31, 2008 of
all
unexercised options and shares of restricted stock held by non-employee
directors.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of
Stock
That
Have
Not
Vested
(#)
(1)
|
Market
Value of
Shares
or
Units of
Stock
That
Have
Not
Vested
($)
(2)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units, or
Other
Rights
That Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
|
|||||||||||||||||||
|
K.
R. Bramlett
|
6,000
|
-
|
-
|
5.469
|
4/30/09
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
6,000
|
-
|
-
|
5.125
|
4/30/10
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
6,000
|
-
|
-
|
6.75
|
4/30/11
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
1,500
|
-
|
-
|
9.00
|
5/14/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
10,500
|
-
|
-
|
11.44
|
5/16/13
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
6,000
|
-
|
-
|
15.42
|
4/30/14
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
6,000
|
-
|
-
|
25.20
|
5/2/15
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
K.
R. Bramlett
|
-
|
-
|
-
|
-
|
-
|
1,000
|
31,850
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
6,000
|
-
|
-
|
5.125
|
4/30/10
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
6,000
|
-
|
-
|
6.75
|
4/30/11
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
1,500
|
-
|
-
|
9.00
|
5/14/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
10,500
|
-
|
-
|
11.44
|
5/16/13
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
6,000
|
-
|
-
|
15.42
|
4/30/14
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
6,000
|
-
|
-
|
25.20
|
5/2/15
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
J.
R. Gilreath
|
-
|
-
|
-
|
-
|
-
|
1,000
|
31,850
|
-
|
-
|
|||||||||||||||||||
|
W.
S. Hummers
|
1,500
|
-
|
-
|
9.00
|
5/14/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
W.
S. Hummers
|
6,000
|
-
|
-
|
15.42
|
4/30/14
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
W.
S. Hummers
|
6,000
|
-
|
-
|
25.20
|
5/2/15
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
W.
S. Hummers
|
-
|
-
|
-
|
-
|
-
|
1,000
|
31,850
|
-
|
-
|
|||||||||||||||||||
|
C.
D. Way
|
6,000
|
-
|
-
|
6.75
|
4/30/11
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
C.
D. Way
|
1,500
|
-
|
-
|
9.00
|
5/14/12
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
C.
D. Way
|
10,500
|
-
|
-
|
11.44
|
5/16/13
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
C.
D. Way
|
6,000
|
-
|
-
|
15.42
|
4/30/14
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
C.
D. Way
|
6,000
|
-
|
-
|
25.20
|
5/2/15
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
C.
D. Way
|
-
|
-
|
-
|
-
|
-
|
1,000
|
31,850
|
-
|
-
|
|||||||||||||||||||
|
(1)
|
Restricted
shares vested at a rate of 50% immediately and 50% vesting on May
19,
2009.
|
|
(2)
|
Represents
the market value of the Company’s stock at the close of business on March
31, 2008.
|
Report
of the Compensation and Stock Option Committee
We
have
reviewed and discussed with management the Compensation Discussion and Analysis
contained in this Proxy Statement. Based on the reviews and discussions referred
to above, we recommend to the Board of Directors that the Compensation
Discussion and Analysis referred to above be included in this Proxy Statement.
Compensation
Committee
Ken
R.
Bramlett, Jr., Chairman
William
S. Hummers, III
Charles
D. Way
Proposal
to Approve the 2008 Stock Option Plan
The
Board
is submitting the Company’s 2008 Stock Option Plan (the “2008 Plan”) to the
shareholders for their approval. The Board has approved the 2008 Plan, which
will become effective on August 6, 2008, subject to shareholder approval. As
of
the date of this Proxy Statement, no awards have been granted under the 2008
Plan.
The
Board
believes that adoption of the 2008 Plan is in the best interests of the Company
because of the need to provide equity incentive awards to attract, retain and
motivate quality employees and directors, to remain competitive in the industry
and to align participants’ interests with those of the Company’s other
shareholders. For these reasons, the Board unanimously recommends a vote
for
the
adoption of the 2008 Plan.
The
principal provisions of the 2008 Plan are summarized below. This summary is
qualified in its entirety by reference to the full text of the 2008 Plan, a
copy
of which is attached to this Proxy Statement as Appendix
A
.
Summary
of the 2008 Plan
General
.
The
2008 Plan provides that the Company may grant stock options and restricted
stock
awards to employees and directors of the Company or its subsidiaries. The
primary purpose of the 2008 Plan is to:
|
·
|
attract
and retain persons eligible to participate in the Plan;
|
|
·
|
motivate
participants in the Plan, by means of appropriate incentives, to
achieve
long-range goals;
|
|
·
|
provide
incentive compensation opportunities that are competitive with those
of
other similar companies; and
|
|
·
|
further
align the interests of persons eligible to participate in the Plan
with
those of the Company’s other shareholders through compensation that is
based on the Company’s Common Stock and Company performance.
|
Shares
Subject to the Plan
.
The
maximum number of Shares of our Common Stock that may be delivered under the
2008 Plan is 1,000,000. The Shares with respect to which awards may be made
under the Plan are currently authorized but unissued Shares or, to the extent
permitted by applicable law, Shares reacquired by the Company, including Shares
purchased in the open market or in private transactions. To the extent provided
by the Committee, any award may be settled in cash rather than Common Stock.
The
closing price of the Company’s common stock on the NASDAQ Global Select Market
on June 27, 2008 was $34.39 per Share. None of the Shares authorized under
the
Company’s 1992, 1994, 2002 or 2005 Stock Option Plans will be made available
under the 2008 Plan. The number of Shares that may be delivered under the 2008
Plan (as well as the exercise prices of outstanding options) will be adjusted
in
the event of a corporate transaction or similar recapitalization event to
reflect any change in the capitalization of the Company as contemplated in
the
2008 Plan.
The
Committee may use Shares of Common Stock available under the Plan as the form
of
payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company or a subsidiary, including
the
plans and arrangements of the Company or a subsidiary assumed in business
combinations.
To
the
extent any Shares of Common Stock covered by an award are not delivered because
the award is forfeited or canceled, or the Shares of Common Stock are not
delivered on an unrestricted basis including, without limitation, by reason
of
the award being used to satisfy the applicable tax withholding obligation,
such
Shares shall not be deemed to have been delivered for purposes of determining
the number of Shares of Common Stock available for delivery under the Plan.
If
the
exercise price of any option granted under the Plan or any prior plan, or the
tax withholding obligation with respect to any award granted under the Plan
or
any prior plan, is satisfied by tendering Shares of Common Stock to the Company,
only the number of Shares of our Common Stock issued net of the Shares of Common
Stock tendered shall be deemed delivered for purposes of determining the number
of Shares of Common Stock available for delivery under the Plan.
Adjustment
of Awards
.
In the
event of a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
sale of assets or subsidiaries, combination or exchange of shares), the
Committee shall adjust awards and the various limits on the maximum number
of
Shares that may be awarded under the Plan and types of awards that may be
granted in the aggregate and to any individual in any calendar year to prevent
undue dilution or enlargement of the awards. In such an event actions by the
Committee may include:
|
·
|
adjustment
of the number and kind of shares which may be delivered under the
Plan;
|
|
·
|
adjustment
of the number and kind of shares subject to outstanding awards;
|
|
·
|
adjustment
of the exercise price of outstanding options; and
|
|
·
|
any
other adjustments that the Committee determines to be equitable which
may
include, without limitation:
|
|
·
|
replacement
of awards with other awards which the Committee determines have comparable
value and which are based on stock of a company resulting from the
transaction; and
|
|
·
|
cancellation
of the award in return for cash payment of the current value of the
award,
determined as though the award is fully vested at the time of payment,
provided that with respect to an option the amount of such payment
may be
the excess of value of Common Stock subject to the option at the
time of
the transaction over the exercise price.
|
Administration
.
The
2008 Plan will be administered by the Compensation and Stock Option Committee
of
the Board (the “Committee”), the members of which are appointed by the Board.
The Committee must be comprised of two or more directors who are not employees
or former employees of the Company. The Board also intends to appoint to the
Committee directors who are “outside directors” as that term is defined pursuant
to Section 162(m) of the Internal Revenue Code, as amended, (the “Code”), and
“non-employee” directors as defined in Rule 16b-3(b)(3) under the Securities
Exchange Act of 1934 (the “Exchange Act”). If the Committee does not exist or
for any other reason determined by the Board, and to the extent not prohibited
by applicable law or the applicable rules of any stock exchange and to the
extent that any proposed action does not require approval by “outside directors”
to comply with Section 162(m) of the Code or “non-employee” directors to comply
with Rule 16b-3 of the Exchange Act, the Board may take any action under the
Plan that would otherwise be the responsibility of the Committee.
