SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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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
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Only (as permitted by Rule 14a-6(e)(2))
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TeleCommunication Systems, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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TABLE OF CONTENTS
275 West
Street
Annapolis, Maryland 21401
May 1, 2009
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of TeleCommunication Systems, Inc.
(TCS)
to be held on Thursday,
June 11, 2009, at 10:00 a.m. local time, at The Westin
Annapolis hotel, 100 Westgate Circle, Annapolis, MD 21401.
The business to be conducted at the Annual Meeting is set forth
in the formal notice that follows.
The Board of Directors urges you to read the accompanying Notice
of Annual Meeting and Proxy Statement, and recommends that you
vote
FOR
the election of each of the nominated directors
as described in this Proxy Statement.
Your vote is important. Whether or not you plan to attend the
Annual Meeting, it is important that your shares be represented.
We rely upon all stockholders to execute and return their
proxies in order to avoid proxy solicitation expenses.
Therefore, in order to save TCS the unnecessary expense of
further proxy solicitation, I ask that you promptly sign and
return the enclosed proxy card in the envelope provided.
I look forward to seeing you at the Annual Meeting.
Sincerely,
Maurice B. Tosé
Chairman of the Board
Chief Executive Officer and President
TELECOMMUNICATION
SYSTEMS, INC.
275 West Street, Suite 400
Annapolis, Maryland 21401
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of TeleCommunication Systems, Inc. (TCS or the
Company), a Maryland corporation, will be held on
Thursday, June 11, 2009, at 10:00 A.M. local time, at
The Westin Annapolis hotel, 100 Westgate Circle, Annapolis,
MD 21401 for the following purposes:
1. Election of directors:
a) To elect the Class III director listed in this
Proxy Statement to hold office until the Annual Meeting of
Stockholders to be held in 2010 and until his successor is duly
elected and qualifies;
b) To elect the Class I director listed in this Proxy
Statement to hold office until the Annual Meeting of
Stockholders to be held in 2011 and until his successor is duly
elected and qualifies; and
c) To elect two Class II directors listed in this
Proxy Statement to hold office until the Annual Meeting of
Stockholders to be held in 2012 and until their respective
successors are duly elected and qualify.
2. To transact such other business as may properly come
before the Annual Meeting or any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on
April 30, 2009 as the record date (the Record
Date) for the determination of stockholders who will be
entitled to notice of the Annual Meeting and to vote at the
Annual Meeting or any adjournments or postponements thereof.
Therefore, only record holders of TeleCommunication Systems,
Inc. Class A Common Stock and Class B Common Stock at
the close of business on that date are entitled to notice of and
to vote shares held on the Record Date at the Annual Meeting and
any adjournments or postponements thereof.
If you plan to attend the Annual Meeting, please be prepared to
present valid picture identification. If you hold your shares
through a broker or other nominee, the Company will accept proof
of ownership only if you bring either a copy of the voting
instruction card provided by your broker or nominee or a copy of
a brokerage statement showing your share ownership in the
Company as of the Record Date.
Whether or not you expect to attend the Annual Meeting, we urge
you to carefully review the enclosed materials. Your vote is
important. All stockholders are urged to attend the Annual
Meeting in person or by proxy. If you receive more than one
proxy card because your shares are registered in different names
or at different addresses, please indicate your vote, sign, date
and return each proxy card so that all of your shares will be
represented at the Annual Meeting.
If you attend the Annual
Meeting, you may choose to vote in person even if you previously
have sent in your proxy card.
By Order of the Board of Directors
Bruce A. White
Secretary
Annapolis, Maryland
May 1, 2009
Important Notice
Regarding the Availability of Proxy Materials for
The Annual Meeting to be held on June 11, 2009
This
Proxy Statement and our Annual Report on
Form 10-K
for the Year Ended December 31, 2009
are Available on the Internet at https://www.proxydocs.com/tsys.
You are receiving this communication because you hold shares in
the above company, and the materials you should review before
you cast your vote are now available.
This communication presents only an overview of the more
complete proxy materials that are available to you on the
internet. We encourage you to access and review all of the
important information contained in the proxy materials before
voting.
Shareholder
Meeting to be held on June 11, 2009
10:00 A.M.
The Westin Annapolis hotel
100 Westgate Circle
Annapolis, MD 21401
Proxy Materials Available:
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Notice and Proxy Statement
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Form 10-K
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TeleCommunication Systems, Inc.
275 West Street, Suite 400
Annapolis, Maryland 21401
PROXY
STATEMENT
Why Am I
Receiving this Proxy Statement and Proxy Card?
You are receiving this Proxy Statement and a proxy card because
you own shares of common stock, either Class A Common
Stock, par value $0.01 per share (the
Class A
Common Stock
), or Class B Common Stock, par
value $0.01 per share (the
Class B Common
Stock,
and together with the Class A Common
Stock, the
Common Stock
) of TCS. This
Proxy Statement describes the issues on which we would like you,
as a stockholder, to vote. It also gives you information on
these issues so that you can make an informed decision.
When you sign the proxy card, you appoint Bruce A. White as your
proxy at the Annual Meeting. Mr. White will vote your
shares as you have instructed them on the proxy card at the
Annual Meeting. This way, your shares will be voted whether or
not you attend the Annual Meeting. Even if you plan to attend
the Annual Meeting, it is a good idea to complete, sign and
return your proxy card in advance of the Annual Meeting just in
case your plans change. This Proxy Statement is being mailed to
you on or about May 1, 2009.
If an issue comes up for vote at the Annual Meeting that is not
on the proxy card, Mr. White will vote your shares, under
your proxy, in accordance with his best judgment.
Who Is Soliciting
this Proxy?
The TCS Board of Directors is soliciting your proxy to vote your
shares at the Annual Meeting.
What Is the
Purpose of the Annual Meeting?
The business to be conducted at the Annual Meeting is set forth
in the formal notice. Specifically, the matter includes the
election of (1) one Class III director to hold office
until the Annual Meeting of Stockholders to be held in 2010 and
until his successor is duly elected and qualifies, (2) one
Class I director to hold office until the Annual Meeting of
Stockholders to be held in 2011 and until his successor is duly
elected and qualifies, and (3) two Class II directors
to hold office until the Annual Meeting of Stockholders to be
held in 2012, and until their respective successors are duly
elected and qualify.
What Are The
Boards Recommendations?
The Boards recommendations are to vote:
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to elect the Class III director listed in this Proxy
Statement to hold office until the Annual Meeting of
Shareholders to be held in 2010 and until his successor is duly
elected and qualifies.
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to elect the Class I director listed in this Proxy
Statement to hold office until the Annual Meeting of
Shareholders to be held in 2011 and until his successor is duly
elected and qualifies.
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to elect the two Class II directors listed in this Proxy
Statement to hold office until the Annual Meeting of
Shareholders to be held in 2012 and until their respective
successors are duly elected and qualify.
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Unless you give other instructions on your proxy card,
Mr. White, in his capacity as proxy holder, will vote in
accordance with the recommendations of the Board of Directors.
With respect to any other matter that properly comes before the
Annual Meeting, the proxy holder will vote in his own discretion.
Who Is Entitled
to Vote?
Only stockholders of record at the close of business on the
record date, April 30, 2009 (the Record Date),
are entitled to receive notice of the Annual Meeting and to vote
the shares of Common Stock that they held on that date at the
Annual Meeting, or any adjournments or postponements thereof. At
the close of business on April 27, 2009,
39,457,595 shares of TCS Class A Common Stock and
6,626,334 shares of Class B Common Stock were
outstanding and entitled to receive notice and to vote at the
Annual Meeting.
How Many Votes
Does Each Share of Common Stock Entitle its Holder to
Cast?
Each share of Class A Common Stock is entitled to one vote
per share at the Annual Meeting. Each share of Class B
Common Stock is entitled to three votes per share at the Annual
Meeting.
Who Can Attend
the Annual Meeting?
Only stockholders as of the Record Date, or their duly appointed
proxies, may attend the Annual Meeting. Registration and seating
will begin at 9:30 a.m. Stockholders may be asked to
present valid picture identification, such as a drivers
license or passport. Cameras, recording devices and other
electronic devices will not be permitted at the Annual Meeting.
Please note that if you hold your shares in street
name (that is, through a broker or other nominee), you
must bring either a copy of the voting instruction card provided
by your broker or nominee or a copy of a brokerage statement
reflecting your stock ownership as of the Record Date and check
in at the registration desk prior to the start of the Annual
Meeting.
How Do I
Vote?
You May Vote by Mail.
You do this by signing the
enclosed proxy card and mailing it in the enclosed, prepaid and
addressed envelope. If you mark your voting instructions on the
proxy card, your shares will be voted as you instruct.
If you return a signed proxy card but do not provide voting
instructions, your shares will be voted to elect each of the
four directors listed in this Proxy Statement.
You May Vote in Person at the Annual
Meeting.
Written ballots will be passed out to
stockholders entitled to vote at the Annual Meeting. If you hold
your shares in street name (through a broker or
other nominee), you must request a legal proxy from your
stockbroker to vote at the Annual Meeting in order to be able to
cast your vote by written ballot.
How Many Votes Do
We Need to Hold the Annual Meeting?
In order to conduct business at the Annual Meeting, our Second
Amended and Restated Bylaws (the Bylaws) require the
presence in person or by proxy of stockholders entitled to cast
a majority of all the votes entitled to be cast on the matters
to be presented at the Annual Meeting. This is called a
quorum. Abstentions, properly executed proxy cards
received by us but marked WITHHOLD AUTHORITY and
broker non-votes (as defined below) are included in
calculating whether a quorum is present.
What Vote Is
Required to Approve Each Item?
Election of
the Nominees for Director
If a quorum is present, the affirmative vote of a plurality of
all the votes cast at the Annual Meeting is required for the
election of directors. Plurality means that the
individuals who receive the largest number of votes cast are
elected as directors. Consequently, abstentions, properly
executed proxy cards marked WITHHOLD AUTHORITY and
broker non-votes do not have any impact on the election of
directors.
Unless a properly executed proxy card is marked WITHHOLD
AUTHORITY, the proxy given will be voted FOR
each of the nominees for director.
2
Transaction of
Other Business
If a quorum is present, the approval of any other proposal that
may properly come before the Annual Meeting generally requires
an affirmative vote of a majority of all the votes cast in
person or by proxy and entitled to vote. A properly executed
proxy card marked ABSTAIN with respect to the
transaction of other business and broker non-votes will not be
voted. Accordingly, abstentions and broker non-votes will have
no impact on the vote concerning the proposal.
Can I Change My
Vote or Revoke My Proxy After I Return My Proxy Card?
Yes. Even after you have submitted your proxy card, you may
change your vote at any time before the proxy is voted at the
Annual Meeting by Mr. White by mailing to the Secretary of
TCS, either a written notice of revocation or an executed proxy
card with a later date than the one you previously submitted, at
TCSs offices, 275 West Street, Annapolis, Maryland
21401. You can also revoke your proxy at the Annual Meeting on a
ballot that we will provide at the Annual Meeting, or you can
appear in person at the Annual Meeting and vote, in person, the
shares to which your proxy relates. Attendance at the Annual
Meeting will not by itself revoke a previously granted proxy.
What If I Wish to
Withhold Authority from Voting on the Election of a Particular
Director or Directors?
If you wish to withhold authority from voting on the election of
a particular director or directors, you may do so by marking
WITHHOLD AUTHORITY, as applicable, on the enclosed
proxy card.
Will My Shares Be
Voted If I Do Not Sign and Return My Proxy Card?
If your shares are held in your name, you must return your proxy
(or attend the Annual Meeting in person) in order to vote on the
proposals. If your shares are held in street name and you do not
vote your proxy, your brokerage firm may either: (i) vote
your shares on routine matters, or (ii) leave your shares
unvoted. Under the rules that govern brokers who have record
ownership of shares that are held in street name for
their clients, brokers may vote such shares on behalf of their
clients with respect to routine matters, but not
with respect to non-routine matters. If the proposals to be
acted upon at any meeting include both routine and non-routine
matters, the broker may turn in a proxy card for uninstructed
shares that votes FOR the routine matters, but expressly states
that the broker is not voting on non-routine matters. This is
called a broker non-vote. Broker non-votes will not
be counted for the purpose of determining the number of votes
cast.
We encourage you to provide instructions to your brokerage firm
if your shares are held in street name. This ensures that your
shares will be voted at the Annual Meeting.
Who Pays the Cost
of Solicitation of My Proxy?
The expense of soliciting proxies and the cost of preparing,
assembling and mailing proxy materials in connection with the
solicitation of proxies will be paid for by TCS. In addition to
the use of mails, certain directors, officers or employees of
TCS, who receive no compensation for their services other than
their regular salaries, may solicit proxies. Arrangements may be
made with brokers and other custodians, nominees and fiduciaries
to send proxies and proxy materials to their principals and TCS
may reimburse them for reasonable out-of-pocket and clerical
expenses.
When are
Stockholder Proposals and Nominations for the Election of
Directors for the 2010 Annual Meeting of Stockholders
Due?
The Company provides all stockholders with the opportunity,
under certain circumstances and consistent with the Bylaws and
the rules of the Securities and Exchange Commission
(SEC)
, to participate in the
governance of the Company by submitting proposals that they
believe merit consideration and nominations for the election of
directors at the Annual Meeting of Stockholders to be held in
2010. To enable management adequately to analyze and respond to
proposals stockholders wish to have included in the Proxy
Statement and proxy card for that meeting, SEC
Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as
amended (the
Exchange Act
), requires
that any such proposal be received by the Company in writing no
later
3
than January 4, 2010. Any stockholder proposal or director
nomination must also be in compliance with the Bylaws. Pursuant
to the Bylaws, any stockholder proposal or director nomination
for that meeting that is submitted outside the processes of
Rule 14a-8
will be considered untimely if it is received by the
Company earlier than January 4, 2010 or later than
February 3, 2010.
