DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
CARDTRONICS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
May 1, 2009
Dear Stockholder:
Notice is hereby given that the 2009 Annual Meeting of Stockholders of Cardtronics, Inc., a
Delaware corporation, will be held on Thursday, June 18, 2009, at 4:00 p.m., central time, at 3250
Briarpark Drive, Suite 400, Houston, Texas 77042. At the Annual Meeting, stockholders will be
asked to:
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Elect two Class II directors to the Board of Directors to serve until the 2012
Annual Meeting of Stockholders; |
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Ratify the Audit Committees selection of KPMG LLP as the independent
registered public accounting firm of Cardtronics, Inc. for the fiscal year ending
December 31, 2009; and |
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Transact such other business as may properly come before the meeting or any
adjournments or postponements of the meeting. |
Only stockholders of record at the close of business on April 24, 2009 are entitled to notice
of and to vote at the Annual Meeting. A list of stockholders will be available commencing May 28,
2009 and may be inspected at our offices during normal business hours prior to the Annual Meeting.
The list of stockholders will also be available for review at the Annual Meeting. In the event
there are not sufficient votes for a quorum or to approve the items of business at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of
proxies.
These materials include the formal notice of the meeting, proxy statement, and financial
statements. The proxy statement tells you about the agenda and related matters for the meeting.
It also describes how the Board of Directors operates, gives information about its director
candidates, and provides information about the other items of business to be conducted at the
meeting.
Even if you plan to attend the Annual Meeting, please sign, date and return the enclosed proxy
card as promptly as possible to ensure that your shares are represented. If you attend the Annual
Meeting, you may withdraw any previously submitted proxy and vote in person.
Sincerely,
Michael E. Keller
General Counsel and Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
2009 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18, 2009.
The Companys Proxy Statement for the 2009 Annual Meeting of Stockholders and Annual Report to
Stockholders for the fiscal year ended December 31, 2008 are available at
http://ir.cardtronics.com.
Additionally, the Companys Annual Report on Form 10-K, including audited financial statements,
but excluding exhibits, accompanies this Proxy Statement.
PROXY STATEMENT
TABLE OF CONTENTS
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CARDTRONICS, INC.
3250 Briarpark Drive, Suite 400
Houston, Texas 77042
PROXY STATEMENT
These proxy materials are furnished to you in connection with the solicitation of proxies by
the Board of Directors (Board) of Cardtronics, Inc., for use at our 2009 Annual Meeting of
Stockholders and any adjournments or postponements of the meeting (the Annual Meeting). The
Annual Meeting will be held on Thursday, June 18, 2009, at 4:00 p.m., central time, at our Houston
offices located at 3250 Briarpark Drive, Suite 400, Houston, Texas 77042. Directions to our offices
are set forth on the last page of this proxy statement.
The Notice of Annual Meeting, this proxy statement, the enclosed proxy card and our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008 are being mailed to stockholders
beginning on or about May 1, 2009.
ABOUT THE ANNUAL MEETING
What is the purpose of the 2009 Annual Meeting of Stockholders?
At the Annual Meeting, our stockholders will be asked to (1) elect two directors to serve
until the 2012 Annual Meeting of Stockholders and until their successors are duly elected, (2)
ratify the Audit Committees selection of KPMG LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2009 and (3) transact such other business as may
properly come before the Annual Meeting and any adjournments or postponements of the Annual
Meeting.
Why did I receive these proxy materials?
You received these proxy materials from us in connection with the solicitation by our Board of
proxies to be voted at the Annual Meeting because you owned our common stock as of April 24, 2009.
We refer to this date as the record date.
This proxy statement contains important information for you to consider when deciding how to
vote your shares at the Annual Meeting. Please read this proxy statement carefully.
What is a proxy?
A proxy is your legal designation of another person to vote the shares that you own. That
other person is called a proxy. If you designate someone as your proxy in a written document, that
document is also called a proxy or a proxy card. Your Board has appointed J. Chris Brewster and
Michael E. Keller (the Proxy Holders) to serve as proxies for the Annual Meeting. If you are a
stockholder of record (as discussed in more detail below), your shares will be voted by the Proxy
Holders in accordance with the instructions on the proxy card you submit by mail. If you do not
provide instructions on the proxy card, the Proxy Holders will vote in accordance with the
recommendations of the Board. See What are the recommendations of the Board? below for
additional information.
1
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, then you own our common stock through multiple
accounts at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to
ensure that all of your shares are voted at the Annual Meeting.
What is the difference between holding shares as a stockholder of record and holding shares in
street name?
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Stockholder of Record. If your shares are registered directly in your name with our
transfer agent, Wells Fargo Bank, N.A., you are considered a stockholder of record with
respect to those shares, and you are receiving these proxy materials directly from us. As
the stockholder of record, you have the right to mail your proxy directly to us or to vote
in person at the Annual Meeting. |
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Street Name Stockholder. If your shares are held in a stock brokerage account, by a
bank or other holder of record (commonly referred to as being held in street name), you
are the beneficial owner with respect to those shares and these proxy materials are being
forwarded to you by that custodian. As summarized below, there are distinctions between
shares held of record and those held beneficially. |
How many votes must be present to hold the Annual Meeting?
There must be a quorum for the Annual Meeting to be held. A quorum is the presence at the
Annual Meeting, in person or by proxy, of the holders of a majority of the shares of common stock
issued and outstanding on the record date. As of the record date, there were 40,518,607 shares of
our common stock outstanding. Consequently, the presence of the holders of at least 20,259,304
shares of common stock, in person or by proxy, is required to establish a quorum for the Annual
Meeting.
How many votes do I have?
You are entitled to one vote for each share of common stock that you owned on the record date
on all matters considered at the Annual Meeting.
How do I vote my shares?
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Stockholder of Record. Shares held directly in your name as the stockholder of record
can be voted in person at the Annual Meeting or you can provide a proxy to be voted at the
Annual Meeting by signing and dating the enclosed proxy card and returning it in the
enclosed postage-paid envelope. If you plan to vote in person at the Annual Meeting,
please bring proof of identification. Even if you currently plan to attend the Annual
Meeting, we recommend that you also submit your proxy as described above so that your vote
will be counted if you later decide not to attend the Annual Meeting. |
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Street Name Stockholder. If you hold your shares in street name (for example, at your
brokerage account), please follow the instructions provided by your bank, broker or other
holder of record (the record holder). Shares held in street name may be voted in person by
you at the Annual Meeting only if you obtain a signed proxy from the record holder giving
you the right to vote the shares. If you hold your shares in street name and wish to
simply attend the Annual Meeting, please bring proof of ownership and identification. |
2
What are the recommendations of the Board?
Our Board recommends that you vote:
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FOR the election of the two nominated Class II directors; and |
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FOR the proposal to ratify the Audit Committees selection of KPMG LLP as our
independent registered public accounting firm for the fiscal year ending December 31, 2009. |
Can I change my vote after I return my proxy card?
Yes. Even after you have returned your proxy card, you may revoke your proxy at any time
before it is exercised by (1) submitting a written a notice of revocation to our Secretary, Michael
E. Keller, by mail to Cardtronics, Inc., 3250 Briarpark Drive, Suite 400, Houston, Texas 77042 or
by facsimile at (832) 308-4761, (2) mailing in a new proxy card bearing a later date or (3)
attending the Annual Meeting and voting in person, which suspends the powers of the Proxy Holders.
If you are a street name stockholder, you may change your vote by submitting new voting
instructions to your bank, broker or nominee in accordance with that entitys procedures.
Could other matters be decided at the Annual Meeting?
At the time this proxy statement went to press, we did not know of any matters to be raised at
the Annual Meeting other than those referred to in this proxy statement.
With respect to any other matter that properly comes before the Annual Meeting, the Proxy
Holders will vote the proxies as recommended by our Board or, if no recommendation is given, in
their own discretion.
What is the effect of abstentions and broker non-votes and what vote is required to approve each
proposal discussed in this proxy statement?
Abstentions and Broker Non-Votes. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of business. Abstentions
occur when stockholders are present at the Annual Meeting but choose to withhold their vote for any
of the matters upon which the stockholders are voting. Broker non-votes occur when other holders
of record (such as banks and brokers) that hold shares on behalf of beneficial owners do not
receive voting instructions from the beneficial owners before the Annual Meeting and do not have
discretionary authority to vote those shares if they do not receive timely instructions from the
beneficial owners. For Proposal Nos. 1 and 2, to be voted on at the Annual Meeting, brokers will
have discretionary authority in the absence of timely instructions from the beneficial owners.
Election of Directors. A plurality of the votes cast is required for the election of
directors. This means that the two director nominees receiving the highest number of affirmative
votes of the shares present in person or represented by proxy at the Annual Meeting and entitled to
vote will be elected to our Board. You may vote FOR or WITHHOLD AUTHORITY for each director
nominee. If you WITHHOLD AUTHORITY, your votes will be counted for purposes of determining the
presence or absence of a quorum, but will have no legal effect on the election of directors under
Delaware law.
Other Items. For each other item properly presented for a vote, the affirmative vote of the
holders of a majority of the shares represented in person or by proxy and entitled to vote on the
item will be required for approval. You may vote FOR, AGAINST or ABSTAIN on our proposal to
ratify the selection of our independent registered public accounting firm. If you ABSTAIN, your
votes will be counted for purposes of establishing a quorum, and the abstention will have the same
effect as a vote AGAINST the proposal. All shares are entitled to vote on this proposal.
3
Who is participating in this proxy solicitation and who will pay for its cost?
We will bear the entire cost of soliciting proxies, including the cost of the preparation,
assembly, printing and mailing of this proxy statement, the proxy card and any additional
information furnished to our stockholders. In addition to this solicitation by mail, our
directors, officers and other employees may solicit proxies by use of mail, telephone, facsimile,
electronic means, in person or otherwise. These persons will not receive any additional
compensation for assisting in the solicitation, but may be reimbursed for reasonable out-of-pocket
expenses in connection with the solicitation.
We have retained Wells Fargo Shareowner Services to aid in the distribution of proxy materials
and to provide voting and tabulation services for the Annual Meeting. For these services, we will
pay Wells Fargo Shareowner Services a fee of approximately $4,300 and reimburse it for certain
expenses. In addition, we will reimburse brokerage firms, nominees, fiduciaries, custodians and
other agents for their expenses in distributing proxy materials to the beneficial owners of our
common stock.
May I propose actions for consideration at the next annual meeting of stockholders or nominate
individuals to serve as directors?
You may submit proposals for consideration at future stockholder meetings, including director
nominations. Please see Corporate GovernanceDirector Selection and Nomination Process and
Proposals for the 2010 Annual Meeting of Stockholders for more details.
What is householding and how does it affect me?
The Securities and Exchange Commission (SEC) has implemented rules regarding the delivery of
proxy materials to households. This method of delivery, often referred to as householding,
permits us to send a single annual report and/or a single proxy statement to any household at which
two or more different stockholders reside where we believe the stockholders are members of the same
family or otherwise share the same address or where one stockholder has multiple accounts. In each
case, the stockholder(s) must consent to the householding process. Under the householding
procedure, each stockholder continues to receive a separate notice of any meeting of stockholders
and proxy card. Householding reduces the volume of duplicate information our stockholders receive
and reduces our expenses. We may institute householding in the future and will notify our
registered stockholders who will be affected by householding at that time.
Many banks, brokers and other holders of record have instituted householding. If you or your
family has one or more street name accounts under which you beneficially own our common stock,
you may have received householding information from your bank, broker or other holder of record in
the past. Please contact the holder of record directly if you have questions, require additional
copies of this proxy statement or our annual report or wish to revoke your decision to household
and thereby receive multiple copies. You should also contact the holder of record if you wish to
institute householding. These options are available to you at any time.
Whom should I contact with questions about the Annual Meeting?
If you have any questions about this proxy statement or the Annual Meeting, please contact our
Secretary, Michael E. Keller, at 3250 Briarpark Drive, Suite 400, Houston, Texas 77042 or by
telephone at (832) 308-4000.
Where may I obtain additional information about Cardtronics, Inc.?
We refer you to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008
filed with the SEC on March 13, 2009. Our Annual Report on Form 10-K, including financial
statements, is also included with your proxy mailing. Our Annual Report on Form 10-K is not part
of the proxy solicitation material. You may also find information about us on our website at
www.cardtronics.com.
IF YOU WOULD LIKE TO RECEIVE ADDITIONAL INFORMATION ABOUT CARDTRONICS, INC., PLEASE CONTACT OUR
SECRETARY, MICHAEL E. KELLER, AT 3250 BRIARPARK DRIVE, SUITE 400, HOUSTON, TEXAS 77042.
4
ELECTION OF CLASS II DIRECTORS
(PROPOSAL NO. 1)
Our Director Nominees
Our Board currently has seven director positions that are divided into three classes, with one
class to be elected at each Annual Meeting of Stockholders to serve for a three-year term. The term
of our incumbent Class I directors expires at the 2011 Annual Meeting; the term of our Class II
directors expires at the 2009 Annual Meeting of Stockholders; and the term of our Class III
Directors expires at the 2010 Annual Meeting of Stockholders; with each director to hold office
until his or her successor is duly elected and qualified or until his or her death, retirement,
resignation or removal. Our Class I directors are Robert P. Barone and Jorge M. Diaz, our Class II
directors are J. Tim Arnoult and Dennis F. Lynch, and our Class III directors are Fred R. Lummis
and Michael A.R. Wilson. Effective March 17, 2009, with the resignation of Jack M. Antonini from
the Board, we have one vacant Class III director position. It is the expectation of the Board that
this vacant position will be filled by our new chief executive officer, when such person is
selected.
Effective March 4, 2009, acting upon the recommendation of its Nominating & Governance
Committee, the Board nominated J. Tim Arnoult and Dennis F. Lynch for re-election as Class II
directors at the Annual Meeting. Class II directors elected at the Annual Meeting will serve for a
term to expire at the 2012 Annual Meeting of Stockholders, with each director to hold office until
his successor is duly elected and qualified or until his earlier death, retirement, resignation or
removal.
Unless authority to vote for a particular nominee is withheld, the shares represented by the
enclosed proxy will be voted FOR the election of each of J. Tim Arnoult and Dennis F. Lynch as
Class II directors. In the event that any nominee becomes unable or unwilling to serve, the shares
represented by the enclosed proxy will be voted for the election of such other person as the Board
may recommend in his place. We have no reason to believe that any nominee will be unable or
unwilling to serve as a director.
A plurality of the shares cast at the Annual Meeting is required to elect each nominee as a
director.
The names and certain information about the Class II director nominees, including their ages
as of the Annual Meeting date, are set forth below:
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J. Tim Arnoult
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Class II Director |
Dennis F. Lynch
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Class II Director |
J. Tim Arnoult was appointed as a director on January 24, 2008. Mr. Arnoult has over 30 years
of banking and financial services experience. From 1979 to 2006, Mr. Arnoult served in various
positions at Bank of America, including President of Global Treasury Services from 2005-2006,
President of Global Technology and Operations from 2000-2005 and President of Central U.S. Consumer
and Commercial Banking from 1996-2000. Mr. Arnoult is also experienced in mergers and acquisitions,
having been directly involved in significant transactions such as the mergers of NationsBank and
Bank America in 1998 and Bank of America and FleetBoston in 2004. Mr. Arnoult has served on a
variety of boards throughout his career, including the board of Visa USA. Mr. Arnoult holds a
Bachelor of Arts degree in psychology and a Masters of Business Administration degree from the
University of Texas at Austin.
Dennis F. Lynch was appointed as a director on January 24, 2008. Mr. Lynch has over 25 years
experience in the payments industry and has led the introduction and growth of various card
products and payment solutions. Mr. Lynch is currently Principal of Future Pay, LLC, a consulting
firm focused on the next generation of consumer payments. From 2005-2008, he served as Chairman
and Chief Executive Officer of RightPath Payments Inc., a company providing business-to-business
payments via the internet. From 1994 to 2004, Mr. Lynch served in various positions of NYCE
Corporation, an electronic payments network, including serving as President and Chief Executive
Officer from 1996 to 2004 and a director from 1992-2004. Prior to joining NYCE, Mr. Lynch served
in a
variety of information technology and products roles, ultimately managing Fleet Financial
Groups consumer payments portfolio. Mr. Lynch has served on a number of boards, including the
board of Open Solutions, Inc., a publicly-traded company delivering core banking products to the
financial services market, from 2005-2007, was a founding director of the New England-wide YANKEE24
Network and served as its Chairman from 1988 to 1990. Additionally, Mr. Lynch has served on the
Executive Committee and the board of the Electronic Funds Association. Mr. Lynch holds a Bachelors
of Arts degree in English and a Masters of Arts degree in American Literature from the University
of Rhode Island.
5
OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE
FOR EACH OF THE DIRECTOR NOMINEES IDENTIFIED ABOVE.
Continuing Directors
In addition to the Class II directors elected at the Annual Meeting, the directors who will
continue to serve on our Board after the Annual Meeting, their ages as of the Annual Meeting date,
positions with Cardtronics, Inc. and other biographical information are set forth below:
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Fred R. Lummis
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Class III Director and Interim Chief
Executive Officer |
Jorge M. Diaz
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Class I Director |
Robert P. Barone
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Class I Director |
Michael A.R. Wilson
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Fred R. Lummis has served as a director and Chairman of the Board since June 2001. Effective
as of March 17, 2009, Mr. Lummis is serving as our Interim Chief Executive Officer. In 2006, Mr.
Lummis co-founded Platform Partners, LLC and currently serves as its Chairman and Chief Executive
Officer. Prior to co-founding Platform Partners, Mr. Lummis co-founded and served as the managing
partner of The CapStreet Group, LLC, CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis
continues to serve as a senior advisor to The CapStreet Group, LLC. From June 1998 to May 2000, Mr.
Lummis served as Chairman of the Board and Chief Executive Officer of Advantage Outdoor Company, an
outdoor advertising company. From September 1994 to June 1998, Mr. Lummis served as Chairman and
Chief Executive Officer of American Tower Corporation, a nationwide communication tower owner and
operator. Mr. Lummis currently serves as a director of Amegy Bancorporation Inc. and several
private companies. Mr. Lummis holds a Bachelor of Arts degree in economics from Vanderbilt
University and a Masters of Business Administration degree from the University of Texas at Austin.
Robert P. Barone has served as a director since September 2001. Mr. Barone is currently
serving as a director of Cable Manufacturing Assembly Company, a private company, located in
Bolivar, Ohio, and as an advisory director of the R.J. Matthews Company, a private company, located
in Massillon, Ohio. Mr. Barone has more than 40 years of sales, marketing and executive leadership
experience from the various positions he has held a Diebold, NCR, Xerox and the Electronic Funds
Transfer Association. Since December 1999, Mr. Barone has served as a consultant for SmartNet
Associates, Inc., a private consulting firm. Additionally, from May 1997 to November 1999, Mr.
