def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
SM&A
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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4695 MacArthur Court,
8th Floor
Newport Beach, California 92660
(949) 975-1550
Notice of Annual Meeting of
Stockholders
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Stockholders of SM&A, a Delaware corporation (hereinafter,
the Company), will be held on Friday, May 23,
2008 at 9:00 a.m. local time, at 4685 MacArthur Court, Suite
380, Newport Beach, California 92660, for the following
purposes, as more fully described in the accompanying Proxy
Statement:
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Item 1
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Election of nine (9) Directors to serve until the next Annual
Meeting of Stockholders
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Item 2
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Approval of Amendment to the Amended and Restated Employee Stock
Purchase Plan
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Item 3
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Ratification of the Independent Registered Public Accounting Firm
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Item 4
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Act on other matters that may properly come before the meeting
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Only stockholders of record at the close of business on
April 9, 2008 are entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.
Accompanying this Notice are a Proxy Statement and Proxy.
By Order of the Board of Directors,
Executive Vice President, Finance
Chief Financial Officer and Secretary
Newport Beach, California
April 18, 2008
YOUR VOTE
IS IMPORTANT
All stockholders are cordially invited to attend the Annual
Meeting. Whether or not you expect to attend the meeting in
person, we urge you to complete, sign, date and return the
enclosed WHITE proxy card as promptly as possible in the
postage-paid envelope provided, or to vote by telephone or
Internet. Telephone and Internet voting information is provided
on the WHITE proxy card. If you are present at the meeting and
desire to vote in person, your vote by proxy will not be counted.
Please note that Steven S. Myers, the former Chief Executive
Officer and former Chairman of the Board of the Company who
retired from all positions with the Company on March 31,
2007, has provided notice that he intends to nominate at the
Annual Meeting, and to solicit proxies for use at the Annual
Meeting to vote in favor of, his own slate of four nominees for
election as directors, in opposition to Item 1 shown on the
previous page. As discussed further in the proxy statement
accompanying this notice, we do not believe that a proxy contest
at this time is in the best interests of the Company or its
stockholders. You may receive proxy solicitation materials from
Mr. Myers. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ELECTION OF EACH OF THE BOARDS NOMINEES ON
THE ENCLOSED WHITE PROXY CARD. THE BOARD OF DIRECTORS URGES YOU
NOT TO SIGN OR RETURN ANY GOLD OR OTHER PROXY CARD SENT TO YOU
BY MR. MYERS. Even if you have previously signed a proxy
card sent by Mr. Myers, you have every right to change your
vote by using the enclosed WHITE proxy card to vote by
telephone, by Internet or by signing, dating and returning the
enclosed WHITE proxy card in the postage-paid envelope provided.
Only the latest dated proxy card you vote will be counted. We
urge you to disregard any proxy card sent to you by
Mr. Myers.
If you have any questions or require any assistance with voting
your shares, please contact:
MACKENZIE PARTNERS, INC.
STOCKHOLDERS CALL TOLL FREE:
(800) 322-2885
BANKS AND BROKERS CALL COLLECT:
(212) 929-5500
Your vote is extremely important regardless of the number of
shares you own. Please promptly use the enclosed WHITE proxy
card to vote by telephone, by Internet, or by signing, dating
and returning the WHITE proxy card in the postage-paid envelope
provided.
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Payments Upon Termination Without Cause or Resignation For Good
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ADDITIONAL INFORMATION
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APPENDICES
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A-1
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B-1
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C-1
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ii
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors (the Board) of SM&A, a
Delaware corporation (the Company) is soliciting the
enclosed proxy for use at the Annual Meeting of Stockholders of
the Company (the Annual Meeting) to be held at
9:00 a.m. local time on Friday, May 23, 2008 at 4685
MacArthur Court, Suite 380, Newport Beach, California
92660. This proxy statement contains information about the
matters to be voted on at the meeting and the voting process, as
well as information about our directors and executive officers.
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Q:
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WHY DID I
RECEIVE THIS PROXY STATEMENT?
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The Board is soliciting your proxy to vote at the Annual Meeting
because you are a stockholder at the close of business on
April 9, 2008, the record date, and are entitled to vote at
that meeting. This proxy statement, the accompanying WHITE proxy
card and the Annual Report for the fiscal year ended
December 31, 2007 are being made available to stockholders
beginning on or about April 21, 2008. This proxy statement
summarizes the information you need to know to vote at the
Annual Meeting. You do not need to attend the Annual Meeting to
vote your shares.
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You are voting on three items of business at the Annual Meeting:
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The election of nine directors (the Boards nominees are
Dwight L. Hanger, William C. Bowes,
J. Christopher Lewis, Cathy L. McCarthy, Peter Pace,
Joseph B. Reagan, Robert Rodin, John P. Stenbit and
Robert J. Untracht) to serve until the Annual Meeting held
in 2009 and until their successors are elected and qualified;
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An Amendment to the Companys Amended and Restated Employee
Stock Purchase Plan.
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The ratification of BDO Siedman, LLP as the independent
registered public accounting firm for the Company for the fiscal
year ending December 31, 2008; and
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WHO IS
ENTITLED TO VOTE?
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Stockholders of record as of the close of business on
April 9, 2008 are entitled to vote at the Annual Meeting.
Each share of the Companys Common Stock is entitled to one
vote.
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WHAT ARE THE
VOTING RECOMMENDATIONS OF THE BOARD OF DIRECTORS?
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The Board recommends that you vote your shares FOR
each of the nominees named in this proxy statement standing for
election to the Board, FOR the ratification of BDO
Seidman, LLP as the Companys independent registered public
accounting firm, and FOR the amendment to the
Companys Amended and Restated Employee Stock Purchase Plan.
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It is important that your shares are represented at the meeting,
whether or not you attend the meeting in person. To make sure
that your shares are represented, we urge you to vote as soon as
possible by signing, dating and returning the WHITE proxy card
in the postage-paid envelope provided, or alternately by
Internet or telephone by following the instructions on the WHITE
proxy card.
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If you are a registered stockholder of record, there are four
ways to vote:
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By calling the toll-free telephone number indicated on your
WHITE proxy card. Easy-to-follow voice prompts allow you to vote
your shares and confirm that your instructions have been
properly recorded;
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By going to the Internet Website indicated on your WHITE proxy
card. As with telephone voting, you can confirm that your
instructions have been properly recorded;
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By signing, dating and returning the accompanying WHITE proxy
card; or
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By written ballot at the annual meeting.
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Your shares will be voted as you indicate. If you do not
indicate your voting preferences, the appointed proxies
(Cathy L. McCarthy and James R. Eckstaedt) will vote
your shares FOR items 1, 2 and 3. If your shares are
owned in joint names, all joint owners must vote by the same
method and if joint owners vote by mail, all of the joint owners
must sign the WHITE proxy card.
If your shares are held in a brokerage account in your
brokers name (this is called street name), please follow
the voting directions provided by your broker or nominee. You
may sign, date and return a voting instruction card to your
broker or nominee or, in most cases, submit voting instructions
by telephone or the Internet to your broker or nominee. If you
provide specific voting instructions by mail, telephone, or the
Internet, your broker or nominee should vote your shares as you
have directed.
At the Annual Meeting, we will pass out written ballots to
anyone who wishes to vote in person. If you hold your shares in
street name, you must request a legal proxy from your broker or
other nominee to vote at the Annual Meeting.
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WHAT SHOULD
I DO IF I RECEIVE A PROXY CARD FROM STEVEN S. MYERS?
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A: |
Steven S. Myers, the former Chief Executive Officer and
former Chairman of the Board of the Company who retired from all
positions with the Company on March 31, 2007, has provided
notice that he intends to nominate at the Annual Meeting, and to
solicit proxies for use at the Annual Meeting to vote in favor
of, his own slate of four nominees for election as directors.
You may receive proxy solicitation materials from Steven S.
Myers, including an opposition proxy statement and proxy card.
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN OR RETURN ANY GOLD
OR OTHER PROXY CARD SENT TO YOU BY STEVEN S. MYERS. Even if
you have previously signed a proxy card sent by Mr. Myers,
you have every right to change your vote by signing, dating and
mailing the enclosed WHITE proxy card in the postage-paid
envelope provided, or by following the instructions on the WHITE
proxy card to vote by telephone or by Internet. Only the latest
dated proxy card you vote will be counted. We urge you to
disregard any proxy card sent to you by Mr. Myers.
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MAY I ATTEND
THE MEETING?
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A: |
All stockholders, properly appointed proxy holders, and invited
guests of the Company may attend the Annual Meeting.
Stockholders who plan to attend the meeting must present a valid
photo identification. If you hold your shares in street name,
please also bring proof of your share ownership, such as a
brokers statement showing that you owned shares of the
Company on the record date of April 9, 2008, or a legal
proxy from your broker or nominee (a legal proxy is required if
you hold your shares in street name and you plan to vote in
person at the Annual Meeting). Stockholders of record will be
verified against an official list available at the registration
area. The Company reserves the right to deny admittance to
anyone who cannot adequately show proof of share ownership as of
the Record Date.
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Q:
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WHAT IS THE
DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND
AS A BENEFICIAL OWNER?
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If your shares are registered directly in your name with the
Companys transfer agent, Computershare, you are
considered, with respect to those shares, the stockholder
of record. The proxy statement, annual report and WHITE
proxy card have been made available directly to stockholders of
record by the Company.
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If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial
owner of shares held in street name. The proxy materials
should be forwarded to you by your broker, bank or nominee who
is considered, with respect to those shares, the stockholder of
record. As the beneficial holder, you have the right to direct
your broker, bank or nominee how to vote and are also invited to
attend the Annual Meeting. However, since you are not a
stockholder of record, you may not vote these shares in person
at the Annual Meeting unless you bring with you a legal proxy
from the stockholder of record. A legal proxy may be obtained
from your broker or nominee. Your broker or nominee has enclosed
a voting instruction card for you to use in directing the
broker, bank or other nominee how to vote your shares.
2
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If you are a stockholder of record, you may revoke your proxy at
any time before it is voted at the Annual Meeting by:
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Returning a later-dated, signed proxy card;
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Sending written notice of revocation to the Secretary of the
Company;
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Submitting a new, proper proxy by telephone, Internet or paper
ballot, after the date of the earlier voted proxy; or
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Attending the Annual Meeting and voting in person.
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If you are a beneficial owner of shares, you may submit new
voting instructions by contacting your broker, bank or other
nominee. You may also vote in person at the Annual Meeting if
you obtain a legal proxy as described above.
The Board strongly urges you to revoke any gold or other proxy
card you may have returned which you received from
Steven S. Myers. Even if you have previously signed a proxy
card sent by Mr. Myers, you have every right to change your
vote by signing, dating and returning the enclosed WHITE proxy
card in the postage-paid envelope provided, or by voting by
telephone or by Internet following the instructions on the WHITE
proxy card. Only the latest dated proxy card you vote will be
counted.
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WHAT VOTE IS
REQUIRED TO APPROVE EACH PROPOSAL?
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For all matters to be voted upon at the Annual Meeting,
stockholders may vote for, against, or
abstain on such matters. The affirmative vote of a
plurality of the votes cast is required to elect each nominee as
a director. Abstentions will be treated as shares present and
entitled to vote, and for purposes of determining the outcome of
the vote, will not be treated as votes cast for a nominee. The
affirmative vote of a majority of shares entitled to vote on a
matter and present in person or represented by proxy, is
necessary for approval of each other matter on the agenda.
Shares represented by a proxy which directs that the shares
abstain from voting or that a vote be withheld on those other
matters are deemed to be represented at the meeting as to those
other matters, and have the same effect as a vote against the
proposal for those other matters.
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Q:
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DO
STOCKHOLDERS HAVE CUMULATIVE VOTING RIGHTS WITH RESPECT TO THE
ELECTION OF DIRECTORS?
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No. Stockholders do not have cumulative voting rights with
respect to the election of directors.
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WHAT
CONSTITUTES A QUORUM?
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A: |
As of the record date, April 9, 2008 19,055,021 shares
of the Companys Common Stock were outstanding. A majority
of the outstanding shares entitled to vote at the Annual
Meeting, represented in person or by proxy, will constitute a
quorum. Shares represented by a proxy that directs that the
shares abstain from voting or that a vote be withheld on a
matter will be included at the Annual Meeting for quorum
purposes. Shares represented by proxy as to which no voting
instructions are given as to matters to be voted upon will be
included at the Annual Meeting for quorum purposes.
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Q:
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WHAT DOES IT
MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
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A: |
If you hold your shares in more than one account, you will
receive a WHITE proxy card for each account. To ensure that all
of your shares are voted, please complete, sign, date and return
a WHITE proxy card for each account or use the WHITE proxy card
to vote by telephone or Internet. You should vote all your
shares. To provide better stockholder service, we encourage you
to have all your shares registered in the same name and address.
You may do this by contacting our transfer agent, Computershare,
250 Royall Street, Canton, Massachusetts 02021 or by telephone
at
(800) 962-4284.
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THE BOARD URGES YOU NOT TO SIGN OR RETURN ANY GOLD OR OTHER
PROXY CARD SENT TO YOU BY STEVEN S. MYERS. Even if you have
previously signed a proxy card sent by Mr. Myers, you have
every right to change your vote by signing, dating and returning
the enclosed WHITE proxy card in the postage-paid envelope
provided. Only the latest dated proxy card you vote will be
counted. We urge you to disregard any proxy card sent to you by
Mr. Myers.
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WHO WILL
SOLICIT PROXIES ON BEHALF OF THE BOARD?
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A: |
Appendix A sets forth certain information relating to our
directors and certain officers of the Company who may be deemed
to be participants in the Boards solicitation
of proxies in connection with the Annual Meeting under the
applicable rules of the SEC.
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Q:
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WHAT IS THE
COMPANYS WEB ADDRESS?
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A: |
The Companys home page is www.smawins.com. You can access
this proxy statement and our 2007 annual report at this web
address. The Companys filings with the Securities and
Exchange Commission are available free of charge via a link from
this address.
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Q:
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WILL ANY
OTHER MATTERS BE VOTED ON?
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A: |
As of the date of this proxy statement, our management knows of
no other matter that will be presented for consideration at the
Annual Meeting other than those matters discussed in this proxy
statement. If any other matters properly come before the Annual
Meeting and call for a vote of the stockholders, validly
executed proxies in the enclosed form will be voted in
accordance with the recommendation of the Board.
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WHO SHOULD I
CALL IF I HAVE ANY QUESTIONS?
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A: |
If you have any questions, or need assistance voting, please
contact our proxy solicitor:
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MacKenzie Partners, Inc.
Stockholders Call Toll Free:
(800) 322-2885
Banks and Brokers Call Collect:
(212) 929-5500
4
MATTERS
TO BE VOTED ON
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ITEM 1.
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ELECTION
OF DIRECTORS
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In accordance with the Companys bylaws, there are
currently nine authorized directors of the Company and nine
directors currently sit on the Board. The Board is not
classified. Accordingly, nine directors will be elected at the
Annual Meeting to hold office until the next Annual Meeting of
Stockholders in 2009, or until their successors are elected and
qualified.
Each of the director nominees listed in this proxy statement
consents to being named in this proxy statement and to serve on
the Board if elected. If for any reason a nominee should, prior
to the Annual Meeting, become unavailable to serve as a director
due to an event not now anticipated, the proxies will be voted
for such substitute nominee, if any, as may be recommended by
the Board. In no event, however, will the proxies be voted for a
greater number of persons than the number of nominees named.
Proxies, if not revoked, will be voted in favor of the
Boards nominees for the Board at the Annual Meeting,
unless the stockholder specifies otherwise.
The names of the director nominees, their ages as of the date of
the Annual Meeting, the year each first became a director, their
principal occupations during at least the past five years, other
public directorships held by each as of the date hereof, and
certain other biographical information are set forth on the
following pages.
Director
Nominees
The following are brief biographies of each director nominee for
election to the Companys Board.
WILLIAM
C. BOWES
Age 66
Director Since April 2004
Mr. Bowes currently serves as Chairman of the
Governance & Nominating Committee and is also a member
of the Compensation Committee.
Mr. Bowes is a retired Vice Admiral and an experienced
industry executive. As Vice Admiral, he served as Commander of
the Naval Air Systems Command, Principal Deputy Assistant
Secretary of the Navy for Research, Development and Acquisition
(RDA), and Acting Assistant Secretary of the Navy for RDA.
Following his retirement from active duty, Mr. Bowes joined
Hughes Aircraft as a senior president and deputy general manager
of Hughes Aircraft Companys Sensors and Communications
Systems Segment. Shortly after Raytheon acquired Hughes, he
joined Litton Industries where he held positions as vice
president for Corporate Strategic Planning and vice president of
Programs Management at Littons Integrated Systems
Division. After Northrop Grumman acquired Litton, Mr. Bowes
led one of three business units in the newly created Navigation
Systems Division of Northrop. Mr. Bowes currently serves on
the board of Omega Aerial Refueling Services and the Software
Engineering Institute at Carnegie Mellon University. He serves
as a member of the Naval Research Advisory Committee and is a
Fellow in the Society of Experimental Test Pilots.
Mr. Bowes holds a Bachelors degree in Chemical Engineering
from the University of Idaho and a Masters degree in Systems
Acquisition Management from the Naval Postgraduate School. He
has completed financial management, corporate planning and
director courses at Harvard, Wharton, the University of Chicago,
and at the University of California, Los Angeles. Mr. Bowes
is a certified director from the UCLA Anderson School of
Business.
DWIGHT L.
HANGER
Age 65
Director Since April 2005
Mr. Hanger was elected as Chairman of the Board effective
April 1, 2007. He also served on the Companys Audit
Committee from April 2005 to April 2007.
From 2000 to 2004 Mr. Hanger held the position of Vice
President for Capgemini Ernst & Young, a provider of
consulting, technology and outsourcing services. From 1969 to
2000, he worked as a management consultant with
Ernst & Young LLC and Ernst & Whinney
serving as a Partner for 22 years. During his tenure, he
managed various business areas, geographies (Los Angeles Western
Region, and National), and significant global clients.
Mr. Hanger
5
has consulted with government agencies and companies focused on
manufacturing, distribution, healthcare and retail. His areas of
expertise include strategic planning, IT strategy, operations,
systems integration and supply chain management, among others.
Mr. Hanger currently serves Biola University in a
non-profit capacity as Vice Chairman of the Board, a member of
the Trustees Affairs Committee, and a member of the Finance and
Audit Committee. He is a member of the AICPA (American Institute
of Certified Public Accountants), the IMA (Institute of
Management Accountants), and the APICS (American Production and
Inventory Control Society).
Mr. Hanger was licensed through the states of California
and Ohio as a Certified Public Accountant. Mr. Hanger holds
a Bachelors degree in Electrical Engineering and an MBA degree
in General Management from the University of California, Los
Angeles.
J.
CHRISTOPHER LEWIS
Age 52
Director Since September 1996
Mr. Lewis currently serves on the Companys
Compensation Committee.
Since 1982, Mr. Lewis has been a general partner of
Riordan, Lewis & Haden, a private equity firm that
invests in high growth middle market enterprises. Mr. Lewis
has been involved in all aspects of private equity investing,
including growth financings, acquisitions, and corporate
advisory activities. Mr. Lewis also serves as a director of
Tetra Tech, Inc., a publicly held company, and several private
companies.
Mr. Lewis graduated cum laude from the University of
Southern California, where he earned a Bachelor of Science in
Business Administration and Finance and subsequently received a
Masters of Business Administration.
CATHY L.
McCARTHY
Age 60
Director Since July 2007
Ms. McCarthy currently serves as President and Chief
Executive Officer of SM&A and is a member of the
Companys Board.
Ms McCarthy has served as President and Chief Executive Officer
since July 2007 and as President and Chief Operating Officer
from February 2006 to July 2007. Ms. McCarthy served as
Executive Vice President, Chief Financial Officer and Corporate
Secretary from September 2001 until February 2006. Prior to
entering into her Employment Agreement with the Company in 2001,
Ms. McCarthy served as Executive Vice President, Chief
Financial Officer and Secretary of PIA Merchandising, Inc., and
as the Chief Financial Officer of The Giant Group, Inc., and in
various capacities at Wherehouse Entertainment, Inc., including
Chief Financial Officer. Ms. McCarthy started her career at
Mellon Bank, N.A. where she served in various capacities over
18 years, including Vice President of the High Leveraged
Transaction Group and Vice President and Account Executive for
major Retail and Consumer Product Fortune 500 and Middle Market
companies. Ms. McCarthy currently serves on the board of
directors, audit and compensation committee of Thermage, Inc.,
the Orange County Advisory Board of City National Bank, and as a
member of the board of directors of Operation HomeFront, a
non-profit organization.
Ms. McCarthy attended Robert Morris College majoring in
finance and accounting, the University of Wisconsin School of
Banking at Madison and the Carnegie Mellon University Executive
Finance & Accounting Program.
PETER
PACE, General USMC (retired)
Age 62
Director Since January 2008
Mr. Pace is President and Chief Executive Officer of
SM&A Strategic Advisors and is a member of the Board of
SM&A.
Mr. Pace served for more than 40 years in the Marine
Corps before retiring in October 2007 from the most senior
position in the United States Armed Forces. As Chairman of the
Joint Chiefs of Staff from 2005 until 2007, he served as the
principal military advisor to the President of the United
States, the Secretary of Defense, the National Security Council,
and the Homeland Security Council during a time of tremendous
change in the nations strategic focus. Prior to becoming
Chairman, he served as Vice Chairman of the Joint Chiefs of
Staff from October 2001 to September 2005. Mr. Pace holds
the distinction of being the first Marine to have served in
either of these positions.
6
Mr. Pace serves on the Board of Directors for the Marine
Corps Law Enforcement Foundation a charity that
provides scholarship bonds to children of Marines or Federal law
enforcement personnel who were killed while serving our country
at home or abroad. Mr. Pace also serves as Operating
Partner of Behrman Capital, a private equity investment firm,
Chairman of the Board of Behrman Capitals portfolio
company, Pelican Products, Inc., and a Director of portfolio
company ILC Industries, Inc., a defense electronics and
engineered softgoods provider.
A 1967 graduate of the United States Naval Academy,
Mr. Pace holds a Masters Degree in Business
Administration from George Washington University and attended
Harvard University for the Senior Executives in National and
International Security programs. Mr. Pace is also a
graduate of the Infantry Officers Advanced Course at
Fort Benning, GA.; the Marine Corps Command and Staff
College in Quantico, VA; and the National War College at
Ft. McNair, Washington, DC.
DR.
JOSEPH B. REAGAN
Age 73
Director Since July 2004
Dr. Reagan currently serves as Chairman of the
Companys Compensation Committee and is a member of the
Audit Committee.
Dr. Reagan is a technology and senior management consultant
to industry and the United States Government. He retired in 1996
after 37 years with the Lockheed Martin Corporation where
he was a corporate officer and vice president and general
manager in the Missiles and Space Company. Dr. Reagan was a
director of Southwall Technologies Inc., an OTC public company,
from October 1987 to May 1992 and from June 1993 to May 2006,
where he served as Chairman of the Compensation Committee and as
a member of the Audit Committee. From December 1998 to December
2004, Dr. Reagan was a director of the Naval Studies Board,
an element of the National Research Council, where he served as
Vice Chairman. From May 1992 until May 2004 he was a director of
the Tech Museum of Innovation in San Jose. He was elected
to the National Academy of Engineering in 1998 and was the
Chairman of the Aerospace Section from 2005 to 2007.