Proxies solicited by the Board of Directors for the Annual
Meeting of Stockholders to be held in 2010 may confer
discretionary authority to vote on any untimely stockholder
proposals or director nominations without express direction from
stockholders giving such proxies. All stockholder proposals and
director nominations must be addressed to the attention of the
Secretary at 275 West Street, Annapolis, Maryland 21401.
The Chairman of the Annual Meeting may refuse to acknowledge the
introduction of any stockholder proposal or director nomination
not made in compliance with the Bylaws or the foregoing
procedures.
How Can I
Communicate with the Companys Board of
Directors?
Stockholders may send correspondence to the Board of Directors
or to any individual Director at the following address:
TeleCommunication Systems, Inc., 275 West Street,
Suite 400, Annapolis, MD 21401. The communication should
indicate that the sender is a stockholder. Based on procedures
approved by the Nominating and Governance Committee of the Board
of Directors, the General Counsel and Secretary will retain and
not send to Directors communications that are purely promotional
or commercial in nature or other topics that clearly are
unrelated to Director responsibilities. These types of
communications will be logged and filed but not circulated to
Directors. The General Counsel and Secretary will review and log
all other communications and subsequently deliver it to the
specified Directors. Further information about communicating
with the Board of Directors is available on the Companys
website at www.telecomsys.com/invetstor_info/corp_governance.cfm.
Where and When
Will I be Able to Find the Results of the Voting?
Preliminary results will be announced at the Annual Meeting. We
will publish the final results in our Quarterly Report on
Form 10-Q
for the quarter ending June 30, 2009 to be filed with the
SEC.
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ITEM 1
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ELECTION OF
DIRECTORS
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Our Amended and Restated Articles of Incorporation provide that
our Board of Directors is divided into three classes based on
their terms of office: Class I, Class II and
Class III. Such classes shall be as nearly equal in number
of directors as possible. Generally, each director serves for a
term ending on the third annual meeting of stockholders
following the annual meeting at which that director was elected,
except when a director is first assigned to a class of director
then serving for a term which is shorter than three years. Our
Bylaws provide that a majority of the then-existing Board of
Directors may fill a vacancy on the Board of Directors at any
time, and that such director elected by the Board of Directors
serves until the next annual meeting of stockholders and until
his or her successor is elected and qualifies. Our Bylaws also
provide that a majority of the then existing Board of Directors
may increase the number of directors which constitutes our Board
of Directors at any time up to a maximum of fifteen.
On January 27, 2009, the Board of Directors elected Thomas
M. Brandt, Jr., Jan C. Huly and Richard A. Young as new
directors and on April 16, 2009, Byron F. Marchant resigned
from the Board of Directors. Accordingly, our Board of Directors
currently has eight members: Maurice B. Tosé, Thomas M.
Brandt, Jr., James M. Bethmann, Clyde A. Heintzelman, Jan
C. Huly, Richard A. Kozak, Weldon H. Latham and Richard A.
Young, divided into three classes with staggered three-year
terms. The Board of Directors is soliciting proxies to re-elect
each of Messrs. Brandt, Huly and Young as described herein.
In addition, the Board of Directors is soliciting proxies to
re-elect Mr. Latham as described herein. Mr. Latham
was elected as a Class II director at the 2006 Annual
Meeting of Stockholders to hold office until the 2009 Annual
Meeting of Stockholders. All directors, except for
Messrs. Brandt, Young and Huly, have been duly elected by
the stockholders.
Nominees for
Director
At the Annual Meeting, the stockholders will have the
opportunity to elect: (1) one Class III director to
hold office until the Annual Meeting of Stockholders to be held
in 2010 and until his successor is duly elected and
4
qualifies, (2) one Class I director to hold office
until the Annual Meeting of Stockholders to be held in 2011 and
until his successor is duly elected and qualifies, and
(3) two Class II directors to hold office until the
Annual Meeting of Stockholders to be held in 2012, and until
their respective successors are duly elected and qualify,
except, with respect to each of the foregoing classes, in the
event of the directors earlier death, resignation or
removal.
Unless otherwise specified, your proxy will be voted
FOR the election of each of the nominees listed
below, except that in the event any of those named should not
continue to be available for election, discretionary authority
may be exercised by the proxy holders to vote for a substitute
of their choice. However, TCS knows of no circumstances that
would make any nominee named herein unavailable. Each nominee is
a current member of the Board of Directors.
The following nominees for director will serve until the Annual
Meeting of Stockholders in the years specified below and until
their respective successors are duly elected and qualify.
Nominees to
serve as Directors:
Class I
Director Term expiring in 2011
Thomas M. Brandt, Jr.
, 57, Senior Vice
President & Chief Financial Officer
Mr. Brandt was appointed to the Board of Directors in
January 2009. Mr. Brandt joined the Company in 1997. He is
responsible for financial management, reporting, controls,
accounting and administration. He was previously CFO of Digex,
Inc. where he helped lead an IPO, and CFO or controller of other
corporations, including a Fortune 500 New York Stock Exchange
company, as well as 12 years with Price Waterhouse. He also
serves on the Boards of Antenna Research Associates, a private
communications technology manufacturing company; and TechAmerica
(formerly American Electronics Association), the largest US IT
trade association. He is a CPA with an AB from Duke University
and an MBA from the Wharton School of the University of
Pennsylvania.
Class II
Directors Terms expiring in 2012
Weldon H. Latham
, 62, Member of the Compensation
and Nominating and Governance Committees
Weldon H. Latham joined the Board of Directors in December 1999.
Mr. Latham has been a senior partner with the law firm of
Davis Wright Tremaine since July 2004. From
2000-04,
he
was a senior partner at the law firm of Holland &
Knight. From
1992-2000,
Mr. Latham was a partner at the law firm of Shaw Pittman.
From
1986-92,
Mr. Latham was a managing partner of the Virginia office of
the law firm Reed Smith. From
1981-86,
Mr. Latham was the Vice President and General Counsel of
Sterling Systems Inc., a software company that was acquired by
Planning Research Corporation (PRC). Mr. Latham
was appointed Executive Assistant and Counsel to the PRC
Chairman and CEO. From
1979-81,
Mr. Latham served as General Deputy Assistant Secretary,
U.S. Department of Housing and Urban Development and
previously served as Assistant General Counsel, Executive Office
of the President (OMB) from
1973-76.
Previously, Mr. Latham served as a Captain, Office of the
Secretary, Air Force General Counsels Honors Program from
1971-73.
Mr. Latham holds a B.A. degree in Business Administration
from Howard University, a J.D. degree from Georgetown University
Law Center, and an executive management certificate from the
Amos Tuck Business School at Dartmouth College.
Jan C. Huly
, 61, Member of the Audit Committee
Retired Lieutenant General Jan C. Huly was appointed to the
Board of Directors in January 2009. He retired from the Marine
Corps in 2006 after almost 37 years of service. In his last
assignment as Deputy Commandant, Plans, Policies and Operations,
he effectively was the principal operations officer for the
Marine Corps with duties including staff coordination of
operational matters, combat readiness and security. He is a
member of the Defense Science Board for the Department of
Defense, and the Board of Directors of the Marine Corps
Scholarship Foundation. Lt. Gen. Huly holds a MA from Central
Michigan University, and a BA from the University of California,
Berkeley.
5
Class III
Director Term expiring in 2010
Richard A. Young
, 62, Executive Vice President and
Chief Operating Officer
Mr. Young was appointed to the Board of Directors in
January 2009. Mr. Young directs all day-to-day activities
in the Company including goal setting, performance monitoring,
and deployment of key personnel. Mr. Young joined TCS in
1992. He has over thirty years of experience in technology
management, with in-depth technical experience in hardware and
software life cycle program management. Prior to TCS,
Mr. Young worked as Senior Manager for ICF Information
Technology, Inc. where he was responsible for managing over
thirty technical staff in designing and developing applications
to customer specifications. From 1986 to 1989, Mr. Young
was the Director of the Information Systems Department of the
Navy Recruiting Command where he managed over seventy technical
employees and was responsible for the information management
requirements of the nationwide recruiting force. Mr. Young
holds a B.S. degree in Engineering from the U.S. Naval
Academy and holds a Master of Science degree in Information
Technology from the Naval Postgraduate School.
THE BOARD
RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES.
Directors
Continuing in Office
Class I
Directors Terms expiring in 2011
Clyde A. Heintzelman
, 70, Member of the Audit
Committee
Clyde A. Heintzelman joined the Board of Directors in December
1999. He most recently was the Chairman of the Board of Citel, a
company focused on enabling enterprise IP telephony with
existing PBX infrastructure. Mr. Heintzelman was the
Chairman of the Board of Optelecom, Inc. from February 2000 to
June 2003, also serving as the interim President and Chief
Executive Officer during 2002. Prior to joining Optelecom,
Mr. Heintzelman was the President of Net 2000
Communications, from November 1999 to May 2001. From December
1998 to November 1999, Mr. Heintzelman was the President
and Chief Executive Officer of SAVVIS Communications
Corporation, a networking and Internet solutions company. From
1995 to 1998, Mr. Heintzelman was the President and Chief
Operating Officer of DIGEX, Inc. Prior to joining DIGEX, Inc.,
Mr. Heintzelman was a General Manager for Bell Atlantic.
Mr. Heintzelman also serves on the Board of Directors of
SAVVIS Communications Corporation and ITC Deltacom.
Mr. Heintzelman holds a B.A. degree in Marketing from the
University of Delaware.
Richard A. Kozak
, 63, Chairman of the Audit
Committee
Mr. Kozak joined the Board of Directors in December 1999.
He is currently Chairman of R&D2 LLC, a company engaged in
helping early stage companies commercialize their intellectual
property assets. In 1998, Mr. Kozak founded and was the
Chief Executive Officer and Chairman of the Board of Directors
of 1eEurope, Ltd., formerly Galileo Communications, Ltd., a
portfolio of companies focused on providing integrated
e-business
solutions to mid and large-size companies throughout Europe.
From 1993 to 1997, Mr. Kozak was a co-founder and the
President, Chief Executive Officer and member of the Board of
Directors of American Communications Services, Inc., which
became e.spire Communications, Inc. Prior to forming American
Communications Services, Inc. in 1993, Mr. Kozak was the
President of the Southern Division of MFS Communications, which
was acquired by MCI WorldCom. From 1986 through 1989,
Mr. Kozak was Vice President and General Manager of Global
Messaging Services for GTE Telenet, now part of Sprint
International. He holds a B.S. degree in Engineering from Brown
University and an M.B.A. in Finance from The George Washington
University School of Government and Business Administration. He
is a member of the board of advisors for the Dingman School of
Entrepreneurship at the University of Maryland, and the
Chesapeake Innovation Center in Annapolis, Maryland.
Class III
Directors Terms expiring in 2010
Maurice B. Tosé
, 52, Chairman of the Board,
President and Chief Executive Officer
Maurice B. Tosé founded TCS in 1987 and has been a director
and Chairman of the Board since then. Prior to founding TCS,
Mr. Tosé was the Director of Department of Defense
Programs for Techmatics, Inc., headquartered in Silver Spring,
Maryland. He was recognized in each of the past three years as
one of the
6
countrys Top Black Technology Entrepreneurs by Career
Communications Group, Inc. He currently is a Commander in the
U.S. Navy Reserves and serves on the Board of Directors of
the U.S. Naval Academy Foundation. Mr. Tosé holds
a B.S. degree in Operations Analysis from the U.S. Naval
Academy.
James M. Bethmann,
54, Chairman of the
Compensation Committee, Member of the Nominating and Governance
Committee
Mr. Bethmann joined the Board of Directors in April 2006.
Mr. Bethmann is a Managing Partner of The Caldwell Partners
International, a retained executive search firm. Previously he
was Managing Partner of Heidrick and Struggles following its
acquisition of Highland Partners where he was a Vice Chairman of
the firm. Before joining Highland Partners, Mr. Bethmann
was Managing Director and co-led Korn/Ferry Internationals
Advanced Technology practice in North America, and established
and led the firms software and emerging technologies
practice. Prior to joining Korn/Ferry, Mr. Bethmann led the
Southwest Technology Practice of Russell Reynolds Associates.
Before executive search, Mr. Bethmann served as a Corporate
Officer and a President of Recognition International, a supplier
of high-performance document recognition systems, image, and
workflow software solutions for leading businesses in the
Americas, Pacific Rim, and Europe. He began his career in the
U.S. Navy, achieving the rank of Lieutenant Commander.
Mr. Bethmann holds a B.S. degree from the U.S. Naval
Academy where he currently is a board trustee.
Former
Class II Director
Byron F. Marchant,
51, joined the Board of
Directors in December 1999. He resigned from the Board of
Directors effective April 16, 2009. Until his resignation,
Mr. Marchant was the Chairman of the Nomination and
Governance Committee and a member of the Audit Committee.
Board of
Directors Nominations
Nominating and
Governance Committee
The Board of Directors maintains a Nominating and Governance
Committee (the Nominating Committee), which is
currently comprised of Messrs. Bethmann and Latham.