Barone served as Chairman of the Board of PetsHealth Insurance, Inc., a pet health insurance
provider. From September 1988 to September 1994, he served as Board Vice-Chairman, President and
Chief Operating Officer at Diebold. He holds a Bachelor of Business Administration degree from
Western Michigan University and a Masters of Business Administration degree from Indiana
University. A founder and past Chairman of the Electronic Funds Transfer Association, Mr. Barone
is now Chairman Emeritus of the Electronic Funds Transfer Association.
6
Jorge M. Diaz has served as a director since December 2004. Mr. Diaz has served as Division
President and Chief Executive Officer of Fiserv Output Solutions, a division of Fiserv, Inc., since
April 1994. Fiserv Output Solutions provides card production services, statement processing and
electronic document distribution services. In January 1985, Mr. Diaz co-founded National Embossing
Company, a predecessor company to Fiserv Output Solutions. Mr. Diaz sold National Embossing Company
to Fiserv in April 1994.
Michael A.R. Wilson has served as a director since February 2005. Mr. Wilson is a Managing
Director at TA Associates, a private equity firm, where he focuses on growth investments and
leveraged buyouts of financial services, business services, and consumer products companies. He
currently serves on the Boards of Advisory Research, Inc., Jupiter Investment Group, and Numeric
Investors. Prior to joining TA Associates in 1992, Mr. Wilson was a Financial Analyst in Morgan
Stanleys Telecommunications Group. In 1994, he joined Affiliated Managers Group, a TA
Associates-backed financial services start-up, as Vice President and a member of the founding
management team. Mr. Wilson received a BA degree, with Honors, in Business Administration from the
University of Western Ontario and a Masters of Business Administration degree, with Distinction,
from Harvard Business School.
CORPORATE GOVERNANCE
Our Governance Practices
General
We are committed to good corporate governance. Our Board has adopted several governance
documents, which include our Corporate Governance Principles, Code of Business Conduct and Ethics,
Financial Code of Ethics and charters for each standing committee of our Board. Each of these
documents is available on our website at www.cardtronics.com.
Code of Ethics
Our Board has adopted a Code of Business Conduct and Ethics for our directors, officers and
employees. In addition, our Board has adopted a Financial Code of Ethics for our principal
executive officer, principal financial officer, principal accounting officer and other accounting
and finance executives. A copy of each of code is available on our website at www.cardtronics.com.
Any change to, or waiver from, either code will be disclosed as required by applicable securities
laws and listing exchange requirements.
Our Board
Board Size
Our Board currently has seven director positions. However, as a consequence of the March 17,
2009 resignation of Jack M. Antonini as a director, we currently have one vacant Class III director
position on our Board. It is the expectation of the Board that this vacant position will be filled
by our new chief executive officer, when such person is selected.
Our Third Amended and Restated Certificate of Incorporation and our Second Amended and
Restated Bylaws provide for a classified Board consisting of three classes of directors, each
serving staggered three-year terms. As a result, stockholders will elect a portion of our Board
each year. Our two Class II directors terms expire at this years Annual Meeting. Accordingly,
they are seeking re-election at the Annual Meeting. Our Class III directors terms will expire at
the Annual Meeting of Stockholders to be held in 2010 and Class I directors terms will expire at
the Annual Meeting of Stockholders to be held in 2011.
The Nominating & Governance Committee of our Board considers and makes recommendations to our
Board concerning the appropriate size and needs of our Board and considers candidates to fill new
positions created by expansion or vacancies that occur by resignation, retirement or any other
reason.
7
Director Independence
As required under the listing standards of The NASDAQ Stock Market LLC (NASDAQ), a majority
of the members of our Board must qualify as independent, as affirmatively determined by our
Board. Our Board has delegated this responsibility to its Nominating & Governance Committee.
Pursuant to its charter, the Nominating & Governance Committee determines whether or not each
director and each prospective director is independent.
The Nominating & Governance Committee evaluated all relevant transactions or relationships
between each director, or any of his or her family members, and our company, senior management and
independent registered accounting firm. Based on this evaluation, the Nominating & Governance
Committee has determined that Messrs. J. Tim Arnoult, Robert P. Barone, Dennis F. Lynch and Michael
A.R. Wilson are each an independent director, under the applicable standards set forth by the
NASDAQ and SEC. Messrs. Arnoult, Barone, Lynch and Wilson constitute a majority of the members of
our Board.
In making these independence determinations, our Board considered the relationships between
the directors and the company described below:
|
|
|
Mr. Lummis. Mr. Lummis co-founded and currently serves as a senior advisor to The
CapStreet Group, LLC, CapStreet II, L.P. and CapStreet Parallel II, L.P. (the CapStreet
Funds). The CapStreet Funds collectively own 20.6% of our common stock. Our Nominating &
Governance Committee has reviewed Mr. Lummis connection to the CapStreet Funds and the
CapStreet Funds influence over us and determined that the CapStreet Funds influence over
us is not material and that Mr. Lummis relationship with the CapStreet Funds does not
impair his independence. However, on March 17, 2009, when Mr. Lummis was appointed our
Interim Chief Executive Officer, he lost his status as an independent director. So long as
Mr. Lummis serves less than one full year as our Interim Chief Executive Officer, he will
regain his independent status when he relinquishes that duty. |
|
|
|
Mr. Wilson. Mr. Wilson is the managing director at TA Associates, Inc., a private
equity firm. TA Associates, Inc. is the ultimate parent of TA IV, L.P, TA/Atlantic Pacific
V, L.P., TA/Atlantic Pacific IV, L.P., TA Strategic Partners Fund A L.P., TA Investors II,
L.P. and TA Strategic Partners Fund B L.P. (collectively, the TA Funds). The TA Funds
collectively own 27.9% of our common stock. Our Nominating & Corporate Governance
Committee has reviewed Mr. Wilsons connection to the TA Funds and the TA Funds influence
over us and determined that the TA Funds influence over us is not material and that Mr.
Wilsons relationship with the TA Funds does not impair his independence. |
|
|
|
Mr. Diaz. Mr. Diaz is not considered independent because of his employment with Fiserv
Output Solutions, a division of Fiserv, Inc. In 2008, we paid approximately $18.8 million
in fees to Fiserv for services rendered to us. |
The purpose of this review was to determine whether any such relationships were material and,
therefore, inconsistent with a determination that the director is independent. As a result of this
review, the board affirmatively determined, based on its understanding of such relationships, that,
except as discussed above, none of the directors nominated for election at the meeting, or any of
our current directors, has any material relationship with us or our subsidiaries.
Meetings
Our Board held a total of nine meetings and acted by written consent two times during the
fiscal year ended December 31, 2008. During the fiscal year ended December 31, 2008, all seven
directors attended seven of the nine meetings. In two of the nine meetings, six directors were
present. Two directors missed one meeting each. No director missed any of the committee meetings
on which he served.
8
Executive Sessions; Presiding Director
According to our Corporate Governance Principles, our independent directors must meet in
executive session at each quarterly meeting. Prior to the effectiveness of the Corporate
Governance Principles, our independent directors met in executive session four times during the
fiscal year ended December 31, 2008. The Chairman of the Board presides at these meetings and is
responsible for preparing an agenda for the meetings of the non-management directors in executive
sessions.
Annual Meeting Attendance
Two of our directors attended our 2008 annual meeting. We do not have a formal policy
regarding director attendance at annual meetings. However, our directors are expected to attend
Board meetings and meetings of committees on which they serve and to spend the time needed and meet
as frequently as necessary to properly discharge their responsibilities.
Limitation on Public Company Board Service
Our Board monitors the number of public company boards on which each director serves and
develops limitations on such service as appropriate to ensure the ability of each director to fully
fulfill his or her duties and as may be otherwise required or limited by applicable securities laws
or NASDAQ listing standards.
Board and Committee Self-Evaluation
Our Board conducts an annual self-evaluation to determine whether it and its committees are
functioning effectively. The Nominating & Governance Committee leads this effort and reports
annually to our Board with an assessment of our Boards performance. The Board will discuss the
annual evaluation during the following year. The assessment is expected to focus on our Boards
contribution to us and specifically focus on areas in which our Board or management believes that
our Board could improve.
Director Selection and Nomination Process
The Nominating & Governance Committee is responsible for establishing criteria for selecting
new directors and actively seeking individuals to become directors for recommendation to our Board.
In considering candidates for our Board, the Nominating & Governance Committee considers the
entirety of each candidates credentials. There is currently no set of specific minimum
qualifications that must be met by a nominee recommended by the Nominating & Governance Committee,
as different factors may assume greater or lesser significance at particular times and the needs of
our Board may vary in light of its composition and the Nominating & Governance Committees
perceptions about future issues and needs. However, while the Nominating & Governance Committee
does not maintain a formal list of qualifications in making its evaluation and recommendation of
candidates, it may consider, among other factors, diversity, skill, experience in the context of
our Boards needs, independence qualifications and whether prospective nominees have relevant
business and financial experience, industry and/or other specialized expertise and good moral
character.
The Nominating & Governance Committee may consider candidates for our Board from any
reasonable source, including from a search firm engaged by the Nominating & Governance Committee or
stockholder recommendations, provided that the procedures set forth below are followed. The
Nominating & Governance Committee does not intend to alter the manner in which it evaluates
candidates based on whether the candidate is recommended by a stockholder or not. However, in
evaluating a candidates relevant business experience, the Nominating & Governance Committee may
consider previous experience as a member of our Board. Any invitation to join our Board must be
extended by our Board as a whole. The Nominating & Governance Committee did not receive
stockholder nominations for this Annual Meeting, nor has it engaged a search firm to find director
candidates during 2009 to date.
9
Stockholders or a group of stockholders may recommend potential candidates for consideration
by the Nominating & Governance Committee by sending a written request to our Secretary, Michael E.
Keller, at 3250
Briarpark Drive, Suite 400, Houston, Texas 77042 generally not later than 120 calendar days
prior to the first anniversary of the date of the previous years annual meeting. The written
request must include the following:
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|
the name and address of the person or persons to be nominated; |
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|
the number and class of all shares of each class of our stock owned of record and
beneficially by each nominee, as reported to the nominating stockholder by the nominee; |
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|
the information regarding each such nominee required by paragraphs (a), (d), (e) and (f)
of Item 401 of Regulation S-K adopted by the SEC; |
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|
a signed consent by each nominee to serve as our director, if elected; |
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|
the nominating stockholders name and address; |
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|
the number and class of all shares of each class of our stock owned of record and
beneficially by the nominating stockholder; and |
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|
|
in the case of a person that holds our stock through a nominee or street name holder of
record, evidence establishing such indirect ownership of stock and entitlement to vote such
stock for the election of directors at the annual meeting. |
From time to time, the Nominating & Governance Committee may request additional information
from the nominee or the stockholder.
The stockholder recommendation procedures described above do not preclude a stockholder of
record from making proposals at any annual stockholder meeting, provided that they comply with the
requirements described in the section entitled Proposals for the 2010 Annual Meeting of
Stockholders.
Communications from Stockholders and Interested Parties
Our Board welcomes communications from our stockholders and other interested parties.
Stockholders and any other interested parties may send communications to our Board, any committee
of our Board, the Chairman of our Board or any director in particular to: c/o Cardtronics, Inc.,
3250 Briarpark Drive, Suite 400, Houston, Texas 77042, Attention: Secretary.
Our Secretary (or any successor to the duties thereof) will review each such communication
received from stockholders and other interested parties and will forward the communication, as
expeditiously as reasonably practicable, to the addressees if: (1) the communication complies with
the requirements of any applicable policy adopted by us relating to the subject matter of the
communication; and (2) the communication falls within the scope of matters generally considered by
our Board. To the extent the subject matter of a communication relates to matters that have been
delegated by our Board to a committee or to an executive officer, our Secretary may forward such
communication to the executive or chairman of the committee to which such matter has been
delegated. The acceptance and forwarding of communications to the members of our Board or an
executive does not imply or create any fiduciary duty of our Board members or executive to the
person submitting the communications.
Committees of Our Board
General
Our Board currently has three standing committees: an Audit Committee, a Compensation
Committee and a Nominating & Governance Committee. Each committee (with the exception of the
Compensation Committee) is comprised of independent directors as currently required under the SECs
rules and regulations and the NASDAQ listing standards and each committee is governed by a written
charter approved by the full Board. These charters
form an integral part of our corporate governance policies, and a copy of each charter is
available on our website at www.cardtronics.com.
10
Effective March 25, 2009, Fred Lummis resigned from the Compensation Committee and the
Nominating & Governance Committee because, in accordance with NASDAQ listing rules, during the time
he serves as Interim Chief Executive Officer he does not qualify as an independent director. It is
our expectation that Mr. Lummis will be re-appointed to these two committees once we select a new
chief executive officer.
The table below provides the current composition of each committee of our Board:
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|
|
|
|
|
|
|
|
|
|
Nominating & |
|
|
Audit |
|
Compensation |
|
Governance |
Name |
|
Committee |
|
Committee |
|
Committee |
J. Tim Arnoult |
|
X |
|
|
|
X |
Robert P. Barone 1 |
|
X |
|
X |
|
|
Jorge M. Diaz |
|
|
|
X |
|
|
Dennis F. Lynch |
|
X |
|
|
|
X |
Michael A.R. Wilson 1 |
|
|
|
X |
|
X |
|
|
|
(1) |
|
Messrs. Barone and Wilson assumed duties as members of the Compensation Committee
and Nominating & Governance Committee, respectively, on March 25, 2009 in connection with
Mr. Lummis temporary resignation from such committees. |
Audit Committee
The Audit Committee is appointed by our Board to:
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|
|
assist the Board in fulfilling its oversight responsibilities with respect to the
conduct by our management of our financial reporting process, including the development and
maintenance of a system of internal accounting and financial reporting controls; |
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|
|
assist the Board in overseeing the integrity of our financial statements, qualifications
and independence of our independent registered public accounting firms, their performance
and the performance of the our internal audit function; |
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|
|
prepare for inclusion in this proxy statement the audit committee report required by the
SEC; |
|
|
|
recommend to our Board whether such audited financial statements should be included in
our Annual Report on Form 10-K to be filed with the SEC; and |
|
|
|
perform such other functions as the Board may assign to the Audit Committee from time to
time. |
The Board, in its business judgment, has determined that the Audit Committee is comprised
entirely of directors who satisfy the standards of independence established under the SECs rules
and regulations, NASDAQ listing standards and our Corporate Governance Principles. In addition,
the Board, in its business judgment, has determined that each member of the committee satisfies the
financial literacy requirements of the NASDAQ listing standards and Mr. Barone qualifies as an
audit committee financial expert within the meaning of the SECs rules and regulations.
Pursuant to its charter, the Audit Committee has the authority, at our expense, to retain
professional advisors, including legal, accounting or other consultants, to advise the Audit
Committee in connection with the exercise of its powers and responsibilities. The Audit Committee
may require any of our officers or employees, our outside legal counsel or our independent
registered public accounting firm to attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee. The Audit Committee is responsible for the
resolution of any disagreements between the independent registered public accounting firm and
management regarding our financial reporting. The Audit Committee meets at least quarterly with
management and the independent registered public accounting firm in separate executive sessions to
discuss any matter that the Audit
Committee or each of these groups believe should be discussed privately. The Audit Committee
makes regular reports to our Board.
11
The Report of the Audit Committee is set forth under Audit Matters in this proxy statement.
The Audit Committee held nine meetings and did not act by written consent during the fiscal
year ended December 31, 2008.
Compensation Committee
The Compensation Committee establishes salary and incentive compensation of our executive
officers and administers our employee benefit plans. Pursuant to the NASDAQ Marketplace Rules, a
company listing its stock for trading on the NASDAQ in connection with its initial public offering
has 12 months from the date of listing to comply with the requirement that its Compensation
Committee be comprised entirely of independent directors unless the Board finds that it is in the
best interest of our company and our stockholders for a non-independent director to continue to
serve on the Committee for a period of time not to exceed two years from the date of its initial
public offering. The Board, in its business judgment, has determined that two of the three
directors on the Compensation Committee (Messrs. Barone and Wilson) currently satisfy the standards
of independence established under the SECs rules and regulations, NASDAQ listing standards and our
Corporate Governance Principles. Although the Board has determined that Mr. Diaz is not
independent due to his relationship with Fiserv, the Board has determined that his continued
service as a member of the Compensation Committee until December 14, 2009 is in the best interests
of our company and stockholders pursuant to the transition rules contained in the NASDAQ listing
standards.
The Report of the Compensation Committee is set forth under Compensation Committee Report in
this proxy statement.
The Compensation Committee is delegated all authority of our Board as may be required or
advisable to fulfill the purposes of the Compensation Committee as set forth in its charter. The
Compensation Committee may form and delegate some or all of its authority to subcommittees when it
deems appropriate.
Pursuant to its charter, the purposes of the Compensation Committee are to:
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oversee the responsibilities of the Board relating to compensation of our directors and
executive officers; |
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|
design, recommend and evaluate our director and executive officer compensation plans,
policies and programs; |
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|
produce the Compensation Committee Report for inclusion in the proxy statement, in
accordance with applicable rules and regulations; |
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|
otherwise discharge our Boards responsibilities relating to compensation of our
directors and executive officers; and |
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|
|
perform such other functions as our Board may assign to the committee from time to time. |
In connection with these purposes, our Board has entrusted the Compensation Committee with the
overall responsibility for establishing, implementing and monitoring the compensation for our
executive officers. In addition, the Compensation Committee works with our executive officers,
including our Chief Executive Officer, to implement and promote our executive compensation
strategy. Please see Compensation Discussion and Analysis for additional information on the
Compensation Committees processes and procedures for the consideration and determination of
executive compensation and Director Compensation for additional information on its consideration
and determination of director compensation.
12
The Compensation Committee held eight meetings and did not act by written consent during the
fiscal year ended December 31, 2008.
Nominating & Governance Committee
The Nominating & Governance Committee identifies individuals qualified to become members of
our Board, makes recommendations to our Board regarding director nominees for the next annual
meeting of stockholders and develops and recommends corporate governance principles to our Board.
The Nominating & Governance Committee, in its business judgment, has determined that it is
comprised entirely of directors who satisfy the standards of independence established under NASDAQ
listing standards and our Corporate Governance Principles. For information regarding the
Nominating & Governance Committees policies and procedures for identifying, evaluating and
selecting director candidates, including candidates recommended by stockholders, please see
Director Selection and Nomination Process above.