Dr. Reagan is a graduate of the Pennsylvania State
University Executive Management Program, the Management
Institute, Advanced Institute, Executive Institute and Senior
Management Institute of Lockheed. Dr. Reagan holds a
Bachelor of Science in Physics from Boston College, a Master of
Science in Physics from Boston College, and a PhD in Space
Science from Stanford University.
ROBERT
RODIN
Age 54
Director Since January 2005
Mr. Rodin currently serves on the Companys
Governance & Nominating Committee.
Mr. Rodin holds the office of Chairman and CEO of RDN
Group, a management consulting firm. From 1999 through October
2002, Mr. Rodin served as Chairman and CEO of eConnections,
a provider of extended supply chain intelligence solutions. From
1991 through 1999, Mr. Rodin served as Chief Executive
Officer and President of Marshall Industries. He remained in
this position until the Company was acquired by Avnet, Inc. in
1999. Mr. Rodin then became President of Global Supply
Chain Management and Electronic Commerce Solutions for Avnet,
Inc., and served on the Advisory Board of the Company.
Mr. Rodin also serves on the Board of Napster, Inc., where
he serves as the Chairman of the Compensation Committee.
Additionally, he serves as Vice Chair and Executive Director of
CommerceNet.
Mr. Rodin holds a Bachelor of Arts in Psychology from the
University of Connecticut.
JOHN P.
STENBIT
Age 67
Director Since April 2004
Mr. Stenbit currently serves on the Companys Audit
Committee and Governance & Nominating Committee.
Mr. Stenbit has had distinguished careers in both the
private and public sectors, including participation as a member
of Secretary Rumsfelds staff in conjunction with the
transformation of the entire Department of Defense during both
of his terms of service. In his most recent position,
Mr. Stenbit served as the Assistant Secretary of
7
Defense Networks and Information Integration (NII), previously
known as Command, Control, Communications, and Intelligence
(C3I), at the Pentagon. He has served in several high profile
positions for TRW, Inc., most recently in Fairfax, Virginia,
where he was responsible for providing systems integration
solutions to the government as an executive vice president and
member of the Management Committee of TRW. Mr. Stenbit has
chaired advisory committees for the Director of the Central
Intelligence Agency and the Administrator of the Federal
Aviation Administration, as well as serving as a member of
advisory committees on information security, strategic systems,
telecommunications, submarines, and future warfare defense
communications. Mr. Stenbit also serves in the following
capacities: (i) as a member of SI Internationals
board committees for compensation and corporate governance;
(ii) as Chairman of the Governance & Nominating
Committee, and member of the Compensation Committee and the
Audit Committee of Cogent, Inc.; (iii) on the Compensation
and the Governance and Nominating Committee of Viasat;
(iv) on technical/scientific boards advising the Secretary
of Defense, Commander Strategic Command, the Director National
Security Agency, and the Director National Reconnaissance
Office. Mr. Stenbit serves as a member of the Board and
Audit Committee of Loral Space and Communications Company. He is
also a Trustee of the MITRE Corporation.
Mr. Stenbit holds a Bachelors degree in Engineering and
Masters degree in Electrical Engineering from the California
Institute of Technology in Pasadena, California, and attended
the Technische Hogeschool in The Netherlands. Mr. Stenbit
was a Fulbright Fellow, an Aerospace Corporation Fellow, and a
member of the National Academy of Engineering. He is presently a
member of Tau Beta Pi, and a recipient of Secretary of Defense
Medals for both Distinguished and Outstanding Public Service.
ROBERT J.
UNTRACHT
Age 59
Director since April 2002
Mr. Untracht currently serves as Chairman of the
Companys Audit Committee and is a member of the
Governance & Nominating Committee.
Mr. Untracht is a consultant on financial reporting matters
and teaches accounting classes at the University of California,
Los Angeles. He formerly served as an Associate Professor of
Accounting at the New York Institute of Technology in Old
Westbury, New York. Earlier in his career, Mr. Untracht
held positions with Ernst & Young LLP from 1981 to
1998 ranging from Manager to Audit Partner and National Director
of Retail and Consumer Product Industry Services where he served
clients in the retail, aircraft leasing and entertainment
industries. He also was involved in the firms financial
restructuring group. From 1974 to 1981, at Deloitte &
Touche LLP, Mr. Untracht served clients in the aerospace,
defense and manufacturing industries.
Mr. Untracht holds a Bachelors degree in Computer
Technology from the New York Institute of Technology, an MBA
degree with a concentration in Finance and Accounting from the
State University of New York at Buffalo, and a Juris Doctorate
degree from Southwestern University School of Law with a
concentration in corporate law. Mr. Untracht is a CPA and
was admitted to the State Bar of California.
Required
Vote; Recommendation of Board
The affirmative vote of a plurality of the votes cast is
required to elect each nominee as a director. Abstentions will
be treated as shares present and entitled to vote, and for
purposes of determining the outcome of the vote, will not be
treated as votes cast for a nominee. Proxies, if not revoked,
will be voted FOR each of the nominees unless a
stockholder specifies otherwise. Each of the Companys
current directors that holds shares of the Companys Common
Stock as of the record date intends to vote those shares for
each of the director nominees listed in this proxy statement.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
Reasons
for Boards Recommendation
Your Board has in place a Governance & Nominating
Committee whose purpose is to oversee the nomination of
directors for election to the Company. The Committee followed
its established procedures in evaluating,
8
selecting and nominating this years slate of directors
based on the evaluation of criteria including the nominees
demonstrated ability to ensure effective corporate governance,
to support and guide the Companys strategies, and to
exemplify the highest personal and professional integrity. The
Committee followed the process outlined in the Corporate
Governance section of this Proxy to fill two vacancies that
occurred in 2007 as a result of the retirement of the former
Chairman of the Board, Mr. Myers, and the resignation of
the former Chief Executive Officer, Cynthia Davis. In addition,
in January, 2008 the Committee recommended Mr. Pace for
Board membership and he subsequently was approved and appointed
to the Board.
In March 2008 the Board received a request from Mr. Myers
to appoint four new candidates for election in 2008 but felt
that the independence and experience represented by the slate of
nominees proposed by your Board far outweighed any benefit
Mr. Myers candidates are purported to have. In
addition, the Board believes that a proxy contest at this time
is disruptive and not in the best interests of the Company and
its stockholders. The Board has complete confidence in the
current management team and believes that it will be successful
in implementing the Companys new strategic plan for the
benefit of all stockholders.
|
|
ITEM 2.
|
APPROVAL
OF AMENDMENT TO THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE
PLAN
|
The Company adopted an employee stock purchase plan effective
March 1, 1999, which has been subsequently amended several
times. The Amended and Restated Employee Stock Purchase Plan
(the ESPP) was adopted by the Board to give eligible
employees of the Company and its subsidiaries the opportunity to
purchase stock in the Company at a 5% discount from the fair
market value price, and to attract and retain employees. As of
March 10, 2008, there were 78,933 shares available for
purchase under the ESPP. On March 4, 2008, the Board
approved an amendment to the ESPP, which is subject to
stockholder approval. The amendment included as Appendix B
(i) adds an additional 100,000 shares to the ESPP
reserve account, thereby increasing the number of shares of
Common Stock that may be issued under the ESPP from 1,500,000 to
1,600,000, and (ii) extends the ESPP expiration date from
December 31, 2008 to December 31, 2018. This amendment
to the ESPP is being proposed to allow future purchases of
Company stock by employees.
Summary
of the ESPP
General. The ESPP is intended to qualify as an
employee stock purchase plan under Section 423
of the Internal Revenue Code. Each participant will be granted
upon entry into an offering period under the ESPP, the right to
purchase through accumulated payroll deductions up to a number
of shares of the Common Stock of the Company determined in
accordance with the ESPP (a Purchase Right). A
participants Purchase Right will be automatically
exercised on the last day of the offering period unless the
Purchase Right has terminated prior to such date.
Shares Subject to Plan. Prior to the proposed
amendment, the ESPP provides for the issuance of a maximum of
1,500,000 of the Companys shares of Common Stock, subject
to appropriate adjustment in the event of any stock dividend,
stock split, spin-off, reorganization, recapitalization, merger,
consolidation, exchange of shares or similar change affecting
the outstanding Common Stock as a class. If any Purchase Right
expires or terminates, the shares subject to the unexercised
portion of such Purchase Right will again be available for
issuance under the ESPP.
Administration. The ESPP will be administered
by the Board or a duly appointed committee of the Board (the
Plan Administrator). The Plan Administrator will
interpret and apply the ESPP, and decisions of the Plan
Administrator are final and binding on all parties having an
interest in the plan. The Plan Administrator may adopt such
rules, policies, procedures, limitations or guidelines as it
deems advisable for proper administration of the ESPP.
Eligibility. All employees of the Company or
of any subsidiary of the Company designated by the Board are
eligible to participate in the plan. However, no employee who
owns or holds options to purchase 5% or more of the total
combined voting power or value of all classes of stock of the
Company may be granted a Purchase Right under the ESPP.
Offering Periods. Shares of Common Stock are
offered under the ESPP through a series of successive
three-month offering periods commencing on the first day of
January, April, July and October of each year. Purchases occur
on the last day of each offering period.
9
Participation and Purchase of Shares. Eligible
employees may commence participation in the ESPP at the
beginning of an offering period. To enroll in the plan, an
eligible employee must authorize payroll deductions prior to the
applicable entry date. Payroll deductions may not exceed 15% of
a participants compensation (as defined by the ESPP)
during each offering period. A participants authorized
payroll deductions will continue throughout the offering period,
unless (i) the participant makes an election to increase or
decrease the rate of or to stop his or her payroll deductions,
(ii) the participant voluntarily terminates his or her
Purchase Right, or (iii) the participant ceases to be
eligible to participate in the ESPP. Upon termination of a
participants Purchase Right, the Company will refund,
without interest, the participants accumulated payroll
deductions not previously applied to the purchase of shares.
Once a participants Purchase Right in an offering period
has terminated, the participant may not resume participation in
the same offering period and may only resume participation by
enrolling in a subsequent offering period.
Generally, each participant in an offering period will be
granted a Purchase Right for that offering period exercisable
for the lesser of (i) 2,500 shares of Common Stock and
(ii) that number of fractional shares determined by
dividing the participants payroll deductions accumulated
during the offering period by the applicable purchase price.
However, no participant may be granted a Purchase Right that
would permit the participant to purchase shares of Common Stock
under the ESPP which, when aggregated with shares purchased
under any other employee stock purchase plan of the Company,
would have a fair market value exceeding $25,000 for each
calendar year (measured by the fair market value of the
Companys Common Stock on the first date of the offering
period) in which the Purchase Right is outstanding at any time.
Purchase Rights are nontransferable and may only be exercised by
the participant.
As soon as practicable after the last day of each offering
period, the Company will issue to each participant in the
offering period, the number of shares of the Companys
Common Stock determined by dividing the amount of payroll
deductions accumulated for the participant during the purchase
interval by the purchase price, subject to the limitations
described above. The price at which shares are sold under the
ESPP is 95% of the fair market value per share of the
Companys Common Stock on the purchase date. Fair market
value currently means the closing price of a share of that
Common Stock on any given date on the NASDAQ Global Market. Any
payroll deductions under the ESPP not applied to the purchase of
shares on any purchase date will be returned to the participant
without interest.
Change of Control. If the Company at any time
proposes to enter into any merger or other reorganization
pursuant to which the Company will not be the surviving entity,
or enter into the sale of substantially all of its assets, then,
to the extent permitted by applicable law, (i) the
successor corporation shall assume the rights previously granted
under the ESPP, or substitute for those rights new rights
covering the shares of the successor corporation (with
appropriate adjustments as to the number and kind of shares and
prices) or (ii) the ESPP and the rights previously granted
shall continue in full force and effect. If the successor
corporation refuses to assume or continue the ESPP, the
outstanding purchase rights will be exercised on the effective
date of such transaction.
Termination or Amendment. Without the proposed
amendment, the ESPP will continue until December 31, 2008,
unless earlier terminated by the Company. The Company may at any
time amend or terminate the ESPP, except that the approval of
the Companys stockholders is required with respect to any
amendment that would increase the number of shares issuable
under the ESPP, materially modify the requirements as to
eligibility for participation in the ESSP, or materially
increase the benefits that accrue to participants under the
ESPP. No termination or amendment of the ESPP will affect rights
previously granted under the ESPP.
The ESPP, as revised to include the proposed amendment, is
included as Appendix B to this Proxy Statement. The
summary discussion above is qualified in its entirety by the
full terms of the ESPP set forth in Appendix B.
New Plan
Benefits
Because benefits under the ESPP will depend on employees
elections to participate and to purchase shares under the ESPP
at various future dates, it is not possible to determine the
benefits that will be received by executive officers and other
employees. Non-employee directors are not eligible to
participate in the ESPP.
10
Equity
Compensation Plan Information
The following table provides information about the
Companys Common Stock that may be issued upon the exercise
of options, warrants and rights under all of the Companys
existing equity compensation plans and arrangements as of
December 31, 2007.
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Number of
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Securities
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Remaining Available
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for Future Issuance
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under Equity
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Compensation Plans
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(Excluding
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Securities
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Reflected in Column (a)
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Number of
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and Giving
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Securities to be
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Effect to the
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Issued upon
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Weighted-average
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Adoption of the
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Exercise of
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Exercise Price of
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2007 Equity
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Outstanding
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Outstanding
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Incentive Plan and
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Options, Warrants
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Options, Warrants
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Expiration of the
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Plan Category
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and Rights
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and Rights
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Prior Plan)
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(a)
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(b)
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(c)
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Equity Compensation Plans Approved by Stockholders
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2007 Equity Incentive Plan(1)
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2,272,448
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$
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7.43
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1,134,800
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Amended & Restated ESPP
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N/A
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N/A
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(2)
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78,933
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Equity Compensation Plans Not Approved by Stockholders
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N/A
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N/A
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N/A
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(1) |
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On June 5, 2007 the Companys stockholders approved
the 2007 Equity Incentive Plan. The Second Amended and Restated
Equity Incentive Plan (the Prior Plan) was frozen
and no further grants or awards were made after June 4,
2007 under such plan. The Prior Plan continues in effect for so
long as and solely to the extent necessary to administer
previously granted awards that remain outstanding under such
plan. |
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(2) |
|
Under the Amended and Restated ESPP, the purchase price per
share of Common Stock is 95% of the fair market value as
determined in accordance with the Plan and Section 423 of
the Internal Revenue code and applicable regulations thereunder. |
Required
Vote; Recommendation of Board
The proposal to approve the amendment to the ESPP will require
approval by a majority of the votes cast by the holders of the
shares of Common Stock voting in person or by proxy at the
meeting. Withholding authority to vote for approval of the ESPP
will be treated as shares present and entitled to vote and, for
purposes of determining the outcome of the vote, will not be
treated as votes cast for the approval of the ESPP. Broker
non-votes will not be treated as shares present and
entitled to vote on the approval of the ESPP and will have no
effect on the outcome of the vote. Broker non-votes
will be counted as present for the purpose of determining
whether a quorum is present. Proxies, if not revoked, will be
voted in favor of the approval of the amendment to the ESPP
unless the stockholder specifies otherwise. Each of the
Companys current directors that holds shares of the
Companys Common Stock as of the record date intends to
vote those shares for the approval of the proposed amendment to
the ESPP.
THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL TO APPROVE THE AMENDMENT TO
THE ESPP.
|
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ITEM 3.
|
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
The Audit Committee of the Board has selected BDO Seidman, LLP
(BDO) as the independent registered public
accounting firm (the Independent Auditor) to audit
the financial statements of the Company for the fiscal year
2008. If the stockholders do not approve the selection of BDO,
the selection of another Independent Auditor will be considered
by the Audit Committee. BDO has been the Independent Auditor for
the Company since June 2006.
11
On June 21, 2006, the Company engaged BDO, as the
Companys Independent Auditor, replacing Ernst &
Young, LLP (EY), which resigned as the
Companys Independent Auditor effective May 18, 2006.
The change in Independent Auditor was approved by the
Companys Board of Directors upon the recommendation of the
Audit Committee.
The audit reports of EY on the consolidated financial statements
for the Company as of and for the years ended December 31,
2005 and 2004 did not contain an adverse opinion or a disclaimer
of opinion, or were qualified or modified as to uncertainty,
audit scope, or accounting principles. As noted below, these
financial statements were restated in an Amendment No. 1 to
Form 10-K/A
filed on May 15, 2006.
During the audits of the Companys financial statements for
the two years ended December 31, 2005 and 2004 and in
connection with EYs review of the subsequent interim
period through May 18, 2006, there were no disagreements
with EY on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of EY,
would have caused it to make reference to the subject matter of
the disagreement in connection with its report, except for the
following:
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In March 2006, the Company received a comment letter from the
Securities and Exchange Commission (SEC) staff in
connection with the staffs review of the Companys
Form 10-K
for the year ended December 31, 2005 that, among other
things, asked the Company to explain the accounting for certain
share repurchase transactions. Following receipt of the comment
letter, the Companys management, the Chairman of the
Companys Audit Committee of its Board, and EY had numerous
and lengthy discussions, and disagreed regarding possible errors
in accounting for transactions that occurred in 2004 and 2005.
The Company believed that these share repurchases were not
compensatory and EY supported a contrary opinion. At no time did
EY assert that the Company failed to provide its Independent
Auditors all relevant facts with respect to the transactions
during the completion of the audits for fiscal years 2004 and
2005. Ultimately, the SEC staff orally stated to the Company
that the staff believed that the transactions were compensatory
and requested that the Company restate its financial statements
for the year ended December 31, 2005, and to review and
consider whether the Company should restate its financial
statements for the year ended December 31, 2004.
Subsequently, the Company restated its consolidated financial
statements for the years ended December 31, 2005 and 2004
in Amendment No. 1 to
Form 10-K/A
filed on May 15, 2006. EY issued an opinion with respect to
the restated financial statements without qualification as
stated above.
|
The Company authorized EY to respond fully to the inquiries of
the Companys subsequent Independent Auditor concerning the
subject matter of the disagreement referenced above. In the
Companys two years ended December 31,2005 and
2004 and in the subsequent interim period through May 18,
2006, there were no reportable events, as defined in
Item 304(a)(1)(v) of
Regulation S-K,
except as follows:
A representative of BDO will be present at the Annual Meeting,
will make a statement if so desired, and will be available to
respond to appropriate questions.
Independent
Auditor Fees
The aggregate audit fees billed to the Company and its
subsidiaries for the fiscal years ended December 31, 2007
and 2006 were:
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2007
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2006
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Audit Fees(a)
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$
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464,700
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$
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478,500
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Audit-Related Fees(b)
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$
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$
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Tax Fees(c)
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$
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53,790
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$
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17,530
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All Other Fees(d)
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$
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$
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(a) |
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The aggregate fees billed for professional services rendered by
the Independent Auditor for the audit of the Companys
annual financial statements and the reviews of the financial
statements included in the Companys
Form 10-Q
or services that are normally provided by the Independent
Auditor in connection with statutory and regulatory filings or
engagements for those fiscal years. These services may include:
fees for services that normally would be provided by the
Independent Auditor in connection with statutory and regulatory
filings or engagements, services that generally only the
Independent Auditor can provide such as comfort letters, |
12
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statutory audits, attest services, consents and assistance with
review of documents filed with the SEC, accounting consultations
on matters that would be addressed during audit and review work. |
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(b) |
|
The aggregate fees billed for assurance and related services by
the Independent Auditor that are reasonably related to the
performance of the audit or review of the Companys
financial statements and not reported as Audit Fees. These
services may include, among others: employee benefit plan
audits, due diligence related to mergers and acquisitions,
accounting consultations and audits in connection with
acquisitions, internal control reviews, attest services that are
not required by statue or regulation and consultation concerning
financial accounting and reporting standards not classified as
audit. |
|
(c) |
|
The aggregate fees billed for professional services rendered by
the Independent Auditor for tax compliance, tax advice and tax
planning. These services may include: out-of-pocket expenses for
services rendered during the year under audit by the Independent
Auditor, fees for tax compliance, tax planning, and tax advice. |
|
(d) |
|
The aggregate fees billed for products and services provided by
the Independent Auditor, other than the services reported in
(a) through (c) of this section. |
The Audit Committee has considered whether provision of the
services described above is compatible with maintaining the
Independent Auditors independence and has determined that
such services did not adversely affect BDOs independence.
Audit
Committee Approval of Audit and Non-Audit Services
The Audit Committee has adopted procedures for pre-approving all
audit and permitted non-audit services provided by the
Independent Auditors. The Audit Committee pre-approves a list of
specific services and categories of services, subject to a
specified cost level. Part of this approval process includes
making a determination of whether non-audit services are
consistent with the SECs rules on auditor independence.
The Audit Committee may delegate pre-approval authority to the
Chairman of the Audit Committee. The Audit Committee
periodically monitors the services rendered and actual fees paid
to the Independent Auditors to ensure such services are within
the parameters approved.
Required
Vote; Recommendation of Board
The proposal to ratify BDO as the Companys Independent
Auditors for the fiscal year ending December 31, 2008
requires the approval by a majority of the votes cast by the
holders of the shares of Common Stock voting in person or by
proxy at the meeting. Withholding authority to vote for the
ratification of BDO will be treated as shares present and
entitled to vote and, for purposes of determining the outcome of
the vote, will not be treated as votes cast for ratification of
BDO. Broker non-votes will not be treated as shares
present and entitled to vote on the ratification of BDO and will
have no effect on the outcome of the vote. Broker
non-votes will be counted as present for the purpose
of determining whether a quorum is present. Proxies, if not
revoked, will be voted in favor of ratifying BDO as the
Companys Independent Auditors for the fiscal year ending
December 31, 2008 unless the stockholder specifies
otherwise. Each of the Companys current directors that
holds shares of the Companys Common Stock as of the record
date intends to vote those shares for the ratification of the
appointment of BDO Seidman, LLP as the Companys
Independent Auditors.
THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
BDO SEIDMAN, LLP
AS THE COMPANYS INDEPENDENT AUDITORS
The Company knows of no other business that will be considered
for action at the Annual Meeting.
13
CORPORATE
GOVERNANCE
The Board continues to implement governance practices that will
be followed by the Company in order to assure that the Board
will have the necessary authority and practices in place to
review and evaluate the Companys business operations as
needed and to make decisions that are independent of the
Companys management. These practices are also intended to
align the interests of directors and management with those of
the Companys stockholders.
Board
Member Attendance
The Board held 16 meetings during the fiscal year ended
December 31, 2007. All of the incumbent directors attended
in excess of 75% of the total number of meetings of the Board
held during the time they were directors, and of the committees
on which they served.
Following most of the regularly scheduled Board meetings in
2007, executive sessions were conducted in which directors in
attendance participated.
The Company expects all incumbent directors to attend Annual
Meetings. The Company generally holds a Board meeting following
the Annual Meeting to minimize travel obligations and to
facilitate director attendance at the Annual Meeting. All of the
Companys directors then in office attended the
Companys 2007 Annual Meeting.
Committees
of the Board
Following is a description of each Committee of the Board.