The
Committee has the authority and discretion to select from among the eligible
individuals those persons who shall receive awards, to determine the time or
times of receipt, to determine the types of awards and the number of Shares
covered by the awards, to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such awards, and to amend, cancel, or
suspend awards. The Committee has full authority and discretion to interpret
the
Plan, to establish, amend, and rescind any rules and regulations relating to
the
Plan, to determine the terms and provisions of any award agreement made pursuant
to the Plan (the terms of which need to be uniform among any or all awards),
and
to make all other determinations that may be necessary or advisable for the
administration of the Plan. Any interpretation of the 2008 Plan by the Committee
and any decision made by it under the 2008 Plan is final and binding on all
persons.
Except
to
the extent prohibited by applicable law or the applicable rules of a stock
exchange, the Committee may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate all or any part
of
its responsibilities and powers to any person or persons selected by it. Any
such allocation or delegation may be revoked by the Committee at any time.
Eligibility
.
Only
employees may receive options intended to quality as incentive stock options,
which we refer to as ISOs, under the 2008 Plan. Nonqualified options, which
we
refer to as NQOs, and restricted stock may be awarded under the 2008 Plan to
employees and directors of the Company or any subsidiary. As of the date of
this
Proxy Statement, all full time permanent employees (approximately 2,623 as
of
the date of this Proxy Statement) are eligible to receive options and restricted
stock awards under the 2008 Plan, including employees who are directors, and
all
five of the Company’s non-employee directors are eligible to receive options and
restricted stock (in each case, assuming the shareholders approve the 2008
Plan).
Types
of Awards
.
Options.
The 2008 Plan permits the granting of options that are intended to qualify
as
ISOs under Section 422 of the Code and options that are not intended to qualify
under Section 422 of the Code. ISOs may be granted only to employees, and a
maximum of 350,000 Shares may be issued pursuant to ISOs over the life of the
2008 Plan. The exercise price for each option granted under the 2008 Plan must
be at least 100% of the fair market value of a Share. “Fair market value” as of
a particular date is generally defined as the closing sales price per Share
on
that date (or the preceding trading day if that date is not a business day).
In
the event that the principal market for the Company’s Shares is no longer NASDAQ
or any national securities exchange or if sales prices are not available for
the
Shares, fair market value will be the average between the highest bid and lowest
asked prices for the Shares on that date (or the immediately preceding date
if
that date is not a business day) as reported on the NASDAQ OTC Bulletin Board,
the National Quotation Bureau, Incorporated or a comparable service. If no
price
for the Shares is available via any of these methods, fair market value will
be
determined in good faith by the Committee.
Options
are exercisable within the times and upon the conditions as the Committee may
determine, as set forth in the applicable award agreement except that no option
may be exercisable for a term greater than ten years. Unless approved by the
Company’s shareholders or in connection with a corporate transaction as
described above under “-Adjustment of Awards,” the 2008 Plan expressly prohibits
the repricing of options, whether by reducing their exercise price, canceling
outstanding options in exchange for options or other awards with an exercise
price lower than the exercise price of the original option, or buying out or
canceling in exchange for cash any options for which the exercise price is
less
than the current fair market value of the Common Stock. No person will be
eligible to receive options with respect to more than 75,000 Shares in any
calendar year under the 2008 Plan.
Restricted
Stock.
The
Committee will determine the terms of any restricted stock awards made under
the
2008 Plan. A maximum of 400,000 Shares may be issued pursuant to restricted
stock awards.
Restricted
stock awards may be conditioned on the achievement of one or more performance
measures based on the financial results or condition of the Company or a
division or facility of the Company. These performance measures may be based
on
any one or more of the following, as selected by the Committee: economic profit,
operating profit, net earnings, net income, pretax income, consolidated
operating income, segment operating income, return on equity, return on assets,
return on capital, earnings growth, cash flow, working capital, share
appreciation, total shareholder return, total business return, EBITDA, and
earnings per share of Common Stock, growth in loans receivable, expense control,
charge-off control and office growth. The Committee may appropriately adjust
any
evaluation of these performance criteria to exclude the effect of various events
that may occur during a performance period, including: asset impairments and
write-downs; litigation or claim judgments or settlements; changes in tax law,
accounting principles or other such laws or provisions affecting reported
results; accruals for reorganization and restructuring programs; and any
extraordinary or non-recurring items as described in Accounting Principles
Board
Opinion No. 30 or in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s annual report on Form 10-K
for the applicable period. For performance-based restricted stock awards, the
grant of the awards and the establishment of the performance measures must
be
made during the period required under Section 162(m) of the Code.
No
more
than 50,000 Shares of Common Stock may be subject to performance-based
restricted stock awards granted to any one individual during any calendar year,
and the maximum amount of cash settled “performance-based compensation” awards,
within the meaning of Section 162(m), that may be granted during any one
calendar year period is $500,000. If, after any Restricted Stock Awards have
been earned, the delivery is deferred, any additional shares attributable to
dividends during the deferral period shall be disregarded for purposes of these
limitations.
Change
in Control
.
The
occurrence of a change in control shall have the effect, if any, with respect
to
any award as set forth in the applicable award agreement or, to the extent
not
prohibited by the Plan or the applicable award agreement, as provided by the
Committee. The Committee’s authority to adjust awards in connection with a
change in control includes, but is not limited to, its authority to adjust
awards as described above under “--Adjustment of Awards.”
Except
as
otherwise provided in an individual’s award agreement or otherwise required in
order to comply with Code section 409A, a “change in control” shall be deemed to
have occurred on the earliest of the following dates:
|
The
date any entity or person (which term in includes parties acting
as a
group) becomes the beneficial owner of, or shall have obtained voting
control over, twenty-five percent (25%) or more of either the Company’s
outstanding Shares or outstanding voting securities. For this purpose,
outstanding voting securities mean the combined voting power of the
then
outstanding securities of the Company entitled to vote generally
in the
election of directors of the
Company;
|
|
·
|
The
date the Company’s shareholders approve any of the
following:
|
|
o
|
a
definitive agreement to merge or consolidate the Company with or
into
another corporation or other business entity in which the Company
is not
the continuing or surviving corporation or pursuant to which any
Shares or
outstanding voting securities of the Company would be converted into
cash,
securities or other property of another corporation, other than a
merger
or consolidation of the Company in which the holders of Shares or
outstanding voting securities immediately prior to the merger or
consolidation continue to own at least (1) seventy-five percent (75%)
in
the aggregate the Shares or outstanding voting securities if the
Company
is the surviving corporation or (2) the same proportionate ownership
percentage of the common stock (or other voting securities) of the
surviving corporation immediately after the merger as immediately
before,
if the Company is not the surviving corporation; however, if consummation
of such merger or consolidation is subject to the approval of federal,
state or other regulatory authorities, then, unless the Committee
determines otherwise, a change in control shall not be deemed to
occur
until the later of the date of shareholder approval of such merger
or
consolidation or the date of final regulatory or other approvals
of such
merger or consolidation;
|
|
o
|
a
definitive agreement to sell or otherwise dispose of all or substantially
all the assets of the Company; or
|
|
o
|
a
plan of complete liquidation or winding up of the
Company;
|
|
·
|
The
date there has been a change in a majority of the Company’s Board within a
12-month period, unless the nomination of each new director was approved
by the vote of two-thirds of the members of the Board (or, if applicable,
a committee of the Board) who were then still in office at the beginning
of the 12-month period; or
|
|
·
|
The
date any other event occurs or action takes place which the Board
determines should constitute a change in
control.
|
The
Board
shall have full and final authority, in its discretion, to determine whether
a
change in control has occurred, the date of the occurrence of any change in
control and any incidental matters relating to a change in control.
Transferability
.
Except
as otherwise provided by the Committee, Awards will not be transferable by
the
Participant other than by will or the laws of descent and distribution.
Amendment
of Plan and Awards
.
In
general, the Board may at any time amend, alter, suspend, discontinue or
terminate the 2008 Plan or any part thereof at any time. However, except for
adjustments in connection with corporate transactions as described above under
“—Adjustment of Awards,” absent approval of the Company’s shareholders, the
Board may not amend the 2008 Plan to:
|
·
|
increase
the maximum number of Shares issuable under the 2008 Plan, the maximum
limitations specified in the 2008 Plan on specified types of awards
or the
maximum limitations specified in the 2008 Plan on the amount of certain
types of awards that may be granted to any one participant during
a
calendar year;
|
|
·
|
decrease
the minimum exercise price of options below fair market value on
the date
of grant; or
|
|
·
|
alter
the prohibition on repricing
options.
|
In
addition, the Board may require shareholder approval of any amendment,
alteration, suspension, discontinuance or termination of the 2008 Plan if the
Board deems such approval necessary or desirable to comply with any tax or
regulatory requirement.
