Attached files
| file | filename |
|---|---|
| EX-31.1 - SECTION 302 CEO CERTIFICATION - POWERWAVE TECHNOLOGIES INC | d344611dex311.htm |
| EX-31.2 - SECTION 302 CFO CERTIFICATION - POWERWAVE TECHNOLOGIES INC | d344611dex312.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 1)
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended January 1, 2012
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 000-21507
POWERWAVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 11-2723423 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1801 E. St. Andrew Place, Santa Ana, CA 92705
(Address of principal executive offices, zip code)
(714) 466-1000
(Registrant’s telephone number, including area code )
Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.0001 NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | x | |||||
| Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
As of July 3, 2011, the last business day of our most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting stock of the registrant held by non-affiliates of the registrant was approximately $513,913,200, which was computed based on the number of shares held by non-affiliates of the registrant as of that date and the closing price of the registrant’s Common Stock, par value $0.0001 per share, on the NASDAQ Global Select Market as of that date, which was $15.25 (adjusted to reflect the 1-for-5 reverse stock split of the registrant’s outstanding Common Stock, effective on October 28, 2011). For purposes of this calculation, the registrant has assumed that all directors, officers and greater than 10% stockholders of the registrant are affiliates. This assumption shall not be deemed to reflect a determination that such persons are affiliates of the registrant for any other purpose.
As of April 24, 2012 the number of outstanding shares of Common Stock, par value $0.0001 per share, of the registrant was 31,741,931.
Documents Incorporated by Reference
None
Table of Contents
INDEX
2
Table of Contents
Powerwave Technologies Inc. (“we,” “us,” “our,” the “Company” or “Powerwave”) is filing this Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended January 1, 2012 (“fiscal 2011”), to include the information required by Part III of form 10-K (Items 10, 11, 12, 13 and 14) as permitted by General Instruction G(3) of Form 10-K. In connection with the filing of this Amendment No. 1 we are also including certain currently dated certifications of our Chief Executive Officer and Chief Financial Officer. Except for the addition of disclosures in response to Items 10, 11, 12, 13 and 14 of Part III and Item 15 of Part IV, no other information included in Powerwave’s Form 10-K for the fiscal year ended January 1, 2012 is changed by this Amendment No. 1. In addition, this Amendment No. 1 does not reflect events occurring after February 28, 2012, the date of filing of our original form 10-K, or modify or update those disclosures that may have been affected by subsequent events. All per share amounts in this Amendment No. 1 have been adjusted to reflect the 1-for-5 reverse stock split of Powerwave’s issued and outstanding Common Stock, effective on October 28, 2011.
3
Table of Contents
| ITEM 10. | Directors, Executive Officers and Corporate Governance |
Directors
Moiz M. Beguwala, 65, has been a member of Powerwave’s Board of Directors (the “Board”) since December 2007. Mr. Beguwala serves as non-executive Chairman of the Board and as a member of the Compensation Committee of RF Nano, a privately-held company engaged in research and development activities in carbon nanotubes and has held such positions since 2009. Mr. Beguwala serves as a Board member of Skyworks Solutions Inc. and serves on the Audit and Nomination and Governance Committees of the Board. Mr. Beguwala is a Board member of Cavendish Kinetics Inc. a privately held company engaged in devices based on MEMS technology. Mr. Beguwala was Senior Vice President and General Manger of the Wireless Communications business unit of Conexant Systems, Inc. from January 1999 to June 2002 when he retired from Conexant. Prior to Conexant’s spin off from Rockwell International Corporation, Mr. Beguwala served as Vice President and General Manager, Wireless Communications Division, Rockwell Semiconductor Systems, Inc. from October 1998 to December 1998; Vice President and General Manager Personal Computing Division, Rockwell Semiconductor Systems, Inc. from January 1998 to October 1998; and Vice President, Worldwide Sales, Rockwell Semiconductor Systems, Inc. from October 1995 to January 1998. Mr. Beguwala brings to the Board extensive experience with respect to management and sales at technology companies with an emphasis on wireless technologies. In addition, Mr. Beguwala also brings directorial experience serving on the board of directors of Skyworks Solutions, Inc., RF Nano Inc. and Cavendish Kinetics, Inc.
Ken J. Bradley, 64, has been a member of the Board since December 2007. Mr. Bradley has been President of Lytica Inc. since February 2005, a privately-held company specializing in supply chain management and product life cycle planning. From January 2003 through January 2005, Mr. Bradley was the Chief Executive Officer of CoreSim, Inc., a company specializing in advanced systems design analysis. Prior to CoreSim, Mr. Bradley was with Nortel Networks from 1972 to 2002, most recently as Nortel’s Chief Procurement Officer. During his 30-year career at Nortel, Mr. Bradley held several national and international executive positions in supply management, operations management and technology development including Vice President, Supplier Strategy; Senior Managing Director, Guandong Nortel Communications Joint Venture in China; and Vice President, China Joint Venture Program. Mr. Bradley also serves on the Board of Directors of two private companies, SynQor, Inc. and Lytica, Inc. Mr. Bradley brings to the Board over thirty years of experience in key leadership roles in supply chain management and procurement in the wireless telecommunications industry at Nortel Networks. His supply chain experience at Nortel Networks together with his understanding of the global wireless industry provides insight to the Board and management.