Audit
Committee
|
|
|
Members: |
|
Robert J. Untracht, Chair
Joseph B. Reagan
John P. Stenbit |
|
Purpose: |
|
The Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the
accounting and reporting practices of the Company, the
qualifications and independence of the Independent Auditors
engaged to prepare or issue an audit report on the financial
statements of the Company and such other duties as directed by
the Board. The Committees role includes discussing with
management the Companys processes to manage financial
risk, and to comply with applicable legal, ethical, and
regulatory requirements. The Committee also approves, subject to
stockholder approval, the appointment and replacement of the
Independent Registered Public Accounting Firm and is directly
responsible for oversight and pre-approval of all audit and
non-audit services provided by the Independent Registered Public
Accounting Firm. For the fiscal year ended December 31,
2007 and the current fiscal year, the Committee consisted
entirely of independent directors (as defined in
Rule 4200(a)(15) of the NASDAQ marketplace rules) and
satisfied the audit committee independence and financial
literacy requirements of NASDAQ. The Board has determined that
Mr. Untracht satisfied the requirements for an audit
committee financial expert under the rules and regulations
of the SEC. The Committee held five meetings during the fiscal
year ended December 31, 2007 attended by all of the
Committee members. A copy of the Amended Charter of the Audit
Committee is available on the Companys website:
www.smawins.com under Investor Relations>Corporate
Governance. |
|
|
|
|
Compensation
Committee
|
|
|
Members: |
|
Joseph B. Reagan, Chair
William C. Bowes
J. Christopher Lewis |
|
Purpose: |
|
The Committees primary duties are to discharge, or assist
the Board in discharging, the Boards responsibilities with
respect to all forms of compensation to the directors, Executive
Officers and |
14
|
|
|
|
|
other employees, to assure that such compensation is fair,
competitive and sufficient to attract and retain highly
qualified individuals, to administer the Companys current
and future equity incentive plans and to review and approve this
Compensation Discussion and Analysis report for inclusion in
this Proxy Statement. |
|
|
|
In performing their role, the Compensation Committee has relied
on publicly available studies, and sought the advice of the
Chief Executive Officer when setting compensation for executives
reporting to her. Individual compensation for Executive Officers
of SM&A, other than the Chief Executive Officer, have been
made, to a great extent, at the time of hire or extension of an
expiring employment agreement, or through award programs
applicable to the entire management team. |
|
|
|
None of the members of the Compensation Committee were, at any
time during fiscal 2007 or at any other time, an officer or
employee of the Company. The Committee held six meetings during
the fiscal year ended December 31, 2007 attended by a
majority of the Committee members. A copy of the Compensation
Committees Amended Charter is available on the
Companys website: www.smawins.com under Investor
Relations>Corporate Governance. |
|
|
|
|
Governance &
Nominating Committee
|
|
|
Members: |
|
William C. Bowes, Chair
Robert Rodin
John P. Stenbit
Robert J. Untracht |
|
Purpose: |
|
The Governance & Nominating Committees role is
to determine the slate of director nominees for election to the
Companys Board and to identify and recommend candidates to
fill vacancies occurring between annual stockholder meetings.
The director nominees are selected or recommended for Board
selection by a majority of the independent directors. The
Committee also reviews, evaluates and recommends changes to the
Companys corporate governance practices, to include the
development and review of the Corporate Governance Guidelines
for the Company. The Committee coordinates an annual performance
review for the Board, Board committees and individual directors.
During the fiscal year ended December 31, 2007, the
Committee held seven meetings attended by a majority of
Committee members A copy of the Governance &
Nominating Committees Amended Charter is available on the
Companys website: www.smawins.com under Investor
Relations>Corporate Governance. |
BOARD AND
COMMITTEE MEMBERSHIP
as of March 14, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Governance
|
|
|
|
|
|
|
|
|
&
|
Director
|
|
Board
|
|
Audit
|
|
Compensation
|
|
Nominating
|
|
William C. Bowes
|
|
X
|
|
|
|
X
|
|
Chair
|
Dwight L. Hanger
|
|
Chair
|
|
|
|
|
|
|
J. Christopher Lewis
|
|
X
|
|
|
|
X
|
|
|
Cathy L. McCarthy
|
|
X
|
|
|
|
|
|
|
Peter Pace
|
|
X
|
|
|
|
|
|
|
Joseph B. Reagan
|
|
X
|
|
X
|
|
Chair
|
|
|
Robert Rodin
|
|
X
|
|
|
|
|
|
X
|
John P. Stenbit
|
|
X
|
|
X
|
|
|
|
X
|
Robert J. Untracht
|
|
X
|
|
Chair
|
|
|
|
X
|
15
Director
Nominee Criteria and Process
The Board is responsible for approving candidates for Board
membership. The Board has delegated the screening and
recruitment process to the Governance & Nominating
Committee. The Committee believes that the criteria for director
nominees should include ensuring effective corporate governance,
supporting the Companys strategies, reflecting the highest
personal and professional integrity, possessing sound judgment,
free from conflicts of interest, having adequate time to devote
to Board responsibilities, supporting the successful recruitment
of qualified candidates for the Board and representing the best
interest of all the Companys stockholders.
The Committee may receive recommendations for Board candidates
from various sources, including the Companys directors,
management and stockholders. Stockholder proposals for
nominations to the Board should be submitted to the
Governance & Nominating Committee in care of the
Corporate Secretary of the Company at its principal executive
office at 4695 MacArthur Court, 8th Floor, Newport Beach,
California 92660. To be considered by the Board for nomination
at the next succeeding Annual Meeting, nominations must be
delivered to the Corporate Secretary no later than
December 19, 2008 (see Submission of Stockholder
Proposals for the 2009 Proxy Statement). The Board will
consider and evaluate all Board recommendations in the same
manner regardless of source.
The Corporate Secretarys office, at the request of the
Committee, researches the qualifications of recommended
candidates and reports its findings to the Chairman of the
Committee.
When a vacancy occurs on the Board, the Committee recommends to
the Board a nominee to fill the vacancy. As provided in the
Companys By-Laws, the Board appoints a new director when a
vacancy occurs between Annual Meetings. During 2007 two
vacancies occurred on the Board. Mr. Myers, former Chairman
of the Board retired on March 31, 2007. The Board appointed
then director Mr. Hanger as Chairman of the Board. The
Board recommended and approved the appointment of
Ms. McCarthy to the Board on July 19, 2007 filling the
vacancy created by the resignation of Ms. Davis.
Ms. McCarthy recommended to the Governance and Nominating
Committee, the appointment of General Pace to the Board. The
Governance and Nominating Committee subsequently provided their
recommendation to the Board, at which time General Pace was
approved and appointed to the Board on January 17, 2008
filling the vacancy created by the retirement of Mr. Myers.
Retention
of Independent Advisors
Each of the Audit, Compensation, and Governance &
Nominating Committees has the authority to retain independent
advisors, legal counsel or other experts or consultants it deems
appropriate to carry out its responsibilities, with all fees and
expenses paid by the Company.
Director
Independence
To promote effective corporate governance, a majority of the
members of the Companys Board qualify as independent under
criteria established by NASDAQ. The Governance &
Nominating Committee regularly reviews the independence and
qualifications of each member of the Board and its various
committees. Ms. McCarthy does not participate in any action
of the Board relating to any executive or employee compensation
plan in which she participates.
The Board has determined that seven of the current directors,
Messrs. William C. Bowes, Dwight L. Hanger, J. Christopher
Lewis, Joseph B. Reagan, Robert Rodin, John P. Stenbit, and
Robert J. Untracht are independent. Ms. McCarthy and
General Pace are employees of the Company and therefore are not
independent.
Certain
Relationships and Related Transactions
The Company reviews all related party transactions for potential
conflict of interest situations on an ongoing basis.
16
The following describes certain transactions that have occurred
during the Companys fiscal year ending December 31,
2007:
Employment
Agreement with Mr. Pace
The Company and Mr. Pace are party to an employment
agreement providing for an annual base salary of $300,000. In
addition, Mr. Pace is entitled to an incentive bonus equal
to two percent (2%) of all revenue in excess of $12,000,000
earned by the Company from all Qualifying Projects during the
Qualifying Periods applicable to such Qualifying Projects (as
defined in the agreement). Mr. Pace also received a
one-time cash Signing Bonus in the amount of $240,000 and was
granted an option on the Effective Date of his agreement to
purchase 100,000 shares of Common Stock of the Company,
issued pursuant to the Companys 2007 Equity Incentive
Plan. The exercise price of the stock option is equal to the
fair market value of such Common Stock on the date of grant and
25% of the option was deemed vested (i.e., exercisable) as of
the Effective Date, with the remainder of such option to vest in
three equal annual installments, commencing on the first
anniversary of the Effective Date. Mr. Pace was included in
the 2008 LTIP that covers calendar years 2008, 2009 and 2010.
The target incentive for Mr. Pace under this plan is
50,000 shares of Common Stock of the Company, but the
actual number of shares granted will be in accordance with the
performance scale described above in this document. Additional
elements of Mr. Paces employment agreement are
outlined in the Compensation Discussion and Analysis section of
this proxy statement under Employment Agreements.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, and
the regulations thereunder, requires the Companys
directors, executive officers and persons who own more than ten
percent (10%) of a registered class of the Companys equity
securities, to file reports of beneficial ownership and changes
in such beneficial ownership of our securities with the SEC.
These persons are also required by rules promulgated by the SEC
to furnish the Company with copies of all Section 16(a)
forms they file with the SEC. To the Companys knowledge,
based solely on a review of the copies of such reports furnished
to the Company and written representations that no other reports
were required during its fiscal year ended December 31,
2007, all these persons complied with all applicable filing
requirements.
Compensation
Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 2007, the members
of the Compensation Committee were Joseph B. Reagan,
William C. Bowes, and J. Christopher Lewis, all of whom were
non-employee directors of the Company. None of the members of
the Compensation Committee was, at any time during fiscal 2007
or at any other time, an officer or employee of the Company.
There are no Compensation Committee interlocks between the
Company and other entities involving the Companys
executive officers and Board members who serve as executive
officers or Board members of such other entities.
Business
Conduct and Ethics Code
The Board has adopted a written code of ethical conduct that
applies to all directors, officers and employees. The code
requires avoidance of conflicts of interest compliance with all
laws and other legal requirements, conduct of business in an
honest and ethical manner, integrity and actions in the
Companys best interest. Directors, officers and employees
are required to report any conduct that they believe in good
faith to be an actual or apparent violation of the code. The
policy is included as Appendix C to this proxy statement
and is available on the Companys website at
www.smawins.com under Investor Relations>Corporate
Governance, or by contacting the Corporate Secretary at 4695
MacArthur Court, 8th Floor, Newport Beach, CA 92660, or
calling
(949) 975-1550
to obtain a copy without charge.
Corporate
Governance Guidelines
The Board has adopted Corporate Governance Guidelines
(Guidelines) that address significant issues of
corporate governance and set forth the procedures by which the
Board carries out its responsibilities. Among the
17
areas addressed by the Guidelines are director qualifications
and responsibilities, Board committee responsibilities, director
compensation and tenure, director orientation and continuing
education, access to management and independent advisors,
succession planning and Board and committee performance
evaluations. The Corporate Governance & Nominating
Committee is responsible for assessing and reviewing the
adequacy of these Guidelines and recommending proposed changes
to the Board, as appropriate. The Guidelines are available on
the Companys website at www.smawins.com under
Investor Relations>Corporate Governance.
Whistleblower
Procedures
The Audit Committee has established procedures for (a) the
receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or
auditing matters, and (b) the confidential and anonymous
submission by the Companys employees and its stockholders,
of concerns regarding questionable accounting or auditing
matters. These procedures are described in the Business Conduct
and Ethics Code.
Stockholder
Communication with Board of Directors
The Company believes the process described in the Companys
Business Conduct and Ethics Code by which stockholders may
communicate directly to directors, has served the Boards
and the stockholders needs. Until any other procedures are
developed and posted on the Companys corporate website,
stockholders may send written correspondence to the Board in
care of the Corporate Secretary:
SM&A
4695 MacArthur Court, 8th Floor
Newport Beach, CA 92660
Attn: Corporate Secretary
18
REPORT OF
THE AUDIT COMMITTEE(1)
The Audit Committee reviewed and discussed with management the
audited financial statements of the Company.
The Audit Committee discussed with the Independent Auditors
matters required to be discussed pursuant to Statement on
Auditing Standards No. 61, Communication with Audit
Committees, as modified or supplemented. The Committee,
has received the written disclosures from the Independent
Auditors required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit
Committees, as currently in effect and has discussed such
independence with the Independent Auditors.
Based on these reviews and discussions, the Audit Committee
recommended to the Board that the audited financial statements
be included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007 for filing with the
SEC.
|
|
|
|
|
The Audit Committee:
|
|
|
Robert J. Untracht, Chairman
Joseph B. Reagan
John P. Stenbit
|
|
(1) Notwithstanding anything to the contrary set forth in
any of the Companys filings under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the Audit Committee Report
shall not be incorporated by reference into any such filings.
19
SECURITY
OWNERSHIP
Principal
Holders
As of March 14, 2008, the Company had
19,030,021 shares of Common Stock outstanding. The, only
persons known by the Company, as of this date, to be beneficial
owners of more than five percent of the Companys Common
Stock are noted below.
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
Percentage of
|
|
|
|
Beneficial
|
|
|
Common
|
|
Name and Address of Beneficial Owner
|
|
Ownership
|
|
|
Stock Owned
|
|
|
Steven S. Myers(1)
|
|
|
2,997,225
|
|
|
|
15.75
|
%
|
Wasatch Advisors, Inc(2)
|
|
|
2,826,125
|
|
|
|
14.85
|
%
|
Sarbit Asset Management, Inc(3)
|
|
|
1,688,289
|
|
|
|
8.87
|
%
|
Royce & Associates, Inc., LLC(4)
|
|
|
1,075,807
|
|
|
|
5.65
|
%
|
Heartland Advisors, Inc(5)
|
|
|
1,000,000
|
|
|
|
5.25
|
%
|
Footnotes to Principal Holders:
|
|
|
(1) |
|
Based on information contained in a Schedule 14A filed with
the SEC on April 11, 2008. Mailing address is
1523 Dolphin Terrace, Corona Del Mar, CA 92625. |
|
|
|
(2) |
|
Based on information contained in a Schedule 13G/A filed
with the SEC on February 14, 2008. Mailing address is
150 Social Hall Avenue, Suite 400, Salt Lake City, UT
84111. |
|
(3) |
|
Based on information contained in a Scheduled 13G filed with the
SEC on February 15, 2008. Mailing address is
100-1 Evergreen
Place, Winnipeg, A2 R3L OE9 Canada |
|
(4) |
|
Based on information contained in a Schedule 13G/A filed
with the SEC on January 31, 2008. Mailing address is
1414 Avenue of Americas, New York, NY 10019. |
|
(5) |
|
Based on information contained in a Schedule 13G/A filed
with the SEC on February 8, 2008. Mailing address is
789 North Water Street, Suite 500, Milwaukee, WI 53202. |
20
Current
Named Executive Officers and Directors
The following table sets forth the shares of the Companys
Common Stock beneficially owned by the current Named Executive
Officers and Directors of the Company as of March 14, 2008.
All current Named Executive Officers and Directors as a group,
consisting of twelve (12) persons, beneficially owned
1,364,974 shares of the Companys Common Stock, which
amount represents 7.17% of the total outstanding shares of the
Companys Common Stock as of that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
Percentage of
|
|
|
|
Beneficial
|
|
|
Common Stock
|
|
Name and Title of Beneficial Owner
|
|
Ownership
|
|
|
Owned
|
|
|
McCarthy, Cathy L.
|
|
President, Chief Executive Officer and Director
|
|
|
404,607
|
(1),(2)
|
|
|
2.13
|
%
|
Pace, Peter
|
|
President, Chief Executive Officer SM&A Strategic Advisors
and SM&A Director
|
|
|
25,000
|
(1),(3)
|
|
|
|
*%
|
Aguirre, Anna L.
|
|
Senior Vice President, Human Resources
|
|
|
|
(1),(4)
|
|
|
|
|
Eckstaedt, James R.
|
|
Executive Vice President, Finance, CFO and Secretary
|
|
|
|
(1),(5)
|
|
|
|
|
Reiners, Kevin L.
|
|
Executive Vice President, Operations
|
|
|
32,379
|
(1),(6)
|
|
|
|
*%
|
Dwight L. Hanger
|
|
Chairman of the Board
|
|
|
54,227
|
(1),(7)
|
|
|
|
*%
|
Bowes, William C.
|
|
Director
|
|
|
101,864
|
(1)
|
|
|
|
*%
|
Lewis, J. Christopher
|
|
Director
|
|
|
359,256
|
(1)
|
|
|
1.89
|
%
|
Reagan, Joseph B.
|
|
Director
|
|
|
77,864
|
(1)
|
|
|
|
*%
|
Rodin, Robert
|
|
Director
|
|
|
75,000
|
(1)
|
|
|
|
*%
|
Stenbit, John P.
|
|
Director
|
|
|
112,818
|
(1)
|
|
|
|
*%
|
Untracht, Robert J.
|
|
Director
|
|
|
121,959
|
(1)
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Named Executive Officers and Directors
|
|
|
1,364,974
|
|
|
|
7.17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
to Current Named Executive Officers and Directors
Table:
|
|
|
(1) |
|
Includes the following shares which could be acquired upon the
exercise of stock options exercisable within 60 days of
March 14, 2008: |
|
|
|
|
|
Ms. Aguirre
|
|
|
-0-
|
|
Mr. Bowes
|
|
|
100,000
|
|
Mr. Eckstaedt
|
|
|
-0-
|
|
Mr. Hanger
|
|
|
50,000
|
|
Mr. Lewis
|
|
|
32,000
|
|
Ms. McCarthy
|
|
|
387,250
|
|
General Pace
|
|
|
25,000
|
|
Dr. Reagan
|
|
|
75,000
|
|
Mr. Reiners
|
|
|
30,000
|
|
Mr. Rodin
|
|
|
75,000
|
|
Mr. Stenbit
|
|
|
112,818
|
|
Mr. Untracht
|
|
|
121,959
|
|
|
|
|
(2) |
|
Ms. McCarthy was appointed as President, Chief Executive
Officer, and a Director of the Company in July 2007. |
21
|
|
|
(3) |
|
General Pace was hired as President and Chief Executive Officer
of SM&A Strategic Advisors, Inc., and appointed as a
Director of SM&A in January 2008. |
|
|
|
(4) |
|
Ms. Aguirre was hired as the Companys Senior Vice
President, Human Resources in September 2007. |
|
|
|
(5) |
|
Mr. Eckstaedt was hired as the Companys Executive
Vice President, Finance, Chief Financial Officer and Secretary
in January 2008. |
|
|
|
(6) |
|
Mr. Reiners was promoted to Executive Vice President,
Operations in August 2007. |
|
|
|
(7) |
|
Mr. Hanger was appointed as Chairman of the Board of
Directors in April 2007. |
Former
Named Executive Officers
The following table sets forth the shares of the Companys
Common Stock beneficially owned, to the Companys
knowledge, as of March 14, 2008 by the Former Named
Executive Officers of the Company who served during 2007 but are
no longer executive officers of the Company. All Former Named
Executive Officers as a group, consisting of six
(6) persons, to the Companys knowledge, beneficially
owned 3,060,774 shares of the Companys Common Stock,
which represents 16.08% of the total outstanding shares of the
Companys Common Stock as of March 14, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
Percentage of
|
|
|
|
Beneficial
|
|
|
Common Stock
|
|
Name and Title of Beneficial Owner
|
|
Ownership
|
|
|
Owned
|
|
|
Myers, Steven S.
|
|
Former Chief Executive Officer and Former Chairman of the Board
|
|
|
2,997,225
|
(1),(2)
|
|
|
15.75
|
%
|
Davis, Cynthia A.
|
|
Former Chief Executive Officer and Former Director
|
|
|
7,000
|
(1),(3)
|
|
|
*
|
%
|
Bauman, G. Timothy
|
|
Former Executive Vice President, Sales and Marketing
|
|
|
5,015
|
(1),(4)
|
|
|
*
|
%
|
Eide, Thomas A.
|
|
Former Senior Vice President, Professional Services
|
|
|
42,784
|
(1),(5)
|
|
|
*
|
%
|
Handy, Steve A.
|
|
Former Senior Vice President, Chief Financial Officer and
Secretary
|
|
|
|
(1),(6)
|
|
|
|
|
Hart, Daniel R.
|
|
Vice President, Controller and Former Interim CFO and Secretary
|
|
|
8,750
|
(1),(7)
|
|
|
*
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Former Named Executive Officers
|
|
|
3,060,774
|
|
|
|
16.08
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
to Former Named Executive Officers Table:
|
|
|
(1) |
|
Includes the following shares which could be acquired upon the
exercise of stock options exercisable within 60 days of
March 14, 2008: |
|
|
|
|
|
Myers, S.
|
|
|
-0-
|
|
Davis, C.
|
|
|
-0-
|
|
Bauman, T.
|
|
|
-0-
|
|
Eide, T.
|
|
|
41,800
|
|
Handy, S.
|
|
|
2,500
|
|
Hart, D.
|
|
|
8,750
|
|
|
|
|
(2) |
|
Mr. Myers, former Chief Executive Officer and former
Chairman of the Board, retired from the Company March 31,
2007. As noted elsewhere in this proxy statement, Mr. Myers
has notified the Company that he intends to vote his shares for,
and solicit proxies in favor of, his own slate of four nominees
for election as directors, in opposition to the Boards
nominees. |
|
|
|
(3) |
|
Ms. Davis resigned from the Company on July 18, 2007. |
22
|
|
|
(4) |
|
Mr. Bauman resigned from the Company on October 3,
2007. |
|
|
|
(5) |
|
Mr. Eide accepted a non Executive Officer role with the
Company effective July 20, 2007. |
|
|
|
(6) |
|
Mr. Handy resigned from the Company on November 9,
2007. |
|
|
|
(7) |
|
Mr. Hart assumed the role of Interim Chief Financial
Officer & Secretary, in addition to his role as Vice
President, Controller following the departure of Mr. Handy
and until the hiring of Mr. Eckstaedt. |
Current
Named Executive Officers Principal Occupation During
Last Five Years
Set forth below is certain information with respect to the
Companys current Named Executive Officers, including the
business experience of each during the past five years.
Cathy L. McCarthy (59) currently serves as President
and Chief Executive Officer of SM&A and is a member of the
Companys Board.
Ms. McCarthy has served as President and Chief Executive Officer
since July 2007 and as President and Chief Operating Officer
from February 2006 to July 2007. Ms. McCarthy served as
Executive Vice President, Chief Financial Officer and Corporate
Secretary from September 2001 until February 2006. Prior to
entering into her Employment Agreement with the Company in 2001,
Ms McCarthy served as Executive Vice President, Chief Financial
Officer and Secretary of PIA Merchandising, Inc., and as the
Chief Financial Officer of The Giant Group, Inc., and in various
capacities at Wherehouse Entertainment, Inc, including Chief
Financial Officer. Ms. McCarthy started her career at
Mellon Bank, N.A. where she served in various capacities over
18 years including Vice President of the High Leveraged
Transaction Group and Vice President and Account Executive for
major Retail and Consumer Product Fortune 500 and Middle Market
companies. Ms. McCarthy currently serves on the board of
directors, audit and compensation committee of Thermage, Inc.,
the Orange County Advisory Board of City National Bank, and as a
member of the board of directors of Operation HomeFront, a
non-profit organization.
Ms.McCarthy attended Robert Morris College majoring in finance
and accounting, the University of Wisconsin School of Banking at
Madison and the Carnegie Mellon University Executive
Finance & Accounting Program.
