def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.
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Soliciting Material Pursuant to §240.14a-12 |
RigNet, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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RIGNET, INC
1880 Dairy Ashford
Suite 300
Houston, Texas 77077
(281) 674-0100
March 31, 2011
Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders of RigNet, Inc. (the Company or
RigNet), which will be held at 10:00 a.m.,
C.S.T., on Wednesday, May 11, 2011, at the Holiday Inn at
1112 Eldridge Parkway, Houston, Texas 77077.
Whether or not you plan to attend the annual meeting, it is
important that your shares be represented and voted at the
meeting. We encourage you to vote your shares according to the
instructions on the enclosed proxy card. If you decide to attend
the meeting and vote in person, you may withdraw your proxy at
that time.
This year you will be asked to vote in favor of the election of
nine directors; in favor of ratifying the appointment of
Deloitte & Touche LLP as the Companys external
auditors; in favor of the 2010 Omnibus Incentive Plan; in favor,
as an advisory vote, of the compensation of named executive
officers; and to vote, as an advisory vote, on the frequency of
the advisory vote on executive compensation.
To assist you in voting your shares, you will find enclosed the
Notice of Annual Meeting, the 2011 Proxy Statement and our 2010
Annual Report to Stockholders, which includes the Companys
audited financial statements.
On behalf of the Board of Directors and employees of RigNet, we
thank you for your continued interest in and support of the
Company.
Sincerely,
Thomas M. Matthews
Chairman of the Board
Mark B. Slaughter
Chief Executive Officer and President
Your vote is important. Please vote promptly.
NOTICE OF 2011 ANNUAL MEETING
OF STOCKHOLDERS
To Be Held on May 11,
2011
Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders (the Annual Meeting) of RigNet, Inc., a
Delaware corporation (RigNet), which will be held on
Wednesday, May 11, 2011, at 10:00 a.m., C.S.T. or
local time, at the Holiday Inn, 1112 Eldridge Parkway, Houston,
Texas 77077. The Annual Meeting will be held for the following
purposes:
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1.
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Elect nine directors to RigNets Board of Directors to
serve until the 2012 Annual Meeting of Stockholders or until
their respective successors have been elected;
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2.
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Ratify the selection of Deloitte & Touche LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2011;
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3.
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Approve our 2010 Omnibus Incentive Plan;
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4.
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Approve, as an advisory vote, the compensation of named
executive officers;
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5.
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Vote, as an advisory vote, on the frequency of the advisory vote
on executive compensation; and
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6. Consider any other business as may properly come before
the meeting.
Additional information regarding the Annual Meeting is set forth
in the attached proxy statement.
Only stockholders of record at the close of business on
March 24, 2011 are entitled to receive notice of and to
vote at the Annual Meeting or any adjournments or postponement
thereof. A list of our stockholders will be available for
examination at the Annual Meeting and at RigNets Houston
office at least ten days prior to the Annual Meeting.
Your vote is important. Whether or not you plan to attend the
meeting, please cast your vote, as instructed in the Proxy
Materials and /or the Proxy Card sent to you, as promptly as
possible.
By Order of the Board of Directors,
William D. Sutton
Vice President, General Counsel and Corporate
Secretary
Houston, Texas
March 31, 2011
Important Notice Regarding Availability of Proxy Materials
for RigNet Inc.s
Stockholder Meeting to be Held on May 11, 2011:
our Proxy Statement and Annual Report to Stockholders are
available on our website at www.rig.net.
Your vote is important. Please vote promptly.
You may
vote according to the instructions on the enclosed Proxy
Card.
RIGNET,
INC.
PROXY
STATEMENT FOR 2011 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF
CONTENTS
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A-i
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1880 S. Dairy
Ashford, Suite 300
Houston, Texas
77077-4760
PROXY
STATEMENT
2011 Annual Meeting of Stockholders
INFORMATION
ABOUT THE MEETING, VOTING AND PROXIES
Date,
Time and Place of Meeting
Our Board of Directors is asking for your proxy for use at the
RigNet, Inc. 2011 Annual Meeting of Stockholders (the
Annual Meeting) or at any adjournments or
postponements thereof. The Annual Meeting will be held on
Wednesday, May 11, 2011, at 10:00 am., C.S.T. or local
time, at the Holiday Inn, 1112 Eldridge Parkway, Houston, Texas
77077. We have first released this proxy statement to our
stockholders beginning on or about March 31, 2011.
Proposals
At our 2011 Annual Meeting of Stockholders, we are asking our
stockholders to consider and act upon proposals to:
(1) elect nine directors to serve until our 2012 Annual
Meeting; (2) ratify the appointment of Deloitte &
Touche LLP as our independent auditor for the fiscal year ending
December 31, 2011; (3) approve the 2010 Omnibus
Incentive Plan; (4) approve, as an advisory vote, the
compensation of named executive officers; and (5) vote, as
an advisory vote, on the frequency of future advisory votes on
executive compensation.
Record
Date, Outstanding Shares and Quorum
Only stockholders of record at the close of business on
March 24, 2011 (the Record Date) are entitled
to notice of, and to vote at the meeting. As of the Record Date,
there were 15,396,034 outstanding shares entitled to vote at the
Annual Meeting. The presence, in person or by proxy, of the
holders as of the Record Date of a majority of our outstanding
shares is necessary to constitute a quorum for purposes of
voting on the proposals at the Annual Meeting. Withheld votes
will count as present for purposes of establishing a quorum on
the proposals.
If by the date of the Meeting we do not receive sufficient
shares to constitute a quorum or approve one or more of the
proposals, the Chair of the Meeting, or the persons named as
proxies, may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. The persons named as
proxies would typically exercise their authority to vote in
favor of adjournment.
Voting
If you are a holder of our common stock, you are entitled to one
vote at the meeting for each share that you held as of the
Record Date. Cumulative voting for directors is not permitted.
The Inspector of Elections appointed for the Meeting will
tabulate all votes.
You may vote in person at the Annual Meeting or by proxy. Even
if you plan to attend the Annual Meeting, we encourage you to
vote your proxy card in advance of the Annual Meeting. If you
plan to attend the Annual Meeting and wish to vote in person, we
will give you a ballot at the meeting. However, please note that
if your shares are held in street name (in the name
of a broker or by a bank or other nominee),
you are considered the beneficial owner of these shares and
proxy materials are being forwarded to you by your broker or
nominee, which is considered, with respect to these shares, the
stockholder of record. As the beneficial owner, you have the
right to direct your broker how to vote; however, since you are
not the stockholder of record, you may not vote these shares in
person at the Annual Meeting unless you obtain from your
brokerage firm an account statement, letter or other evidence
satisfactory to us of your beneficial ownership of the shares.
Please vote your proxy by mail as soon as possible so that your
shares may be represented at the Annual Meeting.
Revoking
Your Proxy
If you submit your proxy by mail, you may still revoke it at any
time before voting takes place at the Meeting. If you are the
record holder of your shares and wish to revoke your proxy, you
may revoke it as follows: (i) by delivering, before or at
the Annual Meeting, a new proxy with a later date; (ii) by
delivering, on or before the business day prior to the Annual
Meeting, a notice of revocation to our Secretary at the address
set forth in the notice of the Annual Meeting; (iii) by
attending the Annual Meeting in person and voting, although your
attendance at the Annual Meeting, without actually voting, will
not by itself revoke a previously granted proxy; or (iv) if
you have instructed a broker to vote your shares, you must
follow the directions received from your broker to change those
instructions.
If you sign and return your proxy card but do not give any
voting instructions, your shares will be voted in favor of the
election of each of the director nominees listed in
Proposal 1, in favor of Proposals 2, 3 and 4 and in
favor of an annual advisory vote on executive compensation. As
far as we know, no other matters will be presented at the
Meeting. However, if any other matters of business are properly
presented, the proxy holders named on the proxy card are
authorized to vote the shares represented by proxies according
to their judgment.
Soliciting
Proxies
RigNet will pay all expenses of soliciting proxies to be voted
at the Meeting. After the proxies are initially distributed,
RigNet
and/or its
agents may also solicit proxies by mail, electronic mail,
telephone or in person. We will ask brokers, custodians,
nominees and other record holders to forward copies of the proxy
materials to beneficial owners for whom they hold shares.
Annual
Report on
Form 10-K
and Additional Materials
The Notice of Annual Meeting, this Proxy Statement and our
Annual Report for the year ended December 31, 2010 have
been made available to all stockholders entitled to vote at the
Meeting. These materials may also be viewed at
www.rig.net.
Unless the context requires otherwise, the terms
our, we, us and similar
terms refer to RigNet, Inc., together with its consolidated
subsidiaries.
OUR BOARD
OF DIRECTORS AND NOMINEES
Our Board of Directors currently consists of eight directors who
serve terms until the next Annual Meeting of Stockholders. Each
director elected to our Board of Directors will serve in such
capacity until his or her term expires or his successor has been
duly elected and qualified, subject to their earlier death,
resignation or removal. All directors, other than our Chief
Executive Officer (CEO), Mark Slaughter, were
independent directors and met the independence
requirements under the listing standards of the NASDAQ. There
are no family relationships among any of our directors or
executive officers.
At the Annual Meeting, our stockholders will consider and act
upon a proposal to elect nine directors to our Board of
Directors to serve until the 2012 Annual Meeting of
Stockholders. Each of the nominees has consented to serve as a
director if so elected. The persons named as proxies in the
accompanying proxy card, who have been designated by our Board
of Directors, intend to vote FOR the election of the
director nominees unless otherwise instructed by a stockholder
in a proxy card. If these nominees become unable for any reason
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to stand for election as a director, the persons named as
proxies in the accompanying proxy card will vote for the
election of such other person or persons as our Board of
Directors may recommend and propose to replace such nominee or
nominees.
Director
Nominees
Information concerning the nine director nominees is set forth
below.
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Director
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Name
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Age
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Position with Our Company
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Since
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Thomas M. Matthews
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Chairman, Independent Director
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2008
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Mark B. Slaughter
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Chief Executive Officer, President and Director
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2010
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James H. Browning
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Independent Director
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2010
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Charles L. Davis
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Independent Director
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2005
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Kevin Neveu
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50
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Independent Director
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2004
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Kevin J. OHara
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49
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Independent Director
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2010
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Keith Olsen
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Independent Director
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2010
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Brent K. Whittington
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Independent Director
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2010
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Ditlef de Vibe
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Independent Director
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New
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Thomas M. Matthews has served as Chairman of our Board of
Directors since May 2008. Mr. Matthews served as Chairman
and Chief Executive Officer of Avista Corporation from July 1998
to December 2001, Chairman of Link Energy and its predecessor
EOTT Energy from April 2002 to February 2003 and as Chief
Executive Officer of Link Energy from March 2003 to January 2005
and has served as Managing Trustee to Link Trust since January
2005. Mr. Matthews received a BSCE from Texas A&M
University and attended advanced management programs in
International Business at Columbia University and in Finance at
Stanford University. Mr. Matthews brings a wealth of public
company board experience and knowledge of the energy industry to
our board.
Mark B. Slaughter has served as the CEO and President
since August 2007 and a Director since the completion of our
initial public offering (IPO) in December 2010.
Prior to that, Mr. Slaughter served as our President and
Chief Operating Officer from January 2007 to July 2007. Prior to
joining us, Mr. Slaughter served as Vice President and
General Manager for Security Services Americas, a division of
United Technologies Corporation from July 2005 to December 2006
and as President, Broadband Division for Stratos Global
Corporation from January 2003 to December 2004.
Mr. Slaughter is a graduate of United Technologies
Executive Program at the University of Virginias Darden
Graduate School of Business. He received an A.B. in General
Studies, C.L.G.S., concentration in Economics, from Harvard
College and an MBA from Stanfords Graduate School of
Business. Mr. Slaughter brings an intimate knowledge of our
business and our industry to our board.
James H. Browning has served as a Director and Chairman
of our Audit Committee since December 2010 when we completed our
IPO. Mr. Browning served as a partner at KPMG LLP, an
international accounting firm, from July 1980 until his
retirement in September 2009. Mr. Browning began his career
at KPMG LLP in 1971, becoming a partner in 1980.
Mr. Browning most recently served as KPMGs Southwest
Area Professional Practice Partner in Houston. Mr. Browning
has also served as an SEC Reviewing Partner and as Partner in
Charge of KPMG LLPs New Orleans audit practice.
Mr. Browning received a B.S. degree in Business
Administration from Louisiana State University and is a
Certified Public Accountant. He currently serves on the Board
and Audit Committee of Texas Capital Bancshares, Inc., a
publicly traded financial holding company. Mr. Browning
brings a wealth of knowledge dealing with financial and
accounting matters to our board as well as extensive knowledge
of the role of public company boards of directors.
Charles L. Davis has served as a member of our Board of
Directors since June 2005. Mr. Davis has been a partner in
SMH Private Equity Group, a United States based investment firm
that funds companies that apply technology solutions in the
energy sector, since December 2004. Mr. Davis received a
Bachelors degree in
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Business from Washington and Lee University and is a Certified
Public Accountant in the Commonwealth of Virginia.
Mr. Davis brings experience in finance, accounting and
investment banking to our board as well as a wealth of
experience in the energy industry.
Kevin Neveu has served as a member of our Board of
Directors since September 2004. Mr. Neveu has served as the
Chief Executive Officer of Precision Drilling Corporation since
August 2007 adding the title of President in January 2009. Prior
to that, Mr. Neveu was with National Oilwell Varco, serving
as President of its Rig Solutions Group from May 2002 to August
2007 and president of its Downhole Tools Business from January
1999 to May 2002. Mr. Neveu has served as a director of
Precision Drilling Corporation since August 2007, as a director
of Heart and Stroke Foundation of Alberta since December 2009
and was appointed a Member of the Board of Directors and a
Member of the Executive Committee of the International
Association of Drilling Contractors, Houston, Texas in January
2010. Mr. Neveu received a Bachelor of Science degree in
Mechanical Engineering from the University of Alberta.
Mr. Neveu brings a wealth of knowledge of the energy
industry and international operations to our board as well as
experience running a public company and being on a public
company board.
Kevin J. OHara has served as a Director since
December 2010 when we completed our IPO. Mr. OHara
was a co-founder and Chairman of the Board of Troppus Software
Corporation, an early stage software company providing technical
solutions to service providers that support home technology and
networks, since March 2009 until it was acquired by a major
service provider in January 2011. He is Chairman of the board of
Integra Telecom Inc., a facility-based communications company,
and has served on its board since December 2009. Since January
2011, Mr. OHara has also served on the Board of
Directors of Elemental Technologies, Inc. the leading provider
of massively parallel video processing solutions for broadcast
and on-line video customers. Prior to that, Mr. OHara
was a co-founder of Level 3 Communications, Inc. and served
as its President from July 2000 to March 2008 and as the Chief
Operating Officer of Level 3 Communications, Inc. from
March 1998 to March 2008. From August 1997 to July 2000,
Mr. OHara served as Executive Vice President of
Level 3 Communications, Inc. Prior to that,
Mr. OHara served as President and Chief Executive
Officer of MFS Global Network Services, Inc. from 1995 to 1997,
and as Senior Vice President of MFS and President of MFS
Development, Inc. from October 1992 to August 1995. From 1990 to
1992, he was a Vice President of MFS Telecom, Inc.
Mr. OHara has a Master of Business Administration
from the University of Chicago and a Bachelor of Science in
Electrical Engineering from Drexel University.
Mr. OHara brings a wealth of experience in the
communications industry to our board as well as experience
running a public company.
Keith Olsen has served as a Director since December 2010
when we completed our IPO. Mr. Olsen served as Chief
Executive Officer, President and Director of Switch and Data
Facilities Company, Inc., a provider of network-neutral data
centers that house, power and interconnect the Internet, from
February 2004 to May 2010, when Switch and Data Facilities
Company, Inc. was acquired by Equinix, Inc. Prior to that,
Mr. Olsen served as a Vice President of AT&T, where he
was responsible for indirect sales and global sales channel
management from May 1993 to February 2004. From 1986 to 1993,
Mr. Olsen served as Vice President of Graphnet, Inc., a
provider of integrated data messaging technology and services.
Mr. Olsen has a Bachelors degree from the State
University of New York, Geneseo. Mr. Olsen will bring
experience in running a public company to our board as well as a
wealth of experience in the communications industry.
Brent K. Whittington has served as a Director since
December 2010 when we completed our IPO. Mr. Whittington
has served as the Chief Operating Officer of Windstream
Corporation, a publicly-traded communications company providing
phone, high-speed Internet and high-definition digital TV
services, since August 2009. Prior to that, Mr. Whittington
served as the Executive Vice President and Chief Financial
Officer of Windstream Corporation from July 2006 to August 2009.
From December 2005 to July 2006, Mr. Whittington served as
Executive Vice President and Chief Financial Officer of
Windstream Corporations predecessor, Alltel Holding Corp.
From 2002 to August 2005, Mr. Whittington served as Vice
President of Finance and Accounting of Alltel Corporation,
parent company of Alltel Holding Corp and, from August 2005 to
December 2005, Mr. Whittington also served as the Senior
Vice President-Operations Support of Alltel Corporation. Prior
to joining Alltel, Mr. Whittington was with Arthur Andersen
LLP for over eight years. Mr. Whittington has a degree in
accounting from the University of Arkansas at Little Rock.
Mr. Whittington
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brings experience in finance and accounting to our board as well
as a wealth of experience in the communications industry.
Ditlef de Vibe has not previously served on our
Board. Since 2001, Mr. De Vibe served as Chief
Executive Officer of Kistefos Venture Capital, a venture capital
firm that primarily invests in the IT and telecommunications
industries. During that time, he also served as from 2007 to
2008 as Chief Executive Officer of Global IP Solutions (GIPS)
Holdings AB, a company that was publicly traded in Norway until
its sale to Google, Inc. From 1996 to 2001, he served as
IBMs Director of Network Outsourcing EMEA from 1999 to
2001, Director of Network Service Sales EMEA from 1998 to 1999,
and Director of Network Outsourcing Services EMEA from 1996 to
1998. He holds a Master of Science degree from the University of
Oslo. Mr. De Vibe brings a wealth of experience in IT and
telecommunications along with extensive operational and
commercial competencies.
CORPORATE
GOVERNANCE
Code of
Ethics
We have adopted a code of business conduct and ethics applicable
to our principal executive, financial and accounting officers
and all persons performing similar functions. A copy of that
code is available on our corporate website at www.rig.net.
Composition
of the Board of Directors
Our Board of Directors currently consists of eight members,
seven of whom are non-employee members. Mr. Slaughter, who
serves as the CEO and President, also serves as a director. Each
director holds office until the election and qualification of
his or her successor, or his or her earlier death, resignation
or removal. Our by-laws permit our Board of Directors to
establish by resolution the authorized number of directors.
With respect to the 2011 Annual Meeting, we have nine nominees
and nine available board seats. A board member may be removed
outside of the normal election process for cause by the
affirmative vote of the holders of a majority of the shares then
entitled to vote at an election of our directors. Each properly
executed proxy received in time for the Annual Meeting will be
voted as specified therein. The nine nominees receiving the most
votes cast at the Annual Meeting will be elected to our Board of
Directors.
Board
Leadership Structure and Role in Risk Oversight
Currently, we separate the role of Chairman and Chief Executive
Officer. In addition, each of the committees of our board is
presently chaired by an independent director. The Chief
Executive Officer is responsible for setting the strategic
direction for the company and the day to day leadership and
performance of the company, while the Chairman of the Board
provides guidance to the Chief Executive Officer, approves the
agenda for Board meetings, and presides over meetings of the
full Board. The independent members of the Board also regularly
meet in executive session without management present. The Board
believes this separation is appropriate at this time because of
our growth rate and new public status. However, our board does
not have a policy on whether or not the roles of Chairman of the
Board and Chief Executive Officer should be separate and, if
they are to be separate, whether the Chairman of the Board
should be selected from the non-employee directors or be an
employee or former employee. The board believes that it should
be free to make a choice from time to time in any manner that it
believes is in the best interests of our Company and our
stockholders at that time. The Board actively oversees
management, particularly through regular conferences between the
chief executive officer and the chairman.
The Board seeks to assess major risks facing our Company and
options for their mitigation in order to promote our
stockholders and other stakeholders long-term
interests. The Board oversees risk by actively reviewing
material management decisions in this area. The Board takes a
hands-on role in risk management practices in such areas as
credit risk, liquidity risk, operational risk, compliance risk
and risks associated with our compensation plans and
arrangements by obtaining detailed reports from management,
continuous
5
dialogues with management, and providing input on material
corporate decisions in these areas. The Board, primarily through
the Audit Committee, also reviews financial and accounting risks
through regular meetings with our outside independent accounting
firm. The extent of the Boards oversight function has the
effect of solidifying the Boards leadership structure by
providing knowledge and input into material risk decisions.
Director
Independence
Our Board of Directors has reviewed the independence of each
director and considered whether any director had or has a
material relationship with us that could compromise his or her
ability to exercise independent judgment in carrying out his or
her responsibilities. As a result of this review, our Board of
Director has determined that Messrs. Matthews, Browning,
Davis, Neveu, OHara, Olsen, Whittington and de Vibe
qualify as independent in accordance with the
published listing standards of the NASDAQ. Mr. Slaughter is
not independent by virtue of his role as CEO and President of
our company.
In addition, the members of the Audit Committee of our Board of
Directors each qualify as independent under
standards established by the Securities and Exchange Commission
(SEC) for members of audit committees, and the Audit
Committee includes at least one member who is determined by our
Board of Directors to meet the qualifications of an audit
committee financial expert in accordance with SEC rules.
Mr. Browning and Mr. Whittington are independent
directors who have been determined to be audit committee
financial experts. Stockholders should understand that this
designation is a disclosure requirement of the SEC related to
Mr. Browning and Mr. Whittingtons experience and
understanding with respect to certain accounting and auditing
matters. The designation does not impose on Mr. Browning or
Mr. Whittington any duties, obligations or liability that
are greater than are generally imposed on them as a member of
the Audit Committee and Board of Directors, and their
designation as an audit committee financial expert pursuant to
this SEC requirement does not affect the duties, obligations or
liability of any other member of the Audit Committee or Board of
Directors.
Policy
Governing Director Qualifications and Nominations
Our Company seeks directors who possess, at a minimum, the
qualifications and skills described below as set forth in our
Policy Governing Director Qualifications and Nominations. Our
Company considers diversity in its nomination of directors, and
in its assessment of the effectiveness of the Board and its
committees. In considering diversity, we evaluate each director
candidate in the context of the overall composition and needs of
our Board, with the objective of recommending a group that can
best manage the business and affairs of the Company and
represent stockholder interests using its diversity of
experience. Our Corporate Governance and Nominating Committee
will consider these and other qualifications, skills, and
attributes when recommending candidates to our Board.
At a minimum, our Corporate Governance and Nominating Committee
must be satisfied that each Committee-recommended nominee meets
the following minimum qualifications:
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The candidate shall exhibit high standards of integrity,
commitment, and independence of thought and judgment.
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The candidate shall be committed to representing the long-term
interests of our Companys stockholders.
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The candidate shall have sufficient time and availability to
devote to the affairs of our Company, particularly in light of
the number of boards on which the nominee may serve.
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To the extent the candidate serves or has previously served on
other boards, the candidate shall have a demonstrated history of
contributing at board meetings.
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The candidate meets any other minimum qualifications and other
criteria for Board membership approved by our Board from time to
time.
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6
In addition to the minimum qualifications for each candidate set
forth above, our Corporate Governance and Nominating Committee
shall recommend that our Board select persons for nomination to
help ensure that:
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A majority of the Board is independent in accordance
with the standards, if any, promulgated by the SEC, or any
exchange upon which securities of our Company are traded, and
any governmental or regulatory body exercising authority over
our Company.
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Each of our Audit, Compensation, and Corporate Governance and
Nominating Committees are comprised entirely of independent
directors.
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At least one member of our Audit Committee shall have such
experience, education and other qualifications necessary to
qualify as an audit committee financial expert as
defined by the rules of the SEC.
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In addition to any other standards our Corporate Governance and
Nominating Committee may deem appropriate from time to time for
the overall structure and composition of our Board, the
Committee may consider the following factors when selecting and
recommending that our Board select persons for nomination:
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Whether the candidate has direct experience in our
Companys industry or in the markets in which our Company
operates.
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Whether the candidate, if elected, assists in achieving a mix of
Board members that represents a diversity of background and
experience.
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Whether the candidate has experience at a strategic or
policymaking level in a business, government, non-profit or
academic organization of high standing.
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Whether the candidate is accomplished in his or her respective
field, with strong credentials and recognition.
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Whether the candidate is well regarded in the community.
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Communications
to Our Board of Directors
Our Board of Directors has a process in place for communication
with stockholders. Stockholders should initiate any
communications with our Board in writing and send them to our
Board of Directors
c/o William
Sutton, Vice President, General Counsel and Corporate Secretary,
RigNet, Inc., 1880 S. Dairy Ashford, Suite 300,
Houston, Texas
77077-4760.
All such communications will be forwarded to the appropriate
directors. This centralized process will assist our Board of
Directors in reviewing and responding to stockholder
communications in an appropriate manner. If a stockholder wishes
for a particular director or directors to receive any such
communication; the stockholder must specify the name or names of
any specific Board recipient or recipients in the communication.
Communications to our Board of Directors must include the number
of shares owned by the stockholder as well as the
stockholders name, address, telephone number and email
address, if any.
Meetings
of Our Board of Directors
During 2010, our Board of Directors held 3 regular and 7 special
meetings. The standing Committees of our Board of Directors held
an aggregate of 8 meetings during this period. Each director
attended at least 75.0% of the aggregate number of meetings of
the Board and Committees on which they served.
Messrs. Slaughter, Browning, OHara, Olsen and
Whittington joined our Board in December 2010; each attended all
meetings in 2010 through the date of this proxy following their
election.
Committees
of Our Board of Directors
Our Board of Directors currently has standing Audit,
Compensation and Corporate Governance and Nominating Committees.
Each member of these Committees is an independent director in
accordance with the NASDAQ listing standards described above and
applicable SEC. Our Board of Directors has adopted a written
charter for each of these Committees, which sets forth each
Committees purposes, responsibilities and authority. These
committee charters are available on our website at
www.rig.net.
7
Audit
Committee
The Audit Committee assists our Board of Directors in fulfilling
its oversight responsibilities to the Company and our
stockholders by overseeing the quality and integrity of our
financial reporting; accounting policies and procedures;
disclosure controls; compliance with legal and regulatory
requirements; independent auditor qualifications, independence
and performance; and the internal audit function. During 2010,
the Audit Committee held 6 meetings. The Audit Committee is
currently comprised of four directors: Messrs. Browning
(Chairman), Matthews, Olsen and Whittington. Each member of the
Audit Committee is independent as defined by the
NASDAQ listing standards and applicable SEC rules, and is
financially literate. Mr. Browning and Mr. Whittington
have been designated an audit committee financial
expert. From January 1, 2010 through
December 20, 2010 our Audit Committee was comprised of
Mr. Matthews and Mr. Davis, with Mr. Davis
serving as Chairman. Mr. Davis resigned from the Audit
Committee on December 21st in conjunction with the
completion of our IPO and the addition of Messrs. Browning,
Olsen and Whittington to the Audit Committee at that time.
The report of our Audit Committee appears under the heading
Report of the Audit Committee below.
Compensation
Committee
The Compensation Committees primary responsibilities are
to: (i) review and recommend for Board approval the
compensation arrangements for the CEO, (ii) review and
recommend for Board approval compensation for our directors,
(iii) make recommendations with respect to the non-CEO
executive officers of our company, (iv) to consider,
recommend, administer and implement Board approved compensation
plans, policies and programs including incentive-compensation
and equity-based plans, and (v) reviewing succession
planning for our executive officers. The Compensation Committee
also oversees the preparation of a report on executive
compensation for inclusion in the annual proxy statement.
During 2010, the Compensation Committee held 2 meetings. The
Compensation Committee is currently comprised of four directors:
Messrs. Neveu (Chairman), Davis, Matthews and OHara.
Each of the Compensation Committee members is
independent as defined by the NASDAQ listing
standards. All Compensation Committee members are also
non-employee directors as defined by
Rule 16b-3
under the Securities Exchange Act of 1934, as amended
(Exchange Act). The report of our Compensation
Committee appears under the heading Compensation Committee
Report below.
Procedures and Processes for Determining Executive and
Director Compensation Please refer to
Compensation Discussion and Analysis, The Compensation
Committee, below for a discussion of the Compensation
Committees procedures and processes for making
compensation determinations.
Compensation Committee Interlocks and Insider
Participation No member of the Compensation
Committee has any relationship with our company that is required
to be disclosed in any of the reports that we file with the SEC
other than service on our Board of Directors. None of our named
executive officers serves as a member of the Board of Directors
or compensation committee of any entity that has one or more of
its executive officers serving as a member of our Board of
Directors or Compensation Committee.
Corporate
Governance and Nominating Committee
The Corporate Governance and Nominating Committees primary
responsibilities are (i) assist our Board of Directors in
identifying prospective director nominees and recommending
nominees for each annual meeting of the stockholders to the
Board of Directors, (ii) review developments in corporate
governance practices and developing and recommending governance
guidelines, code of conduct, and compliance mechanisms
applicable to the Company, (iii) provide ongoing review of
risk performance and exposure company-wide in the company risk
categories including operational, technological, compliance,
reputational and political (it being understood that the Audit
Committee will provide ongoing review of financial risk
management categories), and (iv) ensure the existence and
capability of risk management systems and control including
business continuity in all critical business activities and
company risk categories.
8
The Committee will evaluate each nominee based upon a
consideration of a nominees qualification as independent
and consideration of diversity, age, skills and experience in
the context of the needs of the Board of Directors as described
in our Corporate Governance Guidelines. The Corporate Governance
and Nominating Committee may rely on various sources to identify
director nominees. These include input from directors,
management, professional search firms and others that the
Committee feels are reliable.
Stockholders may recommend director candidates for consideration
by the Corporate Governance and Nominating Committee. The
Corporate Governance and Nominating Committee will consider such
suggestions made by stockholders in the same manner as other
candidates. Any such suggestions should be submitted to the
Chairman of the Corporate Governance and Nominating Committee,
c/o William
Sutton, Vice President, General Counsel and Corporate Secretary,
RigNet, Inc., 1880 S. Dairy Ashford, Suite 300,
Houston,
Texas 77077-4760.
The written request must include the candidates name,
contact information, biographical information and
qualifications. The request must also include the potential
candidates written consent to being a nominee and to
serving as a director if nominated and elected. Additional
information may be requested from time to time by the committee
from the nominee or the stockholder or group of stockholders.