The Nominating & Governance Committee is delegated all authority of our Board as may be
required or advisable to fulfill the purposes of the Nominating & Governance Committee as set forth
in its charter. More particularly, the Nominating & Governance Committee:
|
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prepares and recommends to our Board for adoption appropriate Corporate Governance
Principles and modifications from time to time to those principles; |
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|
establishes criteria for selecting new directors and seeks individuals qualified to
become board members for recommendation to our Board; |
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|
seeks to implement the independence standards required by law, applicable listing
standards, our certificate of incorporation or bylaws or our Corporate Governance
Principles; |
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determines whether or not each director and each prospective director is independent,
disinterested or a non-employee director under the standards applicable to the committees
on which such director is serving or may serve; |
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recommends to our Board a director who serves as Chairman; |
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|
reviews annually the advisability or need for any changes in the number and composition
of our Board; |
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|
reviews annually the advisability or need for any changes in the number, charters or
titles of committees of our Board; |
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|
recommends to our Board annually the composition of each Board committee and the
individual director to serve as chairman of each committee; |
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|
ensures that the chairman of each committee reports to our Board annually about the
committees annual evaluation of its performance and evaluation of its charter; |
|
|
|
receives comments from all directors and reports to our Board annually with an
assessment of our Boards performance to be discussed with the full Board following the end
of each fiscal year; |
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|
reviews and reassesses annually the adequacy of our Corporate Governance Principles and
recommends any proposed changes to our Board for approval; and |
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|
makes a report to our Board annually on succession planning and works with our Board to
evaluate potential successors to the principal executive officer. |
The Nominating & Governance Committee held four meetings during the fiscal year ended December
31, 2008. The Nominating & Governance Committee did not act by unanimous written consent in 2008.
13
STOCK OWNERSHIP MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the Exchange Act)
requires our officers and directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or
Form 5 with the SEC. Such officers, directors and 10% stockholders are also required by securities
laws to furnish us with copies of all Section 16(a) forms they file.
For the fiscal year ended December 31, 2008, to our knowledge and based solely on a review of
copies of reports furnished to us or filed with the SEC and written representations from these
individuals that no other reports were required, all of our officers, directors and 10%
stockholders complied with applicable reporting requirements of Section 16(a).
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our common
stock as of March 31, 2009 for:
|
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each person known by us to beneficially own more than 5% of our common stock; |
|
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each of our directors and director nominees; |
|
|
|
each of our Named Executive Officers (as such term is defined by the SEC); and |
|
|
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all directors and executive officers as a group. |
Footnote 1 to the following table provides a brief explanation of what is meant by the term
beneficial ownership. The number of shares of common stock and the percentages of beneficial
ownership are based on 43,932,063 shares of common stock, which are comprised of 40,518,607 shares
of common stock outstanding as of March 31, 2009 and 3,413,456 shares of common stock subject to
options held by beneficial owners that are exercisable or that will be exercisable within 60 days
of March 31, 2009. The amounts presented may not add due to rounding.
To our knowledge and except as indicated in the footnotes to this table and subject to
applicable community property laws, the persons named in this table have the sole voting power with
respect to all shares of common stock listed as beneficially owned by them.
14
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|
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|
|
|
Percent of |
|
|
|
Amount and Nature of |
|
|
Common Stock |
|
Name and Address of Beneficial Owner (1) (2) |
|
Beneficial Ownership |
|
|
Beneficially Owned |
|
5% Stockholders: |
|
|
|
|
|
|
|
|
TA Associates, Inc. (3) |
|
|
12,259,286 |
|
|
|
27.9 |
% |
TA IX, L.P. (4) |
|
|
7,583,447 |
|
|
|
17.3 |
% |
TA/Atlantic and Pacific V L.P. (5) |
|
|
3,033,370 |
|
|
|
6.9 |
% |
TA/Atlantic and Pacific IV L.P. (6) |
|
|
1,307,663 |
|
|
|
3.0 |
% |
TA Strategic Partners Fund A L.P. (7) |
|
|
155,268 |
|
|
|
* |
|
TA Investors II, L.P. (8) |
|
|
151,663 |
|
|
|
* |
|
TA Strategic Partners Fund B L.P. (9) |
|
|
27,875 |
|
|
|
* |
|
The CapStreet Group, LLC (10) |
|
|
9,041,074 |
|
|
|
20.6 |
% |
CapStreet II, L.P. (11) |
|
|
8,091,222 |
|
|
|
18.4 |
% |
CapStreet Parallel II, L.P. (12) |
|
|
949,852 |
|
|
|
2.2 |
% |
Columbia Wanger Asset Management, L.P. (13) |
|
|
4,127,000 |
|
|
|
9.4 |
% |
Ralph H. Clinard (14) |
|
|
2,700,296 |
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
Directors and Named Executive Officers: |
|
|
|
|
|
|
|
|
Michael A.R. Wilson (15) |
|
|
12,259,286 |
|
|
|
27.9 |
% |
Fred R. Lummis (16) |
|
|
9,041,074 |
|
|
|
20.6 |
% |
Michael H. Clinard (17) |
|
|
1,194,212 |
|
|
|
2.7 |
% |
J. Chris Brewster (18) |
|
|
627,102 |
|
|
|
1.4 |
% |
Ronald Delnevo (19) |
|
|
563,931 |
|
|
|
1.3 |
% |
Jack M. Antonini |
|
|
316,969 |
|
|
|
* |
|
Rick Updyke (20) |
|
|
149,549 |
|
|
|
* |
|
Jorge M. Diaz (21) |
|
|
44,742 |
|
|
|
* |
|
Robert P. Barone (22) |
|
|
24,306 |
|
|
|
* |
|
Dennis F. Lynch |
|
|
10,000 |
|
|
|
* |
|
J. Tim Arnoult |
|
|
5,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (12
persons) |
|
|
24,435,462 |
|
|
|
55.6 |
% |
|
|
|
* |
|
Less than 1.0% of the outstanding common stock. |
|
(1) |
|
Beneficial ownership is a term broadly defined by the SEC in Rule 13d-3 under
the Exchange Act and includes more than the typical forms of stock ownership, that is,
stock held in the persons name. The term also includes what is referred to as indirect
ownership, meaning ownership of shares as to which a person has or shares investment or
voting power. For the purpose of this table, a person or group of persons is deemed to have
beneficial ownership of any shares as of March 31, 2009, if that person or group has the
right to acquire shares within 60 days after such date. |
|
(2) |
|
The address for each Named Executive Officer and director set forth in the table,
unless otherwise indicated, is c/o Cardtronics, Inc., 3250 Briarpark Drive, Suite 400,
Houston, Texas 77042. The address of The CapStreet Group, LLC, CapStreet II, L.P.,
CapStreet Parallel II, L.P., and Mr. Lummis is c/o The CapStreet Group, LLC, 600 Travis
Street, Suite 6110, Houston, Texas 77002. The address of TA Associates, Inc., TA IX, L.P.,
TA/Atlantic and Pacific V L.P., TA/Atlantic and Pacific IV L.P., TA Strategic Partners Fund
A L.P., TA Investors II, L.P., TA Strategic Partners Fund B L.P., and Mr. Wilson is c/o TA
Associates, John Hancock Tower, 56th Floor, 200 Clarendon Street, Boston, Massachusetts
02116. The address of Columbia Wanger Asset Management, L.P. is 227 West Monroe Street,
Suite 3000, Chicago, Illinois 60606, and the address of Ralph H. Clinard is 3306 Chartreuse
Way, Houston, Texas 77082. |
|
(3) |
|
The shares owned by TA Associates, Inc. are owned through its affiliated funds,
including TA IX L.P., TA/Atlantic and Pacific IV L.P., TA/Atlantic and Pacific V L.P., TA
Strategic Partners Fund A L.P., TA Strategic Partners Fund B L.P., and TA Investors II,
L.P., which we collectively refer to as the TA Funds. |
|
(4) |
|
As reported on Schedule 13G dated as of December 31, 2007 and filed with the SEC
on February 14, 2008, TA Associates, Inc. is the general partner of TA IX, L.P., and each
may be considered a beneficial owner, with sole voting and dispositive power of 7,583,447
shares. TA IX, L.P. has not sold or purchased any additional Cardtronics stock since the
February 2008 filing. |
|
(5) |
|
As reported on Schedule 13G dated as of December 31, 2007 and filed with the SEC
on February 14, 2008, TA Associates, Inc. is the general partner of TA Atlantic and Pacific
V L.P., and each may be considered a beneficial owner, with sole voting and dispositive
power of 3,033,370 shares. TA Atlantic and Pacific V L.P. has not sold or purchased any
additional Cardtronics stock since the February 2008 filing. |
15
|
|
|
(6) |
|
As reported on Schedule 13G dated as of December 31, 2007 and filed with the SEC
on February 14, 2008, TA Associates, Inc. is the general partner of TA/Atlantic and Pacific
IV L.P., and each may be considered a beneficial owner, with sole voting and dispositive
power of 1,307,663 shares. TA Atlantic and Pacific IV L.P. has not sold or purchased any
Cardtronics additional stock since the February 2008 filing. |
|
(7) |
|
As reported on Schedule 13G dated as of December 31, 2007 and filed with the SEC
on February 14, 2008, TA Associates, Inc. is the general partner of TA Strategic Partners
Fund A L.P., and each may be considered a beneficial owner, with sole voting and
dispositive power of 155,268 shares. TA Strategic Partners Fund A L.P. has not sold or
purchased any additional Cardtronics stock since the February 2008 filing. |
|
(8) |
|
As reported on Schedule 13G dated as of December 31, 2007 and filed with the SEC
on February 14, 2008, TA Associates, Inc. is the general partner of TA Investors II, L.P.,
and each may be considered a beneficial owner, with sole voting and dispositive power of
151,663 shares. TA Investors II, L.P. has not sold or purchased any additional Cardtronics
stock since the February 2008 filing. |
|
(9) |
|
As reported on Schedule 13G dated as of December 31, 2007 and filed with the SEC
on February 14, 2008, TA Associates, Inc. is the general partner of TA Strategic Partners
Fund B L.P., and each may be considered a beneficial owner, with sole voting and
dispositive power of 27,875 shares. TA Strategic Partners Fund B L.P. has not sold or
purchased any additional Cardtronics stock since the February 2008 filing. |
|
(10) |
|
The shares owned by The CapStreet Group, LLC are owned through its affiliated
funds, CapStreet II, L.P. and CapStreet Parallel II, L.P. |
|
(11) |
|
As reported on Schedule 13G/A dated as of December 31, 2008 and filed with the
SEC on February 13, 2009, The CapStreet Group, LLC is the general partner of CapStreet GP
II, L.P., which is the general partner of CapStreet II, L.P., and each may be considered a
beneficial owner, with shared voting and dispositive power of 8,091,222 shares. |
|
(12) |
|
As reported on Schedule 13G/A dated as of December 31, 2008 and filed with the
SEC on February 13, 2009, The CapStreet Group, LLC is the general partner of CapStreet
Parellel II, L.P., and each may be considered a beneficial owner, with shared voting and
dispositive power of 949,852 shares. |
|
(13) |
|
As reported on Schedule 13G/A dated as of January 31, 2009 and filed with the
SEC on February 9, 2009, Columbia Wanger Asset Management, L.P. is considered a beneficial
owner, with sole voting and dispositive power of 4,127,000 shares. The shares reported
therein include the shares held by Columbia Acorn Trust, a Massachusetts business trust
that is advised by Columbia Wanger Asset Management, L.P. Columbia Acorn Trust holds 9.11%
of our shares. |
|
(14) |
|
As reported on Schedule 13G dated as of December 31, 2008 and filed with the SEC
on February 18, 2009, Mr. Clinard is considered a beneficial owner, with shared voting and
dispositive power of 2,700,296 shares. |
|
(15) |
|
The shares indicated as being beneficially owned by Michael A.R. Wilson are
owned directly by the TA Funds. Mr. Wilson serves as a Managing Director of TA Associates,
Inc., the ultimate general partner of the TA Funds. As such, Mr. Wilson may be deemed to
have a beneficial ownership of the shares owned by the TA Funds. Mr. Wilson disclaims
beneficial ownership of such shares, except to the extent of his pecuniary interest therein
and 22,310 shares of our common stock. |
|
(16) |
|
The shares indicated as being beneficially owned by Fred R. Lummis are owned
directly by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis serves as a
senior advisor of The CapStreet Group, LLC, the ultimate general partner of CapStreet II,
L.P. and CapStreet Parallel II, L.P. As such, Mr. Lummis may be deemed to have a beneficial
ownership of the shares owned by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr.
Lummis disclaims beneficial ownership of such shares. |
|
(17) |
|
Includes 175,641 shares owned directly, 134,000 restricted shares, the
forfeiture restrictions on which lapse as to 33,500 shares on each of the first four
anniversaries grant date beginning in June 2009, and 208,115 options that are exercisable
within 60 days of March 31, 2009. Also included in the shares indicated as being
beneficially owned by Mr. Clinard are 541,164 shares owned by the Ralph Clinard Family
Trust and 135,292 shares owned by a trust for the benefit of Mr. Clinard, of which Mr.
Clinard is a co-trustee of and has shared voting power of and of which he may be deemed to
be the beneficial owner. |
|
(18) |
|
Includes 180,000 shares of restricted shares, the forfeiture restrictions on
which lapse as to 45,000 shares on each of the first four anniversaries of the grant date
beginning in June 2009, and 447,102 options which are exercisable within 60 days of March
31, 2009. |
|
(19) |
|
Includes 69,992 shares owned directly, 176,000 restricted shares, the forfeiture
restrictions on which lapse as to 44,000 shares on each of the first four anniversaries of
the grant date beginning in June 2009, and 317,939 options which are exercisable within 60
days of March 31, 2009. |
|
(20) |
|
Includes 80,000 restricted shares, the forfeiture restrictions on which lapse as
to 20,000 shares on each of the first four anniversaries of the grant date beginning in
June 2009, and 69,549 options which are exercisable within 60 days of March 31, 2009. |
|
(21) |
|
Includes 5,000 shares owned directly and 39,742 options that are exercisable
within 60 days of March 31, 2009. |
|
(22) |
|
Includes 5,000 shares owned directly and 19,306 options that are exercisable
within 60 days of March 31, 2009. |
16
Equity Compensation Plan Information
The following table sets forth information regarding securities authorized for issuance under
our equity compensation plans as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Number of Securities |
|
|
|
Securities to be |
|
|
|
|
|
|
Remaining Available for |
|
|
|
Issued upon |
|
|
Weighted-average |
|
|
Future Issuance under |
|
|
|
Exercise of |
|
|
Exercise Price of |
|
|
Equity Compensation |
|
|
|
Outstanding |
|
|
Outstanding |
|
|
Plans (excluding |
|
|
|
Options, Warrants |
|
|
Options, Warrants |
|
|
Securities Reflected |
|
Plan Category |
|
and Rights |
|
|
and Rights |
|
|
in Column (a)) |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans approved by security holders (1) |
|
|
253,000 |
|
|
$ |
7.95 |
|
|
|
1,243,643 |
|
Equity compensation plans not approved by security holders (2) |
|
|
4,035,942 |
|
|
|
7.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,288,942 |
|
|
$ |
7.96 |
|
|
|
1,243,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents our 2007 Stock Incentive Plan. For additional information on the terms
of this plan, see Executive Compensation Narrative Disclosure to Summary Compensation
Table and Grants of Plan-Based Awards Table Equity Incentive Plans 2007 Plan below. |
|
(2) |
|
Represents our 2001 Stock Incentive Plan, which was approved by our Board. For
additional information on the terms of this plan, see Executive Compensation Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table Equity
Incentive Plans 2001 Plan below. |
EXECUTIVE OFFICERS
Information regarding our executive officers, their ages as of the Annual Meeting, positions
at Cardtronics, Inc., and other biographical information is set forth below:
|
|
|
|
|
Name |
|
Age |
|
Position |
Fred R. Lummis
|
|
55 |
|
Interim Chief Executive Officer |
J. Chris Brewster
|
|
60 |
|
Chief Financial Officer |
Michael H. Clinard
|
|
42 |
|
President of Global Services |
Rick Updyke
|
|
50 |
|
President of Global Development |
Carleton K. Thompson, III
|
|
40 |
|
Chief Accounting Officer |
Ronald Delnevo
|
|
54 |
|
Managing Director of Bank Machine Ltd. |
Fred R. Lummis is the chairman of our Board of Directors and is currently acting as our
Interim Chief Executive Officer while we conduct a formal search for a new Chief Executive Officer.
The biography of Mr. Lummis is provided under Continuing Directors above. During fiscal year
2008, Jack M. Antonini served as our Chief Executive Officer; however, Mr. Antoninis employment
with us and his directorship ended effective March 17, 2009.
J. Chris Brewster has served as our Chief Financial Officer since February 2004. From
September 2002 until February 2004, Mr. Brewster provided consulting services to various
businesses. From October 2001 until September 2002, Mr. Brewster served as Executive Vice President
and Chief Financial Officer of Imperial Sugar Company, a Nasdaq-quoted refiner and marketer of
sugar and related products. From March 2000 to September 2001, Mr. Brewster served as Chief
Executive Officer and Chief Financial Officer of WorldOil.com, a privately-held Internet, trade
magazine, book and catalog publishing business. From January 1997 to February 2000, Mr. Brewster
served as a partner of Bellmeade Capital Partners, LLC, a merchant banking firm specializing in the
consolidation of fragmented industries. From March 1992 to September 1996, he served as Chief
Financial Officer of Sanifill, Inc., a New York Stock Exchange-listed environmental services
company. From May 1984 to March 1992, he served as Chief Financial Officer of National Convenience
Stores, Inc., a New York Stock Exchange-listed operator of 1,100 convenience stores. Mr. Brewster
holds a Bachelor of Science degree in industrial management from the Massachusetts Institute of
Technology and a Masters of Business Administration from Harvard Business School.
17
Michael H. Clinard has served as our President of Global Services since June 2008. Prior to
such time, he served as our Chief Operating Officer since he joined us in August 1997. He holds a
Bachelor of Science degree in business management from Howard Payne University. Mr. Clinard also
serves as a director and Vice President of the ATM Industry Association.
Rick Updyke has served as our President of Global Development since June 2008. Prior to such
time, he served as our Chief Strategy and Development Officer since he joined us in July 2007. From
February 1984 to July 2007, Mr. Updyke held various positions with Dallas-based 7-Eleven, Inc., a
convenience store retail company, most recently serving as Vice President of Corporate Business
Development from February 2001 to July 2007. He holds a Bachelor of Business Administration degree
in management information systems from Texas Tech University and a Masters of Business
Administration from Amberton University.
