def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
DOLAN MEDIA COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing. |
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Persons who are to respond to the collection of information contained in this form
are not required to respond unless the form displays a currently valid OMB control
number |
April 7, 2010
Dear Fellow Stockholder:
I am pleased to invite you to attend Dolan Media Companys
Annual Meeting of Stockholders, which we will hold on
May 26, 2010, at the Minneapolis Club, 729 Second Avenue
South, Minneapolis, MN 55402. The meeting will begin promptly at
9:00 a.m., central daylight time.
Please read the accompanying Notice of Annual Meeting and Proxy
Statement for more details about the annual meeting and matters
that will be presented to stockholders for a vote.
I, and other members of our management team, as well as members
of our board of directors, will be available to respond to your
questions and comments. We look forward to this opportunity to
communicate directly with our stockholders and share information
about our operations and activities and hope that you are able
to join us.
Your vote is very important to us. Whether you own a few shares
or many, it is important that your shares are represented at our
annual meeting. If you cannot attend the annual meeting in
person, please vote as soon as possible. We offer three
convenient ways for you to vote on the Internet
(which we recommend), by telephone, or, if you requested a paper
copy of these materials, by completing and mailing the proxy
card in the postage-paid envelope provided. Instructions
regarding these voting options are described in the Notice of
Internet Availability of Proxy Materials we mailed to you and on
the proxy card, if you requested one be sent to you.
We appreciate your continued support of Dolan Media Company and
look forward to meeting you at our annual meeting.
Very truly yours,
James P. Dolan
Chairman, Chief Executive Officer and President
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
Dolan Media Company will hold its Annual Meeting of Stockholders
as follows:
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Date and Time |
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May 26, 2010, 9:00 a.m. (central daylight time) |
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Place |
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Minneapolis Club
729 Second Avenue South
Minneapolis, MN 55402 |
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Items of Business |
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1. To elect the three Class III directors
nominated by our board to serve for a period of three years;
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2. To approve the Dolan Media Company 2007 Incentive
Compensation Plan, as amended and restated, which includes
authorizing an additional 2,100,000 shares of our common
stock for potential future issuance under the plan, and
reapproving the performance goals under which compensation may
be paid under the plan for purposes of Section 162(m) of
the Internal Revenue Code;
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3. To ratify the Dolan Media Company Rights
Agreement, as amended, which is our stockholders rights plan;
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4. To approve an amendment to our Amended and
Restated Certificate of Incorporation to change our name from
Dolan Media Company to The Dolan Company;
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5. To ratify the Audit Committees appointment
of McGladrey & Pullen, LLP as our independent
registered public accounting firm for 2010; and
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6. To act upon any other business as may properly
come before the stockholders at the annual meeting or any
adjournment or postponement of the meeting.
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Record Date |
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If you were a stockholder of record at the close of business on
March 29, 2010, you are entitled to vote at our annual
meeting on the items of business identified above. |
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Proxy Voting |
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Your vote is important to us. If you are unable to attend our
annual meeting, you may vote your shares by proxy over the
Internet (which our board recommends), by telephone or, if you
requested a paper copy of these materials, by completing,
signing and returning a proxy card in the envelope provided. For
specific instructions on how to vote your shares, please refer
to the instructions on the Notice of Internet Availability of
Proxy Materials that we mailed to you or your proxy card, if you
requested one. If you are voting by proxy, we must receive your
vote no later than (1) 11:59 p.m., eastern daylight
time, on May 25, 2010, if you are voting on the Internet or
by telephone, or (2) 6:00 p.m., central daylight time,
on May 25, 2010, if you are voting by mail. We encourage
you to vote by proxy even if you plan to attend the meeting in
person. If you attend the meeting in person, you can revoke your
proxy and vote in person if you so desire. |
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Adjournments and Postponements |
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Our stockholders may consider any item of business described
above at the annual meeting at the time and the date specified
in this Notice of Annual Meeting or at any other time or date to
which the annual meeting has been properly adjourned or
postponed. |
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Notice of Internet Availability of Proxy Materials |
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We mailed our Notice of Internet Availability of Proxy Materials
on or about April 7, 2010. Our proxy statement and annual
report to stockholders for the year ended December 31,
2009, are available at www.proxyvote.com. Our annual report
contains financial and other information about us, including our
Form 10-K.
You will need your
12-digit
control identification number to access these materials. The
control identification number is included on the Notice of
Internet Availability of Proxy Materials that you received from
us in the mail. |
By Order of the Board of Directors,
Vicki J. Duncomb, Corporate Secretary
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PROXY
STATEMENT
Annual Meeting of
Stockholders
May 26, 2010
Our board of directors is soliciting proxies for the 2010 Annual
Meeting of Stockholders and we are providing these proxy
materials in connection with that solicitation. You are
receiving these proxy materials because you owned shares of our
common stock on March 29, 2010, and are entitled to vote at
the annual meeting. If you are unable to attend the annual
meeting in person, you may vote your shares by proxy. This proxy
statement describes the proposals that we would like you to
consider and vote on and provides additional information to you
relating to these proposals so that you can make an informed
decision.
Proposals You
Are Asked to Vote on and the Boards Voting
Recommendation
You will be asked to vote on five proposals at the annual
meeting. Our Board recommends that you vote your shares on these
proposals as indicated below:
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Proposal
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Boards Voting Recommendation
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1. The election of James P. Dolan, John Bergstrom and
George Rossi as Class III Directors
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FOR
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2. To approve the Dolan Media Company 2007 Incentive
Compensation Plan, as amended and restated, which includes
authorizing an additional 2,100,000 shares of our common
stock for potential future issuance under the plan, and
reapproving the performance goals under which compensation may
be paid under the plan for purposes of Section 162(m) of
the Internal Revenue Code
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FOR
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3. The ratification of the Dolan Media Company Rights
Agreement, as amended, which is our stockholders rights plan
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FOR
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4. To approve an amendment to our Amended and
Restated Certificate of Incorporation to change our name from
Dolan Media Company to The Dolan Company
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FOR
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5. The ratification of the appointment of
McGladrey & Pullen, LLP as our independent registered
public accounting firm for 2010
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FOR
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The Board is not aware of any other matters to be presented to
you for a vote at the annual meeting. If you grant a proxy by
the Internet, telephone or by signing and returning a proxy card
by mail, James P. Dolan, our chairman, chief executive officer
and president, and Vicki J. Duncomb, our vice president and
chief financial officer, or either of them, may, as your
proxies, vote your shares in their discretion for any additional
matters that properly come before the stockholders at the annual
meeting. Further, if any director candidate is unavailable to
serve as director prior to the election at the annual meeting,
Mr. Dolan and Ms. Duncomb, or either of them, will
vote your proxy for another candidate nominated by our board
unless our board allows the vacancy to remain open or reduces
the size of our board.
Stockholders
Entitled to Vote at Annual Meeting
If you owned shares of our common stock at the close of business
on March 29, 2010, the record date, you may vote at the
annual meeting. On that date, there were 30,315,032 shares of
common stock outstanding. You have one vote for each share of
common stock you held on that date. This includes shares for
which you are the stockholder of record and those
for which you are the beneficial owner.
You are the STOCKHOLDER OF RECORD if your shares are registered
directly in your name with our transfer agent, BNY Mellon
Shareholder Services. If you are the stockholder of record, we
have made these proxy materials available to you directly and
you may grant your voting proxy directly to us or vote in person
at the annual meeting.
You are a BENEFICIAL OWNER if your shares are held in a stock
brokerage account or by another person, as nominee, on your
behalf (sometimes referred to as being held in street
name). If you are a beneficial owner, your broker or
nominee is making these proxy materials available to you and
will provide you a voting instruction card to use. You must use
this voting card or follow its instructions regarding voting on
the Internet or by telephone to instruct your broker or nominee
as to how you would like to vote your shares. You are invited to
attend the annual meeting, but may not vote your shares in
person at the meeting, unless you receive a proxy from your
broker or nominee and are present at the meeting.
Voting
Requirements
We need a majority of the votes that could be cast by
stockholders entitled to vote, present in person at the annual
meeting or represented by proxy, to constitute a quorum for the
transaction of business at this meeting. We count abstentions
and broker non-votes, if applicable, as present and entitled to
vote for purposes of determining a quorum.
The nominees for director will be elected by a plurality of the
votes of the shares present and entitled to vote on the
proposal, whether in person or by proxy. A plurality means the
nominees receiving the largest number of votes cast at the
meeting will be elected for the available director positions. It
is possible that a plurality might not be a majority of the
votes cast at the meeting in person or by proxies. An
affirmative FOR vote by a majority of the votes of
the shares present and entitled to vote on the proposal, whether
in person or by proxy, is required on the following matters:
(1) approving the 2007 Incentive Compensation Plan, as
amended and restated, which includes authorizing an additional
2,100,000 shares of our common stock for potential future
issuance under the plan, and reapproving the performance goals
under which compensation may be paid under the plan for purposes
of Section 162(m) of the Internal Revenue Code;
(2) ratifying the Rights Agreement, as amended;
(3) ratifying the appointment of McGladrey &
Pullen, LLP; and (4) approving all other matters that are
properly presented to the stockholders at the annual meeting or
any adjournment or postponement of it. The affirmative
FOR vote by a majority of the shares outstanding and
entitled to vote on the proposal, whether in person or by proxy,
is required to approve the amendment to the Amended and Restated
Certificate of Incorporation.
A broker non-vote occurs when a beneficial owner
fails to provide voting instructions to
his/her
broker or nominee with respect to a matter which the broker or
nominee indicates when voting by proxy that it does not have the
discretionary authority to vote on such matter. We believe that
brokers or nominees have discretionary authority to vote shares
held by beneficial owners with respect to only two of the five
proposals: Proposal 4 Approval of an Amendment
to the Amended and Restated Certificate of Incorporation and
Proposal 5 Ratification of the appointment of
McGladrey & Pullen, LLP. Therefore, if you are a
beneficial owner, to ensure that your shares are voted in the
manner you wish, please provide voting instructions to your
broker or nominee.
Counting
Votes
You may either vote FOR or WITHHOLD
authority to vote for the nominees for the board of directors.
Withholding your authority to vote for a nominee and broker
non-votes will not affect the outcome of the elections for
directors. You may either vote FOR,
AGAINST, or ABSTAIN on the four other
proposals set forth on the agenda. If you ABSTAIN
from voting on any of those proposals, your vote will be counted
as a vote AGAINST this proposal. Broker non-votes,
if applicable, may affect the outcome of some of our proposals.
If you are a beneficial owner and do not send voting
instructions to your broker, if applicable, your broker may vote
your shares at its discretion on Proposals 4 and 5, because the
New York Stock Exchange considers these two proposals routine
matters. If you are a stockholder of record and sign and mail a
proxy card, but do not include voting instructions, the proxies
will vote your shares FOR all of the proposals and,
in their discretion, as to any other matter that may properly
come before the stockholders at the annual meeting.
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A representative of Broadridge Financial Solutions, Inc. will
tabulate the votes represented in person or by proxy at our
annual meeting and act as the inspectors of the election.
How To
Vote
Please refer to Stockholders Entitled to Vote at Annual
Meeting to determine if you are the stockholder of record
of your shares or if you are a beneficial owner of your shares.
Stockholders of record may vote their shares in person at
the annual meeting or by granting a proxy. If you are a
stockholder of record, you may vote by proxy on the Internet
(which our board recommends) or by telephone by following the
voting instructions set forth on the Notice of Internet
Availability of Proxy Materials you received. If you requested a
paper copy of our proxy materials, you may also vote by marking,
signing and dating the proxy card and mailing it to us in the
envelope provided. Please sign your name exactly as it appears
on your proxy card.
Internet and telephone voting ends at 11:59 p.m.,
eastern daylight time, on May 25, 2010.
If you mail your proxy card, we must receive it no later than
6:00 p.m. central daylight time, on May 25, 2010, for
your vote to be counted at the annual meeting.
We encourage you to vote by proxy even if you plan to attend
the annual meeting in person.
Please refer to Changing Your Vote for more
information about the effect of your proxy if you vote in person
at the annual meeting.
Beneficial owners may vote their shares by providing
voting instructions to their broker or nominee before our annual
meeting. If you are a beneficial owner, you may not vote your
shares in person at our annual meeting unless you obtain and
present at the annual meeting a proxy from your broker or
nominee; however, you may attend the annual meeting.
If you received more than one Notice of Internet Availability of
Proxy Materials, you hold shares registered in more than one
name. This sometimes occurs when a stockholder holds shares in
his/her own
name and then also in a representative capacity, such as a
trustee on behalf of a trust. Please vote all shares for which
you received a Notice of Internet Availability of Proxy
Materials so that you can ensure all of your shares are
represented at the meeting.
Attending
the Annual Meeting
The annual meeting begins promptly at 9:00 a.m., central
daylight time. Please arrive no later than 8:30 a.m. to
allow us to register your attendance and to ensure that we start
the meeting on time. You must bring a valid drivers
license or other proof of identification.
Changing
Your Vote
You may change your vote and revoke your proxy at any time prior
to the vote at the annual meeting. If you are a stockholder of
record, you may change your vote by:
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Sending a written statement, revoking your proxy, to our
corporate secretary addressed as follows:
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By Mail
Dolan Media Company
Attention: Corporate Secretary
222 South Ninth Street
Suite 2300
Minneapolis, MN 55402
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By electronic mail
secretary@dolanmedia.com
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We must receive your written statement, revoking your proxy,
by 6:00 p.m., central daylight time, May 25, 2010, for
it to be effective.
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Voting on the Internet or by telephone at a later time;
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Mailing a properly signed proxy card to us, having a later
date; or
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Voting in person at the annual meeting.
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If you are a beneficial owner, you may change your vote by
submitting new voting instructions to your broker or nominee by
the deadline your broker or nominee has set for changing voting
instructions.
Delivery
of Proxy Materials
Pursuant to SEC rules, we are making our proxy materials, which
include our notice of the 2010 annual meeting of stockholders,
proxy statement and annual report to stockholders, available to
you over the Internet at www.proxyvote.com instead of
mailing you a printed set of the proxy materials. You will need
your
12-digit
Control Identification Number, provided with the Notice of
Internet Availability of Proxy Materials, to access the notice
of the 2010 annual meeting of stockholders, proxy statement and
annual report to stockholders. We believe that this
e-proxy
process will expedite your receipt of proxy materials, lower our
costs and reduce the environmental impact of our annual meeting.
In accordance with the
e-proxy
process, we mailed to each of our stockholders of record as of
March 29, 2010, a Notice of Internet Availability of Proxy
Materials, which mailing commenced on or about April 7,
2010. The Notice contains instructions on how you may access our
proxy materials and vote your shares over the Internet or by
telephone. If you would like to receive a printed copy of our
proxy materials from us instead of downloading them from the
Internet, please follow the instructions included with the
Notice of Internet Availability of Proxy Materials.
Stockholders
List
We will make available, upon request, a list of the names of all
stockholders of record who are eligible to vote at our annual
meeting. This list will be available ten days prior to the
annual meeting during the hours of 8:30 a.m. to
4:30 p.m. (central daylight time) at our principal
executive offices, located at 222 South Ninth Street,
Suite 2300, Minneapolis, Minnesota 55402. You may review
the list for any purpose relevant to the annual meeting by
contacting our corporate secretary in writing, either by mail
address to our principal executive offices, attention Corporate
Secretary, or by email to secretary@dolanmedia.com. We
will also make this list available at the annual meeting.
Proxy
Solicitation Costs
We will pay the costs of preparing, assembling, printing,
mailing and distributing the Notice of Internet Availability of
Proxy Materials and any proxy materials that our stockholders
have requested be mailed to them. This includes reimbursing
stockholders of record for the expenses they incur in forwarding
our proxy materials to beneficial owners. Our directors,
officers and employees may solicit proxies personally, by mail,
telephone, fax or over the Internet. We do not pay our
directors, officers or employees any extra compensation for
soliciting proxies. We have also engaged Morrow & Co.,
LLC to solicit proxies on our behalf, either by mail, telephone,
fax, or over the Internet. Morrow & Co., LLCs
address is 470 West Ave., Stamford, CT 06902. We expect to
pay Morrow & Co. approximately $30,000 for its proxy
solicitation services, consisting of a flat fee of $7,000, along
with a fee of $5.50 for each stockholder of record and
beneficial owner it contacts to solicit a proxy on our behalf.
We will also reimburse Morrow & Co. for reasonable
expenses it incurs on our behalf in connection with soliciting
proxies.
Transfer
Agent
Our transfer agent is BNY Mellon Shareholder Services. If you
are a stockholder of record and need to change your name or
address, need information regarding the transfer of your shares,
or have other questions regarding your shares, please contact
BNY Mellon Shareholder Services directly, at
1-800-953-2495,
on the Internet at www.bnymellon.com/shareowner/isd or in
writing at BNY Mellon Shareholder Services,
P.O. Box 358015, Pittsburgh, PA
15252-8015.
4
COMPANY
GOVERNANCE
Corporate
Governance Guidelines
Our board has adopted corporate governance guidelines. These,
along with our committee charters, provide a framework for the
governance of our company. These guidelines provide, among other
things, that:
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Our board of directors consists of a majority of independent
directors and that each of the boards three standing
committees consists of members who are independent. Currently,
Mr. Dolan, our chairman, chief executive officer and
president, is the only director who is not independent.
Mr. Dolan does not serve on any of the boards
committees.
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Our directors possess the highest personal and professional
ethics and are committed to the long-term interests of our
companys stockholders.
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No director serves on the boards of more than three public
companies, unless the board determines that this does not impair
the directors ability to serve effectively on our board.
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The nominating and corporate governance committee oversees and
manages an annual evaluation of the board.
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The nominating and corporate governance committee is responsible
for overseeing these guidelines and ensuring that we adhere to
them. The committee periodically reviews and reassesses the
adequacy of these guidelines and recommends proposed changes to
the board of directors for consideration.
Copies of our corporate governance guidelines and committee
charters are available under Corporate Governance in the
Investor Relations section of our web site at
www.dolanmedia.com, or by written request to our
corporate secretary. Please refer to Communications with
the Company and the Board in this proxy statement for
information about how to contact our corporate secretary.
Our Codes
of Ethics and Business Conduct Policies
We have adopted two codes of ethics: a Code of Business Conduct
and Ethics, which we refer to as our Code of Conduct, and a Code
of Ethics for our Senior Financial Officers, Chief Operating
Officer and Principal Executive Officer, which we refer to as
our Code of Ethics. We adopted these policies to ensure that all
of our directors, officers and employees observe the highest
standards of ethics in conducting our business.
Under our Code of Conduct, our core values include respect for
individuals, honesty, integrity and leadership by example. Among
other things, our Code of Conduct:
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requires all directors, officers and employees to conduct our
business affairs fairly, free of conflicts of interests and in
an ethical manner;
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prohibits conduct that may raise questions to our honesty,
integrity or reputation; and
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includes a process for reporting complaints and concerns about
violations of this code of conduct or other similar policies to
a compliance committee, consisting of our chief operating
officer, our chief financial officer and our controller.
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Our Code of Ethics requires our senior financial officers
(including our principal financial officer), chief operating
officer and principal executive officer to:
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act with honesty and integrity and in an ethical manner,
avoiding actual or apparent conflicts of interests in personal
and professional relationships;
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promptly disclose to the audit committee any material
relationship or transaction that could give rise to a conflict
of interest;
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comply with generally accepted accounting principles and ensure
that accounting entries are promptly and accurately recorded and
documented; and
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report to the audit committee or nominating and corporate
governance committee any violations to the Code of Ethics or
other company policies, compliance programs or laws, including
material weaknesses in the design or operation of internal
controls, fraud or material information that calls into question
disclosures we have made in our periodic reports on file with
the Securities and Exchange Commission.
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Mr. Dolan, Mr. Pollei, Ms. Duncomb, who also acts
as our principal accounting officer, our controller, and our
senior financial officers at National Default Exchange,
DiscoverReady and Counsel Press are subject to this policy.
The nominating and corporate governance committee is responsible
for overseeing and periodically evaluating these policies. The
committee recommends proposed changes to these policies to the
Board for consideration. Both our Code of Conduct and our Code
of Ethics are available in the Corporate Governance section of
our web site under the Investor Relations at
www.dolanmedia.com, or by written request from our
corporate secretary. Please refer to Communications with
the Company and our Board.
Related
Party Transactions and Policies
Our board of directors recognizes that transactions or other
arrangements between us and any of our directors or executive
officers may present potential or actual conflicts of interest.
Accordingly, as a general matter, it is our boards
preference to avoid such transactions and other arrangements.
Nevertheless, our board recognizes that there are circumstances
where such transactions or other arrangements may be in, or not
inconsistent with, our best interests. We have adopted a formal
written policy that requires any transaction, arrangement or
relationship in which we will be a participant and in which the
amount involved exceeds $120,000, and in which any related
person (directors, executive officers, stockholders owning at
least 5% of any class of our voting securities, their immediate
family members and any entity in which any of the foregoing
persons is employed or is a general partner or principal) had or
will have a direct or indirect material interest, to be
submitted to our audit committee for review, consideration and
approval.
In the event that a proposed transaction with a related person
involves an amount that is less than $120,000, the transaction
will be subject to the review and approval of our chief
financial officer (or our chief executive officer, if the chief
financial officer, an immediate family member of the chief
financial officer, or an entity in which any of the foregoing
persons is employed or is a general partner or principal is a
party to such transaction). If the transaction is approved by
the chief financial officer or chief executive officer, if
applicable, such officer will report the material terms of the
transaction to our audit committee at its next meeting. The
policy provides for periodic monitoring of pending and ongoing
transactions. In approving or rejecting the proposed
transaction, our audit committee (or chief financial officer or
chief executive officer, if applicable) will consider the
relevant facts and circumstances available to the audit
committee (or chief financial officer or chief executive
officer, if applicable), including (1) the impact on a
directors independence if the related person is a director
or his or her family member or related entity, (2) the
material terms of the proposed transaction, including the
proposed aggregate value of the transaction, (3) the
benefits to us, (4) the availability of other sources for
comparable services or products (if applicable), and (5) an
assessment of whether the proposed transaction is on terms that
are comparable to the terms available to an unrelated third
party or to our employees generally. Our audit committee (or
chief financial officer or chief executive officer, if
applicable) will approve only those transactions that, in light
of known circumstances, are in, or are not inconsistent with,
our best interests and the best interest of our stockholders.
The following is a summary of transactions since January 1,
2009, (1) to which we have been a party in which the amount
involved exceeded $120,000 and in which any related person had
or will have a direct or indirect material interest, other than
compensation arrangements that are described in
Compensation Discussion and Analysis,
Executive Compensation and Director
Compensation in this proxy statement, or (2) that we
otherwise believe should be disclosed. Except as noted below,
all of the transactions described below are continuing related
party transactions that we initially entered into prior to our
boards adoption of a written policy regarding related
party relationships in July 2007. The audit committee reviewed
and ratified such continuing transactions at its February 2009
and 2010 committee meetings in accordance with our related party
transactions policy.
6
David
A. Trott
David A. Trott is the chairman and chief executive officer of
our majority-owned subsidiary, American Processing Company, LLC
d/b/a National Default Exchange, which we refer to as NDeX.
Mr. Trott owns a 68% interest in and is the managing
attorney of Trott & Trott, P.C., one of eight law
firm customers with whom NDeX has entered an exclusive long-term
services agreement to provide mortgage default processing
services. See Services Agreement below.
Until January 4, 2010, Mr. Trott owned a 5.1% interest
in NDeX. From January 1, 2009, through November 30,
2009, he held this interest indirectly through his ownership in
APC Investments, LLC, whose members comprised the members of
Mr. Trotts law firm, Trott & Trott. APC
Investments held a 7.6% interest in NDeX. On December 1,
2009, APC Investments distributed its interest in NDeX to each
of its members, including Mr. Trott, who had a 68%
ownership interest in APC Investments. On December 31,
2009, the members of APC Investments sold an aggregate 5.1%
interest in NDeX (including Mr. Trott, who sold a 3.5%
interest) to our wholly-owned subsidiary, Dolan APC, LLC. On
January 4, 2010, the members of APC Investments, including
Mr. Trott, sold their remaining interest in NDeX (including
1.7% held by Mr. Trott) to Dolan APC. See Notes
Payable to and Stock Issued to Mr. Trott below for
more information regarding the sale of Mr. Trotts
interest in NDeX.
During 2009, NDeX made distributions to APC Investments (or its
members) in the aggregate amount of $1.6 million, of which
Mr. Trott received approximately $1.1 million. Under
the terms of NDeXs amended and restated operating
agreement, APC Investments had the right until February 7,
2010, to require NDeX to repurchase all or any portion of its
membership interests at a purchase price based on 6.25 times
NDeXs trailing twelve month earnings before interest,
depreciation and amortization, less the aggregate amount of any
interest bearing indebtedness outstanding for NDeX as of the
date the repurchase occurs. This put right expired when the
members of APC Investments, including Mr. Trott, sold their
interest in NDeX in January 2010.
Services Agreement. During the year ended
December 31, 2009, Trott & Trott was one of
NDeXs eight law firm customers. In 2009, Trott &
Trott was NDeXs second largest law firm customer,
accounting for 28.7% of our mortgage default processing services
revenues. NDeXs relationship with Trott & Trott
is governed by a services agreement dated March 14, 2006.
The services agreement provides for the exclusive referral of
files from Trott & Trott to NDeX for servicing, unless
Trott & Trott is otherwise directed by its clients.
The services agreement is for an initial term of fifteen years,
with the term to be automatically extended for up to two
successive ten-year periods unless either party provides the
other party with written notice of its intention not to extend
the initial or extended term then in effect. During 2009, NDeX
was paid a fixed fee for each file its customers directed NDeX
to process, with the amount of such fixed fee being based upon
the type of file (e.g., foreclosure, bankruptcy, eviction
or litigation). For the year ended December 31, 2009, NDeX
received revenues of $43.5 million from fees for mortgage
default processing services by Trott & Trott, which
takes into account an increase in the fees Trott &
Trott pays to us that took effect in January 2009. The success
of our mortgage default processing services business is tied to
the number of files that Trott & Trott and NDeXs
other customers receive from their mortgage lender and loan
servicer clients or that NDeX receives directly from its
customers related to residential real estate in California. We
therefore rely upon Mr. Trott, who through
Trott & Trott has developed and maintains
relationships with a substantial number of Trott &
Trotts clients, to attract additional business from its
current
and/or new
clients.
Detroit Legal News Publishing. We own 35.0% of
the membership interests in The Detroit Legal News Publishing
Company, or DLNP, the publisher of Detroit Legal News.
Mr. Trott and his family members indirectly own 80.0% of
Legal Press, LLC, which is the holder of 10.0% of the membership
interests in DLNP.
In November 2005, DLNP entered into an agreement with
Trott & Trott pursuant to which Trott &
Trott agreed to forward to DLNP for publication all legal
notices that Trott & Trott is required to publish on
behalf of its mortgage default clients in Michigan. As a result,
Detroit Legal News publishes, or through its statewide network
causes to be published, all public notices required to be filed
in connection with files serviced by NDeX for Trott &
Trott that involve foreclosures in Michigan. DLNP also agreed
that it would provide certain other services for
Trott & Trott, including attending foreclosure sales,
bidding on real property and recording
7
of sheriffs deeds in connection with foreclosure sales. In
exchange for the services provided by DLNP under the agreement,
Trott & Trott pays DLNP according to fees agreed to by
the parties from time to time. These fees, however, are not
permitted to exceed the customary fee that DLNP charges its
other customers. In 2009, Trott & Trott paid DLNP
$21.3 million to post foreclosure notices in Detroit Legal
News and for other related services. The agreement terminates on
December 31, 2015 (unless at such date, Legal Press, LLC
remains a member of DLNP, in which case the agreement would
terminate at such date when Legal Press, LLC, or its successor,
is no longer a member of DLNP), but Trott & Trott may
terminate the agreement at any time upon the failure by DLNP to
cure a material breach of its obligations under the agreement.
DLNP maintains a small number of its clerical employees at the
offices of Trott & Trott to facilitate the provision
of services for Trott & Trott.
In November 2005, DLNP entered into a consulting agreement with
Mr. Trott whereby Mr. Trott agreed to provide
consulting services related to the business of DLNP for a term
lasting until December 31, 2015. The agreement may be
terminated by either party prior to December 31, 2015, in
the event of a material breach by either party or in the event
the number of foreclosure notices submitted to DLNP by
Trott & Trott is less than 1,000 in any calendar year
during the term of the agreement. Under the consulting
agreement, DLNP agreed to obtain, for its benefit, an insurance
policy on the life of Mr. Trott in the amount of
$15.0 million for a term of 15 years. In exchange for
the consulting services provided to DLNP, Mr. Trott is
entitled to receive a consulting fee equal to the lesser of
(1) $500,000 or (2) the amount equal to 7% of
DLNPs net income less the amount paid by DLNP for the life
insurance policy. In 2009, Mr. Trott was paid $483,974 in
fees by DLNP for his consulting services. In addition to the
fees Mr. Trott receives under the consulting agreement,
DLNP also pays Mr. Trott an annual salary of $20,000.
Notes Payable and Stock Issued to David A.
Trott. In connection with the sale to us of his
aggregate 5.1% ownership interest in two transactions on
December 31, 2009, and January 4, 2010, we issued
168,644 shares of our common stock, having an aggregate
value of $1.7 million based on the closing share price on
December 31, 2009, and agreed to pay him $8.8 million
(exclusive of interest on $2.3 million of the balance
payable beginning August 1, 2010). Through the date of this
proxy statement, we have paid him $4.1 million. We will pay
an additional $0.7 million on the first business day of
April, May, June and July 2010. Beginning on August 1,
2010, we will pay the remaining $2.3 million balance
(including interest accruing at a rate of 4.25%) in 29 equal
monthly installments. This transaction was not made in
accordance with the terms of our related party transaction
policy because it was approved by our board of directors,
instead of our audit committee.
Net Director. Mr. Trott owns
approximately 11.1% of the membership interests in Net Director,
LLC, which provides an information clearing house service used
by NDeX. NDeX paid Net Director approximately $0.1 million
for these services in 2009. The Barrett law firm, NDeXs
largest customer, also owns a 5.0% interest in Net Director.
American Servicing Corporation. Mr. Trott
owns 50% of American Servicing Corporation, or ASC, a provider
of property tax searches and courier services to NDeX. NDeX paid
ASC approximately $0.3 million for these services in 2009.
8
Loan Agreements. While Mr. Trott directly
or indirectly owned an interest in NDeX, Dolan Finance Company,
our wholly-owned subsidiary, entered into loan agreements with
NDeX, in the following amounts with the following borrowing and
maturity dates:
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Aggregate
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Principal
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and Interest
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Payments
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Principal
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Borrowing
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Maturity
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made in
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Acquisition
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Amount
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Date
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Date
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2009
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Robert Tremain & Associates(1)
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$
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3,300,000
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November 11, 2006
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November 11, 2010
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$ 948,272
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Feiwell & Hannoy(2)
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13,000,000
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January 9, 2007
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January 9, 2011
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3,791,137
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1,750,000
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January 9, 2008
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January 9, 2012
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544,144
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1,750,000
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January 9, 2009
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January 9, 2013
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478,535
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Barrett-NDEx(3)
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166,000,000
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September 2, 2008
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September 2, 2017
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29,039,514
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13,000,000
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December 4, 2009
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November 30, 2013
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321,319
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Albertelli(4)
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7,000,000
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October 1, 2009
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September 30, 2013
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527,192
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This loan was made to fund a portion of the purchase price for
NDeXs acquisition of the mortgage default processing
services business of Robert A. Tremain & Associates.
At such time, Trott & Trott also acquired the
law-related assets of Robert A. Tremain & Associates. |
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In connection with NDeXs acquisition of the mortgage
default processing services business of Feiwell &
Hannoy Professional Corporation, Dolan Finance made three term
loans to NDeX in the amounts and on the dates in 2007, 2008 and
2009, set forth in the table. The loan in the principal amount
of $13.0 million funded the cash portion of the purchase
price for the business acquired. The two loans, each in the
principal amount of $1.75 million, funded payments NDeX
owed to Feiwell & Hannoy under a promissory note
entered at the time of the acquisition. |
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Dolan Finance made the first loan in the amount of
$166.0 million to fund a portion of the purchase price for
the acquisition of National Default Exchange, LP and its
affiliated entities (Barrett-NDEx), and the second
loan in the amount of $13.0 million to fund the earnout
payment due to the sellers of Barrett-NDEx. The
$166.0 million loan was not made in accordance with the
terms of our related party transaction policy because it was
approved by our board of directors, instead of the audit
committee. |
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Dolan Finance made this loan to fund a portion of the purchase
price for the acquisition of the mortgage default processing
services and related business of James E. Albertelli, P.A., The
Albertelli Firm, P.C., Albertelli Title, Inc. and James E.