Stockholder nominations that seek to bypass the consideration of
the Corporate Governance and Nominating Committee must follow
the procedure set forth in our bylaws which is summarized below
in the Section entitled Stockholder Proposals and
Nominations for the 2012 Annual Meeting of the
Stockholders.
In 2010, the Corporate Governance and Nominating Committee,
which was formed in conjunction with the IPO in December 2010,
held no meetings. The Corporate Governance and Nominating
Committee is currently comprised of four directors:
Messrs. Matthews (Chairman), Browning, Davis and Neveu.
Messrs. Matthews Browning, Davis and Neveu are
independent, as defined by the NASDAQ listing
standards.
Report of
the Audit Committee
The Audit Committee oversees the financial reporting process of
RigNet, Inc. on behalf of its Board of Directors. Management has
the primary responsibility for the preparation of the financial
statements and the reporting process, including the systems of
internal control.
With respect to the financial statements for the year ended
December 31, 2010, the Audit Committee reviewed and
discussed the financial statements of RigNet, Inc. and the
quality of financial reporting with management and the
independent auditor. It also discussed with the independent
auditor the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU section 380), as
adopted by the Public Company Accounting Oversight Board in
Rule 3200T, and received from the independent auditor the
written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit
Committees), as modified or supplemented and as adopted by the
Public Company Accounting Oversight Board in Rule 3600T.
Additionally, the Audit Committee has discussed with the
independent auditor their independence with respect to RigNet,
Inc. The Audit Committee determined that the non-audit services
provided to RigNet, Inc. by the independent auditor (discussed
below under Proposal Two: Ratification of Independent
Public Accountants) are compatible with maintaining the
independence of the independent auditor.
Based on the reviews and discussions described above, the Audit
Committee recommended to our Board of Directors that the
financial statements of RigNet, Inc. be included in the Annual
Report on
Form 10-K
for the year ended December 31, 2010 for filing with the
SEC.
Submitted By:
Audit Committee
James H. Browning, Chairman
Thomas M. Matthews
Keith Olsen
Brent K. Whittington
9
This Report of the Audit Committee is not soliciting
material and shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or
under the Securities Act of 1934, as amended, except to the
extent the Company specifically incorporates this report by
reference, and shall not otherwise be deemed filed under such
Acts.
DIRECTOR
COMPENSATION
Summary
of Non-Employee Director Compensation
The CEO does not receive any compensation specifically related
to his service on our Board of Directors. The following
summarizes the compensation of each non-employee member of our
Board of Directors for the fiscal year ended December 31,
2010.
Prior to our IPO in December 2010, all directors who were
affiliated with any of our preferred stockholders did not
receive any compensation. All directors were entitled to
reimbursement for reasonable travel and other business expenses
incurred in connection with attending meetings of the Board of
Directors or committees of the Board of Directors.
Since our IPO, our Board of Directors implemented a compensation
policy applicable to all of our non-employee directors, which
provides all non-employee directors the following compensation
for board and committee services:
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an annual retainer paid in cash in an amount equal to $9,000 per
quarter;
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an annual equity award of restricted stock in an amount to be
approved by the Board or, at the option of our Company, an
equivalent payment in cash;
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$1,500 for each board meeting attended in person if traveling
within North America and $4,500 for each meeting attended if
traveling from outside North America; and
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$1,000 for each committee meeting attended in person.
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In addition, this compensation policy provides that the chairman
of our Audit Committee will receive an additional annual
retainer of $10,000; the chairman of the Compensation Committee
will receive an additional annual retainer of $7,500; the
chairman of the Corporate Governance and Nominating committee
will receive an additional annual retainer of $5,000; and the
non-executive chairman of the Board of Directors will receive an
additional annual retainer of $50,000. For 2011, the approved
equity award of restricted stock approximated $63,000.
We did not grant any options or other equity compensation to any
member of our Board of Directors in 2010. The following table
summarizes the cash compensation of each member of our Board of
Directors in 2010:
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Fees Earned or
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Name
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Service Period During 2010
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Paid in Cash(3)
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Thomas M. Matthews(1)
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Entire year
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$
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112,500
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James H. Browning
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December
21st to
December
31st
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Charles L. Davis
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Entire year
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Kevin Neveu(2)
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Entire year
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51,750
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Kevin J. OHara
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December
21st to
December
31st
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Keith Olsen
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December
21st to
December
31st
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Brent K. Whittington
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December
21st to
December
31st
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Omar Kulbrandstad
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January
1st to
December
20th
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James Newell
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January
1st to
March 2nd
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Dirk McDermott
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March 2nd
to December
20th
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Ørjan Svanevik
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January
1st to
December
20th
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10
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(1) |
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Mr. Matthews received an annual retainer of $55,000, board
fees of $45,000 and committee meeting fees of $12,500 for
in-person attendance at board and compensation committee
meetings. |
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Mr. Neveu received an annual retainer of $33,250 and
committee meeting fees of $18,500 for in-person and telephone
attendance at board and compensation committee meetings. |
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The Company does not provide a pension plan for non-employee
directors. None of the directors received preferential,
above-market earnings or deferred compensation. |
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis addresses the
following topics:
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the role of our Compensation Committee in establishing executive
compensation;
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our process for setting executive compensation;
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our compensation philosophy and policies regarding executive
compensation; and
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our compensation decisions for fiscal year 2010 with respect to
our named executive officers.
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This section of the proxy also describes the compensation paid
to the following named executive officers.
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Name
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Age
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Position with Our Company
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Mark Slaughter
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52
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Chief Executive Officer and President
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Martin Jimmerson
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47
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Chief Financial Officer
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Lars Eliassen
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38
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Vice President & General Manager, Europe Middle East Africa
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William Sutton
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56
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Vice President, General Counsel & Corporate Secretary
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Hector Maytorena
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50
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Vice President & General Manager, Americas
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Mark Slaughter has served as our Chief Executive Officer
and President since August 2007. See his biographical summary as
presented earlier in this proxy statement.
Martin Jimmerson has served as our Chief Financial
Officer since November 2006. Prior to that, Mr. Jimmerson
served as Chief Financial Officer for River Oaks
Imaging & Diagnostic, LP from November 2002 to
December 2005. Mr. Jimmerson received a B.A. degree in
accounting from Baylor University.
Lars Eliassen has been with us and our predecessor since
May 2003 serving as our Vice President & General
Manager, Europe Middle East Africa since November 2007, Vice
President Global Sales from March 2007 to November
2007, Vice President Americas from March 2005 to
March 2007, and as Vice President Global Operations
from May 2003 to March 2005. Mr. Eliassen has completed an
executive education course in Emerging Growth Companies at
Stanford Universitys Graduate School of Business. He
received a B.S. degree in Electrical Engineering from Rice
University.
William Sutton has served as our Vice President, General
Counsel and Corporate Secretary since May 2009. Prior to that,
Mr. Sutton served as our Vice President and General Counsel
from March 2008 through May 2009. Mr. Sutton served as
Chairman for Sweeten & Sutton Brokerage, Inc. from
March 2007 to February 2008 and President and Chief Executive
Officer for Abbey SA, LP from April 2004 to October 2006.
Mr. Sutton received a Bachelor of Business Administration
degree from the University of Texas at Austin and a Juris
Doctorate from the University of Houston.
Hector Maytorena has been with us since November 2007
serving as our Vice President & General Manager,
Americas since November 2009 and as Vice President, Global
Sales & Marketing from November 2007 to October 2009.
Prior to joining RigNet, he served as General Manager of
Southeast Texas for United Technologies UTC
Fire & Security (operating under the Chubb Security
and Redhawk brands) from November 2006 to November 2007. Prior
to that role, he was Director of Sales at Chubb Security USA
from
11
August 2005 to November 2006. Prior to UTC, Mr. Maytorena
served in various leadership roles at Stratos Global
Corporations Broadband Division with his last assignment
as Director of Global Sales and Marketing from November 2002 to
August 2005. Mr. Maytorena is a graduate of United
Technologies Emerging Leaders Program at the University of
Virginias Darden Graduate School of Business.
The compensation programs described, however, apply more broadly
to other officers and management personnel at the Company, with
appropriate changes to reflect different levels and types of
responsibility. The Company believes this approach helps to
align RigNet employees into a unified team committed to the
Companys corporate objectives.
The
Compensation Committee
The Compensation Committee of the Board of Directors (the
Compensation Committee or Committee)
assists the Board in fulfilling its duties relating to
compensation matters. The fundamental responsibilities of the
Committee are to:
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develop RigNets compensation strategy and objectives;
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review and oversee the incentive compensation and equity plans;
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review performance goals, objectives and policies relevant to
executive and board compensation;
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evaluate executive and board performance in light of those goals
to determine compensation levels;
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set compensation levels and review awards under incentive
compensation plans that are consistent with our compensation
philosophy and the performance of our Company, its senior
management, employees and the board;
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review and approve disclosures relating to compensation; and
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oversees and directs succession planning for the CEO and our
named executive officers.
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The Board approves all compensation plans and compensation
arrangements for our named executive officers.
The
Compensation Setting Process
Our Compensation Committee holds regularly scheduled meetings
which coincide with our Board meetings. It also holds additional
meetings as required to carry out its duties. The Committee
Chairman works with our management to establish each meeting
agenda.
At its meetings, the Committee:
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reviews and updates the Companys compensation strategy and
objectives;
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considers and reviews changes in compensation elements for the
upcoming year;
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reviews actual results compared to the pre-established
performance metrics for the current year to determine annual
cash incentive awards for our named executive officers and total
awards authorized;
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reviews equity awards, either in the form of restricted stock
grants or stock option awards or both;
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reviews our performance metrics under our variable compensation
plans for the upcoming year;
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evaluates the compensation paid to our independent directors
and, makes recommendations for adjustments to the Board; and
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reviews performance of the CEO.
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Role
of Compensation Consultant
The Committees Charter grants the Committee the sole and
direct authority to retain and terminate compensation advisors
and to approve their fees. All such advisors report directly to
the Compensation
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Committee and all assignments are directed by the Committee
Chairman. The Committee has engaged Cogent Compensation Partners
(Cogent) as the Committees independent
compensation consultant to assist the Committee in assessing and
determining competitive compensation packages for our named
executive officers for 2011.
In this capacity, Cogent has, from time to time at the
Committees request and under the direction of the
Committee Chairman, assembled information regarding:
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compensation trends in the telecommunication and oil and gas
industries; and
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relative compensation for similarly-situated executive officers
of companies within these groups as well as of other companies
with revenues, transactions or growth trends comparable to our
company.
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While the Committee relies on data provided by Cogent to assess
the reasonableness of our named executive officers total
compensation, it also considers a number of other factors
including:
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historical compensation levels;
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specific role the executive plays within our company;
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performance of the executive; and
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relative compensation levels among our named executive officers.
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In 2011, we established our compensation peer group as the
following seventeen companies: Bronco Drilling Company Inc.,
Dawson Geophysical Company, OYO Geospace Corporation, TGC
Industries Inc., Union Drilling, Inc, 8X8 Inc, Anaren Inc.,
Bigband Networks Inc., Cbeyond Inc., Cogent Communications
Group, Communication Systems Inc., Digi International Inc.,
FiberTower Corp., in Contact Inc, Kvh Industries Inc., Meru
Networks Inc. and Shoretel Inc. We selected these companies
because they were public companies of similar size and headcount
serving the geographies and customer bases in which we operate
and compete for senior management personnel. For 2010, Cogent
provided a compensation study to gain input on compensation
levels and average market increases in the various geographies
in which we operate and compete for executives that was based on
two general industry published surveys rather than an
identifiable peer group. See Determining the Amount of
Each Element of Compensation Base Compensation
below.
Role
of Chief Executive Officer in Executive Compensation
Decisions
Our Compensation Committee generally seeks input from the CEO,
when discussing the performance of and compensation levels for
our named executive officers other than himself.
Mr. Slaughter provides information relating to each named
executive officers performance to support the Compensation
Committees decision-making on executive compensation.
Our
Executive Compensation Program
Compensation
Objectives and Philosophy
Our executive compensation program is designed to encourage our
executives to focus on building stockholder value, maximizing
growth consistent with our strategic plan and deliver financial
results. Our executive compensation program is intended to align
the interests of our named executive officers with those of our
stockholders by motivating our named executive officers to
achieve strong financial and operating results, which we believe
closely correlate to long-term stockholder value. This alignment
of interests is primarily reflected through our named executive
officers participation in variable and equity-based
compensation.
Our Compensation Committee reviews our executives total
compensation elements on an annual basis taking into
consideration any changes in position or responsibilities. In
the event of material changes in position, responsibilities or
other factors, the Compensation Committee may consider changes
in base pay during the year. Beginning with the compensation
packages for 2011 in addition to changes in position or
responsibilities, the Committee primarily considered:
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peer data provided by our outside consultants; and
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internal review of the executives compensation, both
individually and relative to other executive officers.
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Compensation
Strategy
Executive base salaries are expected over the long-term to be
between the 25th percentile and the median for our peer group,
adjusted for each individuals education, experience,
performance and potential. In addition, our executives can earn
variable compensation in support of our pay-for performance
philosophy. Through equity compensation, our executives have a
significant portion of compensation at risk and
accordingly have a potential for earning between the median and
75th percentile of our peer group. At risk means
executives will not realize value unless they meet performance
goals, the majority of which are tied to Company financial,
operational and strategic goals, which we believe closely
correlate to long-term stockholder value creation.
Our compensation program provides for the following elements:
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base salaries designed to allow us to attract
and retain qualified candidates in a highly competitive market;
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variable compensation provides additional
cash compensation or bonus designed to support our
pay-for-performance
philosophy based on the achievement of annual financial and
personal goals;
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equity-based compensation intended to reward
executives for equity valued growth to align executive interests
with our stockholders interests to grow long-term value
and incentivize retention;
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expatriate compensation may include tax
equalization, cost of living allowances, travel, additional paid
time off and increased subsidy of benefits for qualified
executives who relocate internationally; and
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benefits package available to all of our
employees, including our executives in the respective region.
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As we transition to being a public company beginning with our
Compensation Committees review of compensation for 2011,
over the long-term, the Committee is targeting total direct
compensation (including base salary and variable cash
compensation) for all named executive officers at approximately
the median of compensation paid to similarly situated executives
of the companies comprising our 2011 compensation peer group. As
more fully described below under Determining the Amount of
Each Element of Compensation Base
Compensation, the Committee set compensation for the CEO
for 2011 at the
25th
percentile within the median range to compensate for the
transition of responsibilities and risk for public companies
adjusted for the overall experience of the CEO for serving in
this capacity. The Committee again is seeking over the long-term
to place more compensation at risk by setting
1) base salaries and management incentive targets at or
near the median and 2) awards under our 2010 Omnibus Plan
between the median and
75th
percentile of our peer group.
Risk
Assessment of Compensation Programs
We review our compensation programs company-wide to assess
whether they encourage our employees to take unnecessary or
excessive risks that could have a material adverse effect on our
business. We have concluded that our programs are appropriately
tailored to encourage employees to grow our business, but not
incent them to do so in a way that poses unnecessary or
excessive material risk to us. For example, our Management
Incentive Program (MIP) and our equity-based
compensation, which are our two primary performance-based
compensation programs, balance each other by providing
compensation that rewards short-term and long-term performance.
The MIP balances risk by considering a mix of performance goals,
capping the maximum payout a participant can receive and
allowing the Compensation Committee to determine the final
amounts of all bonuses, and the equity-based awards have four
year vesting schedules to encourage long-term growth and provide
retentive value. In addition, we have various policies, such as
our clawback policy and anti-hedging policy that are designed to
discourage undue risk-taking or manipulation of results. In
addition, the MIP portion of the executives compensation
is not so large as to encourage undue risk-taking or
14
manipulation of results at the risk of the long-term health of
our Company. These conclusions have been vetted with the
Compensation Committee.
Elements
of Our Executive Compensation Program
Base
Salary
Our Compensation Committee reviews our executives base
salaries on an annual basis taking into consideration any
changes in position or responsibilities. We utilize base salary
as the primary means of compensating for performing the
essential elements of an executives job. We believe our
base salaries are set at levels that allow us to attract and
retain executive in competitive markets.
Variable
Compensation
Our executives are eligible for variable compensation in the
form of an annual cash bonus through our MIP. The MIP is
intended to incentivize our executives to meet our corporate
objectives and compensate them for achieving these objectives.
In addition, our variable pay compensation is intended to reward
and incentivize our executives for their personal performance
relative to individual objectives. No bonus will be paid if the
Company does not achieve at least 80.0% of the annual Adjusted
EBITDA target, which we define as earnings before interest,
taxes, depreciation and amortization as adjusted to exclude
amounts for the impairment of goodwill, gain (loss) on
retirement of property and equipment, changes in the fair value
of derivatives, stock-based compensation expense and initial
public offering costs. During 2010 and 2009, once the bonus was
determined, the CEO, for other than himself, had discretion to
increase or decrease the bonus by up to 25.0% based upon the
achievement of personal objectives and the CEOs judgment
of the executives relative contribution to results,
subject to board approval. For the CEOs bonus opportunity
during 2010 and 2009, the board had discretion to increase or
decrease the bonus by as much as 25.0%. Individual payouts under
the MIP cannot exceed 2.5 times target payout. Further, total
variable compensation payouts for all employees as a group are
limited to 5.0% for 2010 and 5.5% for 2011 of Adjusted EBITDA
for management and employee incentives, other than sales
commissions.
For 2011, consistent with 2010 and 2009, variable compensation
will be based on the following performance metrics:
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Management EBITDA (a
non-U.S. GAAP
measure) which is our Adjusted EBITDA further adjusted based on
budgeted exchange rates, post acquisition re-organization costs
and any other centrally
agreed-upon
exceptional items.
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Revenue, which we define as gross revenue less credits and
uncollectible billings as reported in accordance with
U.S. GAAP.
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DSO, or Days Sales Outstanding, which we define as the average
of each
end-of-quarter
accounts receivable balance less reserve for doubtful accounts
divided by four, then divided by quarterly revenue multiplied by
365 days.
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Since our financial targets are stretch targets, we believe in
paying smaller bonuses if we reach at least 80.0% of our target
and larger bonuses if we exceed the target level and rewarding
performance above the target levels, up to a maximum individual
amount, but unlimited as to any single metric. The following
15
multiplier table will be used to determine each executives
bonus formula if we achieve the threshold consolidated Adjusted
EBITDA and achieve between 80.0% and 140.0% for each financial
metric:
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Target Multiplier
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Management
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EBITDA
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Revenue
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DSO
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Target Bonus Weighting
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65.0
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%
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20.0
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%
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15.0
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%
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Percentage of Plan:
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140%
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2.000
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1.400
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1.400
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120
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1.500
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1.200
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1.200
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110
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1.250
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1.100
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1.100
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105
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1.125
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1.050
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1.050
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100
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1.000
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1.000
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1.000
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95
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0.875
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0.950
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0.950
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90
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0.750
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0.900
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0.900
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80
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0.500
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0.800
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0.800
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Less than 80
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See the table on page 23 of this proxy statement for the
application of this matrix for 2010. If the results are between
two levels the multiplier will be interpolated on a
straight-line basis between those levels.
For our executives, variable compensation is based on the
achievement of financial targets and further adjusted based on
the personal performance. In 2011, adjustments will be based on
the achievement of personal objectives for each individual.
Equity-Based
Compensation
Equity-based compensation is intended to enhance our ability to
retain executive talent over a longer period of time, reward
long-term efforts that enhance future value of the Company, and
provide executives with a form of reward that aligns their
interests with those of our stockholders. Our executives may
receive equity-based awards annually as the Compensation
Committee determines consistent with the objectives described
above.
Our compensation committee does not apply a rigid formula in
allocating options to executives as a group or to any particular
executive. Instead in making awards, the Compensation Committee
exercises its judgment and discretion and considers, among other
things, the role and responsibility of the executive,
competitive factors, personal performance, the amount of
stock-based equity compensation already held by the executive,
the non-equity compensation received by the executive and the
total number of options to be granted to all participants during
the year.
In connection with our IPO, we adopted the 2010 Omnibus
Incentive Plan which permits the award of (i) incentive or
non-qualified stock options, (ii) stock appreciation
rights, (iii) restricted stock, (iv) restricted stock
units, (v) performance stock, (vi) performance units,
(vii) director awards (viii) annual cash incentive
awards, (ix) cash-based awards, (x) substitution
awards or (xi) other stock-based awards, as approved by the
Board of Directors or its designated committee. Generally awards
will vest over four years, with 25.0% of the shares vesting on
each of the first, second, third and fourth year anniversary of
the grant date assuming continued employment, and expire on the
tenth anniversary date of the applicable award agreement, unless
terminated earlier. No further awards can be made under our
prior equity incentive plans.
Expatriate
Compensation
When the Company requires an executive to relocate
internationally for more than a short-term period of time, the
Committee may recommend for Board approval certain cost of
living, travel, tax equalization, and other benefits to
compensation for increased basic living costs and incentivize
long-term retention of the executive.
16
Nondiscriminatory
Health and Welfare Benefits
Our benefits, such as our basic health benefits, short-term and
long-term disability, life insurance, and accidental death and
dismemberment insurance are intended to provide a stable array
of support to executives and their families throughout various
stages of their careers, and these core benefits are provided to
all employees based on the regional programs regardless of their
individual performance levels. All U.S. employees have the
option to participate in the 401(k) plan, which allows
participants to defer up to 100.0% of their annual compensation,
subject to the cap set by the Internal Revenue Code. Employee
elective deferrals are immediately vested and nonforfeitable
upon contribution to the 401(k) plan.
Perquisites
We believe in a simple, straight-forward compensation program
and as such, named executive officers are not provided unique
perquisites or other personal benefits, other than those
discussed above under expatriate compensation. Consistent with
the Committees strategy, no perquisites or other personal
benefits have or are expected to exceed $10,000 annually for any
of our named executive officers.
Tax and
Accounting Implications
In the review and establishment of our compensation programs, we
consider the anticipated accounting and tax implications to us
and our executives. While we consider the applicable accounting
and tax treatment of alternative forms of equity compensation,
these factors alone are not dispositive, and we also consider
the cash and non-cash impact of the programs and whether a
program is consistent with our overall compensation philosophy
and objectives.
Deductibility
of Compensation and Tax Obligations
Our Compensation Committee does not have any particular policies
concerning the payment of tax obligations on behalf of our
employees. We are required by law to withhold a portion of every
compensation payment we make to our employees. In the case of
noncash compensation, that means either (i) we withhold a
portion of the noncash compensation payment and pay cash to the
appropriate tax authorities or (ii) the employees make a
direct cash payment to us in lieu of our withholding a portion
of the noncash compensation. All payments to or on behalf of our
employees, including tax payments, are considered compensation
and are evaluated by our Compensation Committee as part of our
overall compensation packages.
As part of its role, the Committee reviews and considers the
deductibility of executive compensation. Section 162(m) of
the Internal Revenue Code imposes a limit on the amount of
compensation that we may deduct in any one year with respect to
the CEO and each of our next three most highly compensated named
executive officers, unless specific and detailed criteria are
satisfied. Performance-based compensation, as defined in the
Internal Revenue Code, is fully deductible if the programs are
approved by stockholders and meet other requirements. We believe
that grants of equity awards under our existing stock plans
qualify as performance- based for purposes of satisfying the
conditions of Section 162(m), thereby permitting us to
receive a federal income tax deduction in connection with such
awards. In general, we have determined that we will not seek to
limit executive compensation so that it is deductible under
Section 162(m). However, from time to time, we monitor
whether it might be in our interests to structure our
compensation programs to satisfy the requirements of
Section 162(m). We seek to maintain flexibility in
compensating our executives in a manner designed to promote our
corporate goals and therefore our Compensation Committee has not
adopted a policy requiring all compensation to be deductible.
Our Compensation Committee will continue to assess the impact of
Section 162(m) on our compensation practices and determine
what further action, if any, is appropriate.
Accounting
for Stock-Based Compensation
We account for stock-based payments for all awards under our
2010 Omnibus, 2006 Long-Term Incentive and the 2001 Performance
Stock Option Plans in accordance with the requirements of ASC
Topic 718,
17
subtopic 10, section 10, Stock Compensation. The
Committee reviews stock compensation grant date value in
connection with granting equity awards.
Clawback
Policy
In accordance with the requirements of the Dodd-Frank Act, we
have inserted into our 2011 MIP a provision that provides that
in the event we are required to restate our publicly filed
financial statements for any reason, the Compensation Committee
will review all incentive-based compensation awarded to any
executive that was based on the restated financial statements
and may require that the executive return such compensation to
the extent it would have been less based on the restated
financial statements. We continue to monitor the rule-making
actions of the SEC and NASDAQ with respect to the development,
implementation, and disclosure of claw-back procedures/policies.
We intend to revise our claw-back provisions/policies in the
future as required by applicable law.
Policy
Against Hedging
We prohibit our executive officers and directors from engaging
in short-term or speculative transactions involving company
securities, including activities involving short selling our
securities, hedging their ownership in our securities by the
purchase or sale of options of any kind, whether puts, calls or
other derivative securities, or purchasing of company securities
in the open market on margin.
SUMMARY
COMPENSATION TABLE
The following table sets forth certain information with respect
to the compensation paid to our Chief Executive Officer, our
Chief Financial Officer and our three other most highly
compensated executive officers for the years ended
December 31, 2010 and 2009.
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Non-Equity
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Option
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Incentive Plan
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All Other
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Bonus
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Awards
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Compensation
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Compensation
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Name and Principal Position
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Year
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Salary
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(1)
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(2)
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(3)
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(4)
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Total
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Mark Slaughter
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2010
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$
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281,400
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$
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93,104
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$
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58,650
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$
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187,939
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$
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$
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621,093
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Chief Executive Officer and President
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2009
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262,784
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9,198
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161,700
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91,974
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|
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525,656
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Martin Jimmerson
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2010
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|
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234,300
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68,582
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48,875
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104,322
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|
|
|
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456,079
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Chief Financial Officer
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2009
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|
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218,784
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|
|
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5,360
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|
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103,950
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53,602
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|
|
|
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381,696
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Lars Eliassen
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2010
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200,000
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|
|
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4,032
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|
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24,438
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|
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53,274
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|
|
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390,650
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672,394
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Vice President and General Manager, Europe Middle
East Africa
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2009
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170,000
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|
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2,295
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|
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|
12,125
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|
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45,900
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|
|
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367,941
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598,261
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William Sutton
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2010
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|
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210,000
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|
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39,993
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|
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24,438
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56,101
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|
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330,532
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Vice President, General Counsel and Corporate Secretary
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2009
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|
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172,784
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3,024
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|
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12,125
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|
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30,237
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|
|
|
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218,170
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Hector Maytorena
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2010
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175,000
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|
|
|
3,235
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|
|
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24,438
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|
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42,738
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|
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245,411
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Vice President and General Manager, Americas
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2009
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150,000
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(1,312
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)
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12,125
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|
|
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26,250
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|
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187,063
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(1) |
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Bonuses in 2010 represent both discretionary adjustments to MIP
cash bonuses based on individual performance and cash IPO
success bonuses to reward those who were most directly
associated with preparing our Company for its IPO. Additional
cash IPO bonuses have been awarded, subject to continued service
through December 20, 2011, for Messrs. Slaughter,
Jimmerson and Sutton for $50,000, $50,000 and $30,000,
respectively. Bonuses in 2009 represent discretionary increases
(decreases) to the MIP cash bonuses based on individual
performance. |
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(2) |
|
Assumptions used in the determination of these amounts which
represent grant date fair value are included in Note 12,
Stock-Based Compensation, to our audited financial statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2010. |
18
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(3) |
|
Non-equity incentive plan compensation reflects the Board
approved cash bonuses as reviewed by the Compensation Committee
based on the achievement of performance metrics under our MIP
program for the year. These bonuses are not actually paid until
the following March. |
|
(4) |
|
No pension or deferred compensation plans are provided for our
named executive officers. We generally do not provide
perquisites and other personal benefits exceeding a value of
$10,000 to our named executive officers, except for Eliassen.
Mr. Eliassen receives expatriate compensation including tax
equalization, cost of living allowance, and travel allowance.
The following summarizes his additional compensation for 2010
and 2009: |
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Tax
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Cost of
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Equalization
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Living
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Travel
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Year
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Payments
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Allowance
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|
Allowance
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Total
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Lars Eliassen
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2010
|
|
|
$
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263,450
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|
|
$
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120,000
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|
|
$
|
7,200
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|
|
$
|
390,650
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|
|
|
|
2009
|
|
|
|
251,873
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|
|
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116,068
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|
|
|
|
|
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367,941
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Employment
Agreements
Mr. Slaughter
We entered into an employment agreement with Mark Slaughter, the
CEO, effective on August 15, 2007. Through a subsequent
amendment, we agreed to employ Mr. Slaughter as the CEO and
President through November 15, 2011 and will automatically
extend the term of his employment for successive one year
periods unless either we or Mr. Slaughter give notice of
non-renewal at least 90 days before the end of any term.
Mr. Slaughters initial annual base salary was set at
$225,000, subject to increase from time to time.
Mr. Slaughter is entitled to an annual target bonus of at
least 50.0% of his annual base salary subject to the terms of
our annual bonus plan and payable within four months following
the end of the fiscal year to which the bonus relates. In 2010,
Mr. Slaughters target bonus opportunity was increased
to 75.0% of his base salary.
If we terminate Mr. Slaughters employment without
cause or Mr. Slaughter terminates his
employment with us for good reason, he is entitled
to (i) a lump sum cash severance in an amount equal to the
sum of his then annual base salary and target bonus for the
bonus period in which the termination occurs; (ii) COBRA
premiums for up to 18 months or a cash payment in the
amount of such premiums plus a tax gross up on any tax he would
pay on such amounts under Section 409A of the Internal
Revenue Code, or an insured product that does not subject
Mr. Slaughter to the Section 409A tax; (iii) all
earned but unpaid base salary, accrued but unused vacation and
unreimbursed business expenses; and (iv) outplacement
services of up to $20,000.
If Mr. Slaughters employment with us is terminated
for any reason other than cause, any unvested
options granted to Mr. Slaughter prior to his termination
will become fully vested and exercisable, except any equity
awards, including options, issued to Mr. Slaughter by us
under a long-term incentive plan after our stock is listed on a
public stock exchange or securities market, which awards will
vest and continue in accordance with the terms of any such plan.
All vested options will be exercisable for the remainder of the
original option terms, subject to the same exception noted in
the prior sentence.
Upon a change of control as defined in
Section 409A of the Internal Revenue Code, all equity
awards granted to Mr. Slaughter shall vest and continue to
be exercisable pursuant to their respective terms.
Mr. Slaughter may also require us to repurchase our
warrants that he owns for their net fair market value.