Carleton K. Thompson, III has served as our Chief Accounting Officer since September 2006.
Prior to such time, he served as our Director of Reporting since he joined us in June 2004. From
January 2003 until May 2004, Mr. Thompson served as the Chief Financial Officer of Sternhill
Partners, a venture capital partnership providing funding for seed and early-stage technology
start-ups. From October 2001 until December 2002, Mr. Thompson served as the Chief Accounting
Officer of Q Services, Inc., an oilfield services company specializing in well enhancement and
production services. Prior to that, Mr. Thompson served in several other corporate finance roles
with both privately-held and publicly-traded companies. Mr. Thompson began his career in September
1990 with Arthur Andersen where he spent 8 years working in the firms audit practice providing
accounting and auditing services to a wide range of clients. Mr. Thompson holds a Bachelor of
Science degree in accounting from Trinity University and is a licensed certified public accountant
in the state of Texas.
Ronald Delnevo has served as Managing Director of Bank Machine Ltd. (Bank Machine) since
July 2000 and has been with Bank Machine (formerly the ATM division of Euronet, a processor of
financial and payment transactions) since 1998. From May 2005 to December 2007, Mr. Delnevo served
as a director on our Board. He currently serves as Chairman of the Association of Independent Cash
Machine Operators, a member of two committees of the U.K. Payments Council, a member of the
European Board of the ATMIA, and a member of two committees of Link, the operator of the primary
U.K. ATM network that connects almost all U.K. ATM operators. Prior to joining Bank Machine, Mr.
Delnevo served in various consulting roles in the retail sector. Mr. Delnevo was educated at Heriot
Watt University in Edinburgh and holds a degree in business organization and a diploma in personnel
management.
COMPENSATION DISCUSSION AND ANALYSIS
Objectives of Our Executive Compensation Program
The primary objectives of our executive compensation program are to attract, retain, and
motivate qualified individuals who are capable of leading our company to meet its business
objectives and to increase overall stockholder value. To achieve these objectives, our Compensation
Committees philosophy has been to implement a compensation program that aligns the interests of
management with those of our investors and to provide a compensation program that creates
incentives for and rewards performance of the individuals based on our overall success.
Specifically, our compensation program provides management with the incentive to increase our
adjusted earnings before interest expense, income taxes, depreciation expense, and amortization
expense, or adjusted EBITDA (as defined in our revolving credit facility). In addition, we intend
for our compensation program to both compensate our executives on a level that is competitive with
companies comparable to us as well as maintain a level of internal consistency and equity by paying
higher amounts of compensation to our more senior executive officers based on job role and
complexity along with individual talent and performance.
Our Compensation Committee believes that it is in the best interests of our investors and our
executive officers that our compensation program remains relatively uncomplicated and
straightforward, which should reduce the time and cost involved in setting our compensation
policies and calculating the payments under such policies, as well as reduce the time involved in
furthering our investors understanding of such policies.
18
Named Executive Officers
The Compensation Committees responsibility includes the establishment of all compensation
programs for our executive officers as well as oversight for other broad-based employee benefits
programs. The responsibilities focused on in this Compensation Discussion and Analysis relate
primarily to our Named Executive Officers. For the year ended December 31, 2008, our Named
Executive Officers were:
|
|
|
Name |
|
Position |
Jack M. Antonini
|
|
Chief Executive Officer |
J. Chris Brewster
|
|
Chief Financial Officer |
Michael H. Clinard
|
|
President Global Services
(former Chief Operating Officer) |
Rick Updyke
|
|
President Global Development
(former Chief Strategic and Development Officer) |
Ronald Delnevo
|
|
Managing Director of Bank Machine Ltd. |
In March 2009, we announced that Mr. Antonini would be leaving our company and the Board of
Directors effective as of March 17, 2009. Fred R. Lummis, Chairman of the Board, agreed to serve
as Interim Chief Executive Officer while the Board conducts a formal search for Mr. Antoninis
permanent successor. Mr. Lummis will not receive any compensation for his service as Interim Chief
Executive Officer.
Compensation Review
Historically, our management has performed (typically every other year) an informal market
survey of the competitiveness of our total compensation packages paid to our executive officers
through a review of compensation paid by companies with whom we believe we compete for executive
level talent. However, in 2008, the Compensation Committee engaged the independent compensation
consulting firm Pearl Meyer & Partners (Pearl Meyer) to provide advice and counsel on executive
compensation matters. The consulting firm provides no services to our company other than those
provided directly to or on behalf of the Compensation Committee. Pearl Meyer conducted a thorough
review of our executive compensation program, including base salary, annual incentive targets and
plan metrics, total cash compensation, long-term incentives, and total direct compensation. The
data contained in this study provide our Compensation Committee with a foundation for making
compensation-related decisions. Throughout the course of the engagement, Pearl Meyer has provided
our Compensation Committee with the following:
|
|
|
updates regarding regulatory changes affecting our compensation program; |
|
|
|
information on market trends, practices and other data; |
|
|
|
assistance in designing program elements; and |
|
|
|
overall guidance and advice about the efficacy of each element of our compensation
program and its fit within the Committees developing compensation philosophy. |
Until the Pearl Meyer study, no comprehensive study had been conducted to review the
executives pay elements, the weighting of these elements, and the position to the competitive
markets. The data contained in this study provide our Compensation Committee with a foundation
for making compensation-related decisions. As a result, the Compensation Committee decided that it
will develop and implement a more formal compensation strategy in 2009 that will govern future
compensation decisions.
Use of Peer Companies
The Compensation Committee analyzes the compensation practices of a group of companies we
consider to be our peers. Composition of the peer group is based upon a combination of the
following factors: (1) companies that are competitors for products and services; (2) companies that
compete for our specialized talent; (3) companies that may experience similar market cycles to
ours; (4) companies that may be tracked similarly by analysts; and (5) companies that are in a
generally comparable bracket of market capitalization and/or revenue to ours.
19
The peer group provides meaningful reference points for competitive practices, types of equity
rewards used, and share usage levels for the executives as well as the total amount of shares set
aside for equity programs. The Compensation Committees goal is to provide a total compensation
package that is competitive with prevailing practices in our industry and within the peer group.
Individual peers utilized in the peer group will be periodically reviewed and may change over time,
as needed. The peer group used for the 2008 market analysis was as follows:
|
|
|
|
|
Company Name |
|
Fiscal Year 2008 Revenue |
|
|
|
(In millions) |
|
Coinstar, Inc. |
|
$ |
911.9 |
|
Euronet Worldwide, Inc. |
|
|
1,045.7 |
|
Global Cash Access Holdings, Inc. |
|
|
671.6 |
|
Heartland Payment Systems, Inc. |
|
|
1,544.9 |
|
TNS, Inc. |
|
|
344.0 |
|
Wright Express Corporation |
|
|
393.6 |
|
In addition to studying peer practices, the Compensation Committee also considers the best
practices in compensation policies from other companies and does not react or structure our
compensation programs on market data alone. The Compensation Committee did not use the peer group
to establish a particular range of compensation for any element of pay in 2008. Rather, peer group
and other market data were used as a general guideline in the Compensation Committees
deliberations.
Role of the Chief Executive Officer in Executive Compensation Decisions
Our Chief Executive Officer (CEO) works closely with our Compensation Committee.
Specifically, he provides his assessment and recommendations on the competitiveness of our
compensation programs, as well as performance issues and challenges. He also makes recommendations
for consideration pertaining to his subordinate team. The Compensation Committee takes these
recommendations into consideration and either approves the recommendations or works with the CEO to
develop suitable solutions. The CEO does not, however, make, participate in, provide input for or
make recommendations about his own compensation. The Compensation Committee also meets in
executive session, independently of the CEO and other members of senior management, to review not
only compensation issues related to the CEO but those of all Named Executive Officers and
employees.
Role of the Chief Executive Officer and Chief Financial Officer in Compiling the Compensation
Discussion and Analysis Data
The management team, with some assistance of an outside firm, Pearl Meyer, compiled the
tabular data for this Compensation Discussion and Analysis. The Compensation Committee has
reviewed this data for thoroughness, consistency, and accuracy within the framework of the general
charter of the Compensation Committee (described in Corporate Governance Committees of Our
Board).
20
General Calendar of Events and Decision Making
The Compensation Committee meets periodically in each quarter of the fiscal year, as needed,
to address compensation administration issues and initiatives. A general summary of the 2008
schedule follows:
|
|
|
Quarter of 2008 |
|
Items Associated with Plan Administration |
1st Quarter
|
|
Reviewed results of operations, bonus plan funding
and allocation process; finalized equity grants and
bonus pools. Entertained merit recommendations,
reviewed CEO performance and acted on
recommendations flowing from the appraisal process.
Approved director compensation package. |
2nd Quarter
|
|
Approved key terms/conditions for employment and
restricted stock agreements for executive officers.
Approved 2008 Executive Performance Bonus Plan and
established EBITDA targets. Approved equity
incentive awards for executive officers and certain
other employees. Approved retention of an outside
consulting firm, Pearl Meyer, to conduct a formal
compensation study. |
3rd Quarter
|
|
Approved equity incentive awards to other
executives. Approved work plan of Pearl Meyer. |
4th Quarter
|
|
Reviewed market data from peer data, assessed
against current practices and formulated
recommendations for changes to the next fiscal
years programs. |
Components of Executive Compensation
Our executive compensation program consists of three primary elements: (1) base salary, (2)
annual non-equity incentive plan compensation, and (3) equity awards. In determining the level of
total compensation to be set for each compensation component, our Compensation Committee considers
a number of factors, including market competitiveness analyses of our compensation levels compared
with those paid by comparable companies, our most recent annual performance, each individual
executive officers performance, the desire to maintain internal equity and consistency among our
executive officers and other considerations that the Compensation Committee deems to be relevant.
In addition to the three primary components, we provide our executive officers with
discretionary bonuses (as conditions warrant), severance, certain other generally available
benefits, such as healthcare plans, that are available to all employees and certain limited
perquisites. While our Compensation Committee reviews the total compensation package we provide to
each of our executive officers, our Board and the Compensation Committee view each element of our
compensation program as serving a specific purpose and therefore as distinct elements. In other
words, a significant amount of compensation paid to an executive in the form of one element will
not necessarily cause us to reduce another element of the executives compensation. Accordingly, we
have not adopted any formal or informal policy for allocating compensation between long-term and
short-term, between cash and non-cash or among the different forms of non-cash compensation.
21
The table below provides a summary of each element of pay, the form in which it is paid, the
purpose or objective of each element and any performance metrics associated with each element.
|
|
|
|
|
|
|
Element |
|
Form of Compensation |
|
Purpose / Objective |
|
Performance Metric(s) |
Base Pay
|
|
Cash fixed
|
|
To recognize role,
responsibilities
and experience
consistent with
market for
comparable
positions
|
|
Not
performance-based,
but an executives
advancement in our
company over time
is. |
|
|
|
|
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
Cash variable
|
|
To reward operating
results consistent
with the Management
Incentive Plan
(MIP) and to
provide a strong
motivational tool
to achieve earnings
and other related
pre-established
objectives
|
|
EBITDA; compliance
with the
Sarbanes-Oxley Act
of 2002 |
|
|
|
|
|
|
|
Long-Term Incentive
|
|
Stock options and
restricted stock
awards variable
|
|
To create a strong
financial incentive
for achieving or
exceeding long-term
performance goals
and encourage a
significant equity
stake in our
company
|
|
Varies |
|
|
|
|
|
|
|
Discretionary
Bonuses
|
|
Cash variable
|
|
To reward an
executive for
significant
contributions to a
company initiative
or when the
executive has
performed at a
level above what
was expected
|
|
Varies |
|
|
|
|
|
|
|
Health, Life,
Retirement Savings
and Other Benefits
|
|
Eligibility to
participate in
benefit plans
generally available
to our employees,
including
retirement, health,
life insurance and
disability plans
generally fixed
|
|
Plans are part of
our broad-based
employee benefits
program
|
|
Not performance-based |
|
|
|
|
|
|
|
Executive Severance
and Change in
Control Agreements
|
|
Payment of
compensation and
for benefit
coverage costs in
the form of
separation payments
subject to
compliance with
restrictive
covenants and
related conditions.
Levels are fixed
for duration of
employment
agreements
|
|
To provide the
executive with
assurances against
certain types of
terminations
without cause or
resulting from
change-in-control
where the
terminations were
not based upon
cause. This type
of protection is
intended to provide
the executive with
a basis for keeping
focus and
functioning in the
stockholders
interests at all
times
|
|
Not performance-based |
|
|
|
|
|
|
|
Limited Perquisites
|
|
Cash fixed
|
|
To provide
executive with
additional benefits
considered
necessary or
customary for his
position
|
|
Not performance-based |
22
Base Salary
The base salaries for our executive officers are set at levels believed to be sufficient to
attract and retain qualified individuals. We believe that our base salaries are an important
element of our executive compensation program because they provide our executive officers with a
fixed income stream, based upon their roles within our organization and their relative skills and
experience. Initial base salary levels, which for the Named Executive Officers are set or approved
by our Compensation Committee, take into consideration, in addition to the scope of an individual
executives responsibilities, the compensation paid by other companies with which we believe we
compete for executives.
Subsequent changes in the base salaries of executive officers, other than the CEO, are
reviewed and approved by our Compensation Committee based on recommendations made by our CEO, who
conducts annual performance reviews of each executive. Subsequent changes in the base salary of the
CEO are determined by our
Compensation Committee, which reviews the CEOs performance on an annual basis. Both the CEOs
review and the Compensation Committees review include an analysis of how an individual executive
performed against his personalized goals, which are jointly set by the executive and the CEO at the
beginning of each year, or, in the case of the CEO, by the CEO and the Board. In terms of weighting
the factors that influence decisions related to base salaries, the individual performance of an
executive against his goals is heavily weighted and accounts for roughly 80% of the committees
considerations while additional factors considered are weighted, on average, at only 20%. For a
given year, additional factors may include other achievements or accomplishments of the individual
during the year, any mitigating priorities during the year that may have resulted in a change in
the executives goals, market conditions, an executives participation in the development of others
within our company, and whether additional responsibilities were assumed by the executive during
the period. Under each executives employment agreement, base salary increases are targeted at 5%
per annum.
2008 Base Salaries. For 2008, the CEO proposed, and the Compensation Committee approved, base
salary increases of 5% for our President of Global Development and the Managing Director of Bank
Machine. These percentages are consistent with the 5% targeted increases outlined in their
employment agreements. Our CEO and CFO, however, received increases of 9% and 10%, respectively,
primarily due to their performance against their goals during 2007 and the additional
responsibilities assumed by them as a result of our initial public offering, which was completed in
December 2007. Finally, our President of Global Services received an increase in his base salary
of 53% as a result of his promotion from Chief Operating Officer, the additional responsibilities
assumed as a result of his promotion, our desire to retain Mr. Clinard as a part of our
organization given the depth of his knowledge of our company and the ATM industry and the
elimination of his automobile allowance, which was previously provided to Mr. Clinard under the
terms of his former employment agreement. The amount of Mr. Clinards increase was not determined
through benchmarking; rather, the Compensation Committee arrived at what it subjectively believed
was the appropriate amount.
2009 Base Salaries. For 2009, the CEO proposed, and the Compensation Committee approved, that
no merit increases be granted in 2009 for employees whose base salaries exceeded a predetermined
level. This salary freeze, which applies to all of our Named Executive Officers, was one of the
many actions taken by our company in 2008 and 2009 in response to deteriorating economic
conditions.
Annual Non-Equity Incentive Plan Compensation
To accomplish our goal of aligning the interests of management with those of our investors,
the Compensation Committee ties a portion of the annual cash compensation earned by our executives
to a targeted level of financial operating results. Each year, management proposes and the
Compensation Committee approves a non-equity incentive compensation plan. Under each annual plan,
each executive officer has a target payout, which is provided under the terms of his employment
agreement and is based on a percentage of his base salary. The determination of the ultimate payout
to an executive is primarily based on the achievement of company-level financial objectives.
Although the Compensation Committee does consider an executives performance against his individual
goals in determining the ultimate amount to be paid to an executive, these goals are not
specifically weighted and the achievement of company-level objectives is the primary driver of the
payout amounts.
Our annual non-equity incentive compensation plan, as opposed to any equity grants, is
designed to more immediately reward our executive officers for their performance during the most
recent year. We believe that the immediacy of these cash incentives, in contrast to our equity
grants that vest over a period of time, provides a significant incentive to our executives towards
achieving their respective individual objectives and thus our company-level objectives on an annual
basis. As such, we believe our non-equity incentive compensation plans are a significant motivating
factor for our executive officers, and we believe they have been a significant factor in attracting
and retaining our executive officers.
23
Under the terms of our non-equity incentive plan for 2008 (the 2008 Performance Bonus Plan),
our company-level financial objectives involved the achievement of an adjusted EBITDA target goal
for our consolidated operations (with the exception of the Managing Director of Bank Machine, as
discussed further below) and compliance with the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley). In
addition to these company-level goals, each executives 2008 goals were directly tied to achieving
the 2008 adjusted EBITDA target and compliance with Sarbanes-Oxley. To ensure proper focus on these
goals, each executives 2008 goals were prioritized at the
time they were set and included at least two goals for which actual performance could be
evaluated, using quantitative metrics, such as revenues from new contracts signed, costs per
transaction, or other key profit drivers. In determining the ultimate payouts under the 2008 plan,
the Compensation Committee considered an individual executives performance against his goals.
Assuming all non-financial company goals were achieved (i.e., Sarbanes-Oxley compliance and no
material covenant violations), the 2008 annual incentive compensation pool was targeted to be
funded if the consolidated adjusted EBITDA achieved was equal to at least 90% of the targeted
adjusted EBITDA amount and was to be funded on the following basis:
|
|
|
|
|
Actual Adjusted EBITDA |
|
Estimated Payout |
|
as a % of Target EBITDA |
|
as a % of Target |
|
< 90% |
|
|
0 |
% |
90% |
|
|
50 |
% |
95% |
|
|
75 |
% |
100% |
|
|
100 |
% |
105% |
|
|
125 |
% |
110% |
|
|
150 |
% |
115% |
|
|
175 |
% |
120% |
|
|
200 |
% |
> 120% |
|
|
200 |
% |
In the event the actual adjusted EBITDA as a percentage of the target EBITDA fell between two
of the percentages shown above, interpolation would be used to determine the appropriate pool
percentage. For example, if we achieved 97.5% of the target EBITDA, the pool would be funded at
87.5% of the target. If we achieved 108% of target EBITDA, the pool would be funded at 140% of the
target. In the event our consolidated adjusted EBITDA fell below 90% of the targeted adjusted
EBITDA amount, if, in the judgment of the Audit Committee, Sarbanes-Oxley compliance was not
achieved in all material respects, or if there was a material violation of our bank covenants, the
Compensation Committee, in its sole and absolute discretion, could decide whether or not to pay any
amounts under the plan. However, even if the goals were not achieved, the Compensation Committee
could, at its discretion, consider other mitigating factors and ultimately determine that payment
was warranted. This discretion enables the Compensation Committee to acknowledge circumstances or
developments, which may impact our overall performance relative to our adjusted EBITDA target and
which should not, in all cases, prohibit the payment of a bonus on a selective basis to individual
officers who met or exceeded their performance goals, notwithstanding our failure to meet our
established target.