Mr. Marchant served as the Chairman until his resignation
from the Board on April 16, 2009, after which time the
Nominating Committee has elected Mr. Latham to serve as its
Chairman. The Nominating Committee has the responsibility to
recommend persons for membership on the Board of Directors,
including consideration of any nominees submitted to the Board
of Directors by stockholders, to establish criteria and
procedures for the selection of new directors, to assist the
Board of Directors with the evaluation of its overall
effectiveness, and to develop and recommend a set of corporate
governance principles of the Board (the Corporate
Governance Guidelines). The Nominating Committee Charter,
which was amended on September 19, 2008 (the Revised
Charter) requires that the Nominating Committee will be
comprised of three members. Mr. Marchants departure
left a vacancy on the Nominating Committee and the Board of
Directors intends to fill that vacancy from existing Board
members at its next meeting. The Nominating Committee met once
in 2008, but intends in 2009 to fulfill the Revised Charter
requirement that the Nominating Committee should meet at least
two times per year. The Revised Charter is available on the
Companys website at www.telecomsys.com and will be
provided to stockholders upon request.
Corporate
Governance
The Board of Directors believes that adherence to sound
corporate governance policies and practices is important in
ensuring that our company is governed and managed with the
highest standards of responsibility, ethics and integrity and in
the best interests of the stockholders. The Companys
Corporate Governance Guidelines are intended to reflect a set of
core values that provide the foundation for our governance and
management systems and our interactions with others.
The Board of Directors believes that the interests of the
stockholders are best served by having a substantial number of
objective, independent representatives on the Board. For this
purpose, a director will be considered to be
independent only if the Board affirmatively
determines that the director does not have any direct or
indirect material relationship with us that may impair, or
appear to impair, the directors ability to make
independent judgments.
7
The Board of Directors has determined that each member of the
Board of Directors, other than Messrs. Tosé, Young and
Brandt, is independent as defined by the listing
standards of the Nasdaq, within the meaning of
Rule 4200(a)(15) of the Nasdaq Stock Market.
Nominating
Process
The Nominating and Governance Committee uses a variety of
criteria to evaluate the qualifications and skills necessary for
members of the Board of Directors. Under these criteria, members
of the Board of Directors should have the highest professional
and personal ethics and values, consistent with longstanding
values and standards of the Company. Members of the Board of
Directors should have broad experience at the policy-making
level in business, government, technology or public interest.
They should be committed to enhancing stockholder value and
should have sufficient time to carry out their duties and to
provide insight and practical wisdom based on experience.
In identifying candidates for membership on the Board of
Directors, the Nominating and Governance Committee takes into
account all factors it considers appropriate, which may include
strength of character, conflict of interest, maturity of
judgment, career specialization, relevant skills, diversity and
the extent to which a particular candidate would fill a present
need on the Board of Directors. At a minimum, director
candidates must have unimpeachable character and integrity,
sufficient time to carry out their duties, the ability to read
and understand financial statements, experience at senior levels
in areas relevant to the Company and consistent with the
objective of having a diverse and experienced Board, the ability
and willingness to exercise sound business judgment, the ability
to work well with others and the willingness to assume the
responsibilities required of a director of the Company. Each
member of the Board of Directors must represent the interests of
the stockholders of the Company. The Nominating and Governance
Committee also believes it is in the stockholders best
interest for certain key members of our current management to
participate as members of the Board of Directors.
The Nominating and Governance Committee reviews and determines
whether existing members of the Board of Directors should stand
for reelection, taking into consideration matters relating to
the age and number of terms served by individual directors and
changes in the needs of the Board.
Once the Nominating and Governance Committee has selected
appropriate candidates for election as a director, it presents
the candidates to the full Board of Directors for
(a) election, if the selection has occurred during the
course of the year, or (b) nomination, if the director is
to be elected by the stockholders. Pursuant to our Bylaws,
members of at least one class of Directors are nominated each
year for election by the stockholders and are included in the
Companys Proxy Statement.
The Nominating and Governance Committee assesses the appropriate
size of the Board of Directors and whether any vacancies on the
Board of Directors are expected due to retirement or otherwise.
In the event that vacancies are anticipated or otherwise arise,
the Nominating and Governance Committee considers various
potential candidates for director. Candidates may come to the
attention of the Nominating and Governance Committee through
current members of the Board of Directors, professional search
firms, stockholders or other persons. These candidates are
evaluated by the Nominating and Governance Committee, and may be
considered at any point during the year. The Nominating and
Governance Committee will consider stockholder recommendations
for candidates for the Board of Directors that are properly
submitted in accordance with the Bylaws. In evaluating such
recommendations, the Nominating and Governance Committee will
use the qualifications standards discussed above and seek to
achieve a balance of knowledge, experience and capability on the
Board of Directors.
The Bylaws provide the procedure for stockholders to make
director nominations. A stockholders notice must be
delivered to or mailed and received by the Secretary at the
principal executive offices of the Company:
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in the case of an annual meeting, not more than 120 days
and not less than 90 days prior to the earliest of
(i) such annual meeting, (ii) the first anniversary of
the mailing date of the notice of the preceding years
annual meeting and (iii) the first anniversary of the
preceding years annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by
more than 30 days or delayed by more than 60 days from
the anniversary date of the preceding years annual
meeting, notice by the
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8
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stockholder must be so delivered not earlier than the
120th day prior to the annual meeting and not later than
the earlier of the close of business on the 90th day prior
to the annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first
made; and
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in the case of a special meeting of stockholders called for the
purpose of electing directors, not later than the earlier of the
close of business on the tenth day following the day on which
notice of the date of the special meeting was mailed or public
announcement of the date of the special meeting was made,
whichever first occurs.
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A stockholders notice to the Secretary must be in writing
and set forth:
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as to each person whom the stockholder proposes to nominate for
election as a director, all information relating to such person
that is required to be disclosed in connection with
solicitations of proxies for election of directors pursuant to
Regulation 14A of the Exchange Act, and the rules and
regulations promulgated thereunder; and
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as to the stockholder giving the notice (i) the name and
address of such stockholder as they appear on the Company
s books and of the beneficial owner, if any, on whose
behalf the nomination is made, (ii) the class or series and
number of shares of capital stock of the Company which are owned
beneficially or of record by such stockholder and such
beneficial owner, (iii) a description of all arrangements
or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such
stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to
nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required
to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for
election of directors pursuant to Regulation 14A of the
Exchange Act, and the rules and regulations promulgated
thereunder.
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Such notice must be accompanied by a written consent of each
proposed nominee to be named as a nominee and to serve as a
director if elected. No person shall be eligible for election as
a director of the Company unless nominated in accordance with
the procedures set forth above. If the chairman of the meeting
determines that a nomination was not made in accordance with the
foregoing procedures, the chairman of the meeting shall declare
to the meeting that the nomination was defective and such
defective nomination shall be disregarded. No adjournment or
postponement of a meeting of stockholders shall commence a new
period for the giving of notice of a stockholder proposal
hereunder.
Board
Meetings
Committees of the Board of Directors met a total of twelve times
in 2008. In addition, the full Board met three times during 2008
to review the actions of the Committees and attend to other TCS
business. All of the directors attended 100% meetings of the
Board of Directors and Board Committees of which they were a
member. All members of the Board of Directors also attended the
2008 Annual Meeting of Stockholders.
Director
Compensation
For 2008, non-employee directors were paid an annual retainer of
$15,000, and fee of $3,000 for each Board meeting and $2,000 for
each Committee meeting in which the director participated. The
Chairman of the Audit Committee was paid an additional annual
retainer of $11,000, the Chairman of the Compensation Committee
was paid an additional annual retainer of $5,500, and the
Chairman of the Nominating and Governance Committee was paid an
additional retainer of $4,500.
Generally, each non-employee director is granted restricted
stock or options to purchase shares of Class A Common Stock
under our Fifth Amended and Restated 1997 Stock Incentive Plan
annually. These restricted shares or options vest over a period
of one year in equal amounts at the end of each semi-annual term
of service on the Board. In addition, non-employee directors are
reimbursed for expenses incurred in connection with their
9
service on the Board of Directors. The following table
summarizes the amounts paid to non-employee directors for fiscal
year 2008:
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Fees
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Earned or
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Paid in
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Stock
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Name
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Cash
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Awards
(1)
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Total
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James M. Bethmann
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$
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43,500
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$
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20,000
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$
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63,500
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Clyde A. Heintzelman
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$
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34,000
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$
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20,000
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$
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54,000
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Richard A. Kozak
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$
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45,000
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$
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20,000
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$
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65,000
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Weldon H. Latham
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$
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38,000
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$
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20,000
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$
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58,000
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Byron F.
Marchant
(2)
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$
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40,500
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$
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20,000
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$
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60,500
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(1)
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The amounts in this column reflect the expense amount recognized
by us for financial statement reporting purposes in respect of
awards to our non-employee directors of restricted shares of our
Class A Common Stock during 2008. See Note 17 in the
Notes to Consolidated Financial Statements included in our
Annual Report on
Form 10-K
for the year ended December 31, 2008 (the Annual
Report) for additional information.
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(2)
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Mr. Marchant resigned from the Board of Directors effective
April 16, 2009.
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In January 2008, after reviewing industry comparable
compensation trends for Boards of Directors of comparably sized
companies in the industries in which TCS participates as
published in the Director Compensation Report of the National
Association of Corporate Directors, the Board voted unanimously
to set non-employee director annual fees as follows:
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Target Total Annual Compensation
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$
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55,000
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Board retainer
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$
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15,000
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Audit Committee Chairman retainer
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$
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11,000
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Compensation Committee Chairman retainer
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$
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5,500
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Nominating and Governance Committee Chairman retainer
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$
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4,500
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Board per-meeting fee
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$
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3,000
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Committee per-meeting fee
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$
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2,000
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Non-cash compensation (value)
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$
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20,000
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The Target Total Annual Compensation may be comprised of cash,
non-cash in the form of stock options or restricted shares with
a stated vesting schedule, or a combination of the two.
10
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial ownership is determined in accordance with
Rule 13d-3
under the Exchange Act. The number of shares beneficially owned
by a person includes shares of Class A Common Stock subject
to options held by that person that are currently exercisable or
exercisable within 60 days of April 30, 2009. The
shares issuable pursuant to these options are deemed outstanding
for computing the percentage ownership of the person holding
these options but are not deemed outstanding for the purposes of
computing the percentage ownership of any other person.
The following table lists the number of shares of Class A
Common Stock and Class B Common Stock beneficially owned by
directors and our Named Executive Officers (as defined below
under Summary Compensation Table) of the Company as
of April 30, 2009.
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Shares
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Percentage of Shares
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Name and Address of
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Beneficially Owned
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Beneficially Owned
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Beneficial Owner(1)
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A Shares
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B Shares(3)
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A Shares
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B Shares
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Directors and Named Executive Officers
:
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Maurice B. Tosé(2)
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2,201,878
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6,626,334
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4.6
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%
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100
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%
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Richard A. Young(4)
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1,222,812
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2.6
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%
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Thomas M. Brandt, Jr.(5)
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981,391
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2.1
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%
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Drew A. Morin(6)
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1,189,808
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2.5
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%
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Timothy J. Lorello(7)
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689,258
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1.5
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%
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James M. Bethmann(8)
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12,627
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*
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Clyde A. Heintzelman(9)
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86,053
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*
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Jan C. Huly
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*
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Richard A. Kozak(9)
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89,064
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*
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Weldon H. Latham(9)
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99,446
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*
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Byron F. Marchant(9)(10)
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53,897
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*
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All directors and the Named Executive Officers as a group
(11 persons)(11)
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6,626,234
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6,626,334
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13.3
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%
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100
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%
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Five percent holders
: None
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*
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Less than 1%.
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(1)
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Except as set forth herein, the business address of the named
beneficial owner is
c/o TeleCommunication
Systems, Inc., 275 West Street, Annapolis, Maryland 21401.
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(2)
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Includes 1,961,582 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2009. Under the rules of the SEC,
Mr. Tosé is deemed to beneficially own
229,995 shares of Class A Common Stock owned by Teresa
M.S. Layden, Mr. Tosés wife, 215,753 shares
of Class B Common Stock held in a trust for the benefit of
Mr. Tosés and Ms. Laydens children,
and 51,602 shares of Class B Common Stock held by
Mr. Tosés minor children. Mr. Tosé
disclaims beneficial ownership of all of these shares.
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(3)
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The holders of Class B Common Stock are entitled to three
votes per share on all matters submitted to a vote of the
stockholders. Each share of our Class B Common Stock is
convertible at any time, at the option of the holder, into one
share of our Class A Common Stock.
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(4)
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Includes 1,204,301 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2009.
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(5)
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Includes 835,478 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2009. Under the rules of the SEC,
Mr. Brandt is deemed to beneficially own 51,370 shares
of Class A Common Stock held in a trust for the benefit of
Mr. Brandts wife. Mr. Brandt disclaims
beneficial ownership of all the shares in the trust.
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(6)
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Includes 820,893 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2009. Under the rules of the SEC,
Mr. Morin is deemed to beneficially own 125,354 shares
of Class A Common Stock held in a trust for the benefit of
Mr. Morins wife and child. Mr. Morin disclaims
beneficial ownership of all of these shares.
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(7)
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Includes 449,308 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2009. Under the rules of the SEC,
Mr. Lorello is deemed to beneficially own
236,849 shares of Class A Common Stock held in a trust
for the benefit of Mr. Lorellos wife and children.
Mr. Lorello disclaims beneficial ownership of all these
shares.
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(8)
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Includes 1,946 shares of restricted Class A Common
Stock.
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(9)
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Includes 37,500 shares of Class A Common Stock
issuable upon the exercise of stock options exercisable within
60 days of April 30, 2009 and 1,946 shares of
restricted Class A Common Stock.
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(10)
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Mr. Marchant resigned from the Board of Directors effective
April 16, 2009.