If any payment to Mr. Slaughter would be subject to excise
taxes imposed by Section 4999 or Section 409A of the
Internal Revenue Code, we must pay Mr. Slaughter a
gross-up
payment in an amount such that after the payment by
Mr. Slaughter of all taxes he retains an amount of the
gross-up
payment equal to the initial excise taxes.
If we terminate Mr. Slaughters employment without
cause or if he terminates his employment for other
than good reason, he is subject to restrictive
covenants of noncompetition and non-solicitation for a period of
12 months from his termination date.
19
Under the agreement, cause is defined as any of the
following: (i) executives conviction of a felony or a
misdemeanor involving moral turpitude, or (ii) if
three-fourths of our entire Board approves executives
termination based upon (a) executives intentional or
continued failure to perform his or her duties other than by
reason of an illness or a disability, (b) executives
intentional engagement in conduct that is materially injurious
to us monetarily or otherwise, or (c) executives
gross negligence in the performance of his or her duties. The
agreement defines good reason as any of the
following: (i) an adverse change in the executives
position, authority, duties or responsibilities, including job
title, (ii) an adverse change in the executives base
salary or the taking of any action by us that would diminish,
other than in a de minimis amount, the aggregate incentive
compensation awards or opportunities of the executive or the
level of the executives participation relative to other
participants, (iii) the relocation of our principal
executive offices more than 25 miles from where such
offices are located on the effective date of the agreement or
the executive being based at any office other than our principal
executive offices, except for travel reasonably required in the
performance of the executives duties and reasonably
consistent with the executives travel prior to the
effective date of the agreement, or (iv) a breach of the
employment agreement by us, which remains uncured for
10 days following the executives written notice to us
of such breach.
Mr. Jimmerson
We also agreed to a similar agreement with Mr. Jimmerson on
August 15, 2007. In that agreement, we agree to employ
Mr. Jimmerson as our Chief Financial Officer. That
agreement has all of the same terms as Mr. Slaughters
agreement, including subsequent amendments as to term, except
Mr. Jimmersons initial annual base salary was set at
$180,000, subject to increase from time to time, and his annual
target bonus potential was 35.0% of his base salary. In 2010,
Mr. Jimmersons annual target bonus opportunity was
increased to 50.0% of his base salary.
Mr. Eliassen
Our subsidiary, RigNet AS, is a party to an employment agreement
with Mr. Eliassen effective as of June 1, 2010. Our
subsidiary agreed to employ Mr. Eliassen as Vice
President & General Manager, Europe Middle East
Africa. Through a subsequent amendment, we agreed to employ
Mr. Eliassen through November 15, 2011, and will
automatically extend the term of his employment for successive
one year periods unless either we or Mr. Eliassen give
notice of non-renewal at least 90 days before the end of
any term. Our subsidiary agreed to pay Mr. Eliassen a
monthly base salary of $16,667, plus net adjustments of $3,333
per month and an annual target bonus potential of 30.0% of his
base salary. Our subsidiary also agreed to provide
Mr. Eliassen with housing, a tax equalization benefit equal
to the taxes he would have paid in the United States, closing
costs on a United States home sale, standard house appliances,
repatriation back to the United States if his employment is
involuntarily terminated, use of a company car, two trips back
to the United States each year, and tax allowance for taxes
incurred on these benefits.
Mr. Eliassen agreed not to compete with our subsidiary in
any geographical area in which our subsidiary does or plans to
provide services on the date of termination for a period of
12 months after the date of termination. Mr. Eliassen
also will not hire or induce any employees of our subsidiary to
cease their employment with our subsidiary during the same
12 month period. The payments due to Mr. Eliassen upon
termination of his employment with us under various conditions
and the treatment of the shares of stock that he owns in us
(including any options for such shares that he may hold) are the
same as those stated above in the discussion of
Mr. Slaughters agreement, except that the lump sum
cash severance amount may vary, as it will be negotiated in good
faith at the time of termination.
Mr. Sutton
We also agreed to a similar agreement with Mr. Sutton on
May 18, 2010. In that agreement, we agree to employ
Mr. Sutton as our Vice President, General Counsel and
Corporate Secretary. That agreement has all of the same terms as
Mr. Slaughters agreement, including a subsequent
amendment as to term, except Mr. Suttons initial
annual base salary was set at $172,784, his annual target bonus
potential was 30.0% of his base salary and he is not entitled to
a gross-up
for excise taxes imposed by Section 4999 of the Internal
Revenue Code as discussed above.
20
Mr. Maytorena
We entered into an employment agreement effective as of
May 18, 2010 with Mr. Maytorena, our Vice President
and General Manager, Americas. That agreement has all of the
same terms as Mr. Slaughters agreement, including a
subsequent amendment as to term, except Mr. Maytorena
initial annual base salary was set at $150,000, his annual
target bonus potential was 30.0% of his base salary, and he is
not entitled to a
gross-up for
excise taxes imposed by Section 4999 of the Internal
Revenue Code as discussed above.
Determining
the Amount of Each Element of Compensation
The amount of each element of our compensation program is
determined by our compensation committee on an annual basis
taking into consideration the results of our operations, long
and short-term goals, individual goals, and the competitive
market for our executives and the experience of our compensation
committee members with similar companies and general economic
factors.
Base
Compensation
In 2010, compensation levels were adjusted based on individual
merit, third-party data and cost of living factors considering
each individuals respective level of responsibility within
a private company. Our Compensation Committee used data from a
purchased a third party compensation report from Cogent as one
of the factors that they considered in setting compensation in
2010, but the Committee did not give the study much weight
because much of the data was based on compensation of public
company executives and the Committee did not attempt to
benchmark the compensation of our executives to any particular
percentile of the range of compensation in that study. That
study did not contain objectively verifiable comparisons for
Mr. Eliassen and Mr. Maytorena or an identifiable peer
group and was of limited value, since it included public company
data and we were still a private company. The Compensation
Committee instead relied on an internal review of the
executives compensation, changes in responsibilities and
the Compensation Committees experience with other similar
companies.
For 2010, the Compensation Committee recommended and the Board
of Directors approved an aggregate pool for compensation
adjustments expressed as a percentage of eligible compensation
for all employees. This was equal to 5.0% of eligible
compensation of all employees (3.1% for merit increases, 0.9%
for market adjustments, and 1.0% for special retention and
completion). For our named executive officers, the Compensation
Committee considered performance, career potential, need for
retention, tenure and skills for the position and overall
responsibilities as well as relative compensation based on the
2010 Cogent compensation study subject to the overall funding
pools described above. Compensation increases were approved to
recognize our executives individual performance such that
Mr. Slaughter and Mr. Jimmerson each received 7.1%
increases. Mr. Suttons base compensation was
increased 21.5%, based on a recommendation of the CEO, to
recognize his performance, level of responsibility and
importance to the Company. Mr. Eliassens base salary
level was increased 17.6% commensurate with his responsibility
of managing operations of a large geographic region in our
Company and in recognition for his length of service with the
Company and the importance of his position.
Mr. Maytorenas base salary was increased 16.7% to a
level commensurate with his responsibility of operating another
large geographic region for our company and in recognition and
increased responsibility in his position.
In 2009, due to the harsh economic conditions, we did not
provide increases in base salaries to our named executive
officers unless they received a promotion or assumed additional
duties. Mr. Eliassen received an increase as a result of
adding the operations of the Middle East to his duties effective
May 2009. Mr. Maytorena received an increase as a result of
his promotion and assuming increased operational
responsibilities in October 2009. Our other named executive
officers received no increases.
21
Changes in base compensation in 2010 are summarized in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar
|
|
Percentage
|
|
|
Base Salary
|
|
Increase
|
|
Increase
|
Name
|
|
2010
|
|
2009
|
|
2010
|
|
2010
|
|
Mark Slaughter
|
|
$
|
281,400
|
|
|
$
|
262,784
|
|
|
$
|
18,616
|
|
|
|
7.1
|
%
|
Martin Jimmerson
|
|
|
234,300
|
|
|
|
218,784
|
|
|
|
15,516
|
|
|
|
7.1
|
%
|
Lars Eliassen
|
|
|
200,000
|
|
|
|
170,000
|
|
|
|
30,000
|
|
|
|
17.6
|
%
|
William Sutton
|
|
|
210,000
|
|
|
|
172,784
|
|
|
|
37,216
|
|
|
|
21.5
|
%
|
Hector Maytorena
|
|
|
175,000
|
|
|
|
150,000
|
|
|
|
25,000
|
|
|
|
16.7
|
%
|
In 2011, we have established a peer group and are transitioning
to a market-based pay philosophy across base pay, variable
compensation and long-term equity awards. On March 21,
2011, our Compensation Committee evaluated data from our peer
group and recommended base compensation levels and variable
compensation targets, which were approved by the Board for our
named executive officers. Mr. Slaughters base
compensation was increased 17.3% to the 25th percentile based on
peer group data and his targeted MIP bonus level was increased
to 100.0%, the midpoint of the range of our peer group annual
incentive target percentages, to recognize his increased
responsibilities in running a public company and incentivize
continued achievement of goals. Mr. Jimmersons base
compensation was increased 6.7%, which represents the 36th
percentile compared to our peer group data and his targeted MIP
bonus was increased to 60.0%, the midpoint of the range of our
peer group annual incentive target percentages, to recognize his
increased responsibilities in managing the finances and
achieving financial reporting compliance for a public company
and in recognition of his past experience and performance in
serving as a chief financial officer. Mr. Eliassens
base compensation was increased 2.8% to the 25th percentile
based on peer group data and his targeted MIP bonus level was
increased to 50.0%, representing 95.0% of midpoint of the range
of our peer group annual incentive target percentages, to
recognize his importance and experience in running the
operations of a large geographic region within the company and
incentivize continued achievement of both financial and
individual goals. Mr. Suttons base compensation was
increased 11.9% to the 39th percentile based on peer group data
and his targeted MIP bonus level was increased to 60.0%, the
average of the midpoint of the range and average percentage of
our peer groups annual incentive target percentages, to
recognize his increased responsibilities in compliance and risk
management, increased workload and past experience performing
these duties in a public company, as well as to incentivize
continued achievement of goals. Mr. Maytorenas base
compensation was increased 2.7% to the
24th
percentile based on peer group data and his targeted MIP bonus
level was increased to 50.0%, representing 95.0% of the midpoint
of the range of our peer group annual incentive target
percentages, to recognize his importance and experience in
running the operations of a large geographic region within the
company and incentivize continued achievement of both financial
and individual goals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar
|
|
Percentage
|
|
2011
|
|
|
Base Salary
|
|
Increase
|
|
Increase
|
|
Target MIP
|
Name
|
|
2011
|
|
2010
|
|
2011
|
|
2011
|
|
Bonus Level
|
|
Mark Slaughter
|
|
$
|
330,000
|
|
|
$
|
281,400
|
|
|
$
|
48,600
|
|
|
|
17.3
|
%
|
|
|
100.0
|
%
|
Martin Jimmerson
|
|
|
250,000
|
|
|
|
234,300
|
|
|
|
15,700
|
|
|
|
6.7
|
%
|
|
|
60.0
|
%
|
Lars Eliassen
|
|
|
205,580
|
|
|
|
200,000
|
|
|
|
5,580
|
|
|
|
2.8
|
%
|
|
|
50.0
|
%
|
William Sutton
|
|
|
235,000
|
|
|
|
210,000
|
|
|
|
25,000
|
|
|
|
11.9
|
%
|
|
|
60.0
|
%
|
Hector Maytorena
|
|
|
179,725
|
|
|
|
175,000
|
|
|
|
4,725
|
|
|
|
2.7
|
%
|
|
|
50.0
|
%
|
Variable
Compensation
The Compensation Committee considers variable cash compensation
targets and performance for our executives annually with
distributions typically made during the first calendar quarter
of the next year after determination of whether goals have been
achieved. The Compensation Committee may adjust an executive
officers variable cash compensation up to 25.0% based on
the individuals performance and contribution to Company
results. However, individual payouts under the MIP cannot exceed
2.5 times target payout and total variable compensation payouts
for all employees as a group are limited to 5.0% for 2010 and
5.5% for 2011 of Adjusted EBITDA for management and employee
incentives, other than sales commissions.
22
The following summarizes the financial targets and achievement
of those targets for 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Resulting
|
Name
|
|
Plan
|
|
Actual
|
|
of Plan
|
|
Multiplier
|
|
|
(In millions
|
|
(In millions
|
|
|
|
|
|
|
except DSO)
|
|
except DSO)
|
|
|
|
|
|
Consolidated Management EBITDA
|
|
$
|
32.0
|
|
|
$
|
29.8
|
|
|
|
93.2
|
%
|
|
|
82.9
|
%
|
Consolidated Revenue
|
|
$
|
92.6
|
|
|
$
|
93.3
|
|
|
|
100.8
|
%
|
|
|
100.8
|
%
|
Consolidated DSO
|
|
|
60.0
|
|
|
|
60.0
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Mr. Eliassens Management EBITDA
|
|
$
|
23.2
|
|
|
$
|
23.7
|
|
|
|
102.0
|
%
|
|
|
105.0
|
%
|
Mr. Eliassens Revenue
|
|
$
|
47.9
|
|
|
$
|
49.0
|
|
|
|
102.2
|
%
|
|
|
102.2
|
%
|
Mr. Eliassens DSO
|
|
|
60.0
|
|
|
|
77.2
|
|
|
|
77.7
|
%
|
|
|
0.0
|
%
|
Mr. Maytorenas Management EBITDA
|
|
$
|
12.1
|
|
|
$
|
10.7
|
|
|
|
88.0
|
%
|
|
|
70.0
|
%
|
Mr. Maytorenas Revenue
|
|
$
|
30.0
|
|
|
$
|
30.1
|
|
|
|
100.3
|
%
|
|
|
100.3
|
%
|
Mr. Maytorenas DSO
|
|
|
60.0
|
|
|
|
71.7
|
|
|
|
83.7
|
%
|
|
|
83.7
|
%
|
The percentage of plan was compared to the table described above
in Elements of our Executive Compensation
Program Variable Compensation to obtain the
target multiplier. The 2010 bonus formula multiplied each
executive officers potential target bonus as a percentage
of their base salary multiplied by the sum of (i) 65.0% of
the consolidated Management EBITDA multiplier, plus
(ii) 20.0% of the consolidated revenue multiplier and
(iii) 15.0% of the consolidated DSO multiplier; provided,
however, that for Mr. Eliassen and Mr. Maytorena, the
Management EBITDA, Revenue and DSO multipliers were based 70.0%
upon their respective operational areas and 30.0% of the
consolidated multipliers. The results of which are reported as
non-equity incentive plan compensation for 2010 in
the 2010 Summary Compensation Table. During 2010, the resulting
bonuses were adjusted, on a discretionary basis to reflect each
individuals performance during the year, resulting in the
following adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target MIP
|
|
Target
|
|
Computed
|
|
Discretionary
|
|
|
Name
|
|
Base Salary
|
|
Bonus Level
|
|
100% Payout
|
|
MIP Amount
|
|
Adjustment
|
|
Total
|
|
Mark Slaughter
|
|
$
|
281,400
|
|
|
|
75.0
|
%
|
|
$
|
211,050
|
|
|
$
|
187,939
|
|
|
$
|
43,104
|
|
|
$
|
231,043
|
|
Martin Jimmerson
|
|
|
234,300
|
|
|
|
50.0
|
%
|
|
|
117,150
|
|
|
|
104,322
|
|
|
|
18,582
|
|
|
|
122,904
|
|
Lars Eliassen
|
|
|
200,000
|
|
|
|
30.0
|
%
|
|
|
60,000
|
|
|
|
53,274
|
|
|
|
4,032
|
|
|
|
57,306
|
|
William Sutton
|
|
|
210,000
|
|
|
|
30.0
|
%
|
|
|
63,000
|
|
|
|
56,101
|
|
|
|
9,993
|
|
|
|
66,094
|
|
Hector Maytorena
|
|
|
175,000
|
|
|
|
30.0
|
%
|
|
|
52,500
|
|
|
|
42,738
|
|
|
|
3,235
|
|
|
|
45,973
|
|
For 2010, discretionary adjustments were made in recognition of
executive team and individual performance related to the
achievement of financial goals, the success of the IPO,
expansion of operations in Brazil, realization of stockholder
return, and increased workloads during a time of market and
industry uncertainty related to drilling operations in the Gulf
of Mexico. In addition to the 2.45% incremental incentive payout
pool established for all employees, the Board approved
discretionary adjustments for the named executive officers as
follows. Mr. Slaughter received a 2010 discretionary
increase of 20.0% over his formulaic payout and company-wide
pool adjustment based upon his leadership resulting in the
achievement of financial goals, success of the IPO, expansion of
operations in Brazil and realization of stockholder return.
Mr. Jimmerson received a 2010 discretionary increase of 15%
over his formulaic payout and the company-wide pool adjustment
based upon his continued strong fiscal management in achieving
financial goals, success of the IPO, increased workload, and
realization of stockholder return as well as his progress in
establishing improvements in our internal controls and
remediating our material weakness. Mr. Eliassen received a
discretionary increase of 5% over his formulaic payout and the
company-wide pool adjustment based upon his strong stewardship
over the Europe, Middle East and Africa regions during a time of
market and industry uncertainty and his role in achieving
financial goals and providing stockholder return.
Mr. Sutton received a discretionary increase of 15% over
his formulaic payout and the company-wide pool adjustment based
upon his strong contributions in continuous improvement related
to establishing compliance oversight, improving our contracting
process, and helping us prepare for a public listing from a
legal perspective. Mr. Maytorena received a discretionary
increase of 5% under his formulaic payout and the company-wide
pool adjustment for
23
his increased workload related to the expansion of operations in
Brazil and delivery of results during a time of market and
industry uncertainty related to drilling operations in the Gulf
of Mexico.
In addition, IPO success bonuses were awarded to
Messrs. Slaughter, Jimmerson and Sutton to reward those who
were most directly associated with preparing our Company for its
IPO of $100,000, $100,000 and $60,000, respectively. One half of
the awarded amount was paid in cash in December 2010 upon
completion of the IPO and one half will be paid in cash subject
to continued service through December 20, 2011.
Equity-Based
Awards
Our Compensation Committee typically makes annual grants of
equity awards to our employees in connection with its annual
review of our employees compensation and then throughout
the year our Compensation Committee evaluates grants for new
hires, promotions or other changes that may warrant additional
grants. We do not have any program, plan or practice to time
option grants in coordination with the release of material
non-public information. Prior to completion of our IPO, our
Compensation Committee determined the exercise price of options
based on valuations determined by the board of directors. As a
publicly traded company, our Compensation Committee will utilize
the trading price of our common stock on the date of grant as
the exercise price of option grants.
Grants were made on January 1, 2010 as part of our normal
annual review of equity awards and annual compensation to
incentivize our executives for the long-term success of our
Company. 2010 awards were consistent with levels provided in
prior years based on each executives level of
responsibility within our Company.
2010
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
Under Non-equity Incentive Plan
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80.0%
|
|
|
100.0%
|
|
|
|
|
|
Securities
|
|
|
Exercise
|
|
|
Grant
|
|
|
|
|
|
|
Grant
|
|
|
EBITDA
|
|
|
Target
|
|
|
250.0%
|
|
|
Underlying
|
|
|
Price per
|
|
|
Date Fair
|
|
Name
|
|
|
|
|
Date
|
|
|
Threshold
|
|
|
Payout
|
|
|
Maximum(1)
|
|
|
Options
|
|
|
Share(2)
|
|
|
Value(3)
|
|
|
Mark Slaughter
|
|
|
|
|
|
|
1/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
8.48
|
|
|
$
|
58,650
|
|
|
|
|
|
|
|
|
|
|
|
$
|
68,591
|
|
|
$
|
211,050
|
|
|
$
|
527,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Jimmerson
|
|
|
|
|
|
|
1/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
8.48
|
|
|
|
48,875
|
|
|
|
|
|
|
|
|
|
|
|
|
38,074
|
|
|
|
117,150
|
|
|
|
292,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lars Eliassen
|
|
|
|
|
|
|
1/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
8.48
|
|
|
|
24,438
|
|
|
|
|
|
|
|
|
|
|
|
|
5,850
|
|
|
|
60,000
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William Sutton
|
|
|
|
|
|
|
1/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
8.48
|
|
|
|
24,438
|
|
|
|
|
|
|
|
|
|
|
|
|
20,475
|
|
|
|
63,000
|
|
|
|
157,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hector Maytorena
|
|
|
|
|
|
|
1/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
8.48
|
|
|
|
24,438
|
|
|
|
|
|
|
|
|
|
|
|
|
5,119
|
|
|
|
52,500
|
|
|
|
131,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The MIP provided for cash incentive bonuses based upon each
financial metric if the threshold of consolidated Adjusted
EBITDA achieved 80.0% of plan/budget. The individual bonus
payment is also limited to 2.5 times the target amount and
further subject to a funding limit of 5.0% for 2010 of Adjusted
EBITDA for all management and employee incentives, other than
sales commissions, for all of our employees as a group. |
|
(2) |
|
For a discussion of our methodology in determining the fair
value of our common stock see Note 12, Stock-Based
Compensation, to our audited financial statements included in
our Annual Report on
Form 10-K
for the year ended December 31, 2010. |
|
(3) |
|
Assumptions used in the determination of these amounts which
represent grant date fair value are included in Note 12,
Stock-Based Compensation, to our audited financial statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2010. |
24
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
Options -
|
|
Options -
|
|
Exercise
|
|
Expiration
|
Name
|
|
Exercisable(1)
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Mark Slaughter
|
|
|
144,844
|
|
|
|
48,281
|
(2)
|
|
$
|
7.00
|
|
|
1/1/2017
|
|
|
|
6,250
|
|
|
|
6,250
|
(3)
|
|
|
9.64
|
|
|
1/1/2018
|
|
|
|
8,750
|
|
|
|
26,250
|
(4)
|
|
|
5.32
|
|
|
8/19/2019
|
|
|
|
|
|
|
|
15,000
|
(5)
|
|
|
8.48
|
|
|
1/1/2020
|
Martin Jimmerson
|
|
|
82,781
|
|
|
|
27,594
|
(2)
|
|
|
7.00
|
|
|
1/1/2017
|
|
|
|
6,250
|
|
|
|
6,250
|
(3)
|
|
|
9.64
|
|
|
1/1/2018
|
|
|
|
5,625
|
|
|
|
16,875
|
(4)
|
|
|
5.32
|
|
|
8/19/2019
|
|
|
|
|
|
|
|
12,500
|
(5)
|
|
|
8.48
|
|
|
1/1/2020
|
Lars Eliassen
|
|
|
10,000
|
|
|
|
|
(6)
|
|
|
2.40
|
|
|
1/1/2015
|
|
|
|
12,500
|
|
|
|
|
(7)
|
|
|
4.00
|
|
|
3/1/2016
|
|
|
|
4,688
|
|
|
|
1,562
|
(8)
|
|
|
8.32
|
|
|
5/1/2017
|
|
|
|
3,125
|
|
|
|
3,125
|
(3)
|
|
|
9.64
|
|
|
1/1/2018
|
|
|
|
1,563
|
|
|
|
4,687
|
(9)
|
|
|
5.32
|
|
|
1/1/2019
|
|
|
|
|
|
|
|
6,250
|
(5)
|
|
|
8.48
|
|
|
1/1/2020
|
William Sutton
|
|
|
6,250
|
|
|
|
6,250
|
(3)
|
|
|
9.64
|
|
|
1/1/2018
|
|
|
|
1,563
|
|
|
|
4,687
|
(9)
|
|
|
5.32
|
|
|
1/1/2019
|
|
|
|
|
|
|
|
6,250
|
(5)
|
|
|
8.48
|
|
|
1/1/2020
|
Hector Maytorena
|
|
|
4,688
|
|
|
|
1,562
|
(10)
|
|
|
11.00
|
|
|
11/5/2017
|
|
|
|
3,125
|
|
|
|
3,125
|
(3)
|
|
|
9.64
|
|
|
1/1/2018
|
|
|
|
1,563
|
|
|
|
4,687
|
(9)
|
|
|
5.32
|
|
|
1/1/2019
|
|
|
|
|
|
|
|
6,250
|
(5)
|
|
|
8.48
|
|
|
1/1/2020
|
|
|
|
(1) |
|
The options reflected in the table above, except the options
awarded prior to January 1, 2007, vest as to one-fourth of
the total number of shares on the first, second, third and
fourth year anniversary of the date of award specified in the
award agreement. |
|
(2) |
|
The date of the award was January 1, 2007. |
|
(3) |
|
The date of the award was January 1, 2008. |
|
(4) |
|
The date of the award was August 19, 2009. |
|
(5) |
|
The date of the award was January 1, 2010. |
|
(6) |
|
The date of the award was January 1, 2005 which vested
immediately. |
|
(7) |
|
The date of the award was March 1, 2006 which one forth
vested immediately and on the first, second and third year
anniversary of the date of award specified in the award
agreement. |
|
(8) |
|
The date of the award was May 1, 2007. |
|
(9) |
|
The date of the award was January 1, 2009. |
|
(10) |
|
The date of the award was November 5, 2007. |
25
In addition, Committee recommended and the Board approved the
following equity awards to our named executive officers on
March 23, 2011 as part of the executives approved
2011 compensation:
|
|
|
|
|
|
|
|
|
|
|
Number of Securities Underlying
|
|
|
|
Stock Option
|
|
|
Restricted
|
|
Name
|
|
Awards
|
|
|
Stock Awards
|
|
|
Mark Slaughter
|
|
|
47,536
|
|
|
|
20,291
|
|
Martin Jimmerson
|
|
|
25,209
|
|
|
|
10,761
|
|
Lars Eliassen
|
|
|
14,405
|
|
|
|
6,149
|
|
William Sutton
|
|
|
23,696
|
|
|
|
10,115
|
|
Hector Maytorena
|
|
|
12,604
|
|
|
|
5,380
|
|
The above equity awards were made consistent with our philosophy
that such awards should enhance our ability to retain executives
and align individual performance with the objectives of our
stockholders. In determining the above awards, the number of
share awards for our named executive officers were allocated
70.0% to stock options and 30.0% to restricted stock awards. All
awards vest ratably over the next four years. Total stock awards
for each individual were determined as the amount that would
provide a potential total compensation for 2011 approximating
the 75th percentile compared to total direct compensation of our
peer group for each position, subject to achievement of
financial and individual performance results which will be
evaluated based on planned versus actual financial and
individual performance goals.
OPTION
EXERCISES AND VESTING OF RESTRICTED STOCK
None of our named executive officers exercised any stock options
during 2010 or had any restricted stock that vested.
PENSION
BENEFITS
We do not provide pension benefits for our named executive
officers or other employees. Retirement benefits are provided
through the Savings Plan discussed below.
NON-QUALIFIED
DEFERRED COMPENSATION
We do not have a non-qualified deferred compensation plan and as
such, no compensation has been deferred by our named executive
officers or our other employees. The Savings Plan is a 401(k)
deferred compensation arrangement and a qualified plan under
section 401(a) of the Internal Revenue Code (the
Code).
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
Payments
Made Upon Termination
Regardless of the manner in which an executive officers
employment terminates, the executive will be entitled to receive
amounts earned (but unpaid) during his term of employment. Such
amounts include:
|
|
|
|
|
earned, but unpaid base salary;
|
|
|
target non-equity incentive compensation earned during the
fiscal year;
|
|
|
unused vacation pay; and
|
|
|
amounts contributed and vested through our Savings Plan.
|
If the executives separation is the result of death or
Disability, the executive or his or her estate shall
receive the above benefits, any long-term disability benefits
and all unexercisable equity awards shall immediately vest and
become exercisable.
The employment agreements with each of our executives also
provide certain benefits if their employment is terminated by us
by other than cause, by then for good reason or as a
result of Change of Control the executive officer
shall receive:
|
|
|
|
|
severance payment of one times the executives current base
salary;
|
26
|
|
|
|
|
severance payment of one times the executives current
target under the MIP;
|
|
|
|
COBRA continuation coverage up to a period of eighteen months;
|
|
|
|
the executive may receive, if approved by the Board, an amount
equal to the excise tax charged to the executive as a result of
the receipt of any change of control payments;
|
|
|
|
all stock options awards held by the executive will
automatically vest and become exercisable; and
|
|
|
|
outplacement services at a cost up to $20,000.
|
Excise
Taxes
If any benefits payable or otherwise provided under each named
executive officers employment agreement would be subject
to the excise tax imposed by Section 4999 of the Code (the
Excise Tax), then the Board may, in its sole
discretion, provide for the payment of, or otherwise reimburse
the executive for, an amount up to such Excise Tax and any
related taxes, fees or penalties thereon as the Board may
consider to be customary and appropriate for a comparable public
company.
Quantification
of Payments on Termination
The chart below reflects the amount of compensation to each of
our named executive officers in the event of termination of such
executives employment pursuant to his employment agreement
and our stock compensation plans. The amount of compensation
payable to each executive officer upon voluntary termination
with Good Reason, involuntary termination other than
for Cause, termination following a Change of
Control and the occurrence of the Disability
or death of the executive is shown below. The amounts shown are
calculated assuming that such termination was effective as of
December 31, 2010, and thus include amounts earned through
such time (other than amounts payable pursuant to our Savings
Plan) and are estimates of the amounts which would be paid out
to the executives upon their termination. The actual amounts to
be paid out may only be determined at the time of the
executives actual separation from us.
POST
EMPLOYMENT COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health &
|
|
|
|
|
Severance
|
|
Options
|
|
Welfare
|
|
Total
|
Name
|
|
Payment
|
|
(Unvested)(1)
|
|
Benefits
|
|
Benefit
|
|
Mark Slaughter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death/Disability
|
|
$
|
|
|
|
$
|
640,430
|
|
|
$
|
|
|
|
$
|
640,430
|
|
Other than Cause, Change in Control or Good Reason
|
|
|
521,032
|
|
|
|
640,430
|
|
|
|
28,477
|
|
|
|
1,189,939
|
|
Martin Jimmerson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death/Disability
|
|
|
|
|
|
|
412,490
|
|
|
|
|
|
|
|
412,490
|
|
Other than Cause, Change in Control or Good Reason
|
|
|
381,653
|
|
|
|
412,490
|
|
|
|
28,477
|
|
|
|
822,620
|
|
Lars
Eliassen(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death/Disability
|
|
|
|
|
|
|
91,906
|
|
|
|
|
|
|
|
91,906
|
|
Other than Cause, Change in Control or Good Reason
|
|
|
280,000
|
|
|
|
91,906
|
|
|
|
24,385
|
|
|
|
396,291
|
|
William Sutton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death/Disability
|
|
|
|
|
|
|
96,078
|
|
|
|
|
|
|
|
96,078
|
|
Other than Cause, Change in Control or Good Reason
|
|
|
297,038
|
|
|
|
96,078
|
|
|
|
18,340
|
|
|
|
411,456
|
|
Hector Maytorena
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death/Disability
|
|
|
|
|
|
|
87,719
|
|
|
|
|
|
|
|
87,719
|
|
Other than Cause, Change in Control or Good Reason
|
|
|
247,500
|
|
|
|
87,719
|
|
|
|
27,958
|
|
|
|
363,177
|
|
|
|
|
(1) |
|
See the table Outstanding Equity Awards as of December 31,
2010 presented earlier in this section of the proxy. |
|
(2) |
|
Under Norwegian law, Mr. Eliassens employment
agreement provides that the cash severance amount payable to
Mr. Eliassen will be negotiated in good faith at the time
of severance. |
27
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis included in this Proxy
Statement with management and, based on such review and
discussions, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in this proxy statement.