Subject
to the limitations in the 2008 Plan on lowering the exercise price of an option
below fair market value on the date of grant and the repricing of options,
the
Committee has the right and discretion to modify, amend or cancel, or waive
any
conditions or rights under, any award, either prospectively or retroactively,
if:
|
·
|
the
modification, amendment, cancellation or waiver does not materially
and
adversely affect the rights a participant under an award (provided,
that
neither any modification, amendment, cancellation or waiver that
results
solely in a change in tax consequences with respect to an award,
nor the
exercise of the Committee’s authority and discretion to make adjustments
to awards in connection with corporate transactions or a change in
control, will deemed to materially and adversely affect a participant’s
rights);
|
|
·
|
an
award recipient consents to the modification, amendment, cancellation
or
waiver;
|
|
·
|
the
Company is dissolved or liquidated;
|
|
·
|
the
2008 Plan or the award agreement provides for such modification,
amendment, cancellation or waiver; or
|
|
·
|
the
Company would otherwise have the right to make such modification,
amendment, cancellation or waiver under applicable law.
|
Adjustments
authorized under the 2008 Plan in the event of corporate transactions are not
be
subject to the foregoing limitations. In addition, the Committee has unilateral
authority to make adjustments to the terms and conditions of awards in
recognition of unusual or nonrecurring events affecting the Company or any
subsidiary, or the financial statements of the Company or any Subsidiary, or
of
changes in accounting principles, if the Committee determines that such
adjustments are appropriate in order to prevent dilution or enlargement of
the
benefits or potential benefits intended to be made available under the Plan
or
necessary or appropriate to comply with applicable accounting principles.
Section
409A
.
To the
extent that Section 409A of the Code is applicable, we intend to administer
the
Plan and any grants made thereunder in a manner consistent with the requirements
of Section 409A, and any regulations and other guidance promulgated with respect
to Section 409A by the U.S. Department of Treasury or Internal Revenue Service.
The Committee may permit or require a participant to defer receipt of cash
or
shares of Common Stock that would otherwise be due to the participant under
the
Plan or otherwise create a deferred compensation arrangement (as defined in
Section 409A of the Code) in accordance with the terms of the Plan. The deferral
of an award under the Plan or compensation otherwise payable to the participant
will be set forth in the terms of a deferral agreement or as elected by the
participant pursuant to such rules and procedures as the Committee may
establish. Any such initial deferral election by a participant will designate
a
time and form of payment and will be made at such time as required by and in
accordance with Section 409A. Any deferred compensation arrangement created
under the Plan will be distributed at such times as provided in an award
agreement or a separate election form and in accordance with Section 409A.
No
distribution of a deferral will be made pursuant to the Plan if the Committee
determines that a distribution would (i) violate applicable law; (ii) be
nondeductible pursuant to Section 162(m) of the Code; or (iii) jeopardize the
Company’s ability to continue as a going concern. In any such case, a
distribution will be made at the earliest date at which the Committee determines
such distribution would not trigger clause (i), (ii) or (iii) above. All awards
under the Plan are intended either (i) to be exempt from Section 409A or (ii)
to
comply with Section 409A, and will be administered in a manner consistent with
that intent.
However,
neither
the Board, the Committee, the Company nor any subsidiary, employee or agent
of
any of the foregoing makes any representations with respect to the tax
consequences of any award to a participant, and by the acceptance of such award,
each participant acknowledges the same and agrees to hold each of these parties
harmless from any adverse consequences to the participant under the Code with
respect to any award or any underlying Shares or other property, whether
resulting from any action or inaction or omission of any such parties pursuant
to the Plan or otherwise.
Withholding.
The
Company may withhold amounts from participants to satisfy withholding tax
requirements. The Committee, subject to such requirements as it may impose,
may
permit participants to satisfy tax withholding requirements by tendering a
cash
payment to the Company, having shares withheld from awards or tendering
previously owned shares to the Company.
Executive
Compensation - Equity Plan Compensation Information
.
The
following table sets forth certain information as of March 31, 2008, regarding
the Company’s four existing equity compensation plans (other than the 2008 Plan
being proposed for shareholder approval), which are the 1992 Stock Option Plan,
the 1994 Stock Option Plan, the 2002 Stock Option Plan and the 2005 Stock Option
Plan. All of these plans have been approved by the Company’s shareholders.
|
Plan Category
|
Number of
Securities to
be Issued
upon
Exercise of
Outstanding
Options (#)
|
Weighted
Average
Exercise
Price of
Outstanding
Options ($)
|
Number of Securities
Remaining Available
for Future Issuance
under
Equity Compensation Plans (#)
|
|||||||
|
Equity
Compensation Plans
Approved by Security Holders |
||||||||||
|
1992
Stock Option Plan
|
-
|
-
|
-
|
|||||||
|
1994
Stock Option Plan
|
272,617
|
7.75
|
-
|
|||||||
|
2002
Stock Option Plan
|
323,000
|
22.10
|
-
|
|||||||
|
2005
Stock Option Plan
|
678,600
|
33.93
|
234,123
|
|||||||
|
Equity
Compensation
Plans
Not Approved by
Security
Holders
|
-
|
-
|
-
|
|||||||
|
Total
|
1,274,217
|
25.33
|
234,123
|
|||||||
Federal
Income Tax Consequences
.
The
following is a general summary as of the date of this Proxy Statement of the
federal income tax consequences to the Company and to participants under the
2008 plan. Tax laws may change and the federal, state and local tax consequences
for any participant will depend upon his or her individual circumstances. This
summary does not address the tax consequences to any person or entity to whom
or
which an award, if permitted, is transferred or to a transferring participant.
Each participant and transferee of an award is encouraged to seek the advice
of
a qualified tax advisor regarding the tax consequences of participation in
the
2008 plan.
Options
.
A
participant who is granted an option (either an ISO or NQO) will not recognize
income at the time of grant, and the Company will not be entitled to a tax
deduction by reason of such grant. Upon exercise of a NQO, the excess of the
Share’s fair market value on the exercise date over the exercise price will be
considered ordinary income to the participant. The Company is entitled to a
tax
deduction at the same time and in the same amount, provided that the Company
complies with the applicable withholding requirements. Upon exercise of an
ISO,
the participant will not recognize taxable income (unless the participant is
subject to the federal alternative minimum tax), and the Company is not entitled
to a tax deduction by reason of such exercise. However, if Shares purchased
pursuant to the exercise of an ISO are sold within two years from the date
of
grant or within one year after the transfer of such Shares to the participant,
then the gain realized upon such disposition, up to the difference between
the
fair market value of the Shares at the date of exercise and the exercise price,
will be considered ordinary income, and the Company will be entitled to a tax
deduction at the same time and in the same amount. For disposition after the
above time limits, the gain represented by the differences from the sales
proceeds and the exercise price will be taxed as a capital gain. In the event
of
a sale of Shares purchased upon exercise of a NQO, any appreciation above or
depreciation below the fair market value at the date of exercise will generally
qualify as capital gain or loss.
Restricted
Stock Awards
.
Generally, a participant who receives a restricted stock award will be taxed
at
ordinary income rates on the value of the vested portion of such award in the
year in which such portion vests, and the Company will be entitled to take
a tax
deduction at that time and in the same amount. However, if the participant
makes
an effective election under Section 83(b) of the Code, the participant will,
upon receipt of the stock, realize ordinary income equal to the stock’s fair
market value, and such income will be subject to employment tax withholding.
In
that case, the Company will have a deduction corresponding to the particpant’s
ordinary income.
Effective
Date; Duration
.
As
noted above, the 2008 Plan will become effective on August 6, 2008. Its
existence is subject to approval of our shareholders by a majority of the Shares
cast on the proposal to approve the 2008 Plan. The 2008 Plan shall be unlimited
in duration and, in the event of termination of the 2008 Plan, shall remain
in
effect as long as any awards under it are outstanding; provided, however, that
no awards may be granted hereunder after the ten-year anniversary of the
effective date of the 2008 Plan.
As
of
June 27, 2008, no options or restricted stock awards have been granted or
proposed to be granted under the 2008 Plan.
For
the reasons discussed above, the Board unanimously recommends a vote FOR the
adoption of the 2008 Plan.
APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The
Audit
Committee has approved the selection of the firm KPMG LLP as the independent
registered public accounting firm to audit the consolidated financial statements
and the effectiveness of internal control over financial reporting of the
Company and its subsidiaries for the 2008 fiscal year, and to perform such
other
appropriate accounting services as may be required by the Board.
The
Company has been advised by KPMG LLP that the firm did not have any direct
financial interest or any material indirect financial interest in the Company
and its subsidiaries during the Company’s most recent fiscal year.
Representatives
of KPMG LLP are expected to be present at the Meeting with the opportunity
to
make a statement if they so desire, and they are expected to be available to
respond to appropriate questions.
Approval
of the proposal requires the affirmative vote of a majority of the Shares voted
on the proposal. Should the shareholders vote negatively, the Board of Directors
will consider a change in accountants for the next year.
The
Board unanimously recommends a vote
FOR
ratifying the selection of KPMG LLP as the independent registered public
accounting firm to audit the consolidated financial statements and the
effectiveness of internal control over financial reporting of the Company and
its subsidiaries for the 2009 fiscal year.
Report
of the Audit Committee of the Board of Directors
The
Audit
Committee for the Company’s fiscal year ended March 31, 2008 was composed of
three directors, each of whom is independent within the meaning of applicable
NASDAQ rules and all of whom have accounting or related financial management
expertise. The Audit Committee operates under a written charter approved by
the
Board of Directors.
Management
is responsible for the Company’s financial reporting process, including its
system of internal controls, and for the preparation of consolidated financial
statements in accordance with generally accepted accounting principles. The
Company’s independent registered public accounting firm is responsible for
auditing those financial statements.
It
is not
our duty or our responsibility to conduct auditing or accounting reviews or
procedures.
Our
responsibility,
as
members of the Audit Committee
,
is to
assist the Board of Directors in fulfilling its oversight responsibilities
by
monitoring these processes.
Our
oversight of these processes and
considerations and discussions with management and with our independent
registered public accounting firm do not assure that the Company’s financial
statements are presented in accordance with generally accepted accounting
principles
or
that the
audit of our Company’s financial statements has been carried out in accordance
with generally accepted auditing standards
.
In
this
context, the Audit Committee met with management and our independent registered
public accounting firm to review and discuss the Company’s audited consolidated
financial statements as of and for the fiscal years ended March 31, 2008. The
Audit Committee also discussed with our independent registered public accounting
firm the matters required by Statement on Auditing Standards No. 61
(Codification of Statements on Accounting Standards) as
amended.
The
Audit
Committee also received written disclosures and a letter from our independent
registered public accounting firm required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with our independent registered public accounting firm
that
firm’s independence. In particular, the Audit Committee cons
idered
whether the provision of
non-audit
services
described
in
the
following section is compatible with maintaining the independence of the
accountants.
Based
upon the Audit Committee’s discussions with management and our independent
registered public accounting firm, and the Audit Committee’s review of the
representations of management and our independent registered public accounting
firm, the Audit Committee recommended that the Board of Directors include the
audited consolidated financial statements in the Company’s Annual Report on Form
10-K for the year ended March 31, 2008, for filing with the Securities and
Exchange Commission.
AUDIT
COMMITTEE
Charles
D. Way, Chairman
Ken
R.
Bramlett, Jr.
William
S. Hummers, III
Audit
Committee Pre-Approval of Services Provided by the Independent Registered Public
Accounting Firm
As
mandated by SEC regulations, the Audit Committee pre-approves all audit and
permitted non-audit services provided to the Company by its independent
registered public accounting firm. The Audit Committee’s practice in this regard
is to have the Company’s
independent
registered public accounting firm
,
in
conjunction with their proposed engagement to provide annual audit services,
provide for the Audit Committee’s review and approval the terms of additional
proposed engagements regarding matters such as tax compliance and employee
benefit plan audits. To the extent that any other services not detailed on
these
engagements are proposed throughout the year, these services may be undertaken
only after review with, and approval by, the Audit Committee Chairman, who
reports on such services to the full Audit Committee at its regularly scheduled
meetings.
Audit
Fees
KPMG
LLP
billed
the
Company the following amounts in aggregate fees for fiscal years 2008 and 2007
audit services, the review
of the
financial statements included in
quarterly
reports on Form 10-Q during those years and the services that are normally
provided by them in connection with statutory and regulatory
filings:
|
2008
— $400,000
|
2007
— $485,000
|
Audit-Related
Fees
KPMG
LLP
billed the Company the following amounts in aggregate fees for fiscal years
2008
and 2007 for assurance and related services, other than those described above
under “-Audit Fees,” that are reasonably related to the performance of the audit
or review of the Company’s financial statements:
|
2008
— $30,000
|
2007
— $20,000
|
In
2008
and 2007, these fees were billed for
the
audit
of the Company’s Retirement Savings Plan.
Tax
Fees
For
fiscal 2008 and 2007, KPMG LLP billed the Company the following amounts in
aggregate fees for tax compliance, tax advice and tax planning
services:
|
2008
— $1,440
|
2007
— $0
|
All
Other Fees
There
were no other fees billed for other services rendered by KPMG LLP for fiscal
years
2008
and
2007.
Of
all
the fees reported above, none were approved pursuant to the de minimis exception
to the audit committee pre-approval requirements specified in Rule
2-01(c)(7)(i)(C) of Regulation S-X.
PROPOSALS
FOR 2009 ANNUAL MEETING OF SHAREHOLDERS
Shareholders
who intend to present proposals for consideration at next year’s annual meeting
are advised that any such proposal must be received by the Secretary of the
Company by no later than the close of business on
March
2,
2009, if
such proposal is to be considered for inclusion in the proxy statement and proxy
appointment form relating to that meeting. Only persons who have held
beneficially or of record the lesser of at least $2,000 in market value, or
1%
of the outstanding Common Stock, for at least one year on the date the proposal
is submitted and who continue in such capacity through the meeting date are
eligible to submit proposals to be considered for inclusion in the Company’s
proxy statement. In addition, under SEC rules, proxies of the Board of Directors
may exercise their discretionary voting authority to vote against any
shareholder proposal raised at next year’s annual meeting if notice of such
proposal is received by the Secretary of the Company later than the close of
business on May
18,
2009.
OTHER
MATTERS
The
Board
and the Company’s officers are not aware of any other matters that may be
presented for action at the Meeting, but if other matters do properly come
before the Meeting, it is intended that Shares represented by proxies in the
accompanying form will be voted by the persons named in the proxy in accordance
with their best judgment.
You
are
cordially invited to attend this year’s Meeting. However, whether you plan to
attend the Meeting or not, you are respectfully urged to sign and return the
enclosed proxy, which will, of course, be returned to you at the Meeting if
you
are present and so request.
|
|
Chief
Executive Officer
|
June
30,
2008
Appendix
A
WORLD
ACCEPTANCE CORPORATION
2008
STOCK OPTION PLAN
SECTION
1
GENERAL
1.1
Purpose
.
This
World Acceptance Corporation Stock Option Plan (this “
Plan
”)
has
been established by World Acceptance Corporation (the “
Company
”)
to (i)
attract and retain the services of persons eligible to participate in this
Plan;
(ii) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (iii) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (iv) further identify
Participants’ interests with those of the Company’s other shareholders through
compensation that is based on the Company’s common stock; and thereby promote
the long-term financial interest of the Company and the Subsidiaries, including
the growth in value of the Company’s equity and enhancement of long-term
shareholder return.
1.2
Participation
.
Subject
to the terms and conditions hereof, the Committee shall determine and designate,
from time to time, from among the Eligible Individuals, who will be granted
one
or more Awards under the Plan, and thereby become “
Participants
”
herein.
1.3
Operation,
Administration, and Definitions
.
The
operation and administration of this Plan, including the Awards made hereunder,
shall be subject to the provisions of Section 5 (relating to operation and
administration). Capitalized terms shall be defined as set forth herein
(including the definition provisions of Section 10).
SECTION
2
EMPLOYEE
OPTIONS
2.1
Grant
of Options
.
The
Committee may, in its discretion, from time to time grant to Eligible
Individuals options to purchase Stock (each, an “
Option
”),
subject to the terms and conditions of this Plan, at an Exercise Price
established by the Committee. Any Option granted under this Section 2 may be
either an ISO or an NQO, as determined in the discretion of the Committee.
An
“
ISO
”
is
an
Option that is intended to satisfy the requirements applicable to an “incentive
stock option” described in section 422(b) of the Code. An “
NQO
”
is
an
Option that is not intended to be an “incentive stock option” as that term is
described in section 422(b) of the Code.