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(11)
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Includes an aggregate of 5,421,562 shares of Class A
Common Stock issuable upon the exercise of stock options
exercisable within 60 days of April 30, 2009 and
9,730 shares of restricted Class A Common Stock.
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Executive
Officers
The Board of Directors has elected the executive officers to
serve for indefinite terms. The following table sets forth the
name of each executive officer as of December 31, 2008 and
the principal positions and offices he holds with the Company.
Unless otherwise indicated, each of these officers has served as
an executive officer of the Company for at least five years.
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Name
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Age
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Information About Executive Officer
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Maurice B. Tosé
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52
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Chairman of the Board of Directors, President and Chief
Executive Officer since 1987. Prior to founding TCS, Mr.
Tosé was the Director of Department of Defense Programs for
Techmatics, Inc., headquartered in Silver Spring, Maryland.
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Richard A. Young
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62
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Executive Vice President and Chief Operating Officer. Mr. Young
directs all day-to-day activities in the Company including goal
setting, performance monitoring, and deployment of key
personnel. Mr. Young joined TCS in 1992 and has served in a
chief operating management role throughout his tenure.
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Thomas M. Brandt, Jr.
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57
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Sr. Vice President and Chief Financial Officer. Mr. Brandt
joined the Company in 1997, assuming responsibility for the
Companys financial management, reporting, controls,
accounting, and administration.
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Drew A. Morin
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48
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Sr. Vice President and Chief Technology Officer. Mr. Morin
joined the company in 1988, assuming responsibility for the
technical direction and coordination of TCS development
activities across business units.
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Timothy J. Lorello
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51
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Sr. Vice President, Commercial Sales and Chief Marketing
Officer, In 2007, Mr. Lorello assumed the additional
responsibility of Sales lead for our Commercial segment
offerings. In 2002, Lorello assumed responsibility for
positioning and product management, marketing communications,
branding activities, and product strategy for all of our
products and services. Mr. Lorello joined our company in 1995 to
head our network intelligence application software group where
he was responsible for the marketing and development of software
applications and services sold to wireless carriers.
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Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our
directors and executive officers, and persons that beneficially
own more than 10% of our Class A Common Stock, file with
the SEC initial reports of ownership and reports of changes in
ownership of our Class A Common Stock and other equity
securities. Copies of these reports must be filed with us. Based
solely on our review of the copies of these reports filed with
us, and written representations that no other reports were
required, to our knowledge, all reports required by
Section 16(a) were timely filed in 2008 except as follows:
Messrs. Bethmann, Heintzelman, Kozak, Latham, Marchant and
Morin each filed one Form 4 one day late; Mr. Lorello
filed two Forms 4 each one day late. All of the late
Form 4 filings resulted from administrative oversight.
12
CORPORATE
GOVERNANCE
Independence
The Board of Directors has determined that each member of the
Board of Directors, other than Messrs. Tosé, Young and
Brandt, is independent as defined by the listing
standards of the Nasdaq, within the meaning of
Rule 4200(a)(15) of the Nasdaq Stock Market.
Code of Ethics
and Business Conduct
The Board of Directors has adopted a written code of ethics and
business conduct, a copy of which is available on the
companys website at www.telecomsys.com. The Company
requires all officers, directors and employees to adhere to this
code in addressing the legal and ethical issues encountered in
conducting their work. The code requires that employees avoid
conflicts of interest, comply with all laws and other legal
requirements, conduct business in an honest and ethical manner
and otherwise act with integrity and in the companys best
interest. Employees are required to report any conduct that they
believe in good faith to be an actual or apparent violation of
the code. The Sarbanes-Oxley Act of 2002 requires companies to
have procedures to receive, retain and treat complaints received
regarding accounting, internal accounting controls or auditing
matters and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters. The Company currently has such
procedures in place.
Committees of the
Board of Directors
Audit
Committee
The Audit Committee, which met five times in 2008, oversees the
Companys financial reporting process on behalf of the
Board of Directors and its members are Mr. Richard A.
Kozak, Mr. Clyde A. Heintzelman and Mr. Jan C. Huly.
Mr. Marchant was a member of the Audit Committee until his
resignation from the Board of Directors effective April 16,
2009. The members of the Audit Committee are
independent as defined by the listing standards of
the Nasdaq. The Board of Directors has determined that
Mr. Kozak, Chairman of the Audit Committee, is an
audit committee financial expert under the relevant
rules of the SEC.
The charter for the Audit Committee may be found on the TCS Web
site
(http://www.telecomsys.com).
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed and discussed the audited financial
statements with management including a discussion of the
quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements. The Audit
Committee held four quarterly meetings in 2008 to review
quarterly operating results, and one additional meeting to
review other matters. The Audit Committee met in executive
session with Ernst & Young representatives
and/or
the
Companys internal auditor, without the presence of
management, three times during 2008.
For the fiscal years ended December 31, 2008 and 2007,
professional services were performed by Ernst & Young
LLP. Total fees paid to Ernst & Young LLP aggregated
$722,000 and $595,000 for the fiscal years ended
December 31, 2008 and 2007, respectively, and were composed
of the following:
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31
|
|
|
|
($000)
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
705
|
|
|
$
|
581
|
|
Audit-Related Fees
|
|
|
17
|
|
|
|
14
|
|
Tax Fees
|
|
|
0
|
|
|
|
0
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Professional Services
|
|
$
|
722
|
|
|
$
|
595
|
|
|
|
|
|
|
|
|
|
|
13
Audit Fees:
The aggregate fees billed for the audit
of the annual financial statements for the fiscal years ended
December 31, 2008 and 2007, for reviews of the financial
statements included in the TCS Quarterly Reports on
Form 10-Q,
for testing and evaluating internal controls over financial
reporting and for assistance with and review of documents filed
with the SEC were $705,000 for 2008 and $581,000 for 2007.
Audit-Related Fees:
Audit related fees include:
attest services that are not required by statute or regulation,
internal control reviews and consultations concerning evaluating
internal controls over financial reporting and other financial
accounting/reporting matters. The aggregate fees billed for
audit-related services for the fiscal years ended
December 31, 2008 and 2007 was $17,000 and $14,000,
respectively. The reported fees relate primarily to responding
to the SEC Comment letter related to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007..
Tax Fees:
Tax fees relate to fees billed for
professional services performed by Ernst & Young LLP
with respect to tax compliance, tax advice and tax planning. We
paid no fees to Ernst & Young for tax services for the
fiscal years ended December 31, 2008 and 2007.
All Other Fees:
All other fees consist of aggregate
fees billed by Ernst & Young LLP for products and
services other than the services reported above. We paid no fees
to Ernst & Young for other services for the fiscal
years ended December 31, 2008 and 2007.
Report of the
Audit Committee
The Committee reviewed and discussed with the independent
registered public accounting firm, who are responsible for
expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the
acceptability, of TCSs accounting principles and such
other matters as are required to be discussed with the Committee
under generally accepted auditing standards, as well as the
matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees), as
amended. The Committee discussed with TCSs independent
registered public accounting firm the overall scope and plans
for their respective audits. In addition, the Committee has
discussed with the independent registered public accounting
firm, with and without management present, the results of their
examinations, their evaluations of TCSs internal controls,
and the overall quality of TCSs financial reporting. The
Committee has received the written disclosures and the letter
from the independent registered public accounting firm required
by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public
accounting firms communications with the Audit Committee
concerning independence, and has discussed with the independent
registered public accounting firm that firms independence
and considered the compatibility of non-audit services with the
auditors independence.
The Committee reviewed and discussed the audited financial
statements with management and also discussed and assessed with
management and Ernst & Young LLP, managements
report and Ernst & Young LLPs report and
attestation on internal control over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act. The
Companys manager of Internal Audit, who reports directly
to the Audit Committee, met in executive session with the
Committee (without management present) to report on her review
of the Companys system of internal controls.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors and the
Board has approved the inclusion of the audited financial
statements in the Annual Report for filing with the SEC. The
Committee has also approved the selection of Ernst &
Young LLP as TCSs independent registered public accounting
firm for 2009. Representatives of Ernst & Young LLP
are expected to be present at the Annual Meeting of Stockholders
on June 11, 2009 with the opportunity to make a statement
if they desire to do so, and they will be available to respond
to appropriate questions. The Audit Committee considered whether
the provision by Ernst & Young LLP of the services
entitled all other fees as discussed below is
compatible with maintaining Ernst & Young LLPs
independence.
14
The Audit Committee annually approves each years
engagement for audit services in advance. The Committee has also
established procedures to require pre-approval of all
audit-related, tax and permitted non-audit services provided by
Ernst & Young LLP. Fees for any of these services that
will exceed the pre-approval fee limits or fees not contemplated
by the original pre-approval must be separately approved by the
Audit Committee. The Audit Committee may delegate pre-approval
authority to one or more of its members. Any such fees
pre-approved in this manner shall be reported to the Audit
Committee at its next scheduled meeting. All services described
above were pre-approved by the Audit Committee in fiscal 2008.
The Audit Committee has designated Mr. Thomas M.
Brandt, Jr., Chief Financial Officer, to monitor the
performance of all services provided by the independent
registered public accounting firm and to determine whether such
services are in compliance with this policy. Mr. Brandt
reports to the Audit Committee on a periodic basis the results
of this monitoring. Any member of executive management will
immediately report to the chairman of the Audit Committee any
breach of this policy that comes to his or her attention.
AUDIT COMMITTEE
Richard A. Kozak, Chairman
Clyde A. Heintzelman
Byron F. Marchant
Compensation
Committee
The Compensation Committee, which met six times in 2008,
consists of Messrs. Bethmann and Latham. The Compensation
Committee determines the compensation of our Chief Executive
Officer and President and the compensation of the other Named
Executive Officers and administers the Fifth Amended and
Restated 1997 Stock Incentive Plan, Amended and Restated
Employee Stock Purchase Plan and other executive officer
compensation plans. The Compensation Committees Charter is
available on the Companys website (www.telecomsys.com) and
will be provided to stockholders upon request.
Our executive compensation programs are designed to achieve the
following objectives:
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|
Attract and retain talented and experienced executives in the
highly competitive and dynamic wireless communications
technology industry;
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|
|
Motivate and reward executives whose knowledge, skills and
performance are critical to our success;
|
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|
|
Align the interests of our Named Executive Officers and
stockholders by motivating executive officers to increase
stockholder value and rewarding Named Executive Officers for
meeting operational goals designed to result in stockholder
value increases;
|
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|
Ensure fairness among the executive management team by
recognizing the contributions each executive makes to our
success;
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|
Foster a shared commitment among executives by coordinating
their company and individual goals; and
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|
Motivate our executives to manage our business to meet our
long-range objectives.
|
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
We provide what we believe is a competitive total compensation
package to our executive management team through a combination
of base salary, an annual cash incentive plan, a long-term
equity incentive compensation plan and broad-based benefits
programs.
We place significant emphasis on pay for performance-based
incentive compensation programs, which make compensation
contingent on the attainment of Company and individual goals.
This Compensation Discussion and Analysis explains our
compensation program with respect to Named Executive Officers.
15
The Objectives of
our Executive Compensation Program
We use the following principles to guide our decisions regarding
executive compensation:
Provide
compensation opportunities competitive with market
levels.
To attract and retain executives with the ability and the
experience necessary to lead us and deliver strong performance
to our stockholders, we strive to provide a total compensation
package that is competitive with total compensation provided by
our industry peer group, which we construct to include the
following companies:
|
|
|
Neustar , Inc.
|
|
Sybase, Inc.
|
NCI Inc.
|
|
Globecomm Systems, Inc.
|
Comverse Technology, Inc.
|
|
ViaSat, Inc.
|
Openwave Systems, Inc.
|
|
Syniverse Holdings, Inc.
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|
Comtech Telecommunications Corp.
|
We chose these companies because they are publicly traded
companies in the commercial and technology sectors in which we
operate
and/or
they
are close to our size in terms of revenue and market
capitalization. We believe that such companies provide an
appropriate peer group because they consist of similar
organizations against whom we compete for executive talent. We
annually review the companies in our peer group and add or
remove companies as necessary to insure that our peer group
comparisons are meaningful. We changed our peer group slightly
from the one used in 2007 by adding Comtech Telecommunications
Corp. because its mobile communications systems and satellite
services business lines are comparable to our Government Segment
business. We used this same peer group when constructing the
performance graph that appears in our Annual Report.
For each Named Executive Officer, we consider the relevance of
data of our peer group, considering:
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|
Our business need for the Named Executive Officers skills;
|
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|
|
The contributions that the Named Executive Officer has made or
we believe will make to our success;
|
|
|
|
The transferability of the Named Executive Officers
managerial skills to other potential employers;
|
|
|
|
The relevance of the Named Executive Officers experience
to other potential employers, particularly in the
telecommunications technology industry; and
|
|
|
|
The readiness of the Named Executive Officer to assume a more
significant role with another potential employer.
|
Base
Salaries
We target base salaries to approximate the market median
(50
th
percentile)
for our peer group. To arrive at the
50
th
percentile
for the base salaries of our Named Executive Officers, we
consider the median of the data gathered from proxy statements
for the positions of the Named Executive Officers in relation to
the Named Executive Officers of our peer group for each
position. We also use data from publicly available surveys, when
available, in addition to our peer group, in order to have a
more complete overview of the competitive market for our
executive talent.
Cash
Incentives
Incentive award opportunities are targeted to result in Bonus
Opportunity Plan payments equal to the market median of cash
incentives paid by our peer group assuming our target business
objectives are achieved.