Albertelli (together, Albertelli). This loan was not
made in accordance with the terms of our related party
transaction policy because it was approved by our board of
directors, instead of the audit committee. |
Each of the loans described above bears interest at the prime
rate plus 2.0% and interest and principal for each loan are
payable in equal monthly installments over such loans
term. In connection with the loans made to NDeX to fund the
acquisition of the mortgage default processing services business
of Feiwell & Hannoy, Dolan Finance Company agreed to
pay Trott & Trott a fee equal to
1/2%
of the outstanding balance times Trott & Trotts
(or its assignees) ownership percentage of NDeX so long as the
loan is outstanding. During 2009, Dolan Finance made aggregate
payments of approximately $2,398 to Trott & Trott
pursuant to this agreement. This agreement terminated when we
acquired the remaining portion of Trott & Trotts
interest in NDeX from the former members of APC Investments in
January 2010.
Lease of Office Space. On April 1, 2007,
NDeX and our Michigan Lawyers Weekly publishing unit began
subleasing approximately 30,000 square feet in suburban
Detroit, Michigan from Trott & Trott at a rate of
$10.50 per square foot, triple net, which sublease expires on
March 31, 2012. During 2009, NDeX and Michigan Lawyers
Weekly paid Trott & Trott an aggregate of $688,970 in
lease payments. Trott & Trott leases this space from
NW13, LLC, a limited liability company in which Mr. Trott
owns 75% of the membership interests.
9
Employment
of Mr. Dolans Spouse
Mr. Dolans spouse administers Dolan Media Newswires,
our Internet-based, subscription newswire, and is our employee.
In 2009, we paid $72,288 to Mr. Dolans spouse as
compensation for her services. On May 15, 2009, in
connection with annual employee stock grants, we issued to
Mr. Dolans spouse stock options with an exercise
price equal to $12.51 that are exercisable for 455 shares
of common stock, as well as 250 shares of restricted stock.
The options and restricted stock vest in four equal annual
installments commencing on May 15, 2010, and the options
terminate in seven years.
Employment
of Mr. Stodders Brother
We employ Mr. Stodders brother as the director of
social media for our Business Information Division. In 2009, we
paid Mr. Stodders brother $120,000 for his services.
On May 15, 2009, in connection with annual employee stock
grants, we issued to Mr. Stodders brother stock
options with an exercise price equal to $12.51 that are
exercisable for 800 shares of common stock, as well as
439 shares of restricted stock. The options and restricted
stock vest in four equal annual installments commencing on
May 15, 2010, and the options terminate in seven years.
BOARD
COMMITTEES AND COMMITTEE MEMBERSHIP
Our board of directors has established an audit committee, a
compensation committee and a nominating and corporate governance
committee and the charters for these committees are available
under the Investor Relations section of our web site at
www.dolanmedia.com. Our board may establish other committees
from time to time to facilitate the management of Dolan Media
Company.
During 2009, our board of directors held six meetings. During
2009, each incumbent director attended all of the board meetings
and meetings of committees on which he or she served that
occurred while such director was a member of our board and such
committees, except Ms. Rich Fine who attended 83% of the
board meetings and 100% of the compensation committee meetings.
Our practice is that all directors attend our annual meeting,
unless a director is unable to attend due to illness or another
emergency or because his or her term is ending and he or she has
not been nominated for re-election to the Board. We expect that
most of our directors will attend our 2010 annual meeting.
Mr. Christianson serves on the boards of more than three
public companies, including us. Our board has determined that
his service as a director on these other boards does not impair
his ability to serve us effectively.
The following table describes the composition of each of the
boards standing committees during the year ended
December 31, 2009. In accordance with our corporate
governance guidelines and the requirements of the New York Stock
Exchange, each of our committees consists solely of independent
directors.
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Nominating and
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Name
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Audit
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Compensation
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Corporate Governance
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John C. Bergstrom
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X
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*
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X
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Anton J. Christianson
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X
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X
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*
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Arthur F. Kingsbury
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X
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(1)
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X
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Jacques Massicotte
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X
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X
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Lauren Rich Fine
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X
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George Rossi
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X
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*
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X = member; * = chair
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Mr. Christianson served on our audit committee until
July 31, 2009, when the board appointed Mr. Kingsbury
to serve on the audit committee. |
10
Audit
Committee
In 2009, the audit committee met four times and each member of
the committee attended every meeting. Our audit committee
oversees a broad range of issues relating to our accounting and
financial reporting processes and audits of our financial
statements. In particular, our audit committee:
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assists our board in monitoring the integrity of our
consolidated financial statements, our compliance with legal and
regulatory requirements, our independent registered public
accounting firms qualifications and independence, and the
performance of our independent registered public accounting firm;
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appoints, compensates, retains and oversees the work of any
independent registered public accounting firm engaged for the
purpose of performing any audits, reviews or attest services;
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oversees the work of our internal auditor; and
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prepares the audit committee report that the SEC rules require
be included in this proxy statement.
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The committee reviews and approves all engagement letters
between our independent registered public accounting firm and
us. Please refer to our discussion on the audit committees
Policy on Pre-approval of Audit and Permissible Non-Audit
Services later in this proxy statement for more
information about the committees policies and practices
related to the approval of services our independent registered
public accounting firm performs for us. The committee also
reviews all related party transactions (unless it has elevated a
transaction to our board for its review and consideration) and
resolves conflicts of interest involving our directors,
executive officers and us. Please refer to Related Party
Transactions and Policies for more detailed information
about how we address transactions between our directors,
executive officers, other related persons and us. Our audit
committee is responsible for receiving and investigating
complaints or reports regarding our accounting practices,
internal controls and financial matters and has developed
procedures that allow our employees to communicate anonymously
and/or
confidentially these concerns directly to our audit committee.
Our Board has determined that each member of the audit committee
is independent under the New York Stock Exchange
listing standards, Section 10A(m)(3) of the Securities
Exchange Act of 1934 and our corporate governance guidelines.
The Board has also determined that, as required by the
committees charter, each member is financially literate
and no member serves on the audit committees of more than three
public companies. Our audit committee chair, Mr. Rossi, is
our financial expert under the SEC rules implementing
Section 407 of the Sarbanes-Oxley Act, although both
Messrs. Massicotte and Kingsbury also qualify as a
financial expert under the SEC Rules implementing
Section 407 of the Sarbanes-Oxley Act.
Compensation
Committee
In 2009, the compensation committee met eleven times and each
member of the committee attended every meeting that occurred
while he or she was a member. The committee reviews our
compensation practices and policies and approves the
compensation plans of our executive officers and key employees.
In particular, the compensation committee is responsible for:
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reviewing and approving corporate goals and objectives for
Mr. Dolan and our other executive officers;
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evaluating Mr. Dolans and, with the assistance of
Mr. Dolan, our other executive officers performance
in relation to those goals and objectives and determining and
approving Mr. Dolans and our other executive
officers compensation based on that evaluation;
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administering all of our equity-based and other incentive
compensation plans and determining all awards granted under our
equity-based and other incentive compensation plans, except for
grants to non-employee directors under these plans;
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reviewing, and recommending for our boards approval,
directors fees, committee fees, equity-based compensation and
other amounts we pay to our non-employee directors for their
service as a director;
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overseeing our policies to preserve tax deductibility of our
executive compensation programs;
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reviewing our compensation policies and practices for
risk; and
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reviewing and discussing with our senior managers the
Compensation Discussion and Analysis required by the SECs
disclosure rules for executive compensation and furnishing a
report to be included in our proxy statement.
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In addition, the committee reviews all employment, severance and
change-in-control
agreements for our chief executive officer and other executive
officers, approves those agreements for the chief executive
officer and either approves, or recommends for approval by the
board, those agreements for other executive officers. The
committee also periodically reviews our equity-based and other
incentive compensation plans and makes recommendations to our
board regarding those plans. In determining the compensation of
our executive officers and awards under our incentive
compensation plans other than for our chief executive officer,
the committee considers the recommendations of Mr. Dolan,
our chief executive officer. The committee believes that
Mr. Dolan is in the best position to regularly evaluate the
performance of the other executive officers and our other
employees.
From time to time, the compensation committee engages third
party consultants to assist it in making decisions about
executive compensation, our equity-based and other incentive
compensation plans and other compensation related matters.
During 2008 and 2006, the committee engaged Hewitt Associates, a
human resources consulting firm, to conduct an analysis of the
executive compensation of certain peer companies. In 2009 and
2007, our compensation committee did not conduct an analysis of
executive compensation of peer companies because the committee
believes that this study is not required on an annual basis.
However, the committee did engage Hewitt Associates in 2009 and
2007 to assist the committee in designing executive compensation
plans, including the equity compensation awards we granted in
connection with our initial public offering in 2007. The
committee expects to continue to conduct peer company analyses
from time to time to ensure that our executive compensation is
consistent with that of similar companies.
You should refer to our Compensation Discussion and
Analysis later in this proxy statement for more
information about our compensation committees use of
Hewitt Associates and for additional information on the
committees processes and practices relating to the
compensation of our board and executive officers.
Our Board has determined that each member of the compensation
committee is independent under the New York Stock
Exchange listing standards and our corporate governance
guidelines. Our Board also has determined that each member
qualifies as a non-employee director under
Rule 16(b)(3) of the Securities Exchange Act of 1934 and
that each member qualifies as an outside director
under Section 162(m) of the Code.
Nominating
and Corporate Governance Committee
In 2009, our nominating and corporate governance committee met
seven times and each member of the committee attended every
meeting that occurred. Our nominating and corporate governance
committee:
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oversees and assists our board of directors in identifying,
reviewing and recommending nominees for election as directors;
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advises our board of directors with respect to board
composition, procedures and committees;
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recommends directors to serve on each committee;
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oversees the evaluation of our board of directors and our
management; and
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develops, reviews and recommends corporate governance
guidelines, code of ethics and other similar company policies.
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Our board of directors has determined that each member of our
nominating and corporate governance committee is
independent under the New York Stock Exchange
listing standards and our companys corporate governance
guidelines.
12
Companys
Leadership Structure, Lead Independent Director and Executive
Sessions
Our corporate governance guidelines require our board to select
its chairman and our chief executive officer in any way that it
considers to be in our best interests. Our board believes that
an effective leadership structure can be achieved either by
combining or separating the chairman and chief executive officer
positions as long as the structure encourages the free and open
dialogue of competing views and provides for strong oversight of
management. Our board further believes that the decision of
whether to combine or separate these positions depends upon our
particular circumstances at a given point in time. Accordingly,
our board has no policy with respect to separating the offices
of chairman and chief executive officer, believing that this
issue is part of our succession planning and that it is in our
best interests for the board to make this determination each
time it elects a new chief executive officer.
Since 1992 (which includes time served for our predecessor
company), Mr. Dolan has served as both the chairman of our
board of directors and our chief executive officer. Our board
believes that Mr. Dolan is best situated to serve as its
chairman because he is very familiar with our business and the
industries we serve and is most capable of effectively
identifying the opportunities (including potential acquisitions)
and challenges we face. Because of his long service to us as
both chief executive officer and chairman, our board believes
that Mr. Dolan is in the best position to lead discussions
on and execute our operating strategy and develop agendas to
ensure our board is focusing on the issues that are most
important to our long-term growth. Therefore, we believe that
Mr. Dolan generally speaking for and leading both the
company and our board is appropriate and in our best interests.
Our non-employee directors have designated
Mr. Christianson, the chair of our nominating and corporate
governance committee, to serve as the boards lead
independent director for an indefinite term. Like
Mr. Dolan, Mr. Christianson is a founder of our company and
has served on our board (including the board of our predecessor
company) since 1992. Mr. Christianson sets the agenda for
and presides over all executive sessions of the non-employee
directors of our board. In addition, Mr. Christianson
performs those duties our board delegates to him to assist the
board in fulfilling its responsibilities to us. Our board meets
regularly in executive session, without Mr. Dolan and other
members of our management team, and Mr. Christianson acts
as the boards liaison in discussing matters raised in
these sessions with Mr. Dolan and other members of our
management team.
We believe that our current leadership structure, whereby a
single person with the knowledge, skills and experience of
Mr. Dolan sets the tone and has primary responsibility for
managing our operations, allows for decisive leadership and
ensures that we are able to communicate our message and strategy
clearly and consistently to our stockholders, employees,
customers and other stakeholders. Further, we believe our
leadership structure provides effective oversight of our board
for the following reasons:
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Mr. Christianson is a strong, independent lead director;
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Our board has established and follows detailed corporate
governance guidelines;
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Our board regularly and rigorously reviews the leadership
structure and assesses its effectiveness;
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Seven of our eight directors are independent;
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Each of our board committees is made up entirely of independent
directors;
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Our independent directors meet regularly in executive session
(e.g., after each regularly scheduled meeting in 2009);
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Our compensation committee annually reviews
Mr. Dolans performance as our chief executive officer
and president; and
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Our directors, as a group, possess a broad range of skills and
experience, which we believe, provide the leadership and
strategic direction we require to maximize long-term value for
our stockholders.
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Boards
Role in Risk Oversight
From time to time, we are exposed to risks, including strategic,
operational, financial and compliance risks. Our management has
designed an enterprise-wide risk management process to identify,
monitor and
13
evaluate these risks. Our board of directors is responsible for
overseeing our risk management process and ensuring that this
process, as designed, is adequate to effectively manage the
risks that we face. Annually, our board reviews the risk
assessments undertaken by our management team and assists us in
ensuring that we have policies and practices in place to
mitigate potential risks we have identified.
While our board is ultimately responsible for overseeing our
risk management, our audit committee assists our board in
fulfilling this responsibility by working with our management
team to evaluate and assess our financial risk exposure and
plans we have implemented to monitor and mitigate these risks.
These risks include threatened and pending litigation, published
reports that raise material issues regarding our financial
statements or accounting policies, tax matters, legal and
regulatory compliance, and matters that could materially impact
our internal control over financial reporting, disclosure
controls and financial reporting. At each meeting of our audit
committee, our chief financial officer reports to the audit
committee on these risks and other enterprise risks we are
facing, highlighting any new risks that may have arisen since
the committee last met. Our audit committee updates the board on
these discussions and the results of the risk assessments that
the committee has reviewed. The audit committee further ensures
that our management updates and presents its enterprise risk
assessment to the board at least annually. We have designed the
audit committees role in risk management oversight to
provide our board visibility regarding identifying and assessing
the critical risks we face, as well as mitigation strategies we
have employed to manage these risks.
In addition, our compensation committee evaluates the
compensation programs and practices for certain key employees to
ensure these programs are designed so these key employees are
incentivized to make decisions that lead to long-term value for
our stockholders, without encouraging excessive behavior and
risks that are reasonably likely to have a material adverse
effect on us.
Director
Compensation
The following table provides information for the year ended
December 31, 2009, regarding all plan and non-plan
compensation awarded to, earned by or paid to each person who
served as a director during 2009.
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Fees Earned or
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Option
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All Other
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Name
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Paid in Cash
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Awards(2)
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Compensation
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Total
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James P. Dolan(1)
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$
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$
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$
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$
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John C. Bergstrom
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44,925
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39,679
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4,618
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(3)
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89,222
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Anton J. Christianson
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43,520
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39,679
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83,199
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Arthur F. Kingsbury
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34,830
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30,284
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7,731
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(3)
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74,381
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Jacques Massicotte
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40,100
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36,017
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76,117
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Lauren Rich Fine
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33,125
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30,284
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63,409
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George Rossi
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37,000
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33,946
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70,946
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(1) |
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Mr. Dolan does not receive compensation for his service to
us as a director. See Executive Compensation-Summary
Compensation Table in this proxy statement for information
about the compensation we paid to Mr. Dolan during the year
ended December 31, 2009. |
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(2) |
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We calculated the amounts in these columns, which represent the
aggregate grant date fair value of the equity awards, using the
provisions of FASB ASC Topic 718. See Note 14 to our
consolidated financial statements and Managements
Discussion and Analysis of Financial Condition and Results of
Operations Application of Critical Accounting
Policies and Estimates Share-Based Compensation
Expense, both included in our annual report on
Form 10-K
for the year ended December 31, 2009, that we filed with
the SEC on March 8, 2010, for information regarding the
assumptions used in the valuation |
14
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of equity awards. On May 15, 2009, we granted to each
non-employee director non-qualified options to purchase our
common stock as follows: |
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Name
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Number of Options
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John C. Bergstrom
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7,413
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Anton J. Christianson
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7,413
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Arthur F. Kingsbury
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5,658
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Jacques Massicotte
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6,729
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Lauren Rich Fine
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5,658
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George Rossi
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6,342
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The options have an exercise price equal to $12.51 per share,
the closing share price of our common stock on the grant date,
which was also the date of our 2009 annual meeting. The number
of options we granted to each non-employee director had a target
economic value that was 100% of the annual retainer and
attendance fees we expected to make to these directors during
the 2009 calendar year. The compensation committee determined
the target economic value in the same manner as described for
the named executive officers in Long-Term Equity Incentive
Compensation later in this proxy statement. These stock
options vest in four equal annual installments beginning on
May 15, 2010, and terminate seven years after the grant
date.
In addition to those stock options awarded to our directors in
2009, each of our directors who served in 2009 had the following
other stock option awards outstanding at December 31, 2009:
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Option Awards
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Number of
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Number of
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Securities
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Securities
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Underlying
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Underlying
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Unexercised
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Unexercised
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Option
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Option
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Options
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Options
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Exercise
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Expiration
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Name
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Exercisable
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Unexercisable
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Price
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Date
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John C. Bergstrom(a)
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1,719
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5,157
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$
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16.52
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05/13/2015
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(b)
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6,380
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6,379
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14.50
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08/01/2014
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Anton J. Christianson(a)
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1,719
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5,157
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16.52
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05/13/2015
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(b)
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5,914
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5,912
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14.50
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08/01/2014
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Arthur F. Kingsbury(c)
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2,711
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8,136
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18.00
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08/11/2015
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Jacques Massicotte(a)
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1,646
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4,940
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16.52
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05/13/2015
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(b)
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4,980
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4,979
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14.50
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08/01/2014
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Lauren Rich Fine(c)
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2,711
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8,136
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18.00
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08/11/2015
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George Rossi(a)
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1,719
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5,157
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16.52
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05/13/2015
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(b)
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5,602
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5,601
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14.50
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08/01/2014
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(a) |
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On May 13, 2008, we granted nonqualified stock options to
each of the non-employee directors (except Mr. Kingsbury
and Ms. Rich Fine, who were not directors on that date) in
the amounts set forth opposite each non-employee director in the
table above. The stock options vest and become exercisable in
four equal installments beginning on May 13, 2009. |
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On August 1, 2007, we granted nonqualified stock options to
each of the non-employee directors (except Mr. Kingsbury
and Ms. Rich Fine, who were not directors on that date) in
the amounts set forth opposite each non-employee director in the
table above. The stock options vest and become exercisable in
four equal annual installments beginning on August 1, 2008. |
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On August 11, 2008, we granted nonqualified stock options
to Mr. Kingsbury and Ms. Rich Fine in connection with
their appointments to our board. The stock options vest and
become exercisable in four equal annual installments, beginning
on August 11, 2009. |
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(3) |
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We offer medical coverage under our medical insurance plan to
our directors at no cost to them. During 2009,
Messrs. Bergstrom and Kingsbury were the only directors who
participated in our group health plan. We self-insure for health
insurance and the amount shown is the gross amount of the
premiums we set for the medical coverage elected by these two
directors. |
The table below describes the cash fees we paid to each
non-employee director for his or her services as a director and
for services on board committees for the year ended
December 31, 2009, and that we will pay our non-employee
directors during the year ending December 31, 2010. The
compensation committee reviews the payments we make to directors
for serving on our board and the boards committees and
recommends proposed changes to our board for approval on an
annual basis. From time to time, the committee collects and
reviews information about director compensation for
comparably-sized public companies. In determining the board fees
for 2010, the committee reviewed and considered information
provided by Hewitt Associates. For 2010, the committee
recommended an increase to the fees because, after reviewing a
Hewitt survey of director compensation for comparably-sized
companies, it determined that the retainer and other cash fees
paid to our directors were well below the average of these
companies. In addition, as the committee did not recommend an
increase to the board fees in 2009 consistent with our overall
policy of not granting increases in base salary in 2009, the
committee believed an increase was appropriate in 2010 and
necessary to more closely align our director compensation with
that paid to the directors of our peers.
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Amount of Fee
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Type of Fee
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2009
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2010
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Annual Retainer (Board Services)(1)
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$
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20,800
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26,000
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In-Person Board Meetings
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1,025
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1,400
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Telephone Board Meetings
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525
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600
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Annual Retainer (Committee Services)(1)
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4,100
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5,200
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Annual Committee Chair Retainer(1)
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4,100
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8,000
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In-Person Committee Meetings
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525
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650
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Telephone Committee Meetings
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250
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325
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We pay annual retainers for board, committee and committee chair
services in equal quarterly installments. |
The stock option grants to non-employee directors in 2009, as
described above, reflect our policy, which the board adopted in
December 2007, to grant to each non-employee director
non-qualified stock options exercisable for shares of our common
stock or other equity awards on the date of each regular annual
stockholders meeting if such director is elected at such meeting
to serve as a non-employee director or continues to serve as a
non-employee director. We use a formula that provides for awards
with a certain targeted economic value, calculated in the same
manner as described for the named executive officers in
Compensation Discussion and Analysis Long-Term
Equity Incentive Compensation later in this proxy
statement. The economic value of the awards would be equal to a
percentage (100% in 2009 for continuing directors and 200% in
2009 for new directors) of the expected cash payments to be made
to such non-employee director in the form of the annual retainer
and attendance fees, assuming the director attends all board
meetings and the meetings of committees for which he or she is a
member, during the applicable year.
In 2010 and for future years, we expect to continue to make
grants of stock options (1) to each continuing and
re-elected director coincident with each annual stockholders
meeting having a target economic value that is 100% of the
expected cash payments to be made during the calendar year and
(2) to each newly elected director having a target economic
value equal to 200% of the cash payments we would have expected
to make during the calendar year in which the director is
elected if he or she had served us as a director for the entire
year. For example, in the first quarter of 2010, we granted an
option exercisable for the purchase of 9,477 shares of our
common stock to Mr. Stern, who was appointed to our board
in January. The option had a target economic value of $68,900,
which was 200% of the cash fees we would expect to pay him
during 2010.
All directors are also reimbursed for their reasonable
out-of-pocket
expenses incurred in attending board and committee meetings and
associated with board or board committee responsibilities. We
also offer medical coverage under our self-insured medical plan
to our directors at no cost to them. In addition, we reimburse
our directors up to $5,000 annually in connection with training
related to their service on our board.
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From time to time, the compensation committee may consider and
propose special consulting arrangements or other fees for
directors for our boards approval. No director receives,
or received in 2009, any payments or equity awards in
compensation for his services as a director or on a committee
other than as set forth above.
Stock
Ownership Guidelines for Non-Employee Directors
In 2010, our board of directors adopted stock ownership
guidelines. These guidelines require each of our non-employee
directors to own shares of our common stock, having a value
equal to 300% of the annual retainer for board services (based
on the closing sales price for a share of our common stock on
the measurement date). Our non-employee directors have a period
of five years to fully comply with the guidelines and we measure
their ownership on January 1 of each year. Under the phase-in
provisions of our guidelines, each of our non-employee
directors, except Mr. Stern, must own shares of our common
stock, having a value at least equal to the percentage of the
target level set forth for each measurement date below:
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January 1, 2010
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January 1, 2011
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January 1, 2012
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January 1, 2013
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January 1, 2014
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20% of Target Level
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40% of Target Level
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60% of Target Level
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80% of Target Level
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100% of Target Level
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For purposes of this table, target level means 300%
of the annual retainer for board services that we would pay our
non-employee directors during the calendar year in which the
measurement date occurs. So, for example, for our non-employee
directors, except Mr. Stern, to fully comply with our
ownership guidelines on January 1, 2014, such directors
would need to own shares of our common stock, having a value at
least equal to 300% of the annual retainer for board services
that we would pay our non-employee directors in 2014. For
Mr. Stern, the first measurement date of the five year
phase-in is January 1, 2011. For each new non-employee
director appointed or elected to our board in the future, the
five-year phase-in period will begin on January 1 following the
effective date of the directors appointment or election to
our board.
For purposes of satisfying these guidelines, the non-employee
directors may use stock they own directly or for which they have
investment
and/or
voting control and unvested shares of restricted stock that we
may grant to them in connection with their service as directors.
As of the date of this proxy statement, all of our non-employee
directors, except Mr. Stern, have met the first year
phase-in requirement of holding 20% of the targeted number of
shares of our common stock. As discussed above, Mr. Stern,
who joined our board in January 2010, is not yet subject to
these guidelines.
Our named executive officers are also subject to these stock
ownership guidelines. You should refer to Compensation
Discussion and Analysis Policies related to
Compensation Stock Ownership Guidelines for
information about how these guidelines affect our named
executive officers.
Director
Independence
We have a policy that our board consists of a majority of
outside directors who are independent and that our audit,
compensation and nominating and corporate governance committees
consist solely of independent directors. A director is
independent if our board, as a whole, affirmatively
determines that the director has no material relationship with
us (or our consolidated subsidiaries) either directly or as a
partner, shareholder or officer of an organization that has a
relationship with us (or our consolidated subsidiaries). In
determining whether a relationship is material and thus whether
a director is independent, our board uses the
independence tests set forth in Section 303A.02
of the New York Stock Exchanges Listing Company Manual. In
addition, our board also has adopted specific independence
guidelines that conform to, or augment, the independence tests
prescribed by the New York Stock Exchange. Under these
guidelines, a director will not be independent if, within the
last three years:
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Employment Relationship: A director is or has
been an employee of Dolan Media Company, excluding employment as
an interim chairman of the board or chief executive officer, or
whose immediate family member is or has been an executive
officer of Dolan Media Company.
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Compensation: A director who received, or
whose immediate family member received, more than $120,000 per
year in direct compensation from us or any of our consolidated
subsidiaries other than (1) director and committee fees and
pension or other forms of deferred compensation for prior
service
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(provided the compensation is not contingent on continued
service), (2) compensation received by a director for
service as an interim chairman of the board or chief executive
officer; and (3) compensation received by an immediate
family member of the director for service as a non-executive
employee.
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Relationships with Auditors: A director is or
has been affiliated with or employed by, or a member of a
directors immediate family is or has been affiliated with
or employed in a professional capacity, by our (or our
consolidated subsidiaries) present or former internal or
external auditor.
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Compensation Committee Relationships: A
director, or a member of the directors immediate family,
is or has been employed as an executive officer of another
company where one of our (or of our consolidated
subsidiaries) executive officers serves on that
companys compensation committee.
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Business Relationships: A director is or has
been a director, an executive officer or an employee, or a
member of a directors immediate family is or has been a
director or executive officer, of a company (including customers
or suppliers) that has made payments to, or has received
payments from, us (or any of our consolidated subsidiaries) for
property or services in an amount that, in any single fiscal
year, exceeds the greater of $1 million or 2% of our or the
directors companys consolidated gross revenues.
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Charitable Relationships: A director, or a
member of a directors immediate family, is or has been a
director or an executive officer of a charitable organization
that receives payments from us (or any of its consolidated
subsidiaries) in an amount that, in any single fiscal year,
exceeds the greater of $1 million or 2% of our or the
directors charitable organizations consolidated
gross revenues.
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Debt Arrangements: A director, or a member of
a directors immediate family, is or has been indebted to
us (or any of our consolidated subsidiaries) in an amount that
at any time exceeds $100,000 or such indebtedness is not on
arms-length terms.
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Advisor Relationships: A director, or a member
of a directors immediate family, is a principal of a law
firm, an investment banking firm, a financial advisory firm or a
consulting firm that performs services for us (or any of our
consolidated subsidiaries), and payments made by us (or any of
our consolidated subsidiaries) to the firm in any single year
exceed the greater of $1 million or 1% of our or the
firms consolidated gross revenues.
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These independence guidelines are part of our corporate
governance guidelines, which are available under Corporate
Governance in the Investor Relations section of our web site at
www.dolanmedia.com. For purposes of the New York Stock
Exchanges independence tests and our independence
guidelines, an immediate family member is a persons
spouse, parents, children, siblings, mothers and
fathers-in-law,
sons and
daughters-in-law,
brothers and
sisters-in-law
and anyone (other than domestic employees) who shares the
persons home. In addition to applying the NYSE
independence tests and our independence guidelines, the board
considers all relevant facts and circumstances, and considers
the issue from the standpoint of both the director and person or
organization affiliated with the director.
Members of our audit committee will not be considered
independent if the member directly or indirectly accepts any
consulting, advisory or other compensation fee from us (or any
of our consolidated subsidiaries), other than compensation as a
director or a member of our boards committees, or is an
affiliated person of us (or any of our consolidated
subsidiaries). A director is an affiliated person if the
director directly or indirectly controls, is controlled by, or
is under common control with us (or any of our consolidated
subsidiaries), including an executive officer, employee, general
partner or managing member of the affiliated person. A director
will not be deemed to be in control of us (or one of our
consolidated subsidiaries) if the director does not beneficially
own more than 10% of our common stock and is not an executive
officer of us or our consolidated subsidiary.
In accordance with these guidelines, our board undertook its
annual review of director independence at the regularly
scheduled board meeting following our 2009 annual meeting of
stockholders. During this review, our board considered
transactions and relationships between each director or any
member of his or her immediate family and us and our
consolidated subsidiaries. Our board also considered whether
there were any
18
transactions or relationships between directors or any member of
their immediate families (or any entity of which a director or
an immediate family member is an executive officer, general
partner or significant equity holder). For example, the board
also reviewed relationships between Messrs. Bergstrom,
Christianson and Dolan, who also serve on the board of directors
of Peoples Educational Holdings, Inc. (NASDAQ: PEDH) together.
Also, in connection with his appointment to our board in January
2010, our board evaluated the independence of Mr. Stern.
Based on this review, our board determined that no such
transactions or relationships existed or they were immaterial,
including the fact that Messrs. Dolan, Bergstrom and
Christianson serve on another board together, because they did
not approach the thresholds set forth in either the New York
Stock Exchanges independence tests or our independence
guidelines.
In addition to the foregoing, several of our directors were
designated to our board pursuant to the rights of stockholders
under an amended and restated stockholders agreement dated
September 1, 2004. These directors were Messrs. Dolan
and Rossi. The rights of the stockholders who designated these
directors terminated upon the consummation of our initial public
offering. Both Messrs. Dolan and Rossi are the Boards
nominees for election as directors at the 2010 annual meeting.
See Proposal 1 Election of Directors
below for more information.
As a result of this review, our board has affirmatively
determined that each of our non-employee directors are
independent. The board has also determined that no members of
the audit committee received any compensation from us other than
directors fees and, in the case of Mr. Kingsbury,
medical benefits for the last three years. Mr. Dolan is
considered an inside director because of his employment as our
chairman, chief executive officer and president.
Director
Nominations
Our nominating and corporate governance committee is responsible
for conducting searches and identifying, reviewing and
evaluating candidates for election to our board. In addition to
identifying their own candidates, the committee also considers
candidates suggested by stockholders. If you are interested in
recommending a person to the nominating and corporate governance
committee to serve as a director of our company, you must notify
the corporate secretary in writing no later than
December 16, 2010. Your recommendation should include
biographical information about your proposed candidate as well
as the supporting information required by our bylaws and our
corporate governance guidelines. Our bylaws require that you
disclose the following additional information:
(1) information regarding any stockholder associated with
you; (2) a description of any derivative positions and
other hedging transactions that you or any stockholder
affiliated with you may have entered into; and (3) a
description of any agreement, arrangement or understanding that
your proposed candidate is or intends to become a party to with
respect to how your proposed candidate, if elected, will act or
vote on any issue coming before our board or pursuant to which
another person will compensate or indemnify your proposed
candidate, if elected, for his or her service as our director.