2.2
Exercise
Price
.
The
“
Exercise
Price
”
of
each
Option granted under this Section 2 shall be established by the Committee or
shall be determined by a method established by the Committee at the time the
Option is granted, except that the Exercise Price shall not be less than 100%
of
the Fair Market Value of a share of Stock on the date of grant (or, if greater,
the par value of a share of Stock).
Appendix
A
2.3
Exercise
.
An
Option granted under this Section 2 shall be exercisable in accordance with
such
terms and conditions and during such periods as may be established by the
Committee; provided that no Option may be exercisable for a term greater than
ten years.
2.4
Payment
of Option Exercise Price
.
The
payment of the Exercise Price of an Option granted under this Section 2 shall
be
subject to the following:
(a)
Subject
to the following provisions of this Section 2.4 or as otherwise determined
by
the Committee pursuant to the Plan, the full Exercise Price for shares of Stock
purchased upon the exercise of any Option shall be paid at the time of such
exercise (except that, in the case of an exercise arrangement approved by the
Committee and described in Section 2.4(c), payment may be made as soon as
practicable after the exercise).
(b)
The
Exercise Price shall be payable in cash or by tendering, by either actual
delivery of shares or by attestation, shares of Stock acceptable to the
Committee, and valued at Fair Market Value as of the day of exercise, or in
any
combination thereof, as determined by the Committee.
(c)
The
Committee may permit a Participant to elect to pay the Exercise Price upon
the
exercise of an Option by irrevocably authorizing a third party to sell shares
of
Stock (or a sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to
pay
the entire Exercise Price and any tax withholding resulting from such exercise.
2.5
Settlement
of Award
.
Settlement of Options is subject to Section 5.7.
2.6
Repricing
.
Except
in connection with a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, sale of assets or subsidiaries, combination or exchange of shares),
unless approved by the Company’s shareholders, the terms of outstanding Options
may not be amended to reduce the Exercise Price of outstanding Options, cancel
outstanding Options in exchange for Options or other Awards with an Exercise
Price that is less than the Exercise Price of the original Options or buyout
or
cancel in exchange for cash any outstanding Options for which the Exercise
Price
exceeds the then Fair Market Value of the Stock (“
Underwater
Options
”).
SECTION
3
DIRECTOR
OPTIONS
3.1
Grant
of Options
.
The
Committee may, in its discretion, from time to time grant Options to members
of
the Board who are not employees of the Company or any of its Subsidiaries,
subject to the terms and conditions of this Plan, at an Exercise Price
established by the Committee. Each Option granted under this Section 3 will
be
an NQO.
Appendix
A
3.2
Exercise
Price
.
The
“
Exercise
Price
”
of
each
Option granted under this Section 3 shall be established by the Committee or
shall be determined by a method established by the Committee at the time the
Option is granted, except that the Exercise Price shall not be less than 100%
of
the Fair Market Value of a share of Stock on the date of grant (or, if greater,
the par value of a share of Stock).
3.3
Exercise
.
An
Option granted under this Section 3 shall be exercisable in accordance with
such
terms and conditions and during such periods as may be established by the
Committee; provided that no Option may be exercisable for a term greater than
ten years.
3.4
Payment
of Option Exercise Price
.
The
payment of the Exercise Price of an Option granted under this Section 3 shall
be
subject to the following:
(a)
Subject
to the following provisions of this Section 3.4 or as otherwise determined
by
the Committee pursuant to the Plan, the full Exercise Price for shares of Stock
purchased upon the exercise of any Option shall be paid at the time of such
exercise (except that, in the case of an exercise arrangement approved by the
Committee and described in Section 3.4(c), payment may be made as soon as
practicable after the exercise).
(b)
The
Exercise Price shall be payable in cash or by tendering, by either actual
delivery of shares or by attestation, shares of Stock acceptable to the
Committee, and valued at Fair Market Value as of the day of exercise, or in
any
combination thereof, as determined by the Committee.
(c)
The
Committee may permit a Participant to elect to pay the Exercise Price upon
the
exercise of an Option by irrevocably authorizing a third party to sell shares
of
Stock (or a sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to
pay
the entire Exercise Price and any tax withholding resulting from such
exercise.
3.5
Settlement
of Award
.
Settlement of Options is subject to Section 5.7.
3.6
Repricing
.
Except
in connection with a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, sale of assets or subsidiaries, combination or exchange of shares),
unless approved by the Company’s shareholders, the terms of outstanding Options
may not be amended to reduce the Exercise Price of outstanding Options, cancel
outstanding Options in exchange for Options or other Awards with an Exercise
Price that is less than the Exercise Price of the original Options or buyout
or
cancel in exchange for cash any Underwater Options.
SECTION
4
RESTRICTED
STOCK AWARDS
4.1
Award
of Restricted Stock
.
Subject
to the terms and conditions of this Plan, the Committee may, in its discretion,
from time to time grant to Eligible Individuals shares of Stock that are subject
to a risk of forfeiture or other restrictions that will lapse upon the
achievement of one or more goals relating to completion of service by the
Participant, or achievement of performance or other objectives, as determined
by
the Committee (such shares of Stock, “
Restricted
Stock
”).
Appendix
A
4.2
Restrictions
on Awards
.
Each
Award of Restricted Stock shall be subject to the following:
(a)
Any
such
Restricted Stock Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine.
(b)
The
Committee may designate whether any such Restricted Stock Award being granted
to
any Participant is intended to be “performance-based compensation” as that term
is used in section 162(m) of the Code. All such Restricted Stock Awards
designated as intended to be “performance-based compensation” shall be
conditioned on the achievement of one or more performance measures, to the
extent required by Code section 162(m). The performance measures that may be
used by the Committee for such Awards shall be based on any one or more of
the
following, as selected by the Committee: economic profit, operating profit,
net
earnings, net income, pretax income, consolidated operating income, segment
operating income, return on equity, return on assets, return on capital,
earnings growth, cash flow, working capital, share appreciation, total
shareholder return, total business return, EBITDA, earnings per share of the
Stock of the Company, growth in loans receivable, expense control, charge-off
control and office growth. The Committee may appropriately adjust any evaluation
of performance under criteria set forth in this Section 4 to exclude any of
the
following events that occurs during a performance period: (i) asset impairments
and write-downs; (ii) litigation or claim judgments or settlements; (iii) the
effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results; (iv) accruals for reorganization and
restructuring programs; and (v) any extraordinary or non-recurring items as
described in Accounting Principles Board Opinion No. 30 or in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in the
Company’s annual report on Form 10-K for the applicable period. Where
applicable, performance measures may be measured on a Company, division or
facility level, as determined by the Committee. For Awards under this Section
4
intended to be “performance-based compensation,” the grant of the Awards and the
establishment of the performance measures shall be made during the period
required under Code section 162(m).
SECTION
5
OPERATION
AND ADMINISTRATION
5.1
Effective
Date
.
Subject
to the approval of the shareholders of the Company at the Company’s 2008 annual
meeting of its shareholders, this Plan shall be effective as of August 6, 2008
(the “
Effective
Date
”).
This
Plan shall be unlimited in duration and, in the event of Plan termination,
shall
remain in effect as long as any Awards under it are outstanding;
provided
,
however
,
that no
Awards may be granted hereunder after the ten-year anniversary of the Effective
Date.
5.2
Shares
Subject to Plan
.
The
shares of Stock for which Awards may be granted under this Plan shall be subject
to the following:
(a)
The
shares of Stock with respect to which Awards may be made under the Plan shall
be
shares currently authorized but unissued, including, to the extent permitted
by
applicable law, shares subsequently reacquired by the Company, whether purchased
in the open market or in private transactions.
Appendix
A
(b)
Subject
to the following provisions of this Section 5.2, the maximum number of shares
of
Stock that may be delivered to Participants and their beneficiaries under the
Plan shall be 1,000,000 shares.
(c)
To
the
extent provided by the Committee, any Award may be settled in cash rather than
Stock. Only shares of Stock, if any, actually delivered to the Participant
or
beneficiary on an unrestricted basis with respect to an Award shall be treated
as delivered for purposes of the determination under paragraph (b) above,
regardless of whether the Award is denominated in Stock or cash. Consistent
with
the foregoing:
(i)
To
the
extent any shares of Stock covered by an Award are not delivered to a
Participant or beneficiary because the Award is forfeited or canceled, or the
shares of Stock are not delivered on an unrestricted basis (including, without
limitation, by reason of the Award being settled in cash or used to satisfy
the
applicable tax withholding obligation), such shares shall not be deemed to
have
been delivered for purposes of the determination under paragraph (b) above.