Submitted By:
Compensation Committee
Kevin Neveu, Chairman
Charles L. Davis
Thomas M. Matthews
Kevin J. OHara
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 24, 2011, the
number of shares beneficially owned by: (i) each person who
is known to us to beneficially own more than 5.0% of a class of
shares; (ii) the current directors and nominees of our
Board of Directors; (iii) each named executive officer
included in the Summary Compensation Table; and (iv) all
current directors and named executive officers as a group. We
obtained certain information in the table from filings made with
the SEC. Unless otherwise noted; each beneficial owner has sole
voting power and sole investment power.
Unless indicated in the notes, to our knowledge each stockholder
has sole voting and investment power for all shares shown,
subject to community property laws that may apply to create
shared voting and investment power. Unless indicated in the
notes, the address of each beneficial owner is
c/o RigNet,
Inc., 1880 S. Dairy Ashford, Suite 300, Houston,
Texas
77077-4760.
We calculated the percentage of shares outstanding based on
15,396,034 shares of common stock outstanding on
March 24, 2011. In accordance with SEC regulations, we also
include (1) shares subject to options that are currently
exercisable or will become exercisable within 60 days of
March 24, 2011, and (2) shares issuable upon
settlement of restricted stock units that are vested, or will
become vested within 60 days of March 24, 2011. Those
shares are deemed to be outstanding and beneficially owned by
the person holding such option or restricted stock unit for the
purpose of computing the percentage ownership of that person,
but they are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.
28
Security
Ownership Table
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percentage of
|
|
|
|
Shares
|
|
|
Shares
|
|
|
|
Beneficially
|
|
|
Beneficially
|
|
Name of Beneficial Owner
|
|
Owned
|
|
|
Owned
|
|
|
5.0% Stockholders:
|
|
|
|
|
|
|
|
|
Energy Growth
AS(1)
|
|
|
4,883,010
|
|
|
|
30.1
|
%
|
Altira Group
LLC(2)
|
|
|
2,546,700
|
|
|
|
16.2
|
%
|
Sanders Morris Harris Group,
Inc.(3)
|
|
|
2,448,235
|
|
|
|
15.7
|
%
|
T. Rowe Price Associates,
Inc.(4)
|
|
|
879,182
|
|
|
|
5.7
|
%
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
Mark
Slaughter(5)
|
|
|
277,832
|
|
|
|
1.8
|
%
|
Martin
Jimmerson(6)
|
|
|
169,163
|
|
|
|
1.1
|
%
|
Lars
Eliassen(7)
|
|
|
50,524
|
|
|
|
|
*
|
William
Sutton(8)
|
|
|
24,178
|
|
|
|
|
*
|
Hector
Maytorena(9)
|
|
|
21,005
|
|
|
|
|
*
|
Non-Employee Directors:
|
|
|
|
|
|
|
|
|
Thomas M.
Matthews(10)
|
|
|
3,482
|
|
|
|
|
*
|
James H.
Browning(10)
|
|
|
3,482
|
|
|
|
|
*
|
Charles L.
Davis(11)
|
|
|
2,448,235
|
|
|
|
15.7
|
%
|
Kevin
Neveu(12)
|
|
|
17,482
|
|
|
|
|
*
|
Kevin J.
OHara(10)
|
|
|
3,482
|
|
|
|
|
*
|
Keith
Olsen(10)
|
|
|
3,482
|
|
|
|
|
*
|
Brent K.
Whittington(10)
|
|
|
3,482
|
|
|
|
|
*
|
All of our directors and executive officers as a group
(12 persons)
|
|
|
3,025,829
|
|
|
|
18.8
|
%
|
|
|
|
* |
|
Less than 1.0% of class |
|
(1) |
|
Energy Growth AS owns the shares. It is owned 100.0% by Energy
Growth Holding AS, which is owned 100.0% by CSV III AS, which is
owned 60.0% by the limited partnership Cubera Secondary KS. The
General Partner is the limited partnership Cubera Secondary (GP)
KS which owns 10.0% of Cubera Secondary KS. Cubera Secondary
(GP) AS owns 10.0% of Cubera Secondary (GP) KS and is the
ultimate General Partner. Jørgen Kjærnes is the
Chairman of the Board and Managing Director of Cubera Secondary
(GP) AS. All such entities and Mr. Kjærnes disclaim
beneficial ownership of such shares except to the extent of
their pecuniary interests in such shares. Includes
833,319 shares of common stock subject to warrants which
are exercisable as of December 31, 2010. No other shares
are exercisable within 60 days of March 24, 2011. |
|
(2) |
|
Altira Group LLC is the Managing Member of Altira Technology
Fund III LLC, or Fund III. Additionally, Altira Group
LLC is the Managing Member, and sole member, of Altira
Management IV LLC, which is the General Partner of Altira
Technology Fund IV L.P., or Fund IV. Altira Group LLC
and Altira Management IV LLC are collectively referred to
as the GP. Fund III and Fund IV, which own the
referenced shares, are collectively referred to as the Funds.
Dirk McDermott and Carol McDermott are the members of Altira
Group LLC, or the Managers. The GP and the Managers may vote or
sell securities owned by the Funds. The GP and each of the
Managers disclaim beneficial ownership of the shares owned by
the funds except to the extent of their pecuniary interests.
Includes 367,158 shares of common stock subject to warrants
which are exercisable as of December 31, 2010. No other
shares are exercisable within 60 days of March 24,
2011. |
|
(3) |
|
Ownership is consistent with a Schedule 13G filed with the
SEC in December 2010. Sanders Morris Harris Group, Inc. owns
100.0% of Sanders Morris Harris, Inc., which owns 13,757 of the
referenced shares. The Board of Directors of Sanders Morris
Harris Group, Inc. consists of George L. Ball, Richard E. Bean,
Charles W. Duncan, III, Frederic M. Edelman, Scott B.
McClelland, Ben T. Morris, Albert W. Niemi, Jr., Don A. Sanders,
and W. Blair Waltrip. SOF Management, LLC, or SOF, is the
General Partner of Sanders |
29
|
|
|
|
|
Opportunity Fund, L.P. which owns 102,690 of the referenced
shares, and Sanders Opportunity Fund (Institutional), L.P.,
which owns 346,714 of the referenced shares. Don A. Sanders is
the chief investment officer of SOF and may vote or sell
securities owned by the funds. Sanders Morris Harris Inc. is the
sole member of SOF. SMH PEG II Management I, LLC is the
General Partner of SMH Private Equity Group I, LP, which
owns 968,816 of the referenced shares. Charles L. Davis IV,
Bruce R. McMaken and Ben T. Morris are the managers of the
General Partner. The General Partner and the Managers may vote
or sell securities owned by SMH Private Equity Group I. Sanders
Morris Harris Inc. owns a 62.5% member interest in the General
Partner. SMH PEG II Management II, LLC, which owns 10,164 of the
referenced shares, is the General Partner of SMH Private Equity
Group II, LP, which owns 551,508 of the referenced shares.
Charles L. Davis IV, Bruce R. McMaken and Ben T. Morris are the
managers of the General Partner. The General Partner and the
Managers may vote or sell securities owned by SMH Private Equity
Group I. Sanders Morris Harris Inc. owns approximately a 51.4%
member interest in the General Partner. Don A. Sanders owns
132,536 of the referenced shares and brokerage clients he
represents own 86,256 of the referenced shares. Charles L.
Davis, a manager of two of the private equity funds owns
8,000 shares of the referenced shares. All such entities
and individuals disclaim beneficial ownership of the referenced
shares except to the extent of their pecuniary interests.
Includes 224,312 shares of common stock subject to warrants
which are exercisable as of December 31, 2010. No other
shares are exercisable within 60 days of March 24,
2011. |
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(4) |
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Ownership is based on a Schedule 13G filed with the SEC on
February 10, 2011 by T. Rowe Price Associates, Inc. Their
address is 100 East Pratt Street, Baltimore, Maryland 21207. T.
Rowe Price Associates, Inc. reported that it had sole
dispositive power as to all such shares, but only sole voting
power with respect to 160,175 of such shares. |
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(5) |
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Includes 252,291 shares of stock subject to options and
warrants which are exercisable within 60 days of
March 24, 2011. Also includes 5,000 shares of stock
and 20,291 shares of restricted stock. Also includes
125 shares of stock owned by Kristen Slaughter, who is
Mr. Slaughters daughter, and 125 shares of stock
owned by Leslie Slaughter, who is Mr. Slaughters
daughter. Mr. Slaughter disclaims beneficial ownership of
the shares owned by Kristen Slaughter and Leslie Slaughter. |
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(6) |
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Includes 153,152 shares of stock subject to options and
warrants which are exercisable within 60 days of
March 24, 2011. Also includes 5,250 shares of common
stock and 10,761 shares of restricted stock. |
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(7) |
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Includes 38,125 shares of stock subject to options which
are exercisable within 60 days of March 24, 2011. Also
includes 6,250 shares of common stock and 6,149 shares
of restricted stock. |
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(8) |
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Includes 14,063 shares of stock subject to options which
are exercisable within 60 days of March 24, 2011. Also
includes 10,115 shares of restricted stock. |
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(9) |
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Includes 15,625 shares of stock subject to options which
are exercisable within 60 days of March 24, 2011. Also
includes 5,380 shares of restricted stock. |
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(10) |
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Includes 3,482 shares of restricted stock. |
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(11) |
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Consists of the aggregate shares held by Sanders Morris Harris,
Inc. and related entities as reflected in footnote 3 above
including 8,000 shares owned by Mr. Davis directly and
3,482 shares of restricted stock. Mr. Davis is a
manager of two of the private equity funds referenced in
footnote 3. Mr. Davis disclaims beneficial interest of
those shares other than the 8,000 shares he holds directly. |
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(12) |
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Includes 14,000 shares of stock subject to options which
are exercisable within 60 days of March 24, 2011 and
3,482 shares of restricted stock. |
Section 16(A)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our named
executive officers and directors and persons who own more than
10.0% of our common shares to file reports of ownership and
changes in ownership concerning our common shares with the SEC
and to furnish us with copies of all Section 16(a) forms
they file. Based solely upon our review of the
Section 16(a) filings that have been received by us and
repetitions to us by our executive officers and directors, we
believe that all filings required to be made under
Section 16(a) during 2010 were made timely, except that the
original Form 3 for SMH Private Equity Group II, L.P. and
related persons was filed one day late.
30
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of our business, we purchase products or
services from, or engage in other transactions with, various
third parties. Occasionally, these transactions may involve
entities that are affiliated with one or more members of our
Board of Directors. When they occur, these transactions are
conducted in the ordinary course and on an arms-length basis.
Review
and Approval of Related Party Transactions
Under our code of business conduct and ethics, our employees,
officers and directors are discouraged from entering into any
transaction that may cause a conflict of interest for us. In
addition, they must report any potential conflict of interest,
including related party transactions, to their managers or our
general counsel who then reviews and summarizes the proposed
transaction for our Audit Committee. Pursuant to its charter,
our Audit Committee must then approve any related-party
transactions, including those transactions involving our
directors. In approving or rejecting such proposed transactions,
the Audit Committee considers the relevant facts and
circumstances available and deemed relevant to the Audit
Committee, including the material terms of the transactions,
risks, benefits, costs, availability of other comparable
services or products and, if applicable, the impact on a
directors independence. Our Audit Committee will approve
only those transactions that, in light of known circumstances,
are in, or are not inconsistent with, our best interests, as our
Audit Committee determines in the good faith exercise of its
discretion. A copy of our code of business conduct and ethics
and Audit Committee charter may be found at our corporate
website www.rig.net upon the completion of this offering.
Currently, there are no proposed transactions or series of
similar transactions to which we are party for which the amount
involved would exceed $120,000 with one or more of our
directors, named executive officers, holders of more than 5.0%
of any class of our voting securities, or any member of the
immediate family of any of the foregoing persons. However,
between January 1, 2008 and through the completion of our
IPO, there were transactions to which we were or are a party for
which the amount involved exceeded or exceeds $120,000 and in
which had or will have a direct or indirect material interest,
which are described below other than compensation arrangements
with directors and named executive officers, which are described
under the captions Director Compensation and
Executive Compensation appearing elsewhere in this
proxy.
Board of
Directors
Prior to the completion of our IPO in December 2010, the holders
of our preferred stock had contractual rights to appoint four
members of our Board of Directors. The only appointee that
remained on our board following the IPO was Mr. Charles L.
Davis, but we are under no contractual obligation to retain him.
Registration
Rights
Previous holders of our preferred stock, including Cubera, funds
managed by Altira and funds affiliated with Sanders Morris, have
registration rights with respect to the shares that they hold
beginning 180 days after completion of the IPO or such
earlier date as is agreed by Deutsche Bank Securities Inc.
Stockholder
Transactions
In connection with the IPO in December 2010, the Company
converted all preferred stock to 3,470,224 shares of common
stock, settled preference rights through the issuance of
1,678,065 shares of common stock, and redeemed accrued
dividends through the payment of $0.2 million in cash and
issuance of
31
513,013 shares of common stock. The following is a summary
of transactions with our 5.0% stockholders during 2010:
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Common
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Common
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Common
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Shares
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Shares
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Shares
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IPO
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Issued for
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Issued for
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Issued for
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Dividends
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Shares
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Proceeds
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Preferred
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Major Event
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Accrued
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Paid in
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Sold in
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from Sale
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Related Party
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Shares
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Preference
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Dividends
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Cash
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the IPO
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of Shares
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5.0% Stockholders:
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Energy Growth AS
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1,155,057
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752,857
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728,102
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$
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521,739
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$
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6,260,867
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Altira Group
LLC(1)
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834,675
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471,607
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178,254
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197,381
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383,895
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4,606,733
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Sanders Morris Harris Group,
Inc.(2)
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625,336
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394,651
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330,054
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361,484
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4,337,807
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(1) |
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Mr. Dirk McDermott, director on our board from
January 1, 2010 through December 20, 2010 is the
manager of the general partner of the Altira Technology
Fund III LLC, or Fund III., which is the managing
member of Altira Group LLC. Additionally, Altira Group LLC is
the Managing Member, and sole member, of Altira
Management IV LLC, which is the General Partner of Altira
Technology Fund IV L.P., or Fund IV. Altira Group LLC
and Altira Management IV LLC are collectively referred to
as the GP. Fund III and Fund IV, which own the
referenced shares, are collectively referred to as the Funds.
Dirk McDermott and Carol McDermott are the members of Altira
Group LLC, or the Managers. |
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(2) |
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Mr. Charles L. Davis, director on our board and nominee, is
a manager of the two private equity funds affiliated with
Sanders Morris Harris Group, Inc. |
Warrants
The Company issued warrants in conjunction with certain
financing arrangements with stockholders, including
Messrs. Slaughter and Jimmerson and funds and persons
associated with Cubera, Altira, and Sanders Morris. In May 2009,
we repaid all stockholder notes. At December 31, 2010, the
following warrants were outstanding to our 5.0% stockholders and
named executive officers:
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Outstanding
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Weighted
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Warrants at
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Average
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December 31,
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Exercise
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Remaining
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Related Party
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2010
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Price
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Life
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5.0% Stockholders:
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Energy Growth AS
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833,319
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$
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3.83
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4.99
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Altira Group
LLC(1)
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367,158
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5.27
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5.00
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Sanders Morris Harris Group,
Inc.(2)
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224,312
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7.00
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5.02
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Named Executive Officers:
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Mark Slaughter
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28,541
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5.27
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5.00
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Martin Jimmerson
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19,027
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5.27
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5.00
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All of our directors and executive officers as a group
(12 persons)
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271,880
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6.70
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5.01
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(1) |
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Mr. Dirk McDermott, director on our board from
January 1, 2010 through December 20, 2010 is the
manager of the general partner of the Altira Technology
Fund III LLC, or Fund III., which is the managing
member of Altira Group LLC. Additionally, Altira Group LLC is
the Managing Member, and sole member, of Altira
Management IV LLC, which is the General Partner of Altira
Technology Fund IV L.P., or Fund IV. Altira Group LLC
and Altira Management IV LLC are collectively referred to
as the GP. Fund III and Fund IV, which own the
referenced shares, are collectively referred to as the Funds.
Dirk McDermott and Carol McDermott are the members of Altira
Group LLC, or the Managers. |
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(2) |
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Mr. Charles L. Davis, director on our board and nominee, is
a manager of the two private equity funds affiliated with
Sanders Morris Harris Group, Inc. |
32
Indemnification
Agreements
We have entered into indemnification agreements with each of our
current directors and officers. Each of our named executive
officers also has indemnification provisions in his employment
agreement. These agreements require us to indemnify these
individuals to the fullest extent permitted under Delaware law
against liabilities that may arise by reason of their service to
us, and to advance expenses incurred as a result of any
proceeding against them as to which they could be indemnified.
Precision
Drilling Corporation
One of our directors, Kevin Neveu, is the Chief Executive
Officer of Precision Drilling Corporation. We received an
aggregate of approximately $0.1 million in 2009 and
approximately $0.6 million in 2010 from Precision Drilling
Corporation for services performed by us in the ordinary course
of business.
STOCKHOLDER
PROPOSALS AND NOMINATIONS FOR
THE 2012 ANNUAL MEETING OF THE STOCKHOLDERS
Any stockholder who intends to present a proposal for inclusion
in our 2012 proxy statement and form of proxy must submit the
proposal, in writing, so that our Corporate Secretary receives
it at our principal executive offices, located at
1880 S. Dairy Ashford, Suite 300, Houston, Texas
77077-4760,
by December 1, 2011, which is 120 days prior to the
one year anniversary of the date this proxy statement is being
sent to our stockholders. Any stockholder who wishes to bring a
proposal or nominate a person for election to our Board of
Directors at the 2012 Annual Meeting of Stockholders must
provide written notice of the proposal or nomination to our
Corporate Secretary, at our principal executive offices, between
December 1, 2011 and December 31, 2011, which is 90 to
120 days prior to the one year anniversary of the upcoming
Meeting. In addition, our stockholders must comply with the
requirements of the SEC related to nominations and stockholder
proposals and the procedural requirements in our bylaws, which
stockholders can obtain from us upon request and which are also
on file with the SEC or available on our website at
www.rig.net.
Our bylaws provide that if a stockholder wishes to nominate a
person for election as director (which is separate from simply
recommending someone to be considered by our Corporate
Governance and Nominating Committee for inclusion on the
Companys slate of directors) or to propose other business
to be considered at one of our annual meetings of stockholders,
that stockholder must follow the procedures contained in our
bylaws and satisfy the requirements of Regulation 14A of
the Securities Exchange Act of 1934. The stockholder proposing
such business or making such nomination must be a stockholder of
record of our Company on the date the nomination is delivered to
our Corporate Secretary and at the time of our annual meeting
and be entitled to vote at the annual meeting. The proposal or
nomination must be received by our Corporate Secretary at our
principal executive offices not less than 90 nor more than
120 days prior to the first anniversary of the preceding
years annual meeting, except that if the date of the
annual meeting is more than 30 days before or more than
60 days after such anniversary date, notice by the
stockholder must be delivered not earlier than the close of
business 120 days prior to the annual meeting and no later
than 90 days prior to such annual meeting or 10 days
following our first public announcement of the date of the
annual meeting. In addition, if the number of directors to be
elected to our Board of Directors at an annual meeting is
increased and there is no public announcement by us naming all
of the nominees for director or specifying the size of the
increased Board of Directors at least 100 days prior to the
first anniversary of the preceding years annual meeting, a
stockholders nomination shall also be considered timely,
but only with respect to nominees for any new positions created
by such increase, if it is delivered to our Corporate Secretary
at our principal executive offices not later than the close of
business on the 10th day following the day on which we
first make such public announcement. These time periods are
designed to allow us time to adequately consider all proposals
and nominees.
To be considered, each nomination must include the following
information:
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all information relating to the nominee that is required to be
disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case
pursuant to and in accordance with Section 14 of the
Exchange Act and the rules and regulations promulgated
thereunder;
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33
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the nominees written consent to being named in the proxy
statement as a nominee and to serving as a director if elected;
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a description of all direct and indirect compensation and other
material monetary agreements, arrangements and understandings
during the past three years, and any other material
relationships, between or among the nominating stockholder and
beneficial owner, if any, and their respective affiliates and
associates, or others acting in concert with them, on the one
hand, and each proposed nominee, and his or her respective
affiliates and associates, or others acting in concert with him,
on the other hand, including, all information that would be
required to be disclosed pursuant to Rule 404 promulgated
under
Regulation S-K
if the stockholder making the nomination and any beneficial
owner on whose behalf the nomination is made, if any, or any of
their respective affiliates or associates or persons acting in
concert with any such person, were the registrant
for purposes of such rule and the nominee were a director or
executive officer of such registrant;
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a written questionnaire with respect to the background and
qualification of the nominee and the background of any other
person or entity on whose behalf the nomination is being made,
the form of which questionnaire will be provided by our
Corporate Secretary upon written request; and
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a written representation and agreement, in the form provided by
our Corporate Secretary upon written request, that the nominee
is not and will not become a party to any agreement, arrangement
or understanding with, and has not given any commitment or
assurance to, any person or entity as to how the nominee, if
elected as a director, will act or vote on any issue or question
that has not been disclosed to us or that could limit or
interfere with the nominees ability to comply, if elected
as a director, with the nominees fiduciary duties under
applicable law, is not and will not become a party to any
agreement, arrangement or understanding with any person or
entity other than us with respect to any direct or indirect
compensation, reimbursement or indemnification in connection
with service or action as our director that has not been
disclosed to us, and in the nominees individual capacity
and on behalf of any person or entity on whose behalf the
nomination is being made, would be in compliance, if elected as
our director, and will comply with all of our applicable
publicly disclosed corporate governance, conflict of interest,
confidentiality and stock trading policies and guidelines.
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To be considered, proposals for business to be considered by our
stockholders at an annual meeting, other than the nomination of
persons for election as directors, must include the following
information:
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a brief description of the business desired to be brought before
the annual meeting;
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the reasons for conducting such business at the annual meeting;
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the text of the proposal or business, including the text of any
resolutions proposed for consideration and in the event that
such business includes a proposal to amend our Bylaws, the
language of the proposed amendment;
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any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is
made;
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a description of all agreements, arrangements and understandings
between such stockholder and beneficial owner, if any, and any
other person or persons, including their names, in connection
with the proposal of such business by such stockholder; and
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as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is
made:
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the name and address of such stockholder, as they appear on our
books, and of such beneficial owner, if any,
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the class or series and number of shares of our capital stock
that are, directly or indirectly, owned beneficially and of
record by such stockholder and by such beneficial owner,
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34
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any option, warrant, convertible security, stock appreciation
right, or similar right with an exercise or conversion privilege
or a settlement payment or mechanism at a price related to any
class or series of our capital stock, whether or not such
instrument or right shall be subject to settlement in the
underlying class or series of our capital or otherwise directly
or indirectly owned beneficially by such stockholder and by such
beneficial owner, if any,
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any other direct or indirect opportunity held or owned
beneficially by such stockholder and by such beneficial owner,
if any, to profit or share in any profit derived from any
increase or decrease in the value of our shares,
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any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder or beneficial owner, if any,
has a right to vote any shares of any of our securities,
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any short interest in any of our securities,
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any right to dividends on our shares of capital stock owned
beneficially by such stockholder or such beneficial owner, if
any, which right is separated or separable from the underlying
shares,
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any proportionate interest in shares of our capital stock or
derivative instrument held, directly or indirectly, by a general
or limited partnership in which such stockholder or such
beneficial owner, if any, is a general partner or with respect
to which such stockholder or such beneficial owner, if any,
directly or indirectly, beneficially owns an interest in a
general partner, and
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any performance-related fees, other than an asset-based fee, to
which such stockholder or such beneficial owner, if any, is
entitled to based on any increase or decrease in the value of
our shares or derivative instruments, if any, in each case with
respect to the information required to be included in the notice.
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Such information must include any such interests held by members
of such stockholders or such beneficial owners
immediate family sharing the same household. All such
information must be supplemented by such stockholder and such
beneficial owner, if any, not later than 10 days after the
record date for the annual meeting to disclose such ownership as
of the record date, 10 days before the annual meeting date,
and immediately prior to the commencement of the annual meeting,
by delivery of such supplemented information to our Corporate
Secretary. Such information shall also include any other
information relating to such stockholder and beneficial owner,
if any, that would be required to be disclosed in a proxy
statement or other filings required to be made in connection
with solicitation of proxies for election of directors in a
contested election pursuant to Section 14 of the Exchange
Act and the rules and regulations promulgated thereunder, a
representation that the stockholder is a holder of record of our
stock entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to propose such business or
nomination, and a representation whether the stockholder or the
beneficial owner, if any, intends or is part of a group that
intends to deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of our
outstanding capital stock required to approve or adopt the
proposal or elect the nominee or otherwise to solicit proxies
from stockholders in support of such proposal or nomination.
The proposing stockholder must also include such other
information as we may reasonably require or that is otherwise
reasonably necessary to determine the eligibility of such
proposed nominee to serve as a director of our Company, to
determine whether such nominee qualifies as an independent
director or audit committee financial expert
under applicable law, securities exchange rule or regulation, or
any of our publicly-disclosed corporate governance guidelines or
committee charters; including our policy governing director
qualifications and nominations, and that could be material to a
reasonable stockholders understanding of the independence
and qualifications, or lack thereof, of such nominee.
WHERE YOU
MAY FIND MORE INFORMATION ABOUT US
We file annual, quarterly and current reports and proxy
statements with the SEC. Our SEC filings are available to the
public over the internet at the SECs website at
www.sec.gov. You may also read and copy any document that
we file with the SEC at the SECs Public Reference Room at
100 F Street, NE,
35
Washington, D.C. 20549. You can call the SEC at
1-800-SEC-0330
for further information on the public reference room and its
copy charges. We maintain a website at www.rig.net, where
we post our SEC filings.
You may request copies of our filings, including any documents
incorporated by reference in this proxy statement as described
below, without charge, by calling our Investor Relations
representative at
(281) 674-0100
or write to Investor Relations, 1880 S. Dairy Ashford,
Suite 300, Houston, Texas
77077-4760.
If you would like to request documents from us, please do so at
least five business days before the date of the Annual Meeting
in order to receive timely delivery of the documents before the
Annual Meeting. If you request any incorporated documents from
us, we will mail them to you by first class mail or other
equally prompt means within one business day of receipt of your
request, provided that we will not mail any exhibits to the
information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the
information that this proxy statement incorporates.
You should rely only on the information contained or
incorporated by reference in this proxy statement to vote your
shares at the Annual Meeting. We have not authorized anyone to
provide you with information that is different from what is
contained or incorporated by reference in this proxy statement.
The information contained in this document or any document
incorporated by reference herein speaks only as of the date
indicated on the cover of this document or the document
incorporated by reference unless the information specifically
indicates that another date applies.
OTHER
MATTERS FOR 2011 ANNUAL MEETING
As of the date of this proxy statement, our Board of Directors
knows of no matters to be acted upon at the Annual Meeting other
than the proposals included in the accompanying notice and
described in this proxy statement. If any other matter requiring
a vote of stockholders arises, including a question of
adjourning the Annual Meeting, the persons named as proxies in
the accompanying proxy card will have the discretion to vote
thereon according to their best judgment of what they consider
to be in the best interests of our company. The accompanying
proxy card confers discretionary authority to take action with
respect to any additional matters that may come before the
annual meeting or any adjournment or postponement thereof.
PROPOSAL ONE:
ELECTION OF DIRECTORS
Members of our Board of Directors are elected each year at the
annual meeting of stockholders. All eight of our current Board
members have been nominated to stand for re-election at the
Annual Meeting. Our Corporate Governance and Nominating
Committee, consisting solely of independent directors, as
determined by our Board of Directors recommended the directors
for nomination by our full Board of Directors. Based on that
recommendation, our Board of Directors has nominated nine
directors for election at the Meeting.
Nominees
The following nine directors have all been nominated to serve on
our Board of Directors until the 2012 Annual Meeting of
Stockholders: Thomas M. Matthews, Mark B. Slaughter, James H.
Browning, Charles L. Davis, Kevin Neveu, Kevin J. OHara,
Keith Olsen, Brent K. Whittington and Ditlef deVibe. Each of the
nominees has consented to serve as a director if so elected.
Each nominee who is elected to our Board of Directors will serve
in such capacity until his term expires or his successor has
been duly elected and qualified or, if earlier, until such
director dies, resigns or is removed.
Directors will be elected by a plurality of the votes cast by
the share of common stock present in person or represented by
proxy at the Meeting. As a result, the nine nominees with the
most votes will be elected. Broker non-votes will have no effect
on the outcome of the election of directors.
36
Our Board
recommends that you vote
FOR the election of each of the nominated
directors.
PROPOSAL TWO:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected Deloitte & Touche
LLP, an independent registered public accounting firm, to audit
our consolidated financial statements for fiscal year 2011.
Deloitte & Touche LLP has served as our independent
registered public accounting firm since 2007. We are asking the
stockholders to ratify the appointment of Deloitte &
Touche LLP as our independent registered public accounting firm
for the fiscal year ending December 31, 2011.
Deloitte & Touche LLP was selected by the Audit
Committee in accordance with its charter.
The submission of this matter for ratification by stockholders
is not legally required; however, the Audit Committee and Board
of Directors believe that such submission is consistent with
best practices in corporate governance and is an opportunity for
stockholders to provide direct feedback on an important issue of
corporate governance. If the selection is not ratified, the
Audit Committee will consider whether it is appropriate to
select another independent registered public accounting firm.
The Audit Committee continually monitors the services and fees
of the independent registered public accounting firm and even if
the selection is ratified, the Audit Committee in its discretion
may select a different independent registered public accounting
firm at any time during the year if it determines that such a
change would be in the best interests of our Company and our
stockholders.