Anna L. Aguirre (46) currently serves as Senior Vice
President, Human Resources. Ms. Aguirre joined the Company
as an employee in September 2007. In this role, she has direct
responsibility for human resources operations, recruiting,
training, security and facilities. A seasoned HR professional
with over 18 years of experience, most recently
Ms. Aguirre served five years as the VP Global Human
Resources and Facilities at Iomega Corporation, a leading
provider of data storage products. As an integral member of the
executive team, she provided strategic guidance and set policy
in the areas of change management, organizational development,
human resources planning and facilities management. Prior to
that she lead the human resources and facilities functions at
Proxima Corporation, a manufacturer of multimedia projectors.
Ms. Aguirre holds a Bachelors of Science in Business
Administration and and a minor in Economics from Humboldt State
University. She also attended graduate studies in International
Business at San Diego State University.
James R. Eckstaedt (53) currently serves as
Executive Vice President, Finance, Chief Financial Officer, and
Secretary of the Company. Mr. Eckstaedt joined the Company
in January 2008. Mr. Eckstaedt most recently held the
position of Executive Vice President and Chief Financial Officer
of Sage Software, Inc. from
2001-2007.
He also held the positions of Senior Vice President, Finance and
Chief Financial Officer from
1999-2001,
and Vice President, Finance and Chief Financial officer from
1997-1999.
Prior to Sage Software, Mr. Eckstaedt was the Senior Vice
President and Chief Financial Officer of the Cerplex Group,
Inc., a provider of outsourcing services for the computer
industry. Before that, he held various senior finance positions
at Western Digital Corporation. Mr. Eckstaedt started his
career as a staff auditor of Price Waterhouse and Co. He is a
graduate of Valparaiso University with a B.S. in Business
Administration, Accounting. He is a member of the California
Society of CPAs.
Peter Pace, General USMC (retired) (62) currently
serves as President and Chief Executive Officer of SM&A
Strategic Advisors and is a member of the Board of SM&A.
Mr. Pace served for more than 40 years in the Marine
Corps before retiring in October 2007 from the most senior
position in the United States Armed Forces. As Chairman of the
Joint Chiefs of Staff from 2005 until 2007, he
23
served as the principal military advisor to the President of the
United States, the Secretary of Defense, the National Security
Council, and the Homeland Security Council during a time of
tremendous change in the nations strategic focus. Prior to
becoming Chairman, he served as Vice Chairman of the Joint
Chiefs of Staff from October 2001 to September 2005.
Mr. Pace holds the distinction of being the first Marine to
have served in either of these positions.
Mr. Pace serves on the Board of Directors for the Marine
Corps Law Enforcement Foundation a charity that
provides scholarship bonds to children of Marines or Federal law
enforcement personnel who were killed while serving our country
at home or abroad. Mr. Pace also serves as Operating
Partner of Behrman Capital, a private equity investment firm,
Chairman of the Board of Behrman Capitals portfolio
company, Pelican Products, Inc., and a Director of portfolio
company ILC Industries, Inc., a defense electronics and
engineered softgoods provider.
A 1967 graduate of the United States Naval Academy,
Mr. Pace holds a Masters Degree in Business
Administration from George Washington University and attended
Harvard University for the Senior Executives in National and
International Security programs. Mr. Pace is also a
graduate of the Infantry Officers Advanced Course at
Fort Benning, GA.; the Marine Corps Command and Staff
College in Quantico, VA; and the National War College at
Ft. McNair, Washington, DC.
Kevin L. Reiners (47) currently serves as Executive
Vice President of Operations. In this capacity, Mr. Reiners
is responsible for all product development, product maintenance,
associate deployment, quality, and Information Technology within
SM&A. Mr. Reiners established the Program Services
product area and served as the SVP of Program Services from
October 2005 until August 2007. Prior to joining the Company,
Mr. Reiners served from August 2002 to July 2005 as Vice
President of Business Operations for Lockheed Martin Space
Systems Company. In this capacity, he was responsible for all
contracts, program controls, cost/schedule management, cost
estimating, Finance, Accounting, and compliance for all Lockheed
Martin Space Systems programs. From July 2000 to August 2002
Mr. Reiners served as Business Director for Lockheed Martin
Space Systems Company on the Terminal High Altitude Area Defense
(THAAD) program. Previous to this he served as Controller for
the Space and Strategic Missiles company, and the Program
Manager for the Lockheed/Martin Marietta merger related
Consolidation Program. This program executed the strategic plan
for the 1995 merger including the closure of East Windsor and
Valley Forge and the facilitization of Sunnyvale to accommodate
heritage Astrospace programs. Included within this merger
related activity, Mr. Reiners also served as the Program
Manager for the SAP system implementation project.
Mr. Reiners holds a Bachelor of Science degree in Finance
from San Diego State University.
24
COMPENSATION
DISCUSSION AND ANALYSIS
Certain information provided herein is provided in the limited
context of the Companys compensation programs. This
information should not be interpreted as information regarding
the management teams; expectations or any other guidance and
should not be relied upon by investors or analysts in
establishing future performance metrics. We specifically caution
investors not to apply this information to other contexts.
Overview
of Compensation Program
In the sections that follow, we will provide an overview and
analysis of our compensation program and policies, the material
compensation decisions we have made under those programs and
policies, and the material factors that we considered in making
those decisions. You will also find a series of tables
containing specific information about the compensation earned or
paid in 2007 to the following Executive Officers:
Current
Executive Officers
|
|
|
|
|
Cathy L. McCarthy, President and Chief Executive Officer
|
|
|
|
Kevin L. Reiners, Executive Vice President Operations
|
Former
Executive Officers
|
|
|
|
|
Steven S. Myers, Former Chairman and Former Chief Executive
Officer
|
|
|
|
|
|
Cynthia A. Davis, Former Chief Executive Officer and Former
Director
|
|
|
|
|
|
G. Timothy Bauman, Former Executive Vice President, Sales and
Marketing
|
|
|
|
|
|
Thomas A. Eide, Former Senior Vice President, Consulting
Operations
|
|
|
|
|
|
Steve D. Handy, Former Senior Vice President and Former Chief
Financial Officer
|
The discussion below is intended to help you understand the
detail information provided in those tables and put that
information into context within our overall compensation program.
Compensation
Philosophy and Objectives
The Companys compensation philosophy is to align executive
officer compensation decisions with the Companys desired
business direction, strategy and performance. The primary
objectives and priorities of the executive compensation program
are to:
|
|
|
|
|
Attract, retain and motivate highly qualified individuals;
|
|
|
|
Link executives incentive goals with the interests of the
Companys stockholders;
|
|
|
|
Emphasize variable compensation that is tied to the
Companys performance in an effort to generate and reward
superior individual performance; and
|
|
|
|
Support the Companys business plans and long-term goals.
|
Consistent with our compensation philosophy and objectives, we
consider many factors in determining appropriate compensation
for our Executive Officers, including:
|
|
|
|
|
the experience and career potential of each officer;
|
|
|
|
the competitive market for both short-term and long-term
compensation;
|
|
|
|
the success of the Company in achieving its financial and
performance goals which typically are based on revenue and net
income targets; and
|
|
|
|
the Companys need to obtain, retain and motivate highly
qualified individuals.
|
25
To guide in the implementation of our compensation philosophy,
our compensation program is designed to:
|
|
|
|
|
include equity grants that typically vest over multiple years to
align long-term employee interests with the interests of our
stockholders while effectively managing stockholder dilution;
|
|
|
|
provide a direct and meaningful link between the Companys
goals and individual achievement of pre-determined, objective
and well-defined goals; and
|
|
|
|
provide a competitive blend of short-term and long-term
compensation to provide meaningful incentives for individual
achievement.
|
Our total compensation packages may include the following
components:
|
|
|
|
|
Base salary;
|
|
|
|
Incentive Cash Award;
|
|
|
|
Long-Term Incentives;
|
|
|
|
Benefits and Perquisites; and
|
|
|
|
Post-Termination Benefits
|
Competitive
Market Review
Our market for experienced management is highly competitive. We
aim to attract and retain the most highly qualified executives
to manage each of our business functions. In doing so, we aim to
draw upon a pool of talent that is highly sought after by both
competitive consulting groups and large, established firms in
our clients industries. We believe we have competitive
advantages in our ability to offer significant upside potential
through long-term equity-based incentives. Nonetheless, we must
recognize market cash compensation levels and satisfy the day to
day financial requirements of our executives through competitive
base salaries and cash awards.
To assist us in establishing competitive compensation levels for
our executives, the Compensation Committee engaged
DolmatConnell, a nationally recognized compensation consulting
firm, to perform a study of the compensation of our senior
management and a selection of comparable companies that
generally recruit individuals to fill senior management
positions who are similar in skills and background to those we
recruit. Studies such as this typically include only the five
most highly compensated officers at each company for whom
compensation information is publicly disclosed. DolmatConnell
also provided us with data that was less company-specific to
assist in respect to establishing compensation at other levels
within our organization.
The overall results of this study provided us the starting point
for our analysis and review of Executive Compensation.
DolmatConnell worked directly with the Compensation Committee
and management to interpret results and to make certain specific
and general recommendations. DolmatConnell use the following
market references to compare our executive total compensation
practices and levels to those in the market:
|
|
|
|
|
Proxy data from 21 (listed below) of our publicly traded
competitors in the consulting and information technology
staffing industries with
50th percentile
total revenues of $168 million and market caps of
$159 million.
|
|
|
|
|
|
DolmatConnell Market Reference
Comparator Companies
|
|
|
|
|
|
|
Answerthink, Inc.
CRA International, Inc.
Diamond Management and Technology Consultants
Edgewater Technology, Inc.
ExlService Holdings
Exponent, Inc.
First Consulting Group, Inc.
|
|
GP Strategies Corporation
iGate Corporation
Inforte Corp.
LCC International, Inc.
National Technical Systems, Inc.
PDI, Inc.
Perficient, Inc.
|
|
RCM Technologies RCMT
StarTek, Inc.
TechTeam Global, Inc.
The Advisory Board Company
The Management Network Group, Inc.
Thomas Group, Inc.
TSR, Inc.
|
26
This section is intended to provide a framework within which to
understand the actual compensation awarded to, earned or held by
each Executive Officer during 2007, as reported in the
compensation tables and accompanying narrative sections of this
Proxy Statement.
Elements
of Executive Compensation
Ms. Davis compensation, as embodied in her employment
agreement, was based on the compensation philosophy described
above, an analysis of market data obtained in cooperation with
the executive search firm assisting the Compensation Committee,
and specific incentives intended to replace benefits that had
been earned by Ms. Davis at her previous employer but were
forfeited as a result of her departure. Ms. McCarthys
compensation, as embodied in her employment agreement, is based
on the compensation philosophy described above, market data
obtained from the DolmatConnell report and specific incentives
intended to compensate Ms. McCarthy for returning to the
Company after her retirement.
For other executives, based on competitive market information
and the Companys compensation philosophy and objectives,
the Chief Executive Officer submits her recommendations for
Executive Officer compensation for the upcoming fiscal year to
the Compensation Committee toward the end of the fiscal year.
The Compensation Committee reviews these recommendations and can
decide to accept or modify them. The Compensation Committee then
discusses its recommended proposal with the full Board at the
first meeting in the new fiscal year, and may further modify
targeted compensation based on input from the full Board. The
Companys Executive Officer compensation packages combine
and allocate cash and equity-based compensation taking into
account the role of each Executive Officer of the Company,
market practices, and the total value of all forms of
compensation including benefits and perquisites available to the
individual. Our total compensation packages include base salary
and annual awards, all paid in cash, as well as long-term
compensation in the form of stock options or restricted stock
awards, and other benefits and perquisites. The rationale,
design, reward process, and related information regarding the
components of compensation are described generally below.
The Company does not currently have any equity or other security
ownership policy that mandates ownership of certain amounts of
Common Stock by our Executive Officers. The Company has
arrangements with our Executive Officers, which provide for such
executives to receive certain payments and benefits if their
employment with the Company is terminated. These arrangements
are discussed in detail below. The Board has determined that
such payments and benefits are necessary in order to attract and
retain our Executive Officers.
Base
Salary
Base salaries, which are paid in cash, are provided as
compensation for day-to-day responsibilities and services to the
Company and are designed to meet the objective of attracting and
retaining the talent needed to run the business. Executive
salaries are reviewed annually. Other than the annual award
program described below, and the Long-Term Incentive
Compensation plan adopted in 2007, there are no profit-sharing
or deferred compensation programs.
For fiscal year 2007, the Compensation Committee reviewed
salaries recommended by the Companys Chief Executive
Officer for the Executive Officers, and recommended the base
salary of each Executive Officer on a
case-by-case
basis taking into account each individual officers
responsibilities and performance, the competitive market
information collected by the Compensation Committee and the
compensation objectives of the Company. For fiscal year 2007,
the Company referenced the data provided by the DolmatConnell
review, the relative seniority and level of responsibility of
the Companys Executive Officers as compared to the peer
group, the Companys historic compensation structure, and
other relevant information. The Compensation Committee approved
and recommended to the Board of Directors the following base
salaries for fiscal year 2007 for our named Executive Officers:
Current
Executive Officers
|
|
|
|
|
Ms. McCarthys base salary remained at $450,000 as set
by her employment agreement dated July 19, 2007.
|
|
|
|
Mr. Reiners base salary was increased by 25% to
$250,000 effective August, 3, 2007, reflecting a promotion and
by 20% effective December 31, 2007 reflecting a
redistribution of base salary and cash incentive award weighting.
|
27
Former
Executive Officers
|
|
|
|
|
Mr. Myers base salary remained at $500,000 through
his retirement date.
|
|
|
|
Ms. Davis base salary remained at $400,000 as set by
her employment agreement through her resignation date.
|
|
|
|
Mr. Baumans base salary remained at $275,000 through
his resignation date.
|
|
|
|
Mr. Eides base salary remained at $200,000 during his
2007 Executive Officer role.
|
|
|
|
Mr. Handys base salary remained at $200,000 through
his resignation date.
|
Additionally, after reviewing competitive market compensation
information and the performance of the Company and each
individual Executive Officer in fiscal year 2007, and based on
the recommendation of the Companys Chief Executive
Officer, the Compensation Committee did not approve or recommend
base salary increases for our named Executive Officers for
fiscal year 2008 as Ms. McCarthy entered into her new
employment agreement with a set base salary rate in July, 2007
and Mr. Reiners received increase in base in conjunction
with his promotion in August, 2007.
Incentive
Cash Award
While the Companys goal is long-term sustainable growth,
the Compensation Committee also chooses to provide annual
incentive cash awards to Executive Officer and other management
employees to reward them for individual performance and
achieving Company financial goals. The incentive cash award
arrangements are reflected in each Executive Officers
employment agreement or employment offer letter, and are set by
the Chief Executive Officer for other employees based on
financial and other targets discussed with and approved by the
Compensation Committee. The Compensation Committee reviews these
incentive cash award arrangements on an annual basis taking into
account the individuals level of responsibilities and
performance. The Compensation Committee also considers market
information and the annual awards and other incentives paid to
Executive Officers within the peer groups. The Compensation
Committee discusses the financial targets embodied in annual
executive incentive cash awards with the Companys Board
for its approval during the first quarter of a fiscal year, and
may modify them based on changes to the operating budget and
other factors, including the competitive market for qualified
personnel.
The Compensation Committee and Board on March 7, 2007 set
the following award targets for each Executive Officer as a
percentage of their respective fiscal year 2007 base salaries:
63% for Ms. Davis; 63% for Ms. McCarthy; 50% for
Mr. Handy; 82% for Mr. Bauman; 50% for Mr. Eide;
and 50% for Mr. Reiners. Subsequently,
Ms. McCarthys award target was set at 56% by her
employment agreement dated July 19, 2007 and
Mr. Reiners award target was set at 90% effective
with his promotion on August 3, 2007.
Ms. Aguirres award target was set at 50% as
established in her employment offer letter dated
September 17, 2007. Generally, higher award targets
represent a larger amount of compensation at risk for the
Executive Officer. Executive Officers with greater levels of
responsibility for and influence on achievement of corporate
goals have a larger portion of their compensation at risk and
also have an opportunity for larger reward with achievement of
those goals.
The Executive Officers performance goals for 2007 were
established by the Compensation Committee to be achievable by
each officer when performing at or above a performance level
that the Company believes would be expected of a similarly
situated officer of a competitive peer company. The amount of
the actual award for performance in fiscal year 2007 was based
solely on a combination of annual revenue and net income
targets, measured on a sliding scale and paid on a quarterly
basis. There were no discretionary or individual performance
elements to the calculation of awards.
As an example of the sliding scale calculation, if either the
revenue or net income target is missed by more than 20%, no
incentive payment will be awarded. Conversely, if revenue
and/or net
income targets are exceeded, the incentive payment may be higher
than the award target. The table that follows details the
percent of award target that each Executive Officer received in
2007.
28
|
|
|
|
2007 Executive Officer Incentive Cash Awards
|
2007 Plan Period
|
|
|
% of Award Target Payout
|
Q1
|
|
|
110%
|
|
Q2
|
|
|
122%
|
|
Q3
|
|
|
120%
|
|
Q4
|
|
|
No award achieved
|
|
Using the same approach for determining incentive cash award
arrangements in fiscal year 2008, as in fiscal year 2007, along
with the data from the DolmatConnell report, the Compensation
Committee and the Board on November 28, 2007 set the
following award targets for each Executive Officer as a
percentage of their respective fiscal year 2008 base salaries:
65% for Ms. McCarthy; 60% for Mr. Reiners; 50% for
Ms. Aguirre; and 55% for Mr. Eckstaedt.
The Compensation Committee typically selects one or two measures
at the beginning of the performance period that will focus the
participants, including the Executive Officers, on those
behaviors and short-term decisions that will drive sustainable
growth. When deciding what financial measures to use at the
start of a plan year, and the target level of achievement of
those measures, the Compensation Committee carefully considers
the state of the Companys business and what measures are
most likely to focus the Executive Officers, on making decisions
that deliver short-term results aligned with the Companys
long-term goals. The goals are generally projected after a
review of managements operating budget and forecast for
the coming fiscal year.
Financial performance is determined after the end of the fiscal
year based on actual business results versus these
pre-established business objectives. Payouts occurred on a
quarterly basis in 2007 and will be on an annual basis in 2008.
The final financial performance is reflected as a percentage
amount. For example, achieving target financial performance
would yield an award of 100% of the target amount set at the
beginning of the year, and poor performance, below 80% of the
target range, would result in no award.
In early 2008, the Compensation Committee set the minimum target
and maximum levels for each financial performance goal on an
individual basis. In 2008, the financial performance goals will
again be based on revenue and net income targets. New in 2008 is
the addition of individual performance goals as a portion of the
executive officers incentive award calculations. Financial
performance goals will be weighted at 70% and individual
performance goals will be weighted at 30% of the overall
incentive awards payments. The individual performance goals and
actual results to these goals are approved by the compensation
committee and reflect each executive officers strategic
initiatives for the plan year. For example, individual goals
include the successful introduction of new product offerings,
improvements to business systems and operations and increasing
the net flow of talent in the company.
Long-Term
Incentives
Stock Options. Based on the Companys
compensation philosophy and objectives, the Company intends to
pay a portion of the total compensation for our Executive
Officers in the form of long-term incentives through stock
options. Historically, this has been in the form of stock option
awards that vest over a defined period of employment, almost
always four years, with exercise prices equal to the market
price of the shares on the date of grant and which will be of no
value unless the market price of the Companys Common Stock
appreciates. The Company believes this arrangement best
encourages employee retention and long-term performance, and
aligns employee and stockholder interests. Stock options
typically have been granted to Executive Officers when the
Executive Officer first joins the Company, when management level
employees have been promoted, and annually as part of each
executives annual performance review.
The stockholders of the Company approved the 2007 Equity
Incentive Plan to replace the Second Amended and Restated Equity
Incentive Plan, which expired in October 2007. The Plan provides
the Board, through the Compensation Committee, the ability to
issue stock options, restricted stock, and other forms of stock
based compensation.
29
The Board has delegated to the Compensation Committee the
authority to grant stock and other equity awards including
awards to our Executive Officers. The Compensation Committee
believes that having pre-determined grant dates throughout the
year reduces the degree of subjectivity of option grant date
selection, provides greater transparency to its option granting
practices, and informs potential grantees of dates certain when
grants may occur. Accordingly, in 2007, the Compensation
Committee maintained the following general procedures relating
to the grant of stock options and other awards.
|
|
|
|
|
The Compensation Committee has delegated to the Chief Executive
Officer the power to grant stock options at fair market value of
up to 15,000 shares per person in accordance with the
Committees previously approved guidelines, and no more
than a total of 100,000 shares per annum. This provides the
Company with the flexibility to make grants to new hires and
promoted employees without convening the Compensation Committee.
|
|
|
|
All new employee equity grants and existing employee annual
performance-based equity grants exceeding the Compensation
Committees guidelines will be presented by management for
consideration by the Compensation Committee at each of the
quarterly regularly scheduled Committee meetings;
|
|
|
|
The Compensation Committee will consider managements
recommendations and determine, in its judgment, the appropriate
equity grants to be awarded to each employee of the Company with
reference to guidelines previously approved by the Compensation
Committee for the fiscal year;
|
|
|
|
The Compensation Committee will convene (including
telephonically or by written consent), to address urgent needs
of the Company in relation to stock-based compensation.
|
Equity
Award Grant Practices
The Compensation Committee annually reviews the stock-based
compensation provided to the Executive Officers to further the
Companys compensation philosophy and objectives to
attract, retain and motivate its Executive Officers. Toward the
end of each year the Chief Executive Officer submits her
recommendations for target equity awards for the Executive
Officers (excluding herself) for the following fiscal year to
the Compensation Committee, which may accept or modify her
recommendations. The Compensation Committee then reports to the
Board on its planned annual equity awards, and may modify its
final decisions based on input from the other Board members.
New hire and promotional awards for non-Executive Officers are
approved by the Chief Executive Officer (pursuant to applicable
equity award guidelines for each job position) under the
authority delegated to her by the Compensation Committee and are
typically effective 90 days after the date of hire or the
later of the effective date of the promotion or the Chief
Executive Officers approval.
All stock options are granted with an exercise price equal to
the closing price of Company Common Stock on the date of grant.
We have not engaged in the practice of granting discounted stock
options or backdating our stock options.
In determining the size of option awards for fiscal year 2007,
the Compensation Committee and the Board took into account a
number of standard compensation factors, as well as the
following special considerations:
|
|
|
|
|
the Companys commitments under employment contracts with
Executive Officers;
|
|
|
|
the Companys size, industry and growth rate; and
|
|
|
|
the competitive market for highly skilled talent.
|
The Compensation Committee determines when to grant stock
options to our Executive Officers based on a variety of factors
including performance of the individual officers and the
Company, volatility of the Companys stock price, and the
need of the Company to retain, motivate and promote the
Executive Officers.
During fiscal year 2007, the stock option grants were generally
determined in each Executive Officers employment agreement
or employment offer letter. The Compensation Committee granted
stock options to the Executive Officers as detailed in the
Grants of Plan-Based Awards Table later in this discussion. In
January, 2007,
30
the then current Executive Officers were issued an annual option
grant (exclusive of Mr. Myers). Ms. McCarthy received
the largest grant to reflect her scope of responsibility as
Chief Operating Officer and President and her ability to impact
future company performance. Mr. Bauman and Mr. Reiners
received slightly larger grants in comparison to Mr. Eide
and Mr. Handy in recognition of their broader strategic
responsibilities and impact on company performance.