The nominating and corporate governance committee will review
and evaluate your proposed candidate, along with any potential
candidates the committee has identified through its candidate
searches. Provided that you have timely submitted your candidate
in accordance with our bylaws, as amended, the committee will
give appropriate consideration to your candidate as it does to
our other candidates. If an incumbent director has consented to
re-nomination and that director continues to be qualified and
has satisfactorily performed his duties and no reason otherwise
exists as to why this director should not stand for re-election,
the committees policy is to propose the incumbent director
to our board for re-election. After evaluating all the
candidates, the committee will recommend candidates to our board
to be included as our boards nominees for our next annual
meeting. The committee makes its recommendations based upon the
director criteria described in our corporate governance
guidelines. Our guidelines require that our directors possess
the highest personal and professional ethics; have sufficient
time to carry out their duties and responsibilities effectively;
and be committed to serving on our board for an extended period
of time. In addition, the nominating and corporate governance
committee considers the candidates experience, business
skills, judgment and the existence of conflicts of
19
interest between the candidate and us. In addition, although our
board does not have a policy with regard to the consideration of
diversity in identifying director nominees, among the many
factors that our nominating and corporate governance committee
carefully considers are the benefits to us of diversity,
including gender and racial diversity, in board composition.
Further, our board does not discriminate on the basis of race,
gender or ethnicity and is supportive of any qualified candidate
that would also provide our board with more diversity, including
diversity in skills and experiences.
Our bylaws are available on the SECs web site
(www.sec.gov) as Exhibit 3.2 to our current report
on
Form 8-K
filed with the SEC on December 18, 2008. Our corporate
governance guidelines are available in the Corporate Governance
section of our web site under Investor Relations at
www.dolanmedia.com. You may also request copies of the
bylaws and corporate governance guidelines by sending a written
request to our corporate secretary. Please refer to
Communications with the Company and our Board below
for information about how to request information from our
corporate secretary and the address for sending your candidates
for consideration by our nominating and corporate governance
committee.
Alternatively, if you intend to attend the annual meeting in
person and would like to nominate a candidate for election by
the stockholders at that meeting (in cases where our board does
not intend to nominate your candidate or you have not requested
that the nominating and corporate governance committee consider
your candidate for inclusion in our boards slate of
nominees), you must comply with the procedures set forth in our
bylaws and corporate governance guidelines regarding director
nominations. See Requirements for Submission of
Stockholder Proposals below for information about these
procedures.
Requirements
for Submission of Stockholder Proposals
If you intend to bring business appropriate for stockholder
action at our next annual meeting and intend to have your
stockholder proposal (other than a nominee for election to our
board) considered for inclusion in our proxy materials, our
corporate secretary must receive your stockholder proposal no
later than 5:00 p.m. central daylight time,
December 16, 2010. You should send your proposals by
registered, certified or express mail, courier, electronic mail
or other means that allow you to determine when we received the
notice
and/or
proposal, addressed to the corporate secretary at the address
set forth in Communications with the Company and our
Board below. Your proposal must contain the information
required by our bylaws, including the following information:
(1) information regarding any stockholder associated with
you; and (2) a description of any derivative positions and
other hedging transactions that you or any stockholder
affiliated with you may have entered into. In addition, you must
also comply with
Rule 14a-8
of the Securities Exchange Act and other applicable SEC rules
regarding the inclusion of your proposal in company-sponsored
proxy materials. The advance notice requirements and the
procedures set forth in our bylaws are the sole and exclusive
means for you to propose business to be heard at our
stockholders meetings.
If you intend to present a proposal at the next annual meeting,
but do not intend to have it included in our proxy materials,
you still must comply with the advance notice and other
requirements set forth in our bylaws. The bylaws require, among
other things, that you give written notice of proposals to our
corporate secretary no sooner than December 16, 2010, and
no later than February 14, 2011. The written notice must
contain the information required by our bylaws, including
(1) information regarding any stockholder associated with
you; and (2) a description of any derivative positions and
other hedging transactions that you or any stockholder
affiliated with you may have entered into. If you are nominating
a person to be considered as a director, the written notice must
also include the supporting information required by our
corporate governance guidelines, as well as a description of any
agreement, arrangement or understanding that your proposed
candidate is or intends to become a party to with respect to how
your proposed candidate, if elected, will act or vote on any
issue coming before our board or pursuant to which another
person will compensate or indemnify your proposed candidate, if
elected, for his or her service as our director.
If our corporate secretary receives your proposal after the
deadlines set forth above, your proposal will not be acted upon
at our 2011 annual meeting, and, if applicable, will not be
included in our proxy materials for such meeting.
20
Communications
with the Company and our Board
If you would like to communicate with a member of the board of
directors, you may send a letter or an email to our board of
directors addressed as follows:
|
|
|
By mail or courier: |
|
Dolan Media Company
Board of Directors
Attn: Corporate Secretary
222 South Ninth Street
Suite 2300
Minneapolis, MN 55402 |
|
By email: |
|
secretary@dolanmedia.com
Subject Line: Communication for Board of Directors |
Please include the following information in your communication
to our board: (1) your address, telephone number and email
address (if you have one); (2) if you are a stockholder, a
statement of the type and amount of securities you own;
(3) if you are not a stockholder, the nature of your
interest in us; and (4) any special interest you may have
in the subject matter of your communication to our board.
Our corporate secretary reviews all correspondence to our board
and regularly forwards to our board a summary of correspondence
or copies of correspondence that relates to the functions of our
board or its committees. These matters include communications
regarding governance matters or potential accounting, control or
auditing concerns. Our corporate secretary will not forward
other communications to our board; however, our corporate
secretary may, from time to time, update the chairman of our
board with a brief description of communications received, but
not forwarded to our board.
To request copies of our corporate governance documents,
including our committee charters, or to otherwise communicate
with our corporate secretary, please send a written request to
our corporate secretary at our principal executive offices, 222
South Ninth Street, Suite 2300, Minneapolis, MN 55402 or by
email to secretary@dolanmedia.com.
21
PROPOSALS
Proposal 1
Election of Directors
Our board of directors currently consists of eight directors,
divided into three classes as follows: Class 1
(3 directors), Class II (2 directors) and
Class III (3 directors). Members in each class are
elected to serve for three year terms.
Our Board has nominated our chair, James P. Dolan, as well as
John C. Bergstrom and George Rossi for re-election to the board
of directors to serve until the 2013 annual meeting and until
his respective successor is elected and qualified, subject to
his earlier death, resignation, retirement or removal.
Mr. Dolan, who also serves as our chief executive officer,
is not independent. Both Messrs. Bergstrom and Rossi are
independent directors and also serve as the chairs of our
compensation committee and audit committee, respectively.
Messrs. Dolan and Rossi were previously designated as
directors pursuant to the terms of an amended and restated
stockholder agreement. This agreement terminated upon the
consummation of our initial public offering on August 7,
2007.
Each of Messrs. Dolan, Bergstrom and Rossi has consented to
his respective nomination in this proxy statement and each has
indicated that he is willing to serve as a director, if elected.
If any of Messrs. Dolan, Bergstrom or Rossi becomes unable
or declines to serve before the election at our annual meeting,
the proxies may vote any shares represented by proxy that are
voted in favor of Messrs. Dolan, Bergstrom or Rossi for a
substitute nominee the board has designated unless our board has
decided to leave the director position vacant or reduce the size
of our board.
Nominees
for Director for Three-Year Term Ending at 2013 Annual
Meeting
Class III
Directors
John C. Bergstrom, age 49, has served as our
director since July 2003, and also served as a director of our
predecessor company from its inception in 1992 to July 2003.
Mr. Bergstrom has served as managing partner of RiverPoint
Investments, a St. Paul, Minnesota-based business and financial
advisory firm, since June 1995. Mr. Bergstrom is also
a director of Peoples Educational Holdings, Inc. (NASDAQ: PEDH),
an educational materials publisher; and Znomics, Inc.
(OTCBB:ZNOM), a shell public company. Mr. Bergstrom also
served as a director of Make Music, Inc. ( NASDAQ:MMUS) from
2004 to 2006. Mr. Bergstrom also serves as a director for
several private companies including Tecmark, Inc., a provider of
business services focused on loyalty marketing programs;
Instrumental, Inc., a provider of technology services to the
government sector; Creative Publishing Solutions, Inc., a
specialty marketing publisher; Cramer, LLC, an office furniture
supplier; and JobDig, Inc., a provider of employment advertising
services. Because Mr. Bergstrom has served us for more than
seventeen years, he brings an extensive knowledge about our
business and industry and its evolution. In addition, he has
built his career advising fast-growing companies similar to
ours, making him a skilled adviser to us in the areas of
corporate governance, executive compensation and other
organizational management matters.
James P. Dolan, age 60, has served as our president,
chief executive officer and chairman of the board since July
2003, and as president, chief executive officer and chairman of
the board of our predecessor company rom 1992 to July 2003.
Through his long service to our company, both as our chief
executive and as a director, Mr. Dolan is uniquely
positioned to understand the opportunities and challenges that
we face as company and has the most in-depth knowledge about our
core businesses and long-term growth strategies. In addition,
through the industry experiences described below, he offers us
organizational and operational management skills that are
critical for leading our company as chief executive officer and
our board as its chairman. From January 1989 to January 1993,
Mr. Dolan served first as managing director, and then
executive vice president, of the Jordan Group, New York City, an
investment bank specializing in media. He has previously held
executive positions with Kummerfeld Associates, Inc., a media
mergers and acquisitions advisory firm in New York and Chicago;
News Corporation in New York and San Antonio; Sun-Times
Company in Chicago; and Centel Corp. in Chicago, and also was an
award-winning reporter and editor at newspapers in Texas.
Mr. Dolan is currently a director of each of Advisor Media,
Inc., a magazine and
22
conference company; Peoples Educational Holdings, Inc. (NASDAQ:
PEDH), an educational materials publisher; and The Greenspring
Companies, the for-profit arm of The American Public Media
Group. He also serves as chairman of the board of Greenspring.
George Rossi, age 57, has served as our director
since April 2005. Since 1985, Mr. Rossi has provided
independent consulting services to Capital NDSL, Inc., a
Montréal-based investment company. Mr. Rossi also
regularly provides independent consulting services to Radio Nord
Communications, a Montréal-based media company. From
October 2000 through May 2002, Mr. Rossi served as senior
vice president and chief financial officer, and from June 2002
through July 2003, as interim president, of Cinar Corporation, a
Montréal-based childrens entertainment company. From
January 1983 through September 2000, Mr. Rossi served as
chief financial officer and treasurer of Radiomutuel, a
Montréal-based public media company. Mr. Rossi
currently serves as a director of Student Transportation of
America (TSE: STB.UN), a New Jersey-based provider of school bus
transportation in the United States, and Radio Nord
Communications, a Montréal-based media company, and serves
on the investment valuation committee of Investissement
Desjardins, a Montréal-based fund. Mr. Rossi is a
chartered accountant. He also served as a director for Spectra
Premium, a manufacturer of fuel tanks (TSE: SPD) from 2005 to
2008, and two then-public companies: Kangaroo Media, a
Montréal-based manufacturer and distributor of portable
media devices, where he served from 2006 to 2010; and OFI Income
Fund, an Ottawa-based manufacturer and distributor of insulation
materials, where he served from 2005 to 2009. Through these
experiences, Mr. Rossi is qualified to continue to serve us
a director as well as audit committee chair because he offers us
an in-depth knowledge and understanding of financial and
operational issues that are critical to the management of our
company. In addition, Mr. Rossis varied industry
experiences, including his service on a number of public company
boards, makes him a highly valuable director.
Vote
Required
A plurality of the votes of the shares represented in person or
by proxy at the annual meeting and entitled to vote on this
proposal is required to elect a nominee for director.
The board of directors unanimously recommends a vote FOR the
election of John C. Bergstrom, James P. Dolan and George Rossi
as Class III directors.
Directors
Continuing in Office
Class I
Directors (Term ends in 2011)
Arthur F. Kingsbury, age 61, has served as our
director since June 2008. Mr. Kingsbury has more than
thirty-five years of business and financial experience in the
media and communications sectors and is currently a private
investor. His experience includes financial, senior executive
and director positions at companies engaged in publishing,
internet research, radio broadcasting, cable television, and
cellular telephone communications. Mr. Kingsbury is well
qualified to serve on our board because of his extensive
experience in managing and leading fast growing companies,
particularly in the media sector. During his career he has been
president and chief operating officer of VNU-USA, Inc., vice
chairman and chief operating officer of BPI Communications,
Inc., and chief financial officer of Affiliated Publications,
Inc. Currently Mr. Kingsbury also serves on the board of
HSW International, Inc. (NASDAQ: HSWI), an internet publisher
and web site developer, and Solera Holdings, Inc. (NYSE: SLH), a
provider of claims processing software and information for
automobile insurance companies. He served as a director on the
boards of then-public companies: NetRatings, Inc., a provider of
web site analytics from 2000 to 2007 and Affiliated
Publications, Inc., the former parent company of the Boston
Globe, and McCaw Cellular Communications, Inc., an operator of
cellular telephone systems, during the late eighties and early
nineties.
Lauren Rich Fine, age 50, has served as our director
since July 2008. Ms. Rich Fine serves as a practitioner in
residence at Kent State Universitys College of
Communication and Information, where she teaches and is helping
the school develop its curricula to serve the changing media
landscape. She recently completed a term on the advisory board
of the Poynter Institute, a school for journalists. Previously,
Ms. Rich Fine was managing director at Merrill
Lynch & Co. in the Economics & Securities
Research Division covering the publishing, information,
advertising and online industries. During her
19-year
equity research career at
23
Merrill Lynch, Ms. Rich Fine was a ranked member of the
Institutional Investor
All-American
Research Team for 14 years, holding the number one position
for 11 years. Her experience as an analyst, her extensive
industry connections, and her deep insights into large numbers
of comparable fast-growing companies makes her a valuable
resource for our board. Ms. Rich Fine is also a certified
financial analyst.
Gary H. Stern, age 65, has served as our director
since January 2010. Prior to joining our board, Mr. Stern
served as the president and chief executive officer of the
Federal Reserve Bank of Minneapolis from 1985 until his
retirement in 2009. He joined the Federal Reserve Bank of
Minneapolis as its senior vice president and director of
research in 1982. Prior to 1982, he was a partner in a New York
based consulting firm and also spent seven years at the Federal
Reserve Bank of New York. He has also served on the faculties of
Columbia University, Washington University and New York
University. Through his career leading the Federal Reserve Bank
of Minneapolis and his extensive executive experience,
Mr. Stern has a unique understanding of national economic
and fiscal conditions, trends and drivers that affect many of
our businesses.
Class II
Directors (Term ends in 2012)
Anton J. Christianson, age 57, has served as our
director since July 2003, and also served as a director of our
predecessor company from its inception in 1992 to July 2003,
making him very familiar with our business and industry, as well
as the evolution of our business over the last seventeen years.
Since October 1980, Mr. Christianson has served as the
chairman and managing partner of Cherry Tree Companies, a
Minnetonka, Minnesota-based firm involved in investment
management and investment banking. Affiliates of Cherry Tree
Companies act as the general partner of Adam Smith Fund, LLC and
Adam Smith Growth Partners, L.P. Mr. Christianson also
serves as a director of each of Peoples Educational Holdings,
Inc. (NASDAQ: PEDH), an educational materials publisher;
AmeriPride Services, Inc., a provider of customized apparel for
companies; Titan Machinery, Inc. (NASDAQ: TITN), a provider of
new and used farm and construction equipment; Arctic Cat, Inc.
(NASDAQ:ACAT), a manufacturer of snowmobiles and related
equipment; and Znomics, Inc. (NASDAQ: ZNOM), a public shell
company. Mr. Christianson also served as a director of
Capella Education Company (NYSE: CPLA) from 1993 to 2006 and
Fair Isaac Corporation (NYSE:FICO) from 1999 to 2009. In
addition to his perspective on our business due to his long
service to us as a director, Mr. Christianson offers
valuable insights regarding investor relations, business and
capital strategy, and corporate governance.
Jacques Massicotte, age 56, has served as our
director since December 2006. Mr. Massicotte is a certified
financial analyst and private investor. From December 2000
through February 2004, he served as managing director,
investment banking of TD Securities Inc., a Canadian investment
banking firm. From 1986 to 2000, Mr. Massicotte served as a
financial analyst, covering the Canadian media and
communications sectors with Newcrest Capital
(1995-2000),
RBC Dominion Securities
(1994-1995)
and Nesbitt Thomson
(1986-1994).
Through his investment banking experience, and particularly his
experience as an analyst covering public companies,
Mr. Massicotte offers valuable insight on how our
communications, strategies and business will be viewed by
analysts and investors in the market.
Proposal 2 Approval
of the Dolan Media Company 2007 Incentive Compensation Plan, as
amended and restated, which includes authorizing an additional
2,100,000 shares of our common stock for potential future
issuance under the plan, and reapproving the performance goals
under which compensation may be paid under the plan for purposes
of Section 162(m) of the Internal Revenue Code.
Background
The Dolan Media Company Incentive Compensation Plan was
originally adopted in 2006, and our board amended and restated
the plan on June 22, 2007, prior to the completion of our
initial public offering. The plan, as amended and restated, was
approved by our stockholders on July 9, 2007. As of
December 31, 2009, we had 734,144 shares of common
stock available for issuance under the plan. On March 2,
2010, our board amended and restated the plan, which would,
subject to stockholder approval, authorize an additional
2,100,000 shares of our common stock for issuance under the
plan. The amended and restated plan included other changes to
the plan that were not material. The following table sets forth
information regarding the
24
number of shares underlying stock options and restricted stock
that we have granted since the plans adoption in 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Stock options granted
|
|
|
414,882
|
|
|
|
440,750
|
|
|
|
881,398
|
|
|
|
126,000
|
|
Stock options forfeited
|
|
|
(128,239
|
)
|
|
|
(72,336
|
)
|
|
|
(14,731
|
)
|
|
|
|
|
Restricted stock granted
|
|
|
129,990
|
|
|
|
54,139
|
|
|
|
196,519
|
|
|
|
|
|
Restricted stock forfeited
|
|
|
(16,104
|
)
|
|
|
(21,456
|
)
|
|
|
(24,956
|
)
|
|
|
|
|
Weighted average basic shares outstanding
|
|
|
29,831,660
|
|
|
|
26,985,345
|
|
|
|
15,868,033
|
|
|
|
9,253,972
|
|
The table below sets forth information regarding securities
authorized for issuance under the plan as of December 31,
2009, including those authorized for issuance under an Employee
Stock Purchase Plan, which has an effective date after
December 31, 2007, but which we have not yet implemented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of
|
|
|
Weighted-
|
|
|
Remaining Available
|
|
|
|
Securities to be
|
|
|
Average Exercise
|
|
|
for Future Issuance
|
|
|
|
Issued upon
|
|
|
Price of
|
|
|
under Equity
|
|
|
|
Exercise of
|
|
|
Outstanding
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Options,
|
|
|
(Excluding Securities
|
|
|
|
Options, Warrants
|
|
|
Warrants and
|
|
|
Reflected in First
|
|
Plan Category
|
|
and Rights
|
|
|
Rights
|
|
|
Column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Incentive Compensation Plan
|
|
|
1,629,760
|
|
|
$
|
13.81
|
|
|
|
734,144
|
(1)
|
Employee Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,629,760
|
|
|
$
|
13.81
|
|
|
|
1,634,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,629,760
|
|
|
$
|
13.81
|
|
|
|
1,634,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 16,104 shares of restricted stock that were
forfeited by grantees during 2009, which are available to be
reissued under the 2007 Incentive Compensation Plan. |
We intend to use between 400,000 to 730,000 of the remaining
shares available for issuance under the plan in connection with
annual equity grants to be awarded in conjunction with the 2010
annual meeting of stockholders. To the extent that our
stockholders do not approve the plan, as amended and restated,
our ability to issue the equity awards to our non-employee
directors and named executive officers as described in
Director Compensation and Compensation
Discussion and Analysis will be affected in future years.
The purpose of the plan is to attract and retain exceptionally
qualified employees, consultants and directors upon whom, in
large measure, our sustained progress, growth and profitability
depend. By encouraging our employees, consultants and directors
to acquire a proprietary interest in our growth and performance,
we intend to motivate employees, consultants and directors to
achieve our long-term goals and to more closely align such
persons interests with those of our other stockholders.
Why We
Are Seeking Stockholder Approval
We are seeking stockholder approval of the plan, as recently
amended and restated by our board, to obtain approval from our
stockholders to add 2,100,000 shares of our common stock to
the shares available for grants, for a total share authorization
of 4,800,000 shares. If the stockholders do not approve to
increase the shares available for grant, we will continue to
issue equity awards under the plan until we have used all of the
shares authorized for issuance. In addition, we are seeking
stockholder approval of the plan, as amended and restated,
because such approval would constitute reapproval by the
stockholders of the material terms of the performance goals
under which compensation may be paid under the plan, for
purposes of Section 162(m) of the Internal Revenue Code of
1986, as amended (the Code). In general, under
Section 162(m), in order for
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us to be able to deduct compensation in excess of
$1 million paid in any one year to our chief executive
officer or any of our other named executive officers (other than
our chief financial officer), such compensation must qualify as
performance-based. One of the requirements of performance-based
compensation for purposes of Section 162(m) is that the
material terms of the performance goals under which compensation
may be paid be disclosed to and approved by stockholders at
least once every five years. For purposes of
Section 162(m), the material terms include the employees
eligible to receive compensation, a description of the business
criteria on which performance goals may be based, and the
maximum amount of compensation that can be paid to an employee
under the performance goals.
Material
Terms of the 2007 Incentive Compensation Plan
Summary. The following description of the plan
is only a summary of certain provisions of the plan and is
qualified in its entirety by reference to the full text of the
plan, marked to show changes including the proposed amendment to
Section 4.1, which is included in the electronic copy of
this proxy statement as Appendix A. You may also request a
copy of the 2007 Incentive Compensation Plan, as amended and
restated, including the proposed amendment to Section 4.1,
by sending a written request to our corporate secretary. Please
refer to Communications with the Company and the
Board in this proxy statement for information about how to
contact our corporate secretary. We have registered the shares
authorized for issuance under this plan on
Form S-8,
which we filed with the SEC on August 1, 2007, and plan to
register the additional shares authorized for issuance if the
stockholders approve the plan, including the proposed amendment
to increase the number of shares available for issuance under
the plan.
Administration of Plan. The plan is
administered by our compensation committee, which interprets the
plan and has broad discretion to select the eligible persons to
whom awards will be granted, as well as the type, size and terms
and conditions of each award, including the exercise price of
stock options, the number of shares subject to awards and the
expiration date of, and the vesting schedule or other
restrictions applicable to, awards. The committee may establish,
amend, suspend or waive any rules relating to the plan, and make
any other determination or take any other action that may be
necessary or advisable for the administration of the plan.
Except as otherwise expressly provided in the plan, all
determinations, designations, interpretations and other
decisions of the committee are final, conclusive and binding.
While the committee has the general authority to administer the
plan and the awards to be granted thereunder, our board of
directors has the authority to determine, upon the
recommendation of the committee, the awards to be made to
non-employee directors. In addition, the committee has delegated
to our chief executive officer the authority to grant option
awards in connection with the hiring of new non-executive
employees
and/or the
promotion of non-executive employees. The chief executive
officer, however, may only grant options exercisable for
(1) an aggregate of 45,000 shares of our common stock
to non-executive employees during each fiscal year and
(2) 9,000 shares of our common stock to any one
non-executive employee during each fiscal year.
Awards. The plan allows us to grant the
following types of awards:
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options (non-qualified and incentive stock options);
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stock appreciation rights, or SARs;
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restricted stock;
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restricted stock units;
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deferred shares;
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performance units;
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other stock-based units; and
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annual cash incentive awards.
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In any calendar year, no grantee may be granted awards for
options, SARs, restricted stock, deferred stock, restricted
stock units or performance units (or any other award that is
determined by reference to the value of shares of our common
stock or appreciation in the value of such shares) that exceed,
in the aggregate,
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450,000 underlying shares of our common stock. No grantee may be
granted cash awards for any grant year that exceed 300% of the
grantees annual base salary, up to a maximum of $1,000,000
of base salary.
Options. Options may be granted by the
committee (or the board of directors or our chief executive
officer as provided above) and may be either non-qualified
options or incentive stock options. Options are subject to the
terms and conditions, including vesting conditions, set by the
committee (and incentive stock options are subject to further
statutory restrictions that are set forth in the plan). The
exercise price for all stock options granted under the plan will
be determined by the committee (or our board of directors or
chief executive officer as provided above), except that no stock
options can be granted with an exercise price that is less than
100% of the fair market value of our common stock on the date of
grant. Further, stockholders who own greater than 10% of our
voting stock will not be granted incentive stock options that
have an exercise price less than 110% of the fair market value
of our common stock on the date of grant. The term of all stock
options granted under the plan will be determined by the
committee (or our board of directors or chief executive
officer), but may not exceed 10 years (five years for
incentive stock options granted to stockholders who own greater
than 10% of our voting stock). No incentive stock option may be
granted to an optionee, which, when combined with all other
incentive stock options becoming exercisable in any calendar
year that are held by that optionee, would have an aggregate
fair market value becoming exercisable in the year in excess of
$100,000. In the event an optionee is awarded incentive stock
options with more than $100,000 becoming exercisable in any
calendar year, any incentive stock options having in excess of
$100,000 becoming exercisable during the same year will be
treated as non-qualified stock options. Each stock option will
be exercisable at such time and pursuant to such terms and
conditions as determined by the committee (or our board of
directors or chief executive officer) in the applicable stock
option agreement. Each option gives the grantee the right to
receive a number of shares of our common stock upon exercise of
the option and payment of the exercise price. The exercise price
may be paid by cash (including cash obtained through a broker
selling the share acquired on exercise) or, if approved by the
committee, shares of our common stock or restricted common stock.
Stock Appreciation Rights, or SARs. All SARs
must be granted on a stand-alone basis (i.e., not in conjunction
with stock options granted under the plan). A SAR granted under
the plan entitles its holder to receive, at the time of
exercise, an amount per share equal to the excess of the fair
market value (at the date of exercise) of a share of our common
stock over a specified price, known as the strike price, fixed
by the committee, which will not be less than 100% of the fair
market value of our common stock on the grant date of the SAR.
Payment may be made in cash, shares of our common stock, or
other property, in any combination as determined by the
committee.
Restricted Stock and Restricted Stock
Units. Restricted stock is our common stock that
is forfeitable until the applicable restrictions lapse.
Restricted stock units are rights granted as an award to receive
shares of our common stock, conditioned upon the satisfaction of
restrictions imposed by the committee. The committee will
determine the restrictions for each award and the purchase price
in the case of restricted stock, if any. Restrictions on the
restricted stock and restricted stock units may include
time-based restrictions, the achievement of specific performance
goals or, in the case of restricted stock units, the occurrence
of a specific event. Vesting of restricted stock and restricted
stock units is conditioned upon the grantees continued
employment. Grantees do not have voting rights in restricted
stock units. If the performance goals are not achieved or the
restrictions do not lapse within the time period provided in the
award agreement, the grantee will forfeit his or her restricted
stock and/or
restricted stock units.
Deferred Stock. Deferred stock is the right to
receive shares of our common stock at the end of a specified
deferral period. The committee will determine the number of
shares and terms and conditions for each deferred stock award,
and whether such deferred stock will be acquired upon the lapse
of restrictions on restricted stock or restricted stock units.
Grantees do not have voting rights in deferred stock, but
grantees deferred stock may be credited with dividend
equivalents to the extent dividends are paid or distributions
made during the deferral period.
Performance Units. Performance units are any
grant of (1) a bonus consisting of cash or other property
the amount and value of which,
and/or the
receipt of which, is conditioned upon the achievement of certain
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performance goals specified by the committee, or (2) a unit
valued by reference to a designated amount of property.
Performance units may be paid in cash, shares of common stock or
restricted stock units. The committee will determine the number
and terms of all performance units, including the performance
goals and performance period during which such goals must be
met. If the performance goals are not attained during the
performance period specified in the award agreement, the grantee
will forfeit all of his or her performance units.
Annual Incentive Awards. The plan includes
annual incentive awards. The committee will determine the
amounts and terms of all annual incentive awards, including
performance goals, which may be weighted for different factors
and measures. The committee will designate individuals eligible
for annual incentive awards within the first 90 days of the
year for which the annual cash incentive award will apply, with
certain exceptions, and will certify attainment of performance
goals within 60 days following the end of each year. In
addition, the committee will establish the threshold, target and
maximum annual incentive award opportunities for each grantee.
Payment may be made in cash, shares of our common stock, options
or any other award or any combination as provided in the award
agreement or determined by the committee.
Performance-Based Compensation. The objective
performance criteria for awards (other than stock options and
SARs) granted under the plan that are designed to qualify for
the performance-based exception from the tax deductibility
limitations of Section 162(m) of the Code, and are to be
based on one or more of the following measures relating to the
Company
and/or any
of its subsidiaries:
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earnings (either in the aggregate or on a per share basis);
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net income or loss (either in the aggregate or on a per share
basis);
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operating profit;
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EBITDA or adjusted EBITDA;
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growth or rate of growth in cash flow;
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cash flow provided by operations (either in the aggregate or on
a per share basis);
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free cash flow (either in the aggregate or on a per share basis);
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costs;
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gross revenues;
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reductions in expense levels;
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operating and maintenance cost management and employee
productivity;
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stockholder returns (including return on assets, investments,
equity, or gross sales);
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return measures (including return on assets, equity, or sales);
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growth or rate of growth in return measures;
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share price (including growth measures and total stockholder
return or attainment by the shares of a specified value for a
specified period of time);
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net economic value;
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economic value added;
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aggregate product unit and pricing targets;
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strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market share,
market penetration, geographic business expansion goals,
objectively identified project milestones, production volume
levels, cost targets, and goals relating to acquisitions or
divestitures;
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achievement of business or operational goals such as market
share and/or
business development;
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achievement of diversity objectives;
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results of customer satisfaction surveys; or
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debt ratings, debt leverage and debt service.
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The committee may, on the grant date of an award intended to
comply with the performance-based exception under
Section 162(m), and in the case of other awards, at any
time, provide that the formula for such award may include or
exclude items to measure specific objectives, such as losses
from discontinued operations, extraordinary gains or losses, the
cumulative effect of accounting changes, acquisitions or
divestitures, foreign exchange impacts and any unusual,
nonrecurring gain or loss. The committee shall have the
discretion to adjust the determinations of the degree of
attainment of the pre-established performance goals; provided
that any awards designed to qualify for the
performance-based exception generally may not be adjusted upward
(the committee shall retain the discretion to adjust such awards
downward).
Change in Control. Except as otherwise set
forth in an award agreement, in the event of a change in control
(as defined in the plan) of Dolan Media Company, all awards will
become vested, all restrictions will lapse and all performance
goals shall be deemed to be met, as applicable, except that no
payment of an award shall be accelerated to the extent that such
payment would violate Section 409A of the Code. The
committee may, in order to maintain a grantees rights in
the event of any change in control, (1) make any
adjustments to an outstanding award to reflect such change in
control or (2) cause the acquiring or surviving entity to
assume or substitute rights with respect to an outstanding
award. Furthermore, the committee may cancel any outstanding
unexercised options or SARs (whether or not vested) that have an
exercise price or strike price, as applicable, that is greater
than the fair market value of our common stock as of the date of
the change in control. Under the plan, the committee will also
have the ability to cash out any options or SARs (whether or not
vested) that have an exercise price or strike price, as
applicable, that is less than the fair market value of our
common stock as of the date of the change in control.
Termination of Employment. With respect to
stock options and SARs granted pursuant to an award agreement,
unless the applicable award agreement provides otherwise, in the
event of a grantees termination of employment or service
for any reason other than cause, retirement, disability or
death, such grantees stock options or SARs (to the extent
exercisable at the time of such termination) will remain
exercisable until 60 days after such termination and
thereafter will be cancelled and forfeited to us. Unless the
applicable award agreement provides otherwise, in the event of a
grantees termination of employment or service due to
retirement, disability or death, such grantees stock
options or SARs (to the extent exercisable at the time of such
termination) will remain exercisable until one year after such
termination and thereafter will be cancelled and forfeited to
us. In the event of a grantees termination of employment
or service for cause, such grantees outstanding stock
options or SARs will immediately be cancelled and forfeited to
us.
Unless the applicable award agreement provides otherwise, or
unless otherwise determined by the committee as provided in the
plan, (1) with respect to restricted stock, in the event of
a grantees termination of employment or service for any
reason other than death or disability, all unvested shares will
be forfeited to us, (2) upon termination because of death
or disability, all unvested shares of restricted stock will
immediately vest, (3) all performance units and unvested
restricted stock units will be forfeited upon termination for
any reason, and (4) annual cash incentive awards will be
forfeited in the event of a grantees termination of
employment or service.