Additionally, in the event our consolidated adjusted EBITDA exceeded 90%, despite the payout
percentages that are outlined in the plan, the Compensation Committee could also exercise
discretion and adjust one or more executives percentages as it deems appropriate based on one or
more factors, including an executives performance against his individual performance goals.
Although historically there was no formal cap on the payout amount an executive may receive under
our previous non-equity incentive compensation plans, our Compensation Committee, in an effort to
manage costs and maximize stockholder return, placed a formal cap on payouts under the 2008
Performance Bonus Plan. For the same reason, the Compensation Committee also reduced the payout
percentages in the 2008 from those in the 2007 plan. As a result, the maximum amount an executive
could receive under this plan was 200% of his individual target goal, as noted in the above table.
Adjusted EBITDA Target for our Executive Officers in the United States. For the year ended
December 31, 2008, the targeted adjusted EBITDA amount was $88.0 million for our consolidated
operations. The targeted adjusted EBITDA amount for a given period is typically set within or above
the adjusted EBITDA range communicated to our investors at the beginning of each year ($86.0
million to $90.0 million for 2008.) However, in the event the Board formally approves actions, such
as a material acquisition, that may affect the attainment of the originally forecasted budget
EBITDA, the budget impact is determined and presented to the Compensation Committee for approval of
a revised budgeted EBITDA figure for bonus calculation purposes. No such revisions were required
in 2008.
24
Adjusted EBITDA Target for our Executive Officer in the United Kingdom. The Managing Director
of Bank Machine participates in the same non-equity incentive compensation plan as our other
executives; however, the adjusted EBITDA target utilized to measure his performance and calculate
his non-equity incentive compensation is the adjusted EBITDA contributed by our United Kingdom
operations rather than the consolidated EBITDA used for our other executive officers. Our
Compensation Committee believes the adjusted EBITDA of our United Kingdom operations is a more
appropriate target to use for the Managing Director of Bank Machine, as his actions more directly
impact and ultimately drive the results of our U.K. operations than our consolidated results. For
2008, the targeted adjusted EBITDA amount for our United Kingdom operations was £11.3 million.
Achievability of Adjusted EBITDA Targets. As noted above, the annual company-level financial
target set under our incentive plan is consistent with the adjusted EBITDA range reflected in our
annual budget and communicated to investors at the beginning of each year. The target for our
United Kingdom operations is also consistent with the adjusted EBITDA amount in our annual budget
for our United Kingdom operations. As we expect to achieve our budgeted adjusted EBITDA amounts
when they are set and the financial targets set under our annual incentive plan are consistent with
the adjusted EBITDA range reflected in our annual budget, we have similar expectations that the
targets under our annual incentive plan will be achieved.
2008 Payouts. For the year ended December 31, 2008, we achieved compliance with
Sarbanes-Oxley, had no material covenant violations, and on a consolidated basis, we achieved
approximately 94.5% of our target EBITDA, which equated to a 72.4% bonus pool funding for our
United States operations. Additionally, the committee considered how each U.S. executive performed
with respect to his individual performance goals and adjusted the 72.4% payout threshold
accordingly. However, our United Kingdom operations only achieved EBITDA equal to approximately 40%
of the targeted adjusted EBITDA. As a result, the committee determined that no bonus would be
awarded to our United Kingdom Named Executive Officer. For the specific awards granted to each
Named Executive Officer under the 2008 Performance Bonus Plan, see the Non-Equity Incentive Plan
Compensation column of our Summary Compensation Table for 2008 included in Executive
Compensation below.
Long-term Incentive Program
We have two long-term equity incentive plans the 2007 Stock Incentive Plan (the 2007
Plan) and the 2001 Stock Incentive Plan (the 2001 Plan). The purpose of each of these plans is
to provide directors and employees of our company and our affiliates with additional incentive and
reward opportunities designed to enhance the profitable growth of our company and affiliates.
Equity awards granted under both plans generally vest ratably over four years based on continued
employment and expire ten years from the date of grant. This vesting feature is designed to aid in
officer retention as this feature provides an incentive for our executive officers to remain in our
employment during the vesting period.
Currently, there is no formal policy for granting equity awards to our executive officers, nor
is there a policy in place with respect to the allocation of grants between the various types of
equity instruments eligible to be awarded under the plans. Rather, all grants are discretionary and
are made by the Compensation Committee, who administers the plans. As most of our Named Executive
Officers have established a significant ownership position in our stock and/or options, they gain
significant value through the long-term appreciation in our stock, which we believe contributes to
the alignment of their interests with those of our stockholders. In general, this also means that
those executives incentives will not be substantially altered by a grant of restricted stock or
stock options. As a result, we expect issuances to our existing executive officers under our stock
incentive programs to be somewhat episodic with the focus on situations in which the individual
executive (1) is making significant contributions to our success and is judged to not have enough
ownership to create a sufficient long-term incentive for that executive, or (2) has made individual
contributions that significantly exceeded our expectations of company growth. In these situations,
the Compensation Committee may decide to provide such executive with additional equity, thereby
providing him with additional equity value for having impacted our overall stockholder value.
In its considerations of whether or not to make equity grants to our executive officers and,
if such grants are made, in its considerations of the size of the grants, our Compensation
Committee considers our company-level performance, the applicable executive officers performance,
comparative share ownership by comparable executives of comparable companies, the amount of equity
previously awarded to the applicable executive officer,
the vesting of such awards, and the recommendations of management. While there is no formal
weighting of these elements, the Compensation Committee considers each in its analysis.
25
2008 Equity Grants. In June 2008, our Compensation Committee awarded shares of restricted
stock to certain of our employees, including each of our Named Executive Officers, under the 2007
Plan. The forfeiture provisions on the restricted stock awarded to our Named Executive Officers
lapse at a rate of 25% of the total award on each of the first four anniversaries of the grant
date. In determining the quantity of shares to be granted to each Named Executive Officer,
management considered each such officers outstanding equity awards, stock ownership levels, the
strategic value of the officers role to our company and the impact of our 2007 initial public
offering on the value of awards previously made to such officer. Based on those factors,
management made recommendations to the Compensation Committee on the number of shares that it
believed should be award to each such Named Executive Officer. The Compensation Committee approved
the recommendations and believes that these additional grants created equity packages appropriate
for each executive and that each Named Executive Officer is now adequately incentivized to work to
enhance the profitability of our operations.
Future Considerations. Historically, our company has not had a formal policy regarding grants
made under our equity incentive plans. However, during 2009, our Compensation Committee intends to
develop a formal equity policy that will, among other things, govern the timing of grants and the
mix of equity awards granted to executives beginning in 2010 as well as whether the awards will
have a performance vesting element. As a result, the timing and mix of equity instruments granted
by the Compensation Committee in the future will likely change.
Discretionary Bonuses
If and when it considers it appropriate, our Compensation Committee may grant bonuses to our
employees, including our Named Executive Officers. Examples of circumstances in which employees may
be awarded a bonus include situations in which an employee has made significant contributions to a
company initiative or has otherwise performed at a level above what was expected. Unlike awards
under our non-equity incentive compensation plan that named executives are eligible for on an
annual basis, bonuses are not a recurring element of our executive compensation program. No
discretionary bonuses were granted to any of our Named Executive Officers during fiscal year 2008.
Severance and Change of Control Arrangements
Under the terms of their employment agreements, our executive officers are entitled to certain
benefits upon the termination of their employment. Generally, these provisions are intended to
mitigate some of the risk that our executive officers may bear in working for a developing company
like ours, including a change in control. Additionally, the severance provisions are intended to
compensate an executive during the non-compete period (required under the terms of each employment
agreement), which limit the executives ability to work for a similar and/or competing company for
the period subsequent to his termination. The severance benefits offered to an individual executive
were those negotiated at the time the employment agreement was signed with that particular
executive, and therefore, may differ between executives contracts. For additional information of
the terms of each executives severance and change in control benefits, see Executive Compensation
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment-Related Agreements of Named Executive Officers and Executive Compensation
Potential Payments upon a Termination or Change in Control.
Other Benefits
In addition to base salary, annual cash incentives, long-term equity-based incentives and
severance benefits, we provide the following benefits:
|
|
|
401(k) Savings Plan. We have a defined contribution 401(k) plan, which is designed to
assist our employees in providing for their retirement and allow us to remain competitive
in the market place in terms of benefits offered to employees. Each of our executive
officers is entitled to participate in this plan to the same extent that our other
employees are entitled to participate. In 2007, we began matching 25% of employee
contributions up to 6.0% of the employees salary (for a maximum matching contribution of
1.5% of the executives salary by us). Employees are immediately vested in their
contributions while our matching contributions will vest at a rate of 20% per year. |
26
|
|
|
Health and Welfare Benefits. Our executive officers are eligible to participate in
medical, dental, vision, disability and life insurance, and flexible healthcare and
dependent care spending accounts to meet their health and welfare needs under the same
plans and terms as the rest of our employees. These benefits are provided so as to assure
that we are able to maintain a competitive position in terms of attracting and retaining
executive officers and other employees. This program is a fixed component of compensation
and the benefits are provided on a non-discriminatory basis to all of our employees. |
|
|
|
Perquisites and Other Personal Benefits. We believe that the total mix of compensation
and benefits provided to our executive officers is competitive and perquisites should
generally not play a large role in our executive officers total compensation. As a result,
the perquisites and other personal benefits we provide to our executive officers are very
limited in nature. During the first six months of 2008, we provided our President of Global
Services and President of Global Development with car allowances pursuant to the terms of
their previous employment agreements. However, these allowances were eliminated in June
2008 when the executives signed new or amended agreements. Additionally, we provide the
Managing Director of Bank Machine with a car allowance and make contributions into a
personal retirement account, as such benefits were being provided to the executive prior to
our acquisition of Bank Machine and we, therefore, elected to continue to provide him with
such benefits as incentive to remain under our employment. |
Stock Ownership Guidelines
At this time, we do not have any formal stock ownership and retention guidelines but recognize
the importance of retention of shares by executives as opposed to cashing them out routinely at
maturity. The Board and the Compensation Committee feel that retention of equity and attaining a
significant investment position is important for true stockholder linkage. While the current
long-term incentive grants do provide a significant linkage to stockholder value creation, we will
continue to monitor and assess the need associated with instituting more formal guidelines.
Additionally, our Insider Trading Policy prohibits employees subject to that policy from hedging,
buying on margin and engaging in other speculative trading practices.
Stock Option Granting and Exercise Policy and Policy against Backdating
Under the terms of the governing option agreements, the exercise price of each stock option
awarded to employees under our long-term incentive plan is calculated as the average of the high
and the lower sales prices of our stock on the date of grant. We do not backdate options and have
a specific company policy in place along with a notification system administered by our legal
department to be mindful of black-out periods during which the exercise of options or other sales
of stock would be prohibited or would violate insider trading rules.
Board and Compensation Committee meetings are generally scheduled at a year or at least
several months in advance. The meeting dates at which options, restricted stock or any other
rewards are granted are not established in regard to planned releases of earnings or any other
major announcements. Also, despite the recent decline in our stock price, at this time the
Compensation Committee believes it is not appropriate to recommend any repricing or discounting of
options to any of our employees. Furthermore, if in the future the Compensation Committee believes
repricing or discounting of options is appropriate, the Compensation Committee will submit such a
proposal to a vote of our stockholders for approval of any such actions.
27
Tax Deductibility of Compensation
Internal Revenue Code (the Code) Section 162(m) limits the amount of otherwise deductible
compensation to $1,000,000 of the covered compensation paid a Named Executive Officer unless the
specifics of the plans impacted have been previously submitted to our stockholders for approval as
performance based compensation. While the Board and the Compensation Committee strive to
preserve the deductibility of all compensation, we have chosen to retain the flexibility of some
discretion in the long-term awards to the executives. We will continue to assess the implications
of these rules and the trend towards performance-based awards as part of the total reward strategy.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the disclosure set forth above under the
heading Compensation Discussion and Analysis with management and, based on the review and
discussions, it has recommended to the Board that the Compensation Discussion and Analysis be
included in this proxy statement and incorporated by reference into Cardtronics, Inc.s Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.
Respectfully submitted by the Compensation Committee of the Board of Cardtronics, Inc.,
Jorge M. Diaz, Chairman
Fred R. Lummis*
Michael A.R. Wilson
|
|
|
* |
|
Effective March 25, 2009, Mr. Lummis is no longer a member of the Compensation Committee of
Cardtronics, Inc. |
EXECUTIVE COMPENSATION
Summary Compensation Table for 2008
The following table summarizes, for each of the fiscal years in the three-year period ended
December 31, 2008, the compensation paid to or earned by our Named Executive Officers serving as of
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Incentive Plan |
|
|
All Other |
|
|
|
|
Name & Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus |
|
|
Awards (1) |
|
|
Awards (2) |
|
|
Compensation |
|
|
Compensation |
|
|
Total |
|
J. M. Antonini |
|
|
2008 |
|
|
$ |
397,470 |
|
|
$ |
|
|
|
$ |
135,246 |
|
|
$ |
|
|
|
$ |
136,771 |
|
|
$ |
|
|
|
$ |
669,487 |
|
Chief Executive Officer (3) |
|
|
2007 |
|
|
|
364,651 |
|
|
|
30,000 |
|
|
|
11,025 |
|
|
|
|
|
|
|
176,856 |
|
|
|
|
|
|
|
582,532 |
|
|
|
|
2006 |
|
|
|
347,287 |
|
|
|
|
|
|
|
215,894 |
|
|
|
|
|
|
|
223,653 |
|
|
|
|
|
|
|
786,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. C. Brewster |
|
|
2008 |
|
|
$ |
302,500 |
|
|
$ |
|
|
|
$ |
202,869 |
|
|
$ |
134,891 |
|
|
$ |
104,091 |
|
|
$ |
|
|
|
$ |
744,351 |
|
Chief Financial Officer |
|
|
2007 |
|
|
|
275,000 |
|
|
|
30,000 |
|
|
|
|
|
|
|
132,449 |
|
|
|
133,375 |
|
|
|
|
|
|
|
570,824 |
|
|
|
|
2006 |
|
|
|
248,063 |
|
|
|
|
|
|
|
|
|
|
|
103,929 |
|
|
|
209,753 |
|
|
|
|
|
|
|
561,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. H. Clinard |
|
|
2008 |
|
|
$ |
370,800 |
|
|
$ |
|
|
|
$ |
151,025 |
|
|
$ |
89,928 |
|
|
$ |
134,309 |
|
|
$ |
|
(4) |
|
$ |
746,062 |
|
President of Global Services |
|
|
2007 |
|
|
|
243,101 |
|
|
|
20,000 |
|
|
|
|
|
|
|
88,300 |
|
|
|
129,694 |
|
|
|
10,739 |
(4) |
|
|
491,834 |
|
|
|
|
2006 |
|
|
|
231,525 |
|
|
|
|
|
|
|
|
|
|
|
69,286 |
|
|
|
149,102 |
|
|
|
|
(4) |
|
|
458,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Updyke (5) |
|
|
2008 |
|
|
$ |
291,000 |
|
|
$ |
|
|
|
$ |
90,164 |
|
|
$ |
215,482 |
|
|
$ |
100,134 |
|
|
$ |
13,045 |
(6) |
|
$ |
709,825 |
|
President of Global Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Delnevo (7) |
|
|
2008 |
|
|
$ |
344,698 |
|
|
$ |
|
|
|
$ |
198,361 |
|
|
$ |
(47,250 |
) |
|
$ |
|
|
|
$ |
45,386 |
(8) |
|
$ |
541,195 |
|
Managing Director of Bank Machine |
|
|
2007 |
|
|
|
352,410 |
|
|
|
|
|
|
|
|
|
|
|
47,250 |
|
|
|
137,702 |
|
|
|
51,000 |
(8) |
|
|
588,362 |
|
|
|
|
2006 |
|
|
|
264,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,352 |
|
|
|
46,139 |
(8) |
|
|
454,991 |
|
|
|
|
(1) |
|
Amounts presented for 2008 represent the amounts recognized us as compensation
expense under Statement of Financial Accounting Standards No. 123(R), Share-Based Payment,
(SFAS No. 123R) associated with the restricted stock grants made to our Named Executive
Officers during 2008. For purposes of this disclosure, estimates of forfeitures related to
service-based vesting conditions have been omitted. Amounts presented for Mr. Antonini for
the years ended December 31, 2007 and 2006 related to restricted stock granted to Mr. Antonini
in 2003. |
28
|
|
|
(2) |
|
Amounts presented represent the amounts recognized by us as compensation expense
under SFAS No. 123R associated with stock awards granted to Messrs. Antonini, Brewster, and
Clinard in 2006 and Messrs. Updyke and Delnevo in 2007. For purposes of this disclosure,
estimates of forfeitures related to service-based vesting conditions have been omitted. The
negative amount presented in 2008 for Mr. Delnevo represents the reversal of the compensation
expense recognized in 2007 pursuant to SFAS No. 123R, excluding forfeitures, as the stock
options granted in 2007 did not vest as they were subsequently cancelled in 2008.
Assumptions used in the calculation of these amounts are included in Part II, Item 8.