Ms. Davis and Ms. McCarthy both were issued grants
upon their appointment to Chief Executive Officer as outlined in
their respective employment agreements. In August, 2007,
Mr. Reiners received an additional option grant in
conjunction with his promotion to Executive Vice President,
Operations with corresponding additional scope of responsibility
and strategic impact on company performance. Ms. Aguirre
was issued options as a result of her employment with the
Company. The grant level was determined by reviewing internal
equity and market data as provided by the DolmatConnell survey.
Performance Share Units. Based on the
Companys compensation philosophy and objectives, the
Company will pay a portion of the total compensation for
Executive Officers and certain other management employees in the
form of performance share units under the Companys
Long-Term Incentive Plan (LTIP). The LTIP, which was
adopted by the Compensation Committee on March 7, 2007,
will reward Executive Officers for achieving certain earnings
per share value of the Companys Common Stock over rolling
three-year periods. For the three-year period starting
January 1, 2008 and ending December 31, 2010, earnings
per share less than $0.54 will result in the Executive Officers
earning no award under the LTIP. The Compensation Committee
chose this measure as it believed it is a key metric for the
Companys growth model because it was determined to align
closely the interests of the Executive Officers with those of
the Companys stockholders. The Compensation Committee
believes growth in earnings per share has historically
correlated with the Companys share price. Under the LTIP
for 2008, in the event that the Company achieves earnings per
share of the Companys Common Stock as described in the
table below on or before December 31, 2010, the Executive
Officers will be granted the number of shares as mentioned in
the table that follows. Each Executive Officer participating in
the LTIP will be issued a restricted stock unit agreement
reserving the underlying shares to the Executive Officer, and
reflecting the criteria for receiving the performance share
units as described in the following table.
Earnings
Per Share of Companys Common Stock
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Between $0.78
|
|
|
Between $0.70
|
|
|
Between $0.61
|
|
|
|
$0.79 or Greater
|
|
|
and $0.71
|
|
|
and $0.62
|
|
|
and $0.54
|
|
|
|
Performance
|
|
|
Performance
|
|
|
Performance
|
|
|
Performance
|
|
Name
|
|
Share Units
|
|
|
Share Units
|
|
|
Share Units
|
|
|
Share Units
|
|
|
|
(shares)
|
|
|
(shares)
|
|
|
(shares)
|
|
|
(shares)
|
|
|
Aguirre, Anna L.
|
|
|
25,000
|
|
|
|
21,250
|
|
|
|
18,750
|
|
|
|
16,250
|
|
Eckstaedt, James R.
|
|
|
25,000
|
|
|
|
21,250
|
|
|
|
18,750
|
|
|
|
16,250
|
|
McCarthy, Cathy L.
|
|
|
75,000
|
|
|
|
63,750
|
|
|
|
56,250
|
|
|
|
48,750
|
|
Pace, Peter
|
|
|
50,000
|
|
|
|
42,500
|
|
|
|
37,500
|
|
|
|
32,500
|
|
Reiners, Kevin L.
|
|
|
40,000
|
|
|
|
34,000
|
|
|
|
30,000
|
|
|
|
26,000
|
|
The Compensation Committee developed the LTIP based on publicly
available information, and as part of the process of succession
planning during 2006. The Compensation Committee developed the
view that stock options alone were inadequate for the recruiting
of key personnel, including a potential successor Chief
Executive Officer, and as a means to reward the Executive
Officers for executing a long-term strategic plan, which the
Board viewed as necessary in light of business goals such as
diversification of the client base outside of the Aerospace and
Defense area, reduced concentration risk in the form
of decreased reliance on the largest competitive bids and
program services assignments for the Companys revenue, and
a long-term view towards evaluating acquisition opportunities.
The LTIP combined with existing annual performance-based cash
awards and annual stock-based awards, is believed by the
Compensation Committee to reflect the general approach to
executive compensation in the Companys peer group as
reported in the DolmatConnell survey.
Employee Stock Purchase Plan. In order to
provide employees at all levels with greater incentive to
contribute to the Companys success, the Company provides
employees, including the Executive Officers , with the
opportunity to purchase discounted shares of Common Stock under
the Companys Amended and Restated Employee Stock Purchase
Plan, which is intended to be a qualified plan under
Section 423 of the Internal Revenue Code. Under this plan,
eligible employees may authorize payroll deductions of up to 15%
of their biweekly base pay. The amounts are
31
accumulated and, at the end of each quarter are used to purchase
shares of the Companys Common Stock at 95% of the fair
market value of the Companys Common Stock on the Purchase
Date (as defined in the plan).
Benefits
The Company offers additional benefits designed to be
competitive with overall market practices, and to attract and
retain the talent needed by the Company.
The Company provides a full range of benefits to its Executive
Officers, including standard medical, dental and disability
coverage available to employees generally.
The Company also sponsors a 401(k) Retirement Savings Plan
(401(k) Plan) that allows employees to make plan
contributions on a pre-tax basis. Employees may enroll to a
maximum deferral limit of 20% of covered compensation into the
401(k) Plan. During 2007, the Company matched employee
contributions at 100% of the first 2.5% of salary deferrals for
a total of 2.5% of eligible compensation.
The Company does not maintain a defined benefit supplemental
retirement savings plan or a pension plan for the Executive
Officers.
Perquisites
The Company provides the following perquisites to its Executive
Officers in an effort to remain competitive with similarly
situated companies.
Exec-U-Care Coverage. The Executive Officers
are eligible for a maximum medical benefit of $100,000 a year
through the Exec-U-Care program. During 2007, six of the
Executive Officers participated in this program. Exec-U-Care
supplements an Executive Officers basic health plan by
reimbursing annual expenses not covered under the basic medical
and dental benefit plan that are available on a Company-wide
basis. Examples of such expenses include deductibles,
co-insurance amounts, special health equipment and chiropractic
care. The Executive Officer is entitled to receive reimbursement
for documented medical expenses of the Executive Officer and
dependents.
Club Fees & Entertaining. The
Company reimburses or pays for Executive Officers for entrance
or initiation fees and monthly club dues. Club memberships are
primarily used for business meetings or entertainment purposes.
Only three of the Executive Officers participated with the club
membership perquisite in 2007.
Temporary Housing Allowance. The Company
provides a temporary housing allowance in the Orange County area
for one of its Executive Officers who maintain a permanent
residence outside of California.
Automobile Expense. In lieu of an automobile
allowance, the Company leases an automobile for the Chief
Executive Officers use. In addition, the reasonable cost
of annual insurance, fuel, maintenance, cleaning and repair is
borne by the Company. For Executive Officers that reside outside
the local headquarters vicinity, the Company reimburses mileage
expense for travel to and from the headquarter location.
Life Insurance. The Executive Officers
are entitled to receive reimbursement for documented premium
expenses for life insurance coverage obtained on Executive
Officers life, up to a maximum of two thousand dollars
($2,000) of premium cost per year.
401(k) Matching Contribution. The Executive
Officers are eligible to participate in the Companys
401(k) Plan thereby entitling the Executive Officer to the
Companys matching contribution.
Change of
Control Agreements
The Company has entered into Change of Control agreements with
the Executive Officers which become effective only upon certain
Change of Control events, which are defined in the agreements.
These Change of Control agreements are meant to induce the
continued employment of the Executive Officers and other key
employees and to enhance their loyalty and performance by
providing them with certain compensation and benefits in the
event a Change of Control of the Company occurs. The
Compensation Committee determined that the Executive Officers
should have the protection of receiving severance if their
employment is terminated within 24 months following a
Change of Control event to ensure that the Executive Officers
would be focused on
32
enhancing the long term value of the Company through actions
that might include a transaction that would be in the best
interest of the Companys stockholders rather than focused
on their potential loss of employment as a result of that
transaction. The term of these agreements and the amounts
payable upon the occurrence of the Change of Control events is
described in more detail under the section entitled
Potential Payments Upon Termination or Change of
Control. The Board reserves the right to extend Change of
Control benefits to other Executive Officers to the extent
deemed necessary for the Companys business.
Employment
Agreements
The Company typically does not enter into employment agreements
with its executives. However, it is party to agreements with its
President and Chief Executive Officer, Cathy L. McCarthy and
with the President and Chief Executive Officer of SM&A
Strategic Advisors, Inc., Peter Pace, General USMC (retired). In
addition, the Company was party to an employment agreement with
its former Chief Executive Officer, Ms. Davis. The Company
entered into these agreements because it believes that it is
important to secure the leadership of these key management
individuals. These agreements, which are described in more
detail under the sections entitled Employment Agreement
with Ms. McCarthy, Employment Agreement with
Mr. Pace, and Employment Agreement with
Ms. Davis of this Proxy Statement, set forth the base
salaries, incentive opportunities, stock based compensation and
benefits and perquisites payable to Ms. McCarthy,
Mr. Pace, and Ms. Davis. The Company has provided its
other Executive Officers with letters outlining benefits and
perquisites to which they are entitled, and those benefits
(including Change of Control and severance benefits) are
described herein, including under Potential Payments Upon
Termination or Change of Control.
Employment
Agreement with Ms. McCarthy
The Company and Ms. McCarthy are party to an employment
agreement, as amended, providing for an annual base salary of
$450,000 and an annual incentive award with a target annual
payout equal to 65% of her then current annual base salary
pursuant to a plan adopted by the Board. Pursuant to that
agreement, Ms. McCarthy also received an annual stock
option grant for the purchase of 200,000 shares of the
Companys Common Stock at an exercise price equal to the
fair market value of the Companys Common Stock on the date
of grant. These options vest and become exercisable in 16
quarterly installments. Ms. McCarthy and her dependents are
entitled to reimbursement for documented medical expenses not
otherwise covered by the Companys medical plan and
long-term care and disability insurance coverage and she
receives other benefits as more fully set forth in this
discussion. Ms. McCarthy may not compete with the Company
during the term of the agreement, and may not solicit any
employees to leave their employment with the Company for a
period of two years following the expiration of the term of
the agreement. Ms. McCarthy has an obligation to keep
confidential and protect the trade secrets and other
confidential information of the Company and its customers.
Ms. McCarthys employment agreement has a term
expiring July 18, 2009.
Employment
Agreement with Peter Pace, General USMC (retired)
The Company and Mr. Pace are party to an employment
agreement. Under the terms of this agreement, Mr. Pace is
not obligated to work full time for the Company and may serve on
the boards of, or as a consultant to, businesses that do not
compete with the Company as long as he informs the Company of
those outside activities and those outside activities do not
materially interfere with the performance of his duties to the
Company. The agreement provides for an annual base salary of
$300,000. In addition, Mr. Pace is entitled to an incentive
bonus equal to two percent (2%) of all revenue in excess of
$12,000,000 earned by the Company from all Qualifying Projects
during the Qualifying Periods applicable to such Qualifying
Projects (as defined in the agreement). Mr. Pace also
received a one-time cash Signing Bonus in the amount of $240,000
and was granted an option on the Effective Date of his agreement
to purchase 100,000 shares of Common Stock of the Company,
issued pursuant to the Companys 2007 Equity Incentive
Plan. The exercise price of the stock option is equal to the
fair market value of such Common Stock on the date of grant and
25% of the option was deemed vested (i.e., exercisable) as of
the Effective Date, with the remainder of such option to vest in
three equal annual installments, commencing on the first
anniversary of the Effective Date. Mr. Pace was included in
the 2008 LTIP that covers calendar years 2008, 2009 and
33
2010. The target incentive for Mr. Pace under this plan is
50,000 shares of Common Stock of the Company, but the
actual number of shares granted will be in accordance with the
performance scale described above in this document.
Mr. Pace and his dependents are entitled to reimbursement
for documented medical expenses not otherwise covered by the
Companys medical plan and disability insurance coverage
and he receives other benefits as afforded other Executives and
set forth elsewhere in this discussion. Mr. Pace may not
compete with the Company during the term of the agreement, and
may not solicit any employees to leave their employment with the
Company for a period of two years following the expiration of
the term of the agreement. Mr. Pace has an obligation to
keep confidential and protect the trade secrets and other
confidential information of the Company and its customers.
The Company may terminate the agreement at any time for
Cause (as defined therein), or without
Cause on 30 days prior notice.
Mr. Pace may resign at any time on 30 days prior
notice. If Mr. Pace is terminated without
Cause, or if he resigns for Good Reason
(as defined in the agreement), he will receive his base salary
and health and welfare benefits, for the shorter of three
months, the commencement of full time employment or in the case
of any listed violations of terms of the agreement, and he will
receive the pro rata portion of any incentive bonus which has
been earned through the date of his termination. If
Mr. Pace is terminated without Cause or resigns
for Good Reason within twelve months following a
Change in Control of the Company, Mr. Pace will
receive (i) a lump sum payment equal to his annual base
salary for the longer of the remainder of the term of the
agreement or 18 months, and (ii) health and welfare
benefits for the longer of the remainder of the term of the
agreement or 18 months.
Mr. Paces employment agreement has a term expiring
January 16, 2010.
Employment
Agreement with Ms. Davis
The Company and Ms. Davis were party to an employment
agreement providing for an annual base salary of $400,000 per
annum and participation in the Companys incentive
compensation program with an opportunity to earn $250,000 in
award compensation. In addition, on her first day of employment,
as compensation for relinquishing benefits at her previous
employer, Ms. Davis received 200,000 SM&A stock
options, with an exercise price of $7.14 per share, a grant of
7,000 shares of SM&A Common Stock and a $50,000
payment. On July 18, 2007, Ms. Davis employment
was terminated and she entered into a separation agreement with
the Company that is discussed fully under the section titled
Separation Agreement with Ms. Davis.
Tax
Considerations
Our Compensation Committee has reviewed the impact of tax and
accounting treatment on the various components of our executive
compensation program. We believe that achieving the compensation
objectives discussed above is more important than the benefit of
tax deductibility and our executive officer compensation
programs may, from time to time, limit the tax deductibility of
compensation. Nevertheless, when not inconsistent with these
objectives, we endeavor to award compensation that will be
deductible for income tax purposes. Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to
publicly-held companies for compensation paid to
covered executive officers, to the extent that
compensation paid to such an officer exceeds $1 million
during the taxable year. No material portion of the compensation
paid to our covered executive officers for the year ended
December 31, 2007 that would be taken into account in
determining a Section 162(m) limitation exceeded the
$1 million limit. The Companys employee stock option
plans and option grants to executives, as well as the LTIP plan
adopted in 2007, have been structured so that any compensation
deemed paid to an executive officer in connection with the
exercise of options with an exercise price equal to the fair
market value of the shares on the grant date will qualify as
performance-based compensation that will not be subject to the
$1 million limitation. The Compensation Committee does not
expect to take any action at this time to modify cash
compensation payable to the executive officers that would result
in the application of Section 162(m).
Accounting
Considerations
With the adoption of FAS 123(R), we do not expect
accounting treatment of differing forms of equity awards to vary
significantly and, therefore, accounting treatment is not
expected to have a material effect on the selection of forms of
compensation.
34
Table
1. Summary Compensation Table
The following table shows, for the fiscal year ended
December 31, 2007 and December 31, 2006, the annual
compensation paid to or earned by the Current and Former
Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
Option
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Earned
|
|
Awards
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
(1)
|
|
(2)
|
|
|
|
Bauman, G. Timothy
Former Executive Vice President, Sales and Marketing
|
|
|
2007
|
|
|
|
209,423
|
|
|
|
197,438
|
|
|
|
(20,184
|
)
|
|
|
9,272
|
|
|
|
395,949
|
|
|
|
|
2006
|
|
|
|
275,000
|
|
|
|
205,364
|
|
|
|
|
|
|
|
37,499
|
|
|
|
517,863
|
|
Davis, Cynthia A.
Former Chief Executive Officer
|
|
|
2007
|
|
|
|
567,308
|
(3)
|
|
|
126,250
|
|
|
|
33,449
|
|
|
|
28,729
|
|
|
|
755,736
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eide, Thomas A.
Former Senior Vice President, Consulting Operations
|
|
|
2007
|
|
|
|
200,000
|
|
|
|
87,750
|
|
|
|
136,276
|
|
|
|
25,158
|
|
|
|
449,184
|
|
|
|
|
2006
|
|
|
|
200,000
|
|
|
|
83,127
|
|
|
|
93,351
|
|
|
|
26,707
|
|
|
|
403,185
|
|
Handy, Steve D.
Former Senior Vice President, Former Chief Financial Officer
|
|
|
2007
|
|
|
|
173,077
|
|
|
|
87,750
|
|
|
|
(8,069
|
)
|
|
|
7,594
|
|
|
|
260,352
|
|
|
|
|
2006
|
|
|
|
195,846
|
|
|
|
83,127
|
|
|
|
40,412
|
|
|
|
14,543
|
|
|
|
333,928
|
|
Hart, Daniel R.
Former Interim Chief Financial Officer Vice President, Controller
|
|
|
2007
|
|
|
|
161,092
|
|
|
|
42,001
|
|
|
|
25,076
|
|
|
|
4,027
|
|
|
|
232,196
|
|
|
|
|
2006
|
|
|
|
123,000
|
|
|
|
23,724
|
|
|
|
20,206
|
|
|
|
2,460
|
|
|
|
169,390
|
|
McCarthy, Cathy L.
President and Chief Executive Officer
|
|
|
2007
|
|
|
|
416,348
|
|
|
|
219,375
|
|
|
|
569,484
|
|
|
|
18,693
|
|
|
|
1,223,900
|
|
|
|
|
2006
|
|
|
|
400,000
|
|
|
|
144,629
|
|
|
|
482,550
|
|
|
|
28,286
|
|
|
|
1,055,465
|
|
Myers, Steven S.
Former Chief Executive Officer and Former Chairman of the Board
|
|
|
2007
|
|
|
|
615,385
|
|
|
|
|
|
|
|
|
|
|
|
3,605
|
|
|
|
618,990
|
|
|
|
|
2006
|
|
|
|
500,000
|
|
|
|
261,441
|
|
|
|
|
|
|
|
218,386
|
|
|
|
979,827
|
|
Reiners, Kevin L.
Executive Vice President, Operations
|
|
|
2007
|
|
|
|
220,384
|
|
|
|
112,039
|
|
|
|
175,479
|
|
|
|
5,089
|
|
|
|
512,991
|
|
|
|
|
2006
|
|
|
|
203,311
|
|
|
|
112,374
|
|
|
|
|
|
|
|
3,784
|
|
|
|
319,469
|
|
Footnotes to
Table 1-Summary Compensation Table:
|
|
|
(1) |
|
The aggregate grant date fair value for options awards. |
|
(2) |
|
Perquisites within the Company are described in further detail
under the section entitled Compensation Discussion and
Analysis Elements of Executive
Compensation Perquisites. Additional detail
regarding the components of this aggregate amount is provided in
the following table for each Executive Officer. |
|
|
|
(3) |
|
The Company made a separation payment to Ms. Davis of
$445,000 during 2007 pursuant to the terms of the Separation
Agreement entered into on July 18, 2007. |
|
|
|
(4) |
|
The Company made a retirement payment to Mr. Myers of
$500,000 during the second quarter of 2007 pursuant to the terms
of a Retirement Agreement dated March 9, 2007. |
35
Amount of
All Other Compensation for 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.T.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bauman
|
|
|
C. Davis
|
|
|
T. Eide
|
|
|
S. Handy
|
|
|
D. Hart
|
|
|
S. Myers
|
|
|
C. McCarthy
|
|
|
K. Reiners
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Exec-U-Care
|
|
|
7,157
|
|
|
|
|
|
|
|
1,545
|
|
|
|
5,020
|
|
|
|
|
|
|
|
720
|
|
|
|
8,593
|
|
|
|
60
|
|
Club Fees & Entertaining
|
|
|
|
|
|
|
7,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,475
|
|
|
|
|
|
Housing Allowance
|
|
|
|
|
|
|
|
|
|
|
18,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Premium Reimbursement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Matching Contributions
|
|
|
2,115
|
|
|
|
1,154
|
|
|
|
5,000
|
|
|
|
|
|
|
|
4,027
|
|
|
|
2,885
|
|
|
|
5,625
|
|
|
|
5,029
|
|
Other
|
|
|
|
|
|
|
20,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,272
|
|
|
|
28,729
|
|
|
|
25,158
|
|
|
|
7,594
|
|
|
|
4,027
|
|
|
|
3,605
|
|
|
|
18,693
|
|
|
|
5,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Company directly paid Ms. Davis legal counsel for
her fees incurred resulting from her separation from the Company. |
Table
2. Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
Estimated 2008 Payouts
|
|
|
|
|
|
Stock Awards:
|
|
|
|
|
|
|
|
|
Under Non-equity
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Exercise
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
Under Equity
|
|
|
|
Securities
|
|
or Base
|
|
|
|
|
|
|
Awards
|
|
|
|
|
|
Incentive Plan
|
|
|
|
Underlying
|
|
Price of
|
|
|
|
|
Threshold
|
|
Target
|
|
Max
|
|
|
|
Awards
|
|
Max
|
|
Options
|
|
Option
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
Threshold
|
|
Target
|
|
(#)
|
|
(#)
|
|
Awards
|
Name
|
|
Grant Date
|
|
(1)
|
|
(2)
|
|
(3)
|
|
(#)
|
|
(#)
|
|
(4)
|
|
(5)
|
|
($/Sh)
|
|
Bauman, G. Timothy
|
|
|
01/11/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
6.05
|
|
Davis, Cynthia A.
|
|
|
04/02/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
187,500
|
|
|
|
7.14
|
|
Eide, Thomas A.
|
|
|
01/11/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
6.05
|
|
Handy, Steve D.
|
|
|
01/11/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
6.05
|
|
Hart, Daniel R.
|
|
|
03/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
7.07
|
|
McCarthy, Cathy L.
|
|
|
01/03/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
81,250
|
|
|
|
5.93
|
|
|
|
|
07/19/07
|
|
|
|
87,750
|
|
|
|
292,500
|
|
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
187,500
|
|
|
|
7.29
|
|
Reiners, Kevin L.
|
|
|
01/11/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
6.05
|
|
|
|
|
08/03/07
|
|
|
|
54,000
|
|
|
|
180,000
|
|
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
7.00
|
|
|
|
|
(1) |
|
This represents the lowest level of payout for Incentive Cash
Awards and reflects the 30% portion of the target award that can
be achieved through achievement of individual performance goals. |
|
(2) |
|
This represents the target payout for Incentive Cash Awards and
reflects 100% payout of both the individual and financial
performance goals. |
|
(3) |
|
The Incentive Cash Awards do not have maximum payout limits. |
|
(4) |
|
The maximum number represents options that vested during 2007. |
|
(5) |
|
This represents options granted during the year that were not
performance based and did not vest during 2007. |
36
Table
3. Outstanding Equity Awards at Fiscal Year-End
Table
The following table sets forth information concerning
exercisable and unexercisable stock options for the Executive
Officers named in the Summary Compensation Table as of
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Exercisable
|
|
Unexercisable
|
|
Exercise
|
|
Expiration
|
Name
|
|
Options (#)
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Bauman, G. Timothy
|
|
|
45,000
|
|
|
|
|
|
|
$
|
7.04
|
|
|
|
01/01/08
|
|
Eide, Thomas A.
|
|
|
250
|
|
|
|
|
|
|
$
|
2.50
|
|
|
|
01/02/12
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
11.76
|
|
|
|
01/05/14
|
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
$
|
8.75
|
|
|
|
08/01/15
|
|
|
|
|
5,775
|
|
|
|
17,325
|
|
|
$
|
7.11
|
|
|
|
02/15/16
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
6.05
|
|
|
|
01/11/17
|
|
Handy, Steve D.
|
|
|
2,500
|
|
|
|
|
|
|
$
|
7.11
|
|
|
|
02/07/08
|
|
Hart, Daniel R.
|
|
|
3,750
|
|
|
|
1,250
|
|
|
$
|
8.31
|
|
|
|
06/21/14
|
|
|
|
|
1,250
|
|
|
|
3,750
|
|
|
$
|
7.11
|
|
|
|
02/15/16
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
7.07
|
|
|
|
03/28/17
|
|
McCarthy, Cathy L.
|
|
|
7,250
|
|
|
|
|
|
|
$
|
1.53
|
|
|
|
09/30/10
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
3.04
|
|
|
|
09/30/12
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
11.53
|
|
|
|
09/30/13
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
11.82
|
|
|
|
01/02/14
|
|
|
|
|
68,750
|
|
|
|
31,250
|
|
|
$
|
8.45
|
|
|
|
01/03/15
|
|
|
|
|
43,750
|
|
|
|
56,250
|
|
|
$
|
8.49
|
|
|
|
01/03/16
|
|
|
|
|
12,500
|
|
|
|
81,250
|
|
|
$
|
5.93
|
|
|
|
01/03/17
|
|
|
|
|
12,500
|
|
|
|
187,500
|
|
|
$
|
7.29
|
|
|
|
07/19/17
|
|
Reiners, Kevin L.
|
|
|
15,000
|
|
|
|
15,000
|
|
|
$
|
8.39
|
|
|
|
12/27/15
|
|
|
|
|
|
|
|
|
60,000
|
|
|
$
|
6.05
|
|
|
|
01/11/17
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
7.00
|
|
|
|
08/03/17
|
|
As of December 31, 2007, there were no stock awards issued
to any Executive Officer.