(ii)
If
the
Exercise Price of any Option granted under the Plan or any prior plan, or the
tax withholding obligation with respect to any Award granted under the Plan
or
any prior plan, is satisfied by tendering shares of Stock to the Company (by
either actual delivery or by attestation), only the number of shares of Stock
issued net of the shares of Stock tendered shall be deemed delivered for
purposes of determining the number of shares of Stock available for delivery
under the Plan.
(d)
Subject
to Section 5.2(e), the following additional maximums are imposed under the
Plan.
(i)
The
maximum number of shares of Stock that may be issued by Options intended to
be
ISOs shall be 350,000 shares.
(ii)
The
maximum number of shares that may be covered by Awards granted to any one
individual pursuant to Section 2 (relating to Options) shall be 75,000 shares
during any one calendar-year period.
(iii)
The
maximum number of shares of Stock that may be issued in conjunction with Awards
granted pursuant to Section 4 (relating to Restricted Stock Awards) shall be
400,000 shares.
(iv)
For
Restricted Stock Awards that are intended to be “performance-based compensation”
(as that term is used for purposes of Code section 162(m)), no more than 50,000
shares of Stock may be subject to such Awards granted to any one individual
during any one-calendar-year period, and to the extent required by Section
162(m) of the Code and the related regulations, the maximum amount of cash
settled “performance-based compensation” Awards that may be granted during any
one-year calendar period may not exceed $500,000. If, after such Restricted
Stock Awards have been earned, the delivery is deferred, any additional shares
attributable to dividends during the deferral period shall be disregarded for
purposes of these limitations.
Appendix
A
(e)
In
the
event of a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
sale of assets or subsidiaries, combination or exchange of shares), the
Committee shall adjust Awards and the various limitations on Stock and Awards
specified in Sections 5.2(b) and 5.2(d) to prevent undue dilution or enlargement
of Awards. In such an event, actions by the Committee pursuant to this Section
5.2(e) may include: (i) adjustment of the number and kind of shares which may
be
delivered under the Plan; (ii) adjustment of the number and kind of shares
subject to outstanding Awards; (iii) adjustment of the Exercise Price of
outstanding Options; and (iv) any other adjustments that the Committee
determines to be equitable (which may include, without limitation, (1)
replacement of Awards with other Awards which the Committee determines have
comparable value and which are based on stock of a company resulting from the
transaction, and (2) cancellation of the Award in return for cash payment of
the
current value of the Award, determined as though the Award is fully vested
at
the time of payment, provided that with respect to an Option the amount of
such
payment may be the excess of value of the Stock subject to the Option at the
time of the transaction over the exercise price).
5.3
General
Restrictions
.
Delivery of shares of Stock or other amounts under the Plan shall be subject
to
the following:
(a)
Notwithstanding
any other provision of the Plan, the Company shall have no liability to deliver
any shares of Stock under the Plan or make any other distribution of benefits
under the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
(b)
To
the
extent that the Plan provides for issuance of stock certificates to reflect
the
issuance of shares of Stock, the issuance may be effected on a non-certificated
basis, to the extent not prohibited by applicable law or the applicable rules
of
any stock exchange, automated inter-dealer quotation system or similar
entity.
5.4
Tax
Withholding
.
All
distributions under the Plan are subject to withholding of all applicable taxes,
and the Committee may condition the delivery of any shares or other benefits
under the Plan on satisfaction of the applicable withholding obligations. The
Committee, in its discretion, and subject to such requirements as the Committee
may impose prior to the occurrence of such withholding, may permit such
withholding obligations to be satisfied through cash payment by the Participant,
through the surrender of shares of Stock which the Participant already owns,
or
through the surrender of shares of Stock to which the Participant is otherwise
entitled under the Plan.
5.5
Grant
and Use of Awards
.
In the
discretion of the Committee, an Eligible Individual may be granted any Award
permitted under the provisions of the Plan, and more than one Award may be
granted to a Participant. Subject to the limitations in Sections 2.6 and 3.6
(relating to repricing), Awards may be granted as alternatives to or replacement
of Awards granted or outstanding under the Plan, or any other plan or
arrangement of the Company or a Subsidiary (including a plan or arrangement
of a
business or entity, all or a portion of which is acquired by the Company or
a
Subsidiary). Subject to the overall limitation on the number of shares of Stock
that may be delivered under the Plan, the Committee may use available shares
of
Stock as the form of payment for compensation, grants or rights earned or due
under any other compensation plans or arrangements of the Company or a
Subsidiary, including the plans and arrangements of the Company or a Subsidiary
assumed in business combinations.
Appendix
A
5.6
Dividends
and Dividend Equivalents
.
An
Award (excluding Options) may provide the Participant with the right to receive
dividend payments or dividend equivalent payments with respect to Stock subject
to the Award (both before and after the Stock subject to the Award is earned,
vested, or acquired), which payments may be either made currently or credited
to
an account for the Participant, and may be settled in cash or Stock, as
determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.
5.7
Settlement
of Awards
.
The
obligation to make payments and distributions with respect to Awards may be
satisfied through cash payments, the delivery of shares of Stock, the granting
of replacement Awards, or any combination thereof as the Committee shall
determine. Satisfaction of any such obligations under an Award, which is
sometimes referred to as “settlement” of the Award, may be subject to such
conditions, restrictions and contingencies as the Committee shall determine.
The
Committee may permit or require the deferral of any Award payment or
distribution, in accordance with Section 9 and subject to such rules and
procedures as it may establish, which may include provisions for the payment
or
crediting of interest or dividend equivalents, and may include converting such
credits into deferred Stock equivalents.
5.8
Transferability
.
Except
as otherwise provided by the Committee, Awards granted under this Plan may
not
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated
other than by will or the laws of descent and distribution. All rights with
respect to an Award shall be available during the Participant’s lifetime only to
the Participant or the Participant’s guardian or legal representative. The
Committee may, in its discretion, require a Participant’s guardian or legal
representative to supply it with evidence the Committee deems necessary to
establish the authority of the guardian or legal representative to act on behalf
of the Participant. No transfer of an Award by will or by laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and an authenticated copy of
the
will and/or such other evidence as the Committee may deem necessary or
appropriate to establish the validity of the transfer.
Appendix
A
5.9
Form
and Time of Elections
.
Unless
otherwise specified herein or permitted by the Committee, each election required
or permitted to be made by any Participant or other person entitled to benefits
under the Plan, and any permitted modification, or revocation thereof, shall
be
in writing filed with the Committee at such times, in such form, and subject
to
such restrictions and limitations, not inconsistent with the terms of the Plan,
as the Committee shall require.
5.10
Agreement
with Company
.
An
Award under the Plan shall be subject to such terms and conditions, not
inconsistent with the Plan, as the Committee shall, in its sole discretion,
prescribe. The terms and conditions of any Award to any Participant shall be
reflected in such form of written (including electronic) document as is
determined by the Committee. Such terms shall specify, among other things,
the
extent of Participant’s rights with respect to the Award following the
Participant’s separation from service with the Company and the Subsidiaries. An
Award Agreement’s terms shall be determined by the Committee in its sole
discretion. Such terms need not be uniform among all Awards, and may reflect,
among other things, distinctions based on the reasons for separation from
service. A copy of such document shall be provided to the Participant, and
the
Committee may, but need not, require that the Participant sign a copy of such
document. Such document is referred to in the Plan as an “Award Agreement”
regardless of whether any Participant signature is required.
5.11
Action
by Company or Subsidiary
.
Any
action required or permitted to be taken by the Company or any Subsidiary shall
be by resolution of its board of directors, or by action of one or more members
of the board (including a committee of the board) who are duly authorized to
act
for the board, or (except to the extent prohibited by applicable law or
applicable rules of any stock exchange) by a duly authorized officer of such
company.
5.12
Gender
and Number
.
Where
the context admits, words in any gender shall include any other gender, words
in
the singular shall include the plural and the plural shall include the
singular.
5.13
Limitation
of Implied Rights
.
(a)
Neither
a
Participant nor any other person shall, by reason of participation in this
Plan,
acquire any right in or title to any assets, funds or property of the Company
or
any Subsidiary whatsoever, including, without limitation, any specific funds,
assets, or other property which the Company or any Subsidiary, in its sole
discretion, may set aside in anticipation of a liability hereunder. A
Participant shall have only a contractual right to the Stock or amounts, if
any,
payable under this Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained herein shall constitute a guarantee that
the
assets of the Company or any Subsidiary shall be sufficient to pay any benefits
to any person.