Financial Statements and Supplementary Data, Note 3, Stock-Based Compensation, to our audited
financial statements for the fiscal year ended December 31, 2008, included in our 2008 Form
10-K. |
|
(3) |
|
As previously noted, Mr. Antoninis employment with us and his directorship ended
effective March 17, 2009. |
|
(4) |
|
The amount presented for 2007 is comprised of $9,750 paid to Mr. Clinard related to
the car allowance provided for in his previous employment agreement and $989 of matching
contributions under our 401(k) plan. The new employment agreement signed by Mr. Clinard in
June 2008 eliminated his car allowance. All other compensation amounts paid to Mr. Clinard in
2008 and 2006 totaled less than $10,000 and have, therefore, been omitted as allowed under
Item 402(c)(2)(ix) of Regulation S-K. |
|
(5) |
|
No information is presented for Mr. Updyke for 2007 or 2006, as he did not qualify
as a Named Executive Officer prior to 2008. |
|
(6) |
|
The amount presented is comprised of $9,000 paid to Mr. Updyke related to the car
allowance provided for in his original employment agreement and $4,045 of matching
contributions under our 401(k) plan. The June 2008 amendment to his employment agreement
eliminated his car allowance. |
|
(7) |
|
Amounts presented for Mr. Delnevo, excluding amounts presented in the Stock Awards
and Option Awards columns, were converted from pounds sterling to United States dollars at
$1.85, $2.00, and $1.84, which represent the average exchange rates in effect for the years
ended December 31, 2008, 2007, and 2006, respectively. In prior years, amounts were reported
based on the exchange rates in effect as of the end of the applicable year; however, as a
result of the volatility in the foreign exchange rates during 2008, we determined it was more
appropriate to utilize an average rate for this table and prior year amounts were revised to
reflect the average exchange rate for the applicable year. |
|
(8) |
|
Represents $22,200, $24,000, and $22,080 in 2008, 2007, and 2006, respectively,
related to a £12,000 annual car allowance, and $23,186 (£12,533), $27,000 (£13,500), and
$24,059 (£13,075) of contributions made to a personal retirement account selected by Mr.
Delnevo in 2008, 2007, and 2006, respectively. Both the car allowance and the personal
retirement account contributions are provided for in his employment agreement. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment-Related Agreements of Named Executive Officers
The terms governing each of our executives employment are outlined in individual employment
agreements. Below is a description of the agreements in place with each of our Named Executive
Officers as of December 31, 2008.
Employment Agreements with Jack M. Antonini Chief Executive Officer, J. Chris Brewster
Chief Financial Officer, and Michael H. Clinard President of Global Services. In January 2008,
our previous employment agreements with Messrs. Antonini, Brewster, and Clinard expired and we
subsequently signed new agreements with these executives in June 2008. Under the terms of the new
agreements, Messrs. Antonini, Brewster and Clinard received annual base salaries of $397,470,
$302,500, and $370,800, respectively, in 2008. The annual base salaries are subject to periodic
review by the Board (or a committee thereof) and may be increased at any time. Under the terms of
the agreements, each executive is eligible to receive a performance-based bonus payable on or
before March 15th of each year. The bonus at targeted levels of performance is equal to
50% of the executives base salary, with the annual payout subject to approval by the Board (or a
committee thereof). However, as the ultimate payout of the annual award is determined at the sole
discretion of our Compensation Committee, the actual amount awarded may exceed or fall short of the
targeted level. (For additional information on the terms of our non-equity incentive compensation
plan, see Compensation Discussion and Analysis Annual Non-Equity Incentive Plan Compensation
above.) In addition, each executive is entitled to receive perquisite benefits made available to
other senior officers, sick leave, and four weeks paid vacation time each year. The terms of the
agreements expire in June 2011 and, unless terminated sooner, continue on a year-to-year basis.
In addition to the terms summarized above, the agreements provide for severance compensation
upon termination of the executives employment. If the executives employment terminates due to (1)
medical or mental disability, (2) death, (3) Cause (as defined in the agreements), or (4) the
executive resigns for other than Good Reason (as defined in the agreements), the executive is
entitled to receive payment for all accrued but unpaid base salary, reimbursement of all accrued
but unreimbursed expenses, and benefits to which the executive is entitled. If
the executives employment terminates due to reasons other than those set forth above, the
executive is entitled to any unpaid annual bonus for the calendar year preceding the termination, a
bonus for the calendar year in which the termination occurs (subject to the conditions set forth in
the agreements), and severance in an amount equal to two times the sum of the executives base
salary as of the termination date and the executives Average Annual Bonus amount (as defined in
the agreements). Furthermore, in the event the termination occurs within the one-year period
beginning on the date of a Change in Control (as defined in the agreements), any vested stock
options held by the executive will remain exercisable for five years following the termination
date.
29
Mr. Antoninis employment with us and his directorship ended effective March 17, 2009.
Employment Agreement with Rick Updyke President of Global Development. In July 2007, we
entered into an employment agreement with Rick Updyke. In June 2008, Mr. Updykes July 2007
employment agreement was amended to extend its term to June 2011. Under his employment agreement,
Mr. Updyke received an annual salary in 2008 of $291,000, subject to annual increases as determined
by our Compensation Committee at its sole discretion, with such increases being targeted at 5% of
the previous years base salary. In addition, subject to our achieving certain performance
standards set by our Compensation Committee, Mr. Updyke may be entitled to an annual award under a
non-equity incentive plan, with such award targeted as being 50% of his base salary. However, as
the ultimate payout of the annual award is determined at the sole discretion of our Compensation
Committee, the actual amount awarded may exceed or fall short of the targeted level. (For
additional information on the terms of our non-equity incentive compensation plan, see
Compensation Discussion and Analysis Annual Non-Equity Incentive Plan Compensation above.) In
addition, Mr. Updyke is entitled to receive perquisite benefits made available to other senior
officers, sick leave, and four weeks paid vacation time each year. Under the terms of his previous
employment agreement, Mr. Updyke was also entitled to receive a car allowance and received such an
allowance during the first six months of 2008. However, this allowance was eliminated in June 2008
when his employment agreement was amended.
In addition to the terms summarized above, the agreement provides for severance compensation
upon termination of Mr. Updykes employment. Specifically, if Mr. Updykes employment terminates
due to (1) medical or mental disability, (2) death, (3) Cause (as defined in the agreement), or
(4) he resigns for other than Good Reason (as defined in the agreement), he is entitled to
receive (1) payment for all accrued but unpaid base salary, (2) reimbursement of all accrued but
unreimbursed expenses, (3) benefits to which he is entitled under the terms of any applicable
benefit plan or program, and (4) in the case of termination of employment for any reason other than
Cause, payment of any unpaid bonus for the fiscal year ending prior to the date of such termination
and a pro rata bonus for the fiscal year in which the termination occurred. If Mr. Updykes
employment terminates because of a Without Cause Termination by the company (as defined in the
agreement) or for Good Reason by the employee, in addition to item 1-4 above, he is also entitled
to receive severance equal to his base salary as of the termination date for 12 months.
Employment Agreement with Ronald Delnevo Managing Director of Bank Machine. In May 2005,
we entered into an employment agreement with Ronald Delnevo which runs though May 17, 2009. In June
2008, Mr. Delnevos May 2005 employment agreement was amended to extend his term to June 2011.
Under the employment agreement, Mr. Delnevo received an annual base salary in 2008 of £186,323
($344,698 based on the average exchange rate in effect during fiscal year 2008), subject to
increases as determined by our Compensation Committee in its sole discretion, with such increases
being targeted to be 5% of the previous years base salary. In addition, subject to our achieving
certain performance standards set by our Compensation Committee, Mr. Delnevo may be entitled to an
annual award under a non-equity incentive plan, with such award targeted as being 40% of his base
salary. However, as the ultimate payout of the annual award is determined at the sole discretion of
our Compensation Committee, the actual amount awarded may exceed or fall short of the targeted
level. (For additional information on terms of our bonus plan, see Compensation Discussion and
Analysis Annual Non-Equity Incentive Plan Compensation above.) Further, should we terminate Mr.
Delnevo without cause, or should Mr. Delnevo terminate his employment with us for good reason, as
defined in the employment agreement, then he may receive payment of an amount not to exceed 12
months of his base salary from us.
30
Equity Incentive Plans
As noted above, we have two long-term equity incentive plans the 2007 Plan and the 2001
Plan. Below is a description of each.
2007 Plan. In August 2007, our Board and our stockholders approved our 2007 Plan. The
adoption, approval, and effectiveness of this plan were contingent upon the successful completion
of our initial public offering, which occurred in December 2007. The 2007 Plan provides for the
granting of incentive stock options intended to qualify under Section 422 of the Code, options that
do not constitute incentive stock options, restricted stock awards, performance awards, phantom
stock awards, and bonus stock awards. The number of shares of common stock that may be issued
under the 2007 Plan may not exceed 3,179,393 shares, subject to further adjustment to reflect stock
dividends, stock splits, recapitalizations and similar changes in our capital structure. As of
December 31, 2008, 253,000 options and 1,682,750 shares of restricted stock had been issued under
the 2007 Plan.
2001 Plan. In June 2001, our Board adopted our 2001 Plan. Various plan amendments have been
approved since that time, the most recent being in November 2007. The 2001 Plan allowed for the
issuance of equity-based awards in the form of non-qualified stock options and stock appreciation
rights. However, as a result of the adoption of the 2007 Plan, at the direction of the Board, no
further awards will be granted under our 2001 Stock Incentive Plan. As of December 31, 2008,
options to purchase an aggregate of 6,438,172 shares of common stock (net of options cancelled) had
been granted pursuant to the 2001 Plan, all of which were non-qualified stock options, and options
to purchase 2,342,617 shares of common stock had been exercised.
As previously noted, during 2008, the Compensation Committee awarded shares of restricted
stock to certain of our employees, including each of our Named Executive Officers, under the 2007
Plan. The forfeiture provisions on the restricted stock awards granted to our Named Executive
Officers lapse at the rate of 25% of the total award on each of the first four anniversaries of the
grant date. However, under the terms of the agreements with Messrs. Antonini, Brewster and Clinard,
if a Change in Control (as defined in the agreements) occurs after the date of grant and on or
before the date of the termination of the executives employment, then the Forfeiture
Restrictions (as defined in the agreements) lapse with respect to 50% of the restricted shares
effective as of the date upon which the Change in Control occurs. Further, under the terms of the
agreements with Messrs. Antonini, Brewster, and Clinard, if following a Change of Control the
executive is subsequently terminated and such termination is an Involuntary Termination (as
defined in the agreements) or a Good Reason Termination (as defined in the agreements), all
remaining Forfeiture Restrictions lapse effective as of the date of such termination. Finally, with
regards to the shares granted to Mr. Delnevo, in the event the receipt of the shares or the lapse
of the Forfeiture Restrictions results in compensation income or wages to Mr. Delnevo that are
subject to National Insurance contributions (as further discussed in the agreement), the company
has agreed to pay these obligations, up to a maximum total of 13.8% of such income or wages.
Salary and Annual Non-Equity Incentive Plan Compensation in Proportion to Total Compensation
The following table sets forth the percentage of total compensation that we paid in the form
of base salary, discretionary bonuses, and annual non-equity incentive plan compensation for the
year 2008 to each Named Executive Officer listed in the Summary Compensation Table for 2008:
|
|
|
|
|
|
|
Percentage of |
|
Name |
|
Total Compensation |
|
J. M. Antonini |
|
|
79.8 |
% |
J. C. Brewster |
|
|
54.6 |
% |
M. H. Clinard |
|
|
67.7 |
% |
R. Updyke |
|
|
55.1 |
% |
R. Delnevo |
|
|
63.7 |
% |
31
Grants of Plan-Based Awards for 2008
The following table sets forth certain information with respect to the restricted shares
granted during the year ended December 31, 2008 as well as the details regarding other plan-based
awards granted in 2008 to each of our Named Executive Officers listed in the Summary Compensation
Table for 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards: |
|
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible / Future Payouts Under |
|
|
Number of |
|
|
of Stock and |
|
|
|
|
|
|
|
Approval |
|
|
Non-Equity Incentive Plan Awards(1) |
|
|
Shares of Stocks |
|
|
Option |
|
Name |
|
Grant Date |
|
|
Date(2) |
|
|
Threshold |
|
|
Target |
|
|
Maximum(3) |
|
|
Or Units |
|
|
Awards |
|
|
J. M. Antonini |
|
|
6-20-08 |
|
|
|
6-17-08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
$ |
1,014,000 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
198,735 |
|
|
$ |
397,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. C. Brewster |
|
|
6-20-08 |
|
|
|
6-17-08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000 |
|
|
$ |
1,521,000 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
151,250 |
|
|
$ |
302,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. H. Clinard |
|
|
6-20-08 |
|
|
|
6-17-08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,000 |
|
|
$ |
1,132,300 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
185,400 |
|
|
$ |
370,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Updyke |
|
|
6-20-08 |
|
|
|
6-17-08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000 |
|
|
$ |
676,000 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
145,500 |
|
|
$ |
291,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Delnevo |
|
|
6-20-08 |
|
|
|
6-17-08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
176,000 |
|
|
$ |
1,487,200 |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
137,879 |
(4) |
|
$ |
275,758 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the dollar value of the applicable range (threshold, target and maximum
amounts) of bonuses estimated to be awarded to each named executive officer for 2008. The
actual non-equity incentive plan awards paid to the Named Executive Officers for 2008 are
reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation
Table for 2008. |
|
(2) |
|
Represents the date our Compensation Committee formally approved the restricted
share grants. The approval date differs from the actual grant date, as such grants were
contingent upon the Named Executive Officers executing new or amended employment agreements
with us, which occurred on June 20, 2008. |
|
(3) |
|
Under the 2008 Performance Bonus Plan, the maximum payout amount an executive could
receive in 2008 was equal to 200% of his individual target goal. |
|
(4) |
|
Amount shown for Mr. Delnevo was converted from pounds sterling to United States
dollars at $1.85, which represents the average exchange rate in effect during fiscal year
2008. |
Outstanding Equity Awards at Fiscal 2008 Year-End
The following table sets forth information for each of our Named Executive Officers regarding
the number of shares subject to both exercisable and unexercisable stock options and the number of
shares of restricted stock that have not vested as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Share Awards |
|
|
|
Number |
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Shares or Units |
|
|
of Shares or |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
of Stock That |
|
|
Units of Stock |
|
|
|
Options (#) |
|
|
Options (#) |
|
|
Exercise |
|
|
Expiration |
|
|
Have Not |
|
|
That Have |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
Price |
|
|
Date |
|
|
Vested(1) |
|
|
Not Vested(2) |
|
J. M. Antonini |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
$ |
154,800 |
|
J. C. Brewster |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000 |
|
|
$ |
232,200 |
|
|
|
|
357,682 |
|
|
|
|
|
|
$ |
6.54 |
|
|
|
03-31-2014 |
|
|
|
|
|
|
|
|
|
|
|
|
59,614 |
|
|
|
59,613 |
(3) |
|
$ |
10.55 |
|
|
|
03-05-2016 |
|
|
|
|
|
|
|
|
|
M. H. Clinard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,000 |
|
|
$ |
172,860 |
|
|
|
|
98,696 |
|
|
|
|
|
|
$ |
0.74 |
|
|
|
06-03-2011 |
|
|
|
|
|
|
|
|
|
|
|
|
49,805 |
|
|
|
|
|
|
$ |
1.48 |
|
|
|
03-02-2012 |
|
|
|
|
|
|
|
|
|
|
|
|
39,742 |
|
|
|
39,743 |
(3) |
|
$ |
10.55 |
|
|
|
03-05-2016 |
|
|
|
|
|
|
|
|
|
R. Updyke |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000 |
|
|
$ |
103,200 |
|
|
|
|
69,549 |
|
|
|
208,648 |
(4) |
|
$ |
13.08 |
|
|
|
07-15-2017 |
|
|
|
|
|
|
|
|
|
R. Delnevo |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
176,000 |
|
|
$ |
227,040 |
|
|
|
|
238,455 |
|
|
|
79,484 |
(5) |
|
$ |
10.55 |
|
|
|
05-16-2015 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The forfeiture provisions on these shares lapse at the rate of 25% of the underlying
shares on each of the first four anniversaries of the grant date, the first of which will
occur on June 20, 2009 and the last of which will occur on June 20, 2012. All of Mr.
Antoninis shares were forfeited effective March 17, 2009 as a result of his employment ending
on that date. |
|
(2) |
|
The market value of shares that have not vested is based on the closing price of our
stock as of December 31, 2008 of $1.29 per share. |
|
(3) |
|
These stock options become exercisable as to 25% of the underlying option shares on
each of the first four anniversaries of the grant date. 25% of the underlying option shares
for the stock options granted on March 6, 2006 became exercisable on each of March 6, 2007 and
March 6, 2008. These remaining options will vest in two equal annual installments, the first
of which occurred on March 6, 2009 and the last of which will occur on March 6, 2010. |
|
(4) |
|
These stock options become exercisable as to 25% of the underlying option shares on
each of the first four anniversaries of the employees employment date. 25% of the underlying
option shares for the stock options became exercisable on July 21, 2008. These remaining
options will vest in three equal annual installments, the first of which will occur on July
21, 2009 and the last of which will occur on July 21, 2011. |
|
(5) |
|
These stock options become exercisable as to 25% of the underlying option shares on
each of the first four anniversaries of the grant date. 25% of the underlying option shares
for the stock options granted on May 17, 2005 became exercisable on each of May 17, 2006, May
17, 2007, and May 17, 2008. These remaining options will vest on May 17, 2009. |
32
Option Exercises and Stock Vested during Fiscal Year 2008
During the fiscal year ended December 31, 2008, none of our Named Executive Officers exercised
any stock options or had any restricted shares vest.
Pension Benefits
Currently, we do not offer, and, therefore, none of our Named Executive Officers participate
in or have account balances in qualified or non-qualified defined benefit plans sponsored by us. In
the future, however, the Compensation Committee may elect to adopt qualified or non-qualified
defined benefit plans if it determines that doing so is in our best interests (e.g., in order to
attract and retain employees.)
Nonqualified Deferred Compensation
Currently, we do not offer, and, therefore, none of our Named Executive Officers participate
in or have account balances in non-qualified defined contribution plans or other deferred
compensation plans maintained by us. In the future, however, the Compensation Committee may elect
to provide our officers and other employees with non-qualified defined contribution or deferred
compensation benefits if it determines that doing so is in our companys best interests.
Potential Payments upon a Termination or Change in Control
We have entered into employment agreements with each of our Named Executive Officers which
contain severance and change in control provisions. In January 2008, our previous employment
agreements with Messrs. Antonini, Brewster and Clinard expired and we subsequently signed new
agreements with these Named Executive Officers in June 2008. Our employment agreements with Messrs.
Updyke and Delnevo were entered into in July 2007 and May 2005, respectively, but were each amended
in June 2008 to extend the terms through June 2011.