Amendment and Termination. Unless the plan is
earlier terminated by our board of directors, the plan will
automatically terminate on June 22, 2017. Awards granted
before the termination of the plan may extend beyond that date
in accordance with their terms. The committee is permitted to
amend the plan or the terms and conditions of outstanding
awards, including to extend the exercise period and accelerate
the vesting schedule of such awards, subject to the prohibition
on repricing described below. However, no such action may
adversely affect the rights of any participant with respect to
outstanding awards without the applicable grantees written
consent and no such action or amendment may violate rules under
Section 409A of the Code regarding the form and timing of
payment of deferred compensation. Stockholder approval of any
such
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amendment will be obtained if required to comply with applicable
law or the rules of the New York Stock Exchange.
No Repricing Without Stockholder Approval. In
general, without the prior approval of the companys
stockholders, (i) no option or SAR will be repriced,
replaced, or regranted through cancellation, (ii) the
exercise price of a previously granted option or SAR will not be
lowered and (iii) no option or SAR will be exchanged for an
option or SAR with a lower exercise price, for any other award
or for cash.
Transferability. Unless otherwise determined
by the committee, awards granted under the plan are not
transferable except by will or the laws of descent and
distribution, and except that certain assignments are permitted
in connection with marriage dissolutions. The committee will
have sole discretion to permit the transfer of an award to
certain family members specified in the plan.
Adjustments. In the event a stock dividend,
stock split, reorganization, recapitalization, spin-off, or
other similar event affects shares such that the committee
determines an adjustment to be appropriate to prevent dilution
or enlargement of the benefits or potential benefits intended to
be made available under the plan, the committee will (among
other actions and subject to certain exceptions) adjust the
number and type of shares available under the plan, the number
and type of shares subject to outstanding awards and the
exercise price of outstanding stock options and other awards.
Federal
Income Tax Consequences
Grant of Options and SARs. The grant of an
option or SAR is not expected to result in any taxable income
for the participant.
Exercise of Options and SARs. Upon exercising
a non-qualified stock option, the holder must recognize ordinary
income equal to the excess of the fair market value of the
shares of our common stock acquired on the date of exercise over
the exercise price, and we will generally be entitled at that
time to an income tax deduction for the same amount. Upon the
exercise of a SAR, the amount of any cash received by the
participant and the fair market value on the exercise date of
any shares of our common stock received are taxable to the
recipient as ordinary income and generally deductible by us.
Upon exercising an incentive stock option, generally the stock
option holder is not taxed (except that an alternative minimum
tax liability may arise), and we are not entitled to a deduction
so long as the requirements of Section 422 of the Code
continue to be met. If the stock option holder meets the
employment requirements and does not dispose of the shares of
our common stock acquired upon exercise of an incentive stock
option until at least one year after date of the exercise of the
stock option and at least two years after the date the stock
option was granted, gain or loss realized on sale of the shares
will be treated as long-term capital gain or loss. If the shares
of our common stock are disposed of before those periods expire,
which is called a disqualifying disposition, the stock option
holder will be required to recognize ordinary income in an
amount equal to the lesser of (a) the excess, if any, of
the fair market value of our common stock on the date of
exercise over the exercise price, or (b) if the disposition
is a taxable sale or exchange, the amount of gain realized. Upon
a disqualifying disposition, we will generally be entitled, in
the same tax year, to a deduction equal to the amount of
ordinary income recognized by the stock option holder.
Disposition of Shares Acquired Upon Exercise of Options
and SARs. The tax consequence upon a disposition
of shares acquired through the exercise of an option or SAR will
depend on how long the shares have been held. Ordinarily, any
gain realized upon a disposition will be treated as a capital
gain, with the precise character of that gain (either short or
long term) being determined by the length of time during which
the holder has held the shares. Generally, there will be no tax
consequence to us in connection with the disposition of shares
acquired under an option or SAR.
Awards Other than Options and SARs. As to
other awards granted under the plan that are payable either in
cash or shares of our common stock that are either transferable
or not subject to substantial risk of forfeiture, the holder of
the award must recognize ordinary income equal to (a) the
amount of cash received or, as applicable, (b) the excess
of (i) the fair market value of the shares received
(determined as of the date of
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receipt) over (ii) the amount (if any) paid for the shares
by the holder of the award. We will generally be entitled at
that time to an income tax deduction for the same amount.
As to an award that is payable in shares of our common stock
that are restricted from transfer and subject to substantial
risk of forfeiture, unless a special election is made by the
holder of the award under the Code, the holder must recognize
ordinary income equal to the excess of (1) the fair market
value of the shares received (determined as of the first time
the shares become transferable or not subject to substantial
risk of forfeiture, whichever occurs earlier) over (2) the
amount (if any) paid for the shares by the holder of the award.
We will generally be entitled at that time to an income tax
deduction for the same amount.
Income Tax Deduction. Subject to the usual
rules concerning reasonable compensation, including our
obligation to withhold or otherwise collect certain income and
payroll taxes, we will generally be entitled to a corresponding
income tax deduction at the time a participant recognizes
ordinary income from awards made under the plan. However, in
general, under Section 162(m), in order for our company to
be able to deduct compensation in excess of $1 million paid
in any one year to our chief executive officer or certain of our
other officers with the highest compensation, the compensation
in excess of $1 million must qualify as qualified
performance based compensation within the meaning of
Section 162(m). We expect that options, SARs and certain
other performance awards paid under the plan will continue to
qualify as performance based compensation. As discussed above,
stockholder approval of the amendment of the plan also will
constitute reapproval of the material terms of the performance
goals for purposes of the approval requirements of
Section 162(m) of the Code.
Delivery of Shares for Tax Obligation. Under
the plan, the committee may permit participants receiving or
exercising awards, subject to the discretion of the committee
and upon any terms and conditions it may impose, to deliver
shares of our common stock (either shares received upon the
receipt or exercise of the award or shares previously owned by
the participant) to us to satisfy federal and state tax
obligations.
Withholding. We have the right to withhold
from any payments made under the plan or to collect as a
condition of payment, any taxes required by law to be withheld.
The participant may satisfy this obligation in whole or in part
by electing to have us withhold shares of common stock having a
fair market value up to the minimum amount of withholding taxes
required to be collected on the transaction.
Plan
Benefits
The committee in its sole discretion will determine the number
and types of awards that will be granted under the plan.
Therefore, it is not possible to determine at this time the
benefits that will be received by eligible participants if the
amendment to the plan is approved by our stockholders. However,
to the extent that our stockholders do not approve this
amendment, our ability to issue the equity awards to our
non-employee directors and named executive officers as described
in Director Compensation and Compensation
Discussion and Analysis will be affected in future years.
The closing price per share of our common stock as reported on
the NYSE on March 29, 2010, was $10.43.
Vote
Required
The affirmative vote of a majority of the shares represented in
person or by proxy at the annual meeting and entitled to vote on
the proposal is required for the approval of the Dolan Media
Company 2007 Incentive Compensation Plan, as amended and
restated, which includes increasing the shares of common stock
available for issuance under the plan to 4,800,000 shares,
and reapproving the performance goals under which compensation
may be paid under the plan, for purposes of Section 162(m)
of the Code.
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The board
of directors unanimously recommends a vote FOR the Dolan Media
Company 2007 Incentive Compensation Plan, as amended and
restated, which includes increasing the shares of common stock
available for issuance under the plan to 4,800,000 shares
and reapproving the performance goals under which compensation
may be paid under the plan, for purposes of Section 162(m)
of the Internal Revenue Code.
Proposal 3
Ratification of Rights Agreement, as amended
Background
We are currently a party to a Rights Agreement, dated as of
January 29, 2009, as amended March 17, 2010, with
Mellon Investor Services, LLC. Under the Rights Agreement, we
declared a dividend distribution of one preferred share purchase
right for each outstanding share of our common stock outstanding
on February 9, 2009. Our board has approved the Rights
Agreement to enable the board of directors to assure that our
stockholders are able to realize the long-term value of an
investment in our common stock. Although none of our certificate
of incorporation, our bylaws or applicable law require
stockholder approval or ratification of a stockholder rights
plan or similar arrangement, our board has decided to request
stockholder ratification of the Rights Agreement as a matter of
sound corporate governance. If the stockholders do not ratify
the Rights Agreement, the board will reconsider its decision to
keep the Rights Agreement in place, but will not be required to
terminate the Rights Agreement. Even if our stockholders ratify
the Rights Agreement, our board could terminate the Rights
Agreement prior to the distribution date (as described below).
If the board does not otherwise terminate the Rights Agreement,
it will expire under its current terms on January 29, 2013.
We have summarized certain key provisions of the Rights
Agreement below. Because this is a summary, it may not contain
all of the information that is important to you. Accordingly,
this summary is qualified in its entirety by its reference to
the specific provisions of the Rights Agreement, as amended, the
full text of which we have included as Appendix B to the
electronic copy of this proxy statement. You may also request a
copy of the Rights Agreement, as amended, by sending a written
request to our corporate secretary. Please refer to
Communications with the Company and the Board in
this proxy statement for information about how to contact our
corporate secretary.
We have recently amended the rights agreement to meet the
standards of sound corporate governance, as determined by many
institutional investors. As a result, our rights agreement
contains a number of provisions that have been tailored to meet
these standards and are intended to be stockholder
friendly, including, but not limited to the following:
(1) 20% flip-in and flip-over thresholds as described under
Flip-in and Flip-Over Events and Adjustments below;
(2) a three-year sunset provision as described under
Term below; (3) no features that would limit
the ability of a future board of directors of the company to
redeem the rights or otherwise make the rights agreement
non-applicable to a particular transaction prior to a person or
group becoming an acquiring person; and (4) a
permitted or qualified offer feature that, under certain
circumstances, allows the holders of 10% of our outstanding
common stock to direct our board to call a special meeting of
stockholders to consider a resolution authorizing a redemption
of all of the outstanding rights.
Reasons
for the Rights Agreement
Our board adopted the Rights Agreement as a precautionary
measure and believes that it is in our stockholders best
interests for the following reasons:
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The rights agreement is intended to help our board ensure that
all of our stockholders receive fair and equal treatment in the
event of a takeover proposal and to safeguard against coercive
tactics designed to take control over our company without
allowing our stockholders to realize the long-term value of
their investment. Our board believes that implementing these
safeguards will assist us in preventing an acquirer from gaining
control of our company without offering a fair price to our
stockholders.
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The rights agreement provides the board with adequate time to
evaluate unsolicited offers and may deter or delay offers that
are not in the stockholders or the companys best
interests by encouraging the potential acquirer to negotiate
with our board to have the rights redeemed before the potential
acquirer
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acquires more than 20% or more of our common stock. Accordingly,
the rights agreement allows the board time to pursue alternate
strategies to maximize our stockholders long-term value.
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The rights may have certain anti-takeover effects. The rights
will cause substantial dilution to any person or group that
attempts to acquire us without our boards approval. As a
result, the overall effect of the rights may be to render more
difficult or discourage any attempt to acquire us even if such
acquisition may be favorable to the interests of our
stockholders. Because our board can redeem the rights and amend
the rights agreement in any respect prior to a person or group
owning more than 20% of our outstanding common stock, the rights
should not interfere with a merger or other business combination
that our board approves or any other potential acquirer that is
willing to make an offer at a fair price or otherwise in our
stockholders best interests.
Our rights agreement is similar to rights agreements that other
public companies have adopted and our adoption of this plan was
not prompted by any external actions. We have received no
hostile communications or takeover approaches of any kind. We
adopted the plan to give our board time to evaluate and respond
to any unsolicited future attempts to acquire our company and to
protect the long-term value of our stockholders investment
in us.
Description
of Rights Agreement
Distribution of Rights. On January 29,
2009, our board declared a dividend of one right for each
outstanding share of our common stock, $0.001 par value per
share, or common stock, to stockholders of record at the close
of business on February 9, 2009. Each right entitles the
registered holder to purchase from us one ten-thousandth of a
share of our series A junior participating preferred stock,
or preferred stock, at a purchase price of $40.00 in cash per
one ten-thousandth of a share, subject to adjustment. The rights
are attached to the certificates representing shares of our
common stock and do not trade separately. Until the distribution
date, the rights are not exercisable or transferable separately
from the common stock.
Term. The rights currently will expire on
January 29, 2013, unless earlier redeemed or exchange. If
our stockholders do not ratify the Rights Agreement at the
annual meeting, our board may, but is not required to, terminate
the rights agreement prior to January 29, 2013.
Events Causing Exercisability of Rights. The
rights will separate from our common stock after the
distribution date which is the earlier to occur of the following:
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the close of business on the tenth day after the first public
announcement that a person or group has become an
acquiring person (as defined below); and
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the close of business on the tenth day (or a later date
determined by action of our board prior to such time as any
person or group becomes an acquiring person) following the
commencement of, or announcement of an intention to make, a
tender offer or exchange offer, which when consummated would
result in a person or group becoming an acquiring person.
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Acquiring Person. Our rights agreement
generally defines an acquiring person as a person or
group of affiliated or associated persons that have acquired
beneficial ownership of at least 20% of our outstanding shares
of common stock. As described below, after a person or group
becomes an acquiring person, the rights may not be redeemed or
amended.
Authority of the Board. When evaluating
decisions surrounding the redemption of the rights or any
amendment to the rights agreement to delay or prevent the rights
from detaching and becoming exercisable as a result of a
particular transaction, the board, or any future board, is not
subject to restrictions that would limit its ability to redeem
the rights or ototherwise make the rights non-applicable to a
particular transaction prior to a person or group becoming an
acquiring person.
Flip-in and Flip-Over Events and
Adjustment. After a person or group of affiliated
or associated persons becomes an acquiring person, each holder
of a right, except an acquiring person, will have the right to
receive, upon exercise, shares of our common stock (or, in
certain circumstances, cash, property or other securities of the
company) having a value equal to two times the purchase price of
the right instead of our preferred stock.
33
At any time after a person or group of affiliated or associated
persons becomes an acquiring person, but prior to the
acquisition by an acquiring person of 50% or more of our
outstanding shares of our common stock, our board may exchange
the rights (other than rights owned by such acquiring person
that have become null and void), in whole or in part, without
any additional payment, for shares of our common stock, at an
exchange ratio of one share of common stock (or of a share of a
class or series of the companys preferred shares having
equivalent rights, preferences and privileges) per right
(subject to adjustment).
At any time after the first date of public announcement by the
company or an acquiring person that an acquiring person has
become such, if (1) the company is the surviving
corporation in a merger with any other company or entity,
(2) the company is acquired in a merger or other business
combination transaction, (3) 50% or more of the
companys consolidated assets or earning power are sold, or
(4) an acquiring person engages in certain
self-dealing transactions with the company, each
holder of a right (other than those of an acquiring person whose
rights have become null and void) will thereafter have the right
to receive, upon the exercise thereof at the then-current
purchase price of the right, that number of shares of common
stock of the surviving or acquiring company which at the time of
such transaction will have a market value of two times the
purchase price of such right.
Redemption of Rights. At any time prior to a
person or group of affiliated or associated persons becomes an
acquiring person, our board may redeem all, but not less than
all, of the rights at a price of $.001 per right, which we refer
to as the redemption price. The redemption of the
rights may be made effective at such time, on such basis and
with such conditions as the board in its sole discretion may
establish. Immediately upon any redemption of the rights, the
right to exercise the rights will terminate and the only right
of the holders of rights will be to receive the redemption
price. Immediately upon any redemption of the rights, the right
to exercise the rights will terminate and the only right of the
holders of rights will be to receive the redemption price.
Qualified Offer. A qualifying offer is an
offer that, among other things, our board of directors has
determined to have the following characteristics:
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is an all-cash tender offer or stock exchange offer or
combination thereof for any and all of our outstanding shares of
common stock;
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is an offer whose per-share price represents a reasonable
premium over the highest market price of the common stock in the
preceding 18 months, with, in the case of an offer that
includes shares of common stock of the offeror, such per-share
offer price being determined using the lowest reported market
price for common stock of the offeror during the five trading
days immediately preceding and the five trading days immediately
following the commencement of the offer;
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is an offer which, within 20 business days after the
commencement date of the offer (or within 10 business days after
any increase in the offer consideration), does not result in a
nationally recognized investment banking firm retained by our
board rendering an opinion to the board that the consideration
being offered to our stockholders is either unfair or inadequate;
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is subject only to the minimum tender condition described below
and other customary terms and conditions, which conditions shall
not include any requirements with respect to the offeror or its
agents being permitted to conduct any due diligence with respect
to our books, records, management, accountants and other outside
advisers;
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is accompanied by an irrevocable written commitment by the
offeror to us that the offer will remain open for at least 120
business days and, if a special meeting is duly requested by our
stockholders with respect to the offer, at least 10 business
days after the date of the special meeting or, if no special
meeting is held within 90 business days following receipt of the
notice of the special meeting, for at least 10 business days
following that
90-day
period;
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is accompanied by an irrevocable written commitment by the
offeror to us that, in addition to the minimum time periods
specified above, the offer will be extended for at least 15
business days after any increase in the price offered, and after
any bona fide alternative offer is made;
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34
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is conditioned on a minimum of a majority of the shares of our
common stock being tendered and not withdrawn as of the
offers expiration date;
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is accompanied by an irrevocable written commitment by the
offeror to us to consummate promptly upon successful completion
of the offer a second-step transaction whereby all shares of our
common stock not tendered in the offer will be acquired at the
same consideration per share actually paid pursuant to the
offer, subject to stockholders statutory appraisal rights,
if any;
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is accompanied by an irrevocable written commitment by the
offeror to us that no amendments will be made to the offer to
reduce the offer consideration or otherwise change the terms of
the offer in a way that is adverse to a tendering
stockholder; and
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is accompanied by certifications of the offeror and its chief
executive officer and chief financial officer that all
information that may be material to an investors decision
to accept the offer have been, and will continue to be promptly
for the pendency of the offer, fully and accurately disclosed.
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Further, any offers that have cash or common stock as all or
partial consideration are subject to further conditions for
qualification as qualifying offers, as set forth in
the Rights Agreement, as amended.
Under the qualified offer provisions of our Rights Agreement, as
amended, if our board does not hold a special meeting within 90
business days of receipt of the notice from holders of 10% of
our outstanding common stock (excluding the acquiring person),
the rights will be automatically redeemed at the close of
business on the 10th business day following that date. If a
meeting is held and the holders of a majority of our outstanding
common stock representing a majority of the shares of common
stock represented at the meeting at which a quorum is present
vote in favor of the redemption of the rights, the qualifying
offer will be deemed exempt from the Rights Agreement, provided
that no acquiring person has emerged and the qualifying offer
continues to be a qualifying offer.
Vote
Required
The affirmative vote of a majority of the shares represented in
person or by proxy at the annual meeting and entitled to vote on
the proposal is required for ratification of the Rights
Agreement, as amended.
The board
of directors unanimously recommends a vote FOR ratification of
the Rights Agreement, as amended.
Proposal 4
Approval of Amendment to Amended and Restated Certificate of
Incorporation to Change the Companys Name to The Dolan
Company
Our board of directors has approved an amendment to our Amended
and Restated Certificate of Incorporation to change the name of
the company from Dolan Media Company to The
Dolan Company. Our board is recommending the change to our
name because a majority of our revenues are now derived from our
Professional Services Division, which provides outsourced
services to the legal profession through our subsidiaries, NDeX,
DiscoverReady and Counsel Press. While our Business Information
Division, which consists of business journals, court and
commercial newspapers and other business information products
and services, remains an important part of our business, our
board believes that the name Dolan Media Company no
longer fully and accurately describes the breadth of our
operations.
As approved by our board, the change of our name to The
Dolan Company will not become effective until our
stockholders approve the amendment to our Amended and Restated
Certificate of Incorporation and we file it with the Delaware
Secretary of State. We anticipate filing the Certificate of
Amendment to our Amended and Restated Certificate of
Incorporation on May 26, 2010, or as soon as practicable
thereafter, if our stockholders approve the amendment at our
2010 annual meeting.
If the stockholders approve this proposal, Article FIRST of
the Companys Certificate of Incorporation will be amended
to read in its entirety as follows:
The name of the Corporation is The Dolan
Company.
35
As described above, our board believes that changing our name is
in our best interests because The Dolan Company more
accurately reflects our current operations. We have included the
full text of the Certificate of Amendment to our Amended and
Restated Certificate of Incorporation as Appendix C to the
electronic copy of this proxy statement. You may also request a
copy of the proposed amendment to our Amended and Restated
Certificate of Incorporation by sending a written request to our
corporate secretary. Please refer to Communications with
the Company and the Board in this proxy statement for
information about how to contact our corporate secretary.
Vote
Required
Approval of the amendment to our Amended and Restated
Certificate of Incorporation to change our name to The
Dolan Company requires the affirmative vote of the holders
of a majority of the shares outstanding and entitled to vote on
this matter.
The board of directors unanimously recommends a vote FOR the
approval of the amendment to our Amended and Restated
Certificate of Incorporation, changing our name from Dolan
Media Company to The Dolan Company.
Proposal 5
Ratification of Appointment of Independent Registered Public
Accounting Firm
Our audit committee has appointed McGladrey & Pullen,
LLP, certified public accountants and independent registered
public accounting firm, as Dolan Media Companys
independent registered public accounting firm for the year
ending December 31, 2010. Our audit committee has engaged
McGladrey & Pullen, LLP as our independent registered
accounting firm since 2003. Although it is not required by our
audit committees charter or Delaware law, the audit
committee is submitting the selection of McGladrey &
Pullen, LLP for stockholders ratification at the annual
meeting because we believe it is a good corporate practice. If
the stockholders do not ratify the committees selection of
McGladrey & Pullen, LLP, the committee will reconsider
its decision, but will not be required to change its decision to
appoint McGladrey & Pullen, LLP as the companys
independent registered public accounting firm. Even if our
stockholders ratify this appointment, our audit committee
may change this appointment at any time during the year if it
determines that a change would be in our or our
stockholders best interests.
We expect representatives of McGladrey & Pullen, LLP
to be present at the annual meeting. They will have an
opportunity to make a statement to the stockholders if they
desire and you will have an opportunity to ask them appropriate
questions.
Vote
Required
The affirmative vote of a majority of the shares represented in
person or by proxy at the annual meeting and entitled to vote on
the proposal is required for ratification of the audit
committees appointment of McGladrey & Pullen,
LLP, as our independent registered public accounting firm for
2010.
The board of directors unanimously recommends a vote FOR
ratification of the audit committees appointment of
McGladrey & Pullen, LLP, as our independent registered
public accounting firm for 2010.
36
AUDIT
COMMITTEE REPORT
The audit committee of the board of directors of Dolan Media
Company has reviewed and discussed the companys audited
consolidated financial statements for the year end
December 31, 2009, with the companys management,
which has primary responsibility for the financial statements.
The committee has discussed with the companys independent
registered public accounting firm, McGladrey & Pullen,
LLP, the matters required to be discussed by the statement on
Auditing Standards No. 61, Communication with Audit
Committees, as amended (AICPA, Professional
Standards, Vol. 1. AU section 380), as adopted by the
PCAOB in Rule 3200T. Further, the committee has received
the written disclosures and the letter from the companys
independent registered public accounting firm required by
Rule 3526 of the Public Accounting Oversight Board
Communication with Audit Committees Concerning
Independence, and the committee has discussed with
McGladrey & Pullen, LLP, the companys registered
public accounting firm, that firms independence.
Based upon the review and discussions described above, the audit
committee recommended to the board of directors that the
companys audited consolidated financial statements be
included in its annual report on
Form 10-K
for the year ended December 31, 2009, for filing with the
SEC.
Submitted by the Audit Committee
George Rossi, chair
Arthur F. Kingsbury
Jacques Massicotte
37
AUDIT
COMMITTEE MATTERS
Fees of
the Independent Registered Public Accounting Firm
The following table presents fees for professional services
rendered by McGladrey & Pullen, LLP for the audit of
our consolidated financial statements for the years ended
December 31, 2009, and 2008, and fees billed for other
services rendered by McGladrey & Pullen, LLP during
those periods.
Audit and
Non-Audit Fees
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2009
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2008
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($ in thousands)
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Audit Fees:(1)
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$
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720
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$
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999
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Audit Related Fees:(2)
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80
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276
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Tax Fees:(3)
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All Other Fees:
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Total:
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800
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$
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1,275
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(1) |
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Audit fees are fees billed for professional services for the
audit of our annual financial statements and the audit of our
internal control over financial reporting. Audit fees also
include fees billed for professional services for the review of
our financial statements included in our quarterly reports on
Form 10-Q. |
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(2) |
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This category relates to all fees for assurance and related
services that are reasonably related to the performance of our
audit, including audits of acquisition targets. |
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(3) |
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McGladrey & Pullen, LLP does not provide tax
compliance, tax advice, tax planning or other tax related
services to us. |
Audit
Committee Policy on Pre-Approval of Audit and Permissible
Non-Audit Services
As described earlier in this proxy statement, our audit
committee is responsible for appointing and overseeing the work
of McGladrey & Pullen, LLP, our independent registered
public accounting firm, and has established the following
procedures for the pre-approval of all audit, audit-related, and
other permissible services that McGladrey & Pullen,
LLP provides to us. At this time, McGladrey & Pullen,
LLP does not provide any tax services to us.
During the first quarter of each fiscal year, the committee
determines the type of audit, audit-related, and other
permissible services that it expects McGladrey &
Pullen, LLP will provide to us during that year.
McGladrey & Pullen, LLP then provides the audit
committee with detailed information regarding the specific
services in those categories and the proposed fee structure for
the fiscal year. After reviewing the information
McGladrey & Pullen, LLP provides, the committee will
pre-approve those services up to a specific fee level for that
fiscal year. All other services that McGladrey &
Pullen, LLP expects to provide or that exceed the pre-approved
fee level require separate pre-approval from the committee.
McGladrey & Pullen, LLP and our chief financial
officer, Ms. Duncomb, submit joint requests to our audit
committee for approval of services requiring the separate
pre-approval of our audit committee. These requests include a
joint statement, describing whether, in their view, the request
is consistent with the SECs rules on auditor independence.
The policy authorizes our audit committee to delegate to one or
more of its members pre-approval authority with respect to
permitted services. During the year ended December 31,
2009, and for the fiscal year 2010, our audit committee has
delegated its pre-approval authority to its chair,
Mr. Rossi. He must report any pre-approval decisions to the
audit committee at its next scheduled meeting.
Our audit committee pre-approved all audit and permissible
non-audit related services that McGladrey & Pullen,
LLP provided to us during the year ended December 31, 2008,
in accordance with this pre-approval policy. Our audit committee
further concluded that McGladrey & Pullen, LLP could
provide these services to us and still maintain their
independence. You may request a copy of our audit
committees pre-approval policy by writing to our corporate
secretary. See Communications with the Company and the
Board in this proxy statement for our corporate
secretarys mailing and email addresses.
38
EXECUTIVE
OFFICERS
The following table sets forth information concerning our
executive officers, including their age as of the date of this
proxy statement.
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Name
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Age
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Position
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James P. Dolan
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60
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Chairman of the Board, Chief Executive Officer and President
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Vicki J. Duncomb
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53
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Vice President, Chief Financial Officer and Corporate Secretary
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Scott J. Pollei
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49
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Executive Vice President and Chief Operating Officer
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Mark W.C. Stodder
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50
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Executive Vice President Business Information
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David A. Trott
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49
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Chairman and Chief Executive Officer, National Default Exchange
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You should refer to Nominees for Director for
Three-Year Term Ending at 2013 Annual Meeting earlier
in this proxy statement for biographical information about our
chairman, chief executive officer and president, James P. Dolan.
Biographical information for our other executive officers is set
forth below.
Vicki J. Duncomb has served as our vice president and
chief financial officer since August 2009. Prior to serving in
this capacity, she served as our vice president
finance from July 2006 until August 2009. She has also served as
our corporate secretary since April 2007. From February 2000
through March 2006, Ms. Duncomb served as the director of
finance and operations for The McGraw-Hill Companies Healthcare
Information Group, an Edina, Minnesota-based educational and
professional healthcare information provider.
Scott J. Pollei has served as our executive vice
president and chief operating officer since August 2009 and our
executive vice president and chief financial officer from
December 2001 to August 2009. From January 1994 to December
2001, Mr. Pollei served as our vice president of finance.
Prior to 1994, Mr. Pollei was a senior manager at KPMG LLP.
Mr. Pollei is an inactive certified public accountant.
Mark W.C. Stodder has served as our executive vice
president business information since February 2005.
Prior to serving in this capacity, Mr. Stodder served as
our vice president, newspapers, from January 2004 to February
2005; as our chair, Circulation Marketing Board, from May 2001
to January 2004; and as our vice president and publisher, Daily
Reporter Publishing Company in Milwaukee, from March 1994 to
January 2004. Prior to joining Dolan Media Company,
Mr. Stodder held news reporting, editing and executive
positions with community newspapers in Los Angeles and Colorado.
Mr. Stodder is active in a number of newspaper, media and
legislative associations. He is a director of DLNP and the
National Newspaper Association, and is the president of the
Public Notice Resource Center, a non-profit foundation which
tracks and studies public notice legislation across the country.
He is a past president of American Court and Commercial
Newspapers, Inc.
David A. Trott has served as chairman and chief executive
officer of National Default Exchange since September 2008 and
its president from March 2006 to September 2008. In addition,
since January 1992, Mr. Trott has served as the managing
attorney of Trott & Trott, P.C., a law firm
located in Farmington Hills, Michigan, of which he is the
majority shareholder, and the president of Attorneys
Title Agency, LLC, a title agency located in Southfield,
Michigan. Mr. Trott has also previously served as president
of the Michigan Mortgage Bankers Association and the
U.S. Foreclosure Network, one of the largest organizations
of foreclosure attorneys in the United States.
39
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
The compensation committee of our board of directors, or for
purposes of this compensation discussion and analysis, the
committee, has responsibility for establishing, implementing and
administering our executive compensation program. In this
section, we discuss certain aspects of our executive
compensation program as it relates to James P. Dolan, our
chairman, chief executive officer and president; Vicki J.
Duncomb, our vice president and chief financial officer (who has
served as our principal financial officer since August 1,
2009); Scott J. Pollei, our executive vice president and chief
operating officer (who served as our principal financial officer
from January 1, 2009, through July 31, 2009); and our
two other most highly-compensated executive officers in 2009
(Mark W.C. Stodder, executive vice president, Business
Information Division; and David A. Trott, chairman and chief
executive officer of NDeX). We have also included Mark Baumbach,
our former vice president technology, who would have
been one of our three other most highly compensated executive
officers in 2009 if he were employed with us at
December 31, 2009. We refer to these individuals as our
named executive officers.
Compensation
Philosophy and Objectives
The committees primary objectives with respect to
executive compensation are to (1) attract, motivate and
retain talented and dedicated executive officers, (2) tie
annual and long-term cash and equity incentives to the
achievement of measurable corporate and individual performance
objectives, (3) compensate our executives at levels
comparable to executives at similar companies to remain
competitive in our recruiting, and (4) align the interests
of our executives with the long-term interests of our
stockholders through award opportunities that will result in the
ownership of our common stock. To achieve these objectives, the
committee has designed and implemented an executive compensation
program for the named executive officers consisting of a mix of
the following items:
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base salary;
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performance-based short-term cash incentive compensation;
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long-term equity incentive compensation;
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perquisites and other benefits; and
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severance and change in control benefits.
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The relative mix of compensation for the three primary
components (base salary, performance-based short term cash
incentive and long term equity incentive) for each of our named
executive officers (excluding Mr. Baumbach who was not
employed with us at the end of 2009) based on compensation
paid in 2009 is set forth in the charts below. We have also
presented the targeted 2009 compensation mix for each named
executive officer (excluding Mr. Baumbach who was not
employed with us at the end of 2009) for comparison
purposes. As discussed in Performance-based Short Term
Cash Incentives below, we paid each of our named executive
officers (excluding Mr. Baumbach who was not employed with
us at the end of 2009) more than the targeted short-term
cash incentive because our performance in relation to each
performance metric exceeded the performance targets.
40
Compensation
Consultant
Since 2006, our compensation committee has engaged Hewitt
Associates, a human resources consulting firm, to advise the
committee and assist us in ensuring that our compensation plans
are consistent with our strategic and financial goals. We do not
use Hewitt Associates or any of its affiliated entities for any
other work. In 2006 and again in 2008, as a part of this
process, Hewitt, in consultation with the committee, developed a
peer group for compensation purposes composed of companies with
similar revenues and in industries with respect to which we
believe we compete for executive talent. The peer group that was
developed consisted of public companies that are generally in
the business information, business process outsourcing, business
services or publishing industries. On February 1, 2010,
Hewitt spun-off its executive compensation business into a
separate company known as Meridian Compensation Partners, LLC.
Since the spin-off, Meridian, rather than Hewitt, has been
advising our compensation committee on the matters in which the
compensation committee had previously engaged Hewitt.