Appendix
A
(b)
This
Plan
does not constitute a contract of employment, and selection as a Participant
will not give any participating employee or other individual the right to be
retained in the employ of the Company or any Subsidiary or the right to continue
to provide services to the Company or any Subsidiary, nor any right or claim
to
any benefit hereunder, unless such right or claim has specifically accrued
under
the terms of this Plan. Except as otherwise provided herein, no Award under
this
Plan shall confer upon the holder thereof any rights as a shareholder of the
Company prior to the date on which the individual fulfills all conditions for
receipt of such rights.
5.14
Evidence
.
Evidence required of anyone under the Plan may be by certificate, affidavit,
document or other information which the Committee or other designated person(s)
acting on its behalf considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
SECTION
6
CHANGE
IN CONTROL
The
occurrence of a Change in Control shall have the effect, if any, on an Award
as
set forth in the Award Agreement or, to the extent not prohibited by the Plan
or
the Award Agreement, as provided by the Committee. For avoidance of doubt,
and
without limiting the foregoing authority of the Committee, the Committee shall
have the authority, in its sole discretion, in connection with a Change in
Control, to adjust Awards (including, without limitation, the replacement or
cancellation of Awards) in the manner provided in Section 5.2(e).
SECTION
7
COMMITTEE
7.1
Administration
.
The
authority to control and manage the operation and administration of the Plan
shall be vested in a committee (the “Committee”) in accordance with this Section
7. The Committee shall be selected by the Board, and shall consist solely of
two
or more members of the Board who are not employees or former employees of the
Company or any Subsidiary. If the Committee does not exist, or for any other
reason determined by the Board, and to the extent not prohibited by applicable
law or the applicable rules of any stock exchange and to the extent that such
action does not require approval by “outside directors” to comply with Code
section 162(m) and the related regulations or by “non-employee” directors to
comply with Rule 16b-3 under the Securities Exchange Act of 1934 (the
“
Exchange
Act
”)
and
related regulations, the Board may take any action hereunder that would
otherwise be the responsibility of the Committee.
Appendix
A
7.2
Powers
of Committee
.
The
Committee’s administration of this Plan shall be subject to the
following:
(a)
Subject
to the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Eligible Individuals those persons who
shall
receive Awards, to determine the time or times of receipt, to determine the
types of all Awards and the number of shares covered by such Awards, to
establish the terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and (subject to the restrictions imposed by Section
8) to amend, cancel or suspend Awards.
(b)
To
the
extent that the Committee determines that the restrictions imposed hereby
preclude the achievement of the material purposes of the Awards in jurisdictions
outside the United States, the Committee will have the authority and discretion
to modify those restrictions as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of such
jurisdictions outside the United States.
(c)
The
Committee will have the full authority and discretion to interpret this Plan,
to
establish, amend, and rescind any rules and regulations relating hereto, to
determine the terms and provisions of any Award Agreement made pursuant hereto,
and to make all other determinations that may be necessary or advisable for
the
administration of this Plan.
(d)
Any
interpretation of this Plan by the Committee and any decision made by it
hereunder is final and binding on all persons.
(e)
In
controlling and managing the operation and administration of this Plan, the
Committee shall take action in a manner that conforms to the articles and
by-laws of the Company, and applicable state corporate law.
7.3
D
elegation
by Committee
.
Except
to the extent prohibited by applicable law or the applicable rules of a stock
exchange, automated inter-dealer quotation system or similar entity, the
Committee may allocate all or any portion of its responsibilities and powers
to
any one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any time.
7.4
Information
to be Furnished to Committee
.
The
Company and Subsidiaries shall furnish the Committee with such data and
information as it determines may be required for it to discharge its duties.
The
records of the Company and Subsidiaries as to an employee’s or Participant’s
employment, termination of employment, leave of absence, reemployment and
compensation shall be conclusive on all persons unless determined to the
Committee’s satisfaction to be incorrect. Participants and other persons
entitled to benefits hereunder must furnish the Committee such evidence, data
or
information as the Committee considers desirable to carry out the terms of
the
Plan.
Appendix
A
(i)
No
representations or warranties
.
Neither
the Board, the Committee, the Company nor any Subsidiary, employee or agent
of
any of the foregoing makes any representations with respect to the tax
consequences of any Award to a Participant, and by the acceptance of such Award,
each Participant acknowledges the same and agrees to hold the Board, the
Committee, the Company and any Subsidiary, employee or agent of any of the
foregoing harmless from any adverse consequences to the Participant under the
Code with respect to the Award or any underlying Shares or other property,
whether resulting from any action or inaction or omission of any such parties
pursuant to the Plan or otherwise.
SECTION
8
AMENDMENT
AND TERMINATION
The
Board
may amend, alter, suspend, discontinue or terminate the Plan or any portion
thereof at any time; provided that no such amendment, alteration, suspension,
discontinuation or termination shall be made without approval of the
shareholders of the Company if such approval is necessary to comply with any
tax
or regulatory requirement for which or with which the Board deems it necessary
or desirable to comply; and provided further, however, that absent approval
of
the Company’s shareholders, (i) no amendment may increase the limitations on the
number of shares set forth in Sections 5.2(b) and (d) or decrease the minimum
Exercise Price set forth in Sections 2.2 and 3.2; and (ii) the provisions of
Sections 2.6 and 3.6 cannot be amended. Subject to the restrictions of Sections
2.2 and 3.2, 2.6 and 3.6, the Committee shall have the right to modify, amend
or
cancel, or waive any conditions or rights under, any Award, prospectively or
retroactively, if; (i) the modification, amendment, cancellation or waiver
does
not materially and adversely affect the rights of the Participant under the
Award (provided, however, that neither a modification, amendment or cancellation
or waiver that results solely in a change in tax consequences with respect
to an
Award, nor the exercise of the Committee’s authority and discretion under
Sections 5.2(e) and Section 6 shall not be deemed to materially and adversely
affect the rights of a Participant under an Award); (ii) the Participant
consents to such modification, amendment, cancellation or waiver; (iii) there
is
a dissolution or liquidation of the Company; (iv) this Plan or the Award
Agreement provides for such modification, amendment, cancellation or waiver;
or
(v) the Company would otherwise have the right to make such modification,
amendment, cancellation or waiver under applicable law. Adjustments pursuant
to
Section 5.2(e) shall not be subject to the foregoing limitations of this Section
8. The Committee shall have unilateral authority to make adjustments to the
terms and conditions of Awards in recognition of unusual or nonrecurring events
affecting the Company or any Subsidiary, or the financial statements of the
Company or any Subsidiary, or of changes in accounting principles, if the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or necessary or appropriate to comply with
applicable accounting principles.
SECTION
9
DEFERRALS
AND SECTION 409A
9.1
Purpose
.
As
provided in an Award Agreement, the Committee may permit or require a
Participant to defer receipt of cash or shares of Stock that would otherwise
be
due to him or her under the Plan or otherwise create a deferred compensation
arrangement (as defined in section 409A of the Code) in accordance with this
Section 9.
Appendix
A
9.2
Initial
Deferral Elections
.
The
deferral of an Award under the Plan or compensation otherwise payable to the
Participant shall be set forth in the terms of the Award Agreement or as elected
by the Participant pursuant to such rules and procedures as the Committee may
establish. Subject to the foregoing, any such initial deferral election by
a
Participant shall designate a time and form of payment and shall be made at
such
time as provided below:
(a)
A
Participant may make a deferral election with respect to an Award under the
Plan
(or compensation giving rise thereto) at any time in any calendar year preceding
the year in which service giving rise to such compensation or Award is rendered.
(b)
In
the
case of the first year in which a Participant becomes eligible to receive an
Award or defer compensation under the Plan, the Participant may make a deferral
election within 30 days after the date the Participant becomes eligible to
participate in the Plan; provided, that such election may apply only with
respect to the portion of the Award or compensation attributable to service
to
be performed subsequent to the election.
(c)
Where
the
grant of an Award under the Plan or payment of compensation, or the applicable
vesting, is conditioned upon the satisfaction of pre-established organizational
or individual performance criteria relating to a performance period of at least
12 consecutive months in which the Participant performs service, a Participant
may make a deferral election no later than six months prior to the end of the
applicable performance period.
(d)
Where
the
vesting of an Award under the Plan is contingent upon the Participant’s
continued service for a period of no less than 13 months, the Participant may
make a deferral election within 30 days of receiving an Award.
(e)
To
the
extent permitted by the Committee, a Participant may make a deferral election
in
other circumstances and at such times as may be permitted under section 409A
of
the Code.
9.3
Distribution
Dates
.