Table
4: Option Exercises and Stock Vested Table
The following table presents information regarding the exercise
of stock options by Executive Officers during 2007. There were
no performance shares to the Executive Officers during 2007.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
Shares
|
|
Value Realized
|
|
|
Acquired on Exercise
|
|
on Exercise
|
|
|
(#)
|
|
($)
|
|
Handy, Steve D.
|
|
|
18,750
|
|
|
|
60,848
|
|
McCarthy, Cathy L.
|
|
|
75,800
|
|
|
|
382,838
|
|
Employment
Agreement with Ms. McCarthy
The Company has entered into agreements with its Executive
Officers as noted that provide certain payments and benefits
upon termination of such officers employment.
Payments to Chief Executive Officer Upon Termination Without
Cause or Resignation For Good Reason
The Company may terminate Ms. McCarthys agreement at
any time for Cause (as defined therein), or without
Cause on 30 days prior notice.
Ms. McCarthy also may resign at any time on
30 days prior notice. If Ms. McCarthy is
terminated without Cause, or if she resigns for
Good Reason (each as defined in the agreement), she
will receive her base salary, and health and welfare benefits,
for the shorter of six months or until the expiration of the
term of the agreement, and she will receive the pro rata portion
of any incentive award which has been earned through the date of
her termination. If Ms. McCarthy is terminated without
Cause or resigns for Good Reason within
twelve months following a Change in Control of the
Company, Ms. McCarthy will receive
37
(i) a lump sum payment equal to her annual base salary for
the shorter of the remainder of the term of the agreement or six
months, and (ii) health and welfare benefits for the
shorter of the remainder of the term of the agreement, the date
which is 18 months from the date of the Change in
Control, or the date which is six months from the date of
termination.
Payments Upon Termination Due to Death or Disability
The Company provides Ms. McCarthy with continuation of
salary following death or disability for up to six months, or
the expiration of the applicable agreement term, whichever
occurs first. In the case of disability, health and life
insurance will be provided (or premiums reimbursed) for the
period.
Benefits
Letters
The Company entered into a benefits letter with each of the
other Executive Officers which requires the Company to provide
the following payments and benefits upon termination of such
officers employment as follows.
Payments
Upon Termination Without Cause or Resignation For Good
Reason
In the event that, absent a Change of Control, the
Company terminates any other Executive Officers employment
without cause or any Executive Officer resigns for good reason
and the officer signs a waiver and release in a form that meets
the Companys approval, the officer will be entitled to
(i) a payment equal to twelve times the sum of the
Executive Officers then current monthly base salary plus
1/12
annual target incentive compensation in accordance with the
Companys customary payroll practices and (ii) the
same health and life insurance benefits he or she was then
currently receiving until twelve calendar months after the
effective date of the termination or, if the policies for such
benefits do not permit continued participation in such plan, the
monthly premium or premiums for such discontinued health
and/or life
insurance.
The continuation of health and life insurance benefits will
cease on the date upon which an Executive Officer becomes
employed on a full-time basis (including to self-employment, but
only if the Executive Officer holds himself or herself out to
the public as being a self-employed consultant or other
businessman) or the date upon which the Executive Officer
violates any provision of the Companys Proprietary
Information and Invention Assignment Agreement or the
Companys Business Conduct and Ethics Code. Cause includes
but is not limited to the following: (i) refusal or failure
to carry out any reasonable direction from the Company;
(ii) demonstrated negligence or misconduct in the execution
of the Executive Officers assigned duties;
(iii) habitual non-performance or incompetent performance
of an Executive Officers duties; (iv) conviction of a
felony or other serious crime involving moral turpitude;
(v) engaging in fraud, embezzlement or other illegal
conduct; (vi) a violation of the Companys Proprietary
Information and Invention Assignment Agreement or the
Companys Business Conduct and Ethics Code;
(vii) failure or refusal to materially perform the
Executive Officers duties and responsibilities; or
(viii) material violation of any material written policy or
procedure of the Company. Good reason is defined as any of the
following: (x) the assignment of duties inconsistent with
the Executive Officers then current position, duties, or
responsibilities which is sufficient to constitute a diminution
of status with the Company; (y) a significant reduction by
the Company in the Executive Officers base salary then in
effect unless the reduction is the result of an across the board
reduction in salary of all Executive Officers; or (z) any
failure by the Company to obtain the assumption of the terms of
the employment agreement that contains these provisions by a
successor or assignee of the Company, if the successor or
assignee asserts that it is not bound by those provisions.
Payments
Upon Change of Control
In the event of a Change of Control of the Company, each
Executive Officer (except Ms. McCarthy with respect to the
vesting of unvested stock options as described below), if the
Executive Officer is terminated within 24 months of the
Change of Control for any reason (including non-continuation of
his or her position with the acquirer), the Executive Officer
will be entitled to (i) a payment equal to 18 times the
Executive Officers then current monthly base salary plus
1/12
annual target incentive compensation in accordance with the
Companys customary payroll practices and (ii) the
same health and life insurance benefits he or she was then
currently receiving until 18 calendar months after the effective
date of the termination or, if the policies for such benefits do
38
not permit continued participation in such plan, the monthly
premium or premiums for such discontinued health
and/or life
insurance. Under these arrangements, date termination is defined
as the earliest date on which any of the following occurs:
(i) a merger or consolidation in which the shares of the
Company outstanding immediately prior to such merger or
consolidation (or the securities into which they are converted
by virtue of such merger or consolidation) do not represent at
least 50% of the voting power of the surviving corporation or
its parent or (ii) a sale, lease or other transfer of all
or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, or (iii) any transaction in
which the Company ceases to be a publicly traded company.
The table that follows reflects the estimated amount of
compensation that would be payable to (i) Ms. McCarthy
under the terms of her employment agreement in effect on
December 31, 2007 and (ii) each of the other Executive
Officers under the terms of the Companys severance pay
policy, in each case, in the event of termination of each such
Executive Officers employment under any one of the follow
scenarios effective as of December 31, 2007:
|
|
|
|
|
Without Cause by the Company or with Good Reason by the
Executive Officer;
|
|
|
|
Upon the death or disability of the Executive Officer;
|
|
|
|
Change of Control with no termination of employment; and
|
|
|
|
Without Cause by the Company or with Good Reason by the
Executive Officer in connection with a Change of Control of the
Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change of
|
|
|
Termination
|
|
|
|
|
|
Without Cause
|
|
|
Due to
|
|
|
Control; No
|
|
|
Following
|
|
|
|
|
|
or
|
|
|
Death or
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
For Good Reason
|
|
|
Disability
|
|
|
(1)
|
|
|
Control(2)
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
McCarthy, Cathy L.
|
|
Base Salary
|
|
|
225,000
|
|
|
|
225,000
|
|
|
|
|
|
|
|
225,000
|
|
|
|
Cash Incentive
|
|
|
146,750
|
|
|
|
146,750
|
|
|
|
|
|
|
|
146,750
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Benefit Continuation
|
|
|
7,990
|
|
|
|
7,990
|
|
|
|
|
|
|
|
7,990
|
|
Reiners, Kevin L.
|
|
Base Salary
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
Cash Incentive
|
|
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
270,000
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Benefit Continuation
|
|
|
2,123
|
|
|
|
|
|
|
|
|
|
|
|
3,184
|
|
Aguirre, Anna L.
|
|
Base Salary
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
Cash Incentive
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Benefit Continuation
|
|
|
3,827
|
|
|
|
|
|
|
|
|
|
|
|
5,740
|
|
|
|
|
(1) |
|
Assumes all stock options are assumed by the acquirer as
permitted under the Second Amended and Restated Equity Incentive
Plan and the 2007 Equity Incentive Plan. |
|
|
|
(2) |
|
Assumes employment is terminated without cause by the acquirer
within the period specified in the applicable agreement or
benefit letter. |
Payments
to Former Named Executive Officers
The following table represents the actual payments to former
Executive Officers in 2007.
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
Beyond Statutorily
|
|
|
|
|
|
Required Payments
|
|
|
|
Termination Reason
|
|
($)
|
|
|
Bauman, G. Timothy
|
|
Resignation
|
|
|
none
|
|
Davis, Cynthia A.
|
|
Termination upon mutual agreement
|
|
|
559,553
|
|
Handy, Steve D.
|
|
Resignation
|
|
|
none
|
|
39
Separation
Agreement with Ms. Davis
On July 18, 2007, the Company entered into a Separation
Agreement with Cynthia A. Davis, who resigned as Chief Executive
Officer and a member of the Board on July 18, 2007. The
Company made a separation payment to Ms. Davis of $455,000
in the third quarter of 2007 and reimbursed Ms. Davis for
$20,000 of attorneys fees. In addition, the Company will
pay for the continuation of Ms. Davis health benefits
through August 1, 2008. She also received her incentive
cash award earned for Q2 2007. The Company and Ms. Davis
agreed to a mutual release of claims, provided that the
Companys indemnification obligations and certain
restrictive covenants of Ms. Davis employment
agreement remain in force following her termination.
Director
Compensation
The President and Chief Executive Officer of SM&A and
SM&A Strategic Advisors, as Board members, receive no
additional compensation other than their normal salary, for
serving on the Board.
Non-employee directors receive the following annual cash
and/or stock
compensation as approved by the Board and as provided in
Amendment 2 dated March 7, 2007 of the 2005 Director
Compensation Plan.
DIRECTOR
COMPENSATION PLAN
Effective
April 1, 2007
|
|
|
|
|
|
|
Type of Compensation
|
|
Cash
|
|
Annual Retainer
|
|
$
|
20,000
|
(1)
|
|
|
Independent Chairman of the Board Retainer
|
|
$
|
40,000
|
(2)
|
|
|
Additional Retainer for Audit Committee Chair
|
|
$
|
10,000
|
(3)
|
|
|
Additional Retainer for Compensation Committee Chair
|
|
$
|
5,000
|
(4)
|
|
|
Additional Retainer for Governance & Nominating
Committee Chair
|
|
$
|
5,000
|
(4)
|
|
|
Board Meeting Attendance Fee
|
|
$
|
1,500
|
(5)
|
|
|
Committee Meeting Attendance Fee
|
|
$
|
750
|
(6)
|
|
|
Telephonic Meeting Attendance Fee
|
|
$
|
500
|
(7)
|
|
|
Stock Options
|
|
|
|
|
|
|
Stock Options-In Lieu of Retainer Fee(s)
|
|
$
|
|
|
|
Vested 100% on Date of Grant(8)
|
Stock Options-All Existing Non-Employee Directors
|
|
$
|
|
|
|
Options Must Vest 100%(9)
|
Stock Options-All New Non-Employee Directors
|
|
$
|
|
|
|
Option for 50,000 Shares(10)
|
Stock Options-Annual Membership Anniversary Grant
|
|
$
|
|
|
|
Option for 12,000 Shares(11)
|
Footnotes to Director Compensation Table:
|
|
|
(1) |
|
Paid to all non-employee directors (except the Independent
Chairman) in quarterly increments as follows: (a) $5,000
paid in shares of Company Common Stock on January 1;
(b) $5,000 paid in cash on April 1; (c) $5,000 paid in
cash on July 1; (d) $5,000 paid in cash on October 1.
If the payment date is a holiday or weekend, the next open
business or market trading day will apply. |
|
(2) |
|
Paid in quarterly increments as follows: (a) $10,000 paid
in shares of Company Common Stock on January 1; (b) $10,000
paid in cash on April 1; (c) $10,000 paid in cash on July
1; (d) $10,000 paid in cash on October 1. If the
payment date is a holiday or weekend, the next open business or
market trading day will apply. |
|
(3) |
|
Paid in quarterly increments of $2,500 on January 1,
April 1, July 1, and October 1. |
40
|
|
|
(4) |
|
Paid in quarterly increments of $1,250 on January 1,
April 1, July 1, and October 1. |
|
(5) |
|
Paid to each non-employee director (except the Independent
Chairman) for each scheduled Board meeting day, including days
the director spends working on SM&A Board business. The
director is also eligible for reimbursement of expenses incurred
while attending Board meetings, in accordance with Company
policy. The Independent Chairman is paid $2,000 for each
scheduled Board meeting day, including days the Independent
Chairman spends working on SM&A business. The Independent
Chairman is also eligible for reimbursement of expenses incurred
while attending Board meetings, in accordance with Company
policy. |
|
(6) |
|
Paid to each non-employee director for each scheduled Committee
meeting day. The director is also eligible for reimbursement of
reasonable expenses incurred while attending Committee meetings,
in accordance with Company policy. |
|
(7) |
|
Paid to each non-employee director for each scheduled telephonic
meeting. The director is also eligible for reimbursement of
telephonic expenses incurred for participation in telephonic
meetings, in accordance with Company policy. |
|
(8) |
|
At the request of a non-employee director, the cash fees
(retainer and/or meeting attendance fees) will be converted into
equivalent number of options, according to the fair market value
closing price of the Companys Common Stock on the grant
date and multiplied by a factor of 2 to determine the equivalent
number of options to be granted. Stock options granted in lieu
of a retainer fee(s) will vest 100% on the date of grant. The
grant date shall be equal to the quarterly incremental payment
date(s) as shown in Footnotes 1 through 4. If the grant date
falls on a weekend, legal holiday, or closed market trading
date, the next open market trading date and fair market value
closing price shall be designated as the option exercise price. |
|
(9) |
|
A non-employee director will be eligible for an additional stock
option grant under the Director Compensation Plan when the
following criteria have been met: (i) The non-employee
directors serving on the Companys Board as of
April 11, 2005 namely Messrs. Bowes, Lewis, Reagan,
Rodin, Stenbit, and Untracht (the Existing
Directors) will retain all options granted through and
including April 11, 2005 and each said option grant(s) must
vest 100%; (ii) A non-employee director whose option grant
vesting schedule was accelerated on June 8, 2005, namely
Messrs. Hanger, Bowes, and Stenbit, must conclude the
original vesting period schedule. For example, an option granted
on February 1, 2005 with a four-year vesting schedule is
accelerated to 100% vested on June 8, 2005. The
non-employee director would not be eligible for an additional
stock option grant until February 1, 2009. |
|
(10) |
|
Upon initial appointment or election to the Board, (or the next
open market trading date), the new non-employee director
(New Director) is automatically granted an option to
purchase 50,000 shares of the Companys Common Stock
under the 2007 Equity Incentive Plan or such equity incentive
plan in effect as approved by the stockholders. The option will
vest at a rate of 25% per year over a period of 4 years
with the term of the option being 10 years. The standard
90-day
waiting period will be waived for all initial appointments or
elections to the Board. |
|
|
|
(11) |
|
On each anniversary date of appointment to the Board (or the
next open market trading date), the non-employee directors whose
Appointment Grants original vesting period has been
fulfilled, are automatically granted an additional option to
purchase 12,000 shares of the Companys Common Stock
under the 2007 Equity Incentive Plan or such equity incentive
plan in effect as approved by the stockholders. The exercise
price of the option grant will be equal to the fair market value
closing price of the Companys Common Stock on the date of
the option grant. The option will vest at a rate of 25% per year
over a period of 4 years with the term of the option being
10 years. |
As of March 14, 2008, options to purchase an aggregate of
702,777 shares of the Companys Common Stock had been
issued under the Plan to the Companys current non-employee
directors, at exercise prices ranging from $1.53 to $12.00 per
share.
41
Director
Compensation Table
The following table shows the compensation made to the
non-employee Board members for the fiscal year ended
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
or Paid
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
|
Incurred
|
|
|
in Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)
|
|
($)
|
Bowes, William C.
|
|
|
45,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,750
|
|
|
|
|
|
Hanger, Dwight L.
|
|
|
53,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,000
|
|
|
|
|
|
Lewis, J. Christopher
|
|
|
33,500
|
|
|
|
|
|
|
|
7,922
|
|
|
|
|
|
|
|
41,422
|
|
|
|
|
|
Reagan, Joseph B.
|
|
|
41,250
|
|
|
|
|
|
|
|
89,389
|
|
|
|
|
|
|
|
130,639
|
|
|
|
|
|
Rodin, Robert
|
|
|
34,000
|
|
|
|
|
|
|
|
91,370
|
|
|
|
|
|
|
|
125,370
|
|
|
|
|
|
Stenbit, John P.
|
|
|
8,750
|
|
|
|
|
|
|
|
27,618
|
|
|
|
|
|
|
|
36,368
|
|
|
|
|
|
Untracht, Robert J.
|
|
|
39,500
|
|
|
|
|
|
|
|
17,754
|
|
|
|
|
|
|
|
57,254
|
|
|
|
|
|
|
|
|
(1) |
|
Directors may convert into stock options, all or a portion of
the fees otherwise payable to them in accordance with Amendment
2 of the 2005 Director Compensation Plan. |
|
(2) |
|
No restricted stock awards were granted to non-employee
directors in 2007. |
|
(3) |
|
The amounts in this column reflect the expenses related to stock
options granted in the current and prior periods and recognized
in our 2007 financial statements as described in Statement of
Financial Accounting Standards No. 123(R). For a discussion
of the valuation assumptions, see Note 9 to our
consolidated financial statements included in our Annual Report
on
Form 10-K
for the year ended December 31, 2007. |
The aggregate grant date fair value of stock options computed in
accordance with FAS 123(R) at December 31, 2007 is
shown below:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Grant Date
|
|
Name
|
|
Stock Options
|
|
|
Fair Value
|
|
|
Lewis
|
|
|
12,000
|
|
|
$
|
43,190
|
|
Reagan
|
|
|
100,000
|
|
|
$
|
485,310
|
|
Rodin
|
|
|
100,000
|
|
|
$
|
484,620
|
|
Stenbit
|
|
|
8,855
|
|
|
$
|
27,618
|
|
Untracht
|
|
|
14,755
|
|
|
$
|
52,537
|
|
At fiscal year ended December 31, 2007, the following
option awards (vested and unvested) were outstanding for each of
the non-employee directors:
|
|
|
|
|
|
|
Outstanding
|
|
Name
|
|
Stock Options
|
|
|
Bowes
|
|
|
100,000
|
|
Hanger
|
|
|
50,000
|
|
Lewis
|
|
|
41,000
|
|
Reagan
|
|
|
100,000
|
|
Rodin
|
|
|
100,000
|
|
Stenbit
|
|
|
112,818
|
|
Untracht
|
|
|
125,531
|
|
42
REPORT OF
THE COMPENSATION COMMITTEE(1)
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on that review and discussion, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement.
|
|
|
|
|
The Compensation Committee:
|
|
|
Dr. Joseph B. Reagan, Chairman
William C. Bowes
J. Christopher Lewis
|
|
(1) Notwithstanding anything to the contrary set forth in
any of the Companys filings under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the Compensation Committee
Report shall not be incorporated by reference into any such
filings.
43
ADDITIONAL
INFORMATION
Submission
of Stockholder Proposals for the 2009 Proxy Statement
Stockholders are advised that any stockholder proposals and
director nominations intended for consideration at the 2009
Annual Meeting and for consideration for inclusion in the proxy
materials for that meeting, must be received by the Company no
later than December 19, 2008 and must be in accordance with
the requirements of the Company. Stockholders submitting
proposals must direct them to the Corporate Secretary of the
Company. It is recommended that stockholders utilize certified
mail, return-receipt requested, in order to ensure timely
delivery, at: Corporate Secretary, SM&A, 4695 MacArthur
Court, Eighth Floor, Newport Beach, California 92660.
Solicitation
of Proxies
In addition to sending this Proxy Statement, some of the
Companys Directors and officers as well as management and
non-management employees may solicit proxies by telephone, mail,
email or in person. You may also be solicited by means of press
releases issued by the Company or postings on the Companys
website, www.smawins.com. None of the Companys
Directors, officers or employees will receive any special or
additional compensation for soliciting proxies. In addition, the
Company has retained MacKenzie Partners, Inc., to assist in the
solicitation of proxies for a fee not to exceed $200,000, plus
reimbursement of
out-of-pocket
expenses. MacKenzie Partners, Inc. expects that approximately 45
of its employees will assist in the solicitation. The
Companys expenses related to the solicitation in exc-ess
of those normally spent for an annual meeting with an
uncontested director election are estimated to be approximately
$550,000, of which approximately $125,000 has been spent to
date. The cost of the Companys solicitation of proxies
will be borne by the Company.
The Appendix A sets forth information relating to the
Companys Directors, Director nominees, officers and
employees who are considered participants in the
solicitation under the rules of the SEC by reason of their
position as Directors or Director nominees or because they may
be soliciting proxies on the Companys behalf.
Delivery
of Documents to Stockholders Sharing an Address
Beneficial owners sharing an address who are receiving multiple
copies of proxy materials and annual reports and wish to receive
a single copy of such materials in the future will need to
contact the Companys transfer agent, Computershare, by
visiting their website at www.computershare.com, or
contact them by mail at 250 Royall Street, Canton, MA 02021. If
you own shares of stock through a bank, broker or other nominee,
please contact that entity to eliminate duplicate mailings
Other
Matters
The Board knows of no matters to come before the Annual Meeting,
other than as specified herein. If other business should,
however, be properly brought before such meeting, the persons
voting the proxies will vote them in accordance with their best
judgment.
44
Appendix A
The following table sets forth the name, principal business
address and the present principal occupation or employment, and
the name, principal business and address of any corporation or
other organization in which their employment is carried on, of
the Directors, Director Nominees, and Executive Officers of
SM&A who, under SEC rules, are participants in
our solicitation of proxies from SM&A stockholders in
connection with the Annual Meeting.