Long-Term
Equity Compensation
Annual equity grants are targeted at 75 percent of the
median level of market practices for the Named Executive
Officer, but may be adjusted in the discretion of the
Compensation Committee based on individual performance or other
factors. The allocation between long-term and currently paid out
compensation reflects
16
consideration of how our peer companies use long-term and
currently paid compensation to pay their Named Executive
Officers because we feel it is important to maintain parity with
competitors for our management team.
Total
Compensation
Total compensation is targeted at the 75th percentile of
our peer group, considering individual performance and
experience. The targets for compensation are set at the
beginning of each fiscal year. The Companys outstanding
operational performance achieved in fiscal year 2008 resulted in
the Named Executive Officers earning total compensation which
significantly exceeded the targeted compensation set forth at
the beginning of the year.
Require
performance goals to be achieved in order for the majority of
the target pay levels to be earned.
Our executive compensation program emphasizes pay for
performance. Performance is measured based on achievement of
company and individual performance goals that are aligned with
our business strategy and are approved by our Compensation
Committee relative to the annual business plan as approved by
the Board of Directors. If the target level for the performance
goals is exceeded, executives have an opportunity to earn cash
incentive awards above the median of the market of our peer
group pursuant to our Bonus Opportunity Plan. If the target
levels for the performance goals are not achieved, executives
may earn less or no Bonus Opportunity Plan payments.
Offer a
comprehensive benefits package to all full-time
employees.
We provide a competitive benefits package to all full-time
employees which includes health and welfare benefits, such as
medical, dental, vision care, disability insurance, life
insurance benefits, and a 401(k) savings plan. We have no
structured executive perquisite benefits (e.g., club memberships
or company vehicles) for any executive officer, including the
Named Executive Officers, and we currently do not provide any
supplemental pensions to any executive officer, including the
Named Executive Officers. In December 2008 the Compensation
Committee adopted a Deferred Compensation Plan under which
certain highly compensated employees, including the Named
Executive Officers, are allowed to defer receipt of current
income until some future period, which period must be determined
prior to making contributions. The Company also may contribute
compensation on behalf of an employee, including a Named
Executive Officer, which will vest to the beneficiary employee
at the pre-determined future date.
Provide fair
and equitable compensation.
We provide a total compensation program that we believe will be
perceived by both our Named Executive Officers and our
stockholders as fair and equitable. In addition to conducting
analyses of market pay levels and considering individual
circumstances related to each Named Executive Officer, we also
consider the pay of each Named Executive Officer relative to
each other Named Executive Officer and relative to other members
of the management team. We have designed the total compensation
programs to be consistent for our executive management team.
Certain Policies
of our Executive Compensation Program
We have adopted the following material policies related to our
executive compensation program:
|
|
|
|
|
Allocation between long-term and currently paid out
compensation
: The compensation we currently pay
consists of base pay and annual cash incentive compensation in
the form of the Bonus Opportunity Plan payments. The long-term
compensation consists entirely of awards of stock options or
restricted shares pursuant to our Fifth Amended and Restated
1997 Stock Incentive Plan, as amended. The allocation between
long-term and currently paid out compensation reflects
consideration of how our peer companies use long-term and
currently paid compensation to pay their executive officers
because we feel it is important to maintain parity with
competitors for our management team.
|
17
|
|
|
|
|
Allocation between cash and non-cash
compensation:
It is our policy to allocate all
currently paid compensation in the form of cash and all
long-term compensation in the form of awards of options to
purchase our common stock or restricted shares of our
Class A common stock, because we believe that this balance
best serves our interests in retaining experienced managers
while also aligning their long-term compensation with
stockholder interests in long-term growth and success.
|
Our Executive
Compensation Programs
The basic elements of our executive compensation programs are
summarized in the table below, followed by a more detailed
discussion of each compensation program.
|
|
|
|
|
Element
|
|
Characteristics
|
|
Purpose
|
|
Base salary
|
|
Fixed annual cash compensation; all executives are eligible for
periodic increases in base salary based on performance; targeted
at the median market pay level.
|
|
Keep our annual compensation competitive with the market for
skills and experience necessary to meet the requirements of the
executives role with us.
|
Bonus Opportunity Plan awards
|
|
Performance-based annual cash incentive earned based on company
and individual performance against target performance levels;
targeted at the median market pay level.
|
|
Motivate and reward for the achievement and over-performance of
our critical financial and strategic goals. Amounts earned for
achievement of target performance levels based on our annual
budget is designed to provide a market-competitive pay package
at median performance; potential for lesser or greater amounts
are intended to motivate participants to achieve or exceed our
financial performance goals and to not reward if performance
goals are not met.
|
Long-term equity incentive plan awards (stock options and
restricted shares)
|
|
Performance-based equity award which has value to the extent our
common stock price increases over time; targeted at the
75
th
percentile
of market pay level and/or competitive practices at peer
companies.
|
|
Align interest of management with stockholders; motivate and reward management to increase the stockholder value of the company over the long term.
Vesting based on continued employment will facilitate retention; amount realized from exercise of stock options rewards increased stockholder value of the company; provides change in control protection.
|
Retirement savings opportunity
|
|
Tax-deferred 401(k) plan in which all employees can choose to
defer compensation for retirement. We provide discretionary but
non-discriminatory matching contributions to all employees based
on operational performance; we do not allow employees to invest
these savings in company stock.
|
|
Provide employees the opportunity to save for their retirement.
Account balances are affected by contributions and investment
decisions made by the employee.
|
18
|
|
|
|
|
Element
|
|
Characteristics
|
|
Purpose
|
|
Health & welfare benefits
|
|
Fixed component. The same/comparable health & welfare
benefits (medical, dental, vision, disability insurance and life
insurance) are available for all full-time employees.
|
|
Provides benefits to meet the health and welfare needs of
employees and their families.
|
In general, compensation or amounts realized by executives from
prior compensation from us, such as gains from previously
awarded stock options or options awards, are not taken into
account in setting other elements of compensation, such as base
pay, Bonus Opportunity Plan payments, or awards of stock options
or restricted shares under our long-term equity incentive
program, because we believe that the opportunity for additional
cash and equity compensation is a significant motivator and we
want our executives to be rewarded for contributing to our
success. With respect to Named Executive Officers, we take into
account their prior base salary and annual cash incentive, as
well as the contribution expected to be made by the Named
Executive Officer, the business needs and the role of the Named
Executive Officer with us.
Annual Cash
Compensation
Base
Salary
Annually we review salary ranges and individual salaries for our
Named Executive Officers. We establish the base salary for each
Named Executive Officer based on consideration of median pay
levels of our peer group and internal factors, such as the
individuals performance and experience, and the pay of
others on the executive team. For example, in the case of
Mr. Lorello, we considered the additional responsibilities
that he assumed in 2007 when we set his salary for 2008.
We also consider business requirements for certain skills,
individual experience and contributions, the roles and
responsibilities of the executive and other factors. We believe
competitive base salary is necessary to attract and retain an
executive management team with the appropriate abilities and
experience required to lead us.
The base salaries paid to our Named Executive Officers are set
forth below in the Summary Compensation Table. For the fiscal
year ended December 31, 2008, cash compensation to our
Named Executive Officers in the form of base salary was
approximately $1.7 million, with our chief executive
officer receiving approximately $475,833 of that amount. We
believe that the base salary paid to our Named Executive
Officers during 2008 achieves our executive compensation
objectives, compares appropriately to our peer group and is
within our target of providing a base salary at the market
median.
In 2009, adjustments to our Named Executive Officers base
salaries were made by the Compensation Committee based on an
analysis of current market conditions, our operational budgets
set for 2009 and information available to the Compensation
Committee Chairman whose profession is executive recruiting, to
consider executive salary levels in companies whose businesses
intersect with certain facets of ours. Based on these factors,
the Compensation Committee approved a 4.5% increase in base
salary for each of our Named Executive Officers in 2009.
Bonus
Opportunity Plan Awards
Consistent with our emphasis on pay for performance incentive
compensation programs, we have established a Bonus Opportunity
Plan pursuant to which certain of our executive officers,
including our Named Executive Officers, are eligible to receive
Bonus Opportunity Plan awards based upon annual established
performance targets, including financial measures and other
factors, including individual performance, all at the discretion
of the Compensation Committee. The Bonus Opportunity Plan is
important to focus our Named Executive Officers efforts
and reward them for annual operating results that help create
value for our stockholders. The Bonus Opportunity Plan for 2008
was designed to create an opportunity for award representing
approximately 30% to 65% of a Named Executive Officers
total potential cash compensation, depending on
19
the executives role, and included an opportunity for the
award to exceed the target amount if certain operational results
exceeded the performance metric.
In 2008, our Named Executive Officers exceeded all of the target
business objectives by unusually wide margins, which resulted in
the Named Executive Officers as a group earning total cash
bonuses above the amounts anticipated under the Bonus
Opportunity Plan when the incentive plan targets for the Bonus
Opportunity Plan were set through our annual planning process,
which generally begins in October before each fiscal year.
For 2008, the financial measures used to determine annual
incentive cash payments included total revenue
and/or
specific revenue targets for the operating unit within the
executives control; Earnings Before Interest, Taxes,
Depreciation and Amortization (including non-cash stock-based
compensation), (collectively, EBITDA); cash
and cash equivalents balances at year-end; a goal tied to the
financial covenant in our bank line of credit; and, in the case
of our Chief Financial, Technology and Marketing Officers (the
CFO, CTO and CMO), attainment of certain subjective goals
related to the executives role. The Compensation Committee
set individual subjective performance goals for only our CFO,
CTO and CMO because their respective responsibilities include
matters for which the results are more directly within their
respective control and on which we want them to apply focused
efforts. While these financial measures and individual goals
form a framework for awarding incentive payments, the
Compensation Committee retains discretion over the final amount
of the payouts under the Bonus Opportunity Plan.
For 2008, the individual performance goals included:
Chief
Financial Officer
|
|
|
|
|
Maintain SEC compliance with internal control regulations
subject to reporting under the
Sarbanes-Oxley Act
|
Chief
Technology Officer
|
|
|
|
|
Control research and development expenditures
|
|
|
|
Generate customer satisfaction survey results for software
division
|
|
|
|
Achieve days sales outstanding metrics for software
division
|
Chief
Marketing Officer
|
|
|
|
|
Plan and execute speaking engagements designed to draw attention
to our business
|
|
|
|
Produce Company-related articles in technical or trade
publications
|
The goals for our company and individual performance goals were
established so that target attainment was not assured. The
attainment of payment for performance at target or above is
expected to require significant effort on the part of our
executives.
The revenue measure is designed to reflect our objective of
developing new products and markets, growing top line revenue,
and expanding our market share in existing markets. To ensure we
efficiently develop and expand our markets, the EBITDA measure
motivates our executives to manage our costs and to take into
account the appropriate level of expenses expected with our
growth. The cash at year-end measure is designed to ensure that
the appropriate level of attention is paid to the need to fund
our operations and investments for the next rolling twelve-month
period. The subjective goals provide recognition for
contributions made to the overall health of the business and are
intended to capture how the Named Executive Officer has
performed in areas that are not quantified in the major metrics.
A business plan which contains annual financial and strategic
objectives is developed each year by management, reviewed and
recommended by the Named Executive Officers, presented to the
board of directors, and ultimately reviewed and approved by our
board of directors with such changes it deems
20
appropriate. The Bonus Opportunity Plan is presented to the
Compensation Committee for review and approval with such
modifications it deems appropriate.
Bonus Opportunity Plan awards are determined after year-end
based on our performance against the approved Bonus Opportunity
Plan targets. The Compensation Committee also has the ability to
exercise discretion in adjusting awards based on factors it
deems relevant which may include its consideration of each Named
Executive Officers individual performance and for each
Named Executive Officer other than the chief executive officer,
based on a review of such executives performance as
communicated to the Compensation Committee by the chief
executive officer, internal pay equity among the Named Executive
Officers, changing compensation practices within our peer group
and other industries against which the Company competes for
executive talent, customers and capital, our overall performance
during the year, and any unusual or non-recurring business,
financial or accounting matters otherwise impacting our
performance. The committee may modify the Bonus Opportunity Plan
awards prior to their payment.
The Compensation Committee sought the advice and counsel of an
independent compensation consultant regarding the payment of
bonus amounts using the formula that had been established at the
beginning of 2008. The Committee also discussed the bonus
calculations with other Board members and considered their
inputs. After review of the data and considering the advice from
the outside compensation consultants, the Committee determined
that Named Executive Officers had delivered superior results,
had executed in accordance with the plans set forth by the
Committee in early 2008, and had earned a total compensation
package that rewarded the outstanding performance.
2008 Financial
Measures
Shown as a percentage of the total Bonus Opportunity Plan award
at target in the following table, is the weighting of the
measures used to determine award payments to the Named Executive
Officers for the fiscal year ended December 31, 2008:
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|
2008 Measures
|
|
CEO
|
|
|
COO
|
|
|
CFO
|
|
|
CTO
|
|
|
CMO
|
|
|
Company performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
20
|
%
|
|
|
30
|
%
|
|
|
15
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
EBITDA
|
|
|
30
|
%
|
|
|
60
|
%
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
Net Income
|
|
|
20
|
%
|
|
|
10
|
%
|
|
|
25
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
Cash at end of year
|
|
|
20
|
%
|
|
|
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
Individual/Operating Unit contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
%
|
|
|
40
|
%
|
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
Expense Controls
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
%
|
|
|
|
|
Subjective goals
|
|
|
10
|
%
|
|
|
|
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
The year-end cash goal applied only to the CEO and CFO because
those executives have the most direct influence on the decisions
that produce these results. The EBITDA goal was significantly
more weighted with respect to our COO because he manages the
Companys operations and approves the expense and
investment decisions that most significantly influence the
EBITDA results. The revenue goal was significantly more weighted
with respect to our CMO to focus his role as sales executive on
driving top line results.