Jack M. Antonini. Mr. Antoninis employment with us ended effective on March 17, 2009; as a
result, there is no need to estimate the amount of potential termination payments he could receive,
as we have exact payment information relating to his termination of employment. As a result of his
termination, which was deemed to be a without cause termination under the terms of the agreement
that governed his previous employment with us, Mr. Antonini was entitled to severance pay equal to
two times his current base salary plus two times the average amount paid to him in the two
preceding calendar years under our non-equity incentive plan. This equates to $1,108,567, based on
his $397,470 salary as of his termination date and the average of his 2008 and 2007 payout amounts
(shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table
for 2008 above). Such amount is payable in 48 equal consecutive semi-monthly installments on the
15th and the last day of each of the 24 calendar months following the month in which his
termination occurred (March 2009). Additionally, Mr. Antonini has elected to continue benefits
coverage through our group health plan under the Consolidated Omnibus Budget Reconciliation Act of
1986 (COBRA). As a result, we will reimburse him for his COBRA premiums for up to 18 months, which
could equal $12,564 if he elects to continue coverage for the full 18 months allowed under his
employment agreement. Finally, Mr. Antonini may be eligible to receive a pro rata payment under
our non-equity incentive plan for his services in 2009, which would be payable in March 2010 when
and if our bonus pool is funded. However, as the payment of a pro rata bonus for 2009 would be for
actual services rendered, we do not believe such a payment would be considered a termination
payment.
33
Other Named Executive Officers. Generally, the employment agreements in place as of December
31, 2008 contain the following definitions for each of the possible triggering events that could
result in a payment to our other Named Executive Officers:
|
|
|
Messrs. Brewster and Clinard may be terminated for cause if the
executive: (1) engages in gross negligence, gross incompetence or willful
misconduct in the performance of his employment duties; (2) refuses, without proper
legal reason, to perform his employment duties and responsibilities; (3) materially
breaches any material provision of his employment agreement, any written agreement
or a corporate policy or code of conduct established by us; (4) willfully engages
in conduct that is materially injurious to us; (5) discloses without specific
authorization confidential information that is materially injurious to us; (6)
commits an act of theft, fraud, embezzlement, misappropriation or willful breach of
a fiduciary duty to us; (7) is convicted of (or pleads no contest to) a crime
involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar
import in a foreign jurisdiction). |
|
|
|
Mr. Updyke may be terminated for cause if he (1) engages in gross
negligence or willful misconduct when performing his employment duties; (2) is
indicted for a felony; (3) refuses to perform his employment duties; (4) materially
breaches any of our policies or our code of conduct; (5) engages in conduct in
which the executive knows would be materially injurious to us; or (6) materially
breaches, and fails to cure, any provision of his employment agreement. |
|
|
|
Mr. Delnevo may be terminated without payment (without specifically
deeming this for cause) if he: (1) commits an act of serious misconduct; (2)
materially or persistently breaches the terms of his service agreement; (3) has a
bankruptcy order made against him; (4) is charged with or is convicted of any
criminal offence; (5) is disqualified from holding an office position with us or
any other company under the Insolvency Act of 1986; or (6) acts in a way in which
our Board believes will discredit our company. |
|
|
|
Change in Control. Messrs. Brewster and Clinards agreements state that a change in
control may occur upon any of the following events: |
|
|
|
a merger, consolidation, or asset sale where all or substantially all of
our assets are held by a third party if (1) the holders of our equity securities no
longer own equity securities of the resulting entity that are entitled to 60% or more
of the votes eligible to be cast in the election of directors of the resulting
entity, or (2) the members of the Board immediately prior to such transaction no
longer constitute at least a majority of the board of directors of the resulting
entity immediately after such transaction or event; |
|
|
|
our dissolution or liquidation; |
|
|
|
the date any person or entity, including a group as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or
gains ownership or control (including, without limitation, power to vote) of more
than 50% of the combined voting power of the resulting entitys outstanding
securities; or |
|
|
|
as a result of or in connection with a contested election of directors, the
members of the Board immediately before such election cease to constitute a majority
of the Board. |
Messrs. Brewster and Clinard may be subject to a federal excise tax on compensation they
receive in connection with a change in control of our company. The value determined in
accordance with Section 280G of the Internal Revenue Code of payments and benefits provided
that are contingent upon a change in control may be subject to a 20% excise tax to the
extent of the excess of such value over the executives average annual taxable compensation
from our company for the five years preceding the year of the change in control (or such
shorter period as the executive was employed by us) if the total value of such payments and
benefits equals or exceeds an amount equal to three times such average annual taxable
compensation. In accordance with their employment agreements, if such excise tax is
applicable, Messrs. Brewster and Clinard are entitled to receive a gross-up payment from
our company in an amount necessary to place the executive in the same after-tax position had
no portion of such contingent payments been subject to excise tax.
Messrs. Updyke and Delnevos agreements do not contain gross-up payments for additional
taxes imposed pursuant to Section 280G of the Internal Revenue Code or severance provisions
in connection with a change in control; thus, there is no definition for a change in control
within either of their employment agreements.
34
|
|
|
Messrs. Brewster and Clinard have the right to terminate employment upon
the occurrence of any of the following good reason events: (1) a material diminution
in the executives base salary; (2) a material diminution of the executives
authority, duties or responsibilities of his job function; and (3) without the
executives prior consent, a required involuntary relocation of more than 75 miles
from our corporate headquarters in Houston, Texas. |
|
|
|
Mr. Updyke has the right to terminate employment upon the occurrence of any
of the following good reason events: (1) prior to the first anniversary date of
employees employment, the company is sold and as a consequence of such sale Mr.
Updyke is (a) not retained in the same job function; (b) required to relocate to a
location that is greater than 100 miles from Dallas, Texas; or (c) without his prior
consent, the assignment of duties inconsistent with his current role or any
significant reduction or significant change in either position or job function,
except in connection with the termination of employment for cause or in connection
with the termination of employment by reason of him becoming totally disabled
(defined below); or (2) a material breach by us of Article 4 of his employment
agreement (i.e., the article governing the payment of compensation and the provision
of benefits to Mr. Updyke). |
Mr. Delnevos agreement does not contain a good reason concept.
|
|
|
Under Messrs. Brewster and Clinards employment agreements, we have the
right to terminate the executives employment at any time if the employee is unable
to perform his duties or fulfill his obligations by reason of any medically
determinable physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than six months, as
certified by a competent physician (without this specifically being deemed as
totally disabled). |
|
|
|
Under Messrs. Updyke and Delnevos employment agreement, the executives
will be considered totally disabled if, by reason of his illness, incapacity or other
disability, the executive fails to perform his duties or fulfill his obligations
under his employment agreement, as certified by a competent physician, for 180 days
in any 12 month period. Under Mr. Updykes agreement, we have the right to terminate
his employment at any time if he becomes Totally Disabled. |
|
|
|
Without Cause Termination. A termination without cause shall mean a termination of the
executives employment other than for death, voluntary resignation, total disability, or
cause. |
Messrs. Brewster, Clinard, Updyke and Delnevo also received restricted stock grants pursuant
to our 2007 Stock Incentive Plan on June 20, 2008, the award agreements of which contained
provisions permitting accelerated lapsing of forfeiture restrictions upon certain termination and
change in control scenarios. Each of the executives receive partial (25%) accelerated lapsing upon
a termination of employment for death or disability (as well as an involuntary termination for Mr.
Delnevo). Messrs. Brewster and Clinard will also receive partial (50%) accelerated lapsing upon
the occurrence of a change in control; this acceleration will be increased to 100% if a termination
other than for cause or a good reason termination follows such a change in control. The definition
of applicable terms in the restricted stock agreements are substantially similar to the same terms
as described above in the executives employment agreement.
The table below reflects the amount of compensation payable to our Named Executive Officers in
the event of a termination of employment or a change in control of our company on December 31,
2008. For purposes of calculating the potential payments, we have made certain assumptions that we
have determined to be reasonable and relevant to our shareholders. Upon the occurrence of any of
the termination events listed, or in the event of a for-cause termination or a voluntary
termination (neither of which are shown in the above below), the terminated executive would receive
any base salary amount that had been earned but had not been paid at the time of termination. In
the event of a without cause termination, a termination for good reason, or a termination in
connection with a change in control, the executive would also be entitled to receive payment of any
prior year bonus earned under our non-equity incentive plan (if not already paid) and a pro rata
portion of the amount earned under our non-equity incentive plan for the year in which the
termination occurred. However, such amounts would not be considered termination payments but
rather would represent compensation earned by the executive for services rendered, and we,
therefore, have not reflected the amount of earned but unpaid salary and bonuses in the table
below. The executives are also entitled to receive reimbursement payments for reasonable
business expenses, and we have assumed that for purposes of the calculations below, all expense
reimbursements were current as of December 31, 2008.
35
The amount of compensation payable to each Named Executive Officer for each situation is
listed below based on the employment agreements in place for each executive as of December 31,
2008. The amounts shown assume that such termination event was effective as of December 31, 2008
and that the closing price of our common stock on that date was $1.29. The amounts below are our
best estimates as to the amounts that each executive would receive upon that particular termination
event; however, exact amounts that any executive would receive could only be determined upon an
actual termination of employment.
Potential Payments upon a Termination or Change in Control Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination in |
|
|
|
|
|
|
|
|
|
|
|
|
Good Reason |
|
|
|
|
|
|
Connection with |
|
|
|
|
|
|
|
|
Without Cause |
|
|
Termination |
|
|
Change in Control |
|
|
a Change |
|
|
Death or |
|
Executive |
|
Benefits |
|
Termination |
|
|
By Executive |
|
|
(No Termination) |
|
|
in Control |
|
|
Disability |
|
J. C. Brewster |
|
Base salary |
|
$ |
605,000 |
(1) |
|
$ |
605,000 |
(1) |
|
$ |
|
|
|
$ |
605,000 |
(1) |
|
$ |
|
|
|
|
Non-equity incentive
compensation |
|
|
343,128 |
(1) |
|
|
343,128 |
(1) |
|
|
|
|
|
|
343,128 |
(1) |
|
|
|
|
|
|
Post-employment
health care |
|
|
25,024 |
(1) |
|
|
25,024 |
(1) |
|
|
|
|
|
|
25,024 |
(1) |
|
|
|
|
|
|
Restricted shares |
|
|
|
|
|
|
|
|
|
|
116,100 |
(2) |
|
|
232,200 |
(3) |
|
|
58,050 |
(4) |
|
|
Tax gross-up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
973,152 |
|
|
$ |
973,152 |
|
|
$ |
116,100 |
|
|
$ |
1,205,352 |
|
|
$ |
58,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. H. Clinard |
|
Base salary |
|
$ |
741,600 |
(1) |
|
$ |
741,600 |
(1) |
|
$ |
|
|
|
$ |
741,600 |
(1) |
|
$ |
|
|
|
|
Non-equity incentive
compensation |
|
|
278,796 |
(1) |
|
|
278,796 |
(1) |
|
|
|
|
|
|
278,796 |
(1) |
|
|
|
|
|
|
Post-employment
health care |
|
|
25,024 |
(1) |
|
$ |
25,024 |
(1) |
|
|
|
|
|
|
25,024 |
(1) |
|
|
|
|
|
|
Restricted shares |
|
|
|
|
|
|
|
|
|
|
86,430 |
(2) |
|
|
172,860 |
(3) |
|
|
43,215 |
(4) |
|
|
Tax gross-up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348,777 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,045,420 |
|
|
$ |
1,045,420 |
|
|
$ |
86,430 |
|
|
$ |
1,567,057 |
|
|
$ |
43,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Updyke (6) |
|
Base salary |
|
$ |
291,000 |
(7) |
|
|
291,000 |
(7) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
Post-employment
health care |
|
|
7,066 |
(7) |
|
|
7,066 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,800 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
297,066 |
|
|
|
297,066 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
25,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Delnevo (8) |
|
Base salary |
|
$ |
344,698 |
(9) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
106,061 |
(10) |
|
|
Restricted shares |
|
|
56,760 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,760 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
344,698 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
162,821 |
|
|
|
|
(1) |
|
In the event of a without cause termination, a good reason termination by Messrs.
Brewster or Clinard, or a termination in connection with a change in control, the executive
indicated would be entitled to receive severance pay equal to two times his current base
salary plus two times the average amount paid to him in the two preceding calendar years under
our non-equity incentive plan. The average of each executives 2007 and 2006 payout amounts
were used to calculate the values in the table above. Additionally, in the event the
executive elected to continue benefits coverage through our group health plan under COBRA, we
would reimburse the executive for the COBRA premiums for up to 18 months. For each executive,
all amounts would be payable in bi-monthly installments; provided, however, that if the
executive is a specified employee under Section 409A of the Internal Revenue Code at the
time of his termination, the amounts will be delayed for a period of six months to the extent
required to avoid additional federal income taxes for the executive. |
|
(2) |
|
Pursuant to the terms of Messrs. Brewster and Clinards restricted stock agreements,
in the event that a change in control, 50% of all remaining forfeiture restrictions lapse
effective as of the date the change in control occurs. The amounts presented represent the
product of (a) the number of restricted shares that would have vested as of December 31, 2008
upon the change in control (i.e., 50% of the total grant made in 2008 as no restrictions had
been lifted as of December 31, 2008), and (b) $1.29, the closing price of our stock as of
December 31, 2008. |
|
(3) |
|
Pursuant to the terms of Messrs. Brewster and Clinards restricted stock agreements,
in the event the executive is terminated following a change in control, and such termination
is an Involuntary Termination or a Good Reason Termination, all remaining forfeiture
restrictions lapse effective as of the termination date. The amounts presented represent the
product of (a) the number of then unvested restricted shares that each executive held as of
December 31, 2008, and (b) $1.29, the closing price of our stock as of December 31, 2008. |
|
(4) |
|
Pursuant to the terms of Messrs. Brewster, Clinard and Updykes restricted stock
agreements, in the event the executive dies or becomes disabled during the term of his
employment, the percentage of the total number of restricted shares as to which the forfeiture
restrictions shall lapse shall automatically increase by 25% of the shares awarded. The
amounts presented represent the product of (a) the number of restricted shares that would have
vested as of December 31, 2008 upon the aforementioned events (i.e., 25% of the total grant
made in 2008 as no restrictions had been lifted as of December 31, 2008), and (b) $1.29, the
closing price of our stock as of December 31, 2008. |
36
|
|
|
(5) |
|
Federal excise tax gross-up payments were calculated pursuant to Section 280G of the
Code. Only the severance amount payable to Mr. Clinard exceeded his Section 280G safe harbor
amount; therefore, he is the only Named Executive Officer that would have received a gross-up
payment for federal excise taxes in the event his employment was terminated on December 31,
2008 following a change in control of our company. Mr. Clinards potential gross-up payment
was calculated based upon an excise tax rate under Section 4999 of the Internal Revenue Code
of 20%, a 35% federal income tax rate and a 1.45% Medicare tax rate. |
|
(6) |
|
In the event of a termination of employment for any reason other than cause, Mr.
Updyke would be entitled to receive payment of any prior year bonus earned under our
non-equity incentive plan (if not already paid) and a pro rata portion of the amount earned
under our non-equity incentive plan for the year in which the termination occurred. However,
such amounts would not be considered a termination payment but rather would represent
compensation earned by the executive for services rendered, and we, therefore, have not
reflected these amounts in the table. |
|
(7) |
|
In the event of a termination without cause or a good reason termination by the
executive, Mr. Updyke would be entitled to receive severance pay equal to 12 months of his
current base salary. This amount would be payable in bi-monthly installments. However, in
the event he accepts another full-time employment position (defined as 20 hours per week)
within one year after termination, remaining payments to be made by us would be reduced by the
gross amount being earned under his new employment arrangement. Additionally, if Mr. Update
elected to continue benefits coverage through our group health plan under COBRA, we would
partially subsidize Mr. Updykes incremental healthcare premiums. Specifically, we would
reimburse Mr. Updyke on a monthly basis for the difference between the amount he must pay to
continue such coverage and the employee contribution amount that active senior executive
employees would pay for the same or similar coverage under our group health plan. Amounts
shown above represent the difference in Mr. Updykes current insurance premiums and current
COBRA rates for a similar plan. |
|
(8) |
|
Amounts shown for Mr. Delnevo were converted from pounds sterling to U.S. dollars at
$1.85, which represent the average exchange rates in effect for the years ended December 31,
2008. |
|
(9) |
|
In the event of a without cause termination where we do not follow the otherwise
applicable notice of termination provisions within his employment agreement, we will pay Mr.
Delnevo an amount not to exceed 12 months of salary, which for purposes of this table we
assumed that we would pay the full 12 months to him. This amount is to be paid within 14 days
of terminating Mr. Delnevo and is considered to be paid in lieu of providing him with any
required period of notice. |
|
(10) |
|
In the event Mr. Delnevo becomes disabled, Mr. Delnevo would be entitled to receive
payments equal to his base salary for a maximum of 16 weeks (i.e., 80 work days); he is not
entitled to a bonus for the year in which a termination for death or disability occurs. |
|
(11) |
|
Pursuant to the terms of Mr. Delnevos restricted stock agreements, in the event
the executive is terminated for reason of death, disability or involuntary termination prior
to the fourth anniversary of the date of grant, the forfeiture restrictions shall lapse with
respect to an additional 25% of the total number of restricted shares. The amount presented
represents the product of (a) 44,000 restricted shares (i.e., 25% of the total grant made in
2008 as no restrictions had been lifted as of December 31, 2008), and (b) $1.29, the closing
price of our stock as of December 31, 2008. Furthermore, though not reflected in the above
table, to the extent that the lapse of forfeiture restrictions results in compensation income
or wages that are subject to National Insurance contributions under any laws or regulations in
the United Kingdom, then we will pay such obligations up to a maximum of 13.8% of such income
or wages. |
Our employment agreements with Messrs. Brewster and Clinard require the executives to sign a
full release within 50 days of the executives termination of employment waiving all claims against
us, our subsidiaries, and our officers, directors, employees, agents, representatives or
stockholders before receiving any severance benefits due under the employment agreements. Mr.
Updyke is also required to promptly report any subsequent full-time employment during the period in
which he is receiving severance payments, for we are entitled to reduce his severance payments by
the amount of the new salary he is receiving from a third party.
The employment agreements with our executive officers also contain non-competition and
non-solicitation provisions. Our employment agreements with Messrs. Brewster and Clinard have a
12-month non-compete and non-solicitation period, during which the executives may not (1) directly
or indirectly participate in or have significant ownership in a competing company; (2) solicit or
advise any of our employees to leave our employment; or (3) solicit any of our customers either for
his own interest or that of a third party. In addition to these three prohibited items, our
employment agreement with Mr. Updyke, which has a 24-month non-compete and non-solicitation period,
also prohibits the executive from calling upon an acquisition candidate of ours either for his own
interest or that of a third party. In the event that Mr. Updyke is terminated without cause, for a
good reason event or the expiration of the employment agreement term, however, the non-compete
period will end contemporaneously with the termination of Mr. Updykes employment. Mr. Delnevos
non-solicitation provisions prevent him from soliciting either our employees or our customers for a
period of 12 months following termination, while he is subject to a non-compete provisions lasting
8 months following his termination of employment.