Directors
and Nominees
The principal occupations of our directors and director nominees
who may be deemed participants in our solicitation
are set forth under the Board of Directors section
of this proxy statement. The name and business addresses of each
of our directors and director nominees are as follows:
|
|
|
|
|
Name
|
|
Business Address
|
|
|
William C. Bowes
|
|
|
*
|
|
Dwight L. Hanger
|
|
|
*
|
|
J. Christopher Lewis
|
|
|
*
|
|
Cathy L. McCarthy
|
|
|
*
|
|
Peter Pace
|
|
|
*
|
|
Dr. Joseph B. Reagan
|
|
|
*
|
|
Robert Rodin
|
|
|
*
|
|
John P. Stenbit
|
|
|
*
|
|
Robert J. Untracht
|
|
|
*
|
|
|
|
|
* |
|
c/o SM&A
4695 Mac Arthur Court
8th Floor
Newport Beach, California 92660 |
Executive
Officers and Employees
The principal occupations of our Executive Officers and
Employees who may be deemed participants in our
solicitation of proxies are set forth below. The principal
occupation refers to such persons position with SM&A,
and the business address is SM&A, 4695 MacArthur Court, 8th
Floor, Newport Beach, California 92660.
|
|
|
Name
|
|
Business Address
|
|
Cathy L. McCarthy
|
|
President and Chief Executive Officer
|
Peter Pace
|
|
President and Chief Executive Officer, SM&A Strategic
Advisors
|
James R. Eckstaedt
|
|
Executive Vice President, Finance, Chief Financial Officer and
Secretary
|
Kevin L. Reiners
|
|
Executive Vice President, Operations
|
Anna L. Aguirre
|
|
Senior Vice President, Human Resources
|
Information
Regarding Ownership of SM&A Securities by
Participants
The number of shares of our Common Stock held by Directors,
Director Nominees and the Named Executive Officers as of
March 14, 2008, is set forth in the proxy statement under
the caption Security Ownership.
A-1
The number of shares of our Common Stock held by the other
Executive Officers and Employees listed above under
Executive Officers and Employees as of
March 14, 2008 is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
|
Percentage of
|
|
|
|
Amount and Nature
|
|
|
Within
|
|
|
Common Stock
|
|
Name and Title of Beneficial Owner
|
|
of Beneficial Ownership
|
|
|
60 Days
|
|
|
Owned
|
|
|
Peter Pace
|
|
President and Chief Executive Officer, SM&A Strategic
Advisors, Inc.
|
|
|
|
|
|
|
25,000
|
|
|
|
*
|
%
|
Anna L. Aguirre
|
|
Senior Vice President, Human Resources
|
|
|
|
|
|
|
|
|
|
|
*
|
%
|
James R. Eckstaedt
|
|
Executive Vice President, Finance, Chief Financial Officer and
Secretary
|
|
|
|
|
|
|
|
|
|
|
*
|
%
|
Information
Regarding Transactions in the Companys Securities by
Participants
The following table sets forth all transactions that may be
deemed purchases and sales of our Common Stock by the
participants since March 14, 2006. Unless otherwise
indicated, all transactions were in the public market and none
of the purchase price or market value of those shares is
represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
Acquired
|
|
Executive Officers & Employees
|
|
Date
|
|
|
(Disposed of)
|
|
|
Anna L. Aguirre
|
|
|
|
|
|
|
|
|
James R. Eckstaedt
|
|
|
|
|
|
|
|
|
Cathy L. McCarthy
|
|
|
May 1, 2007
|
|
|
|
36,250
|
|
|
|
|
May 1, 2007
|
|
|
|
(36,250
|
)
|
|
|
|
May 1, 2007
|
|
|
|
(33,750
|
)
|
|
|
|
May 2, 2007
|
|
|
|
10,000
|
|
|
|
|
May 2, 2007
|
|
|
|
(10,000
|
)
|
|
|
|
June 12, 2007
|
|
|
|
(17,250
|
)
|
|
|
|
June 12, 2007
|
|
|
|
9,550
|
|
|
|
|
June 12, 2007
|
|
|
|
(9,550
|
)
|
|
|
|
June 13, 2007
|
|
|
|
20,000
|
|
|
|
|
June 13, 2007
|
|
|
|
(20,000
|
)
|
|
|
|
March 13, 2008
|
|
|
|
5,000
|
|
|
|
|
March 14, 2008
|
|
|
|
5,000
|
|
Peter Pace
|
|
|
|
|
|
|
|
|
Kevin L. Reiners
|
|
|
June 28, 2007
|
|
|
|
821
|
|
|
|
|
June 29, 2007
|
|
|
|
157
|
|
|
|
|
September 28, 2007
|
|
|
|
159
|
|
|
|
|
December 31, 2007
|
|
|
|
239
|
|
A-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
Acquired
|
|
Directors & Nominees
|
|
Date
|
|
|
(Disposed of)
|
|
|
William C. Bowes
|
|
|
January 2, 2008
|
|
|
|
864
|
|
|
|
|
March 12, 2008
|
|
|
|
1,000
|
|
Dwight L. Hanger
|
|
|
March 14, 2007
|
|
|
|
1,000
|
|
|
|
|
January 2, 2008
|
|
|
|
1,727
|
|
|
|
|
March 12, 2008
|
|
|
|
1,500
|
|
J. Christopher Lewis
|
|
|
January 2, 2008
|
|
|
|
864
|
|
Cathy L. McCarthy
|
|
|
|
|
|
|
|
|
Peter Pace
|
|
|
|
|
|
|
|
|
Joseph B. Reagan
|
|
|
January 2, 2008
|
|
|
|
864
|
|
|
|
|
March 11, 2008
|
|
|
|
2,000
|
|
Robert Rodin
|
|
|
January 2, 2008
|
|
|
|
864
|
|
John P. Stenbit
|
|
|
January 2, 2008
|
|
|
|
864
|
|
Robert J. Untracht
|
|
|
January 2, 2008
|
|
|
|
864
|
|
Information
Regarding Stock Options Granted to Participants
The following table sets forth certain information with respect
to stock options granted to each of the Participants since
March 14, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Exercise
|
|
|
|
|
|
|
Underlying Options
|
|
|
Price
|
|
Name
|
|
Grant Date
|
|
|
Granted
|
|
|
Per Share
|
|
|
Anna L. Aguirre
|
|
|
December 17, 2007
|
|
|
|
40,000
|
|
|
$
|
5.26
|
|
|
|
|
January 4, 2008
|
|
|
|
10,000
|
|
|
$
|
5.75
|
|
James R. Eckstaedt
|
|
|
January 23, 2008
|
|
|
|
60,000
|
|
|
$
|
5.28
|
|
J. Christopher Lewis
|
|
|
September 25, 2006
|
|
|
|
12,000
|
|
|
$
|
6.42
|
|
Cathy L. McCarthy
|
|
|
January 3, 2007
|
|
|
|
100,000
|
|
|
$
|
5.93
|
|
|
|
|
July 19, 2007
|
|
|
|
200,000
|
|
|
$
|
7.29
|
|
|
|
|
January 4, 2008
|
|
|
|
75,000
|
|
|
$
|
5.75
|
|
Peter Pace
|
|
|
January 17, 2008
|
|
|
|
100,000
|
|
|
$
|
5.45
|
|
Kevin L. Reiners
|
|
|
January 11, 2007
|
|
|
|
60,000
|
|
|
$
|
6.05
|
|
|
|
|
August 3, 2007
|
|
|
|
50,000
|
|
|
$
|
7.00
|
|
|
|
|
January 4, 2008
|
|
|
|
40,000
|
|
|
$
|
5.75
|
|
John P. Stenbit
|
|
|
July 3, 2006
|
|
|
|
1,198
|
|
|
$
|
6.26
|
|
|
|
|
August 10, 2006
|
|
|
|
498
|
|
|
$
|
6.03
|
|
|
|
|
October 2, 2006
|
|
|
|
1,240
|
|
|
$
|
6.05
|
|
|
|
|
October 24, 2006
|
|
|
|
496
|
|
|
$
|
6.05
|
|
|
|
|
November 30, 2006
|
|
|
|
531
|
|
|
$
|
5.65
|
|
|
|
|
January 3, 2007
|
|
|
|
1,265
|
|
|
$
|
5.93
|
|
|
|
|
February 6, 2007
|
|
|
|
462
|
|
|
$
|
6.49
|
|
|
|
|
February 13, 2007
|
|
|
|
1,304
|
|
|
$
|
6.90
|
|
|
|
|
March 7, 2007
|
|
|
|
423
|
|
|
$
|
7.09
|
|
|
|
|
April 25, 2007
|
|
|
|
2,201
|
|
|
$
|
7.27
|
|
|
|
|
June 5, 2007
|
|
|
|
641
|
|
|
$
|
7.02
|
|
|
|
|
June 29, 2007
|
|
|
|
143
|
|
|
$
|
7.01
|
|
|
|
|
July 2, 2007
|
|
|
|
1,427
|
|
|
$
|
7.01
|
|
|
|
|
July 3, 2007
|
|
|
|
143
|
|
|
$
|
7.01
|
|
|
|
|
July 20, 2007
|
|
|
|
417
|
|
|
$
|
7.21
|
|
|
|
|
August 2, 2007
|
|
|
|
429
|
|
|
$
|
7.00
|
|
A-3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Exercise
|
|
|
|
|
|
|
Underlying Options
|
|
|
Price
|
|
Name
|
|
Grant Date
|
|
|
Granted
|
|
|
Per Share
|
|
|
Robert J. Untracht
|
|
|
March 29, 2006
|
|
|
|
1,277
|
|
|
$
|
6.37
|
|
|
|
|
April 3, 2006
|
|
|
|
1,615
|
|
|
$
|
6.50
|
|
|
|
|
April 12, 2006
|
|
|
|
12,000
|
|
|
$
|
6.24
|
|
|
|
|
June 12, 2006
|
|
|
|
935
|
|
|
$
|
6.42
|
|
|
|
|
July 3, 2006
|
|
|
|
1,677
|
|
|
$
|
6.26
|
|
|
|
|
July 18, 2006
|
|
|
|
520
|
|
|
$
|
5.77
|
|
|
|
|
August 10, 2006
|
|
|
|
498
|
|
|
$
|
6.03
|
|
|
|
|
October 2, 2006
|
|
|
|
1,736
|
|
|
$
|
6.05
|
|
|
|
|
October 24, 2006
|
|
|
|
496
|
|
|
$
|
6.05
|
|
|
|
|
November 2, 2006
|
|
|
|
976
|
|
|
$
|
6.15
|
|
|
|
|
November 30, 2006
|
|
|
|
531
|
|
|
$
|
5.65
|
|
|
|
|
December 19, 2006
|
|
|
|
515
|
|
|
$
|
5.82
|
|
|
|
|
January 3, 2007
|
|
|
|
1,804
|
|
|
$
|
5.93
|
|
|
|
|
January 19, 2007
|
|
|
|
489
|
|
|
$
|
6.13
|
|
|
|
|
February 6, 2007
|
|
|
|
462
|
|
|
$
|
6.49
|
|
|
|
|
January 17, 2008
|
|
|
|
275
|
|
|
$
|
5.45
|
|
|
|
|
February 6, 2008
|
|
|
|
1,156
|
|
|
$
|
6.05
|
|
|
|
|
March 4, 2008
|
|
|
|
997
|
|
|
$
|
6.02
|
|
Information
Regarding Restricted Stock Awards Granted to
Participants
There have been no restricted stock awards granted to
participants since March 14, 2006.
Information
Regarding Performance Unit Awards Granted to
Participants
There have been no performance unit awards granted to
participants since March 14, 2006.
Miscellaneous
Information Regarding Participants
Except as described in this Appendix A or the Proxy
Statement, (i) none beneficially owns (within the meaning
of
Rule 13d-3
under the Exchange Act), directly or indirectly, any shares or
other securities of SM&A or any of its subsidiaries,
(ii) has purchased or sold any of such securities within
the past two years, (iii) none of the participants has any
substantial interests, direct or indirect, by security holding
or otherwise, in any matter to be acted upon at the Annual
Meeting, (iv) is or has been within the past year a party
to any contract, arrangement or understanding with any person
with respect to any securities of SM&A, including, but not
limited to, joint ventures, loan or option agreements, put or
calls, guarantees against loss or guarantees of profit, division
of losses or profits or the giving or withholding of proxies, or
(v) has been convicted in a criminal proceeding during the
past ten years.
Except as disclosed in this Appendix A or the Proxy
Statement, to the best knowledge of the participants,
(i) none of their associates beneficially owns, directly or
indirectly, any securities of SM&A, (ii) none of the
participants or any of their associates has had or will have a
direct or indirect material interest in any transaction or
series of similar transactions since the beginning of the
Companys last fiscal year or any currently proposed
transactions, or series of similar transactions, to which
SM&A or any of its subsidiaries was or is to be a party in
which the amount involved exceeds $120,000, (iii) none of
the participants or any of their associates has any arrangements
or understandings with any person with respect to any future
employment by SM&A or its affiliates or with respect to any
future transactions to which SM&A or any of its affiliates
will or may be a party.
A-4
Appendix B
AMENDED
AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
DOCUMENT
SM&A, a Delaware corporation (the
Company), originally established an Employee Stock
Purchase Plan (the Plan) effective as of
March 1, 1999. The Plan was amended and restated effective
as of July 1, 1999. Subsequent amendments to the Plan
followed by shareholder approval on May 18, 1999,
June 6, 2001, June 5, 2002, June 10, 2003,
June 8, 2004, June 8, 2005, June 6, 2006, and
May 23, 2008.
ARTICLE 1
PURPOSE OF THE PLAN
1.1 Purpose. The Company has
determined that it is in its best interest to provide incentives
to attract and retain employees and to increase employee morale
by providing a program through which employees of the Company,
and the Companys subsidiaries as the Companys Board
of Directors (the Board of Directors or the
Board) may from time to time designate (each a
Designated Subsidiary, and collectively,
Designated Subsidiaries), may acquire a proprietary
interest in the Company through the purchase of shares of the
Common Stock of the Company (Company Stock). The
Plan is hereby established by the Company to permit employees to
subscribe for, and purchase directly from the Company, shares of
the Company Stock at a discount from the market price and to pay
the purchase price in installments by payroll deductions. The
Plan is intended to qualify as an employee stock purchase
plan under Section 423 of the Internal Revenue Code
of 1986, as amended from time to time (the Code).
Accordingly, the provisions of the Plan shall be administered,
interpreted, and construed in a matter consistent with the
requirements of that section of the Code. The Plan is not
intended to be an employee benefit plan under the Employee
Retirement Income Security Act of 1974, and therefore is not
required to comply with that Act.
ARTICLE 2
DEFINITIONS
2.1 Compensation. Compensation
means wages, tips, overtime pay, bonuses, commissions, and other
Compensation reported on
Form W-2.
Compensation shall include any amounts contributed by the
Employer pursuant to a salary reduction agreement that is not
currently includible in the Participants gross income by
reason of the application of Code Sections 125, 402(e)(3),
402(g)(3), 402(h)(1)(B), 403(b), 414(h)(2), or 457(b).
Compensation excludes the sum of all of the following items,
even if otherwise includible in gross income:
(i) reimbursements or other expense allowances;
(ii) cash and noncash fringe benefits; (iii) moving
expenses; (iv) deferred compensation; and (v) welfare
benefits.
2.2 Eligibility
Date. Eligibility Date means ninety
(90) calendar days from an Employees initial date of
employment with the Company or any of its Designated
Subsidiaries.
2.3 Employee. Employee
means each person currently employed by the Company or any of
its Designated Subsidiaries, any portion of whose income is
subject to federal withholding of income or employment taxes,
but excluding any persons employed by the Company or any
Designated Subsidiary on a part-time (less than 20 hours
per week) or temporary basis.
2.4 Enrollment
Date. Enrollment Date means the first
day of each Offering Period (January 1, April 1,
July 1, and October 1) under the Plan.
2.5 Five Percent (5%)
Owner. 5% Owner means an Employee
who, immediately after the grant of any rights under the Plan,
would own Company Stock
and/or hold
outstanding options to purchase Company Stock possessing five
percent (5%) or more of the total combined voting power of all
classes of stock of the Company. For purposes of this Section,
the ownership attribution rules of Code Section 425(d)
shall apply.
B-1
2.6 Offering Period. Offering
Period means either of the three-month periods from
January 1 through March 31, April 1 through June 30,
July 1 through September 30, and October 1 through December
31 of each year.
2.7 Participant. Participant
means an Employee who has satisfied the eligibility requirements
of Section 3.1 and has become a participant in the Plan in
accordance with Section 3.2.
2.8 Purchase Date. Purchase
Date means the last day of each Offering Period (i.e.,
March 31, June 30, September 30 or December 31).
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Subject to
limitations imposed by Section 423(b) of the Code, each
Employee of the Company or any Designated Subsidiary may become
a Participant in the Plan on the Enrollment Date coincident with
or next following the Eligibility Date.
3.2 Participation. An Employee who
has satisfied the eligibility requirements of Section 3.1
may become a Participant in the Plan upon his completion and
delivery to the Companys stock purchase coordinator, as
designated by the Company, of an election notice form provided
by the Company (the Election Notice Form)
authorizing payroll deductions. Payroll deductions for a
Participant shall commence on the Enrollment Date coincident
with or next following the filing of the Participants
Election Notice Form and shall remain in effect until revoked by
the Participant by the filing of a notice of withdrawal from the
Plan under Article 8 or by the filing of a new Election
Notice Form providing for a change in the Participants
payroll deduction rate in accordance with Section 5.
|
|
|
|
3.3
|
Special Rules. Under no circumstances shall:
|
(a) A 5% Owner be granted a right to purchase Company Stock
under the Plan;
(b) A Participant be entitled to purchase Company Stock
under the Plan which, when aggregated with all other employee
stock purchase plans of the Company, exceed an amount equal to
the Aggregate Maximum. Aggregate Maximum means an
amount equal to $25,000 worth of Company Stock (determined using
the fair market value of such Company Stock at each applicable
Enrollment Date) during each calendar year; or
(c) The number of shares of Company Stock purchasable by a
Participant on any Purchase Date exceed 2,500 shares,
subject to periodic adjustments under Section 10.4.
ARTICLE 4
OFFERING PERIOD
The initial grant of the right to purchase Company Stock under
the Plan shall occur on July 1, 1999 and terminate on
December 31, 1999. Thereafter, the Plan shall provide for
Offering Periods commencing on each Enrollment Date and
terminating on the next following Purchase Date.
ARTICLE 5
PAYROLL DEDUCTIONS
5.1 Participant Election. Upon
completion of the Election Notice Form, each Participant shall
designate the amount of payroll deductions to be made from his
or her paycheck to purchase Company Stock under the Plan. The
amount of payroll deductions shall be designated in whole
percentages of Compensation, not to exceed 15%. The amount so
designated upon the Election Notice Form shall be effective as
of the next payroll period and shall continue until terminated
or altered in accordance with Section 5.2 below.
5.2 Changes in Election. A
Participant may terminate participation in the Plan at any time
prior to the close of an Offering Period as provided in
Article 8. A Participant may increase or decrease the rate
of payroll deductions once during each Offering Period by
completing and delivering to the Companys stock purchase
coordinator a new Election Notice Form setting forth the desired
change. A Participant may also terminate payroll deductions and
B-2
have accumulated deductions for the Offering Period applied to
the purchase of Company Stock as of the next Purchase Date by
completing and delivering to the stock purchase coordinator a
new Election Notice Form setting forth the desired change. Any
change under this Section shall become effective on the next
payroll period (to the extent practical under the Companys
payroll practices) following the delivery of the new Election
Notice Form.
5.3 Participant Accounts. The
Company shall establish and maintain a separate account
(Account) for each Participant. The amount of each
Participants payroll deductions shall be credited to his
or her Account. No interest will be paid or allowed on amounts
credited to a Participants Account. All payroll deductions
received by the Company under the Plan are general corporate
assets of the Company and may be used by the Company for any
corporate purpose. The Company is not obligated to segregate
such payroll deductions.
ARTICLE 6
GRANT OF PURCHASE RIGHTS
6.1 Right to Purchase Shares. On
each Purchase Date, each Participant shall have the right to
purchase at the price determined under Section 6.2 that
number of shares (including fractional shares) of Company Stock
that can be purchased or issued by the Company based upon that
price with the amounts held in his or her Account, subject to
the limits set forth in Section 3.3. In the event that
there are amounts held in a Participants Account that are
not used to purchase Company Stock, such amounts shall be
returned to the Participant, without interest.
6.2 Purchase Price. The purchase
price for any Offering Period shall be 95% of the Fair Market
Value of Company Stock on the Purchase Date.
|
|
|
|
6.3
|
Fair Market Value. Fair Market
Value shall be determined as follows:
|
(a) If the Company Stock is then listed or admitted to
trading on the NASDAQ National Market or a stock exchange which
reports closing sale prices, the Fair Market Value shall be the
closing sale price on the date of valuation on the NASDAQ
National Market or principal stock exchange on which the Company
Stock is then listed or admitted to trading, or, if no closing
sale price is quoted or no sale takes place on such day, then
the Fair Market Value shall be the closing sale price of the
Company Stock on the NASDAQ National Market or such exchange on
the preceding day on which a sale occurred.
(b) If the Company Stock is not then listed or admitted to
trading on the NASDAQ National Market or a stock exchange which
reports closing sale prices, the Fair Market Value shall be the
average of the closing bid and asked prices of the Company Stock
in the over-the-counter market on the date of valuation.
(c) If neither (a) nor (b) is applicable as of
the date of valuation, then the Fair Market Value shall be
determined by the Administrator (see Section 7.2) using any
reasonable method of valuation, which determination shall be
conclusive and binding on all interested parties.
ARTICLE 7
PURCHASE OF STOCK
7.1 Purchase of Company Stock. A
Participant who does not, prior to a Purchase Date, notify the
Company that such Participant does not want to purchase any
shares of Company Stock pursuant to the Plan or that such
Participant wants to purchase fewer than the maximum number of
shares available for purchase, shall be deemed to elect to
purchase the maximum number of shares of Company Stock
(including fractional shares) purchasable with the amounts held
in such Participants Account, at the purchase price
determined under Section 6.2 above and, on each Purchase
Date, the Plan shall purchase such shares on behalf of such
Participant. In the event that there are amounts held in a
Participants Account that are not used to purchase Company
Stock, all such amounts shall be returned to the Participant,
without interest.
The Board or a Committee may, in its discretion, limit the
purchase of Company Stock to only whole shares and not
fractional shares.
B-3
|
|
|
|
7.2
|
Delivery of Company Stock.
|
(a) Company Stock acquired under the Plan shall be issued
directly to a contract administrator (the
Administrator) engaged by the Company to administer
the Plan under Article 9. All Company Stock so issued
(Plan Held Stock) shall be held in the name of the
Administrator for the benefit of the Plan. The Administrator
shall maintain accounts for the benefit of the Participants that
shall reflect each Participants interest in the Plan Held
Stock. Such accounts shall reflect the number of shares of
Company Stock (including fractional shares) that are being held
by the Administrator for the benefit of each Participant.
(b) For share withdrawals, only whole shares of Company
Stock will be issued to a Participant. The time of issuance and
delivery of shares may be postponed for such period as may be
necessary to comply with the registration requirements under the
Securities Act of 1933, as amended, the listing requirements of
any securities exchange on which the Company Stock may then be
listed, or the requirements under other laws or regulations
applicable to the issuance or sale of such shares. A payment
will be made to a Participant for any fractional shares of
Company Stock owned by the Participant. This payment shall be
computed using the Fair Market Value of a share of Company Stock
on the date the withdrawal is processed by the Companys
stock purchase coordinator. For shares of Company Stock sold by
a Participant from his or her account maintained by the
Administrator, the Participant shall receive credit for all
whole and fractional shares at the actual price for which the
shares were sold.