Bonus Opportunity
Plan Payout
Subject to the discretion of the Compensation Committee to
adjust awards as described above, if a Named Executive Officer
does not achieve 85% of all of his goals, there is no payout of
the bonus opportunity. If a Named Executive Officer meets 85%,
but not 100% of his goals, the Compensation Committee evaluates
what percentage of his goals were met, and adjusts his actual
payment downward accordingly. Subject to the discretion of the
Compensation Committee to adjust awards as described above, if a
Named Executive Officer exceeds all of his corporate goals and
personal objectives, he receives his target payment
and is eligible to also receive additional payments to the
extent our Net Income results exceed our targets. The payment
21
opportunities under the 2008 annual Bonus Opportunity Plan were
set based on competitive market pay levels of our peer group and
are shown as a percentage of annual base salary at corresponding
levels of performance against our goals as shown in the
following table:
|
|
|
|
|
|
|
2008 Bonus Opportunity Plan Payout Level Based on Goal
Achievement
|
Officer
|
|
At 100% (Target)
|
|
Bonus Adjustments Based on Performance
|
|
CEO
|
|
75% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
COO
|
|
55% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
CFO
|
|
50% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
CTO
|
|
50% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
CMO
|
|
65% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
The actual annual incentive payments made to our Named Executive
Officers were calculated in consideration of the following
summary of key operational results (including two non-recurring
items):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named
|
|
|
|
|
|
|
|
|
|
2008 Operating Results
|
|
Executive Officer
|
|
Goal
|
|
|
Actual
|
|
|
Achievement
|
|
|
|
|
|
($000)
|
|
|
($000)
|
|
|
|
|
|
Company performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Total Revenue
|
|
All
|
|
|
170,000
|
|
|
|
220,142
|
|
|
|
129
|
%
|
EBITDA
|
|
All
|
|
|
19,500
|
|
|
|
36,102
|
|
|
|
185
|
%
|
Net Income
|
|
All
|
|
|
5,000
|
|
|
|
57,562
|
|
|
|
1151
|
%
|
Cash at end of year
|
|
CEO/CFO
|
|
|
20,000
|
|
|
|
37,107
|
|
|
|
186
|
%
|
Individual/Operating Unit contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
CTO
|
|
|
40,000
|
|
|
|
52,745
|
|
|
|
132
|
%
|
|
|
CMO
|
|
|
100,000
|
|
|
|
107,070
|
|
|
|
107
|
%
|
EBITDA
|
|
CTO
|
|
|
17,000
|
|
|
|
22,268
|
|
|
|
131
|
%
|
R&D Expense Control
|
|
CTO
|
|
|
<10,000
|
|
|
|
9,739
|
|
|
|
100
|
%
|
Subjective measure
|
|
CEO/CFO
|
|
|
Qualitative
|
|
|
|
Met
|
|
|
|
100
|
%
|
|
|
CTO/CMO
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe that the annual incentive payments made to our Named
Executive Officers for the fiscal year ended December 31,
2008 achieved the objectives of our executive compensation
program, compare appropriately to our peer group and are
consistent with the Companys superior performance in 2008.
The Compensation Committee concluded that as a result of the
outstanding operational results achieved in 2008, the amounts
payable to our Named Executive Officers appropriately exceeded
our target of providing total compensation at the
50
th
percentile
of the market.
Long-term Equity
Incentive Compensation
We award long-term equity incentive grants to executive
officers, including the Named Executive Officers, as part of our
total compensation package. These awards are consistent with our
pay for performance principles and align the interests of the
executive officers to the interests of our stockholders. The
Compensation Committee reviews and approves the amount of each
award to be granted to each Named Executive Officer. Long-term
equity incentive awards are made pursuant to our Fifth Amended
and Restated 1997 Stock Incentive Plan (the 1997
Plan).
Our long-term equity incentive compensation currently is
primarily in the form of options to acquire our common stock,
but some restricted shares also have been awarded. The value of
the stock options awarded is dependent upon the performance of
our common stock price. While the 1997 Plan allows for other
forms of equity compensation, the Compensation Committee and
management believe that currently stock options
and/or
restricted shares are the appropriate vehicle to provide
long-term incentive compensation to our executive
22
officers because their characteristics are readily understood by
our executives and investors, provide the long term incentive
that we believe is important, and there currently is no
compelling reason to develop more complex equity incentive
programs. Other types of long-term equity incentive compensation
may be considered in the future as our business strategy evolves.
Stock option awards provide our executive officers with the
right to purchase shares of our Class A Common Stock at a
fixed exercise price for a period of up to ten years under the
1997 Plan. Stock options are earned on the basis of continued
service to us and generally vest over three years, beginning
with one-third vesting at each one year anniversary of the date
of grant.
The exercise price of each stock option granted 2008 is the fair
market value of our common stock on the grant date. We do not
have any program, plan or practice of setting the exercise price
based on a date or price other than the fair market value of our
common stock on the grant date.
Our Named Executive Officers and other employees are eligible to
receive annual awards of stock options based on the
Companys performance in the prior fiscal year. The grants
are usually made in the first quarter of each fiscal year as
soon as practical after operating results for the prior year
have been finalized.
In setting individual grants, the Compensation Committee
considers our performance relative to the financial and
strategic objectives set forth in the annual business plan, the
previous years individual performance of each Named
Executive Officer, and the market pay levels for the Named
Executive Officer. Annual grants are targeted at the
75
th
percentile
of the median level of market practice for the executive
officer, but may be adjusted in the discretion of the
Compensation Committee based on individual performance or other
factors. This analysis is also used to determine any new hire or
promotion-related grants that may be made during the year.
Generally, we do not consider an executive officers stock
holdings or previous stock option grants in determining the
number of stock options to be granted. Moreover, we believe that
our long-term incentive compensation program furthers our
significant emphasis on pay for performance compensation.
While the vast majority of stock option awards to our Named
Executive Officers have been made pursuant to our annual grant
program or in connection with their hiring or promotion, the
Compensation Committee retains discretion to make stock option
awards to Named Executive Officers at other times, including in
connection with the hiring of a new executive officer, the
promotion of an executive officer, to reward executive officers,
for retention purposes or for other circumstances recommended by
management or the Compensation Committee. The exercise price of
any such grant would be the fair market value of our stock on
the grant date.
Other
Benefits
Retirement
Savings Opportunity
All employees, including our Named Executive Officers, may
participate in our 401(k) Retirement Savings Plan, or 401(k)
Plan. Each employee may make before-tax contributions up to the
current Internal Revenue Service limits. We provide this plan to
help our employees save some amount of their cash compensation
for retirement in a tax efficient manner. We match contributions
made by our employees to the 401(k) Plan at discretionary
amounts. For 2008 we contributed 35% of each employees
contribution to the 401(k) plan and for 2009 we intend to
contribute 40% of each employees contribution to the
401(k) plan. We currently do not provide an option for our
employees to invest in our companys stock in the 401(k)
plan.
We currently offer a nonqualified deferred compensation
arrangement to certain highly compensated employees, including
our Named Executive Officers. The purpose of the deferred
compensation plan is to conform the Companys compensation
elements to those of similar companies by providing tax deferred
savings opportunities. It is a voluntary, non-qualified Plan
that allows a select group of management and highly compensated
employees to elect to defer receipt of specified portions of
compensation, and to have those deferred amounts treated as if
invested in specific hypothetical investment benchmarks.
The Compensation Committee may carve out a portion of an
eligible employees cash compensation as subject to
deferral at any time or the eligible employees may elect
deferral amounts prior to the income being earned. Employee
contributions will be 100% vested upon deposit, but Company
discretionary contributions may
23
be vested immediately, vested over a specified period of time or
upon the achievement of certain performance goals, or in
accordance with other requirements set by the Company or the
Compensation Committee. Any unvested Company contributions would
be forfeited upon separation of employment and can be used to
offset future discretionary contributions. All deferred
compensation will be subject to withdrawal in accordance with
pre-contribution decisions made by the employee and otherwise in
accordance with the deferred contribution plan. The Board of
Directors or the Compensation Committee may amend or cancel the
deferred compensation plan at any time, so long as the
termination complies with IRS regulations.
Health and
Welfare Benefits
All full-time employees, including our Named Executive Officers,
may participate in our health and welfare benefit programs,
including medical, dental and vision care coverage, disability
insurance and life insurance.
Employment
Agreements, Severance Benefits and Change in Control
Provisions
Except with respect to our Chairman and Chief Executive Officer,
Mr. Maurice B. Tosé, we have employment agreements in
effect with our Named Executive Officers. We intend to enter
into an employment agreement with Mr. Tosé in 2009. No
assurance can be given that we will be successful in negotiating
such an agreement with Mr. Tosé. We entered into the
existing agreements to ensure the Named Executive Officers would
perform the role for an extended period of time and we
considered the critical nature of the positions and our need to
retain the individuals.
The agreements with our Named Executive Officers, except for
Mr. Tosé, provide that if the executive is terminated
for cause or terminates without good reason, we are obligated to
pay only those wages and bonuses pursuant to the terms of our
annual incentive plan and other compensation then vested. If
terminated without cause or if he terminates the employment
agreement for good reason, in addition to the payment of amounts
then vested, in exchange for a general release of all claims, he
is entitled to salary in an amount which is the greater of the
current annual salary for the remaining term of the agreement,
or six months salary.
In the alternative, if a Named Executive Officers
employment with us is terminated because of a change in control,
as defined in the agreement, then he is entitled to one
years salary (except for Mr. Richard Young, Chief
Operating Officer, who is entitled to two years salary)
and all then outstanding stock options become immediately
vested. We believe these provisions are important to ensure that
our executives remain with us through the closing of any sale of
the business. The terms of these agreements are discussed in
greater detail in the Employment Agreements section
below.
Compensation
Decisions for Fiscal 2009
The Compensation Committee met on January 26, 2009 to
review and approved Named Executive Officer base salary amounts
for 2009, and again March 2, 2009 to review and approve
long-term equity incentive stock awards and the Bonus
Opportunity Plans for 2009 as described below.
Base
Salary
Adjustments to our Named Executive Officers base salaries
for 2009 were made by the Compensation Committee based on an
analysis of current market conditions, our operational budgets
set for 2009 and information available to the Compensation
Committee Chairman whose profession is executive recruiting, to
consider executive salary levels in companies whose businesses
intersect with certain facets of ours. Based on these factors,
the Compensation Committee approved a 4.5% increase in base
salary for each of our Named Executive Officers for 2009.
Long Term
Equity Incentive Compensation for 2009
On March 2, 2009, the Compensation Committee issued the
Named Executive Officers long-term equity incentive compensation
in the form of options to purchase a total of 575,000 shares of
Company Class A Common Stock, down from 1,150,000 from the
2008 incentive grant. The options will vest ratably over three
years and were priced at the days closing market price of
$7.95 per share.
24
Bonus
Opportunity Plan Awards
Consistent with our emphasis on pay for performance incentive
compensation programs, the Compensation Committee has
established a Bonus Opportunity Plan for 2009 pursuant to which
certain of our executive officers, including our Named Executive
Officers, are eligible to receive Bonus Opportunity Plan awards
based upon the established performance targets, including
financial measures and other factors, including individual
performance, all at the discretion of the Compensation Committee.
Shown as a percentage of the total Bonus Opportunity Plan award
at target in the following table, is the weighting of the
measures to be used to determine award payments to the Named
Executive Officers for the fiscal year ended December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Measures
|
|
CEO
|
|
|
COO
|
|
|
CFO
|
|
|
CTO
|
|
|
CMO
|
|
|
Company performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
20
|
%
|
|
|
30
|
%
|
|
|
15
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
EBITDA
|
|
|
35
|
%
|
|
|
60
|
%
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
Net Income
|
|
|
25
|
%
|
|
|
10
|
%
|
|
|
25
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
Cash at end of year
|
|
|
10
|
%
|
|
|
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
Individual/Operating Unit contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
10
|
%
|
|
|
15
|
%
|
|
|
40
|
%
|
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
Expense Controls
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
%
|
|
|
|
|
Subjective goals
|
|
|
10
|
%
|
|
|
|
|
|
|
10
|
%
|
|
|
25
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
2009 Bonus Opportunity Plan Payout Level Based
|
on Goal Achievement
|
Officer
|
|
At 100% (Target)
|
|
At 110%
|
|
Bonus Adjustments Based on Performance
|
|
CEO
|
|
110% of base salary
|
|
110% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
COO
|
|
60% of base salary
|
|
70% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
CFO
|
|
55% of base salary
|
|
65% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
CTO
|
|
55% of base salary
|
|
65% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
CMO
|
|
70% of base salary
|
|
80% of base salary
|
|
1% increase in bonus pool for every 1% increase in Net Income.
|
The Compensation Committee noted that Company results for 2008
reflect outstanding performance by the Named Executive Officers,
and that performance has made a materially positive impact on
the Companys stock performance in the public markets.
After discussion with management, the Compensation Committee has
determined that providing an incentive for the senior management
team to remain employed with the Company and encouraging efforts
toward continued outstanding performance in 2009 is important to
the Company and its stockholders. In order to provide additional
incentive opportunities, the Committee included in the 2009
Bonus Opportunity Plans the opportunity for each Named Executive
Officer to earn additional variable incentive compensation under
the deferred compensation plan if the stated 2009 goals for that
element of compensation are met during each 2009 fiscal quarter.