37
Additionally, pursuant to the terms of our 2001 and 2007 Stock Incentive Plans (the Plans),
the Compensation Committee, at its sole discretion, may take action related to and/or make changes
to stock options and the related option agreements upon the occurrence of an event that qualifies
as a Corporate Change under the Plans (such definition of which is substantially similar to the
definition of Change in Control in the employment agreements described above). Such actions and/or
changes could include (but are not limited to) (1) acceleration of the vesting of the outstanding,
non-vested options; (2) modifications to the number and price of shares subject to the option
agreements; and/or (3) the requirement for mandatory cash out of the options (i.e., surrender by an
executive of all or some of his outstanding options, whether vested or not, in return for
consideration deemed adequate and
appropriate based on the specific change in control event). The Compensation Committee also
has discretion to make changes to any awards and the related agreements under the 2007 Stock
Incentive Plan in the event of a change in our outstanding common stock by reason of a
recapitalization, a merger, a reorganization or other similar transaction, in order to prevent the
dilution or enlargement of rights under the Plans. Such actions and/or changes, if any, may vary
among plan participants. As a result of their discretionary nature, these potential changes have
not been estimated and are not reflected in the above table.
DIRECTOR COMPENSATION
The following table provides compensation information for each individual who served as a
member of our Board during the year ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
|
|
Name |
|
Paid in Cash |
|
|
Stock Awards (1) |
|
|
Total |
|
Fred R. Lummis |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Tim Arnoult |
|
|
50,000 |
|
|
|
39,579 |
|
|
|
89,579 |
|
Robert P. Barone |
|
|
45,000 |
|
|
|
44,590 |
|
|
|
89,590 |
|
Jorge M. Diaz |
|
|
45,000 |
|
|
|
44,590 |
|
|
|
89,590 |
|
Dennis Lynch |
|
|
50,000 |
|
|
|
39,579 |
|
|
|
89,579 |
|
Michael A.R. Wilson |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Messrs. Arnoult, Barone, Diaz and Lynch were each granted 5,000 shares of restricted
stock in June 2008. The grant date fair value of each grant, as computed in accordance with
SFAS No. 123R, was $44,800. The amount presented for each director represents the compensation
expense recognized under SFAS No. 123R for the restricted stock grants during 2008. Although
each director received the same number of shares, the difference in the expense amounts is
attributable to the timing of when the forfeiture restrictions lapsed, as the restrictions on
the shares granted to Messrs. Barone and Diaz lapsed in early January 2009 while the
restrictions on the shares granted to Messrs. Arnoult and Lynch lapsed in late January 2009.
Other than the 5,000 shares of restricted stock each, Messrs. Arnoult, Barone, Diaz and Lynch
had no other unvested stock awards outstanding as of December 31, 2008. |
In 2008, each of our non-employee directors, with the exception of Messrs. Lummis and Wilson,
earned a $30,000 annual retainer for their services. Additionally, each non-employee director
received an additional $10,000 annual retainer for each committee on which he serves during the
year and $5,000 for chairing a committee, up to a maximum of $50,000 for the year. These amounts
are paid on a monthly basis in the form of cash. Additionally, during 2008, Messrs. Arnoult,
Barone, Diaz and Lynch were each granted 5,000 shares of restricted stock, the forfeiture
restrictions on which lapsed in January 2009. Messrs. Lummis and Wilson have waived their rights
to receive payment for services rendered as members of our Board as each of these directors are
affiliated with and/or employed by companies that have a significant ownership interest in us. All
of our directors are reimbursed for their reasonable expenses in attending Board and committee
meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Fred R. Lummis, Jorge M. Diaz and Michael A.R. Wilson served on the Compensation Committee
during the fiscal year ended December 31, 2008. During 2008, none of our executive officers or
employees (current or former) served as a member of the Compensation Committee. Additionally, none
of our executive officers has served as a director or member of the Compensation Committee of any
other entity whose executive officers served as a director or member of our Compensation Committee.
38
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Investors Agreement
In February 2005, we issued 894,568 shares of our Series B redeemable convertible preferred
stock (the Series B Stock) to the TA Funds for a per share price of $83.8394 resulting in
aggregate gross proceeds of $75.0 million. In connection with our issuance of this Series B Stock,
all our existing stockholders entered into an
investors agreement relating to several matters. However, upon the completion of our initial
public offering in December 2007, only the registration rights provision of the investors
agreement continue to be in force. The material terms of that agreement are set forth below.
Registration Rights. The investors agreement grants CapStreet II, L.P. (on behalf of itself,
CapStreet Parallel II, L.P., and permitted transferees thereof) and TA Associates the right to
demand that we file a registration statement with the SEC to register the sale of all or part of
the shares of common stock beneficially owned by them. Subject to certain limitations, we will be
obligated to register these shares upon CapStreet II, L.P.s or TA Associates demand, for which we
will be required to pay the registration expenses. In connection with any such demand registration,
the stockholders who are parties to the investors agreement may be entitled to include their shares
in that registration. In addition, if we propose to register securities for our own account, the
stockholders who are parties to the investors agreement may be entitled to include their shares in
that registration.
All of these registration rights are subject to conditions and limitations, which include
certain rights to limit the number of shares included in a registration under some circumstances.
Transactions with our Directors and Officers
General. During 2008, each of our non-employee directors, with the exception of Messrs.
Lummis and Wilson, were compensated for their services on our Board. See Director Compensation
above for details on the amounts paid and restricted shares granted to these directors. Other
directors were not compensated during 2008 for Board services due to their employment and/or
stockholder relationships with us. Additionally, all of our directors are reimbursed for their
reasonable expenses in attending Board and committee meetings.
The CapStreet Group. Fred R. Lummis, the Chairman of our Board of Directors and Interim Chief
Executive Officer, is a senior advisor to The CapStreet Group, LLC, the ultimate general partner of
CapStreet II and CapStreet Parallel II, which collectively own 20.6% of our outstanding common
stock as of March 31, 2009.
TA Associates. Michael Wilson, a member of our Board of Directors, is a managing director of
TA Associates, Inc., affiliates of which are Cardtronics stockholders that own 27.9% of our
outstanding common stock as of March 31, 2009.
Jorge M. Diaz, a member of our Board of Directors, is the Division President and Chief
Executive Officer of Fiserv Output Solutions, a division of Fiserv, Inc. In 2008, Fiserv provided
us with third-party services during the normal course of business, including transaction
processing, network hosting, network sponsorship, maintenance, cash management, and cash
replenishment. The amount paid to Fiserv represented approximately 4.5% of our total cost of
revenues and selling, general, and administrative expenses for the year.
Subscriptions Receivable. Historically, we made loans to certain employees related to past
exercises of employee stock options and purchases of our common stock, as applicable. These loans,
which were initiated in 2003, are reflected as subscriptions receivable in our consolidated balance
sheets contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. The
notes were due in December 2008, but a single note remained unpaid as of year-end and was extended
for six additional months. The rate of interest on the note remained at 5.0% per annum. The total
amount outstanding under the remaining loan, including accrued interest, was $35,000 as of December
31, 2008. This loan was subsequently repaid in March 2009.
39
Approval of Related Person Transactions
In the ordinary course of business, we may enter into a related person transaction (as such
term is defined by the SEC). The policies and procedures relating to the approval of related person
transactions are set forth in our Related Persons Transactions Policy adopted on February 19, 2009.
The Audit Committee is charged with the responsibility of reviewing all the material facts related
to any such proposed transaction and either to approve or disapprove of the entry into such
transaction. Our Related Persons Transaction Policy is available on our website at
http://ir.cardtronics.com/. In 2008, we did not enter into any related person transactions.
Additionally, any material agreement related to our Mexico operations is reviewed and approved by
the board of directors of our Mexico subsidiary.
RATIFICATION OF THE SELECTION OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL NO. 2)
The Audit Committee has selected KPMG LLP as our independent registered public accounting firm
to conduct our audit for the fiscal year ending December 31, 2009.
We engaged KPMG LLP to serve as our independent registered public accounting firm and to audit
our consolidated financial statements beginning with the fiscal year ended December 31, 2001. The
engagement of KPMG LLP has been recommended by the Audit Committee and approved by our Board
annually. The Audit Committee has reviewed and discussed the audited consolidated financial
statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008,
and has recommended, and our Board has approved their inclusion therein. See Audit
MattersReport of the Audit Committee included elsewhere in this proxy statement.
Although stockholder ratification of the selection of KPMG LLP is not required, the Audit
Committee and our Board consider it desirable for our stockholders to vote upon this selection.
The affirmative vote of the holders of a majority of the shares entitled to vote at the Annual
Meeting is required to approve and ratify the selection of KPMG LLP. Even if the selection is
ratified, the Audit Committee may, in its discretion, direct the appointment of a different
independent registered public accounting firm at any time during the year if it believes that such
a change would be in the best interests of us and our stockholders.
A representative of KPMG LLP is expected to be present at the Annual Meeting and will have an
opportunity to make a statement if the representative desires to do so and will be available to
respond to appropriate questions from stockholders at the Annual Meeting.
OUR BOARD RECOMMENDS VOTING FOR THE RATIFICATION
OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
AUDIT MATTERS
Report of the Audit Committee
Each member of the Audit Committee is an independent director as such term is defined under
the current listing requirements. The Audit Committee is governed by an Audit Committee Charter,
which complies with the requirements of the Sarbanes-Oxley Act of 2002 and corporate governance
rules of NASDAQ. The Audit Committee Charter may be further amended to comply with the rules and
regulations of the SEC and NASDAQ listing standards as they continue to evolve. A copy of the
Audit Committee Charter is available on our website at www.cardtronics.com.
40
In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited
consolidated financial statements contained in Cardtronics, Inc.s Annual Report on Form 10-K for
the fiscal year ended December 31, 2008 with Cardtronics, Inc.s management and independent
registered public accounting firm. Management is responsible for the financial statements and the
reporting process, including the system of internal controls. The independent registered public
accounting firm is responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United States.
The Audit Committee discussed with the independent registered public accounting firm their
independence from Cardtronics, Inc. and its management including the matters in the written
disclosures required by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, and considered the compatibility of non-audit services with the registered
public accounting firms independence. In addition, the
Audit Committee discussed the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as amended.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the Board, and the Board approved, the inclusion of the audited consolidated financial
statements in Cardtronics, Inc.s Annual Report on Form 10-K for the fiscal year ended December 31,
2008 for filing with the SEC.
Respectfully submitted by the Audit Committee of the Board of Directors of Cardtronics, Inc.,
Robert P. Barone (Chairman)
Tim Arnoult
Dennis F. Lynch
Independent Registered Public Accounting Firm Fee Information
Fees for professional services provided by our independent registered public accounting firm,
KPMG LLP, in each of the last two fiscal years in each of the following categories were:
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2008 |
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2007 |
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Audit Fees |
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1,288 |
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$ |
1,412 |
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Audit-Related Fees |
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Tax Fees |
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All Other Fees |
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Total |
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$ |
1,288 |
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$ |
1,412 |
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Audit fees include fees associated with the annual audit and quarterly review of our financial
statements and the separate statutory audit of Bank Machine Ltd. in the United Kingdom. The 2007
amount includes $562,000 in fees for professional services rendered in connection with our debt and
equity offerings, including procedures performed with respect to our registration statements filed
with the SEC and other related services. The Audit Committee considers whether the provision of
these services is compatible with maintaining the registered public accounting firms independence,
and has determined such services for fiscal year 2008 were compatible.
No other services were provided by KPMG LLP during the years ended December 31, 2008 or 2007.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered
Public Accounting Firm
Among its other duties, the Audit Committee is responsible for appointing, setting
compensation, and overseeing the work of the independent registered public accounting firm. The
Audit Committee has established a policy regarding pre-approval of all audit and non-audit services
provided by the independent registered public accounting firm. On an as-needed basis, management
will communicate specific projects and categories of service for which the advance approval of the
Audit Committee is requested. The Audit Committee reviews these requests and advises management if
the committee approves the engagement of the independent registered public accounting firm. On a
periodic basis, management reports to the Audit Committee regarding the actual spending for such
projects and services compared to the approved amounts. The Audit Committee approved 100% of the
services provided by KPMG LLP in 2008 and 2007.
41
PROPOSALS FOR THE 2010 ANNUAL MEETING OF STOCKHOLDERS
Pursuant to the various rules promulgated by the SEC, stockholders interested in submitting a
proposal for inclusion in our proxy materials and for presentation at the 2010 Annual Meeting of
Stockholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act.
To be eligible for inclusion in such proxy materials, stockholder proposals must be received by our
Corporate Secretary no later than December 31, 2009. No stockholder proposal was received for
inclusion in this proxy statement.
In addition to the requirements of the SEC described in the preceding paragraph, and as more
specifically provided for in our Bylaws, in order for a nomination of persons for election to our
Board or a proposal of business to be properly brought before our annual meeting of stockholders,
it must be either specified in the notice of the meeting given by our Secretary or otherwise
brought before the meeting by or at the direction of our Board or by a stockholder entitled to vote
and who complies with the following notice procedures. A stockholder making a nomination for
election to our Board or a proposal of business must deliver proper notice to our Corporate
Secretary at least 120 days prior to the anniversary date of the 2009 Annual Meeting of
Stockholders.
If a stockholder provides notice for a proposal of business to be considered at the annual
meeting, the notice must include the following information:
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a brief description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; |
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the stockholders name and address as they appear on the Corporations books; |
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the number and class of all shares of each class of stock of the Corporation owned of
record and beneficially by the stockholder; |
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any material interest of the stockholder in the matter proposed (other than as a
stockholder), if applicable; |
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in the case of a Nominee Holder, evidence establishing the Nominee Holders indirect
ownership of stock and entitlement to vote the stock on the matter proposed at the meeting;
and |
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any other information that is required to be provided by stockholder pursuant to
Regulation 14A under the Exchange Act in his capacity as a proponent to a stockholder
proposal. |
Please see Corporate Governance Director Selection and Nomination Process for additional
information concerning the notice requirements for director nominations by stockholders.
42
OTHER MATTERS
Management does not intend to bring before the Annual Meeting any matters other than those set
forth herein and has no present knowledge that any other matters will or may be brought before the
Annual Meeting by others. However, if any other matters properly come before the Annual Meeting,
then the Proxy Holders will vote the proxies as recommended by our Board or, if no recommendation
is given, in their own discretion.
ANNUAL REPORT TO STOCKHOLDERS
Our Annual Report on Form 10-K, which includes our consolidated financial statements for the
fiscal year ended December 31, 2008, accompanies the proxy material being mailed to all of our
stockholders. The Annual Report is not part of the proxy solicitation material.
We will provide you, without charge upon your request, additional copies of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2008. We will furnish a copy of any exhibit to
our Annual Report on Form 10-K upon payment of a reasonable fee, which shall be limited to our
reasonable expenses in furnishing the exhibit. You may request such copies by contacting our
Secretary, Michael E. Keller, by mail to Cardtronics, Inc., 3250 Briarpark Drive, Suite 400,
Houston, Texas 77042 or by facsimile at (832) 308-4761.
DIRECTIONS TO 2009 ANNUAL MEETING OF STOCKHOLDERS
Directions to Cardtronics Offices:
From George Bush Intercontinental Airport: Take Beltway 8 West. Exit and turn left onto
Westheimer Road. Turn right (South) onto Briarpark Drive. Our offices are located on the west
side of Briarpark Drive approximately 4/10 of a mile from the Westheimer-Briarpark Drive
intersection. Free parking is available in the parking garage located to the left rear of the
building. Please park on the roof of the parking garage.
From Hobby Airport: Turn left onto Airport Blvd. Turn left onto Telephone Road. Take
Beltway 8 West. Exit and turn right onto Westheimer Road. Turn right (South) onto Briarpark
Drive. Our offices are located on the west side of Briarpark Drive approximately 4/10 of a mile
from the Westheimer-Briarpark Drive intersection. Free parking is available in the parking garage
located to the left rear of the building. Please park on the roof of the parking garage.
43
CARDTRONICS, INC.
ANNUAL MEETING OF STOCKHOLDERS
June 18, 2009
4:00 p.m.
Cardtronics Corporate Offices
3250 Briarpark Drive, Suite 400
Houston, Texas 77042
This proxy is solicited on behalf of the board of directors. The undersigned hereby appoints J.
Chris Brewster and Michael E. Keller as proxyholders with full power of substitution, to represent,
vote and act with respect to all shares of common stock of Cardtronics, Inc., which the undersigned
would be entitled to vote at the meeting of stockholders to be held on Thursday, June 18, 2009 at
4:00 p.m., at the corporate offices of Cardtronics, Inc., located at 3250 Briarpark Drive, Suite
400, Houston, Texas 77042 or any postponements or adjournments thereof, with all the powers the
undersigned would possess if personally present.
This proxy is solicited on behalf of the board of directors and may be revoked prior to its
exercise by filing with the secretary of Cardtronics, Inc. a duly executed proxy bearing a later
date or an instrument revoking this proxy or by attending the meeting and voting in person.
See reverse for voting instructions.
To vote your Proxy
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Cardtronics, Inc.,
c/o Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873.
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
The Board of Directors Recommends a Vote FOR Items 1 and 2.
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1. Election of Class II directors:
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01 J. Tim Arnoult
02 Dennis Lynch
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Vote FOR all nominees
(except as marked)
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Vote WITHHELD
from all nominees |
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(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.) |
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2. Ratification of the Audit Committees selection of KPMG LLP as Cardtronics
Inc.s independent registered public accounting firm to conduct the Companys
audit for the fiscal year ending December 31, 2009.
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o For
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o Against
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o Abstain |
3. Transaction of such other business as may properly come before the meeting
and any adjournments or postponements thereof. |
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The proxy confers authority to vote and shall be voted in accordance with such recommendation
unless a contrary instruction is indicated, in which case, the shares represented by the proxy will
be voted in accordance with such instruction. If no instruction is specified with respect to the
matter to be acted upon, the shares represented by the proxy will be voted in accordance with the
recommendations of management. If any other business is presented at the meeting, this proxy
confers authority to and shall be voted in accordance with the recommendations of management.
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Address Change? Mark Box o Indicate changes below:
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Date |
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Signature(s) in Box |
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(Please date this proxy and sign your
name exactly as it appears on your
stock certificate. Executors,
administrators, trustees, etc., should
give their full title. If a
corporation, please sign in full
corporate name by the president or
other authorized officer. If a
partnership, please sign in partnership
name by an authorized person. All joint
owners should sign.) |