41
Peer
Study
Hewitt delivered the most recent version of this study to the
committee in writing as well by presentation at the
committees meeting held on October 29, 2008. The 2008
Hewitt study consisted of the following peer group companies,
who were chosen because they operate in similar industries and
have similar annual revenues to us. As shown by the table below,
these twenty companies ranged in size from $83 million to
$749 million in revenues, with a mean and median revenue
size of $300 million and $206 million, respectively,
as compared to our 2009 annual revenues of $263 million.
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Revenues
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Peer Company
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Industry (as Defined by Hewitt & Associates)
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(In millions)(1)
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Advent Software, Inc.
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Bank office software
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$
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240
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Amrep Corporation
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Publication services
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166
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Bottomline Technologies, Inc.
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Payment processing
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|
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131
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Concur Technologies, Inc.
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Business spend processing
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|
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194
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Corporate Executive Board, Co.
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Business research services
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557
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Costar Group, Inc.
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Real estate information services
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|
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206
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Courier Corp.
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Book publisher
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|
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285
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Cybersource Corp.
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E-payment services
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181
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Digital River, Inc.
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Online sale services
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|
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381
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Epiq Systems, Inc.
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Legal technology systems
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|
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203
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Factset Research Systems Inc.
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Financial information services
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|
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551
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InfoGroup, Inc.
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Database services
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749
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Interactive Data Corp.
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Financial information and analytics
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725
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Marchex Inc.
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Online advertising services
|
|
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145
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Morningstar, Inc.
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|
Investment research information
|
|
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487
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NIC, Inc.
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Internet services for governments
|
|
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94
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Online Resources Corp.
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Payment services
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|
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149
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Primedia, Inc.
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|
Real estate publishing
|
|
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314
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SkillSoft Public Limited Company
|
|
E-learning for employers
|
|
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317
|
|
Value Line
|
|
Investment publications
|
|
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83
|
|
Webmedia Brands Inc. (formerly Jupiter Media Corp.)
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|
Online business information
|
|
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140
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|
Mean of Peer Companies
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$
|
300
|
|
Median of Peer Companies
|
|
|
|
$
|
206
|
|
Dolan Media Company total 2009 revenues
|
|
|
|
$
|
263
|
|
|
|
|
(1) |
|
We calculated the revenues for each of our peer companies using
information from the most recent four quarters that were
publicly available for each company when the Hewitts peer
study was issued to our compensation committee in October 2008. |
The peer group study examined the most recently available
stockholder meeting proxy information, which for the 2008 study
was generally from the 2008 annual stockholders meeting and
therefore included 2007 fiscal year compensation information for
each of the peer companies.
The committee has carefully considered Hewitts analyses of
the peer group compensation information, as well as other
factors in establishing our executive compensation programs. For
example, the committee also considers the results of its
performance evaluation of the named executive officers an
important factor in setting total compensation packages. In
general, the committee intends to establish total compensation
packages for our named executive officers at or near the
50th percentile level for total compensation paid to
executives in similar positions and with similar
responsibilities at companies in our peer group but does not
require that total compensation packages meet or exceed this
level. In particular, the allocation of total compensation for
each named
42
executive officer among base salary, short-term cash incentive,
long-term equity-based incentive and other non-cash benefit
components was based, in part, on a review of the results of the
Hewitt study, with the objective of providing a significant
portion of total compensation in the form of performance-based
compensation. The Hewitt study is one, but not the only, factor
the committee reviews in setting compensation for our named
executive officers. For 2008 and 2009, total compensation
packages for our named executive officers were at or near the
50th percentile level of similarly situated executives at our
peer companies.
Compensation
Components
Base
Salary
Base salary is intended to reflect the executives skill
level, knowledge base and performance record, and takes into
account competitive market compensation paid by companies in our
peer group for similar positions. The committee reviews the base
salaries of our named executive officers on an annual basis, and
adjusts base salaries from time to time to realign salaries with
market levels, taking into account individual responsibilities,
performance and experience, and to comply with the requirements
in any applicable employment agreements. The committee approves
the base salary of our president and chief executive officer,
and, with input from our president and chief executive officer,
the base salary for each executive officer below the chief
executive officer level.
For the year ended December 31, 2009, the committee
established base salaries for each of the named executive
officers at the same level as the named executive officers
respective base salaries for the year ended December 31,
2008. This was consistent with an overall decision by us to
maintain 2008 salary levels due to the general economic
environment. Further, Messrs. Dolan, Pollei and Stodder,
who each have employment agreements with automatic increases to
their base salaries, executed waivers of their contractual
increases. We promoted Mr. Pollei to executive vice
president and chief operating officer and Ms. Duncomb to
vice president and chief financial officer on August 1,
2009. In connection with those promotions, we increased
Mr. Polleis and Ms. Duncombs salaries to
$289,000 and $225,000, respectively.
In January 2010, the committee established base salaries for the
year ending December 31, 2010, based on a combination of
the Hewitt study information, individual performance
evaluations, changes in the cost of living in the area where the
executive resides, as well as any requirements of employment
agreements between us and the executives. The committee also
noted that, other than the increases in connection with the
promotions of Ms. Duncomb and Mr. Pollei, it had not
awarded any increases in base salaries to the named executive
officers in 2009. The committee further noted that a part of the
consideration for determining Mr. Trotts base salary
level is the fact that he splits his time between NDeX and his
law firm, Trott & Trott. The increase in base salaries
for our named executive officers ranged between three and eleven
percent to meet the committees overall goal of
compensating our named executive officers similar to the
executive officers of our peer companies, as well as providing
compensation packages that, in the committees judgment,
were appropriate given the competitive market for talent. Based
upon the Hewitt analysis of our peer groups for 2008, as
adjusted for changes in the cost of living, the total target
compensation packages for 2010 are approximately equal to, or
below, the 50% percentile of the compensation packages for
similarly situated executive officers at our peer companies. The
committee also noted that salaries are set forth in the
employment agreements for all of the named executive officers
and that, except in the case of Mr. Trott, will, at a
minimum, increase each year at a rate based on a change in the
consumer price index specified in these employment agreements.
See Executive Compensation Employment
Agreements for further information regarding the matters
set forth above.
43
In January 2010, the committee established the base salaries for
each of the named executives for the year ending
December 31, 2010, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
2008 Base
|
|
2009 Base
|
|
2010 Base
|
|
Change
|
Executive Officer
|
|
Salary
|
|
Salary
|
|
Salary
|
|
(2009 to 2010)
|
|
James P. Dolan
|
|
$
|
479,000
|
|
|
$
|
479,000
|
|
|
$
|
527,000
|
|
|
|
10.0
|
%
|
Vicki J. Duncomb(1)
|
|
|
200,000
|
|
|
|
225,000
|
|
|
|
250,000
|
|
|
|
11.1
|
%
|
Scott J. Pollei(1)
|
|
|
264,000
|
|
|
|
289,000
|
|
|
|
317,000
|
|
|
|
11.2
|
%
|
Mark W.C. Stodder
|
|
|
232,800
|
|
|
|
232,800
|
|
|
|
240,000
|
|
|
|
3.1
|
%
|
David A. Trott
|
|
|
269,000
|
|
|
|
269,000
|
|
|
|
277,000
|
|
|
|
3.0
|
%
|
Mark E. Baumbach(2)
|
|
|
217,400
|
|
|
|
217,400
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects Ms. Duncomb and Mr. Polleis base salary
for 2009 after their respective promotions, which were effective
August 1, 2009. See the Summary Compensation
Table for actual amounts that we paid Ms. Duncomb and
Mr. Pollei during 2009 as base salary. Consistent with the
compensation committees decision not to increase base
salaries at the beginning of 2009, Ms. Duncombs and
Mr. Polleis base salaries from January 1, 2009,
through the effective date of their promotions on August 1,
2009, were $200,000 and $264,000, respectively. |
|
(2) |
|
Mr. Baumbach was no longer employed with us at
December 31, 2009. |
Performance-Based
Short-Term Cash Incentives
Under our 2007 incentive compensation plan, which includes a
cash short-term incentive program, we provide annual short-term
cash incentives to our named executive officers. Annually, the
committee establishes the target cash incentive for each named
executive officer as a targeted percentage of base salary. In
addition, the committee scales performance based on achieving
results above or below targeted performance-metric levels. This
provides the named executive officers with an opportunity to
earn more or less than the targeted incentive amount. The
maximum payout of this cash incentive is capped at 2 times the
target cash incentive. The table below provides the threshold
cash incentive, the target cash incentive, and the maximum cash
incentive that could have been earned, as well as the actual
cash incentive earned, for each named executive officer in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
|
|
Threshold
|
|
|
|
Maximum
|
|
Cash
|
|
|
2009
|
|
Cash
|
|
Target Cash
|
|
Cash
|
|
Incentive
|
Name
|
|
Base Salary
|
|
Incentive(3)
|
|
Incentive(4)
|
|
Incentive(5)
|
|
Earned (6)
|
|
James P. Dolan
|
|
$
|
479,000
|
|
|
$
|
|
|
|
$
|
287,400
|
|
|
$
|
574,800
|
|
|
$
|
500,076
|
|
Vicki J. Duncomb(1)
|
|
|
210,417
|
|
|
|
|
|
|
|
105,209
|
|
|
|
210,417
|
|
|
|
183,063
|
|
Scott J. Pollei(1)
|
|
|
274,417
|
|
|
|
|
|
|
|
137,209
|
|
|
|
274,417
|
|
|
|
238,743
|
|
Mark W.C. Stodder
|
|
|
232,800
|
|
|
|
|
|
|
|
116,400
|
|
|
|
232,800
|
|
|
|
192,806
|
|
David A. Trott
|
|
|
269,000
|
|
|
|
|
|
|
|
134,500
|
|
|
|
269,000
|
|
|
|
210,358
|
|
Mark E. Baumbach(2)
|
|
|
217,400
|
|
|
|
|
|
|
|
108,700
|
|
|
|
217,400
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects the actual amounts paid to Ms. Duncomb and
Mr. Pollei as base salary during 2009 as their salaries
were increased in August 2009, in connection with their
promotions to vice president and chief financial officer and
executive vice president and chief operating officer,
respectively. See Summary Compensation Table for
more information. |
|
(2) |
|
Mr. Baumbachs employment with us ended on
July 22, 2009, at which time he had not earned his
short-term cash incentive. See Severance and Other
Payments made to Mark E. Baumbach for information about
payments we paid to Mr. Baumbach in connection with the
termination of his employment. |
|
(3) |
|
The named executive officers are entitled to no portion of their
cash incentive if the actual performance metrics are 80% or less
than the performance target the compensation committee set. The
named executive |
44
|
|
|
|
|
officers are entitled to a portion of their bonus if the actual
performance metric is more than 80% of the performance target. |
|
(4) |
|
The named executive officers are entitled to the target cash
incentive if the actual performance metrics are equal to (i.e.,
100% of) the performance targets the compensation committee set. |
|
(5) |
|
The named executive officers are entitled to the maximum cash
incentive if the actual performance metrics are 150% of the
performance targets that the compensation committee set. |
|
(6) |
|
Reflects the actual amounts earned by each named executive
officer in connection with the achievement of the performance
targets. |
The committee sets the performance targets, which our named
executive officers must achieve to earn a short-term cash
incentive payment. In each case, the performance targets, as
established by the committee for 2009, consisted of a
combination of cash earnings per diluted share, adjusted EBITDA
for Dolan Media Company, adjusted EBITDA for NDeX, adjusted
EBITDA for the Business Information Division or other metrics.
The relative weight of each performance target as it relates to
the named executive officer is set forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
Adjusted
|
|
|
|
|
|
|
EBITDA for
|
|
|
|
EBITDA for
|
|
|
|
|
Cash
|
|
Dolan
|
|
Adjusted
|
|
Business
|
|
|
|
|
Earnings per
|
|
Media
|
|
EBITDA for
|
|
Information
|
|
|
Name
|
|
Diluted Share
|
|
Company
|
|
NDeX
|
|
Division
|
|
Other(1)
|
|
James P. Dolan
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki J. Duncomb
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J. Pollei
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W.C. Stodder
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
66
|
%
|
|
|
|
|
David A. Trott
|
|
|
34
|
%
|
|
|
|
|
|
|
66
|
%
|
|
|
|
|
|
|
|
|
Mark E. Baumbach
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
%
|
|
|
|
(1) |
|
This performance metric consisted of meeting technology spending
and other information technology department objectives as set by
our chief operating officer. |
We define cash earnings as net income attributable to Dolan
Media Company before (1) non-cash interest income or
expense related to the change in fair value of our interest rate
swaps; (2) non-cash compensation expense;
(3) amortization of intangibles, including the DLNP
intangible; (4) non-recurring items of income or expense;
and (5) an adjustment to income tax expense related to the
reconciling items at the effective tax rate. We define cash
earnings per diluted share as cash earnings divided by the
weighted average number of diluted common shares outstanding
over the period measured. We define adjusted EBITDA for Dolan
Media Company as net income (loss) attributable to Dolan Media
Company (1) before (a) non-cash interest expense
related to redeemable preferred stock; (b) interest
expense, net; (c) income tax expense; (d) depreciation
and amortization (including the amortization of the DLNP
intangible); (e) non-cash compensation expense;
(f) noncontrolling interest, and (g) non-recurring
income
and/or
expense, and (2) after cash distributions paid to holders
of noncontrolling interest. We calculate adjusted EBITDA for
NDeX in the same manner as we calculate adjusted EBITDA for
Dolan Media Company, except as follows: (1) we start from
net income attributable to NDeX and only add back that portion
of each reconciling item that is attributable to our NDeX
operations; and (2) we do not add back the amortization
expense for our DLNP intangible as it is not attributable to our
NDeX operations. We calculate adjusted EBITDA for our Business
Information Division in the same manner as we calculate adjusted
EBITDA for Dolan Media Company, except as follows: (1) we
start with the net income of our Business Information Division;
and (2) do not add back non-controlling interest or
subtract the cash distributions we pay to the holders of our
noncontrolling interests as those reconciling items are not
attributable to our Business Information Division.
The committee believes that adjusted EBITDA and cash earnings
per diluted share are more appropriate measures than EBITDA,
earnings per share and other similar GAAP financial metrics, as
well as EBITDA, because they are the same primary metrics being
used by our management and board of directors to evaluate our
financial performance.
45
We have grown in large part through acquisitions, many of which
were financed with debt. These acquisitions have generally
resulted in relatively significant levels of interest expense
due to increased debt service obligations and amortization
expense due to the amortization of acquired finite-lived
intangibles. The committee believes that the combination of
increased interest expense and amortization expense renders our
accounting profits or losses less meaningful as a measure of
success of our business operations than EBITDA or adjusted
EBITDA, which the committee believes also serve as a proxy for
operational cash flow. The committee expects that we will
continue to identify and evaluate potential acquisition
opportunities and, accordingly, the committee and our board of
directors has established a rigorous process of amending
adjusted EBITDA targets during the fiscal year to account for
acquisitions.
We also believe cash earnings per diluted share provides a
meaningful measure of our cash earnings on a per share basis,
after both interest and taxes, which are generally paid in cash,
but before amortization expense which is a non-cash charge. The
committee believes that the combination of amortization expense
and certain other non-cash charges related to interest rate
swaps renders our accounting earnings per share less meaningful
as a measure of success of our business operations than cash
earnings per diluted share.
The performance targets for the metrics set forth above, along
with the actual performance for those metrics, as adjusted by
the compensation committee, where applicable, is set forth in
the table below (in thousands, except per share amounts and
percentages).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Results,
|
|
|
|
|
Target for
|
|
as adjusted,
|
|
Percentage
|
|
|
Performance
|
|
for Performance
|
|
OverPerformance/
|
Performance Metric
|
|
Metric
|
|
Metric(1)
|
|
UnderPerformance(3)
|
|
Cash earnings per diluted share
|
|
$
|
0.94
|
|
|
$
|
1.39
|
|
|
|
149
|
%
|
Adjusted EBITDA for Dolan Media Company(2)
|
|
|
67,741
|
|
|
|
85,151
|
|
|
|
126
|
%
|
Adjusted EBITDA for NDeX(2)
|
|
|
45,379
|
|
|
|
53,499
|
|
|
|
118
|
%
|
Adjusted EBITDA for Business Information Division
|
|
|
25,562
|
|
|
|
31,944
|
|
|
|
125
|
%
|
|
|
|
(1) |
|
For purposes of determining the 2009 results for the cash
earnings per diluted share and adjusted EBITDA for Dolan Media
Company performance metrics, the compensation committee added
$0.05 and $2.4 million, respectively, which represents the
gain from the sale of our interest in GovDelivery, Inc., to the
cash earnings per diluted share and adjusted EBITDA for Dolan
Media Company metrics that we reported in our fourth quarter
2009 earnings release (which we also furnished to the SEC on
Exhibit 99 to our
Form 8-K
dated February 23, 2010). The committee made this
adjustment for compensation purposes because it believed that
management should be credited for the gain received from this
sale as management had evaluated the investment in GovDelivery
and recommended that investment to the board for its approval. |
|
(2) |
|
The committee increased the adjusted EBITDA performance target
during 2009 to account for the acquisitions of DiscoverReady
(for Dolan Media Company only) and Albertelli (for NDeX and
Dolan Media Company) that occurred during the fourth quarter of
2009. |
|
(3) |
|
For purposes of this table, overperformance means
any percentage over 100% and underperformance means
any percentage under 100%. |
We developed our target cash earnings per diluted share and
adjusted EBITDA goals as a company and for NDeX and the Business
Information Division during our annual financial planning
process, when we assess our operations, the markets we serve and
our competitors, and formulate internal financial projections.
Our cash earnings per diluted share and adjusted EBITDA targets
for 2009 were established based on a careful examination of the
prospects for the business. The committees ultimate
objective is to set performance targets that are likely to be
achieved such that the target cash incentive will be paid out.
This would mean that the actual performance metrics would equal
the performance targets. Our targeted adjusted EBITDA for Dolan
Media Company and NDeX were increased by our committee to
reflect acquisitions occurring during 2009. We further note
that, in the past three years, we paid our named executive
officers at above the targets in both 2007 and 2009 and below
the targets in 2008 because in each of 2009 and 2007, the actual
results for the performance metrics exceeded the targets the
committee had set and in 2008.
46
For 2010, the committee has established the target short-term
incentive payouts for each of the named executive officers,
based on weighted performance metrics, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
|
Maximum
|
|
|
2010
|
|
Cash
|
|
Target Cash
|
|
Cash
|
Name
|
|
Base Salary
|
|
Incentive
|
|
Incentive
|
|
Incentive
|
|
James P. Dolan
|
|
$
|
527,000
|
|
|
$
|
|
|
|
$
|
316,200
|
|
|
$
|
632,400
|
|
Vicki J. Duncomb
|
|
|
250,000
|
|
|
|
|
|
|
|
125,000
|
|
|
|
250,000
|
|
Scott J. Pollei
|
|
|
317,000
|
|
|
|
|
|
|
|
190,200
|
|
|
|
380,400
|
|
Mark W.C. Stodder
|
|
|
240,000
|
|
|
|
|
|
|
|
125,000
|
|
|
|
240,000
|
|
David A. Trott
|
|
|
277,000
|
|
|
|
|
|
|
|
138,500
|
|
|
|
277,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
Adjusted
|
|
|
|
|
|
|
EBITDA for
|
|
|
|
EBITDA for
|
|
|
|
|
Cash
|
|
Dolan
|
|
Adjusted
|
|
Business
|
|
Material
|
|
|
Earnings per
|
|
Media
|
|
EBITDA for
|
|
Information
|
|
Geographic
|
Name
|
|
Diluted Share
|
|
Company
|
|
NDeX
|
|
Division
|
|
Expansion(1)
|
|
James P. Dolan
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki J. Duncomb
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J. Pollei
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W.C. Stodder
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
50
|
%
|
|
|
25
|
%
|
David A. Trott
|
|
|
25
|
%
|
|
|
|
|
|
|
50
|
%
|
|
|
|
|
|
|
25
|
%
|
|
|
|
(1) |
|
This is a new performance metric for Messrs. Stodder and
Trott. As this performance metric relates to Mr. Stodder,
material geographic expansion means providing
business information services in markets that our Business
Information Division did not serve at December 31, 2009. As
this performance metric relates to Mr. Trott,
material geographic expansion means providing
mortgage default processing services in states where NDeX did
not provide these services at December 31, 2009. The
compensation committee, with advice from our chief executive
officer and chief operating officer, will determine whether a
geographic expansion in either the Business Information Division
or at NDeX is material. |
Similar to the process in the prior year, our adjusted EBITDA
and cash earnings per diluted share targets for 2010 were
established based on a careful examination of the prospects for
the business and represent a significant increase over the
results of the prior year. These targets were set with the
objective of making it equally likely that actual results for
each performance metric will exceed the performance target or
fall short of those targets. As with 2009, the named executive
officers are entitled to a short term cash incentive payment,
ranging from the threshold cash incentive to the maximum cash
incentive depending upon whether the actual performance metrics
exceed the performance targets set by the committee. The named
executive officers are entitled to a portion of their short term
cash incentive to the extent a performance metric exceeds 80% of
the performance target.
For more information about expected and earned payouts to the
named executive officers under our short term incentive
performance plan, please refer to the Executive
Compensation and the Grants under Non-Equity
Incentive Plans and Summary Compensation
tables in that section of this proxy statement.
Long-Term
Equity Incentive Compensation
The committee believes that long-term company performance will
be improved through the development of an ownership culture that
includes the use of stock-based awards as a part of our
executive compensation program. Our incentive plan permits the
grant of stock options, stock appreciation rights, restricted
shares, restricted stock units, performance shares and other
stock awards to our executive officers, employees, consultants
and non-employee board members.
After consultation with Hewitt and Associates, the committee has
determined that equity awards under our 2007 Incentive
Compensation Plan should be made on an annual basis using a
formula that provides for aggregate awards with an economic
value equal to a designated percentage of each named executive
officers
47
base salary. The economic value of an award is calculated based
on certain assumptions determined by the compensation committee
to be appropriate for compensation purposes, which may or may
not be consistent with valuations determined for accounting
purposes. In particular, the committee utilizes a value of its
common stock based on a weighted average trading price for a
period of time, while for accounting purposes the valuation of
stock and options granted for compensation purposes is based
exclusively on the value of stock as traded on the single date
of the issuance of the stock or options. In addition, certain
assumptions utilized in the Black-Scholes model for determining
the value of stock options for compensation purposes are not the
same as the assumptions used in the accounting version of that
calculation.
For 2009, the committee issued long term equity awards to each
named executive officer, having a targeted economic value of
110% of base salary for Mr. Dolan, 75% of base salary for
Messrs. Pollei, Stodder and Trott, and 60% of base salary
for Ms. Duncomb and Mr. Baumbach. For 2009, the
committee allowed each of the named executive officers to decide
whether they wanted that targeted economic value in the form of
stock options or a mix of 50% stock options and 50% restricted
stock. Messrs. Pollei and Trott and Ms. Duncomb
elected to take both options and restricted stock. The committee
believes it is advantageous to provide executive officers with
such a choice, as this can enhance the perceived value of the
award to that officer. These grants were issued on May 15,
2009, to each of the named executive officers in the amounts and
components set forth in the table below.
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
|
Stock Grants
|
|
Stock Options
|
|
James P. Dolan
|
|
|
|
|
|
|
87,817
|
|
Vicki. J. Duncomb
|
|
|
5,484
|
|
|
|
10,000
|
|
Scott J. Pollei
|
|
|
9,049
|
|
|
|
16,500
|
|
Mark W.C. Stodder
|
|
|
|
|
|
|
29,100
|
|
David A. Trott
|
|
|
9,221
|
|
|
|
16,813
|
|
Mark E. Baumbach
|
|
|
|
|
|
|
21,740
|
|
The restricted stock and stock options we granted vest in four
equal annual installments beginning on May 15, 2010. The
stock options have an exercise price of $12.51 and have a term
of seven years. See the Summary Compensation Table and the
Grants under Equity Incentive Plans for more information about
the stock options granted to our named executive officers under
this plan in 2009.
For 2010, the committee increased the targeted economic value of
long term equity awarded to Mr. Pollei and Ms. Duncomb
to 85% and 75% of base salary, respectively, as a result of
their promotions in 2009. The targeted economic value of long
term equity awarded to each of Messrs. Dolan, Stodder and
Trott did not change. The committee will continue to evaluate
this targeted economic value for each named executive officer on
an annual basis. The committee again will allow the named
executive officers to decide whether they would prefer long term
equity compensation in the form of stock options or a mix of
stock options and restricted stock. We expect that 2010 awards
made under the incentive plan to the named executive officers as
well as awards to other management employees may be either
non-qualified stock options, restricted stock grants or a
combination thereof. Executive Compensation
Incentive Compensation Plan for further information
regarding our incentive plan. The committee again will allow the
named executive officers to decide whether they would prefer
long term equity compensation in the form of stock options or a
mix of stock options and restricted stock.
Perquisites
and Other Benefits
The committee believes that it has taken a conservative approach
to other elements of its compensation program relative to
companies similarly situated to us. We provide our named
executive officers with various perquisites and other personal
benefits that are described below. The committee does not
consider these benefits and perquisites when working to
establish total compensation at or near the 50th percentile
level of executives at companies in our competitive peer group.
48
401(k) Plan Contributions. Our 401(k)
retirement savings plan is a qualified defined contribution plan
under which employees may make pre-tax contributions into the
plan, up to certain specified annual limits. We also provide
discretionary employer matching contributions. We provided in
2009, and provide in 2010, a discretionary employer matching
contribution of 50% of the first 6% of employee contributions.
For highly compensated employees, including the named executive
officers, this match was capped at $7,350 for 2009 and 2010.
Medical and Dental Insurance. We self-insure
for medical insurance by withholding an amount from
participating employees compensation to fund our medical
insurance program. In 2009 for each of Messrs. Dolan,
Stodder, and Baumbach, we withheld $9,268, $11,966 and $8,078,
respectively, less than the amount withheld by us from our other
employees for applicable medical coverage. We do not self-insure
for dental insurance; however, in 2009, we paid $990 on behalf
of Messrs. Dolan, Stodder and Baumbach for dental insurance
premiums. In 2009, we paid $18,121 to a third party provider on
Mr. Trotts behalf for medical insurance.
Club Memberships. We pay club membership dues
to a professional or social club for each of Messrs. Dolan,
Pollei and Trott. We believe these club memberships serve to
facilitate their roles as our representatives in the local
business communities that we serve.
Minneapolis Apartment and Commuting
Expenses. Mr. Stodder, who lives in
Whitefish Bay, Wisconsin, receives a rent reimbursement for an
apartment that we lease for him near our offices in Minneapolis.
We also pay for Mr. Stodders flights between
Minneapolis and his home in Whitefish Bay. In 2009, we
reimbursed Mr. Stodder $10,140 for rent and paid $4,969 for
such flights.
Parking Expenses. In 2009, we paid parking
expenses in the amounts of $3,000, $2,392, and $1,750 for each
of Ms. Duncomb, Mr. Pollei and Mr. Baumbach
(through July 31, 2009), respectively, because they drove
to our headquarters in Minneapolis on a regular basis.
Home Office Expenses. In 2009, we paid $1,704
for home Internet access for Mr. Dolan because
Mr. Dolan and his spouse, who administers Dolan Media
Newswires, use his home office on a regular basis for business
purposes. This amount represents the portion of such payments
attributable to personal use of the home office and Internet
access, which we have assumed constitutes 25% of total use.
Use of Company Apartment in New York City. We
have acquired the right to use an apartment in New York City in
connection with our employees business travel. We also
make this apartment available for the named executive officers
to use for personal reasons. During 2009, Mr. Dolan and
Ms. Duncomb used this apartment for personal reasons, the
benefit of which equaled $650 and $975, respectively.
2010
Compensation Plan
The graphs below set forth the 2010 target compensation mix
(exclusive of perquisites, severance payments and other
benefits) for each of the named executive officers (except
Mr. Baumbach, who is no longer employed by us).
49
Severance
Arrangements and Change in Control Plan
Severance Benefits. The committee believes
that severance arrangements for our named executive officers
will allow us to continue to attract, motivate and retain the
best possible executive talent in a marketplace where such
protections are commonly offered. In particular, severance
benefits help ease the named executive officers burden if
he or she is unexpectedly terminated by us for reasons other
than cause. Accordingly, our employment agreements with each
named executive officer contain severance arrangements pursuant
to which each such executive officer will receive severance
benefits if their employment with us is terminated by us without
cause or, with respect to the named executive officers, except
Mr. Trott, if such named executive officer terminates his
employment with us for good reason. See Executive
Compensation Employment Agreements and
Executive Compensation Potential Payments Upon
Termination or Change In Control for further information
regarding these severance benefits and Executive
Compensation Severance and Other Payments to Mark E.
Baumbach for information about severance benefits we paid
to Mr. Baumbach in connection with the termination of his
employment relationship with us. Mr. Baumbach did not have
an employment agreement with us.
Change in Control Plan. Our board of
directors, upon the recommendation of the committee, has adopted
an Executive Change of Control Plan that provides each of the
named executive officers other than Mr. Trott with certain
severance benefits in the event of termination of employment in
connection with a qualified change of control event. The
committee believes that this change in control plan will provide
continuity and focus for these named executive officers in the
event of a change in control of the company. See Executive
Compensation Potential Payments Upon Termination or
Change In Control for further information regarding these
severance benefits.
Policies
Related to Compensation
Guidelines
for Equity Awards
The committee and our board of directors have approved and
adopted guidelines for equity awards, or guidelines. Among other
things, the guidelines delineate the authority of our board of
directors, the committee and our chief executive officer with
respect to the grant of equity awards, specify procedures for
equity awards to be made under various circumstances, address
the timing of equity awards in relation to the availability of
information about us and provide procedures for grant
information to be communicated to and tracked by our human
resources and finance departments. The guidelines require that
any stock options or stock appreciation rights have an exercise
or strike price not less than the fair market value of our
common stock on the date of the grant. See Executive
Compensation Incentive Compensation
Administration of Plan for more information regarding the
approval of our equity awards by the committee, our board of
directors or our chief executive officer.
Stock
Ownership Guidelines
Consistent with the committees executive pay philosophy,
the board of directors adopted stock ownership guidelines in
2010. These guidelines require that all of our executive
officers own shares of our common stock, and establish a
targeted level of stockholder ownership with a value equal to
the ownership multiple set forth in the table below (based on
the closing sales price for a share of our common stock on the
measurement date).
|
|
|
Executive
|
|
Stock Ownership Multiple
|
|
Chief Executive Officer
|
|
300% of base salary
|
Chief Operating Officer
|
|
200% of base salary
|
Other executive officers
|
|
100% of base salary
|
The phase-in provision of our guidelines require each of our
named executive officers, except Mr. Baumbach who is no
longer employed by us, to own common stock, having a value equal
to the target level set forth for each measurement date below:
|
|
|
|
|
|
|
|
|
January 1, 2010
|
|
January 1, 2011
|
|
January 1, 2012
|
|
January 1, 2013
|
|
January 1, 2014
|
|
20% of Target Level
|
|
40% of Target Level
|
|
60% of Target Level
|
|
80% of Target Level
|
|
100% of Target Level
|
50
For purposes of this table, target level means the
named executive officers stock ownership multiple, using
base salary for that calendar year. So, for example, for our
named executive officers, except Mr. Baumbach, to fully
comply with our ownership guidelines on January 1, 2014,
such named executive officers would need to own common stock,
having a value equal to their respective stock ownership
multiple, using their base salary for 2014. For each executive
officer appointed in the future, the five-year phase-in period
will begin on January 1 following the effective date of the
executive officers appointment. For purposes of satisfying
these guidelines, the executive officers may use stock they own
directly or for which they have investment
and/or
voting control and unvested shares of restricted stock that we
may grant to them in connection with their service as officers.
As of the date of this proxy statement, each executive officer
has met the first year phase-in requirement of holding at least
20% of the targeted number of shares of our common stock.
Our non-employee directors are also subject to these stock
ownership guidelines. You should refer to Board Committees
and Committee Membership Stock Ownership
Guidelines for information about how these guidelines
affect our non-employee directors.
Compliance
with Sections 162(m) and 409A of the Code
We generally intend for our executive compensation program to
comply with Code Section 162(m) and Code Section 409A.