25
Stock Ownership
Guidelines
Effective January 28, 2008, the Board adopted a guideline
that Board members should maintain equity ownership in the
corporation of a value equal to two times the annual retainer
amount for Board members, for each three year term. Current
directors not owning equity in the recommended amount will have
three years from January 28, 2008 to accumulate that
amount, and new directors will have three years from the date
their service begins to accumulate the appropriate amount. The
guideline also provides that in accumulating the equity
ownership, a Director should strive to achieve at least
one-third of the guideline ownership amount in each year of the
three year period. We have chosen not to require stock ownership
by Named Executive Officers given their long tenure and the
evolution of our company. We will continue to periodically
review best practices and re-evaluate our position with respect
to stock ownership guidelines.
Securities
Trading Policy
Our securities trading policy states that executive officers,
including the Named Executive Officers, and directors may not
purchase or sell puts or calls to sell or buy our stock, or
engage in short sales with respect to our stock.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis contained in this proxy
statement with management. Based on these reviews and
discussions, the committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
companys proxy statement for the 2009 Annual Meeting of
Shareholders.
COMPENSATION COMMITTEE
James M. Bethmann (Chairman)
Weldon H. Latham
Compensation
Committee Interlocks
None of the members of the Compensation Committee is a current
or former officer or employee of the Company. During 2008, no
member of the Compensation Committee had any relationship with
the Company requiring disclosure under Item 404 of
Regulation S-K.
During 2008, none of the Companys executive officers
served on the Compensation Committee (or its equivalent) or
board of directors of another entity any of whose executive
officers served on the Companys Compensation Committee or
Board of Directors.
26
Compensation of
the Named Executive Officers
The following table shows all compensation earned by our Chief
Executive Officer, Chief Financial Officer and our three other
most highly paid executive officers (collectively referred to as
our Named Executive Officers) whose annual salary
and bonus exceeded $100,000 in the fiscal year ended
December 31, 2008:
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive
|
|
|
All Other
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Awards(1)
|
|
|
Comp. Plan(2)
|
|
|
Compensation(3)
|
|
|
Total
|
|
|
Maurice B. Tosé
|
|
|
2008
|
|
|
$
|
475,833
|
|
|
$
|
832,120
|
|
|
$
|
2,960,902
|
|
|
$
|
74,460
|
|
|
$
|
4,343,315
|
|
Chief Executive Officer,
|
|
|
2007
|
|
|
|
452,917
|
|
|
$
|
835,094
|
|
|
|
246,179
|
|
|
|
50,283
|
|
|
|
1,584,473
|
|
President, and Chairman of the Board
|
|
|
2006
|
|
|
|
432,121
|
|
|
|
508,177
|
|
|
|
213,899
|
|
|
|
45,886
|
|
|
|
1,200,083
|
|
Richard A. Young
|
|
|
2008
|
|
|
$
|
342,177
|
|
|
$
|
520,466
|
|
|
$
|
1,522,699
|
|
|
$
|
44,552
|
|
|
$
|
2,429,894
|
|
Executive Vice President,
|
|
|
2007
|
|
|
|
320,301
|
|
|
|
525,578
|
|
|
|
98,816
|
|
|
|
39,663
|
|
|
|
984,358
|
|
Chief Operating Officer
|
|
|
2006
|
|
|
|
305,594
|
|
|
|
332,293
|
|
|
|
101,765
|
|
|
|
36,148
|
|
|
|
775,800
|
|
Thomas M. Brandt, Jr.
|
|
|
2008
|
|
|
$
|
297,995
|
|
|
$
|
408,855
|
|
|
$
|
1,237,192
|
|
|
$
|
35,680
|
|
|
$
|
1,979,722
|
|
Senior Vice President and
|
|
|
2007
|
|
|
|
282,126
|
|
|
|
411,440
|
|
|
|
81,171
|
|
|
|
35,956
|
|
|
|
810,693
|
|
Chief Financial Officer
|
|
|
2006
|
|
|
|
270,300
|
|
|
|
284,080
|
|
|
|
109,473
|
|
|
|
29,959
|
|
|
|
693,812
|
|
Drew A. Morin
|
|
|
2008
|
|
|
$
|
292,907
|
|
|
$
|
408,855
|
|
|
$
|
1,094,842
|
|
|
$
|
41,922
|
|
|
$
|
1,838,526
|
|
Senior Vice President and
|
|
|
2007
|
|
|
|
276,594
|
|
|
|
411,440
|
|
|
|
84,449
|
|
|
|
25,651
|
|
|
|
798,134
|
|
Chief Technology Officer
|
|
|
2006
|
|
|
|
265,000
|
|
|
|
284,080
|
|
|
|
106,001
|
|
|
|
27,928
|
|
|
|
683,009
|
|
Timothy J. Lorello
|
|
|
2008
|
|
|
$
|
260,691
|
|
|
$
|
185,363
|
|
|
$
|
1,136,809
|
|
|
$
|
29,039
|
|
|
$
|
1,611,902
|
|
Senior Vice President
|
|
|
2007
|
|
|
|
230,000
|
|
|
|
171,719
|
|
|
|
43,700
|
|
|
|
33,079
|
|
|
|
478,498
|
|
Commercial Sales & Chief Mkt. Officer
|
|
|
2006
|
|
|
|
230,000
|
|
|
|
142,438
|
|
|
|
52,325
|
|
|
|
25,244
|
|
|
|
450,007
|
|
|
|
|
(1)
|
|
The amounts shown in this column reflect the expense amount (net
of estimated forfeitures over the requisite service period)
recognized by us for financial statement reporting purposes,
valued using Black-Scholes algorithms. See Note 17 to our
Consolidated Financial Statements in our Annual Report for each
respective fiscal period for more information, including the
assumptions used in calculating our equity-based compensation
expense. Includes stock options and restricted shares granted in
2005, 2006, and 2007 to the extent the vesting period for such
grants fell in 2008.
|
|
(2)
|
|
Represents amounts earned and accrued under the Bonus
Opportunity Plan in the year reported; the amount is actually
paid in the subsequent year.
|
|
(3)
|
|
Represents payments made to each of these executive officers in
lieu of accrued vacation, plus matching contributions made by us
under our 401(k) plan and health and life insurance premiums
paid by us, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Compensation
|
|
|
|
|
|
|
|
|
|
Unused
|
|
|
401(k)
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation
|
|
|
Matching
|
|
|
Insurance
|
|
|
|
|
|
|
|
|
|
Payout
|
|
|
Contribution
|
|
|
Premiums
|
|
|
Total
|
|
|
Mr. Tose
|
|
|
2008
|
|
|
$
|
55,235
|
|
|
$
|
5,425
|
|
|
$
|
13,800
|
|
|
$
|
74,460
|
|
|
|
|
2007
|
|
|
$
|
36,840
|
|
|
$
|
0
|
|
|
$
|
13,443
|
|
|
$
|
50,283
|
|
|
|
|
2006
|
|
|
$
|
33,257
|
|
|
$
|
0
|
|
|
$
|
12,629
|
|
|
$
|
45,886
|
|
Mr. Young
|
|
|
2008
|
|
|
$
|
26,552
|
|
|
$
|
4,200
|
|
|
$
|
13,800
|
|
|
$
|
44,552
|
|
|
|
|
2007
|
|
|
$
|
26,220
|
|
|
$
|
0
|
|
|
$
|
13,443
|
|
|
$
|
39,663
|
|
|
|
|
2006
|
|
|
$
|
23,519
|
|
|
$
|
0
|
|
|
$
|
12,629
|
|
|
$
|
36,148
|
|
Mr. Brandt
|
|
|
2008
|
|
|
$
|
16,455
|
|
|
$
|
5,425
|
|
|
$
|
13,800
|
|
|
$
|
35,680
|
|
|
|
|
2007
|
|
|
$
|
22,513
|
|
|
$
|
0
|
|
|
$
|
13,443
|
|
|
$
|
35,956
|
|
|
|
|
2006
|
|
|
$
|
17,330
|
|
|
$
|
0
|
|
|
$
|
12,629
|
|
|
$
|
29,959
|
|
Mr. Morin
|
|
|
2008
|
|
|
$
|
22,704
|
|
|
$
|
5,418
|
|
|
$
|
13,800
|
|
|
$
|
41,922
|
|
|
|
|
2007
|
|
|
$
|
12,208
|
|
|
$
|
0
|
|
|
$
|
13,443
|
|
|
$
|
25,651
|
|
|
|
|
2006
|
|
|
$
|
15,299
|
|
|
$
|
0
|
|
|
$
|
12,629
|
|
|
$
|
27,928
|
|
Mr. Lorello
|
|
|
2008
|
|
|
$
|
15,239
|
|
|
$
|
0
|
|
|
$
|
13,800
|
|
|
$
|
29,039
|
|
|
|
|
2007
|
|
|
$
|
19,636
|
|
|
$
|
0
|
|
|
$
|
13,443
|
|
|
$
|
33,079
|
|
|
|
|
2006
|
|
|
$
|
12,615
|
|
|
$
|
0
|
|
|
$
|
12,629
|
|
|
$
|
25,244
|
|
27
The following tables provide information about options granted,
exercised and held by the Named Executive Officers in the
Summary Compensation Tables at December 31, 2008.
2008 Grants of
Plan-Based Awards
In this table, we provide information concerning each grant of
an award made to a Named Executive Officer in the most recently
completed fiscal year. This includes cash compensation under the
Bonus Opportunity Plan and stock option awards under the
Companys Fifth Amended and Restated 1997 Stock Incentive
Plan, each of which is discussed in greater detail in this Proxy
Statement under the caption, Compensation Discussion and
Analysis. The threshold, target and maximum columns
reflect the range of estimated payouts under the Bonus
Opportunity Plan. In the 7th and 8th columns, we
report the number of shares of common stock underlying options
granted in the fiscal year and corresponding per-share exercise
prices. In all cases, the exercise price was equal to the
closing market price of our common stock on the date of grant.
Finally, in the last column, we report the aggregate
FAS 123(R) value of all awards made in 2008; in contrast to
how we present amounts in the Summary Compensation Table, we
report such figures here without apportioning such amount over
the service or vesting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Under Non-Equity Incentive
|
|
|
Securities
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
Award
|
|
|
Plan Awards
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
|
|
|
Award
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
|
|
|
Name
|
|
Type
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($/sh)
|
|
|
($)
|
|
|
|
|
|
Maurice B. Tosé
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
119,671
|
|
|
$
|
359,012
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
1/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
$
|
3.09
|
|
|
$
|
733,720
|
|
|
|
|
|
Richard A. Young
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
86,275
|
|
|
$
|
189,804
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
1/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
$
|
3.09
|
|
|
$
|
458,575
|
|
|
|
|
|
Thomas M. Brandt, Jr.
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
75,005
|
|
|
$
|
150,011
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
1/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
$
|
3.09
|
|
|
$
|
366,860
|
|
|
|
|
|
Drew A. Morin
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
73,750
|
|
|
$
|
147,501
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
1/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
$
|
3.09
|
|
|
$
|
366,860
|
|
|
|
|
|
Timothy J. Lorello
|
|
|
BOP(1
|
)
|
|
|
|
|
|
$
|
66,269
|
|
|
$
|
172,299
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2
|
)
|
|
|
1/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
$
|
3.09
|
|
|
$
|
183,430
|
|
|
|
|
|
|
|
|
(1)
|
|
Information relates to the Bonus Opportunity Plan for 2008.
|
|
(2)
|
|
Granted under the TeleCommunication Systems, Inc. Fifth Amended
and Restated 1997 Stock Incentive Plan. The stock options
granted to the Named Executive Officers in 2008 have a
10-year
term
and vest in equal increments in each of the three successive
anniversaries of the grant date. Stock options have no express
performance criteria other than continued employment (with
limited exceptions for termination of employment due to death,
disability, retirement,
reduction-in-force
and change in control). However, options have an implicit
performance criterion because the options have no value to the
executive until they vest and unless and until our stock price
exceeds the exercise price. For additional information, refer to
Note 17 to our Consolidated Financial Statements in our
Annual Report.
|
|
(3)
|
|
The Bonus Opportunity Plan provides for incremental increases in
the potential payout amount in the event certain performance
results exceed the specified goals, and does not specify a
maximum amount.
|
28
Outstanding
Equity Awards at Fiscal Year-End 2008
The following table provides information concerning unexercised
options, stock that has not vested, and equity incentive plan
awards for each Named Executive Officer outstanding as of the
end of our most recently completed fiscal year. Each outstanding
award is represented by a separate row which indicates the
number of securities underlying the award, including awards that
have been transferred other than for value (if any).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
|
Grant Date
|
|
|
(#) Exercisable
|
|
|
(#) Unexercisable(1)
|
|
|
($)
|
|
|
Date
|
|
|
Maurice B. Tosé
|
|
|
6/22/2001
|
|
|
|
318,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
136,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
135,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
436,404
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
266,855
|
|
|
|
0
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
189,993
|
|
|
|
94,997
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
125,000
|
|
|
|
250,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
|
|
|
1/28/2008
|
|
|
|
0
|
|
|
|
400,000
|
|
|
$
|
3.09
|
|
|
|
1/28/2018
|
|
Richard A. Young
|
|
|
6/22/2001
|
|
|
|
175,000
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
75,000
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
75,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
279,013
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
175,836
|
|
|
|
0
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
125,190
|
|
|
|
62,596
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
76,666
|
|
|
|
153,334
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
|
|
|
1/28/2008
|
|
|
|
0
|
|
|
|
250,000
|
|
|
$
|
3.09
|
|
|
|
1/28/2018
|
|
Thomas M. Brandt, Jr.