The Audit Committee has approved all services provided by
Deloitte & Touche LLP. A representative of
Deloitte & Touche LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement,
and is expected to be available to respond to appropriate
questions you may ask.
Fees Paid
to Independent Registered Public Accounting Firm
The following table reflects fees for professional audit
services rendered by Deloitte & Touche LLP for
(i) the audit of our financial statements for the year
ended December 31, 2010; and (ii) fees billed for
other services rendered by Deloitte & Touche LLP.
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2010
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|
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2009
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|
|
Audit
Fees(1)
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$
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624,000
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$
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876,000
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Audit Related
Fees(2)
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1,075,000
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307,000
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Tax
Fees(3)
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827,000
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608,000
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All Other Fees
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Total
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$
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2,526,000
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|
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$
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1,791,000
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(1) |
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Audit Fees consist of professional services and related expenses
for the audit of our annual financial statements. |
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(2) |
|
Audit Related Fees include the preparation of a comfort letter
in connection with our initial public offering, review of
interim financial statements included in our
S-1, and
consulting related to the implementation of accounting standards. |
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(3) |
|
Tax Fees include professional services for tax return
preparation, uncertain tax position implementation and income
tax audit support. |
Audit
Committee Pre-Approval of Audit and Permissible Non-Audit
Services
Pursuant to its charter, the Audit Committee of our Board of
Directors is responsible for reviewing and approving, in
advance, any audit and any permissible non-audit engagement
between the Company and its independent auditors.
Deloitte & Touche LLPs engagement to conduct the
audit of RigNet, Inc. for fiscal 2010 was approved by the Audit
Committee on November 15, 2010. All of the services covered
under the caption Audit Related Fees were approved
by the Audit Committee and none were provided under the de
minimis exception of Section 10A of the Securities
Exchange Act of 1934, as amended.
37
We have been advised by Deloitte & Touche LLP that
substantially all of the work done in conjunction with its 2010
audit of the Companys financial statements for the most
recently completed fiscal year was performed by full-time
employees and partners of Deloitte & Touche LLP. The
Audit Committee has determined that the provisions of services
rendered for all other fees, as described above, is compatible
with maintaining independence of Deloitte & Touche LLP.
Proposal No. 2 must be approved by a majority of the
votes cast on the proposal. Broker non-votes will not affect the
outcome of the vote on this proposal but abstentions have the
same effect as a vote against this proposal under Delaware law.
If the selection of Deloitte & Touche LLP is not
ratified accordingly, our Board of Directors will consider
whether we should select another independent registered public
accounting firm.
Our Board
recommends that you vote
FOR the ratification of Independent Public
Accountants
PROPOSAL THREE:
APPROVAL OF 2010 OMNIBUS INCENTIVE PLAN
Background
Our Board of Directors has adopted, and our stockholders have
previously approved, the RigNet, Inc. 2010 Omnibus Incentive
Plan, or our 2010 Plan, prior to our becoming a public company.
Our 2010 Plan is a broad-based incentive plan that provides for
the grant of incentive stock options that satisfy the
requirements of Section 422 of the Internal Revenue Code,
nonqualified stock options, stock appreciation rights,
restricted stock, restricted stock units, performance stock,
performance units, annual cash incentive awards, other
stock-based awards and certain other cash awards. Our Board of
Directors believes that our companys success and long-term
progress are dependent upon attracting and retaining qualified
individuals who may serve as directors, officers, employees,
consultants, and advisers, and aligning the interests of such
individuals with those of its stockholders. Our 2010 Plan gives
our Board of Directors and Compensation Committee the maximum
flexibility to use various forms of incentive awards as part of
our companys overall compensation programs.
Section 162(m) of the Internal Revenue Code
(Section 162(m)) and the guidance issued by the
Internal Revenue Service thereunder generally prohibit our
company from deducting for federal income tax purposes
compensation in excess of $1 million that is paid to each
of the CEO and the other three highest compensated officers of
our company (excluding the Chief Financial Officer). That
deduction limit does not apply; however, to certain compensation
that satisfies the requirements of Section 162(m).
The deduction limit in Section 162(m) does not apply to
performance-based compensation that satisfies the requirements
of Section 162(m). The requirements of Section 162(m)
for performance-based compensation include stockholder approval
of the material terms of the performance goals under which the
compensation is paid. The material terms include (1) the
employees eligible to receive compensation upon attainment of a
goal, (2) the business criteria on which the goals may be
based, and (3) the maximum amount payable to an employee
upon attainment of a goal. Those terms were previously approved
by the stockholders of our company when they approved our 2010
Plan prior to the completion of our IPO.
Section 162(m) requires that now that we are a public
company we obtain stockholder re-approval of the performance
goals for performance-based awards that are authorized to be
granted under our 2010 Plan to certain employees in order for
certain future awards to qualify as performance-based
compensation that is exempt from the deduction limitation in
Section 162(m) and thereby preserve our companys
federal income tax deduction for performance-based compensation
paid to certain named executive officers.
Material
Terms of Performance Goals under Our 2010 Plan
The following summary of the material terms of the performance
goals for performance-based awards under our 2010 Plan is
qualified in its entirety by reference to the full text of our
2010 Plan attached as Appendix A to this proxy statement.
38
Performance stock awards and performance unit awards may be
granted under our 2010 Plan to any common law employee of our
company or any affiliate, any non-employee director and to
certain consultants, agents, representatives, advisors, and
independent contractors who render services to our company or an
affiliate, and other persons designated by our Board of
Directors. Annual cash incentive awards may be granted under our
2010 Plan to key executive employees of our company or an
affiliate who, by the nature and scope of their positions,
regularly and directly make or influence policy decisions which
significantly impact the overall results or success of our
company.
Under our 2010 Plan, the maximum number of shares of our common
stock with respect to which performance stock awards may be
granted to an employee during a calendar year is equal to
3,000,000 shares and the maximum number of shares of our
common stock with respect to which performance unit awards
payable in shares of our common stock may be granted to an
employee during a calendar year is equal to
3,000,000 shares. Under our 2010 Plan the maximum value of
cash with respect to which performance unit awards payable in
cash may be granted to an employee during a calendar year is
$3,000,000 and the maximum amount that may be paid to a key
executive employee under an all annual cash incentive awards
granted to the employee during a calendar year is $3,000,000.
Under our 2010 Plan, performance stock awards, performance unit
awards, and annual cash incentive awards are subject to the
satisfaction of one or more performance goals during the
applicable performance period. Performance goals for such awards
will be determined by our Compensation Committee and will be
designed to support our companys business strategy and
align participants interests with stockholder interests.
Performance goals for performance stock awards, performance unit
awards, and annual cash incentive awards to a covered
employee (as defined in Section 162(m) and the
regulations or other guidance promulgated by the Internal
Revenue Service under Section 162(m)) (Covered
Employee) that are intended to qualify as
performance-based compensation under Section 162(m) will be
based on the criteria contained in our 2010 Plan, including one
or more of the following business criteria which were previously
approved by our stockholders: earnings per share, earnings per
share growth, total stockholder return, economic value added,
cash return on capitalization, increased revenue, revenue ratios
(per employee or per customer), net income, stock price, market
share, return on equity, return on assets, return on capital,
return on capital compared to cost of capital, return on capital
employed, return on invested capital, stockholder value, net
cash flow, operating income, earnings before interest and taxes,
cash flow, cash flow from operations, cost reductions, cost
ratios (per employee or per customer), proceeds from
dispositions, project completion time and budget goals, net cash
flow before financing activities, customer growth, and total
market value.
Achievement of the goals may be measured:
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individually, alternatively or in any combination; and
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with respect to our company, one or more business units or
subsidiaries, a peer group of companies or any combination of
the foregoing.
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Our Compensation Committee may, in its discretion, decrease the
amount payable under any award. The Compensation Committee may
not increase the amount payable under an award.
In addition to the performance-based awards described above, our
Compensation Committee may issue options and stock appreciation
rights to Covered Employees that may constitute
performance-based compensation under Section 162(m). Under
our 2010 Plan, the maximum number of shares of our common stock
with respect to which incentive stock options may be granted to
an employee during a calendar year is equal to
3,000,000 shares, the maximum number of shares of our
common stock with respect to which nonqualified stock options
may be granted to an employee during a calendar year is equal to
3,000,000 shares, and the maximum number of shares of our
common stock with respect to which stock appreciation rights may
be granted to an employee during a calendar year is equal to
3,000,000 shares.
We initially reserved 3,000,000 shares of our common stock
for issuance under our 2010 Plan. At December 31, 2010,
there were 3,000,000 shares still available for issuance
under our 2010 Plan.
39
Vote
Required
The approval required by Section 162(m) of the material
terms of the performance goals under our 2010 Plan requires the
affirmative vote of the holders of at least a majority of the
votes cast; provided that the total votes cast on this proposal
represent over 50.0% of the outstanding shares of our common
stock. Brokers do not have discretion to vote on this proposal
without your instruction. If you do not instruct your broker how
to vote on this proposal, your broker will deliver a non-vote on
this proposal. Under Delaware law, abstentions are counted as
votes cast, so abstentions have the same effect as a vote
against this proposal. Broker non-votes are not counted as votes
cast so they would not affect the vote on this proposal.
However, broker non-votes could prevent the total votes cast on
the proposal from representing 50.0% of our outstanding shares.
Plan
Summary
Certain features of our 2010 Plan are summarized below. This
summary does not purport to be complete, and is qualified in its
entirety by reference to the full text of our 2010 Plan attached
as Appendix A to this proxy statement.
Our employees are eligible to receive awards under our 2010
Plan. In addition, the non-employee directors of our company and
consultants, agents, representatives, advisors and independent
contractors who render services to our company and its
affiliates that are not in connection with the offer and sale of
our companys securities in a capital raising transaction
and do not directly or indirectly promote or maintain a market
for our companys securities will be eligible to receive
awards settled in shares of our common stock, other than
incentive stock options, under our 2010 Plan.
Our Board of Directors will administer our 2010 Plan with
respect to awards to non-employee directors and our Compensation
Committee will administer our 2010 Plan with respect to awards
to employees and other non-employee service providers other than
non-employee directors. In administering awards under our 2010
Plan our Board of Directors or the Compensation Committee, as
applicable (the committee), has the power to
determine the terms of the awards granted under our 2010 Plan,
including the exercise price, the number of shares subject to
each award and the exercisability of the awards. The committee
also has full power to determine the persons to whom and the
time or times at which awards will be made and to make all other
determinations and take all other actions advisable for the
administration of the plan.
Under our 2010 Plan, the committee may grant:
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options to acquire our common stock. The exercise price of
options granted under our 2010 Plan must at least be equal to
the fair market value of our common stock on the date of grant
and the term of an option may not exceed ten years, except that
with respect to an incentive stock option granted to any
employee who owns more than 10.0% of the voting power of all
classes of our outstanding stock as of the grant date the term
must not exceed five years and the exercise price must equal at
least 110.0% of the fair market value on the grant date.
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stock appreciation rights, or SAR, which allow the recipient to
receive the appreciation in the fair market value of our common
stock between the date of grant and the exercise date. The
amount payable under the stock appreciation right may be paid in
cash or with shares of our common stock, or a combination
thereof, as determined by the committee.
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restricted stock awards, which are awards of our shares of
common stock that vest in accordance with terms and conditions
established by the committee.
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restricted stock units, which are awards that are based on the
value of our common stock and may be paid in cash or in shares
of our common stock.
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Under our 2010 Plan, the committee may also grant performance
stock, performance unit and annual cash incentive awards.
Performance stock, performance unit and annual cash incentive
awards are awards that will result in a payment to a participant
only if performance goals established by the committee are
achieved or the award otherwise vests. It is intended that our
2010 Plan will conform to the standards of Section 162(m).
The committee will establish organization or individual
performance goals which, depending on the extent to which
40
they are met, will determine the number and the value of
performance stock and performance units to be paid out to
participants. Payment under performance unit awards may be made
in cash or in shares of our common stock with equivalent value,
or in some combination, as determined by the committee.
The amount of, the vesting and the transferability restrictions
applicable to any performance stock, performance unit and annual
cash incentive award will be based upon the attainment of such
performance goals as the committee may determine.
Awards may be granted under our 2010 Plan in substitution for
stock options and other awards held by employees of other
corporations who are about to become employees of our company or
any of its subsidiaries. The terms and conditions of the
substitute awards granted may vary from the terms and conditions
set out in our 2010 Plan to the extent our Board of Directors
may deem appropriate.
The existence of outstanding awards will not affect in any way
the right or power of our company to make any adjustments,
recapitalizations, reorganizations or other changes in our
companys capital structure or its business. If our company
shall effect a capital readjustment or any increase or reduction
of the number of shares of our common stock outstanding, without
receiving compensation therefore in money, services or property,
then the number and per share price of our common stock subject
to outstanding awards under our 2010 Plan shall be appropriately
adjusted.
If we are not the surviving entity in any merger, consolidation
or other reorganization; if we sell, lease or exchange or agree
to sell, lease or exchange all or substantially all of our
assets; if we are to be dissolved; or if we are a party to any
other corporate transaction, then the committee may:
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accelerate the time at which some or all of the awards then
outstanding may be exercised, after which all such awards that
remain unexercised shall terminate;
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require the mandatory surrender to our company of some or all of
the then outstanding awards as of a date in which event the
committee will then cancel such awards and our company will pay
to each such holder an amount of cash per share equal to the
excess, if any, of the per share price offered to stockholders
of our company in connection with such transaction over the
exercise prices under such awards for such shares;
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have some or all outstanding awards assumed or have a new award
of a similar nature substituted for some or all of the then
outstanding awards;
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provide that the number of our shares of common stock covered by
an award will be adjusted so that such award when exercised will
then cover the number and class or series of our common stock or
other securities or property to which the holder of such award
would have been entitled pursuant to the terms of the agreement
or plan relating to such transaction if the holder of such award
had been the holder of record of the number of shares of our
common stock then covered by such award; or
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make such adjustments to awards then outstanding as the
committee deems appropriate to reflect such transaction.
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After a merger or consolidation involving our company each
holder of a restricted stock award granted under our 2010 Plan
shall be entitled to have his restricted stock appropriately
adjusted based on the manner in which the shares of our common
stock were adjusted under the terms of the agreement of merger
or consolidation.
Awards under our 2010 Plan shall be designed, granted and
administered in such a manner that they are either exempt from
the application of, or comply with, the requirements of
Section 409A of the Internal Revenue Code.
Our Board of Directors may alter, amend, or terminate our 2010
Plan and the committee may alter, amend, or terminate any award
agreement in whole or in part; however, no termination,
amendment, or modification shall adversely affect in any
material way any award previously granted, without the written
consent of the holder.
41
Our 2010 Plan became effective May 26, 2010. No awards may
be granted under our 2010 Plan on or after the tenth anniversary
of the effective date, unless our 2010 Plan is subsequently
amended, with the approval of stockholders, to extend the
termination date.
U.S.
Federal Income Tax Consequences of Awards Granted Under Our 2010
Plan
The following is a general summary of certain of the
U.S. Federal income tax consequences to participants who
are either U.S. citizens or residents of certain
transactions with respect to awards granted under our 2010 Plan.
Incentive
Stock Options
When the committee grants an employee an incentive stock option
to purchase shares of our common stock under our 2010 Plan, the
employee will not be required to recognize any U.S. Federal
taxable income as a result of the grant or as a result of the
employees exercise of the incentive stock option; however,
the difference between the exercise price and the fair market
value of the shares of our common stock at the time of exercise
is an item of tax preference that may require payment of an
alternative minimum tax. On the sale of the shares acquired
through exercise of an incentive stock option (assuming such
sale does not occur within two years of the date of grant of the
option or within one year from the date of exercise), any gain
(or loss) will be taxed as long term capital gain (or loss) and
our company will not be entitled to any deduction in connection
with the sale (or the grant or exercise) of the incentive stock
option. With respect to a sale of shares that occurs after the
later of two years from the date of grant and one year from the
date of exercise, the tax basis of the shares for the purpose of
a subsequent sale includes the option price paid for the shares.
However, if the employee sells the shares acquired upon exercise
of an incentive stock option before the later of (i) two
years from the date of grant and (ii) one year from the
date of exercise, the employee will be treated as having
received, at the time of sale, compensation taxable as ordinary
income, and our company will be entitled to a corresponding
deduction. The amount treated as compensation income is the
excess of the fair market value of the shares at the time of
exercise over the exercise price, and any amount realized in
excess of the fair market value of the shares at the time of
exercise would be treated as long or short term capital gain,
depending on how long such shares were held. With respect to a
sale of shares that occurs before the later of two years from
the date of grant and one year from the date of exercise, the
tax basis of the shares for the purpose of a subsequent sale
includes the option price paid for the shares and the
compensation income reported at the time of sale of the shares.
Nonqualified
Stock Options
When the committee grants a nonqualified stock option to
purchase shares of our common stock under our 2010 Plan, the
recipient will not be required to recognize any
U.S. Federal taxable income as a result of the grant.
However, the recipient will be required to recognize ordinary
income on the date the recipient exercises the nonqualified
stock option. Generally, the measure of the income will be equal
to the difference between the fair market value of the shares of
our common stock acquired on the date the shares are acquired
and the option price. The tax basis of the shares acquired on
exercise of the nonqualified stock option for the purpose of a
subsequent sale includes the option price paid and the ordinary
income reported on exercise of the nonqualified stock option.
The income reportable on exercise of the nonqualified stock
option by an employee is subject to Federal tax withholding.
Generally, our company will be entitled to a deduction in the
amount reportable as income by the recipient on the exercise of
a nonqualified stock option.
Stock
Appreciation Rights
The grant of SARs under our 2010 Plan generally will not result
in the recognition of any U.S. Federal taxable income by
the recipient or a deduction for our company, at the time of
grant. However, the recipient will be required to recognize
ordinary income on the date the recipient exercises the SAR.
Generally, the measure of the income will be equal to the amount
realized on exercise of the SAR. The income reportable on
42
exercise of the SAR by an employee is subject to Federal tax
withholding. Generally, our company will be entitled to a
deduction in the amount reportable as income by the recipient on
the exercise of a SAR.
Restricted
Stock Awards
The grant of a restricted stock award under our 2010 Plan
generally will not result in the recognition of any
U.S. Federal taxable income by the recipient or a deduction
for our company, at the time of grant unless the recipient
timely makes an election under Section 83(b) of the
Internal Revenue Code, as described below. Upon the expiration
of the forfeiture restrictions applicable to the restricted
stock award (i.e., as the shares become vested), the recipient
will recognize ordinary income in an amount equal to the excess
of the fair market value of those shares at that time over the
amount (if any) the recipient paid for the shares. The income
realized by an employee is subject to Federal tax withholding.
The Company will be entitled to a deduction in the amount and at
the time the recipient recognizes income. If an election under
Section 83(b) of the Internal Revenue Code has not been
made, any dividends received with respect to any restricted
shares that are not vested (i.e., the forfeiture restrictions
have not yet lapsed) generally will be treated as compensation
that is taxable as ordinary income to the recipient and our
company will be entitled to a corresponding deduction. With
respect to any restricted shares that are vested (i.e., the
forfeiture restrictions have lapsed), the recipient will be
taxed on any dividends on such shares as the dividends are paid
to the recipient and our company will not be entitled to
deductions with respect to the dividends.
If a participant makes an election under Section 83(b) of
the Internal Revenue Code within 30 days of the date of
transfer of the restricted shares awarded under the restricted
stock award, the participant will recognize ordinary income on
the date the shares are awarded. The amount of ordinary income
required to be recognized is an amount equal to the excess, if
any, of the fair market value of the shares on the date of award
over the amount, if any, paid for such shares. In such case, the
participant will not be required to recognize additional
ordinary income when the shares vest. However, if the shares are
later forfeited, a loss may only be recognized up to the amount
the participant paid, if any, for the shares.
Restricted
Stock Unit Awards
The grant of a restricted stock unit award under our 2010 Plan
generally will not result in the recognition of any
U.S. Federal taxable income by the recipient or a deduction
for our company at the time of grant. At the time a restricted
stock unit award vests or is paid, the recipient will recognize
ordinary income and our company will be entitled to a
corresponding deduction. Generally, the measure of the income
and deduction will be the fair market value of our
companys common stock at the time the restricted stock
unit is settled. The income realized under the restricted stock
unit award that is reportable by an employee is subject to
Federal tax withholding.
Performance
Stock and Performance Unit Awards
Performance stock awards granted under our 2010 Plan generally
have the same tax consequences as restricted stock awards as
discussed above (except that the compensation deduction
limitation described below generally will not apply). A
recipient of a performance unit award under our 2010 Plan
generally will not realize U.S. Federal taxable income at
the time of grant of the award, and our company will not be
entitled to a deduction at that time with respect to the award.
When the performance goals applicable to the performance unit
award are attained and amounts are due under the award, the
holder of the award will be treated as receiving compensation
taxable as ordinary income, and our company will be entitled to
a corresponding deduction.
Annual
Cash Incentive Awards
The grant of an annual cash incentive award under our 2010 Plan
generally will not result in the recognition of any
U.S. Federal taxable income by the recipient or a deduction
for us at the time of grant. At the time the annual cash
incentive award is settled in cash, the recipient will recognize
ordinary income and
43
our company will be entitled to a corresponding deduction, in
the amount of cash received by the recipient under the award at
that time.
Other
Cash-Based and Stock-Based Awards
The grant of a cash-based award under our 2010 Plan generally
will not result in the recognition of any U.S. Federal
taxable income by the recipient or a deduction for us at the
time of grant. At the time a cash-based award is settled in
cash, the recipient will recognize ordinary income and our
company will be entitled to a corresponding deduction, in the
amount of cash received by the recipient under the award at that
time.
Other stock-based awards granted under our 2010 Plan generally
have the same tax consequences as restricted stock unit awards.
Compensation
Deduction Limitation
Under Section 162(m) our companys Federal income tax
deductions for certain compensation paid to Covered Employees is
limited to $1,000,000 per year. Section 162(m) provides an
exception to this limitation for certain performance
based compensation approved by a committee consisting
solely of at least two outside directors. We believe
that options to purchase shares of our common stock, stock
appreciation rights and performance-based awards granted under
our 2010 Plan generally should qualify as performance based
compensation for purposes of Section 162(m) of the Code.
New Plan
Benefits
Our Compensation Committee and our Board of Directors, as
applicable, in their discretion determine awards granted under
our 2010 Plan and, therefore, our company is unable to determine
the awards that will be granted in the future under our 2010
Plan. The following table sets forth the type and amount of
awards that have been granted to the named executive officers
and the specified groups of individuals through
December 31, 2009 under our 2010 Plan.
2010
Plan
THE 2011 AWARDS IN THIS TABLE FOR THE NAMED EXECUTIVE
OFFICERS ARE NOT INCLUDED IN THE 2010 SUMMARY COMPENSATION TABLE
AND IN THE 2010 GRANTS OF PLAN-BASED AWARDS TABLE SET FORTH IN
THIS PROXY STATEMENT BUT ARE NEW AWARDS REPRESENTING 2011
COMPENSATION AS DISCUSSED IN OUR COMPENSATION DISCUSSION AND
ANALYSIS. THE 2011 AWARDS IN THIS TABLE FOR THE NON-EMPLOYEE
DIRECTORS ARE NOT INCLUDED IN THE 2010 DIRECTOR COMPENSATION
TABLE SET FORTH IN THIS PROXY STATEMENT.
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Number of Securities Underlying
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Stock Option
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Restricted
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Awards
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Stock Awards
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|
|
Mark Slaughter
|
|
|
47,536
|
|
|
|
20,291
|
|
Martin Jimmerson
|
|
|
25,209
|
|
|
|
10,761
|
|
Lars Eliassen
|
|
|
14,405
|
|
|
|
6,149
|
|
William Sutton
|
|
|
23,696
|
|
|
|
10,115
|
|
Hector Maytorena
|
|
|
12,604
|
|
|
|
5,380
|
|
All current named Executive officers as a group
|
|
|
123,450
|
|
|
|
52,696
|
|
All current non-employee directors as a group
|
|
|
|
|
|
|
24,374
|
|
All current employees except current named executive officers as
a group
|
|
|
86,851
|
|
|
|
55,152
|
|
Our 2010 Plan will continue for 2010 and future years as
permitted by applicable law. If our stockholders do not approve
the material terms of the performance goals under our 2010 Plan
the plan will still continue but awards to certain executives
under the plan will not satisfy the requirements for
performance-based
44
compensation within the meaning of Section 162(m) and thus
will not qualify for the exclusion from the $1 million
deduction limitation that is available to our company under
Section 162(m).
Equity
Compensation Plan Information
The table below sets forth the following information as of the
end of December 31, 2010 for (i) all compensation
plans previously approved by our stockholders and (ii) all
compensation plans not previously approved by our stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of Securities to
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
be Issued upon Exercise
|
|
|
Exercise Price of Such
|
|
|
Plans (Excluding
|
|
|
|
of Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
Warrants and Rights(a)
|
|
|
Warrants and Rights
|
|
|
Column (a))
|
|
|
Equity compensation plans approved by security
holders(1)
|
|
|
809,875
|
|
|
$
|
7.13
|
|
|
|
3,000,000
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
809,875
|
|
|
$
|
7.13
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Under the 2006 and 2001 Plans 4.5 million options were
available for award prior to the plans being frozen by the
Board. No additional shares will be awarded under these plans.
As such, the 3.0 million securities available for future
issuance relates only to the 2010 Omnibus Incentive Plan. |
In addition to our 2010 Plan, we maintain the RigNet, Inc. 2006
Long-Term Incentive Plan and the RigNet, Inc. 2001 Performance
Stock Option Plan, both of which were previously approved by our
stockholders in connection with their adoption prior to our IPO.
We do not maintain any equity compensation plans that have not
been approved by our stockholders.
Our Board recommends that you vote
FOR the approval of the 2010 Omnibus Incentive
Plan
PROPOSAL 4:
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE
OFFICERS
At the meeting, the stockholders will vote on a non-binding,
advisory resolution regarding the compensation of the
Companys named executive officers.
We believe that our compensation policies and procedures are
competitive, focused on
pay-for-performance
and strongly aligned with the long-term interests of our
stockholders. This advisory stockholder vote, commonly known as
Say-on-Pay,
gives you as a stockholder the opportunity to express approval
or withhold approval of the compensation we pay our named
executive officers through voting for or against the following
resolution:
Resolved, that the stockholders approve the compensation
of the Companys named executive officers as disclosed in
the Companys 2011 proxy statement, which includes the
Compensation Discussion and Analysis, the Summary Compensation
Table and the other executive compensation tables and related
discussion).
The Company and the Compensation Committee remain committed to
the compensation philosophy, policies and objectives outlined
under the heading Compensation Discussion and
Analysis in this proxy statement. As always, the
Compensation Committee will continue to review all elements of
the executive compensation program and take any steps it deems
necessary to continue to fulfill the objectives of the program.
45
Stockholders are encouraged to carefully review the
Compensation Discussion and Analysis section of this
proxy statement for a detailed discussion of the Companys
executive compensation program.
Because your vote is advisory, it will not be binding upon the
Company or the Board of Directors. However, the Compensation
Committee will take into account the outcome of the vote when
considering future executive compensation arrangements.
This proposal must be approved by the affirmative vote of a
majority of the shares present in person or represented by proxy
at the Meeting and entitled to vote on this proposal.
Abstentions with respect to the approval of this proposal will
have the effect of a vote against this proposal. Broker
non-votes will not be counted for the purpose of determining the
number of votes necessary for approval of this proposal.
Our Board
recommends that you vote
FOR the resolution to approve on an advisory
basis
the compensation of RigNets named executive
officers.
At the meeting, the stockholders will vote on a non-binding,
advisory proposal regarding the frequency of the advisory
stockholder vote on executive compensation discussed in
Proposal No. 4 above in this proxy statement.
Stockholders will have the opportunity to cast an advisory vote
on whether the stockholder vote on executive compensation should
occur every one, two or three years. Stockholders may also
abstain from voting on the matter.
Because your vote is advisory, it will not be binding upon the
Company or the Board of Directors. However, the Board of
Directors will take into account the outcome of the vote when
considering the frequency of the advisory stockholder vote on
executive compensation.
Board
Recommendation
The Board of Directors recommends voting for an advisory
stockholder vote on executive compensation every year. We
believe this approach provides the most direct form of
communication for our stockholders. Implicit in the annual
process, the vote corresponds directly to the information
presented in the accompanying proxy statement for the annual
stockholders meeting.
We emphasize, however, that you are not voting to approve or
disapprove the Board of Directors recommendation. Instead,
your proxy card provides you with four options regarding this
non-binding, advisory proposal. You may cast an advisory vote
for the stockholder vote on executive compensation to occur
every one, two or three years, or you may abstain from voting on
the matter.
Our Board
recommends that you vote
FOR providing an advisory vote
on executive compensation every year.
46
RIGNET,
INC.