The committee currently intends for all compensation paid to the
named executive officers to be tax deductible to us pursuant to
Section 162(m) of the Code. Section 162(m) provides
that compensation paid to the named executive officers, except
our chief financial officer, Ms. Duncomb, in excess of
$1,000,000 cannot be deducted by us for federal income tax
purposes unless, in general, such compensation is performance
based, is established by a committee of independent directors,
is objective and the plan or agreement providing for such
performance based compensation has been approved in advance by
stockholders. In the future the committee may determine to
provide compensation, or to adopt a compensation program, that
does not satisfy the conditions of Section 162(m) if, in
its judgment, after considering the additional costs of not
satisfying Section 162(m), such compensation or program is
appropriate. During the year ended December 31, 2009, none
of our named executive officers received non-performance based
compensation in excess of the Section 162(m) tax deduction
limit.
Section 409A of the Code addresses certain nonqualified
deferred compensation benefits payable to our executives and
provides that, if such benefits do not comply with
Section 409A, they will be taxable in the first year they
are not subject to a substantial risk of forfeiture. In such
case, our executives are subject to regular federal income tax,
interest and an additional federal income tax of 20% of the
benefit includible in income. In 2008, we amended the employment
agreements of Messrs. Dolan, Stodder and Trott, as well as
our executive change in control plan, to comply with
Section 409A. Ms. Duncomb and Mr. Polleis
employment agreements were entered into after the effective date
of Section 409A.
Risk
Assessment
In the first quarter of 2010, the committee reviewed the
companys compensation policies and practices for executive
and management employees who, in the committees judgment,
had positions with us where their compensation plans could
potentially raise material risks to us if we did not design
their plans appropriately. These employees included all of our
named executive officers, as well as certain highly-compensated
management employees in both of our divisions. In selecting the
compensation plans of these employees, the committee considered
a number of factors, including whether the employee had the
ability to direct strategic and operational decisions for a
significant operating unit or multiple operating units of the
business.
The committee reviewed base salary, short-term incentive and
equity compensation for each of the employees the committee
selected, evaluating both 2009 actual compensation results and
2010 compensation plans. In particular, the committee reviewed
these policies and practices to ensure they were designed in a
way that did not encourage excessive risk-taking, including
evaluating the plans for, among other things: (1) too much
focus on equity compensation; (2) too much focus on
short-term incentive compensation; (3) uncapped formulas
for short-term incentives; (4) highly leveraged payout
curves for short-term incentives; (5) incentive
51
targets or thresholds set at unreasonably high levels; and
(6) steep cliffs on payout plans under short-term incentive
formulas.
In evaluating the plans, the committee noted certain features of
our compensation plans and programs that mitigate and reduce the
likelihood that these employees would engage in excessive
risk-taking, as follows:
|
|
|
|
|
All compensation plans are balanced as their design is based on
a mix of base salary, short-term incentives and annual equity
grants.
|
|
|
|
Base salaries for all employees reviewed have been set at a
sufficient level to avoid excessive reliance on short-term cash
incentive payments.
|
|
|
|
Short-term cash incentive plan targets are based on reasonable
goals and include scaling formulas which result in reasonable
incremental payments for achievable incremental results.
|
|
|
|
All short-term cash incentive plans are capped at a maximum
payment level relative to targeted level of payment, ranging
from 125% to 200% of target.
|
|
|
|
Equity grants include vesting provisions over a four-year period
and executive officers are also subject to ownership guidelines,
requiring them to hold a certain number of shares during their
employment.
|
|
|
|
Equity awards generally include a mixture of both stock options
and restricted stock grants, providing for long-term value to
the employees selected, which yields a wide variety of stock
valuation outcomes.
|
Based on this review and analysis, the committee determined
that, for these employees, the companys compensation
policies and practices for 2009, and as proposed for 2010, do
not encourage excessive risk taking and, thus, are not
reasonably likely to encourage behavior that would have a
material adverse effect on us or our operations.
52
COMPENSATION
COMMITTEE REPORT
The compensation committee of the board of directors of Dolan
Media Company has reviewed and discussed with management the
compensation discussion and analysis required by
Item 402(b) of
Regulation S-K
and included in this proxy statement and incorporated by
reference in the companys annual report on
Form 10-K
filed with the SEC on March 8, 2010. Based on this review
and these discussions with management, the compensation
committee recommended to the board of directors that this
compensation discussion and analysis be included in the
companys 2010 proxy statement and incorporated by
reference in the companys annual report on
Form 10-K.
Submitted by the Compensation Committee
John C. Bergstrom, chair
Arthur F. Kingsbury
Lauren Rich Fine
53
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table provides information concerning the
compensation for services in all capacities to us for the years
ended December 31, 2009, 2008, and 2007, earned by our
named executive officers. See Compensation Discussion and
Analysis, Employment Agreements and
Severance and Other Payments to Mark E. Baumbach in
this proxy statement for a description of the material factors
necessary to understand the information in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and Position
|
|
Year
|
|
Salary
|
|
Bonus(4)
|
|
Awards(5)
|
|
Awards(5)
|
|
Compensation(4)
|
|
Compensation(6)
|
|
Total
|
|
James P. Dolan
|
|
|
2009
|
|
|
$
|
479,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
470,040
|
|
|
$
|
500,076
|
|
|
$
|
24,772
|
|
|
$
|
1,473,888
|
|
President and Chief Executive Officer
|
|
|
2008
|
|
|
|
479,000
|
|
|
|
|
|
|
|
|
|
|
|
420,435
|
|
|
|
172,000
|
|
|
|
18,460
|
|
|
|
1,089,895
|
|
|
|
|
2007
|
|
|
|
463,000
|
|
|
|
|
|
|
|
|
|
|
|
1,003,745
|
|
|
|
389,000
|
|
|
|
157,139
|
|
|
|
2,012,884
|
|
Vicki J. Duncomb(1)
|
|
|
2009
|
|
|
|
210,417
|
|
|
|
|
|
|
|
68,605
|
|
|
|
53,525
|
|
|
|
183,063
|
|
|
|
11,325
|
|
|
|
525,935
|
|
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J. Pollei(2)
|
|
|
2009
|
|
|
|
274,417
|
|
|
|
|
|
|
|
113,203
|
|
|
|
88,316
|
|
|
|
238,743
|
|
|
|
16,054
|
|
|
|
730,733
|
|
Executive Vice President and
|
|
|
2008
|
|
|
|
264,000
|
|
|
|
|
|
|
|
|
|
|
|
157,992
|
|
|
|
79,000
|
|
|
|
15,439
|
|
|
|
516,431
|
|
Chief Operating Officer
|
|
|
2007
|
|
|
|
255,000
|
|
|
|
|
|
|
|
|
|
|
|
376,922
|
|
|
|
179,000
|
|
|
|
87,300
|
|
|
|
898,222
|
|
Mark W.C. Stodder
|
|
|
2009
|
|
|
|
232,800
|
|
|
|
|
|
|
|
|
|
|
|
155,758
|
|
|
|
192,805
|
|
|
|
33,633
|
|
|
|
614,996
|
|
Executive Vice President Business
|
|
|
2008
|
|
|
|
232,800
|
|
|
|
|
|
|
|
|
|
|
|
139,322
|
|
|
|
105,000
|
|
|
|
31,016
|
|
|
|
508,138
|
|
Information
|
|
|
2007
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
332,579
|
|
|
|
158,000
|
|
|
|
57,639
|
|
|
|
773,218
|
|
David A. Trott,
|
|
|
2009
|
|
|
|
269,000
|
|
|
|
|
|
|
|
115,355
|
|
|
|
89,992
|
|
|
|
210,358
|
|
|
|
25,451
|
|
|
|
710,156
|
|
Chairman and Chief Executive Officer,
|
|
|
2008
|
|
|
|
269,000
|
|
|
|
60,000
|
|
|
|
|
|
|
|
160,986
|
|
|
|
|
|
|
|
28,360
|
|
|
|
518,346
|
|
NDeX
|
|
|
2007
|
|
|
|
260,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
384,312
|
|
|
|
|
|
|
|
19,172
|
|
|
|
763,484
|
|
Mark E. Baumbach(3)
|
|
|
2009
|
|
|
|
127,932
|
|
|
|
|
|
|
|
|
|
|
|
116,363
|
|
|
|
|
|
|
|
338,675
|
|
|
|
582,970
|
|
Former Vice President Technology
|
|
|
2008
|
|
|
|
217,400
|
|
|
|
|
|
|
|
|
|
|
|
104,084
|
|
|
|
94,000
|
|
|
|
15,102
|
|
|
|
430,586
|
|
|
|
|
2007
|
|
|
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
248,324
|
|
|
|
119,000
|
|
|
|
52,377
|
|
|
|
629,701
|
|
|
|
|
(1) |
|
Ms. Duncomb was promoted to vice president and chief
financial officer on August 1, 2009. She also serves as our
principal financial and principal accounting officers. In
connection with her promotion, her base salary of $200,000 was
increased to $225,000 effective August 1, 2009. While she
was an executive officer in 2008 and 2007, she was not one of
our three most highly compensated officers. |
|
(2) |
|
Mr. Pollei was promoted to executive vice president and
chief operating officer on August 1, 2009. He had
previously served as our executive vice president and chief
financial officer, as well as our principal financial officer.
In connection with his promotion, his base salary of $264,000
was increased to $289,000 effective August 1, 2009. |
|
(3) |
|
Mr. Baumbach served as our vice president
technology until July 22, 2009. His annual base salary for
2009 was $217,400. In connection with the end of his employment
relationship with us, we entered into a separation agreement and
general release under the terms of which we paid to him or on
his behalf the amounts set forth in columns (a) through
(c) below. In September 2009, we entered into a consulting
agreement with Mr. Baumbach, under the terms of which we
paid him $32,725 in 2009. The aggregate sum of the severance and
other payments we made to him or on his behalf are included in
the table above as All Other Compensation. See
Severance and Other Payments to Mark E. Baumbach for
more information about these payments. We also allowed
Mr. Baumbach to retain the laptop computer he used as our
employee. The laptop was fully depreciated and thus, we believe
the value to him was de minimus. On July 22, 2009,
Mr. Baumbach had vested stock options exercisable for the
purchase of 21,765 shares of our common stock, not
including the option to acquire 1,125 shares that we vested
upon the execution of his severance agreement. Of those, he
exercised an option to acquire 4,500 shares of our common
stock at an exercise price of $2.22 and forfeited the remaining
vested options, as well as unvested options to acquire
76,911 shares of our common stock. |
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
Accelerated
|
|
|
|
|
|
|
|
|
Severance
|
|
and Dental
|
|
Stock
|
|
Consulting
|
|
|
Name
|
|
Year
|
|
Payment(a)
|
|
Insurance(b)
|
|
Options(c)
|
|
Fees(d)
|
|
Total
|
|
Mark E. Baumbach
|
|
|
2009
|
|
|
$
|
271,750
|
|
|
$
|
6,376
|
|
|
$
|
13,039
|
|
|
$
|
32,725
|
|
|
$
|
323,890
|
|
|
|
|
(a) |
|
Represents 52 weeks pay at the rate in effect on
July 22, 2009, along with one-half of the short-term
performance-based cash incentive that Mr. Baumbach would be
expected to earn had he been employed with us through
December 31, 2009. We paid $176,637 of the severance
payment in 2010. |
|
|
|
(b) |
|
Represents the medical and dental premiums we paid on
Mr. Baumbachs behalf under COBRA for the period
August 1, 2009, through December 31, 2009. |
|
(c) |
|
The compensation committee accelerated the vesting on an option
to acquire 1,125 shares of our common stock in connection
with the end of Mr. Baumbachs employment relationship
with us. This option would have vested on October 11, 2010,
had Mr. Baumbach remained our employee. This option had an
exercise price of $2.22 and the value was calculated using the
closing per share price on July 22, 2009, assuming that
Mr. Baumbach exercised the options and then sold the shares
on that date. |
|
(d) |
|
Represents fees we paid to Mr. Baumbach under a consulting
agreement through December 31, 2009. |
|
|
|
(4) |
|
We paid a portion of the amounts set forth in these columns for
the year ended December 31, 2009, to each named executive
officer during the first quarter of 2010. |
|
(5) |
|
We calculated the amounts in these columns, which represent the
aggregate grant date fair value of the equity awards, using the
provisions of FASB ASC Topic 718. See Note 14 to our
consolidated financial statements and Managements
Discussion and Analysis of Financial Condition and Results of
Operations Application of Critical Accounting
Policies and Estimates Share-Based Compensation
Expense, both included in our annual report on
Form 10-K
for the year ended December 31, 2009, that we filed with
the SEC on March 10, 2010, for information regarding the
assumptions used in the valuation of equity awards. See
Outstanding Equity Awards at Year End 2009 below for
more information about our equity awards to the named executive
officers. |
|
(6) |
|
All other compensation for the year ended December 31,
2009, consisted of the following components. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of
|
|
Apartment
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
Company
|
|
in MN and
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
401(k)
|
|
Apartment
|
|
Flights from
|
|
Home
|
|
|
|
|
|
|
|
|
Club
|
|
Dental
|
|
Matching
|
|
in New
|
|
MN to Place
|
|
Office
|
|
|
|
Severance
|
|
|
|
|
Membership
|
|
Insurance(a)
|
|
Contribution
|
|
York City
|
|
of Residence
|
|
Expenses(b)
|
|
Parking
|
|
Payments
|
|
Total
|
|
James P. Dolan
|
|
$
|
4,835
|
|
|
$
|
10,258
|
|
|
$
|
7,350
|
|
|
$
|
625
|
|
|
$
|
|
|
|
$
|
1,704
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,772
|
|
Vicki J. Duncomb
|
|
|
|
|
|
|
|
|
|
|
7,350
|
|
|
|
975
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
11,325
|
|
Scott J. Pollei
|
|
|
6,312
|
|
|
|
|
|
|
|
7,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,392
|
|
|
|
|
|
|
|
16,054
|
|
Mark W.C. Stodder
|
|
|
|
|
|
|
12,956
|
|
|
|
5,568
|
|
|
|
|
|
|
|
15,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,633
|
|
David A. Trott
|
|
|
7,330
|
|
|
|
18,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,451
|
|
Mark E. Baumbach
|
|
|
|
|
|
|
9,068
|
|
|
|
4,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,750
|
|
|
|
323,890
|
|
|
|
338,765
|
|
|
|
|
(a) |
|
We self-insure for medical insurance by withholding an amount
from participating employees compensation to fund our
medical insurance program. With the exception of the amount
reported for Mr. Trott, the amount in this column
represents amounts withheld by us during 2009 (and for
Mr. Baumbach from January 1, 2009, through
July 31, 2009) from our other participating employees
in excess of that which was withheld by us from the named
executive officers for applicable medical coverage and premiums
paid on behalf of such officers for dental insurance.
Mr. Trott does not participate in our medical insurance
program. Instead, the amount reported in this column for
Mr. Trott reflects premiums paid on his behalf to a
third-party provider for medical insurance. |
|
(b) |
|
In 2009, we paid for home Internet access for Mr. Dolan
because Mr. Dolan and his spouse, who administers Dolan
Media Newswires, use his home office on a regular basis for
business purposes. This amount represents the portion of such
payments attributable to personal use of the home office and
Internet access, which we have assumed constitutes 25% of the
total use. |
55
Employment
Agreements
James
P. Dolan Employment Agreement
We entered into an employment agreement with James P. Dolan as
of April 1, 2002, pursuant to which Mr. Dolan agreed
to serve as president and chief executive officer of Dolan Media
Company. We amended and restated Mr. Dolans
employment agreement, effective as of April 1, 2007, for an
initial term of two years. In December 2008, we amended
Mr. Dolans employment agreement in connection with
the effective date of Section 409A of the Code. Beginning
April 1, 2008, and on each day thereafter the employment
term will be automatically extended for one day, such that at
any given time the remaining employment term will be one year.
This
day-to-day
extension may be terminated immediately upon written notice by
either Mr. Dolan or us. The agreement provides that
Mr. Dolan reports to our board of directors.
Under the amended and restated employment agreement,
Mr. Dolans annual base salary was $463,000 for 2007.
For each calendar year after 2007, Mr. Dolans base
salary will be increased, at a minimum, by the positive
percentage change, if any, in the consumer price index from the
month of December from two years prior to the month of December
from the previous year. For 2010, the committee set
Mr. Dolans base salary at $527,000, which was an
increase of 10 percent over 2009. Because Mr. Dolan
waived the increase that would have been due as of
January 1, 2009, his base salary for both of 2009 and 2008
was $479,000. In addition to his base salary, Mr. Dolan is
eligible to receive an annual cash short-term incentive payment
of at least 60% of his base salary that will be based on
performance goals for the applicable fiscal year set by the
compensation committee, in its sole discretion, as part of an
annual cash short-term incentive program that is established in
accordance with our incentive compensation plan. The employment
agreement provides Mr. Dolan four weeks of paid vacation
annually, a club membership as approved by our compensation
committee and the right to participate in our 401(k), welfare
and fringe benefit plans and to receive perquisites that we
generally make available to our other executive officers. We
paid, or will pay, as applicable, Mr. Dolans fees in
connection with the negotiation, preparation and enforcement of
his employment agreement.
Mr. Dolan is entitled to severance benefits upon a
termination of his employment without cause or a resignation by
Mr. Dolan with good reason. See Executive
Compensation Potential Payments Upon Termination or
Change In Control for a description of the severance
payments and other benefits that Mr. Dolan would receive,
including those payments and benefits under our change of
control plan if he incurs a termination in connection with a
change of control of our company, and for a description of the
definitions of cause and good reason as
those terms relate to Mr. Dolan.
Mr. Dolan has agreed to restrictive covenants that will
survive for one year following expiration or termination of his
employment agreement pursuant to which he has agreed to not
compete with our business, subject to certain limited
exceptions, nor solicit or interfere with our relationships with
our employees and independent contractors.
Vicki
J. Duncomb Employment Agreement
We entered into an employment agreement with Vicki J. Duncomb,
effective as of August 1, 2009, pursuant to which
Ms. Duncomb agreed to serve as executive vice president and
chief financial officer of Dolan Media Company.
Ms. Duncombs employment agreement has an initial term
of two years. Beginning August 1, 2010, and on each day
thereafter, the employment term will be automatically extended
for one day, such that at any given time the remaining
employment term will be one year. This
day-to-day
extension may be terminated immediately upon written notice by
either Ms. Duncomb or us. The agreement provides that
Ms. Duncomb will report to our chief operating officer and,
indirectly, to our chief executive officer and our board of
directors.
Under the employment agreement, Ms. Duncombs annual
base salary was $225,000 for the remainder of 2009. For each
calendar year after 2009, Ms. Duncombs base salary will be
increased, at a minimum, by the positive percentage change, if
any, in the consumer price index from the month of December from
two years prior to the month of December from the previous year.
For 2010, the committee set Ms. Duncombs base
56
salary at $250,000, which was an 11.1% increase. In addition to
her base salary, Ms. Duncomb is eligible to receive an
annual cash short-term incentive payment that will be based on
performance goals set by the compensation committee, in its sole
discretion, as part of an annual cash short-term incentive
program that is established in accordance with our incentive
compensation plan. The employment agreement provides
Ms. Duncomb four weeks of paid vacation annually, a club
membership as approved by our compensation committee and the
right to participate in our 401(k), welfare and fringe benefit
plans and to receive perquisites that we generally make
available to our other executive officers. We have paid, or will
pay, as applicable, Ms. Duncombs fees in connection
with the negotiation, preparation and enforcement of her
employment agreement.
Ms. Duncomb is entitled to severance benefits upon a
termination of her employment without cause or a resignation by
Ms. Duncomb with good reason. See Executive
Compensation Potential Payments Upon Termination or
Change In Control for a description of the severance
payments and other benefits that Ms. Duncomb will receive,
including those payments and benefits under our change of
control plan if she incurs a termination in connection with a
change of control of our company, and for a description of the
definitions of cause and good reason as
those terms relate to Ms. Duncomb
Ms. Duncomb has agreed to restrictive covenants that will
survive for one year following expiration or termination of her
employment agreement pursuant to which she has agreed to not
compete with our business, subject to certain limited
exceptions, nor solicit or interfere with our relationships with
our employees and independent contractors
Scott
J. Pollei Employment Agreement
We entered into an amended and restated employment agreement
with Scott J. Pollei, effective as of August 1, 2009,
pursuant to which Mr. Pollei agreed to serve as executive
vice president and chief operating officer of Dolan Media
Company. Mr. Polleis employment agreement has an
initial term of two years. Beginning August 1, 2010, and on
each day thereafter, the employment term will be automatically
extended for one day, such that at any given time the remaining
employment term will be one year. This
day-to-day
extension may be terminated immediately upon written notice by
either Mr. Pollei or us. The agreement provides that
Mr. Pollei will report to our chief executive officer and
our board of directors.
Under the employment agreement, Mr. Polleis annual
base salary was $289,000 for the remainder of 2009. For each
calendar year after 2009, Mr. Polleis base salary
will be increased, at a minimum, by the positive percentage
change, if any, in the consumer price index from the month of
December from two years prior to the month of December from the
previous year. For 2010, the committee set
Mr. Polleis base salary at $317,000, which was an
11.2% increase. In addition to his base salary, Mr. Pollei
is eligible to receive an annual cash short-term incentive
payment that will be based on performance goals set by the
compensation committee, in its sole discretion, as part of an
annual cash short-term incentive program that is established in
accordance with our incentive compensation plan. The employment
agreement provides Mr. Pollei four weeks of paid vacation
annually, a club membership as approved by our compensation
committee and the right to participate in our 401(k), welfare
and fringe benefit plans and to receive perquisites that we
generally make available to our other executive officers. We
have paid, or will pay, as applicable, Mr. Polleis
fees in connection with the negotiation, preparation and
enforcement of his employment agreement.
Mr. Pollei is entitled to severance benefits upon a
termination of his employment without cause or a resignation by
Mr. Pollei with good reason. See Executive
Compensation Potential Payments Upon Termination or
Change In Control for a description of the severance
payments and other benefits that Mr. Pollei will receive,
including those payments and benefits under our change of
control plan if he incurs a termination in connection with a
change of control of our company, and for a description of the
definitions of cause and good reason as
those terms relate to Mr. Pollei.
Mr. Pollei has agreed to restrictive covenants that will
survive for one year following expiration or termination of his
employment agreement pursuant to which he has agreed to not
compete with our business, subject to certain limited
exceptions, nor solicit or interfere with our relationships with
our employees and independent contractors.
57
Mark
W.C. Stodder Employment Agreement
We entered into an employment agreement with Mark W.C. Stodder,
effective as of April 1, 2007, pursuant to which
Mr. Stodder agreed to continue to serve as executive vice
president, Business Information Division, of Dolan Media
Company. Mr. Stodders employment agreement had an
initial term of two years. Beginning April 1, 2008, and on
each day thereafter, the employment term has been and will be
automatically extended for one day, such that at any given time
the remaining employment term will be one year. This
day-to-day
extension may be terminated immediately upon written notice by
either Mr. Stodder or us. In December 2008, we amended
Mr. Stodders employment agreement in connection with
the effective date of Section 409A of the Code. In August
2009, we amended his employment agreement to change his
reporting relationship from our chief executive officer to our
chief operating officer.
Under the employment agreement, Mr. Stodders annual
base salary was $225,000 for 2007. For each calendar year after
2007, Mr. Stodders base salary will be increased, at
a minimum, by the positive percentage change, if any, in the
consumer price index from the month of December from two years
prior to the month of December from the previous year. For 2010,
the committee set Mr. Stodders base salary at
$240,000, an increase of 3.1% over 2009. Because
Mr. Stodder waived the increase that would have been due as
of January 1, 2009, his base salary for both of 2009 and
2008 was $232,800. In addition to his base salary,
Mr. Stodder is eligible to receive an annual cash
short-term incentive payment that will be based on performance
goals set by the compensation committee, in its sole discretion,
as part of an annual cash short-term incentive program that is
established in accordance with our incentive compensation plan.
The employment agreement provides Mr. Stodder four weeks of
paid vacation annually, a club membership as approved by our
compensation committee and the right to participate in our
401(k), welfare and fringe benefit plans and to receive
perquisites that we generally make available to our other
executive officers. We have paid or will pay, as applicable,
Mr. Stodders fees in connection with the negotiation,
preparation and enforcement of his employment agreement.
Mr. Stodder is entitled to severance benefits upon a
termination of his employment without cause or a resignation by
Mr. Stodder with good reason. See Executive
Compensation Potential Payments Upon Termination or
Change In Control for a description of the severance
payments and other benefits that Mr. Stodder will receive,
including those payments and benefits under our change of
control plan if he incurs a termination in connection with a
change of control of our company, and for a description of the
definitions of cause and good reason as
those terms relate to Mr. Stodder.
Mr. Stodder has agreed to restrictive covenants that will
survive for one year following expiration or termination of his
employment agreement pursuant to which he has agreed to not
compete with our business, subject to certain limited
exceptions, nor solicit or interfere with our relationships with
our employees and independent contractors.
David
A. Trott Employment Agreement
NDeX, our majority-owned subsidiary, entered into an employment
agreement with David A. Trott on March 14, 2006, pursuant
to which Mr. Trott agreed to serve as chairman and chief
executive officer of NDeX and report to the president of Dolan
Media Company. Mr. Trotts employment agreement
includes an initial two-year employment term, with an automatic
one-year renewal, unless either party provides prior written
notice of its or his intent not to renew the agreement to the
other party at least sixty days prior to the end of the term. In
December 2008, we amended Mr. Trotts employment
agreement in connection with the effective date of
Section 409A of the Code.
Under the terms of the employment agreement, Mr. Trott
received an annual salary of $260,000 for his services during
2006 and 2007 and also is entitled to three weeks of paid
vacation annually. Mr. Trott must devote no less than
one-half of his full business time to NDeX. Mr. Trott is
also entitled to participate in and receive such benefits under
NDeXs welfare benefit plans and its other general
practices, policies and arrangements, including medical and
hospitalization coverage, group term life insurance, disability
insurance, accidental death insurance, retirement plans and
fringe benefits, that NDeX makes generally available to its
senior management employees. Mr. Trotts employment
agreement with NDeX automatically renewed for an
58
additional one year term on each of March 14, 2008, 2009
and 2010. In January 2008, the compensation committee approved a
3.5% increase in Mr. Trotts base salary to $269,000
for year ended 2008, and did not approve an increase for 2009.
For 2010, the committee set Mr. Trotts base salary at
$277,000, which is a 3.0% increase over 2009.
Either party may terminate Mr. Trotts employment at
any time, with or without cause and with or without notice. If
NDeX terminates Mr. Trotts employment without cause,
Mr. Trott is entitled to severance benefits. See
Executive Compensation Potential Payments Upon
Termination or Change In Control for a description of the
severance payments and other benefits that Mr. Trott will
receive upon a termination without case and for a description of
the definition of cause as that term relates to
Mr. Trott.
Mr. Trott has agreed to restrictive covenants that will
survive for three years following expiration or termination of
his employment agreement pursuant to which he has agreed to not
compete with NDeXs business, subject to certain limited
exceptions, or solicit or interfere with NDeXs or any of
NDeXs members relationships with NDeXs or
NDeXs members employees and independent contractors.
Mr. Trott also has agreed to maintain the confidentiality
of NDeXs proprietary information and assign any inventions
to NDeX that he acquired or developed during his relationship
with NDeX. Additionally, Mr. Trott has agreed not to divert
any corporate opportunities from NDeX or Dolan Media Company
during the term of his employment. See Executive
Compensation Potential Payments Upon Termination or
Change In Control for a further description of severance
benefits Mr. Trott will receive.
Severance
and Other Payments to Mark E. Baumbach
On July 22, 2009, we mutually agreed with Mr. Baumbach
to end his employment with us as our vice president
technology. In connection with that agreement, we entered into a
separation agreement and general release under the terms of
which we agreed to pay Mr. Baumbach $271,750 in two lump
sum payments, which amount represents fifty-two weeks pay
at the rate in effect on July 22, 2009, and 50% of the
expected short-term performance based cash incentive the Company
would have paid Mr. Baumbach if we had employed him through
December 31, 2009, and if he had satisfied all applicable
performance criteria. We also agreed to pay on
Mr. Baumbachs behalf the premiums for his health and
dental coverage under COBRA until he becomes eligible for
coverage under the health plan of a new employer or, if earlier,
July 31, 2010. We further agreed to accelerate the vesting
of the unvested portion of the incentive stock option granted to
him on October 11, 2006, representing 1,125 option shares,
and extend the time by which he may exercise any vested portion
of the options granted to him during his employment to
November 19, 2009. We further agreed that he could retain
the laptop computer he used while an employee.
In exchange for the severance benefits described above,
Mr. Baumbach released any and all claims he may have
against us and reaffirmed his obligations under the restrictive
covenant agreement between Mr. Baumbach and us dated
effective August 1, 2007. Under the terms of the
restrictive covenant agreement, he agreed, among other things,
not to compete with the company for 12 months following
July 22, 2009.
On September 28, 2009, we entered into a consulting
agreement with Mr. Baumbach to provide us technology
consulting services in connection with acquisitions. During
2009, we paid him $32,725 in consulting fees.
The aggregate value of the severance and other payments we made
to, or on behalf of, Mr. Baumbach in connection with the
termination of his employment relationship with us are set forth
as Note 3 to the Summary Compensation Table above.