|
|
|
4/1/1999
|
|
|
|
96,370
|
|
|
|
0
|
|
|
$
|
1.28
|
|
|
|
4/1/2009
|
|
|
|
|
6/22/2001
|
|
|
|
87,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
63,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
157,392
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
152,180
|
|
|
|
0
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
108,348
|
|
|
|
54,174
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
56,666
|
|
|
|
113,334
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
|
|
|
1/28/2008
|
|
|
|
0
|
|
|
|
200,000
|
|
|
$
|
3.09
|
|
|
|
1/28/2018
|
|
Drew A. Morin
|
|
|
6/22/2001
|
|
|
|
87,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
63,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
157,392
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
152,180
|
|
|
|
0
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
108,348
|
|
|
|
54,174
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
56,666
|
|
|
|
113,334
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
|
|
|
1/28/2008
|
|
|
|
0
|
|
|
|
200,000
|
|
|
$
|
3.09
|
|
|
|
1/28/2018
|
|
Timothy J. Lorello
|
|
|
6/22/2001
|
|
|
|
87,500
|
|
|
|
0
|
|
|
$
|
3.05
|
|
|
|
6/22/2011
|
|
|
|
|
6/22/2001
|
|
|
|
37,500
|
|
|
|
0
|
|
|
$
|
3.60
|
|
|
|
6/22/2011
|
|
|
|
|
2/15/2002
|
|
|
|
63,000
|
|
|
|
0
|
|
|
$
|
3.10
|
|
|
|
2/15/2012
|
|
|
|
|
2/26/2004
|
|
|
|
100,158
|
|
|
|
0
|
|
|
$
|
6.81
|
|
|
|
2/26/2014
|
|
|
|
|
6/9/2005
|
|
|
|
55,400
|
|
|
|
0
|
|
|
$
|
2.52
|
|
|
|
6/9/2015
|
|
|
|
|
3/8/2006
|
|
|
|
11,218
|
|
|
|
26,669
|
|
|
$
|
2.39
|
|
|
|
3/8/2016
|
|
|
|
|
2/6/2007
|
|
|
|
21,000
|
|
|
|
42,000
|
|
|
$
|
3.69
|
|
|
|
2/6/2017
|
|
|
|
|
1/28/2008
|
|
|
|
0
|
|
|
|
100,000
|
|
|
$
|
3.09
|
|
|
|
1/28/2018
|
|
29
|
|
|
(1)
|
|
Vesting dates of unvested option awards are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting
|
|
Mr. Tosé
|
|
|
Mr. Young
|
|
|
Mr. Brandt
|
|
|
Mr. Morin
|
|
|
Mr. Lorello
|
|
Date
|
|
# Options
|
|
|
# Options
|
|
|
# Options
|
|
|
# Options
|
|
|
# Options
|
|
|
1/28/2009
|
|
|
133,333
|
|
|
|
83,333
|
|
|
|
66,666
|
|
|
|
66,666
|
|
|
|
33,333
|
|
2/6/2009
|
|
|
125,000
|
|
|
|
76,667
|
|
|
|
56,667
|
|
|
|
56,667
|
|
|
|
21,000
|
|
3/8/2009
|
|
|
94,997
|
|
|
|
62,596
|
|
|
|
54,174
|
|
|
|
54,174
|
|
|
|
26,699
|
|
1/28/2010
|
|
|
133,333
|
|
|
|
83,333
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
26,049
|
|
2/6/2010
|
|
|
125,000
|
|
|
|
76,667
|
|
|
|
56,667
|
|
|
|
56,667
|
|
|
|
21,000
|
|
3/2/2010
|
|
|
66,666
|
|
|
|
41,666
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
16,666
|
|
1/28/2011
|
|
|
133,334
|
|
|
|
83,334
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
972
|
|
3/2/2011
|
|
|
66,667
|
|
|
|
41,667
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
16,667
|
|
3/2/2012
|
|
|
66,667
|
|
|
|
41,667
|
|
|
|
33,334
|
|
|
|
33,334
|
|
|
|
16,667
|
|
2008 Option
Exercises and Stock Vested
The following table provides information concerning exercises of
stock options and vesting of stock (restricted stock) during the
most recently completed fiscal year for each Named Executive
Officer on an aggregated basis. The table reports the number of
shares of stock that vested and the aggregate dollar value
realized upon vesting of the stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Maurice B. Tosé
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard A. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas M. Brandt, Jr.
|
|
|
96,370
|
|
|
$
|
545,753
|
|
|
|
|
|
|
|
|
|
Drew A. Morin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Lorello
|
|
|
44,780
|
|
|
$
|
151,684
|
|
|
|
|
|
|
|
|
|
Equity
Compensation Plan Information
The following table provides information for all equity
compensation plans at plans December 31, 2008, under which
our equity securities were authorized for issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of Securities to
|
|
|
Weighted Average
|
|
|
Equity Compensation
|
|
|
|
be Issued Upon Exercise
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
of Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders(1)
|
|
|
11,685,237
|
|
|
$
|
3.77
|
|
|
|
4,523,538
|
|
Equity compensation plans not approved by security holders
|
|
|
None
|
|
|
|
N/A
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11,685,237
|
|
|
$
|
3.77
|
|
|
|
4,523,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As a result of the merger of XYPOINT Corporation
(XYPOINT
) with the Company effective
January 15, 2001 and the merger of ReachNet, Inc.
(ReachNet
) with the Company effective
February 14, 2001, the Company assumed the options issued
under the XYPOINT 1995, 1997 and 2000 Stock Option Plans and the
ReachNet 2000 Stock Incentive Plan. As of December 31,
2006, 86,548 shares of our Class A Common Stock were
reserved for future issuance upon the exercise of the
outstanding stock options assumed in the mergers at a weighted
average exercise price of $6.63. No further options may be
granted under the XYPOINT 1995, 1997 and 2000 Stock Option Plans
or the ReachNet 2000 Stock Incentive Plan.
|
30
Employment
Agreements
We have entered into employment agreements with
Messrs. Young, Brandt, Morin and Lorello which became
effective December 1, 2008. See also the Employment
Agreements, Severance Benefits and Change in Control
Provisions section of the Compensation Discussion and
Analysis portion of this Proxy Statement. The employment
agreements provide for their annual salaries as adjusted
annually by the Board of Directors, and give them the
opportunity to participate in bonus or incentive compensation
plans of the Company, if any. The agreements state an initial
term of two months from the effective date, and automatically
extend for additional one-year increments until terminated by us
or the individuals.
The individuals may resign their employment voluntarily by
giving 30 days notice to the Board of Directors. If we
terminate any of the individuals without cause or if the
individual resigns with good reason, he is entitled to receive
from us his earned bonus plus an amount equal to the greater of
the salary he would have received during the balance of the term
of the employment contract, or six months. Under the agreements,
cause means committing an act of gross negligence or
other willful act that materially adversely affects TCS, acts of
dishonesty involving fraud or embezzlement or being convicted or
pleading no contest to a felony involving theft or moral
turpitude. Under the agreements, good reason
includes circumstances that constitute a material diminution in
authority, require the individual to physically relocate more
than 75 miles and any material breach by the Company of its
obligations under the agreement. If we terminate an
individuals employment without cause, or if he resigns for
good reason, within 12 months of a change in control, he is
entitled to receive from us an amount based upon his annual
salary. Mr. Young is entitled to receive two times his
annual salary, and the other individuals are entitled to receive
one times their annual salary. The following table summarizes
estimated payments to the Named Executive Officers upon
termination without cause or resignation for good reason after a
change in control assuming that the termination event was
effective as of the last day of the most recently completed
fiscal year, or December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon
|
|
|
|
Potential Payments upon
|
|
|
Termination Without Cause
|
|
|
|
Termination Without Cause
|
|
|
or for Good Reason after
|
|
Name
|
|
or for Good Reason
|
|
|
a Change in Control
|
|
|
Richard A. Young
|
|
$
|
172,550
|
|
|
$
|
690,198
|
|
Thomas M. Brandt, Jr.
|
|
|
150,011
|
|
|
|
300,021
|
|
Drew A. Morin
|
|
|
147,501
|
|
|
|
295,001
|
|
Timothy J. Lorello
|
|
|
132,538
|
|
|
|
265,075
|
|
Pursuant to the agreements, vesting of any stock options awarded
to the individuals shall be immediately accelerated in the event
of a change of control as defined in the agreements. The
following table summarizes the intrinsic value of stock options
that would be accelerated upon a change of control, assuming
that a change of control event occurred on December 31,
2008.
|
|
|
|
|
|
|
Intrinsic Value of
|
|
|
|
Stock Options Accelerated
|
|
Name
|
|
Upon Change in Control(1)
|
|
|
Richard A. Young
|
|
$
|
1,139,432
|
|
Thomas M. Brandt, Jr.
|
|
|
891,216
|
|
Drew A. Morin
|
|
|
891,216
|
|
Timothy J. Lorello
|
|
|
371,148
|
|
|
|
|
(1)
|
|
Intrinsic value was determined by subtracting the exercise price
of in-the-money stock options from the market price on
December 31, 2008 ($8.59 per share), multiplied by the
number of shares underlying outstanding options.
|
31
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In February 2003, we entered into a lease with Annapolis
Partners LLC to explore the opportunity of relocating our
Annapolis offices to a planned new real estate development. Our
President and Chief Executive Officer owns a controlling voting
and economic interest in Annapolis Partners LLC and he also
serves as a member. The financial and many other terms of the
lease have not yet been established. The lease is subject to
several contingencies and rights of termination. For example,
the lease can be terminated at the sole discretion of our Board
of Directors if the terms and conditions of the development are
unacceptable to us, including without limitation the
circumstances that market conditions make the lease not
favorable to us or the overall cost is not in the best interest
of us or our stockholders, or any legal or regulatory
restrictions apply. Our Board of Directors will evaluate this
opportunity along with alternatives that are or may become
available in the relevant time periods and there is no assurance
that we will enter into a definitive lease at this new
development site.
OTHER
MATTERS
We do not know of any matters to be presented at the Annual
Meeting other than those mentioned in this Proxy Statement. If
any other matters are properly brought before the Annual
Meeting, it is intended that Mr. White will vote the
proxies in accordance with his best judgment.
STOCKHOLDERS
SHARING THE SAME ADDRESS
In accordance with notices previously sent to many stockholders
who hold their shares through a bank, broker or other holder of
record and share a single address, only one Annual Report and
Proxy Statement is being delivered to that address unless
contrary instructions from any stockholder at that address were
received. This practice, known as householding, is
intended to reduce our printing and postage costs. However, any
such street-name stockholder residing at the same address who
wishes to receive a separate copy of this Proxy Statement or
accompanying Annual Report may request a copy by contacting the
bank, broker or other holder of record, or the Company by
telephone at: 410.263.7616. The voting instruction sent to a
street-name stockholder should provide information on how to
request (1) householding of future Company materials or
(2) separate materials if only one set of documents is
being sent to a household. If it does not, a stockholder who
would like to make one of these requests should contact the
Company as indicated above.
ANNUAL REPORT TO
STOCKHOLDERS AND
FORM 10-K
The Annual Report of the Company, including financial statements
of the Company for the fiscal year ended December 31, 2008
is being mailed to the stockholders with this Proxy Statement.
You may request, without charge, a copy of the Annual Report, as
filed with the SEC, by addressing a request to TeleCommunication
Systems, Inc., 275 West Street, Annapolis, Maryland 21401
Attention: Investor Relations.
By order of the Board of Directors,
Bruce A. White
Secretary
Annapolis, Maryland
May 1, 2009
32
ANNUAL MEETING OF STOCKHOLDERS OF
TELECOMMUNICATION SYSTEMS, INC.
June 11, 2009
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 11, 2009:
The Notice of Meeting, the Proxy Statement and our annual
report on Form 10-K
for the year ended December 31, 2008
are
available at https://www.proxydocs.com/tsys
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
ê
Please
detach along perforated line and mail in the envelope
provided.
ê
|
|
|
|
|
|
20400000000000000000 4
|
061109
|
|
|
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Election of Directors.
|
|
2.
|
TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOMINEES:
|
|
|
|
|
|
o
|
|
FOR ALL NOMINEES
|
O
O
|
Thomas M. Brandt, Jr.
Weldon H. Latham
|
|
|
|
The undersigned hereby acknowledges receipt of notice of said meeting and the related Proxy Statement.
IF NO CHOICE IS INDICATED ABOVE, THE PROXIES WILL VOTE FOR ALL DIRECTOR NOMINEES.
PLEASE MARK, SIGN AND RETURN THE PROXY PROMPTLY, USING THE ENCLOSED POSTAGE PAID ENVELOPE
|
|
o
o
|
|
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See Instructions below)
|
O
O
|
Jan C. Huly
Richard A. Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s),
mark
FOR ALL EXCEPT
and fill in the circle next to each
nominee you wish to withhold, as shown here:
=
|
|
|
|
|
|
|
|
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature of Stockholder
|
|
|
|
Date:
|
|
|
|
Signature of Stockholder
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
|
|
|
TELECOMMUNICATION SYSTEMS, INC.
Annapolis, Maryland 21401
ANNUAL MEETING JUNE 11, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bruce A. White, proxy (and if the undersigned is a proxy, as
substitute proxy) with the power to appoint his substitute, and hereby authorizes him to
represent and to vote, as designated on the reverse side, all of the shares of Class A Common
Stock and Class B Common Stock of TeleCommunication Systems, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on Thursday, June 11, 2009, at 10:00 a.m.
local time, at the The Westin Annapolis hotel, 100 Westgate Circle, Annapolis, MD 21401 and any adjournments
or postponements thereof.
(Continued and to be signed on the reverse side)