2010
OMNIBUS INCENTIVE PLAN
|
|
|
|
|
|
|
|
|
ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION
|
|
|
A-1
|
|
|
1.1
|
|
|
Establishment
|
|
|
A-1
|
|
|
1.2
|
|
|
Purpose of the Plan
|
|
|
A-1
|
|
|
1.3
|
|
|
Duration of Plan
|
|
|
A-1
|
|
|
|
|
|
|
ARTICLE II DEFINITIONS
|
|
|
A-1
|
|
|
2.1
|
|
|
Affiliate
|
|
|
A-1
|
|
|
2.2
|
|
|
Annual Cash Incentive Award
|
|
|
A-1
|
|
|
2.3
|
|
|
Authorized Shares
|
|
|
A-1
|
|
|
2.4
|
|
|
Award
|
|
|
A-1
|
|
|
2.5
|
|
|
Award Agreement
|
|
|
A-2
|
|
|
2.6
|
|
|
Beneficial Owner
|
|
|
A-2
|
|
|
2.7
|
|
|
Board
|
|
|
A-2
|
|
|
2.8
|
|
|
Cash-Based Award
|
|
|
A-2
|
|
|
2.9
|
|
|
Code
|
|
|
A-2
|
|
|
2.10
|
|
|
Committee
|
|
|
A-2
|
|
|
2.11
|
|
|
Company
|
|
|
A-2
|
|
|
2.12
|
|
|
Corporate Change
|
|
|
A-2
|
|
|
2.13
|
|
|
Covered Employee
|
|
|
A-2
|
|
|
2.14
|
|
|
Director
|
|
|
A-2
|
|
|
2.15
|
|
|
Disability
|
|
|
A-2
|
|
|
2.16
|
|
|
Dividend Equivalent
|
|
|
A-2
|
|
|
2.17
|
|
|
Effective Date
|
|
|
A-2
|
|
|
2.18
|
|
|
Employee
|
|
|
A-3
|
|
|
2.19
|
|
|
Exchange Act
|
|
|
A-3
|
|
|
2.20
|
|
|
Fair Market Value
|
|
|
A-3
|
|
|
2.21
|
|
|
Fiscal Year
|
|
|
A-3
|
|
|
2.22
|
|
|
Freestanding SAR
|
|
|
A-3
|
|
|
2.23
|
|
|
Holder
|
|
|
A-3
|
|
|
2.24
|
|
|
Incentive Stock Option or ISO
|
|
|
A-3
|
|
|
2.25
|
|
|
Insider
|
|
|
A-3
|
|
|
2.26
|
|
|
Mature Shares
|
|
|
A-3
|
|
|
2.27
|
|
|
Minimum Statutory Tax Withholding Obligation
|
|
|
A-3
|
|
|
2.28
|
|
|
Nonqualified Stock Option or NQSO
|
|
|
A-3
|
|
|
2.29
|
|
|
Option
|
|
|
A-3
|
|
|
2.30
|
|
|
Option Price
|
|
|
A-3
|
|
|
2.31
|
|
|
Other Stock-Based Award
|
|
|
A-4
|
|
|
2.32
|
|
|
Parent Corporation
|
|
|
A-4
|
|
|
2.33
|
|
|
Performance-Based Compensation
|
|
|
A-4
|
|
|
2.34
|
|
|
Performance Goals
|
|
|
A-4
|
|
|
2.35
|
|
|
Performance Stock Award
|
|
|
A-4
|
|
|
2.36
|
|
|
Performance Unit Award
|
|
|
A-4
|
|
|
2.37
|
|
|
Period of Restriction
|
|
|
A-4
|
|
|
2.38
|
|
|
Permissible under Section 409A
|
|
|
A-4
|
|
|
2.39
|
|
|
Plan
|
|
|
A-4
|
|
|
2.40
|
|
|
Restricted Stock
|
|
|
A-4
|
|
A-i
|
|
|
|
|
|
|
|
|
|
2.41
|
|
|
Restricted Stock Award
|
|
|
A-4
|
|
|
2.42
|
|
|
RSU
|
|
|
A-4
|
|
|
2.43
|
|
|
RSU Award
|
|
|
A-4
|
|
|
2.44
|
|
|
SAR
|
|
|
A-4
|
|
|
2.45
|
|
|
Section 409A
|
|
|
A-4
|
|
|
2.46
|
|
|
Separation from Service
|
|
|
A-4
|
|
|
2.47
|
|
|
Stock
|
|
|
A-4
|
|
|
2.48
|
|
|
Subsidiary Corporation
|
|
|
A-4
|
|
|
2.49
|
|
|
Substantial Risk of Forfeiture
|
|
|
A-5
|
|
|
2.50
|
|
|
Tandem SAR
|
|
|
A-5
|
|
|
2.51
|
|
|
Ten Percent Stockholder
|
|
|
A-5
|
|
|
2.52
|
|
|
Third Party Service Provider
|
|
|
A-5
|
|
|
|
|
|
|
ARTICLE III ELIGIBILITY
|
|
|
A-5
|
|
|
|
|
|
|
ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS
|
|
|
A-5
|
|
|
4.1
|
|
|
Authority to Grant Awards
|
|
|
A-5
|
|
|
4.2
|
|
|
Shares That Count Against Limit
|
|
|
A-6
|
|
|
4.3
|
|
|
Non-Transferability
|
|
|
A-6
|
|
|
4.4
|
|
|
Requirements of Law
|
|
|
A-6
|
|
|
4.5
|
|
|
Changes in the Companys Capital Structure
|
|
|
A-7
|
|
|
4.6
|
|
|
Election Under Section 83(b) of the Code
|
|
|
A-9
|
|
|
4.7
|
|
|
Forfeiture for Cause
|
|
|
A-9
|
|
|
4.8
|
|
|
Forfeiture Events
|
|
|
A-9
|
|
|
4.9
|
|
|
Award Agreements
|
|
|
A-10
|
|
|
4.10
|
|
|
Amendments of Award Agreements
|
|
|
A-10
|
|
|
4.11
|
|
|
Rights as Stockholder
|
|
|
A-10
|
|
|
4.12
|
|
|
Issuance of Shares of Stock
|
|
|
A-10
|
|
|
4.13
|
|
|
Restrictions on Stock Received
|
|
|
A-10
|
|
|
4.14
|
|
|
Compliance With Section 409A
|
|
|
A-10
|
|
|
4.15
|
|
|
Date of Grant
|
|
|
A-10
|
|
|
4.16
|
|
|
Source of Shares Deliverable Under Awards
|
|
|
A-11
|
|
|
|
|
|
|
ARTICLE V OPTIONS
|
|
|
A-11
|
|
|
5.1
|
|
|
Authority to Grant Options
|
|
|
A-11
|
|
|
5.2
|
|
|
Type of Options Available
|
|
|
A-11
|
|
|
5.3
|
|
|
Option Agreement
|
|
|
A-11
|
|
|
5.4
|
|
|
Option Price
|
|
|
A-11
|
|
|
5.5
|
|
|
Duration of Option
|
|
|
A-11
|
|
|
5.6
|
|
|
Amount Exercisable
|
|
|
A-11
|
|
|
5.7
|
|
|
Exercise of Option
|
|
|
A-11
|
|
|
5.8
|
|
|
Transferability Incentive Stock Options
|
|
|
A-13
|
|
|
5.9
|
|
|
Notification of Disqualifying Disposition
|
|
|
A-13
|
|
|
5.10
|
|
|
No Rights as Stockholder
|
|
|
A-13
|
|
|
5.11
|
|
|
$100,000 Limitation on ISOs
|
|
|
A-13
|
|
|
5.12
|
|
|
Separation from Service
|
|
|
A-13
|
|
|
|
|
|
|
ARTICLE VI STOCK APPRECIATION RIGHTS
|
|
|
A-13
|
|
|
6.1
|
|
|
Authority to Grant SAR Awards
|
|
|
A-13
|
|
|
6.2
|
|
|
Type of Stock Appreciation Rights Available
|
|
|
A-14
|
|
|
6.3
|
|
|
General Terms
|
|
|
A-14
|
|
A-ii
|
|
|
|
|
|
|
|
|
|
6.4
|
|
|
SAR Agreement
|
|
|
A-14
|
|
|
6.5
|
|
|
Term of SAR
|
|
|
A-14
|
|
|
6.6
|
|
|
Exercise of Freestanding SARs
|
|
|
A-14
|
|
|
6.7
|
|
|
Exercise of Tandem SARs
|
|
|
A-14
|
|
|
6.8
|
|
|
Payment of SAR Amount
|
|
|
A-14
|
|
|
6.9
|
|
|
Separation from Service
|
|
|
A-14
|
|
|
6.10
|
|
|
Nontransferability of SARs
|
|
|
A-15
|
|
|
6.11
|
|
|
No Rights as Stockholder
|
|
|
A-15
|
|
|
6.12
|
|
|
Restrictions on Stock Received
|
|
|
A-15
|
|
|
|
|
|
|
ARTICLE VII RESTRICTED STOCK AWARDS
|
|
|
A-15
|
|
|
7.1
|
|
|
Restricted Stock Awards
|
|
|
A-15
|
|
|
7.2
|
|
|
Restricted Stock Award Agreement
|
|
|
A-15
|
|
|
7.3
|
|
|
Holders Rights as Stockholder
|
|
|
A-15
|
|
|
|
|
|
|
ARTICLE VIII RESTRICTED STOCK UNIT AWARDS
|
|
|
A-16
|
|
|
8.1
|
|
|
Authority to Grant RSU Awards
|
|
|
A-16
|
|
|
8.2
|
|
|
RSU Award
|
|
|
A-16
|
|
|
8.3
|
|
|
RSU Award Agreement
|
|
|
A-16
|
|
|
8.4
|
|
|
Dividend Equivalents
|
|
|
A-16
|
|
|
8.5
|
|
|
Form of Payment Under RSU Award
|
|
|
A-16
|
|
|
8.6
|
|
|
Time of Payment Under RSU Award
|
|
|
A-16
|
|
|
8.7
|
|
|
Holders Rights as Stockholder
|
|
|
A-16
|
|
|
|
|
|
|
ARTICLE IX PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS
|
|
|
A-16
|
|
|
9.1
|
|
|
Authority to Grant Performance Stock Awards and Performance Unit
Awards
|
|
|
A-16
|
|
|
9.2
|
|
|
Performance Goals
|
|
|
A-16
|
|
|
9.3
|
|
|
Time of Establishment of Performance Goals
|
|
|
A-17
|
|
|
9.4
|
|
|
Written Agreement
|
|
|
A-17
|
|
|
9.5
|
|
|
Form of Payment Under Performance Unit Award
|
|
|
A-17
|
|
|
9.6
|
|
|
Time of Payment Under Performance Unit Award
|
|
|
A-17
|
|
|
9.7
|
|
|
Holders Rights as Stockholder With Respect to a
Performance Stock Award
|
|
|
A-17
|
|
|
9.8
|
|
|
Increases Prohibited
|
|
|
A-17
|
|
|
9.9
|
|
|
Stockholder Approval
|
|
|
A-18
|
|
|
9.10
|
|
|
Dividend Equivalents
|
|
|
A-18
|
|
|
|
|
|
|
ARTICLE X DIRECTOR AWARDS
|
|
|
A-18
|
|
|
|
|
|
|
ARTICLE XI ANNUAL CASH INCENTIVE AWARDS
|
|
|
A-18
|
|
|
11.1
|
|
|
Authority to Grant Annual Cash Incentive Awards
|
|
|
A-18
|
|
|
11.2
|
|
|
Covered Employees
|
|
|
A-18
|
|
|
11.3
|
|
|
Written Agreement
|
|
|
A-18
|
|
|
11.4
|
|
|
Form of Payment Under Annual Cash Incentive Award
|
|
|
A-18
|
|
|
11.5
|
|
|
Time of Payment Under Annual Cash Incentive Award
|
|
|
A-18
|
|
|
|
|
|
|
ARTICLE XII OTHER STOCK-BASED AWARDS
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A-18
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12.1
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Authority to Grant Other Stock-Based Awards
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A-18
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12.2
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Value of Other Stock-Based Award
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A-19
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12.3
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Payment of Other Stock-Based Award
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A-19
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12.4
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Separation from Service
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A-19
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12.5
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Time of Payment of Other Stock-Based Award
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A-19
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A-iii
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ARTICLE XIII CASH-BASED AWARDS
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A-19
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13.1
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Authority to Grant Cash-Based Awards
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A-19
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13.2
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Value of Cash-Based Award
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A-19
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13.3
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Payment of Cash-Based Award
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A-19
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13.4
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Time of Payment of Cash-Based Award
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A-19
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13.5
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Separation from Service
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A-19
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ARTICLE XIV SUBSTITUTION AWARDS
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A-19
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ARTICLE XV ADMINISTRATION
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A-20
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15.1
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Awards
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A-20
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15.2
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Authority of the Committee
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A-20
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15.3
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Decisions Binding
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A-21
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15.4
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No Liability
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A-21
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ARTICLE XVI AMENDMENT OR TERMINATION OF PLAN
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A-21
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16.1
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Amendment, Modification, Suspension, and Termination
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A-21
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16.2
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Awards Previously Granted
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A-21
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ARTICLE XVII MISCELLANEOUS
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A-21
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17.1
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Unfunded Plan/No Establishment of a Trust Fund
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A-21
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17.2
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No Employment Obligation
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A-21
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17.3
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Tax Withholding
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A-22
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17.4
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Indemnification of the Committee
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A-22
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17.5
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Gender and Number
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A-23
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17.6
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Severability
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A-23
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17.7
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Headings
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A-23
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17.8
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Other Compensation Plans
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A-23
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17.9
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Retirement and Welfare Plans
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A-23
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17.10
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Other Awards
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A-23
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17.11
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Successors
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A-23
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17.12
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Law Limitations/Governmental Approvals
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A-23
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17.13
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Delivery of Title
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A-23
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17.14
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Inability to Obtain Authority
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A-23
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17.15
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Investment Representations
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A-23
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17.16
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Persons Residing Outside of the United States
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A-23
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17.17
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Arbitration of Disputes
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A-24
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17.18
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No Fractional Shares
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A-24
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17.19
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Governing Law
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A-24
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A-iv
RIGNET,
INC.
2010
OMNIBUS INCENTIVE PLAN
(As
Adopted May 26, 2010)
ARTICLE I
ESTABLISHMENT,
PURPOSE AND DURATION
1.1 Establishment. The Company
hereby establishes an incentive compensation plan, to be known
as the RigNet, Inc. 2010 Omnibus Incentive
Plan, as set forth in this document. The Plan
permits the grant of Incentive Stock Options, Nonqualified Stock
Options, SARs, Restricted Stock, RSUs, Performance Stock Awards,
Performance Unit Awards, Annual Cash Incentive Awards, Other
Stock-Based Awards and Cash-Based Awards. The Plan is effective
as of May 26, 2010 (the Effective
Date), provided that the Companys
stockholders approve the adoption of the Plan within
12 months after the date of adoption of the Plan by the
Board.
1.2 Purpose of the Plan. The Plan
is intended to advance the best interests of the Company, its
Affiliates and its stockholders by providing those persons who
have substantial responsibility for the management and growth of
the Company and its Affiliates with additional performance
incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to
continue in their employment or affiliation with the Company or
its Affiliates.
1.3 Duration of Plan. The Plan
shall continue indefinitely until it is terminated pursuant to
Section 16.1. No Award may be granted under the Plan on or
after the tenth anniversary of the Effective Date. The
applicable provisions of the Plan will continue in effect with
respect to an Award granted under the Plan for as long as such
Award remains outstanding. Notwithstanding the foregoing, no
Incentive Stock Option may be granted under the Plan on or after
the date that is ten years from the earlier of (a) adoption
of the Plan by the Board and (b) the Effective Date.
ARTICLE II
DEFINITIONS
Each word and phrase defined in this Article shall have the
meaning set out below throughout the Plan, unless the context in
which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.
2.1 Affiliate means any corporation,
partnership, limited liability company or association, trust or
other entity or organization which, directly or indirectly,
controls, is controlled by, or is under common control with, the
Company. For purposes of the preceding sentence,
control (including, with correlative meanings, the
terms controlled by and under common control
with), as used with respect to any entity or organization,
shall mean the possession, directly or indirectly, of the power
(a) to vote more than fifty percent (50%) of the securities
having ordinary voting power for the election of directors or
comparable individuals of the controlled entity or organization,
or (b) to direct or cause the direction of the management
and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or
otherwise.
2.2 Annual Cash Incentive Award means an
Award granted pursuant to Article XI to an individual who
is then a key executive Employee.
2.3 Authorized Shares shall have the
meaning ascribed to that term in Section 4.1(a).
2.4 Award means, individually or
collectively, a grant under the Plan of an Incentive Stock
Option, a Nonqualified Stock Option, a SAR, Restricted Stock, a
RSU, a Performance Stock Award, a Performance Unit Award, an
Annual Cash Incentive Award, an Other Stock-Based Award or a
Cash-Based Award, in each case subject to the terms and
provisions of the Plan.
A-1
2.5 Award Agreement means an agreement
that sets forth the terms and conditions applicable to an Award
granted under the Plan.
2.6 Beneficial Owner shall have the
meaning ascribed to such term in
Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
2.7 Board means the board of directors
of the Company.
2.8 Cash-Based Award means an Award
granted pursuant to Article XIII.
2.9 Code means the United States
Internal Revenue Code of 1986, as amended from time to time.
2.10 Committee means (a) in the
case of an Award granted to a Director, the Board, and
(b) in the case of any other Award granted under the Plan,
the Compensation Committee of the Board or, if the Compensation
Committee of the Board chooses to delegate it duties, a
committee of at least two persons who are members of the
Compensation Committee of the Board and are appointed by the
Compensation Committee of the Board to administer the Plan. Each
member of the Committee in respect of his or her participation
in any decision with respect to an Award that is intended to
satisfy the requirements of section 162(m) of the Code must
satisfy the requirements of outside director status
within the meaning of section 162(m) of the Code; provided,
however, that the failure to satisfy such requirement shall not
affect the validity of the action of any committee otherwise
duly authorized and acting in the matter. As to Awards, grants
or other transactions that are authorized by the Committee and
that are intended to be exempt under
Rule 16b-3
of the General Rules and Regulations under the Exchange Act, the
requirements of
Rule 16b-3(d)(1)
of the General Rules and Regulations under the Exchange Act with
respect to committee action must also be satisfied.
2.11 Company means RigNet, Inc., a
Delaware corporation, or any successor (by reincorporation,
merger or otherwise).
2.12 Corporate Change shall have the
meaning ascribed to that term in Section 4.5(c).
2.13 Covered Employee means an Employee
who is a covered employee, as defined in
section 162(m) of the Code and the regulations and other
guidance promulgated by the United States Department of Treasury
and/or the
Internal Revenue Service under section 162(m) of the Code,
or any successor statute.
2.14 Director means a director of the
Company who is not an Employee.
2.15 Disability means as determined by
the Committee in its discretion exercised in good faith,
(a) in the case of an Award that is exempt from the
application of the requirements of Section 409A, a physical
or mental condition of the Holder that would entitle him or her
to payment of disability income payments under the
Companys long-term disability insurance policy or plan for
employees as then in effect; or in the event that the Holder is
a Director or is not covered, for whatever reason, under the
Companys long-term disability insurance policy or plan for
employees or in the event the Company does not maintain such a
long-term disability insurance policy or for purposes of an ISO
granted under the Plan, Disability means a permanent
and total disability as defined in section 22(e)(3) of the
Code and (b) in the case of an Award that is not exempt
from the application of the requirements of Section 409A,
(i) the Holder is unable to engage in any substantial
gainful activity 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 12 months, or (ii) the Holder is, 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 12 months,
receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering
employees of the Company. A determination of Disability may be
made by a physician selected or approved by the Committee and,
in this respect, the Holder shall submit to an examination by
such physician upon request by the Committee.
2.16 Dividend Equivalent means a payment
equivalent in amount to dividends paid to the Companys
stockholders.
2.17 Effective Date shall have the
meaning ascribed to that term in Section 1.1.
A-2
2.18 Employee means (a) a person
employed by the Company or any Affiliate as a common law
employee or (b) a person who has agreed to become a common
law employee of the Company or any Affiliate and is expected to
become such within six (6) months from the date of a
determination made for purposes of the Plan.
2.19 Exchange Act means the Securities
Exchange Act of 1934, as amended, or any successor act.
2.20 Fair Market Value of the Stock as
of any particular date means,
(a) if the Stock is traded on a stock exchange,
(i) and if the Stock is traded on that date, the closing
sale price of the Stock on that date; or
(ii) and if the Stock is not traded on that date, the
closing sale price of the Stock on the last trading date
immediately preceding that date;
as reported on the principal securities exchange on which the
Stock is traded; or
(b) if the Stock is traded in the
over-the-counter
market,
(i) and if the Stock is traded on that date, the average
between the high bid and low asked price on that date; or
(ii) and if the Stock is not traded on that date, the
average between the high bid and low asked price on the last
trading date immediately preceding that date;
as reported in such
over-the-counter
market; provided, however, that (x) if the Stock is not so
traded, or (y) if, in the discretion of the Committee,
another means of determining the fair market value of a share of
Stock at such date shall be necessary or advisable, the
Committee may provide for another method or means for
determining such fair market value, which method or means shall
comply with the requirements of a reasonable valuation method as
described under Section 409A.
2.21 Fiscal Year means the calendar year.
2.22 Freestanding SAR means a SAR that
is granted independently of any Options, as described in
Article VI.
2.23 Holder means a person who has been
granted an Award or any person who is entitled to receive shares
of Stock or cash under an Award.
2.24 Incentive Stock Option or
ISO means an option to purchase Stock granted
pursuant to Article V that is designated as an incentive
stock option and that is intended to satisfy the requirements of
section 422 of the Code.
2.25 Insider shall mean an individual
who is, on the relevant date, an officer, a Director, or more
than ten percent (10%) Beneficial Owner of any class of the
Companys equity securities that is registered pursuant to
Section 12 of the Exchange Act, as determined by the Board
in accordance with Section 16 of the Exchange Act.
2.26 Mature Shares means shares of Stock
that the Holder has held for at least six months.
2.27 Minimum Statutory Tax Withholding
Obligation means, with respect to an Award, the amount
the Company, an Affiliate or other subsidiary is required to
withhold for federal, state, local and foreign taxes based upon
the applicable minimum statutory withholding rates required by
the relevant tax authorities.
2.28 Nonqualified Stock Option or
NQSO means a nonqualified stock
option to purchase Stock granted pursuant to
Article V that does not satisfy the requirements of
section 422 of the Code.
2.29 Option means an Incentive Stock
Option or a Nonqualified Stock Option.
2.30 Option Price shall have the meaning
ascribed to that term in Section 5.4.
A-3
2.31 Other Stock-Based Award means an
equity-based or equity-related Award not otherwise described by
the terms and provisions of the Plan that is granted pursuant to
Article XII.
2.32 Parent Corporation means any
corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if, at the time of the
action or transaction, each of the corporations other than the
Company owns stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of
the other corporations in the chain.
2.33 Performance-Based Compensation
means compensation under an Award that satisfies the
requirements of section 162(m) of the Code for
deductibility of remuneration paid to Covered Employees.
2.34 Performance Goals means one or more
of the criteria described in Section 9.2 on which the
performance goals applicable to an Award are based.
2.35 Performance Stock Award means an
Award designated as a performance stock award granted to a
Holder pursuant to Article IX.
2.36 Performance Unit Award means an
Award designated as a performance unit award granted to a Holder
pursuant to Article IX.
2.37 Period of Restriction means the
period during which Restricted Stock is subject to a substantial
risk of forfeiture (based on the passage of time, the
achievement of Performance Goals, or upon the occurrence of
other events as determined by the Committee, in its discretion),
as provided in Article VII.
2.38 Permissible under Section 409A
means with respect to a particular action (such as, the grant,
payment, vesting, settlement or deferral of an amount or award
under the Plan) that such action shall not subject the
compensation at issue to the additional tax or interest
applicable under Section 409A.
2.39 Plan means the RigNet, Inc. 2010
Omnibus Incentive Plan, as set forth in this document as it may
be amended from time to time.
2.40 Restricted Stock means shares of
restricted Stock issued or granted under the Plan pursuant to
Article VII.
2.41 Restricted Stock Award means an
authorization by the Committee to issue or transfer Restricted
Stock to a Holder.
2.42 RSU means a restricted stock unit
credited to a Holders ledger account maintained by the
Company pursuant to Article VIII.
2.43 RSU Award means an Award granted
pursuant to Article VIII.
2.44 SAR means a stock appreciation
right granted under the Plan pursuant to Article VI.
2.45 Section 409A means
section 409A of the Code and the regulations and other
guidance promulgated by the United States Department of Treasury
and/or the
United States Internal Revenue Service under section 409A
of the Code, or any successor statute.
2.46 Separation from Service means,
except as otherwise provided in the case of an ISO in the
following sentence of this Section 2.45, the termination of
the Award recipients employment or service relationship
with the Company and all Affiliates as determined under
Section 409A. Separation from Service
means, in the case of an ISO, the termination of the
Employees employment relationship with all of the Company,
any Parent Corporation, any Subsidiary Corporation and any
parent or subsidiary corporation (within the meaning of
section 422(a)(2) of the Code) of any such corporation that
issues or assumes an ISO in a transaction to which
section 424(a) of the Code applies.
2.47 Stock means the common stock of the
Company, $0.001 par value per share (or such other par
value as may be designated by act of the Companys
stockholders).
2.48 Subsidiary Corporation means any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations
A-4
other than the last corporation in an unbroken chain owns stock
possessing 50 percent or more of the total combined voting
power of all classes of stock in one of the other corporations
in the chain.
2.49 Substantial Risk of Forfeiture
shall have the meaning ascribed to that term in
Section 409A.
2.50 Tandem SAR means a SAR that is
granted in connection with a related Option pursuant to
Article VI herein, the exercise of which shall require
forfeiture of the right to purchase a share of Stock under the
related Option (and when a share of Stock is purchased under the
Option, the Tandem SAR shall similarly be canceled).
2.51 Ten Percent Stockholder means an
individual, who, at the time the applicable Option is granted,
owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
any Parent Corporation or Subsidiary Corporation. An individual
shall be considered as owning the stock owned, directly or
indirectly, by or for his or her brothers and sisters (whether
by the whole or half blood), spouse, ancestors, and lineal
descendants; and stock owned, directly or indirectly, by or for
a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its
stockholders, partners, or beneficiaries.
2.52 Third Party Service Provider means
any consultant, agent, representative, advisor, or independent
contractor who renders services to the Company or an Affiliate
that (a) are not in connection with the offer and sale of
the Companys securities in a capital raising transaction,
and (b) do not directly or indirectly promote or maintain a
market for the Companys securities, or any other person as
determined by the Committee.
ARTICLE III
ELIGIBILITY
Except as otherwise specified in this Article III, the
persons who are eligible to receive Awards under the Plan are
Employees, Directors and Third Party Service Providers,
provided, however, that (a) only those persons who are, on
the dates of grant, key employees of the Company or any Parent
Corporation or Subsidiary Corporation are eligible for grants of
Incentive Stock Options under the Plan, (b) the only
persons who are eligible to receive Annual Cash Incentive Awards
under the Plan are key executive Employees who, by the nature
and scope of their positions, regularly directly make or
influence policy decisions which significantly impact the
overall results or success of the Company and (c) Directors
and Third Party Service Providers are only eligible to receive
NQSOs, SARs, Restricted Stock, RSUs, Performance Stock Awards
and Performance Unit Awards. Awards other than ISOs, Performance
Stock Awards, Performance Units Awards or Annual Cash Incentive
Awards may also be granted to a person who is expected to become
a key Employee within six months.
ARTICLE IV
GENERAL
PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The
Committee may grant Awards to those Employees, Directors and
Third Party Service Providers as the Committee shall from time
to time determine, under the terms and conditions of the Plan.
Subject only to any applicable limitations set out in the Plan,
the number of shares of Stock or other value to be covered by
any Award to be granted under the Plan shall be as determined by
the Committee in its sole discretion.
(a) The aggregate number of shares of Stock with respect to
which Awards may be granted under the Plan is 3,000,000 (the
Authorized Shares).
(b) The aggregate number of shares of Stock with respect to
which ISOs may be granted under the Plan is equal to the
Authorized Shares.
A-5
(c) The maximum number of shares of Stock with respect to
which ISOs may be granted to an Employee during a Fiscal Year is
equal to the Authorized Shares. The maximum number of shares of
Stock with respect to which NQSOs may be granted to an Employee
during a Fiscal Year is equal to the Authorized Shares. The
maximum number of shares of Stock with respect to which SARs may
be granted to an Employee during a Fiscal Year is equal to the
Authorized Shares. The maximum number of shares of Stock with
respect to which Performance Stock Awards may be granted to an
Employee during a Fiscal Year is equal to the Authorized Shares.
The maximum number of shares of Stock with respect to which
Performance Unit Awards payable in shares of Stock may be
granted to an Employee during a Fiscal Year is equal to the
Authorized Shares. The maximum value of cash with respect to
which Performance Unit Awards payable in cash may be granted to
an Employee during a Fiscal Year, determined as of the dates of
grants of the Performance Unit Awards, is $3,000,000. The
maximum amount that may be paid to a key executive Employee
under Annual Cash Incentive Award(s) granted to an Employee
during a Fiscal Year is $3,000,000.
(d) Each of the foregoing numerical limits stated in this
Section 4.2 shall be subject to adjustment in accordance
with the provisions of Section 4.5.
4.2 Shares That Count Against Limit.
(a) If shares of Stock are withheld from payment of an
Award to satisfy tax obligations with respect to the Award, such
shares of Stock will not count against the aggregate number of
shares of Stock with respect to which Awards may be granted
under the Plan.
(b) If shares of Stock are tendered in payment of an Option
Price of an Option, such shares of Stock will not count against
the aggregate number of shares of Stock with respect to which
Awards may be granted under the Plan.
(c) To the extent that any outstanding Award is forfeited
or cancelled for any reason or is settled in cash in lieu of
shares of Stock, the shares of Stock allocable to such portion
of the Award may again be subject to an Award granted under the
Plan.
(d) When a SAR is settled in shares of Stock, the number of
shares of Stock subject to the SAR under the SAR Award Agreement
will be counted against the aggregate number of shares of Stock
with respect to which Awards may be granted under the Plan as
one share for every share subject to the SAR, regardless of the
number of shares used to settle the SAR upon exercise.
(e) The maximum number of shares of Stock available for
issuance under the Plan shall not be reduced to reflect any
dividends or Dividend Equivalents that are reinvested into
additional shares of Stock or credited as additional Restricted
Stock, Restricted Stock Units, Performance Shares, or other
Stock-Based Awards.
4.3 Non-Transferability. Except as
specified in the applicable Award Agreements or in domestic
relations court orders, an Award shall not be transferable by
the Holder other than by will or under the laws of descent and
distribution, and shall be exercisable, during the Holders
lifetime, only by him or her. Any attempted assignment of an
Award in violation of this Section shall be null and void. In
the discretion of the Committee, any attempt to transfer an
Award other than under the terms of the Plan and the applicable
Award Agreement may terminate the Award.
4.4 Requirements of Law. The
Company shall not be required to sell or issue any shares of
Stock under any Award if issuing those shares of Stock would
constitute or result in a violation by the Holder or the Company
of any provision of any law, statute or regulation of any
governmental authority. Specifically, in connection with any
applicable statute or regulation relating to the registration of
securities, upon exercise of any Option or pursuant to any other
Award, the Company shall not be required to issue any shares of
Stock unless the Committee has received evidence satisfactory to
it to the effect that the Holder will not transfer the shares of
Stock except in accordance with applicable law, including
receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable
law. The determination by the Committee on this matter shall be
final, binding and conclusive. The Company may, but
A-6
shall in no event be obligated to, register any shares of Stock
covered by the Plan pursuant to applicable securities laws of
any country or any political subdivision. In the event the
shares of Stock issuable on exercise of an Option or pursuant to
any other Award are not registered, the Company may imprint on
the certificate evidencing the shares of Stock any legend that
counsel for the Company considers necessary or advisable to
comply with applicable law, or, should the shares of Stock be
represented by book or electronic entry rather than a
certificate, the Company may take such steps to restrict
transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law.