Any
deferred compensation arrangement created under the Plan shall be distributed
at
such times as provided in the Award Agreement or a separate election form,
which
may include the earliest or latest of one or more of the following:
Appendix
A
(a)
a
fixed
date as set forth in the Award Agreement or pursuant to a Participant’s
election;
(b)
the
Participant’s death;
(c)
the
Participant’s “disability,” as defined in section 409A of the Code;
(d)
a
“change
in control event” as defined in section 409A of the Code;
(e)
an
“unforeseeable emergency,” as defined in section 409A of the Code and
implemented by the Committee;
(f)
a
Participant’s “separation from service,” as defined in section 409A of the Code
or, in the case of a “specified employee” (as defined in section 409A of the
Code), six months following the Participant’s “separation from service”; or
(g)
such
other events as permitted under section 409A of the Code and the regulations
and
guidance thereunder.
9.4
Restrictions
on Distributions
.
No
distribution of a deferral may be made pursuant to the Plan if the Committee
reasonably determines that such distribution would (i) violate federal
securities laws or other applicable law; (ii) be nondeductible pursuant to
section 162(m) of the Code; or (iii) jeopardize the Company’s ability to
continue as a going concern. In any such case, distribution shall be made at
the
earliest date at which the Committee determines such distribution would not
trigger clause (i), (ii) or (iii) above.
9.5
Redeferrals
.
The
Company, in its discretion, may permit a Participant to make a subsequent
election to delay a distribution date, or, as applicable, to change the form
of
distribution payments, attributable to one or more events triggering a
distribution, so long as (i) such election may not take effect until at least
12
months after the election is made, (ii) such election defers the distribution
for a period of not less than five years from the date such distribution would
otherwise have been made, and (iii) such election may not be made less than
12
months prior to the date the distribution was to be made.
9.6
Termination
of Deferred Compensation Arrangements
.
In
addition, the Committee may in its discretion terminate the deferred
compensation arrangements created under the Plan subject to the following:
(a)
the
arrangement may be terminated within the 30 days preceding, or 12 months
following, a change in control event, as defined in section 409A, provided
that
all payments under such arrangement are distributed in full within 12 months
after termination;
Appendix
A
(b)
the
arrangement may be terminated in the Committee’s discretion at any time provided
that (i) all deferred compensation arrangements of similar type maintained
by
the Company are terminated, (ii) all payments are made at least 12 months and
no
more than 24 months after the termination, and (iii) the Company does not adopt
a new arrangement of similar type for a period of five years following the
termination of the arrangement; and
(c)
the
arrangement may be terminated within 12 months of a corporate dissolution taxed
under section 331 of the Code or with the approval of a bankruptcy court
pursuant to 11 U.S.C. § 503(b)(1)(A) provided that the payments under the
arrangement are distributed by the latest of the (i) the end of the calendar
year of the termination, (ii) the calendar year in which such payments are
fully
vested, or (iii) the first calendar year in which such payment is
administratively practicable.
9.7
Interpretation
and Section 409A Payments
.
Any
Award under the Plan is intended either (i) to be exempt from section 409A
of
the Code under the stock right, short-term deferral or other exceptions
available under section 409A, or (ii) to comply with section 409A of the Code,
and the Plan shall be administered in a manner consistent with such intent.
For
purposes of section 409A, each payment of deferred compensation under this
Plan
shall be considered a separate payment.
DEFINED
TERMS
In
addition to the other definitions contained herein, the following definitions
shall apply:
(a)
Award
.
The
term “Award” shall mean any grant of Options or award of Restricted Stock under
this Plan.
(b)
Board
.
The
term “Board” shall mean the Board of Directors of the Company.
(c)
Change
in Control
:
Except
as may be otherwise provided in an individual Award Agreement or as may be
otherwise required in order to comply with Code section 409A, a Change in
Control shall be deemed to have occurred on the earliest of the following dates:
(A)
The
date
any entity or person shall have become the beneficial owner of, or shall have
obtained voting control over, twenty-five percent (25%) or more of either the
outstanding Stock or the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of
directors of the Company (the “
Outstanding
Voting Securities
”);
(B)
The
date
the shareholders of the Company approve (X) a definitive agreement to merge
or
consolidate the Company with or into another corporation or other business
entity (for purposes of this section, each, a “corporation”), in which the
Company is not the continuing or surviving corporation or pursuant to which
any
shares of Stock or Outstanding Voting Securities of the Company would be
converted into cash, securities or other property of another corporation, other
than a merger or consolidation of the Company in which the holders of Company
Stock or Outstanding Voting Securities immediately prior to the merger or
consolidation continue to own at least seventy-five percent (75%) in the
aggregate of the Stock or Outstanding Voting Securities, or if the Company
is
not the surviving corporation, the same proportionate ownership of the common
stock (or other voting securities) of the surviving corporation immediately
after the merger as immediately before; provided, however, that if consummation
of such merger or consolidation is subject to the approval of federal, state
or
other regulatory authorities, then, unless the Committee determines otherwise,
a
“Change in Control” shall not be deemed to occur until the later of the date of
shareholder approval of such merger or consolidation or the date of final
regulatory or other approvals of such merger or consolidation; (Y) a definitive
agreement to sell or otherwise dispose of all or substantially all the assets
of
the Company; or (Z) a plan of complete liquidation or winding up of the Company;
Appendix
A
(C)
The
date
there shall have been a change in a majority of the Board of the Company within
a 12-month period unless the nomination for election by the Company’s
shareholders of each new director was approved by the vote of two-thirds of
the
members of the Board (or a committee of the Board, if nominations are approved
by a Board committee rather than the Board) then still in office who were in
office at the beginning of the 12-month period; or
(D)
The
date
any other event occurs or action takes place which the Board determines should
constitute a Change in Control.
(For
the
purposes herein, the term “person” shall mean any individual, corporation,
partnership, group, association or other person, as such term is defined in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than the
Company, a subsidiary of the Company or any employee benefit plan(s) sponsored
or maintained by the Company or any subsidiary thereof, and the term “beneficial
owner” shall have the meaning given the term in Rule 13d-3 under the Exchange
Act.)
The
Board
shall have full and final authority, in its discretion, to determine whether
a
Change in Control has occurred, the date of the occurrence of such Change in
Control and any incidental matters relating thereto.
(d)
Code
.
The
term “Code” means the Internal Revenue Code of 1986, as amended. A reference to
any provision of the Code shall include reference to any successor provision
of
the Code.
(e)
Eligible
Individual
.
The
term “Eligible Individual” shall mean (1) with respect to Awards of ISOs, any
salaried employee of the Company or any Subsidiary, (ii) with respect to grants
under Section 3 hereof, directors who are not employees of the Company and
(iii)
with respect to any other Awards, any employees or directors of the Company
or
any Subsidiary of the Company. An Award may be granted to an employee, in
connection with hiring, retention or otherwise, prior to the date the employee
first performs services for the Company or a Subsidiary, provided that such
Awards shall not become vested prior to the date the employee first performs
such services.
Appendix
A
(f)
Fair
Market Value
.
For
purposes of determining the “Fair Market Value” of a share of Stock as of any
date, the following rules shall apply:
(i)
If
the
principal market for the Stock is a national securities exchange (including,
for
this purpose, the Nasdaq stock market), then the “Fair Market Value” as of that
date shall be the closing price of the Stock on such date on the principal
exchange or market on which the Stock is then listed or admitted to
trading.
(ii)
If
sale
prices are not available or if the principal market for the Stock is not a
national securities exchange, then the “Fair Market Value” as of that date shall
be the average between the highest bid and lowest asked prices for the Stock
on
such date as reported on the Nasdaq OTC Bulletin Board Service or by the
National Quotation Bureau, Incorporated or a comparable service.
(iii)
If
the
immediately preceding date is not a business day, and as a result, clauses
(i)
and (ii) above are inapplicable, the Fair Market Value of the Stock shall be
determined as of the next earlier business day. If such clauses are otherwise
inapplicable, then the Fair Market Value of the Stock shall be determined in
good faith by the Committee.
(g)
Subsidiaries
.
For
purposes of the Plan, the term “Subsidiary” means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is owned, directly or indirectly, by the
Company (or by any entity that is a successor to the Company), and any other
business venture designated by the Committee in which the Company (or any entity
that is a successor to the Company) has a significant interest, as determined
in
the discretion of the Committee.
(h)
Stock
.
The
term “Stock” shall mean shares of common stock of the Company.
Notice
of Annual Meeting
and
Proxy
Statement
Annual
Meeting
of
Shareholders
to
be held on
August
6, 2008