ARTICLE 8
WITHDRAWAL
8.1 In Service Withdrawal. At any
time prior to the Purchase Date of an Offering Period, a
Participant may withdraw the amounts held in his or her Account
by executing and delivering to the Companys stock purchase
coordinator written notice of withdrawal on the form provided by
the Company. In such a case, the entire balance of the
Participants Account shall be paid to the Participant,
without interest, as soon as is practicable. Upon such
notification, the Participant shall cease to participate in the
Plan for the remainder of the Offering Period in which the
notice is given. An Employee who has withdrawn under this
Section 8.1 at least thirty (30) days prior to the
Purchase Date of an Offering Period shall be excluded from
participation in the Plan for the remainder of the Offering
Period, but may then be reinstated as a participant for a
subsequent Offering Period by executing and delivering a new
Election Notice Form to the Companys stock purchase
coordinator. An Employee who has withdrawn under this
Section 8.1 less than thirty (30) days prior to the
Purchase Date of an Offering Period shall be excluded from
participation in the Plan for the remainder of the Offering
Period and for one (1) subsequent Offering Period, but may
thereafter be reinstated as a participant for a subsequent
Offering Period by executing and delivering a new Election
Notice Form to the Companys stock purchase coordinator.
8.2 Termination of Employment. In the
event that a Participants employment with the Company
terminates for any reason, the Participant shall cease to
participate in the Plan on the date of termination. As soon as
is practical following the date of termination, the entire
balance of the Participants Account shall be paid to the
Participant, without interest.
ARTICLE 9
PLAN
ADMINISTRATION
9.1 Plan Administration.
(a) The authority to control and manage the operation and
administration of the Plan shall be vested in the Board of
Directors or a committee (Committee) thereof. The
Board or the Committee shall have all powers necessary to
supervise the administration of the Plan and control its
operations.
(b) In addition to any powers and authority conferred on
the Board or Committee elsewhere in the Plan or by law, the
Board or the Committee shall have the following powers and
authority:
(i) To designate agents to carry out responsibilities
relating to the Plan;
B-4
(ii) To administer, interpret, construe and apply the Plan
and to answer all questions which may arise or which may be
raised under the Plan by a Participant, his beneficiary or any
other person whatsoever;
(iii) To establish rules and procedures from time to time
for the conduct of its business and for the administration and
effectuation of its responsibilities under the Plan; and
(iv) To perform or cause to be performed such further acts
as it may deem to be necessary, appropriate, or convenient for
the operation of the Plan.
(c) Any action taken in good faith by the Board or the
Committee in the exercise of authority conferred upon it by this
Plan shall be conclusive and binding upon a Participant and his
beneficiaries. All discretionary powers conferred upon the Board
shall be absolute.
9.2 Limitation on Liability. No Employee
or member of the Board or Committee shall be subject to any
liability with respect to his or her duties under the Plan
unless the person acts fraudulently or in bad faith. To the
maximum extent permitted by law, the Company shall indemnify
each member of the Committee and every other member of the
Board, as well as any other Employee with duties under the Plan,
against all liabilities and expenses (including any amount paid
in settlement or in satisfaction of a judgment) reasonably
incurred by the individual in connection with any claims against
the individual by reason of the performance of the
individuals duties under the Plan. This indemnity shall
not apply, however, if: (a) it is determined in the action,
lawsuit, or proceeding that the individual is guilty of gross
negligence or intentional misconduct in the performance of those
duties; or (b) the individual fails to assist the Company
in defending against any such claim. The Company shall have the
right to select counsel and to control the prosecution or
defense of the suit. The Company shall not be obligated to
indemnify any individual for any amount incurred through any
settlement or compromise of any action unless the Company
consents in writing to the settlement or compromise.
ARTICLE 10
COMPANY STOCK
10.1 Limitations on Purchase of
Shares. The maximum number of shares of Company
Stock that shall be made available for sale under the Plan shall
be 1,600,000 shares, subject to adjustment under
Section 10.4 below. The shares of Company Stock to be sold
to Participants under the Plan will be issued by the Company. If
the total number of shares of Company Stock that would otherwise
be issuable pursuant to rights granted pursuant to
Section 6.1 of the Plan at the Purchase Date exceeds the
number of shares then available under the Plan, the Company
shall make a pro rata allocation of the shares remaining
available in as uniform and equitable manner as is practicable.
In such event, the Company shall give written notice of such
reduction of the number of shares to each participant affected
thereby and any unused payroll deductions shall be returned to
such participant if necessary.
10.2 Registration of Company
Stock. Shares to be delivered to a Participant
under the Plan will be registered in the name of the Participant.
10.3 Changes in Capitalization of the
Company. Subject to any required action by the
shareholders of the Company, the number of shares of Company
Stock covered by each right under the Plan which has not yet
been exercised and the number of shares of Company Stock which
have been authorized for issuance under the Plan but have not
yet been placed under rights or which have been returned to the
Plan upon the cancellation of a right, as well as the Purchase
Price per share of Company Stock covered by each right under the
Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued
shares of Company Stock resulting from a stock split, stock
dividend, spin-off, reorganization, recapitalization, merger,
consolidation, exchange of shares or the like. Such adjustment
shall be made by the Board of Directors for the Company, whose
determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Company Stock subject to any
right granted hereunder.
10.4 Merger of Company. In the event that
the Company at any time proposes to merge into, consolidate
with, or enter into any other reorganization pursuant to which
the Company is not the surviving entity (including the
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sale of substantially all of its assets or a reverse
merger in which the Company is the surviving entity), then, to
the extent permitted by applicable law: (i) any surviving
corporation shall assume the rights theretofore granted or
substitute for such rights new rights covering the shares of a
successor corporation, with appropriate adjustments as to the
number and kind of shares and prices, or (ii) the Plan and
the rights theretofore granted shall continue in full force and
effect. In the event any surviving corporation refuses to assume
or continue the Plan, or to substitute similar options for those
under the Plan, then the Board of Directors or its committee
shall cause written notice of the proposed action to be given to
the persons holding rights not less than 10 days prior to
the anticipated effective date of the proposed transaction and,
concurrent with the effective date of the proposed transaction,
such rights shall be exercised automatically in accordance with
Section 7.1 as if such effective date were a Purchase Date
of the applicable Offering Period unless a Participant withdraws
from the Plan as provided in Section 8.1.
ARTICLE 11
MISCELLANEOUS
11.1 Amendment and Termination. The Plan
shall terminate on December 31,
2018. Since future conditions affecting the
Company cannot be anticipated or foreseen, the Company reserves
the right to amend, modify, or terminate the Plan at any time.
Notwithstanding the foregoing, no such amendment or termination
shall affect rights previously granted, nor may an amendment
make any change in any right previously granted which adversely
affects the rights of any Participant. In addition, no amendment
may be made without prior approval of the shareholders of the
Company if such amendment would:
(a) Increase the number of shares of Company Stock that may
be issued under the Plan;
(b) Materially modify the requirements as to eligibility
for participation in the Plan; or
(c) Materially increase the benefits that accrue to
Participants under the Plan.
11.2 Benefits Not Alienable. Benefits
under the Plan may not be assigned or alienated, whether
voluntarily or involuntarily. Any attempt at assignment,
transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to
withdraw funds in accordance with Article 8.
11.3 No Enlargement of Employee
Rights. The Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed
to constitute a contract between the Company and any Employee or
to be consideration for, or an inducement to, or a condition of,
the employment of any Employee. Nothing contained in the Plan
shall be deemed to give the right to any Employee to be retained
in the employ of the Company or to interfere with the right of
the Company to discharge any Employee at any time.
11.4 No Additional Rights. Neither the
adoption of the Plan nor the granting of any right to purchase
stock hereunder shall affect or restrict in any way the power of
the Company to undertake any corporate action otherwise
permitted under applicable law. Furthermore, no Employee shall
have any rights as a Stockholder with respect to shares to be
purchased under the Plan until time at which the Fair Market
Value of the Common Stock is determined on the Purchase Date.
Finally, except as provided in Section 10.4, no adjustments
will be made for cash or stock dividends or other rights
relating to Company Stock for which the record date is prior to
the Purchase Date.
11.5 Governing Law. To the extent not
preempted by Federal law, all legal questions pertaining to the
Plan shall be determined in accordance with the laws of the
State of California.
11.6 Non-business Days. When any act
under the Plan is required to be performed on a day that falls
on a Saturday, Sunday or legal holiday, that act shall be
performed on the next succeeding day which is not a Saturday,
Sunday or legal holiday. Notwithstanding the above, Fair Market
Value shall be determined in accordance with Section 6.3.
11.7 Compliance With Securities
Laws. Notwithstanding any provision of the Plan,
the Committee shall administer the Plan in such a way to ensure
that the Plan at all times complies with any requirements of
Federal Securities Laws.
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Appendix C
SM&A
BUSINESS CONDUCT AND ETHICS CODE
Amendment
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1.0 EFFECTIVE
DATE
This policy was adopted September 1, 2003 by the
Companys Board of Directors. This policy supersedes all
prior SM&A Business Conduct & Ethics codes. The
Board of Directors of SM&A (the Company)
reserves the right to change the Business Conduct &
Ethics Code (the BC&E Code) at any time.
2.0 PURPOSE
To provide written standards designed to promote:
a. Honest and ethical conduct, including the ethical
handling of conflicts of interest between personal and
professional relationships;
b. Full, fair, accurate, timely and understandable
disclosure in reports and documents that the Company files with,
or submits to, the Securities and Exchange Commission and in
other public communications made by the Company;
c. Compliance with applicable governmental laws, rules and
regulations;
d. Prompt internal reporting of violations of the BC&E
Code to an appropriate person or persons identified in this
BC&E Code; and
e. Accountability for adherence to the BC&E Code.
3.0 POLICY
We shall consistently treat our customers, employees,
shareholders, suppliers and the community with honesty, dignity,
fairness and respect. We will conduct our business with the
highest ethical standards.
3.1 Reporting of Risks
The Company is committed to providing quality services that meet
or exceed the expectations of our customers. Deficiencies that
put the financial security of the Company at risk or, more
importantly, threaten the physical well-being of any person,
should be reported immediately to management.
3.2 Promoting Health and Safety
The health and safety of the Companys employees is of
utmost importance. Our work processes and policies are designed
to minimize risk. We all must routinely review and improve
workplace conditions to ensure a safe and healthful workplace
and report unsafe working conditions to supervisors and
management.
3.3 Equal Opportunity and Diversity
We value and respect the diversity of our employees, officers,
directors, suppliers, customers and communities. The Company is
committed to providing equal opportunity in all of our
employment and purchasing practices. Only in valuing diversity
and committing to equal opportunity practices will we be able to
fully utilize the human and business resources available to us
in our pursuit of customer satisfaction. At the same time, we
believe that by valuing diversity we enable all to fully realize
their potential. We are committed to providing a workplace that
is free of harassment or any other behavior that diminishes a
persons integrity and self-esteem. Harassment, in any form
or degree, will not be tolerated.
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3.4 Protecting the Environment
We respect the needs and concerns of the communities in which we
live and work. This is exemplified in the Companys long
tradition of caring about the quality of the environment. Our
services reflect this concern and our belief that what is good
for the environment is good for the Company. Sound waste
management and source reduction practices, recycling and energy
conservation are legal, ethical, and business requirements.
3.5 Protecting Employee Privacy
The Company is committed to providing privacy protection of
employee data maintained by the Company. Employee data will be
used for the sole purpose of supporting company operations and
providing employee benefits. The Company will comply with all
local data protection regulations.
The Company has put safeguards in place to ensure that personal
data is protected from unauthorized access and disclosure,
including limiting access to such data only to those employees
with a legitimate business purpose. All employees are
responsible for ensuring compliance with this employee privacy
policy.
3.6 Protecting the Companys Information
Protecting information about the Companys services,
activities, performance or plans is critical to the
Companys competitive position and reputation. Good
judgment is needed to determine what information can or cannot
be disclosed to others. Should there be any question as to
whether certain information is confidential, employees should
consult their supervisor. To limit the potential for important
information being used improperly, employees should use
need to know guidelines even with other employees of
the Company.
The use of confidential Company information for the personal
gain of an employee, officer, director or anyone else is
contrary to the Companys policies and, in many cases
unlawful. Confidential information includes all nonpublic
information that might be of use to competitors, or harmful to
the Company or its customers, if disclosed.
Buying or selling of the Companys stock based on material
nonpublic information is also prohibited. It is unlawful to
communicate this information to other persons who may trade in
our stock. Material information is defined, as anything a
prudent investor should know before investing in a company. This
type of information includes, but is not limited to, financial
results, new contracts and acquisition plans that have not
already been disclosed to the public.
3.7 Protecting our Clients
Protecting all information obtained while working with our
clients and customers is vital. During engagements with our
clients we will obtain competition sensitive, company private
and company specific information which must and will be
protected. If you believe that client or customer information is
being compromised, whether by an SM&A employee or by
another person at the work site, you should immediately report
it to your supervisor or, if you wish to remain anonymous, to
the Business Conduct Line (see below).
3.8 Avoiding Conflicts of Interest
The best interests of the Company are expected to be foremost in
the minds of our employees, officers and directors as they
perform their duties. When we become employees of the Company,
and receive pay and benefits, we make this commitment. It is
wrong to seek any other economic gain by virtue of being an
employee, officer or director of the Company. Giving or
receiving anything of enough value to influence sound business
judgment is prohibited. This also applies to family, friends and
business associates. In addition, discussions of future
employment with government officials with whom the Company seeks
to do business must be approved in advance.
The Company trusts its employees, officers and directors with
information about Company activities and with Company funds and
property. Use of any of these in a way that conflicts with
Company interests is strictly prohibited. Situations or
arrangements that may conflict with Company interests must be
approved in advance by the employees respective business
group Vice President. We must also take care that our actions
cannot be perceived as serving other interests. While mutually
beneficial relationships with customers and suppliers are
encouraged, we should avoid situations that offer the potential
for problems. Examples include having a significant
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stake in, or serving as a director of, a firm that sells to or
purchases from the Company. Employees should also not work for a
customer or a supplier. All these examples apply to involvement
with our competitors as well.
The extension of loans or credit guarantees to or for the
personal benefit of directors, officers and employees shall be
prohibited except as permitted by law and the listing standards
of any exchange or quotation system on which the Companys
shares are listed.
3.9 Proper Use of Company Funds
Employees are personally accountable for any form of Company
funds such as credit cards, cash and checks. Those who authorize
the use of funds must ensure that the Company has received
proper value in return. The Company may be obligated to notify
appropriate civil authorities should funds be used for any
improper or illegal purpose and will take appropriate
disciplinary action in any event.
3.10 Proper Use of Company Information and Company Property
The Company trusts its employees with information about Company
activities and with Company property. Use of these in a way that
conflicts with Company interests, or in any manner that may
reasonably be considered offensive or disruptive to another
employee, is strictly prohibited.
3.11 Appropriate Use of
E-Mail,
Internet and Other Computing Resources
Electronic commerce, electronic mail, and other Internet-related
systems are intended to be used for Company business.
Additionally, all information on Company computer systems,
including electronic mail, is the property of the Company.
Therefore, to ensure that computing resources are used in
accordance with expectations, management may inspect and
disclose the contents of electronic messages if such inspection
and disclosure is made for legitimate business purposes or as
necessary to protect the rights and property of the Company. The
Company is careful to ensure that all employees, customers,
suppliers, and the public in general, are treated with dignity
and respect. Use of computing resources to offend or harass
others is prohibited. Employees, who use the Internet to access
sites that contain offensive materials related to sex, race, or
other protected categories, or who otherwise violate these
prohibitions, will be subject to discharge.
3.12 Integrity of Recordkeeping/Accounting
The Company documents a wide range of its activities. The
integrity of these records is relied upon to make important
business decisions and take actions. Therefore, it is essential
that all records are accurate and complete. This responsibility
prohibits false or misleading entries regarding both the amount
and purpose of transactions. Some examples include vouchers,
bills, financial data, expense reports and performance records.
Employees, officers, and directors should report any concerns
regarding questionable accounting or auditing matters to the
Audit Committee by calling the Business Conduct and Ethics Line.
3.13 Political/Governmental and Non-Governmental
Contributions
Within the U.S., no contribution of funds or services is to be
made to, or on behalf of, any political organization or
candidate by the Company or any of our subsidiary companies
without advance approval of the Board of Directors. Within the
U.S., offering anything of value, directly or indirectly, to
government officials in connection with their government duties
is prohibited, including gifts or other things of value offered
to their family members. Throughout the world, direct or
indirect contributions to any government officials (including
their representatives or family members) that are intended to
gain preferential treatment for our company are always
prohibited.
The Company recognizes that in some countries outside the
U.S. it is legal and customary for companies to make
certain contributions to political parties and government
officials. Nevertheless, no such contributions or payments can
be made by the Company or its subsidiaries, employees, officers,
directors or agents with the intent to obtain or retain business.
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3.14 Rule of Law
Any employee, officer or director involved in court or other
similar proceedings arising out of his or her employment with,
or service to, the Company shall abide by the rules of that
forum, cooperate with the orders of that forum, and not in any
way commit perjury or obstruction of justice.
3.15 Defense Security
Some of our employees have security clearances. Strict care must
be taken to comply with the laws on the protection and
disclosure of classified information relating to such
businesses. All visits to certain hostile countries, or meetings
with their officials anywhere, must be formally reported to the
Companys facility security manager.
3.16 Antitrust
Planning or acting together with any competitor to fix prices or
to agree about the nature, extent or means of competition in any
market is against company policy and in violation of antitrust
laws. Antitrust laws may also in some circumstances prohibit
agreements to boycott, to allocate products, territories, or
markets, and to limit the production or sale of products. Using
illegal or unethical means to obtain competitive information or
gain a competitive advantage over a competitor is prohibited.
3.17 International Business
There are several laws that restrict where we can do business,
what information or products we can supply to certain countries
and what information we can provide to a foreign government
(e.g. boycott-related requests or U.S. national security
concerns). For these reasons, business entry into any new
foreign country must comply with these restrictions.
3.18 Corporate Opportunities
Directors and employees are prohibited from taking opportunities
that are discovered through the use of Company property,
information or position, or using Company property, information
or position for personal gain. Directors and employees have a
duty to the Company to advance its legitimate interest when the
opportunity to do so arises.
3.19 Waiver of the Code
Any waiver of this Code may be made only by the independent
directors on the Board of Directors, or by an authorized
committee of the Board of Directors comprised solely of
independent directors and will be disclosed as required by law,
the regulations of the Securities and Exchange Commission, or
the rules and listing standards of any national securities
exchange on which the Companys securities may be listed.
3.20 Responsibilities
Each employee, officer and director of the Company is expected
to carry out his or her work in accordance with the BC&E
Code of the Company. Further, all employees are urged to direct
any questions or concerns about the Companys activities or
these standards to their supervisors or the human resources
department without delay. Any employee who suspects that a
violation of the BC&E Code has occurred is obligated to
report it, and such employees shall be protected from
retaliation. Employees should also be aware that these standards
are greater than those that may be required by local law.
Adherence to these standards is a condition of employment with
the Company. Violations are serious matters and will result in
disciplinary action. Managers and supervisors are responsible
for distributing copies of the BC&E Code to employees,
officer and directors, as well as making them aware of the
importance and specific requirements of the policy. The
BC&E Code is not all encompassing, and questions about
situations not discussed in the BC&E Code should be
addressed to the human resources department, or your supervisor.
Senior
Financial Officers
The Companys principal executive officer, principal
financial officer, principal accounting officer or controller,
or any person performing similar functions must engage in honest
and ethical conduct, including the ethical handling of apparent
conflicts of interest between personal and professional
relationships. These officers must
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avoid conflicts of interest, including disclosure to the Audit
Committee of any material transaction or relationship that
reasonably could be expected to give rise to such a conflict.
The Company requires full, fair, accurate, timely, and
understandable disclosure in reports, documents and any other
public communications made by the Company. In addition, all
employees of the Company must maintain compliance with
applicable governmental laws, rules and regulations. All
violations of the BC&E Code by a principal executive
officer, principal financial officer, principal accounting
officer or controller, or any person performing similar
functions should be reported to the Audit Committee by calling
the Business Conduct
Reporting
Violations of the Business Conduct and Ethics Code
Any violation or suspected violation of the Business Conduct and
Ethics Code by an employee, officer or director of SM&A
will be reported to the Business Conduct and Ethics Line: 1 +
(888) 762-9467
extension 401. All calls to the Business Conduct and Ethics Line
will be anonymous, unless the person reporting the occurrence
chooses to provide
his/her
name. The Business Conduct and Ethics Line is a toll-free line
that is available 24 hours a day, 7 days a week. Your
call will be directed to the Audit Committee Chairman who will
answer all calls within 24 hours.
ADHERENCE
TO THESE STANDARDS IS A CONDITION OF EMPLOYMENT WITH
THE
COMPANY. VIOLATIONS ARE SERIOUS MATTERS AND WILL RESULT IN
DISCIPLINARY
ACTION UP TO AND INCLUDING TERMINATION.
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Approvals:
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Amendment 5
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March 4, 2008
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Amendment 4
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April 25, 2007
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Amendment 3
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April 11, 2006
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Amendment 2
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September 7, 2005
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Amendment 1
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April 14, 2005
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Adopted
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September 1, 2003
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PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, MAY 23, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Cathy L. McCarthy and James R. Eckstaedt, and each of them, with full
power of substitution, to vote all shares of Common Stock of any class of SM&A held of record by
the undersigned as of April 9, 2008, at the Annual Meeting of
Stockholders of SM&A to be held at 4685 MacArthur Court, Suite
380, Newport Beach, California 92660 on Friday, May 23, 2008, and at all adjournments thereof, upon the following matters, which
are described in SM&As Proxy Statement for the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
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FOR THE ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS; |
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FOR APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN; and |
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FOR RATIFICATION OF BDO SEIDMAN, LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. |
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT
WILL BE VOTED
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FOR THE ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS; |
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FOR APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN; and |
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FOR RATIFICATION OF BDO SEIDMAN, LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. |
PLEASE SIGN AND DATE ON REVERSE SIDE
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ELECTION OF DIRECTORS |
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Director Nominees: William C. Bowes, Dwight L. Hanger, J. Christopher Lewis, Cathy
L. McCarthy, Peter Pace, Joseph B. Reagan, Robert Rodin, John P. Stenbit, Robert J.
Untracht. |
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FOR all nominees listed above
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WITHHOLD AUTHORITY to vote |
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(except as indicated to the contrary below)
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for all nominees listed above. |
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(INSTRUCTIONS: To Withhold Authority to vote for any individual nominee, write that nominees name in this |
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APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN |
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RATIFICATION OF BDO SEIDMAN, LLP |
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OTHER BUSINESS |
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To act upon all other matters that properly come before the meeting. |
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF ANY NOMINEE NAMED ABOVE DECLINES OR IS UNABLE TO SERVE AS A DIRECTOR, THE PERSONS
NAMED AS PROXIES SHALL HAVE FULL DISCRETION TO VOTE FOR ANY OTHER PERSON WHO MAY BE NOMINATED.
PLEASE DATE, SIGN, MAIL AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears herein. If the stock is registered in the
name of two or more persons, each should sign. Executors, administrators, trustees,
guardians, attorneys and corporate officers should add their titles.
Date
Signature
Signature