The Company shall not be obligated to take any other affirmative
action in order to cause or enable the exercise of an Option or
any other Award, or the issuance of shares of Stock pursuant
thereto, to comply with any law or regulation of any
governmental authority.
4.5 Changes in the Companys Capital
Structure.
(a) The existence of outstanding Awards shall not affect in
any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Companys capital
structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, preferred or prior
preference shares ahead of or affecting the Stock or Stock
rights, the dissolution or liquidation of the Company, any sale
or transfer of all or any part of its assets or business or any
other corporate act or proceeding, whether of a similar
character or otherwise.
(b) If the Company shall effect a subdivision or
consolidation of Stock or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of
the number of shares of Stock outstanding, without receiving
compensation therefor in money, services or property, then
(i) the number, class or series and per share price of
Stock subject to outstanding Awards under the Plan shall be
appropriately adjusted in such a manner as to entitle a Holder
to receive upon exercise of an Award, for the same aggregate
cash consideration, the equivalent total number and class or
series of Stock the Holder would have received had the Holder
exercised his or her Award in full immediately prior to the
event requiring the adjustment, and (ii) the number and
class or series of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and
class or series of Stock then reserved, that number and class or
series of Stock that would have been received by the owner of an
equal number of outstanding shares of Stock of each class or
series of Stock as the result of the event requiring the
adjustment.
(c) If while unexercised Awards remain outstanding under
the Plan (i) the Company shall not be the surviving entity
in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than an entity
that was wholly-owned by the Company immediately prior to such
merger, consolidation or other reorganization), (ii) the
Company sells, leases or exchanges or agrees to sell, lease or
exchange all or substantially all of its assets to any other
person or entity (other than an entity wholly-owned by the
Company), (iii) the Company is to be dissolved or
(iv) the Company is a party to any other corporate
transaction (as defined under section 424(a) of the Code
and applicable Department of Treasury regulations) that is not
described in clauses (i), (ii) or (iii) of this
sentence (each such event is referred to herein as a
Corporate Change), then, except as otherwise
provided in an Award Agreement or another agreement between the
Holder and the Company (provided that such exceptions shall not
apply in the case of a reincorporation merger), or as a result
of the Committees effectuation of one or more of the
alternatives described below, there shall be no acceleration of
the time at which any Award then outstanding may be exercised,
and no later than ten days after the approval by the
stockholders of the Company of such Corporate Change, the
Committee, acting in its sole and absolute discretion without
the consent or approval of any Holder, shall act to effect one
or more of the following alternatives, which may vary among
individual Holders and which may vary among Awards held by any
individual Holder (provided that, with respect to a
reincorporation merger in which Holders of the Companys
ordinary shares will receive one ordinary share of the successor
corporation for each ordinary share of the Company, none of such
alternatives shall apply and, without Committee action, each
Award shall automatically convert into a similar award of the
successor corporation exercisable for the same number
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of ordinary shares of the successor as the Award was exercisable
for ordinary shares of Stock of the Company):
(1) accelerate the time at which some or all of the Awards
then outstanding may be exercised so that such Awards may be
exercised in full for a limited period of time on or before a
specified date (before or after such Corporate Change) fixed by
the Committee, after which specified date all such Awards that
remain unexercised and all rights of Holders thereunder shall
terminate;
(2) require the mandatory surrender to the Company by all
or selected Holders of some or all of the then outstanding
Awards held by such Holders (irrespective of whether such Awards
are then exercisable under the provisions of the Plan or the
applicable Award Agreement evidencing such Award) as of a date,
before or after such Corporate Change, specified by the
Committee, in which event the Committee shall thereupon cancel
such Award and the Company shall pay to each such Holder an
amount of cash per share equal to the excess, if any, of the per
share price offered to stockholders of the Company in connection
with such Corporate Change over the exercise prices under such
Award for such shares;
(3) with respect to all or selected Holders, have some or
all of their then outstanding Awards (whether vested or
unvested) assumed or have a new award of a similar nature
substituted for some or all of their then outstanding Awards
under the Plan (whether vested or unvested) by an entity which
is a party to the transaction resulting in such Corporate Change
and which is then employing such Holder or which is affiliated
or associated with such Holder in the same or a substantially
similar manner as the Company prior to the Corporate Change, or
a parent or subsidiary of such entity, provided that
(A) such assumption or substitution is on a basis where the
excess of the aggregate fair market value of the Stock subject
to the Award immediately after the assumption or substitution
over the aggregate exercise price of such Stock is equal to the
excess of the aggregate fair market value of all Stock subject
to the Award immediately before such assumption or substitution
over the aggregate exercise price of such Stock, and
(B) the assumed rights under such existing Award or the
substituted rights under such new Award, as the case may be,
will have the same terms and conditions as the rights under the
existing Award assumed or substituted for, as the case may be;
(4) provide that the number and class or series of Stock
covered by an Award (whether vested or unvested) theretofore
granted shall be adjusted so that such Award when exercised
shall thereafter cover the number and class or series of Stock
or other securities or property (including, without limitation,
cash) to which the Holder would have been entitled pursuant to
the terms of the agreement or plan relating to such Corporate
Change if, immediately prior to such Corporate Change, the
Holder had been the holder of record of the number of shares of
Stock then covered by such Award; or
(5) make such adjustments to Awards then outstanding as the
Committee deems appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its sole
and absolute discretion that no such adjustment is necessary to
reflect such Corporate Change).
Any adjustment effected by the Committee under Section 4.5
shall be designed to provide the Holder with the intrinsic value
of his or her Award, as determined prior to the Corporate
Change, or, if applicable, equalize the Fair Market Value of the
Award before and after the Corporate Change.
In effecting one or more of the alternatives set out in
paragraphs (3), (4) or (5) immediately above, and
except as otherwise may be provided in an Award Agreement, the
Committee, in its sole and absolute discretion and without the
consent or approval of any Holder, may accelerate the time at
which some or all Awards then outstanding may be exercised.
(d) In the event of changes in the outstanding Stock by
reason of recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant
changes in capitalization occurring after the date of the grant
of any Award and not otherwise provided for by this
Section 4.5, any outstanding Award and any Award Agreement
evidencing such Award shall be subject to adjustment by
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the Committee in its sole and absolute discretion as to the
number and price of Stock or other consideration subject to such
Award. In the event of any such change in the outstanding Stock,
the aggregate number of shares of Stock available under the Plan
may be appropriately adjusted by the Committee, whose
determination shall be conclusive.
(e) After a merger of one or more corporations into the
Company or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving
corporation, each Holder shall be entitled to have his or her
Restricted Stock appropriately adjusted based on the manner in
which the shares of Stock were adjusted under the terms of the
agreement of merger or consolidation.
(f) The issuance by the Company of stock of any class or
series, or securities convertible into, or exchangeable for,
stock of any class or series, for cash or property, or for labor
or services either upon direct sale or upon the exercise of
rights or warrants to subscribe for them, or upon conversion or
exchange of stock or obligations of the Company convertible
into, or exchangeable for, stock or other securities, shall not
affect, and no adjustment by reason of such issuance shall be
made with respect to, the number, class or series, or price of
shares of Stock then subject to outstanding Awards.
4.6 Election Under Section 83(b) of the
Code. No Holder shall exercise the election
permitted under section 83(b) of the Code with respect to
any Award without the prior written approval of the General
Counsel or the Chief Financial Officer of the Company. Any
Holder who makes an election under section 83(b) of the
Code with respect to any Award without the prior written
approval of the General Counsel or the Chief Financial Officer
of the Company may, in the discretion of the Committee, forfeit
any or all Awards granted to him or her under the Plan.
4.7 Forfeiture for
Cause. Notwithstanding any other provision of the
Plan or an Award Agreement, if the Committee finds by a majority
vote that a Holder, before or after his or her Separation from
Service (a) committed a felony or a crime involving moral
turpitude or committed any other act or omission involving
fraud, embezzlement or any other act of dishonesty in the course
of his or her employment by the Company or an Affiliate which
conduct damaged the Company or an Affiliate;
(b) substantially and repeatedly failed to perform duties
of the office held by the Holder as reasonably directed by the
Company or an Affiliate, (c) committed gross negligence or
willful misconduct with respect to the Company or an Affiliate;
(d) committed a material breach of any employment agreement
between the Holder and the Company or an Affiliate that is not
cured within ten (10) days after receipt of written notice
thereof from the Company or the Affiliate, as applicable;
(e) failed, within ten (10) days after receipt by the
Holder of written notice thereof from the Company or an
Affiliate, to correct, cease or otherwise alter any failure to
comply with instructions or other action or omission which the
Board reasonably believes does or may materially or adversely
affect the Companys or an Affiliates business or
operations, (f) committed misconduct which is of such a
serious or substantial nature that a reasonable likelihood
exists that such misconduct will materially injure the
reputation of the Company or an Affiliate, (g) harassed or
discriminated against the Companys or an Affiliates
employees, customers or vendors in violation of the
Companys policies with respect to such matters,
(h) misappropriated funds or assets of the Company or an
Affiliate for personal use or willfully violated the Company
policies or standards of business conduct as determined in good
faith by the Board, (i) failed, due to some action or
inaction on the part of the Holder, to have immigration status
that permits the Holder to maintain full-time employment with
the Company or an Affiliate in the United States in compliance
with all applicable immigration law, (j) disclosed trade
secrets of the Company or an Affiliate, then as of the date the
Committee makes its finding, any Awards awarded to the Holder
that have not been exercised by the Holder (including all Awards
that have not yet vested) will be forfeited to the Company. The
findings and decision of the Committee or the Board, if
applicable, with respect to such matter, including those
regarding the acts of the Holder and the damage done to the
Company, will be final for all purposes. No decision of the
Committee, however, will affect the finality of the discharge of
the individual by the Company or an Affiliate.
4.8 Forfeiture Events. The
Committee may specify in an Award Agreement that the
Holders rights, payments, and benefits with respect to an
Award shall be subject to reduction, cancellation, forfeiture,
or recoupment upon the occurrence of certain specified events,
in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events may include, but shall not
be limited to, Separation from
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Service for cause, Separation from Service for any other reason,
violation of material policies of the Company and its
Affiliates, breach of noncompetition, confidentiality, or other
restrictive covenants that may apply to the Holder, or other
conduct by the Holder that is detrimental to the business or
reputation of the Company and its Affiliates.
4.9 Award Agreements. Each Award
shall be embodied in a written Award Agreement that shall be
subject to the terms and conditions of the Plan. The Award
Agreement shall be signed by an executive officer of the
Company, other than the Holder, on behalf of the Company, and
may be signed by the Holder to the extent required by the
Committee. The Award Agreement may specify the effect of a
change in control of the Company on the Award. The Award
Agreement may contain any other provisions that the Committee in
its discretion shall deem advisable which are not inconsistent
with the terms and provisions of the Plan.
4.10 Amendments of Award
Agreements. The terms of any outstanding Award
under the Plan may be amended from time to time by the Committee
in its discretion in any manner that it deems appropriate and
that is consistent with the terms of the Plan or necessary to
implement the requirements of the Plan. However, no such
amendment shall adversely affect in a material manner any right
of a Holder without his or her written consent. Except as
specified in Section 4.5(b), the Committee may not directly
or indirectly lower the exercise price of a previously granted
Option or the grant price of a previously granted SAR.
4.11 Rights as Stockholder. A
Holder shall not have any rights as a stockholder with respect
to Stock covered by an Option, a SAR, an RSU, a Performance
Unit, or an Other Stock-Based Award payable in Stock until the
date, if any, such Stock is issued by the Company; and, except
as otherwise provided in Section 4.5, no adjustment for
dividends, or otherwise, shall be made if the record date
therefor is prior to the date of issuance of such Stock.
4.12 Issuance of Shares of
Stock. Shares of Stock, when issued, may be
represented by a certificate or by book or electronic entry.
4.13 Restrictions on Stock
Received. The Committee may impose such
conditions
and/or
restrictions on any shares of Stock issued pursuant to an Award
as it may deem advisable or desirable. These restrictions may
include, but shall not be limited to, a requirement that the
Holder hold the shares of Stock for a specified period of time.
4.14 Compliance With
Section 409A. Awards shall be designed,
granted and administered in such a manner that they are either
exempt from the application of, or comply with, the requirements
of Section 409A. The Plan and each Award Agreement under
the Plan that is intended to comply the requirements of
Section 409A shall be construed and interpreted in
accordance with such intent. If the Committee determines that an
Award, Award Agreement, payment, distribution, deferral
election, transaction, or any other action or arrangement
contemplated by the provisions of the Plan would, if undertaken,
cause a Holder to become subject to additional taxes under
Section 409A, then unless the Committee specifically
provides otherwise, such Award, Award Agreement, payment,
distribution, deferral election, transaction or other action or
arrangement shall not be given effect to the extent it causes
such result and the related provisions of the Plan
and/or Award
Agreement will be deemed modified, or, if necessary, suspended
in order to comply with the requirements of Section 409A to
the extent determined appropriate by the Committee, in each case
without the consent of or notice to the Holder. The
exercisability of an Option or a SAR shall not be extended to
the extent that such extension would subject the Holder to
additional taxes under Section 409A.
4.15 Date of Grant. The date on
which an option or SAR is granted shall be the date the Company
completes the corporate action constituting an offer of stock
for sale to a Holder under the terms and conditions of the
Option or SAR; provided that such corporate action shall
not be considered complete until the date on which the
maximum number of shares that can be purchased under the
Option and the minimum Option price are fixed or determinable.
If the corporate action contemplates an immediate offer of stock
for sale to a class of individuals, then the date of the
granting of an Option is the time or date of that corporate
action, if the offer is to be made immediately. If the corporate
action contemplates a particular date on which the offer is to
be made, then the date of grant is the contemplated date of the
offer.
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4.16 Source of Shares Deliverable Under
Awards. Any shares of Stock delivered pursuant to
an Award may consist, in whole or in part, of authorized and
unissued shares of Stock or of treasury shares of Stock.
ARTICLE V
OPTIONS
5.1 Authority to Grant
Options. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant Options under the Plan to eligible persons in such number
and upon such terms as the Committee shall determine;
provided that ISOs may be granted only to eligible
Employees of the Company or of any Parent Corporation or
Subsidiary Corporation (as permitted by section 422 of the
Code and the regulations thereunder).
5.2 Type of Options
Available. Options granted under the Plan may be
NQSOs or ISOs.
5.3 Option Agreement. Each Option
grant under the Plan shall be evidenced by an Award Agreement
that shall specify (a) whether the Option is intended to be
an ISO or an NQSO, (b) the Option Price, (c) the
duration of the Option, (d) the number of shares of Stock
to which the Option pertains, (e) the exercise
restrictions, if any, applicable to the Option and (f) such
other provisions as the Committee shall determine that are not
inconsistent with the terms and provisions of the Plan.
Notwithstanding the designation of an Option as an ISO in the
applicable Award Agreement for such Option, to the extent the
limitations of Section 5.11 of the Plan are exceeded with
respect to the Option, the portion of the Option in excess of
the limitation shall be treated as a NQSO. An Option granted
under the Plan may not be granted with any Dividend Equivalents
rights.
5.4 Option Price. The price at
which shares of Stock may be purchased under an Option (the
Option Price) shall not be less than one
hundred percent (100%) of the Fair Market Value of the shares of
Stock on the date the Option is granted; provided,
however, if the Option is an ISO granted to a Ten Percent
Stockholder, the Option Price must not be less than one hundred
ten percent (110%) of the Fair Market Value of the shares of
Stock on the date the ISO is granted. Subject to the limitations
set forth in the preceding sentences of this Section 5.4,
the Committee shall determine the Option Price for each grant of
an Option under the Plan.
5.5 Duration of Option. An Option
shall not be exercisable after the earlier of (a) the
general term of the Option specified in the applicable Award
Agreement (which shall not exceed ten years, or, in the case of
a Ten Percent Stockholder, no ISO shall be exercisable later
than the fifth (5th) anniversary of the date of its grant) or
(b) the period of time specified in the applicable Award
Agreement that follows the Holders Separation from Service.
5.6 Amount Exercisable. Each Option
may be exercised at the time, in the manner and subject to the
conditions the Committee specifies in the Award Agreement in its
sole discretion.
5.7 Exercise of Option.
(a) General Method of Exercise. Subject
to the terms and provisions of the Plan and the applicable Award
Agreement, Options may be exercised in whole or in part from
time to time by the delivery of written notice in the manner
designated by the Committee stating (i) that the Holder
wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of Stock with respect
to which the Option is to be exercised and (iii) the
address to which a stock certificate, if any, representing such
shares of Stock should be mailed or delivered, or the account to
which the shares of Stock represented by book or electronic
entry should be delivered. Except in the case of exercise by a
third party broker as provided below, in order for the notice to
be effective the notice must be accompanied by payment of the
Option Price (and all applicable federal, state, local and
foreign withholding taxes described in Section 17.3) by any
combination of the following: (w) cash, certified check,
bank draft or postal or express money order for an amount equal
to the Option Price under the Option, (x) Mature Shares
with a Fair Market Value on the date of exercise equal to the
Option Price under the Option (if approved in advance by the
Committee or an executive officer of the Company), (y) an
election to make
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a cashless exercise through a registered broker-dealer (if
approved in advance by the Committee or an executive officer of
the Company) or (z) except as specified below, any other
form of payment which is acceptable to the Committee. If Mature
Shares are used for payment by the Holder, the aggregate Fair
Market Value of the shares of Stock tendered must be equal to or
less than the aggregate Option Price of the shares of Stock
being purchased upon exercise of the Option, and any difference
must be paid by cash, certified check, bank draft or postal or
express money order payable to the order of the Company.
If, at the time of receipt by the Company or its delegate of
such written notice, (i) the Company has unrestricted
surplus in an amount not less than the Option Price of such
shares of Stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all
outstanding shares of preferred stock of the Company have been
fully paid, (iii) the acquisition by the Company of its own
shares of Stock for the purpose of enabling such Holder to
exercise such Option is otherwise permitted by applicable law,
does not require any vote or consent of any stockholder of the
Company and does not violate the terms of any agreement to which
the Company is a party or by which it is bound, and
(iv) there shall have been adopted, and there shall be in
full force and effect, a resolution of the Board authorizing the
acquisition by the Company of its own shares of stock for such
purpose, then such Holder may deliver to the Company, in payment
of the Option Price of the shares of Stock with respect to which
such Option is exercised, (x) certificates registered in
the name of such Holder that represent a number of shares of
stock legally and beneficially owned by such Holder (free of all
liens, claims and encumbrances of every kind) and having a Fair
Market Value on the date of receipt by the Company or its
delegate of such written notice that is not greater than the
Option Price of the shares of Stock with respect to which such
Option is to be exercised, such certificates to be accompanied
by stock powers duly endorsed in blank by the record holder of
the shares of Stock represented by such certificates, with the
signature of such record holder guaranteed by a national banking
association, and (y) if the Option Price of the shares of
Stock with respect to which such Option is to be exercised
exceeds such Fair Market Value, a cashiers check drawn on
a national banking association and payable to the order of the
Company, in an amount, in United States dollars, equal to the
amount of such excess. Notwithstanding the provisions of the
immediately preceding sentence, the Committee, in its sole
discretion, may refuse to accept shares of Stock in payment of
the Option Price of the shares of Stock with respect to which
such Option is to be exercised and, in that event, any
certificates representing shares of Stock that were received by
the Company or its delegate with such written notice shall be
returned to such Holder, together with notice by the Company or
its delegate to such Holder of the refusal of the Committee to
accept such shares of Stock. If, at the expiration of seven
business days after the delivery to such Holder of such written
notice from the Company or its delegate, such Holder shall not
have delivered to the Company or its delegate a cashiers
check drawn on a national banking association and payable to the
order of the Company in an amount, in United States dollars,
equal to the Option Price of the shares of Stock with respect to
which such Option is to be exercised, such written notice from
the Holder to the Company or its delegate shall be ineffective
to exercise such Option.
Whenever an Option is exercised by exchanging shares of Stock
owned by the Holder, the Holder shall deliver to the Company or
its delegate certificates registered in the name of the Holder
representing a number of shares of Stock legally and
beneficially owned by the Holder, free of all liens, claims, and
encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented
by the certificates, (with signature guaranteed by a commercial
bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of
certificates upon the exercise of Option is subject to the
condition that the person exercising the Option provide the
Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition of an
Option.
(b) Issuance of Shares. Subject to
Section 4.3 and Section 5.7(c), as promptly as
practicable after receipt of written notification and payment,
in the form required by Section 5.7(a), of an amount of
money necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, the Company
shall deliver to the Holder certificates for the number of
shares with respect to which the Option has been exercised,
issued in the Holders name. Delivery of the shares shall
be deemed effected
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for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail,
addressed to the Holder, at the address specified by the Holder
or shall have transferred to the account designated by the
Holder to which the shares of Stock represented by book or
electronic entry are to be delivered.
(c) Exercise Through Third-Party
Broker. The Committee may permit a Holder to
elect to pay the Option Price and any applicable tax withholding
resulting from such exercise by authorizing a third-party broker
to sell all or a portion of the shares of Stock acquired upon
exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the Option Price and any
applicable federal, state, local and foreign tax withholding
resulting from such exercise.
(d) Limitations on Exercise
Alternatives. The Committee shall not permit a
Holder to pay such Holders Option Price upon the exercise
of an Option by having the Company reduce the number of shares
of Stock that will be delivered pursuant to the exercise of the
Option. In addition, the Committee shall not permit a Holder to
pay such Holders Option Price upon the exercise of an
Option by using shares of Stock other than Mature Shares. An
Option may not be exercised for a fraction of a share of Stock.
5.8 Transferability Incentive Stock
Options. Notwithstanding anything in the Plan or
an Award Agreement to the contrary, no ISO granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of
descent and distribution, and all ISOs granted to an Employee
under this Article V shall be exercisable during his or her
lifetime only by such Employee.
5.9 Notification of Disqualifying
Disposition. If any Employee shall make any
disposition of shares of Stock issued pursuant to the exercise
of an ISO under the circumstances described in
section 421(b) of the Code (relating to certain
disqualifying dispositions), such Employee shall notify the
Company of such disposition within ten (10) days thereof.
5.10 No Rights as Stockholder. A
Holder of an Option shall not have any rights as a stockholder
with respect to Stock covered by an Option until the date a
stock certificate for such Stock is issued by the Company; and,
except as otherwise provided in Section 4.5, no adjustment
for dividends, or otherwise, shall be made if the record date
therefor is prior to the date of issuance of such certificate.
5.11 $100,000 Limitation on
ISOs. To the extent that the aggregate Fair
Market Value of shares of Stock with respect to which ISOs first
become exercisable by a Holder in any calendar year exceeds
$100,000, taking into account both shares of Stock subject to
ISOs under the Plan and Stock subject to ISOs under all other
plans of the Company, such Options shall be treated as NQSOs.
For this purpose, the Fair Market Value of the
shares of Stock subject to Options shall be determined as of the
date the Options were awarded. In reducing the number of Options
treated as ISOs to meet the $100,000 limit, the most recently
granted Options shall be reduced first. To the extent a
reduction of simultaneously granted Options is necessary to meet
the $100,000 limit, the Committee may, in the manner and to the
extent permitted by law, designate which shares of Stock are to
be treated as shares acquired pursuant to the exercise of an ISO.
5.12 Separation from Service. Each
Award Agreement shall set forth the extent to which the Holder
of an Option shall have the right to exercise the Option
following the Holders Separation from Service. Such
provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant
to the Award Agreement or the Plan, and may reflect distinctions
based on the reasons for termination.
ARTICLE VI
STOCK
APPRECIATION RIGHTS
6.1 Authority to Grant SAR
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant SARs under the Plan to eligible persons in such number and
upon such terms as the Committee shall determine. Subject to the
terms and conditions of the Plan, the Committee
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shall have complete discretion in determining the number of SARs
granted to each Holder and, consistent with the provisions of
the Plan, in determining the terms and conditions pertaining to
such SARs.
6.2 Type of Stock Appreciation Rights
Available. The Committee may grant Freestanding
SARs, Tandem SARs, or any combination of these forms of SARs.
6.3 General Terms. Subject to the
terms and conditions of the Plan, a SAR granted under the Plan
shall confer on the recipient a right to receive, upon exercise
thereof, an amount equal to the excess of (a) the Fair
Market Value of one share of the Stock on the date of exercise
over (b) the grant price of the SAR, which shall not be
less than one hundred percent (100%) of the Fair Market Value of
one share of the Stock on the date of grant of the SAR. The
grant price of Tandem SARs shall be equal to the Option Price of
the related Option. A SAR granted under the Plan may not be
granted with any Dividend Equivalents rights.
6.4 SAR Agreement. Each Award of
SARs granted under the Plan shall be evidenced by an Award
Agreement that shall specify (a) the grant price of the
SAR, (b) the term of the SAR, (c) the vesting and
termination provisions of the SAR and (d) such other
provisions as the Committee shall determine that are not
inconsistent with the terms and provisions of the Plan. The
Committee may impose such additional conditions or restrictions
on the exercise of any SAR as it may deem appropriate.
6.5 Term of SAR. The term of a SAR
granted under the Plan shall be determined by the Committee, in
its sole discretion; provided that no SAR shall be exercisable
on or after the tenth anniversary date of its grant.
Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection
with an ISO: (a) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (b) the value of the
payout with respect to the Tandem SAR may be for no more than
one hundred percent (100%) of the excess of the Fair Market
Value of the shares of Stock subject to the underlying ISO at
the time the Tandem SAR is exercised over the Option Price of
the underlying ISO; and (c) the Tandem SAR may be exercised
only when the Fair Market Value of the shares of Stock subject
to the ISO exceeds the Option Price of the ISO.
6.6 Exercise of Freestanding
SARs. Subject to the terms and provisions of the
Plan and the applicable Award Agreement, Freestanding SARs may
be exercised in whole or in part from time to time by the
delivery of written notice in the manner designated by the
Committee stating (a) that the Holder wishes to exercise
such SAR on the date such notice is so delivered, (b) the
number of shares of Stock with respect to which the SAR is to be
exercised and (c) the address to which the payment due
under such SAR should be delivered. In accordance with
applicable law, a Freestanding SAR may be exercised upon
whatever additional terms and conditions the Committee, in its
sole discretion, imposes.
6.7 Exercise of Tandem
SARs. Subject to the terms and provisions of the
Plan and the applicable Award Agreement, Tandem SARs may be
exercised for all or part of the shares of Stock subject to the
related Option upon the surrender of the right to exercise the
equivalent portion of the related Option and by the delivery of
written notice in the manner designated by the Committee stating
(a) that the Holder wishes to exercise such SAR on the date
such notice is so delivered, (b) the number of shares of
Stock with respect to which the SAR is to be exercised and
(c) the address to which the payment due under such SAR
should be delivered. A Tandem SAR may be exercised only with
respect to the shares of Stock for which its related Option is
then exercisable. In accordance with applicable law, a Tandem
SAR may be exercised upon whatever additional terms and
conditions the Committee, in its sole discretion, imposes.
6.8 Payment of SAR Amount. Upon the
exercise of a SAR, a Holder shall be entitled to receive payment
from the Company in an amount determined by multiplying the
excess of the Fair Market Value of a share of Stock on the date
of exercise over the grant price of the SAR by the number of
shares of Stock with respect to which the SAR is exercised. At
the discretion of the Committee, the payment upon SAR exercise
may be in cash, in Stock of equivalent value, in some
combination thereof or in any other manner approved by the
Committee in its sole discretion. The Committees
determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.
6.9 Separation from Service. Each
Award Agreement shall set forth the extent to which the Holder
of a SAR shall have the right to exercise the SAR following the
Holders Separation from Service. Such
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provisions shall be determined in the sole discretion of the
Committee, may be included in the Award Agreement entered into
with the Holder, need not be uniform among all SARs issued
pursuant to the Plan, and may reflect distinctions based on the
reasons for termination or severance.
6.10 Nontransferability of
SARs. Except as otherwise provided in a
Holders Award Agreement, no SAR granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated, other than by will or by the laws of descent
and distribution. Further, except as otherwise provided in a
Holders Award Agreement, all SARs granted to a Holder
under the Plan shall be exercisable during his or her lifetime
only by the Holder, and after that time, by the Holders
heirs or estate. Any attempted assignment of a SAR in violation
of this Section 6.10 shall be null and void.
6.11 No Rights as Stockholder. A
grantee of a SAR award, as such, shall have no rights as a
stockholder.
6.12 Restrictions on Stock
Received. The Committee may impose such
conditions
and/or
restrictions on any shares of Stock received upon exercise of a
SAR granted pursuant to the Plan as it may deem advisable or
desirable. These restrictions may include, but shall not be
limited to, a requirement that the Holder hold the shares of
Stock received upon exercise of a SAR for a specified period of
time.
ARTICLE VII
RESTRICTED
STOCK AWARDS
7.1 Restricted Stock
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
make Awards of Restricted Stock under the Plan to eligible
persons in such number and upon such terms as the Committee
shall determine. The amount of, the vesting, forfeiture and the
transferability restrictions applicable to any Restricted Stock
Award shall be determined by the Committee in its sole
discretion. If the Committee imposes vesting, forfeiture or
transferability restrictions on a Holders rights with
respect to Restricted Stock, the Committee may issue such
instructions to the Companys share transfer agent in
connection therewith as it deems appropriate. The Committee may
also cause the certificate for shares of Stock issued pursuant
to a Restricted Stock Award to be imprinted with any legend
which counsel for the Company considers advisable with respect
to the restrictions or, should the shares of Stock be
represented by book or electronic entry rather than a
certificate, the Company may take such steps to restrict
transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law.
7.2 Restricted Stock Award
Agreement. Each Restricted Stock Award shall be
evidenced by an Award Agreement that contains any vesting,
forfeiture and transferability restrictions and other provisions
not inconsistent with the Plan as the Committee may specify.
7.3 Holders Rights as
Stockholder. Subject to the terms and conditions
of the Plan, each recipient of a Restricted Stock Award shall
have all the rights of a stockholder with respect to the shares
of Restricted Stock included in the Restricted Stock Award
during the Period of Restriction established for the Restricted
Stock Award. Dividends paid with respect to Restricted Stock in
cash or property other than shares of Stock or rights to acquire
shares of Stock shall be paid to the recipient of the Restricted
Stock Award currently. Dividends paid in shares of Stock or
rights to acquire shares of Stock shall be added to and become a
part of the Restricted Stock. During the Period of Restriction,
certificates representing the Restricted Stock shall be
registered in the Holders name and bear a restrictive
legend to the effect that ownership of such Restricted Stock,
and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms, and conditions provided in the Plan
and the applicable Award Agreement. Such certificates shall be
deposited by the recipient with the Secretary of the Company or
such other officer or agent of the Company as may be designated
by the Committee, together with all stock powers or other
instruments of assignment, each endorsed in blank, which will
permit transfer to the Company of all or any portion of the
Restricted Stock which shall be forfeited in accordance with the
Plan and the applicable Award Agreement.