59
Grants of
Plan-Based Awards in 2009
The following table sets forth certain information with respect
to cash compensation paid, options to purchase shares of our
common stock granted, and restricted shares of our common stock
granted, during the year ended December 31, 2009, to our
named executive officers. See Compensation Discussion and
Analysis Performance-Based Short-Term Cash
Incentives for a description of the material factors
necessary to understand the information in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
under Non-Equity Incentive
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Awards:
|
|
Exercise
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Number of
|
|
or Base
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Securities
|
|
Price of
|
|
of Stock
|
|
|
Grant
|
|
|
|
|
|
|
|
Number of
|
|
Underlying
|
|
Option
|
|
and Option
|
Name
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Shares(2)
|
|
Options (2)
|
|
Awards
|
|
Awards(3)
|
|
James P. Dolan
|
|
|
05/15/09
|
|
|
|
|
|
|
$
|
287,400
|
|
|
$
|
574,800
|
|
|
|
|
|
|
|
87,817
|
|
|
$
|
12.51
|
|
|
$
|
470,040
|
|
Vicki J. Duncomb
|
|
|
05/15/09
|
|
|
|
|
|
|
|
105,209
|
|
|
|
210,417
|
|
|
|
|
|
|
|
10,000
|
|
|
|
12.51
|
|
|
|
53,525
|
|
|
|
|
05/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,484
|
|
|
|
|
|
|
|
|
|
|
|
68,605
|
|
Scott J. Pollei
|
|
|
05/15/09
|
|
|
|
|
|
|
|
137,209
|
|
|
|
274,417
|
|
|
|
|
|
|
|
16,500
|
|
|
|
12.51
|
|
|
|
88,316
|
|
|
|
|
05/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,049
|
|
|
|
|
|
|
|
|
|
|
|
113,203
|
|
Mark W.C. Stodder
|
|
|
05/15/09
|
|
|
|
|
|
|
|
116,400
|
|
|
|
232,800
|
|
|
|
|
|
|
|
29,100
|
|
|
|
12.51
|
|
|
|
155,758
|
|
David A. Trott
|
|
|
05/15/09
|
|
|
|
|
|
|
|
134,500
|
|
|
|
269,000
|
|
|
|
|
|
|
|
16,813
|
|
|
|
12.51
|
|
|
|
89,992
|
|
|
|
|
05/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,221
|
|
|
|
|
|
|
|
|
|
|
|
115,355
|
|
Mark E. Baumbach(4)
|
|
|
05/15/09
|
|
|
|
|
|
|
|
108,700
|
|
|
|
217,400
|
|
|
|
|
|
|
|
21,740
|
|
|
|
12.51
|
|
|
|
116,363
|
|
|
|
|
(1) |
|
These columns describe the range of cash payments that could
have been made with respect to our 2009 short-term cash
incentive program described under Compensation Discussion
and Analysis Performance Based Short-Term Cash
Incentives You should also refer to the Summary
Compensation table for specific information about the
amounts paid to each named executive officer in 2009 as
performance-based short-term cash incentives and Severance
and Other Payments to Mark E. Baumbach for more
information. |
|
(2) |
|
These shares of restricted stock and options vest and become
exercisable in four equal annual installments beginning on
May 15, 2010. None of Messrs. Dolan, Stodder or
Baumbach elected to take a portion of his long-term equity
compensation in the form of restricted stock. |
|
(3) |
|
This column shows the full grant date fair value of restricted
stock and stock options granted to the named executive officers
in 2009, using the provisions of FASB ASC Topic 718. See
Note 14 to our consolidated financial statements and
Managements Discussion and Analysis of Financial
Condition and Results of Operations Application of
Critical Accounting Policies and Estimates
Share-Based Compensation Expense, both included in our
annual report on
Form 10-K
for the year ended December 31, 2009, that we filed with
the SEC on March 10, 2010, for information regarding the
assumptions used in the valuation of equity awards. |
|
(4) |
|
Mr. Baumbachs employment with us ended on
July 22, 2009. At that time, he forfeited the options
granted to him in 2009. See Severance and Other Payments
to Mark E. Baumbach for information about payments we made
to Mr. Baumbach in connection with the termination of his
employment. |
60
Outstanding
Equity Awards at Year End 2009
The following table sets forth certain information with respect
to all unexercised options to purchase shares of our common
stock and unvested shares of restricted stock awarded to each of
the named executive officers as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Market
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares of
|
|
Shares of
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock that
|
|
Stock that
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Expiration
|
|
have not
|
|
have not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Vested
|
|
Vested
|
|
James P. Dolan(1)
|
|
|
|
|
|
|
87,817
|
|
|
$
|
12.51
|
|
|
|
05/15/2016
|
|
|
|
|
|
|
$
|
|
|
(2)
|
|
|
21,488
|
|
|
|
64,466
|
|
|
|
16.52
|
|
|
|
05/12/2015
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
105,664
|
|
|
|
105,664
|
|
|
|
14.50
|
|
|
|
08/01/2014
|
|
|
|
|
|
|
|
|
|
Vicki J. Duncomb(1),(5)
|
|
|
|
|
|
|
10,000
|
|
|
|
12.51
|
|
|
|
05/15/2016
|
|
|
|
5,484
|
|
|
|
55,992
|
|
(2)
|
|
|
4,894
|
|
|
|
14,682
|
|
|
|
16.52
|
|
|
|
05/12/2015
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
18,672
|
|
|
|
18,672
|
|
|
|
14.50
|
|
|
|
08/01/2014
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
4,500
|
|
|
|
|
|
|
|
2.22
|
|
|
|
10/11/2016
|
|
|
|
|
|
|
|
|
|
Scott J. Pollei(1),(5)
|
|
|
|
|
|
|
16,500
|
|
|
|
12.51
|
|
|
|
05/15/2016
|
|
|
|
9,049
|
|
|
|
92,390
|
|
(2)
|
|
|
8,075
|
|
|
|
24,225
|
|
|
|
16.52
|
|
|
|
05/12/2015
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
39,678
|
|
|
|
39,679
|
|
|
|
14.50
|
|
|
|
08/01/2014
|
|
|
|
|
|
|
|
|
|
Mark W.C. Stodder(1),(6)
|
|
|
|
|
|
|
29,100
|
|
|
|
12.51
|
|
|
|
05/15/2016
|
|
|
|
|
|
|
|
|
|
(2),(6)
|
|
|
7,120
|
|
|
|
21,363
|
|
|
|
16.52
|
|
|
|
05/12/2015
|
|
|
|
|
|
|
|
|
|
(3),(6)
|
|
|
35,010
|
|
|
|
35,011
|
|
|
|
14.50
|
|
|
|
08/01/2014
|
|
|
|
|
|
|
|
|
|
David A. Trott(1),(5)
|
|
|
|
|
|
|
16,813
|
|
|
|
12.51
|
|
|
|
05/15/2016
|
|
|
|
9,221
|
|
|
|
94,146
|
|
(2)
|
|
|
8,228
|
|
|
|
24,684
|
|
|
|
16.52
|
|
|
|
05/12/2015
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
40,456
|
|
|
|
40,457
|
|
|
|
14.50
|
|
|
|
08/01/2014
|
|
|
|
|
|
|
|
|
|
Mark E. Baumbach(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On May 15, 2009, we granted nonqualified stock options to
each of the named executive officers in the amounts set forth
opposite each named executive officer in the table above. The
stock options vest and become exercisable in four equal
installments on each of May 15, 2010, 2011, 2012 and 2013. |
|
(2) |
|
On May 12, 2008, we granted nonqualified stock options to
each of the named executive officers in the amounts set forth
opposite each named executive officer in the table above. The
stock options vest and become exercisable in four equal
installments on each of May 12, 2009, 2010, 2011 and 2012.
At December 31, 2009, each named executive is fully vested
in one quarter of the options granted and has the right to
exercise them through May 12, 2015. |
|
(3) |
|
On August 1, 2007, we granted nonqualified stock options to
each of the named executives in the amounts set forth opposite
each named executive in the table above. The stock options vest
and become exercisable in four equal installments on each of
August 1, 2008, 2009, 2010 and 2011. At December 31,
2009, each named executive is fully vested in one half of the
options granted and has the right to exercise them through
August 1, 2014. |
|
(4) |
|
On October 11, 2006, we granted incentive stock options to
purchase 4,500 shares of common stock to Ms. Duncomb,
all of which are fully vested. Ms. Duncomb has the right to
exercise these options through October 11, 2016. |
|
(5) |
|
On May 15, 2009, we granted restricted shares of our common
stock to Ms. Duncomb, Mr. Pollei and Mr. Trott in
the amounts set forth opposite each named executive officer in
the table above. The restricted shares vest in four equal
installments on each of May 15, 2010, 2011, 2012 and 2013. |
|
(6) |
|
Includes vested and unvested options to acquire an aggregate
63,802 shares of our common stock that Mr. Stodder
assigned to his former spouse in connection with a marital
termination agreement in 2009. |
61
|
|
|
(7) |
|
Mr. Baumbach forfeited unvested options to purchase an
aggregate 76,911 shares of our common stock in connection
with the termination of his employment in July 2009. He
forfeited vested options to purchase an aggregate of
21,765 shares of our common stock because he failed to
exercise them within the 120 day period the compensation
committee had set for their exercise. He exercised a vested
option to purchase 4,500 shares of common stock, 1,125
which vesting was accelerated in connection with the execution
of Mr. Baumbachs severance agreement. At
December 31, 2009, Mr. Baumbach had no outstanding
options. |
Option
Exercises and Stock Vested for 2009
The following table sets forth certain information with respect
to options our named executive officers exercised to purchase
shares of our common stock during 2009. No restricted stock
awards granted to our named executive officers vested during
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number
|
|
|
|
Number of
|
|
|
|
|
of Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized
|
|
Acquired
|
|
Realized
|
Name
|
|
Exercise
|
|
on Exercise
|
|
on Vesting
|
|
on Vesting
|
|
James P. Dolan(1)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Vicki J. Duncomb
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J. Pollei
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark W.C. Stodder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Trott
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark E. Baumbach
|
|
|
4,500
|
|
|
|
49,230
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Does not include shares of restricted stock held by
Mr. Dolans spouse of which 237 were vested at
December 31, 2009. |
Non-qualified
Deferred Compensation for 2009
Our named executive officers did not earn any non-qualified
deferred compensation benefits from us during the year ended
December 31, 2009.
Pension
Benefits
Our named executive officers did not participate in, or
otherwise receive any benefits under, any pension or
supplemental retirement plans sponsored by us during the year
ended December 31, 2009.
Potential
Payments Upon Termination or Change in Control
As of December 31, 2009, we were party to certain
agreements and had in place a change of control plan that would
have required us to provide compensation to our named executive
officers (other than Mr. Baumbach whose employment with us
ended prior to December 31, 2009 and to whom we paid
severance as described above in Severance and Other
Payments to Mark E. Baumbach) in the event that their
employment with us was terminated or if we experienced a change
in control. A description of these agreements follows. A
qualitative analysis of the amount of compensation payable to
each of these named executive officers in each situation
involving a termination of employment or change in control,
assuming that each had occurred as of December 31, 2009, is
listed in the tables below.
Severance
Payments
James P. Dolan. Under Mr. Dolans
employment agreement with us, if Mr. Dolans
employment was terminated by us without cause or by
Mr. Dolan with good reason (as such terms are defined
below), then in addition to his base salary and benefits through
the termination date and any unpaid annual short-term incentive
payment due to Mr. Dolan for the preceding fiscal year, we
would provide Mr. Dolan (1) for a period of twelve
months from the date of termination severance pay equal to his
base salary, (2) a pro-rated portion
62
of his annual short-term incentive payment that would have been
payable to him for such fiscal year had he remained employed by
us for the entire year, and (3) medical and dental benefits
for Mr. Dolan and his covered dependents for a period of
eighteen months following his termination. If
Mr. Dolans employment was terminated due to his death
or disability or by us for cause or by Mr. Dolan without
good reason, we would pay to Mr. Dolan (or his beneficiary,
as applicable) (1) any accrued but unpaid base salary and
benefits earned through the date of termination, and (2) a
pro-rated portion of his annual short-term incentive payment
that would have been payable to him for such fiscal year had he
remained employed by us for the entire year in the case of
termination due to death or disability.
Cause is defined in Mr. Dolans employment
agreement to mean the occurrence of any of the following events:
(1) a material breach by Mr. Dolan of his employment
agreement that remains uncured for 30 days after he
receives written notice of the breach; (2) Mr. Dolan
continues to willfully and materially fail to perform his duties
under his employment agreement, or engages in excessive
absenteeism unrelated to illness or permitted vacation, for a
period of 30 days after delivery of a written demand for
performance that specifically identifies the manner in which we
believe Mr. Dolan has not performed his duties;
(3) Mr. Dolan is convicted of, or pleads guilty or
nolo contendere to, theft, fraud, misappropriation or
embezzlement in connection with our or our affiliates
business, or (4) Mr. Dolan is convicted of, or pleads
guilty or nolo contendere to, criminal misconduct constituting a
felony. Mr. Dolans employment agreement defines
good reason as the following: (1) we move our
principal offices from the Minneapolis-St. Paul metropolitan
area and require Mr. Dolan to relocate, (2) we remove
Mr. Dolan as our chief executive officer or substantially
diminish his duties or responsibilities; (3) we materially
breach any of our obligations under Mr. Dolans
employment agreement, which breach remains uncured for
30 days after we receive written notice of the breach, or
(4) a diminution of Mr. Dolans base salary or
the target amount of any annual short-term incentive payment, or
a material diminution in benefits available to Mr. Dolan,
other than (a) an inadvertent and isolated act or omission
that is promptly cured upon notice to us or (b) a
diminution of benefits applicable to our other executive
officers.
Scott Pollei, Mark Stodder and Vicki
Duncomb. Under each of Messrs. Pollei and
Stodder and Ms. Duncombs employment agreements, if
such officers employment was terminated by us without
cause or by the officer with good reason (as such terms are
defined below), then in addition to such officers base
salary and benefits through the termination date and any unpaid
annual short-term incentive payment due to such officer for the
preceding fiscal year, we would provide such officer (1) an
amount equal to one year of such officers annual base
salary, in effect at the time of the termination, (2) a
pro-rated portion of his or her annual short-term incentive
payment that would have been payable to him or her for such
fiscal year had he or she remained employed by us for the entire
year, and (3) medical and dental benefits for such officer
and his or her covered dependents for a period of eighteen
months following his or her termination. If such officers
employment was terminated due to his or her death or disability
or by us for cause or the executive without good reason, we
would pay to such officer (or his or her beneficiary, as
applicable) (1) any accrued but unpaid base salary and
benefits earned through the date of termination, and (2) a
pro-rated portion of his or her annual short-term incentive
payment that would have been payable to him for such fiscal year
had he remained employed by us for the entire year in the case
of termination due to death or disability. .
For these officers, cause and good
reason have the meanings set forth in their employment
agreements. Cause means the occurrence of any of the
following events: (1) a material breach by the executive
officer of his or her employment agreement that remains uncured
for 10 days after he receives notice of the breach;
(2) the executive officer continues to willfully and
materially fail to perform his or her duties under his or her
employment agreement, or engages in excessive absenteeism
unrelated to illness or permitted vacation, for a period of
10 days after delivery of a written demand for performance
that specifically identifies the manner in which we believe the
executive officer has not performed his or her duties;
(3) the executive officers commission of theft,
fraud, misappropriation or embezzlement in connection with our
or our affiliates business; or (4) the executive
officers commission of criminal misconduct constituting a
felony. Good reason means: (1) we move our
principal offices from the Minneapolis-St. Paul metropolitan
area and require the executive officer to relocate, (2) any
material diminution by us in the executive officers duties
or responsibilities inconsistent with the terms of his or her
employment agreement which remains uncured for
63
30 days after we receive notice; (3) we materially
breach any of our obligations under the executive officers
employment agreement that remains uncured for 30 days after
we receive notice of the breach, or (4) a diminution in the
executive officers base salary or the target amount of any
annual short-term incentive payment, or a material diminution in
benefits available to the executive officer, other than:
(a) an inadvertent and isolated act or omission that is
promptly cured upon notice to us or (b) a diminution of
benefits applicable to our other executive officers.
David A. Trott. Under NDeXs employment
agreement with Mr. Trott, if we terminate
Mr. Trotts employment without cause, then we must pay
Mr. Trott a monthly severance amount of $21,666.67 for the
twelve-month period beginning on the last day of the month
following the termination date and we must provide medical
insurance to Mr. Trott for the twelve-month period
following the termination date.
Mr. Trotts employment agreement defines
cause to mean that: (1) Mr. Trott has
committed an act of dishonesty against NDeX that results or is
intended to result in his gain or personal enrichment or has, or
is intended to have, a detrimental effect on the reputation of
NDeX or NDeXs business of providing non-legal foreclosure,
bankruptcy and eviction processing and related services;
(2) Mr. Trott has committed an act or acts of fraud,
moral turpitude against NDeX or a felony; (3) any breach by
Mr. Trott of any material provision of his employment
agreement that, if curable, has not been cured by Mr. Trott
within 10 days of notice of such breach from NDeX;
(4) any intentional act or gross negligence by
Mr. Trott (other than an act in good faith and with a
reasonable belief that such act was in the best interests of
NDeX) that has, or is intended to have, a detrimental effect on
the reputation of NDeX or its business; or
(5) Mr. Trotts refusal, after notice thereof, to
perform specific directives of the president of Dolan Media
Company that are reasonable and consistent with the scope and
nature of this duties and responsibilities that are set forth in
his employment agreement.
Stock
Option and Restricted Stock Rights upon Termination or Change of
Control
As of December 31, 2009, our named executed officers held
options to purchase an aggregate 842,918 shares of our
common stock, 293,785 of which have vested, and
23,754 shares of restricted stock, none of which have
vested. These totals do not include stock options or restricted
shares that were issued to Mr. Dolans spouse in
connection with her employment with us. See Related Party
Transactions Employment of Mr. Dolans
spouse for more information regarding her equity awards.
Under our incentive compensation plan, no stock options or
restricted stock held by any named executive officer would vest
upon the termination of his or her employment, except in those
circumstances described below. If any named executive officer
incurs a termination of service due to his or her death,
disability or retirement, options may be exercised for a period
of one year from the date of such termination to the extent that
the options were exercisable at the time of his termination. If,
however, any of the named executive officers is terminated for
cause, the options (whether or not vested) will be immediately
cancelled and forfeited. Cause has the meaning set
forth in each such named executive officers employment
agreement. If a named executive officer incurs a termination of
service either without cause or due to a reason other than his
or her death, disability or retirement, the options may be
exercised for a period of 60 days from the date of such
termination to the extent that the options were exercisable at
the time of his termination. Unvested shares of restricted stock
will immediately vest upon a termination of service due to a
named executive officers death, disability or retirement.
Our incentive compensation plan further provides that, in the
case of a change of control, all unvested stock options and
shares of restricted stock that we have granted will immediately
vest and become exercisable upon a change of control. The table
below describes the pre-tax amount each named executive officer
would receive if a change of control had occurred on
December 31, 2009, and, on that date, each named executive
officer sold all shares of restricted stock that vested upon
such change of control and exercised and sold all of the
underlying shares of common stock that would be issued upon the
exercise of options that became exercisable upon such change of
control; however, because at December 31, 2009, the
exercise price of the unvested options was greater than the
closing per share price of our common stock as reported by the
New
64
York Stock Exchange, the table below does not reflect the named
executive officers receiving any amount upon the exercise
of such options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value at
|
|
|
|
|
|
Amount
|
|
|
|
Grant
|
|
|
Number of
|
|
|
Restricted
|
|
|
December 31,
|
|
|
Exercise
|
|
|
Received
|
|
Name
|
|
Date
|
|
|
Options
|
|
|
Shares
|
|
|
2009(1)
|
|
|
Price
|
|
|
(before taxes)
|
|
|
James P. Dolan
|
|
|
08/01/07
|
|
|
|
105,664
|
|
|
|
|
|
|
$
|
10.21
|
|
|
$
|
14.50
|
|
|
$
|
|
|
|
|
|
05/12/08
|
|
|
|
64,466
|
|
|
|
|
|
|
|
10.21
|
|
|
|
16.52
|
|
|
|
|
|
|
|
|
05/15/09
|
|
|
|
87,817
|
|
|
|
|
|
|
|
10.21
|
|
|
|
12.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki J. Duncomb
|
|
|
08/01/07
|
|
|
|
18,672
|
|
|
|
|
|
|
|
10.21
|
|
|
|
14.50
|
|
|
|
|
|
|
|
|
05/12/08
|
|
|
|
14,682
|
|
|
|
|
|
|
|
10.21
|
|
|
|
16.52
|
|
|
|
|
|
|
|
|
05/15/09
|
|
|
|
10,000
|
|
|
|
5,484
|
|
|
|
10.21
|
|
|
|
12.51
|
|
|
|
55,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,992
|
|
Scott J. Pollei
|
|
|
08/01/07
|
|
|
|
39,679
|
|
|
|
|
|
|
|
10.21
|
|
|
|
14.50
|
|
|
|
|
|
|
|
|
05/12/08
|
|
|
|
24,225
|
|
|
|
|
|
|
|
10.21
|
|
|
|
16.52
|
|
|
|
|
|
|
|
|
05/15/09
|
|
|
|
16,500
|
|
|
|
9,049
|
|
|
|
10.21
|
|
|
|
12.51
|
|
|
|
92,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,390
|
|
Mark W.C. Stodder
|
|
|
08/01/07
|
|
|
|
35,011
|
(2)
|
|
|
|
|
|
|
10.21
|
|
|
|
14.50
|
|
|
|
|
|
|
|
|
05/12/08
|
|
|
|
21,363
|
(2)
|
|
|
|
|
|
|
10.21
|
|
|
|
16.52
|
|
|
|
|
|
|
|
|
05/15/09
|
|
|
|
29,100
|
(2)
|
|
|
|
|
|
|
10.21
|
|
|
|
12.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Trott
|
|
|
08/01/07
|
|
|
|
40,457
|
|
|
|
|
|
|
|
10.21
|
|
|
|
14.50
|
|
|
|
|
|
|
|
|
05/12/08
|
|
|
|
24,684
|
|
|
|
|
|
|
|
10.21
|
|
|
|
16.52
|
|
|
|
|
|
|
|
|
05/15/09
|
|
|
|
16,813
|
|
|
|
9,221
|
|
|
|
10.21
|
|
|
|
12.51
|
|
|
|
94,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,146
|
|
|
|
|
(1) |
|
The closing per share price for our common stock on
December 31, 2009, as reported by the New York Stock
Exchange. |
|
(2) |
|
Includes unvested options to acquire shares of our common stock
that Mr. Stodder assigned to his former spouse in
connection with a marital termination agreement in 2009. Under
that agreement, his former spouse received an aggregate of
42,737, which represents one-half of the unvested options in
each of the grants dated April 1, 2007, May 12, 2008,
and May 15, 2009, respectively. |
Change
of Control Plan
We have adopted an Executive Change of Control Plan that
provides each of our named executive officers (other than
Mr. Trott), as well as certain other members of our senior
management (each referred to as a participant), with
certain severance benefits in the case of a qualified change of
control event. Under the change of control plan, a participant
is entitled to receive a severance payment and additional
severance benefits if his or her employment with us is
terminated by us or the acquirer without cause or by the
employee for good reason 90 days prior to or within
12 months following a change in control (as defined below).
In connection with such change of control termination, each of
Messrs. Dolan, Pollei and Stodder will receive two times
his base salary plus annual target short-term incentive amounts
for the year in which the termination occurs, and
Ms. Duncomb and all other participants will receive one
times such participants base salary plus annual target
short-term incentive amounts for the year in which the
termination occurs. In addition, the terminated participant will
receive 18 months of continuing health and dental coverage
on the same terms as the participant received such benefits
during employment, and will receive outplacement services for
12 months following termination. Under the terms of the
change of control plan, if any payments or benefits to which a
65
participant becomes entitled are considered excess
parachute payments under Section 280G of the Code,
then he or she will be entitled to an additional
gross-up
payment from us in an amount such that, after payment by the
participant of all taxes, including any excise tax imposed upon
the gross-up
payment he or she will retain a net amount equal to the amount
he or she would have been entitled to had the excise tax not
been imposed upon the payment; provided, however, that if the
total payments that the participant is entitled to receive from
us do not exceed 110% of the greatest amount that could be paid
to the participant without becoming an excess parachute payment,
then no
gross-up
payment will be made by us, and the participants payments
will be reduced to the greatest amount that could be paid
without cause the payments to be excess parachute
payments.
Change in control is defined in the plan to mean (1) the
acquisition by a third party of more than 50% of our voting
shares, (2) a merger, consolidation or other reorganization
if our stockholders following such transaction no longer own
more than 50% of the combined voting power of the surviving
organization, (3) our complete liquidation or dissolution,
or (4) a sale of substantially all of our assets. The
definitions of cause and good reason for
Messrs. Dolan, Pollei and Stodder and Ms. Duncomb for
purposes of the plan are the same as is contained in such
executive officers employment agreement. For all other
participants, cause is defined as (1) the
willful and continued failure to substantially perform the
participants duties (other than due to illness or after
notice of termination by us without cause or by the executive
officer for good reason) and such failure continues for
10 days after a demand for performance is delivered, or
(2) the participant willfully engages in illegal or gross
misconduct that injures our reputation. Also, for all other
participants of the plan, good reason is defined as
(1) the participants base salary and target
short-term incentive opportunity is reduced immediately prior to
a change of control, (2) a material or adverse change in
the participants authority, duties, responsibilities,
title or offices following a change of control or an adverse
change, following a change of control, in the duties,
responsibilities, authority or managerial level of the
individual(s) to who the participant reports, (3) we
require the participant to be based more than 50 miles from
the executive officers employment base prior to a change
of control, or (4) our failure to require our successor to
assume the change of control plan.
In addition, our employment agreements with the named executive
officers contain severance arrangements pursuant to which each
such executive officer will receive severance benefits if, in
the absence of a change in control, we terminate their
employment without cause or if such executive officer terminates
his employment with us for good reason. See Executive
Compensation Employment Agreements for further
information regarding the terms of these employment agreements.
Summary
of Payments upon Termination or Change in Control
James P. Dolan. The following table describes
the potential payments and benefits upon termination of
employment or in connection with a change in control for James
P. Dolan, our president and chief executive officer, assuming
such event occurred as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal
|
|
|
Resignation for
|
|
|
Death or
|
|
|
For Cause
|
|
|
Change in
|
|
Payment and Benefits
|
|
Retirement
|
|
|
Good Reason
|
|
|
Disability
|
|
|
Termination
|
|
|
Control
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
479,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
958,000
|
|
Non-Equity Incentive Compensation Plan Payment(1)
|
|
|
|
|
|
|
500,076
|
|
|
|
500,076
|
|
|
|
|
|
|
|
1,000,152
|
|
Stock Options(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
Medical and Dental Benefits(3)
|
|
|
|
|
|
|
16,470
|
|
|
|
|
|
|
|
|
|
|
|
16,470
|
|
Section 280G Gross Up(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
309,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
995,546
|
|
|
$
|
500,076
|
|
|
$
|
|
|
|
$
|
2,328,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
(1) |
|
This amount reflects the non-equity incentive compensation plan
payment Mr. Dolan earned as of December 31, 2009. |
|
(2) |
|
At December 31, 2009, Mr. Dolan had unvested options
to acquire 257,947 shares of our common stock, all of which
would vest upon a change of control. The exercise price of these
options was greater than the closing per share price of our
common stock on December 31, 2009, so we have assumed that
Mr. Dolan did not exercise and sell the options for
purposes of this table. |
|
(3) |
|
We self-insure for medical insurance by withholding an amount
from the participating employees compensation to fund our
medical insurance program. Reflects 18 months of the COBRA
premium for medical and dental benefits at the rate in effect at
December 31, 2009. |
|
(4) |
|
This amount is an estimate of the payment we would be obligated
to make to Mr. Dolan under the executive change in control
plan in addition to those payments Mr. Dolan receives upon
a change in control under that plan. Our estimate of this
payment assumes that the base amount is equal to the average of
Mr. Dolans total compensation for the years ended
December 31, 2009, 2008 and 2007, as reported in the
Summary Compensation Table earlier in this proxy statement. The
base amount is used to determine whether any payments received
by Mr. Dolan upon a change in control constitute excess
parachute payments under Section 280G of the Code. Our
estimate of this payment also assumes that payments made on his
behalf for continuing medical and dental coverage constitute
parachute payments under Section 280G. |
|
|
|
Under the change in control plan, we are only obligated to
provide a
gross-up
payment for the base salary, short term non-equity incentive
compensation payment, the outplacement service payment and any
amounts paid on Mr. Dolans behalf for continuing
medical and dental coverage. In calculating this estimated
payment, we have used 35% for the federal income tax rate and
7.85% for the Minnesota income tax rate. |
Vicki J. Duncomb. The following table
describes the potential payments and benefits upon termination
of employment or in connection with a change in control for
Vicki J. Duncomb, our vice president, chief financial officer
and corporate secretary, assuming such event occurred as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal
|
|
|
Resignation for
|
|
|
Death or
|
|
|
For Cause
|
|
|
Change in
|
|
Payment and Benefits
|
|
Retirement
|
|
|
Good Reason
|
|
|
Disability
|
|
|
Termination
|
|
|
Control
|
|
|
Base Salary(1)
|
|
$
|
|
|
|
$
|
210,417
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
210,417
|
|
Non-Equity Incentive Compensation
Plan Payment(2)
|
|
|
|
|
|
|
183,063
|
|
|
|
|
|
|
|
|
|
|
|
183,063
|
|
Stock Options(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of Restricted Stock(4)
|
|
|
|
|
|
|
|
|
|
|
55,992
|
|
|
|
|
|
|
|
55,992
|
|
Outplacement Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
Medical and Dental Benefits(5)
|
|
|
|
|
|
|
18,431
|
|
|
|
|
|
|
|
|
|
|
|
18,431
|
|
Estimated Section 280G Gross Up(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
411,911
|
|
|
$
|
55,992
|
|
|
$
|
|
|
|
$
|
568,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Ms. Duncombs base salary from January 1, 2009,
through July 31, 2009, was $200,000. Her salary was
increased to $225,000 on August 1, 2009, in conjunction
with her promotion to our vice president and chief financial
officer. |
|
(2) |
|
This amount reflects the non-equity incentive compensation plan
payment Ms. Duncomb earned as of December 31, 2009. |
|
(3) |
|
At December 31, 2009, Ms. Duncomb had unvested options
to acquire 43,354 shares of our common stock, all of which
would vest upon a change of control. The exercise price of these
options was greater than the closing per share price of our
common stock on December 31, 2009, so we have assumed that
Ms. Duncomb did not exercise and sell the options for purposes
of the table. |
67
|
|
|
(4) |
|
Reflects 5,484 shares of restricted stock, which have not
yet vested. In connection with a termination due to
Ms. Duncombs death or disability or in connection
with a change in control, the unvested restricted shares would
vest immediately. In connection with any other termination of
Ms. Duncombs employment, she would forfeit any shares
of restricted stock, which has not yet vested. The amount in the
table assumes that Ms. Duncomb sold all such shares
(including restricted shares that would vest upon such event) at
$10.21, the closing per share price of our common stock on
December 31, 2009. |
|
(5) |
|
We self-insure for medical insurance by withholding an amount
from the participating employees compensation to fund our
medical insurance program. Reflects 18 months of the COBRA
premium for medical and dental benefits at the rate in effect at
December 31, 2009. |
|
(6) |
|
This amount is an estimate of the payment we would be obligated
to make to Ms. Duncomb under the executive change in
control plan in addition to those payments Ms. Duncomb
receives upon a change in control under that plan. Our estimate
of this payment assumes that the base amount is equal to the
average of Ms. Duncombs total compensation for the years
ended December 31, 2009, 2008 and 2007, which is $180,139.
The base amount is used to determine whether any payments
received by Ms. Duncomb upon a change in control constitute
excess parachute payments under Section 280G of the Code.
Our estimate of this payment also assumes that payments made on
her behalf for continuing medical and dental coverage constitute
parachute payments under Section 280G. |
|
|
|
Under the change in control plan, we are only obligated to
provide a
gross-up
payment for the base salary, short term non-equity incentive
compensation payment, the outplacement service payment and any
amounts paid on Ms. Duncombs behalf for continuing medical
and dental coverage. In calculating this estimated payment, we
have used 35% for the federal income tax rate and 7.85% for the
Minnesota income tax rate. |
Scott J. Pollei. The following table describes
the potential payments and benefits upon termination of
employment or in connection with a change in control for Scott
J. Pollei, our executive vice president and chief operating
officer, assuming such event occurred as of December 31,
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal
|
|
|
Resignation for
|
|
|
Death or
|
|
|
For Cause
|
|
|
Change in
|
|
Payment and Benefits
|
|
Retirement
|
|
|
Good Reason
|
|
|
Disability
|
|
|
Termination
|
|
|
Control
|
|
|
Base Salary(1)
|
|
$
|
|
|
|
$
|
274,417
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
548,834
|
|
Non-Equity Incentive Compensation Plan Payment(2)
|
|
|
|
|
|
|
238,743
|
|
|
|
|
|
|
|
|
|
|
|
477,486
|
|
Stock Options(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of Restricted Stock(4)
|
|
|
|
|
|
|
|
|
|
|
92,390
|
|
|
|
|
|
|
|
92,390
|
|
Outplacement Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
Medical and Dental Benefits(5)
|
|
|
|
|
|
|
18,431
|
|
|
|
|
|
|
|
|
|
|
|
18,431
|
|
Estimated Section 280G Gross Up(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
531,591
|
|
|
$
|
92,390
|
|
|
$
|
|
|
|
$
|
1,369,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Polleis base salary from January 1, 2009,
through July 31, 2009, was $264,000. His salary was
increased to $289,000 on August 1, 2009, in conjunction
with his promotion to our executive vice president and chief
operating officer. |
|
(2) |
|
This amount reflects the non-equity incentive compensation plan
payment Mr. Pollei earned as of December 31, 2009. |
|
(3) |
|
At December 31, 2009, Mr. Pollei had unvested options
to acquire 80,404 shares of our common stock. The exercise
price of Mr. Polleis options was greater than the
closing per share price of our common stock on December 31,
2009, so we have assumed that Mr. Pollei did not exercise
and sell the options for purposes of this table. |
68
|
|
|
(4) |
|
Reflects 9,049 shares of restricted stock, which have not
yet vested. In connection with a termination due to
Mr. Polleis death or disability or in connection with
a change in control, the unvested restricted shares would vest
immediately. In connection with any other termination of
Mr. Polleis employment, he would forfeit any shares
of restricted stock, which has not yet vested. The amount in the
table assumes that Mr. Pollei sold all such shares
(including restricted shares that would vest upon such event) at
$10.21, the closing per share price of our common stock on
December 31, 2009. |
|
(5) |
|
We self-insure for medical insurance by withholding an amount
from participating employees compensation to fund our
medical insurance program. Reflects 18 months of the COBRA
premium for medical and dental benefits at the rate in effect at
December 31, 2009. |
|
(6) |
|
This amount is an estimate of the payment we would be obligated
to make to Mr. Pollei under the executive change in control
plan in addition to those payments Mr. Pollei receives upon
a change in control under that plan. Our estimate of this
payment assumes that the base amount is equal to the average of
Mr. Polleis total compensation for the years ended
December 31, 2009, 2008 and 2007, as reported in the
Summary Compensation Table earlier in this proxy statement. The
base amount is used to determine whether any payments received
by Mr. Pollei upon a change in control constitute excess
parachute payments under Section 280G of the Code. Our
estimate of this payment also assumes that payments made on his
behalf for continuing medical and dental coverage constitute
parachute payments under Section 280G. |
|
|
|
Under the change in control plan, we are only obligated to
provide a
gross-up
payment for the base salary, short term non-equity incentive
compensation payment, the outplacement service payment and any
amounts paid on Mr. Polleis behalf for continuing
medical and dental coverage. In calculating this estimated
payment, we have used 35% for the federal income tax rate and
7.85% for the Minnesota income tax rate. |
Mark W.C. Stodder. The following table
describes the potential payments and benefits upon termination
of employment or in connection with a change in control for Mark
W.C. Stodder, our executive vice president Business
Information Division, assuming such event occurred as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal
|
|
|
Resignation for
|
|
|
Death or
|
|
|
For Cause
|
|
|
Change in
|
|
Payment and Benefits
|
|
Retirement
|
|
|
Good Reason
|
|
|
Disability
|
|
|
Termination
|
|
|
Control
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
232,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
465,600
|
|
Non-Equity Incentive Compensation Plan Payment(1)
|
|
|
|
|
|
|
192,805
|
|
|
|
192,805
|
|
|
|
|
|
|
|
385,610
|
|
Stock Options(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
Medical and Dental Benefits(3)
|
|
|
|
|
|
|
16,470
|
|
|
|
|
|
|
|
|
|
|
|
16,470
|
|
Estimated Section 280G Gross Up(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
447,475
|
|
|
$
|
192,805
|
|
|
$
|
|
|
|
$
|
1,046,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This amount reflects the non-equity incentive compensation plan
payment Mr. Stodder earned as of December 31, 2009. |
|
(2) |
|
At December 31, 2009, Mr. Stodder had unvested options
to acquire 85,474 shares of our common stock, including an
aggregate 42,737 unvested options he assigned to his former
spouse in connection with a marital termination agreement. The
exercise price of these options was greater than the closing per
share price of our common stock on December 31, 2009, so we
have assumed that Mr. Stodder did not exercise and sell the
options for purposes of this table. |
|
(3) |
|
We self-insure for medical insurance by withholding an amount
from the participating employees compensation to fund our
medical insurance program. Reflects 18 months of the COBRA
premium for medical and dental benefits at the rate in effect at
December 31, 2009. |
69
|
|
|
(4) |
|
This amount is an estimate of the payment we would be obligated
to make to Mr. Stodder under the executive change in
control plan in addition to those payments Mr. Stodder
receives upon a change in control under that plan. Our estimate
of this payment assumes that the base amount is equal to the
average of Mr. Stodders total compensation for the
years ended December 31, 2009, 2008 and 2007, as reported
in the Summary Compensation Table earlier in this proxy
statement. The base amount is used to determine whether any
payments received by Mr. Stodder upon a change in control
constitute excess parachute payments under Section 280G of
the Code. Our estimate of this payment also assumes that
payments made on his behalf for continuing medical and dental
coverage constitute parachute payments under Section 280G. |
|
|
|
Under the change in control plan, we are only obligated to
provide a
gross-up
payment for the base salary, short term non-equity incentive
compensation payment, the outplacement service payment and any
amounts paid on Mr. Stodders behalf for continuing
medical and dental coverage. In calculating this estimated
payment, we have used 35% for the federal income tax rate and
6.75% for the Wisconsin income tax rate. |
David A. Trott. The following table describes
the potential payments upon termination of employment or in
connection with a change in control for David A. Trott, chairman
and chief executive officer of National Default Exchange,
assuming such event occurred as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal
|
|
|
Resignation for
|
|
|
Death or
|
|
|
For Cause
|
|
|
Change in
|
|
Payment and Benefits
|
|
Retirement
|
|
|
Good Reason
|
|
|
Disability
|
|
|
Termination
|
|
|
Control
|
|
|
Severance Payment(1)
|
|
$
|
|
|
|
$
|
260,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Stock Options(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of Restricted Stock(3)
|
|
|
|
|
|
|
|
|
|
|
94,146
|
|
|
|
|
|
|
|
94,146
|
|
Medical and Dental Benefits(4)
|
|
|
|
|
|
|
18,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
278,483
|
|
|
$
|
94,146
|
|
|
$
|
|
|
|
$
|
94,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Twelve monthly payments of $21,666.67 commencing on the last day
of the full calendar month following the termination date. |
|
(2) |
|
At December 31, 2009, Mr. Trott had vested options to
acquire 48,684 shares of our common stock. The exercise
price of Mr. Trotts options was greater than the
closing per share price of our common stock on December 31,
2009, so we have assumed that Mr. Trott did not exercise
and sell the options for purposes of this table. |
|
|
|
Under our incentive compensation plan, Mr. Trott has a
period of 1 year, in the case of a termination of his
employment due to death, retirement or disability, or sixty
days, in the case of a termination without cause or resignation
for good reason or in connection with a change in control. If
Mr. Trott is terminated for cause, he forfeits all of his
stock options, including any which have vested. |
|
(3) |
|
Reflects 227,895 shares of our common stock, which
Mr. Trott owned as of December 31, 2009. This includes
9,221 shares of restricted stock, which have not yet
vested. In connection with a termination due to
Mr. Trotts death or disability or in connection with
a change in control, the unvested restricted shares would vest
immediately. In connection with any other termination of
Mr. Trotts employment, he would forfeit any shares of
restricted stock, which has not yet vested. The amount in the
table assumes that Mr. Trott sold all such shares
(including restricted shares that would vest upon such event) at
$10.21, the closing per share price of our common stock on
December 31, 2009. |
|
(4) |
|
Reflects 12 months of medical benefits under COBRA at the
premium amount in effect at December 31, 2009. |
70
COMPENSATION
COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
John C. Bergstrom, Arthur Kingsbury and Lauren Rich Fine served
on our boards compensation committee for the year ended
December 31, 2009. No member of our compensation committee
has any relationship requiring any disclosure. None of our
executive officers serve as a member of the board of directors
or compensation committee of any entity that has one or more
executive officers who serve on our compensation committee.
71
PRINCIPAL
STOCKHOLDERS AND
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS
The following table describes information with respect to the
beneficial ownership of our common stock as of March 29,
2010, by:
|
|
|
|
|
Each person or group of affiliated persons known by us to
beneficially own more than 5% of our outstanding shares of
common stock;
|
|
|
|
Each of our directors;
|
|
|
|
Each of our executive officers; and
|
|
|
|
All of our directors and executive officers as a group.
|
We have determined beneficial ownership according to SEC rules.
In computing the percentage ownership of each person, we have
included shares of common stock subject to options that person
holds, to the extent such options are currently exercisable or
may be exercisable within 60 days of March 29, 2010.
These shares, however, were not included for purposes of
computing the percentage ownership for any other person.
Unless otherwise indicated, the stockholders in this table have
sole voting and investment power with respect to those shares
set forth opposite that stockholders name. We have based
our computation of the percentage ownership of our common stock
on 30,315,032 shares outstanding on March 29, 2010.
The address for each executive officer and director is
c/o Dolan
Media Company, 222 South Ninth Street, Suite 2300,
Minneapolis, Minnesota 55402.
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Number of Shares
|
|
Common Stock
|
Name and Address of Beneficial Owner
|
|
Beneficially Owned
|
|
Outstanding
|
|
Beneficial Owners of More than 5%
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.(1)
|
|
|
|
|
|
|
|
|
100 E. Pratt Street
|
|
|
|
|
|
|
|
|
Baltimore, Maryland 21202
|
|
|
2,912,141
|
|
|
|
9.6
|
%
|
William Blair & Company, L.L.C.(2)
|
|
|
|
|
|
|
|
|
222 W. Adams
|
|
|
|
|
|
|
|
|
Chicago, Illinois 60606
|
|
|
1,808,614
|
|
|
|
6.0
|
%
|
Executive Officers and Directors
|
|
|
|
|
|
|
|
|
James P. Dolan(3)
|
|
|
1,700,328
|
|
|
|
5.6
|
%
|
Vicki J. Duncomb(4)
|
|
|
39,405
|
|
|
|
|
*
|
Scott J. Pollei(5)
|
|
|
264,676
|
|
|
|
|
*
|
Mark W. C. Stodder(6)
|
|
|
74,039
|
|
|
|
|
*
|
David A. Trott(7)
|
|
|
276,579
|
|
|
|
|
*
|
John C. Bergstrom(8)
|
|
|
74,819
|
|
|
|
|
*
|
Anton J. Christianson(9)
|
|
|
374,699
|
|
|
|
1.2
|
%
|
Arthur F. Kingsbury(10)
|
|
|
8,711
|
|
|
|
|
*
|
Jacques Massicotte(11)
|
|
|
16,626
|
|
|
|
|
*
|
Lauren Rich Fine(12)
|
|
|
12,711
|
|
|
|
|
*
|
George Rossi(13)
|
|
|
17,321
|
|
|
|
|
*
|
Gary H. Stern
|
|
|
|
|
|
|
|
|
Executive Officers and Directors as a group (12 persons)(14)
|
|
|
2,859,914
|
|
|
|
9.3
|
%
|
|
|
|
* |
|
less than 1% beneficial ownership |
|
(1) |
|
The information provided here is based upon a
Schedule 13G/A filed on February 12, 2010, and
information by the stockholder. These shares are owned by
various individual and institutional investors, including T.
Rowe Price New Horizons Fund, Inc. (which owns
2,000,000 shares, representing 6.6% of the |
72
|
|
|
|
|
shares outstanding on March 29, 2010) for which T.
Rowe Price Associates, Inc. serves as investment advisor with
power to direct investments and/or sole power to vote the
shares, and therefore, may be deemed to be the beneficial owner
of these shares; however, T. Rowe Price Associates, Inc.
expressly disclaims beneficial ownership of these shares. T.
Rowe Price Associates, Inc. is the wholly-owned subsidiary of T.
Rowe Price Group, Inc., a publicly traded financial services
holding company. |
|
(2) |
|
The information provided here is based upon a Schedule 13G
filed on February 5, 2010 and information previously
provided by the stockholder. William Blair & Company,
LLC, as investment advisor to each of the entities that own the
shares reported here has voting and/or investment power with
respect to these shares and, therefore, may be deemed to be the
beneficial owner of these shares. However, William
Blair & Company, LLC expressly disclaims beneficial
ownership of these shares. |
|
(3) |
|
These shares include the following: (a) 16,338 shares
owned by Mr. Dolans spouse (including 555 shares
of restricted stock that are not yet vested) and options to
acquire 721 shares of common our common stock, which
Mr. Dolans spouse may exercise during the
60-day
period following March 29, 2010; and (b) options to
acquire 127,152 shares of our common stock, which
Mr. Dolan may exercise during the
60-day
period following March 29, 2010. Mr. Dolan disclaims
beneficial ownership of all shares his spouse owns, including
shares she could own pursuant to the exercise of any stock
options. |
|
(4) |
|
These shares include the following: (a) 5,484 shares
of restricted stock that were granted to Ms. Duncomb in
connection with her employment, of which none is vested, and
(b) options to acquire 28,066 shares of our common
stock, which Ms. Duncomb may exercise during the
60-day
period following March 29, 2010. |
|
(5) |
|
These shares include the following: (a) 14,998 shares
that Mr. Pollei owns through an individual retirement
account, (b) 9,049 shares of restricted stock that
were granted to Mr. Pollei in connection with his
employment, none of which is vested, (c) an aggregate
180,000 shares held in four separate trusts for
Mr. Polleis children, and (d) options to acquire
47,753 shares of common stock, which Mr. Pollei may
exercise during the
60-day
period following March 29, 2010. Mr. Pollei is the
trustee of each trust and has sole voting and investment power
with respect to the shares held by each trust. Mr. Pollei
disclaims beneficial ownership of the shares held in trust for
his children. |
|
(6) |
|
These shares include the following: (a) 250 shares
owned by his minor daughter; and (b) options to acquire
21,066 shares of our common stock, which Mr. Stodder
may exercise during the
60-day
period following March 29, 2010. Mr. Stodder disclaims
beneficial ownership of those shares his minor daughter owns.
The shares reported do not include an aggregate
52,473 shares and options to acquire 21,065 shares of
common stock, which are exercisable during the
60-day
period following March 29, 2010, that Mr. Stodder
assigned to his former spouse in connection with a marital
termination agreement in 2009. |
|
(7) |
|
These shares include the following: (a) 50,000 shares
owned by the David Trott Revocable Trust for which
Mr. Trott is the trustee; (b) 9,221 shares of
restricted stock that were granted to Mr. Trott in
connection with his employment, of which none is vested;
(c) options to acquire 48,684 shares of our common
stock, which Mr. Trott may exercise in the
60-day
period following March 29, 2010,
(d) 168,644 shares issued to Mr. Trott, as
partial consideration, for the sale of a 5.1% membership
interest in American Processing Company, LLC d/b/a NDeX, and
(e) 30 shares owned by Mr. Trotts spouse.
Mr. Trott disclaims beneficial ownership of the shares
owned by his spouse. In addition, the shares reported exclude an
aggregate of 7,200 shares held by three separate trusts for
the benefit of Mr. Trotts children on March 1,
2010. Mr. Trott is not a trustee of these trusts and has no
investment or voting power with respect to the shares the trusts
own. |
|
(8) |
|
These shares include the following: (a) 10,000 shares
that Mr. Bergstrom owns through an individual retirement
account, and (b) options to acquire 8,099 shares of
our common stock which Mr. Bergstrom may exercise during
the 60-day
period following March 29, 2010. |
|
(9) |
|
These shares include (a) 12,880 shares held by Adam
Smith Growth Partners, L.P., (b) 351,895 shares held
by Adam Smith Fund, L.L.C., (c) 1,300 shares held by
Adam Smith Companies, LLC, and (d) options to purchase
7,633 shares of our common stock, which
Mr. Christianson may exercise during the
60-day
period following March 29, 2010. Mr. Christianson is
the chairman of Adam Smith Companies, LLC, the general partner
of Adam Smith Growth Partners L.P. Mr. Christianson is also
the president |
73
|
|
|
|
|
of Adam Smith Management, LLC, the managing member of the Adam
Smith Fund, L.L.C. Mr. Christianson has shared voting and
investment power with respect to, and therefore may be deemed to
be the beneficial owner of the shares of common stock owned by
Adam Smith Growth Partners, L.P., Adam Smith Fund, L.L.C. and
Adam Smith Companies, LLC. Mr. Christianson disclaims
beneficial ownership to the shares of our common stock owned by
Adam Smith Growth Partners, L.P., Adam Smith Fund, L.L.C., and
Adam Smith Companies, LLC, except to the extent of his indirect
ownership in those entities. |
|
(10) |
|
These shares include options to acquire 2,711 shares of our
common stock, which Mr. Kingsbury may exercise in the
60-day
period following March 29, 2010. |
|
(11) |
|
These shares include options to acquire 6,626 shares of our
common stock, which Mr. Massicotte may exercise in the
60-day
period following March 29, 2010. |
|
(12) |
|
These shares include options to acquire 2,711 shares of our
common stock, which Ms. Rich Fine may exercise in the
60-day
period following March 29, 2010. |
|
(13) |
|
These shares include options to acquire 7,321 shares of our
common stock, which Mr. Rossi may exercise in the
60-day
period following March 29, 2010. |
|
(14) |
|
See Notes 3 through 13 above. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
executive officers and persons who own more than 10% of our
common stock to file reports of their ownership, and changes in
their ownership, with the SEC. We are required to identify any
person who fails to file these reports on a timely basis. To our
knowledge, all filings were made on a timely basis during 2009.
In making this statement, we have relied upon our examination of
the Forms 3, 4 and 5 on file with the SEC for each of our
directors and executive officers and also those directors and
executive officers written representations to us.
By order of the Board of Directors,
Vicki J. Duncomb
Corporate Secretary
April 7, 2010
74
Appendix A
Dolan Media Company
2007 Incentive Compensation Plan
(Amended and restated in 2010)
Table of Contents
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Section 1. Establishment, Purpose and Duration |
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1 |
1.1 Effective Date and Purpose |
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1 |
1.2 Duration of the Plan. |
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1 |
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Section 2. Definitions |
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1 |
2.1 Annual Incentive Award |
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1 |
2.2 Award |
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2.3 Award Agreement |
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2 |
2.4 Beneficiary |
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12
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2.5 Board |
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12
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2.6 Bonus Opportunity |
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2 |
2.7 Cause |
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2 |
2.8 Change in Control |
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2 |
2.9 Code |
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34
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2.10 Committee |
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4 |
2.11 Common Stock |
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4 |
2.12 Company |
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4 |
2.13 Covered Employee |
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4 |
2.14 Deferred Compensation Awards |
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4 |
2.15 Deferred Stock |
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4 |
2.16 Disability |
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4 |
2.17 Dividend Equivalent |
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4 |
2.18 Effective Date |
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4 |
2.19 Eligible Person |
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4 |
2.20 Employer |
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4 |
2.21 Exchange Act |
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45
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2.22 Exercise Date |
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45
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2.23 Fair Market Value |
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45
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2.24 Grant Date |
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5 |
2.25 Grantee |
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5 |
2.26 Incentive Stock Option |
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5 |
2.27 including |
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5 |
2.28 Non-Qualified Stock Option |
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5 |
2.29 Option |
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5 |
2.30 Option Price |
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6 |
2.31 Performance-Based Exception |
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56
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2.32 Performance Goal |
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56
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2.33 Performance Measures |
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6 |
2.34 Performance Period |
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6 |
2.35 Performance Unit |
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6 |
2.36 Person |
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6 |
2.37 Restricted Stock |
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6 |
2.38 Restricted Stock Unit or RSU |
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6 |
2.39 Restrictions |
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6 |
i
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2.40 Retirement |
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67
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2.41 Rule 16b-3 |
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67
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2.42 SEC |
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67
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2.43 Section 16 Non-Employee Director |
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7 |
2.44 Section 16 Person |
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7 |
2.45 Settlement Date |
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7 |
2.46 Share |
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7 |
2.47 Stock Appreciation Right or SAR |
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7 |
2.48 Strike Price |
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7 |
2.49 Subsidiary |
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7 |
2.50 Substitute Award |
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7 |
2.51 Term |
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7 |
2.52 Termination of Service |
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8 |
2.53 Year |
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78
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Section 3. Administration |
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78
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3.1 Committee |
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78
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3.2 Powers of the Committee |
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8 |
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Section 4. Shares Subject to the Plan and Adjustments |
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10 |
4.1 Number of Shares Available for Grants |
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10 |
4.2 Adjustments in Authorized Shares and Awards |
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1011
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4.3 Compliance With Code Section 162(m) |
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11 |
4.4 Performance -Based Exception Under Section
162(m) |
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1112
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Section 5. Eligibility and General Conditions of Awards |
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14 |
5.1 Eligibility |
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14 |
5.2 Award Agreement |
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14 |
5.3 General Terms and Termination of Service |
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14 |
5.4 Nontransferability of Awards |
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16 |
5.5 Cancellation and Rescission of Awards |
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1617
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5.6 Substitute Awards |
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1617
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5.7 Exercise by Non-Grantee |
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1617
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5.8 No Cash Consideration for Awards |
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1617
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Section 6. Stock Options |
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18 |
6.1 Grant of Options |
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18 |
6.2 Award Agreement |
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18 |
6.3 Option Price |
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18 |
6.4 Vesting |
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1718
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6.5 Grant of Incentive Stock Options |
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1718
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6.6 Exercise and Payment |
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1819
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Section 7. Stock Appreciation Rights |
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1920
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7.1 Grant of SARs |
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1920
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7.2 Award Agreements |
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1921
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7.3 Strike Price |
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21 |
7.4 Vesting |
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21 |
7.5 Exercise and Payment |
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21 |
ii
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7.6 Grant Limitations |
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2021
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Section 8. Restricted Stock |
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2021
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8.1 Grant of Restricted Stock |
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2021
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8.2 Award Agreement |
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2021
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8.3 Consideration for Restricted Stock |
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2021
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8.4 Vesting |
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2021
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8.5 Effect of Forfeiture |
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2022
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8.6 Escrow; Legends |
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22 |
8.7 Stockholder Rights in Restricted Stock |
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2122
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Section 9. Restricted Stock Units |
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2122
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9.1 Grant of Restricted Stock Units |
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2122
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9.2 Award Agreement |
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2122
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9.3 Crediting Restricted Stock Units |
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2123
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Section 10. Deferred Stock |
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2223
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10.1 Grant of Deferred Stock |
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2223
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10.2 Award Agreement |
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2224
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10.3 Deferred Stock Elections |
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24 |
10.4 Deferral Account |
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2324
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Section 11. Performance Units |
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2425
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11.1 Grant of Performance Units |
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2425
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11.2 Value/Performance Goals |
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2425
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11.3 Earning of Performance Units |
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26 |
11.4 Adjustment on Change of Position |
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2526
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11.5 Dividend Rights |
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2526
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Section 12. Annual Incentive Awards |
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2526
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12.1 Annual Incentive Awards. |
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2526
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12.2 Determination of Amount of Annual Incentive Awards. |
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2527
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12.3 Time of Payment of Annual Incentive Awards. |
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2628
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12.4 Form of Payment of Annual Incentive Awards. |
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2628
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Section 13. Change in Control |
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2628
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13.1 Acceleration of Vesting |
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2628
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13.2 Special Treatment In the Event
ofif a
Change in Control Occurs |
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28 |
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Section 14. Dividend Equivalents |
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2729
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Section 15. Stockholders Agreement 27 Section 16. Amendments
and Termination 28 16.1 |
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29 |
15.1 Amendment and Termination |
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29 |
16.2 15.2 Effect of Termination or Amendments on Previously Granted Awards
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29 |
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Section 17.16. Beneficiary Designation |
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2830
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Section 18.17. Withholding |
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2830
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18.117.1 Required Withholding
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2830
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18.217.2 Notification under
Code
Section 83(b) of the Code
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29 31
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Section 19.18. General Provisions |
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2931
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19.118.1 Governing Law
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2931
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iii
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Page |
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2931
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2931
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19.418.4 Requirements of Law |
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3032
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19.518.5 Securities Law Compliance |
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3032
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3032
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19.718.7 No Rights as a Stockholder |
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3133
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19.818.8 Awards Not Taken Into Account for Other Benefits |
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3133
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19.918.9 Employment Agreement Supersedes Award Agreement |
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3133
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19.1018.10 Non-Exclusivity of Plan |
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3133
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19.1118.11 No Trust or Fund Created |
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3133
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19.1218.12 No Right to Continued Employment or Awards |
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3133
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19.1318.13 Military Service |
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3234
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3234
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19.1518.15 No Fractional Shares |
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3234
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19.1618.16 Plan Document Controls . |
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32
34 |
iv
Dolan Media Company
2007 Incentive Compensation Plan
(Amended and restated in 2010)
Section 1.
Establishment, Purpose and Duration
1.1 Effective Date and Purpose. Dolan Media Company, a Delaware corporation (the
Company), hereby amends and restates the Dolan Media Company 2006 Equity Incentive
Plan (the 2006 Plan), and renames it the Dolan Media Company 2007 Incentive
Compensation Plan (the Plan). The Plan is intended to attract and retain exceptionally
qualified employees, consultants and directors upon whom, in large measure, the sustained progress,
growth and profitability of the Company depend. By encouraging employees, consultants and
directors of the Company and its subsidiaries to acquire a proprietary interest in the Companys
growth and performance, the Company intends to motivate employees, consultants and directors to
achieve long-term Company goals and to more closely align such persons interests with those of the
Companys other stockholders. The amended and restated
Plan was approved by the Board on June 22,
2007 March 2, 2010 (the Effective
Date), subject to approval by the Companys stockholders. All numbers of
shares included in the Plan have been adjusted to reflect a nine-for-one stock split effective
August 7, 2007.
1.2 Duration of the Plan. The Plan shall commence on the Effective Date and shall
remain in effect, subject to the right of the Board of Directors of the Company to amend or
terminate the Plan at any time pursuant to Section
1615 hereof, until the
earlier to occur of (a) the date all Shares subject to the Plan shall have been purchased or
acquired and the Restrictions on all Restricted Stock granted under the Plan shall have lapsed,
according to the Plans provisions, and (b) ten (10) years from the Effective Date of
thethis amended and
restated Plan. The termination of the Plan shall not adversely affect any
Awards outstanding on the date of termination.
Section 2.
Definitions
As used in the Plan, in addition to terms elsewhere defined in the Plan, the following terms
shall have the meanings set forth below:
2.1 Annual Incentive Award
means a performance bonus determined under Section 12.
2.2 Award means any Option (including Non-Qualified
Stock Options and Incentive Stock Options), Stock Appreciation Right, Restricted Stock, Share,
Restricted Stock Unit, Deferred Stock, Performance Unit, Substitute Award, Dividend Equivalent or
Annual Incentive Award.
2.3 Award Agreement means any written agreement, contract, or other instrument or
document evidencing any Award granted hereunder between the Company and the Grantee.
2.4 Beneficiary means the Person designated to receive Plan benefits, if any,
following the Grantees death in accordance with Section
17.16.
2.5 Board means the Board of Directors of the Company.
2.6 Bonus Opportunity means a Grantees threshold, target and maximum bonus
opportunity for a Year,; provided that
such bonus opportunity shall be either
(ia) to the extent
that the Grantee has entered into an employment agreement with the Company, the threshold, target
and maximum bonus levels, if any, specified in the employment agreement for such Year based on the
Grantees base salary in effect on the first day of such Year, or
(iib) if there is no
employment agreement in effect between the Company and the Grantee as of the first day of such Year
or if the employment agreement does not specify such bonus levels, the
percentageapplicable threshold, target and
maximum percentages of such Grantees base salary in effect on the first
day of such Year (or such later date as such person is designated as a
Grantee), as determined by the Committee in its
sole discretion within the first ninety (90) days of such Year (or before such later date as such
person is designated as a Grantee, subject to the time limit stated in
Section 12.1, if applicable).
2.7 Cause means, as determined by the Committee, the occurrence of any one of the
following: (a) any act of dishonesty, willful misconduct, gross negligence, intentional or
conscious abandonment or neglect of duty; (b) commission of a criminal activity, fraud or
embezzlement; (c) any unauthorized disclosure or use of confidential information or trade secrets;
or (d) any violation of any non-compete or non-disclosure agreement between an Eligible Person and
any Employer; provided, however, that in the
eventif a Grantee is a party to an
employment agreement with the Company or a Subsidiary that contains a different definition of
Cause, the definition of Cause contained in such employment agreement shall be controlling.
2.8 Change in Control means, with respect to Awards other than Deferred
Compensation Awards, the occurrence of any one or more of the following:
(ia) the acquisition
by any Person of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
more than fifty percent (50%) of the outstanding voting Shares; provided,
however, that a Change in Control
shall not be deemed to occur solely because more than fifty percent (50%) of the outstanding voting
Shares is acquired by
(Ai) a trustee or
other fiduciary holding securities under one or more employee benefit plans maintained by the
Company or any of its subsidiaries, or
(Bii) any Person
whichthat, immediately
prior tobefore such
acquisition, is owned directly or indirectly by the stockholders of the Company in approximately
the same proportion as their ownership of voting Shares immediately prior
tobefore such acquisition;
(iib) a merger,
consolidation or other reorganization involving the Company if the stockholders of the Company and
their affiliates, immediately before such merger, consolidation or other reorganization, do not, as
a result of such merger, consolidation, or other reorganization, own directly or indirectly, more
than fifty percent (50%) of the combined voting power of the then outstanding voting shares of the
Person resulting from such merger, consolidation or other reorganization;
(iiic) a complete
liquidation or dissolution of the Company; or
(ivd) the sale or
other disposition of all or substantially all of the assets of the Company and its subsidiaries
determined on a consolidated
basis. Notwithstanding the foregoing, unless otherwise
provided in an Award Agreement, an initial public offering of the Shares of the Company (an IPO)
shall not constitute a Change in Control for purposes of the Plan or any Award Agreement
hereunder.
Change in Control means, with respect to Deferred Compensation Awards, the
occurrence one or more of any of the following:
(a) A Change in the
Ownership of the Company. A change in ownership of the Company shall occur on the date that
any one Person, or more than one Person acting as a Group (as defined under Code Section 409A),
acquires ownership of stock of the Company that, together with stock held by such Person or Group,
constitutes more than 50% of the total fair market
valueFair Market Value or total
voting power of the stock of the Company; provided, however, that, if
any one Person, or more than one Person acting as a Group, is already
considered to own more than 50% of the total fair market
valueFair Market Value or total
voting power of the stock of the Company, the acquisition of additional stock by the same Person or
Persons is not considered to cause a change in the ownership of the Company.
(b) A Change in the
Effective Control of the Company. A change in the effective control of the Company occurs on
the date that any one
Person, or more than one Person acting as a Group, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such Person or Persons)
ownership of stock of the Company possessing 50% or more of the total voting power of the stock of
the Company; or
(c) A Change inthe
Ownership of aSubstantial Portion of the
Companys Assets. A change in the ownership of a substantial portion of the Companys assets
occurs on the date that any one Person, or more than one Person acting as a Group, acquires (or has
acquired during the 12-month period ending on the date of the most recent acquisition by such
Person or Persons) assets from the Company that have a total Gross Fair Market Value (as defined
below in this Section) equal to or more than 50% of
the total Gross Fair Market Value of all of the assets of the Company immediately
prior tobefore such
acquisition or acquisitions; provided, however,
that, a transfer of assets by the Company is not treated as a change
in the ownership of such assets if the assets are transferred to:
(i) a stockholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;
(ii) an entity, 50% or more of the total Fair Market Value or voting power of which is
owned, directly or indirectly, by the Company;
(iii) a Person, or more than one Person acting as a Group, that owns, directly or
indirectly, 50% or more of the total Fair Market Value or voting power of all the
outstanding stock of the Company; or
(iv) an entity, at least 50% of the total Fair Market Value or voting power of which is
owned, directly or indirectly, by a Person described in clause (iii) of this paragraph
2.8(c).
For purposes of this definition, Gross Fair
Market Value means the value of the assets of the
Company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets.
For all purposes of the latter definition of Change in Control that applies to Deferred
Compensation Awards, stock ownership is determined under Code Section 409A.
2.9 Code means the Internal Revenue Code of 1986 (and any successor thereto), as
amended from time to time. References to a particular Code
section of the Code include references to
regulations and rulings and other guidance
thereunder; and to
successor provisions.
2.10 Committee has the meaning set forth in Section 3.1(a).
2.11 Common Stock means common stock, par value $.001 per share, of the Company.
2.12 Company has the meaning set forth in Section 1.1.
2.13 Covered Employee means a Grantee who, as of the last day of the
fiscalCompanys
taxable year in which the value of an Award is includable in income for
federal income tax purposes, is one of the group of covered employees, within the meaning of Code
Section 162(m), with respect to the Company.
2.14 Deferred Compensation Awards means Awards that could be subject to liability
under Code Section 409A and do not qualify for an exemption from Code Section 409A coverage.
2.15 Deferred Stock means a right, granted as an Award under Section 10, to receive
payment in the form of Shares (or measured by the value of Shares) at the end of a specified
deferral period.
2.16 Disability means a Grantees inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than twelve (12)
months, as determined by the Committee.
2.17 Dividend Equivalent means any right to receive payments equal to dividends or
property, if and when paid or distributed, on Shares or Restricted Stock Units.
2.18 Effective Date has the meaning set forth in Section 1.1.
2.19 Eligible Person means any employee of an Employer, non-employee director of
the Company or consultant engaged by an Employer.
2.20 Employer means the Company or any Subsidiary.
2.21 Exchange Act means the Securities and Exchange Act of 1934, as amended, or any
successors thereto, and the rules and regulations promulgated thereunder, all as shall be amended
from time to time.
2.22 Exercise Date means the date the holder of an Award that is subject to
exercise delivers notice of such exercise to the Company, accompanied by such payment,
attestations, representations and warranties or other documentation as required hereunder, under
the applicable Award Agreement or as the Committee may otherwise specify.
2.23 Fair Market Value means, as of any applicable date, (a) the closing sales
price for one Share on such date as reported on the New York Stock Exchange or, if the foregoing
does not apply, on such other market system or stock exchange on which the Companys Common Stock
is then listed or admitted to trading, or on the last previous day on which a sale was reported if
no sale of a Share was reported on such date, or (b) if the foregoing subsection (a) does not
apply, the fair market value of a Share as reasonably determined in good faith by the Board in
accordance with Code Section 409A. For purposes of subsection (b), the determination of such Fair
Market Value by the Board will be made no less frequently than every twelve (12) months and will
either (x) use one of the safe harbor methodologies permitted under Proposed
Treasury Regulation Section
1.409-1(b)(5)(iv)(B)(2) (or such
other similar final regulation provision as may be
provided); or (y) include, as
applicable, the value of tangible and intangible assets of the Company, the present value of future
cash flows of the Company, the market value of stock or other equity interests in similar
corporations and other entities engaged in trades or businesses substantially similar to those
engaged in by the Company, the value of which can be readily determined through objective means
(such as through trading prices or an established securities market or an amount paid in
ana re