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ARTICLE VIII
RESTRICTED
STOCK UNIT AWARDS
8.1 Authority to Grant RSU
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant RSU Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine.
The amount of, the vesting, forfeiture and the transferability
restrictions applicable to any RSU Award shall be determined by
the Committee in its sole discretion. The Committee shall
maintain a bookkeeping ledger account which reflects the number
of RSUs credited under the Plan for the benefit of a Holder.
8.2 RSU Award. An RSU Award shall
be similar in nature to a Restricted Stock Award except that no
shares of Stock are actually transferred to the Holder until a
later date specified in the applicable Award Agreement. Each RSU
shall have a value equal to the Fair Market Value of a share of
Stock.
8.3 RSU Award Agreement. Each RSU
Award shall be evidenced by an Award Agreement that contains any
Substantial Risk of Forfeiture, transferability and forfeiture
restrictions, form and time of payment provisions and other
provisions not inconsistent with the Plan as the Committee may
specify.
8.4 Dividend Equivalents. An Award
Agreement for an RSU Award may specify that the Holder shall be
entitled to the payment of Dividend Equivalents under the Award.
8.5 Form of Payment Under RSU
Award. Payment under an RSU Award shall be made
in cash, shares of Stock or any combination thereof, as
specified in the applicable Award Agreement.
8.6 Time of Payment Under RSU
Award. A Holders payment under an RSU Award
shall be made at such time as is specified in the applicable
Award Agreement. The Award Agreement shall specify that the
payment will be made (a) by a date that is no later than
the date that is two and one-half
(21/2)
months after the end of the Fiscal Year in which the RSU Award
payment is no longer subject to a Substantial Risk of Forfeiture
or (b) at a time that is Permissible under
Section 409A.
8.7 Holders Rights as
Stockholder. Each recipient of an RSU Award shall
have no rights of a stockholder with respect to the
Holders RSUs. A Holder shall have no voting rights with
respect to any RSU Awards.
ARTICLE IX
PERFORMANCE
STOCK AWARDS AND PERFORMANCE UNIT AWARDS
9.1 Authority to Grant Performance Stock Awards
and Performance Unit Awards. Subject to the terms
and provisions of the Plan, the Committee, at any time, and from
time to time, may grant Performance Stock Awards and Performance
Unit Awards under the Plan to eligible persons in such amounts
and upon such terms as the Committee shall determine. The amount
of, the vesting, forfeiture and the transferability restrictions
applicable to any Performance Stock Award or Performance Unit
Award shall be based upon the attainment of such Performance
Goals as the Committee may determine; provided, however, that
the performance period for any Performance Stock Award or
Performance Unit Award shall not be less than one year. If the
Committee imposes vesting or transferability restrictions on a
Holders rights with respect to Performance Stock Award or
Performance Unit Awards, the Committee may issue such
instructions to the Companys share transfer agent in
connection therewith as it deems appropriate. The Committee may
also cause the certificate for shares of Stock issued pursuant
to a Performance Stock Award or Performance Unit Award to be
imprinted with any legend which counsel for the Company
considers advisable with respect to the restrictions or, should
the shares of Stock be represented by book or electronic entry
rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the
Company considers necessary or advisable to comply with
applicable law.
9.2 Performance Goals. A
Performance Goal must be objective such that a third party
having knowledge of the relevant facts could determine whether
the goal is met. Unless and until the Committee proposes for
stockholder vote and the stockholders approve a change in the
general Performance Goals set
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forth in this Article IX, the Performance Goals upon which
the payment or vesting of an Award to a Covered Employee that is
intended to qualify as Performance-Based Compensation shall be
limited to one or more of the following Performance Goals, which
may be based on one or more business criteria that apply to the
Holder, one or more business units or subsidiaries of the
Company, or the Company as a whole: earnings per share, earnings
per share growth, total stockholder return, economic value
added, cash return on capitalization, increased revenue, revenue
ratios (per employee or per customer), net income, stock price,
market share, return on equity, return on assets, return on
capital, return on capital compared to cost of capital, return
on capital employed, return on invested capital, stockholder
value, net cash flow, operating income, earnings before interest
and taxes, cash flow, cash flow from operations, cost
reductions, cost ratios (per employee or per customer), proceeds
from dispositions, project completion time and budget goals, net
cash flow before financing activities, customer growth, and
total market value. Goals may also be based on performance
relative to a peer group of companies. Unless otherwise stated,
such a Performance Goal need not be based upon an increase or
positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting
economic losses (measured, in each case, by reference to
specific business criteria). In interpreting Plan provisions
applicable to Performance Goals and Performance Stock or
Performance Unit Awards, it is intended that the Plan will
conform with the standards of section 162(m) of the Code
and Treasury Regulations § 1.162-27(e)(2)(i), and the
Committee in establishing such goals and interpreting the Plan
shall be guided by such provisions. Prior to the payment of any
compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance
Goals and any of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Performance Stock
or Performance Unit Awards made pursuant to the Plan shall be
determined by the Committee.
9.3 Time of Establishment of Performance
Goals. With respect to a Covered Employee, a
Performance Goal for a particular Performance Stock Award or
Performance Unit Award must be established by the Committee
prior to the earlier to occur of (a) 90 days after the
commencement of the period of service to which the Performance
Goal relates or (b) the lapse of 25 percent of the
period of service, and in any event while the outcome is
substantially uncertain.
9.4 Written Agreement. Each
Performance Stock Award or Performance Unit Award shall be
evidenced by an Award Agreement that contains any vesting,
transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.
9.5 Form of Payment Under Performance Unit
Award. Payment under a Performance Unit Award
shall be made in cash, shares of Stock or any combination
thereof, as specified in the applicable Award Agreement.
9.6 Time of Payment Under Performance Unit
Award. A Holders payment under a
Performance Unit Award shall be made at such time as is
specified in the applicable Award Agreement. The Award Agreement
shall specify that the payment will be made (a) by a date
that is no later than the date that is two and one-half
(21/2)
months after the end of the calendar year in which the
Performance Unit Award payment is no longer subject to a
Substantial Risk of Forfeiture or (b) at a time that is
Permissible under Section 409A.
9.7 Holders Rights as Stockholder With
Respect to a Performance Stock Award. Subject to
the terms and conditions of the Plan, each Holder of a
Performance Stock Award shall have all the rights of a
stockholder with respect to the shares of Stock issued to the
Holder pursuant to the Award during any period in which such
issued shares of Stock are subject to forfeiture and
restrictions on transfer, including without limitation, the
right to vote such shares of Stock.
9.8 Increases Prohibited. Neither
the Committee nor the Board may increase the amount of
compensation payable under a Performance Stock or Performance
Unit Award. If the time at which a Performance Stock Award or
Performance Unit Award will vest or be paid is accelerated for
any reason, the number of shares of Stock subject to, or the
amount payable under, the Performance Stock or Performance Unit
Award shall be reduced pursuant to Department of Treasury
Regulation § 1.162-27(e)(2)(iii) to reasonably reflect
the time value of money.
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9.9 Stockholder Approval. No
payments of Stock or cash will be made to a Covered Employee
pursuant to this Article IX unless the stockholder approval
requirements of Department of Treasury Regulation
§ 1.162-27(e)(4) are satisfied.
9.10 Dividend Equivalents. An Award
Agreement for a Performance Unit Award may specify that the
Holder shall be entitled to the payment of Dividend Equivalents
under the Award.
ARTICLE X
DIRECTOR
AWARDS
All Awards to Directors shall be determined by the Board.
ARTICLE XI
ANNUAL CASH
INCENTIVE AWARDS
11.1 Authority to Grant Annual Cash Incentive
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant Annual Cash Incentive Awards under the Plan to key
executive Employees who, by the nature and scope of their
positions, regularly directly make or influence policy decisions
which significantly impact the overall results or success of the
Company in such amounts and upon such terms as the Committee
shall determine. Subject to the following provisions in this
Article XI, the amount of any Annual Cash Incentive Awards
shall be based on the attainment of such Performance Goals as
the Committee may determine and the term, conditions and
limitations applicable to any Annual Cash Incentive Awards made
pursuant to the Plan shall be determined by the Committee.
11.2 Covered Employees. The
Performance Goals upon which the payment or vesting of an Annual
Cash Incentive Award to a Covered Employee that is intended to
qualify as Performance-Based Compensation must meet the
requirements of Sections 9.2, 9.3, 9.8 and 9.9 as applied
to such Annual Cash Incentive Award.
11.3 Written Agreement. Each Annual
Cash Incentive Award shall be evidenced by an Award Agreement
that contains any vesting, transferability restrictions and
other provisions not inconsistent with the Plan as the Committee
may specify.
11.4 Form of Payment Under Annual Cash Incentive
Award. Payment under an Annual Cash Incentive
Award shall be made in cash.
11.5 Time of Payment Under Annual Cash Incentive
Award. A Holders payment under an Annual
Cash Incentive Award shall be made at such time as is specified
in the applicable Award Agreement. The Award Agreement shall
specify that the payment will be made (a) by a date that is
no later than the date that is two and one-half
(21/2)
months after the end of the calendar year in which the Annual
Cash Incentive Award payment is no longer subject to a
Substantial Risk of Forfeiture or (b) at a time that is
Permissible under Section 409A.
ARTICLE XII
OTHER
STOCK-BASED AWARDS
12.1 Authority to Grant Other Stock-Based
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant other types of equity-based or equity-related Awards not
otherwise described by the terms and provisions of the Plan
(including the grant or offer for sale of unrestricted shares of
Stock) under the Plan to eligible persons in such number and
upon such terms as the Committee shall determine. Such Awards
may involve the transfer of actual shares of Stock to Holders,
or payment in cash or otherwise of amounts based on the value of
shares of Stock and may include, without limitation, Awards
designed to comply with or take advantage of the applicable
local laws of jurisdictions other than the United States.
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12.2 Value of Other Stock-Based
Award. Each Other Stock-Based Award shall be
expressed in terms of shares of Stock or units based on shares
of Stock, as determined by the Committee.
12.3 Payment of Other Stock-Based
Award. Payment, if any, with respect to an Other
Stock-Based Award shall be made in accordance with the terms of
the Award, in cash, shares of Stock or any combination thereof,
as the Committee determines.
12.4 Separation from Service. The
Committee shall determine the extent to which a Holders
rights with respect to Other Stock-Based Awards shall be
affected by the Holders Separation from Service. Such
provisions shall be determined in the sole discretion of the
Committee and need not be uniform among all Other Stock-Based
Awards issued pursuant to the Plan.
12.5 Time of Payment of Other Stock-Based
Award. A Holders payment under an Other
Stock-Based Award shall be made at such time as is specified in
the applicable Award Agreement. If a payment under the Award
Agreement is subject to Section 409A, the Award Agreement
shall specify that the payment will be made (a) by a date
that is no later than the date that is two and one-half
(21/2)
months after the end of the calendar year in which the Other
Stock-Based Award payment is no longer subject to a Substantial
Risk of Forfeiture or (b) at a time that is Permissible
under Section 409A.
ARTICLE XIII
CASH-BASED
AWARDS
13.1 Authority to Grant Cash-Based
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant Cash-Based Awards under the Plan to eligible persons in
such amounts and upon such terms as the Committee shall
determine.
13.2 Value of Cash-Based
Award. Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Committee.
13.3 Payment of Cash-Based
Award. Payment, if any, with respect to a
Cash-Based Award shall be made in accordance with the terms of
the Award, in cash.
13.4 Time of Payment of Cash-Based
Award. Payment under a Cash-Based Award shall be
made at such time as is specified in the applicable Award
Agreement. If a payment under the Award Agreement is subject to
Section 409A, the Award Agreement shall specify that the
payment will be made (a) by a date that is no later than
the date that is two and one-half
(21/2)
months after the end of the calendar year in which the
Cash-Based Award payment is no longer subject to a Substantial
Risk of Forfeiture or (b) at a time that is Permissible
under Section 409A.
13.5 Separation from Service. The
Committee shall determine the extent to which a Holders
rights with respect to Cash-Based Awards shall be affected by
the Holders Separation from Service. Such provisions shall
be determined in the sole discretion of the Committee and need
not be uniform among all Cash-Based Awards issued pursuant to
the Plan.
ARTICLE XIV
SUBSTITUTION
AWARDS
Awards may be granted under the Plan from time to time in
substitution for stock options and other awards held by
employees of other entities who are about to become Employees,
or whose employer is about to become an Affiliate as the result
of a merger or consolidation of the Company with another
corporation, or the acquisition by the Company of substantially
all the assets of another corporation, or the acquisition by the
Company of at least fifty percent (50%) of the issued and
outstanding stock of another corporation as the result of which
such other corporation will become a subsidiary of the Company.
The terms and conditions of the substitute Awards so granted may
vary from the terms and conditions set forth in the Plan to such
extent as the Board at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of
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the awards in substitution for which they are granted. If shares
of Stock are issued under the Plan with respect to an Award
granted under this Article such shares of Stock will not count
against the aggregate number of shares of Stock with respect to
which Awards may be granted under the Plan.
ARTICLE XV
ADMINISTRATION
15.1 Awards. The Plan shall be
administered by the Committee or, in the absence of the
Committee or in the case of awards issued to Directors, the Plan
shall be administered by the Board. The members of the Committee
(that is not itself the Board) shall serve at the discretion of
the Board. The Committee shall have full and exclusive power and
authority to administer the Plan and to take all actions that
the Plan expressly contemplates or are necessary or appropriate
in connection with the administration of the Plan with respect
to Awards granted under the Plan.
15.2 Authority of the
Committee. The Committee shall have full and
exclusive power to interpret and apply the terms and provisions
of the Plan and Awards made under the Plan, and to adopt such
rules, regulations and guidelines for implementing the Plan as
the Committee may deem necessary or proper, all of which powers
shall be exercised in the best interests of the Company and in
keeping with the objectives of the Plan. A majority of the
members of the Committee shall constitute a quorum for the
transaction of business relating to the Plan or Awards made
under the Plan, and the vote of a majority of those members
present at any meeting shall decide any question brought before
that meeting. Any decision or determination reduced to writing
and signed by a majority of the members shall be as effective as
if it had been made by a majority vote at a meeting properly
called and held. All questions of interpretation and application
of the Plan, or as to Awards granted under the Plan, shall be
subject to the determination, which shall be final and binding,
of a majority of the whole Committee. No member of the Committee
shall be liable for any act or omission of any other member of
the Committee or for any act or omission on his or her own part,
including but not limited to the exercise of any power or
discretion given to him or her under the Plan, except those
resulting from his or her own willful misconduct. In carrying
out its authority under the Plan, the Committee shall have full
and final authority and discretion, including but not limited to
the following rights, powers and authorities to
(a) determine the persons to whom and the time or times at
which Awards will be made; (b) determine the number and
exercise price of shares of Stock covered in each Award subject
to the terms and provisions of the Plan; (c) determine the
terms, provisions and conditions of each Award, which need not
be identical and need not match the default terms set forth in
the Plan; (d) accelerate the time at which any outstanding
Award will vest; (e) prescribe, amend and rescind rules and
regulations relating to administration of the Plan; and
(f) make all other determinations and take all other
actions deemed necessary, appropriate or advisable for the
proper administration of the Plan.
The Committee may make an Award to an individual who the Company
expects to become an Employee of the Company or any of its
Affiliates within six (6) months after the date of grant of
the Award, with the Award being subject to and conditioned on
the individual actually becoming an Employee within that time
period and subject to other terms and conditions as the
Committee may establish.
The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award to a
Holder in the manner and to the extent the Committee deems
necessary or desirable to further the Plans objectives.
Further, the Committee shall make all other determinations that
may be necessary or advisable for the administration of the
Plan. As permitted by law and the terms and provisions of the
Plan, the Committee may delegate to one or more of its members
or to one or more officers of the Company,
and/or its
Affiliates or to one or more agents or advisors such
administrative duties or powers as it may deem advisable, and
the Committee or any person to whom it has delegated duties or
powers as aforesaid may employ one or more persons to render
advice with respect to any responsibility the Committee or such
person may have under the Plan. The Committee may, by
resolution, authorize one or more officers of the Company to do
one or more of the following on the same basis as can the
Committee: (a) designate Employees to be recipients of
Awards; (b) designate Third Party Service Providers to be
recipients of Awards; and (c) determine the size of any
such Awards; provided, however, (i) the Committee
shall not delegate such responsibilities to
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any such officer for Awards granted to an Employee that is
considered an Insider; (ii) the resolution providing such
authorization sets forth the total number of Awards such
officer(s) may grant; and (iii) the officer(s) shall report
periodically to the Committee regarding the nature and scope of
the Awards granted pursuant to the authority delegated. The
Committee may employ attorneys, consultants, accountants,
agents, and other persons, any of whom may be an Employee, and
the Committee, the Company, and its officers and Board shall be
entitled to rely upon the advice, opinions, or valuations of any
such persons.
15.3 Decisions Binding. All
determinations and decisions made by the Committee or the Board,
as the case may be, pursuant to the provisions of the Plan and
all related orders and resolutions of the Committee or the
Board, as the case may be, shall be final, conclusive and
binding on all persons, including the Company, its Affiliates,
its stockholders, Holders and the estates and beneficiaries of
Holders.
15.4 No Liability. Under no
circumstances shall the Company, its Affiliates, the Board or
the Committee incur liability for any indirect, incidental,
consequential or special damages (including lost profits) of any
form incurred by any person, whether or not foreseeable and
regardless of the form of the act in which such a claim may be
brought, with respect to the Plan or the Companys, its
Affiliates, the Committees or the Boards roles
in connection with the Plan.
ARTICLE XVI
AMENDMENT OR
TERMINATION OF PLAN
16.1 Amendment, Modification, Suspension, and
Termination. Subject to Section 16.2, the
Board may, at any time and from time to time, alter, amend,
modify, suspend, or terminate the Plan and the Committee may, at
any time and from time to time, alter, amend, modify, suspend,
or terminate any Award Agreement in whole or in part; provided,
however, that, without the prior approval of the Companys
stockholders and except as provided in Section 4.5, the
Committee shall not directly or indirectly lower the Option
Price of a previously granted Option or the grant price of a
previously granted SAR, cancel a previously granted Option or
previously granted SAR for a payment of cash or other property
if the aggregate fair market value of such Award is less than
the aggregate Option Price of such Award in the case of an
Option or the aggregate grant price of such Award in the case of
a SAR, and no amendment of the Plan shall be made without
stockholder approval if stockholder approval is required by
applicable law or stock exchange rules.
16.2 Awards Previously
Granted. Notwithstanding any other provision of
the Plan to the contrary, no termination, amendment, suspension,
or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the
Holder holding such Award.
ARTICLE XVII
MISCELLANEOUS
17.1 Unfunded Plan/No Establishment of a
Trust Fund. Holders shall have no right,
title, or interest whatsoever in or to any investments that the
Company or any of its Affiliates may make to aid in meeting
obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Holder, beneficiary,
legal representative, or any other person. To the extent that
any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and
no segregation of assets shall be made to assure payment of such
amounts, except as expressly set forth in the Plan. No property
shall be set aside nor shall a trust fund of any kind be
established to secure the rights of any Holder under the Plan.
The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.
17.2 No Employment Obligation. The
granting of any Award shall not constitute an employment or
service contract, express or implied, and shall not impose upon
the Company or any Affiliate any obligation to
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employ or continue to employ, or to utilize or continue to
utilize the services of, any Holder. The right of the Company or
any Affiliate to terminate the employment of, or the provision
of services by, any person shall not be diminished or affected
by reason of the fact that an Award has been granted to him, and
nothing in the Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company or its Affiliates
to terminate any Holders employment or service
relationship at any time or for any reason not prohibited by law.
17.3 Tax Withholding. The Company
or any Affiliate shall be entitled to deduct from other
compensation payable to each Holder any sums required by
federal, state, local or foreign tax law to be withheld with
respect to the vesting or exercise of an Award or lapse of
restrictions on an Award. In the alternative, the Company may
require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any
Affiliate in cash or by check within one day after the date of
vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company
may reduce the number of shares of Stock issued to the Holder
upon such Holders exercise of an Award or the vesting of
an Award to satisfy the tax withholding obligations of the
Company or an Affiliate; provided that the Fair Market
Value of the shares of Stock held back shall not exceed the
Companys or the Affiliates Minimum Statutory Tax
Withholding Obligation.
The Committee may, in its discretion, permit a Holder to satisfy
any Minimum Statutory Tax Withholding Obligation arising upon
the vesting of or payment under an Award by delivering to the
Holder a reduced number of shares of Stock in the manner
specified herein. If permitted by the Committee and acceptable
to the Holder, at the time of vesting of shares under the Award,
the Company shall (a) calculate the amount of the
Companys or an Affiliates Minimum Statutory Tax
Withholding Obligation on the assumption that all such shares of
Stock vested under the Award are made available for delivery,
(b) reduce the number of such shares of Stock made
available for delivery so that the Fair Market Value of the
shares of Stock withheld on the vesting date approximates the
Companys or an Affiliates Minimum Statutory Tax
Withholding Obligation and (c) in lieu of the withheld
shares of Stock, remit cash to the United States Treasury
and/or other
applicable governmental authorities, on behalf of the Holder, in
the amount of the Minimum Statutory Tax Withholding Obligation.
The Company shall withhold only whole shares of Stock to satisfy
its Minimum Statutory Tax Withholding Obligation. Where the Fair
Market Value of the withheld shares of Stock does not equal the
amount of the Minimum Statutory Tax Withholding Obligation, the
Company shall withhold shares of Stock with a Fair Market Value
slightly less than the amount of the Minimum Statutory Tax
Withholding Obligation and the Holder must satisfy the remaining
minimum withholding obligation in some other manner permitted
under this Section 17.3. The withheld shares of Stock not
made available for delivery by the Company shall be retained as
treasury shares or will be cancelled and the Holders
right, title and interest in such shares of Stock shall
terminate.
The Company shall have no obligation upon vesting or exercise of
any Award or lapse of restrictions on an Award until the Company
or an Affiliate has received payment sufficient to cover the
Minimum Statutory Tax Withholding Obligation with respect to
that vesting, exercise or lapse of restrictions. Neither the
Company nor any Affiliate shall be obligated to advise a Holder
of the existence of the tax or the amount which it will be
required to withhold.
17.4 Indemnification of the
Committee. The Company shall indemnify each past,
present and future member of the Committee against, and each
member of the Committee shall be entitled without further action
on his or her part to indemnity from the Company for, all
expenses (including attorneys fees, the amount of
judgments and the amount of approved settlements made with a
view to the curtailment of costs of litigation, other than
amounts paid to the Company itself) reasonably incurred by such
member in connection with or arising out of any action, suit or
proceeding in which such member may be involved by reason of
such member being or having been a member of the Committee,
whether or not he or she continues to be a member of the
Committee at the time of incurring the expenses, including,
without limitation, matters as to which such member shall be
finally adjudged in any action, suit or proceeding to have been
negligent in the performance of such members duty as a
member of the Committee. However, this indemnity shall not
include any expenses incurred by any member of the Committee in
respect of matters as to which such member shall be finally
adjudged in any action, suit or proceeding to have been guilty
of willful misconduct in the performance
A-22
of his or her duty as a member of the Committee. In addition, no
right of indemnification under the Plan shall be available to or
enforceable by any member of the Committee unless, within
60 days after institution of any action, suit or
proceeding, such member shall have offered the Company, in
writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the
benefit of the heirs, executors or administrators of each member
of the Committee and shall be in addition to all other rights to
which a member of the Committee may be entitled as a matter of
law, contract or otherwise.
17.5 Gender and Number. If the
context requires, words of one gender when used in the Plan
shall include the other and words used in the singular or plural
shall include the other.
17.6 Severability. In the event any
provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been
included.
17.7 Headings. Headings of Articles
and Sections are included for convenience of reference only and
do not constitute part of the Plan and shall not be used in
construing the terms and provisions of the Plan.
17.8 Other Compensation Plans. The
adoption of the Plan shall not affect any other option,
incentive or other compensation or benefit plans in effect for
the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive
compensation arrangements for Employees, Directors or Third
Party Service Providers.
17.9 Retirement and Welfare
Plans. Neither Awards made under the Plan nor
shares of Stock or cash paid pursuant to such Awards, may be
included as compensation for purposes of computing
the benefits payable to any person under the Companys or
any Affiliates retirement plans (both qualified and
non-qualified) or welfare benefit plans unless such other plan
expressly provides that such compensation shall be taken into
account in computing a participants benefit.
17.10 Other Awards. The grant of an
Award shall not confer upon the Holder the right to receive any
future or other Awards under the Plan, whether or not Awards may
be granted to similarly situated Holders, or the right to
receive future Awards upon the same terms or conditions as
previously granted.
17.11 Successors. All obligations
of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business
and/or
assets of the Company.
17.12 Law Limitations/Governmental
Approvals. The granting of Awards and the
issuance of shares of Stock under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities
exchanges as may be required.
17.13 Delivery of Title. The
Company shall have no obligation to issue or deliver evidence of
title for shares of Stock issued under the Plan prior to
(a) obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable; and
(b) completion of any registration or other qualification
of the Stock under any applicable national or foreign law or
ruling of any governmental body that the Company determines to
be necessary or advisable.
17.14 Inability to Obtain
Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which
authority is deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any shares of Stock
hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such shares of Stock as to which
such requisite authority shall not have been obtained.
17.15 Investment
Representations. The Committee may require any
person receiving Stock pursuant to an Award under the Plan to
represent and warrant in writing that the person is acquiring
the shares of Stock for investment and without any present
intention to sell or distribute such Stock.
17.16 Persons Residing Outside of the United
States. Notwithstanding any provision of the Plan
to the contrary, in order to comply with the laws in other
countries in which the Company or any of its Affiliates
A-23
operates or has employees, the Committee, in its sole
discretion, shall have the power and authority to
(a) determine which Affiliates shall be covered by the
Plan; (b) determine which persons employed outside the
United States are eligible to participate in the Plan;
(c) amend or vary the terms and provisions of the Plan and
the terms and conditions of any Award granted to persons who
reside outside the United States; (d) establish subplans
and modify exercise procedures and other terms and procedures to
the extent such actions may be necessary or
advisable any subplans and modifications to Plan
terms and procedures established under this Section 17.16
by the Committee shall be attached to the Plan document as
Appendices; and (e) take any action, before or after an
Award is made, that it deems advisable to obtain or comply with
any necessary local government regulatory exemptions or
approvals. Notwithstanding the above, the Committee may not take
any actions hereunder, and no Awards shall be granted, that
would violate the Exchange Act, the Code, any securities law or
governing statute or any other applicable law.
17.17 Arbitration of Disputes. Any
controversy arising out of or relating to the Plan or an Award
Agreement shall be resolved by arbitration conducted in Houston,
Texas pursuant to the arbitration rules of the American
Arbitration Association. The arbitration shall be final and
binding on the parties.
17.18 No Fractional Shares. No
fractional shares of Stock shall be issued or delivered pursuant
to the Plan or any Award. The Committee shall determine whether
cash, additional Awards, or other property shall be issued or
paid in lieu of fractional shares of Stock or whether such
fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
17.19 Governing Law. The provisions
of the Plan and the rights of all persons claiming thereunder
shall be construed, administered and governed under the laws of
the State of Delaware, excluding any conflicts or choice of law
rule or principle that might otherwise refer construction or
interpretation of the Plan to the substantive law of another
jurisdiction. Unless otherwise provided in the Award Agreement,
recipients of an Award under the Plan are deemed to submit to
the sole and exclusive jurisdiction and venue of the federal or
state courts of the State of Texas to resolve any and all issues
that may arise out of or relate to the Plan or any related Award
Agreement.
A-24
RIGNET, INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2011.
Important Notice Regarding Internet Availability of Proxy Materials for the Stockholder Meeting to be Held on April 20, 2011
The Proxy Statement and 2010 Annual Report to Stockholders and any other additional soliciting materials, are available via the Internet at
http://www.rig.net. Other information on the Companys website does not constitute part of the Companys proxy materials.
The undersigned hereby appoints Mark Slaughter, Martin Jimmerson and William Sutton, jointly and severally, as the undersigneds proxy or proxies, each
with full power of substitution and to act without the other, to vote in the manner directed herein all shares of common stock of RigNet, Inc. which the
undersigned is entitled to vote at the annual meeting of stockholders to be held at the Holiday Inn, 1112 Eldridge Parkway, Houston, Texas on Wednesday,
May 11, 2011, at 10:00 a.m., Central time, and any postponements or adjournments thereof, as fully as the undersigned could if personally present, revoking
any proxy or proxies heretofore given.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE BELOW, BUT IF NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL DIRECTOR
NOMINEES IN PROPOSAL 1, FOR PROPOSALS 2, 3, AND 4, FOR ONE YEAR ON PROPOSAL 5, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ANY OTHER MATTER AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.
(Continued, and to be marked, dated and signed, on the other side.) |
? FOLD AND DETACH HERE ?
The Board of Directors recommends a vote FOR all director nominees in Proposal 1, FOR Proposals Please mark your
2, 3, and 4 and FOR one year on Proposal 5. votes as indicated
in this example.
X
-
1. Election of nine directors to hold office until the next annual meeting of RigNets stockholders and until their respective successors
shall have been duly elected and qualified.
? FOR ALL NOMINEES (except for the names ? WITHHOLD AUTHORITY FOR ALL NOMINEES
struck out below)
(James Browning, Charles Davis, Thomas
Matthews, Kevin Neveu, Kevin OHara,
Keith Olsen, Mark Slaughter, Ditlef de
Vibe, Brent Whittington)
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), write their name(s) here: _____________________.
2. Ratification of the appointment of Deloitte & Touche LLP as RigNets independent registered public accounting firm for the year ending
December 31, 2011.
? FOR ? AGAINST ? ABSTAIN
3. Approval of RigNets 2010 Omnibus Incentive Plan.
? FOR ? AGAINST ? ABSTAIN
4. Non-binding, advisory vote on RigNets executive compensation.
? FOR ? AGAINST ? ABSTAIN
5. Non-binding, advisory vote on the frequency of future advisory votes on RigNets executive compensation.
? 1 YEAR ? 2 YEARS ? 3 YEARS
? ABSTAIN
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF.
name by authorized officer.
Date
Signature
Signature, If Jointly Held
If acting as Attorney, Executor, Trustee or in other representative capacity, please sign your name, title and state your capacity. Joint
owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership
name by authorized officer.
042019:00119 : DALLAS : 888333.3 |