Richard Burns, 59, has been a member of the Board since March 2011. Mr. Burns has been an independent consultant working as a senior advisor for McKinsey & Co. since April 2008. From December 2006 through March 2008, Mr. Burns was President of Network Services for AT&T’s wireless network and mobility division, where he was responsible for strategically deploying AT&T’s 3G mobile broadband network and management and oversight of all phases of wireless network engineering, construction, operations and maintenance. From December 2004 through December 2006, Mr. Burns was Chief Integration Officer, Broadband for BellSouth Corporation, where he had responsibility for overseeing the company’s business transformation and broadband strategy. Prior to 2004, Mr. Burns held other positions at BellSouth Corporation, including Chief Supply Chain Officer and President of BellSouth’s broadband and internet division. Mr. Burns brings to the Board extensive management and operational experience in the telecommunications industry, which enables him to offer a broad range of management, operations and supply chain experience to the Board and management.
Ronald J. Buschur, 48, became Chief Executive Officer of Powerwave and a member of the Board in February 2005. Mr. Buschur joined the Company in June 2001 as Chief Operating Officer. In May 2004, Mr. Buschur became President of the Company. Prior to joining the Company, Mr. Buschur held various positions at HMT Technology/Komag, an independent supplier of thin-film disks, including President and Chief Operating Officer from 1999 to 2000, Vice President of Sales, Marketing and Quality Assurance from 1997 to 1999 and Vice President of Quality Assurance from 1994 to 1997. From 1993 to 1994, Mr. Buschur was Director of Quality at Maxtor, a disk drive company. Mr. Buschur held various managerial positions at Digital Equipment Corporation, a computer manufacturer from 1987 to 1993. Mr. Buschur’s knowledge of all aspects of the business, combined with his leadership and his extensive experience in operations management at other technology companies, positions him well to serve as Powerwave’s President, Chief Executive Officer and as a director.
John L. Clendenin, 77, was the Lead Director of Powerwave from February 2005 to October 2007. Mr. Clendenin was non-executive Chairman of the Board of Powerwave from January 3, 1999 to February 2005 and has been a member of the Board since May 1998. Mr. Clendenin is a Chairman Emeritus of BellSouth Corporation, a telecommunications holding company. He served as Chairman of the Board of BellSouth until December 31, 1997 and as President and Chief Executive Officer from 1984 until his retirement at the end of 1996. Prior to BellSouth, Mr. Clendenin was President of Southern Bell from April 1981 to December 1983. Mr. Clendenin brings to the Board extensive knowledge of Powerwave’s operations from his tenure on the Board since 1998. In addition, Mr. Clendenin’s extensive management experience in the telecommunications industry enables him to offer a wealth of management experience, business understanding and front-line exposure to many of the issues facing public companies.
4
Table of Contents
David L. George, 58, has been a member of the Board since November 1995. Since August 2007, he has been President of Prime Radio Products, a privately-held manufacturer of commercial radio accessories for public safety equipment. From January 2005 to August 2007, he served as Executive Vice President, Operations of the Land Mobile Division of Vertex Standard Inc., a company that designs, manufactures and sells communications equipment for commercial land mobile, amateur radio and general aviation applications. From April 2002 to June 2004, Mr. George served as Chief Operating Officer, Chief Technical Officer and President of the Wireless Communications Division of Bizcom U.S.A., Inc., a public company specializing in emergency management software solutions and wireless communications systems. Prior to joining Bizcom, Mr. George was in private practice providing consulting services to participants in the wireless industry. From June 2000 to June 2001, he was Executive Vice President of Operations for Securicor Wireless, Inc., a large mobile radio network provider. Mr. George was the co-founder and served as Executive Vice President and Chief Technical Officer of ComSpace Corporation, formerly known as Unique Technologies, International, L.L.C., a wireless technology development company from February 1994 to June 2000. From November 1983 to February 1994, Mr. George served as Vice President, Director of Operations, and Commercial Communications Division of Uniden America. A member of the Institute of Electrical and Electronic Engineers for more than 22 years, he holds several patents relating to wireless technology and networks. Mr. George brings to the Board extensive knowledge of Powerwave’s operations from his tenure on the Board since 1995. In addition, Mr. George has over thirty years of experience in engineering and product development in the wireless technology industry, which enables him to be a valuable contributor to the Board.
Eugene L. Goda, 76, has been a member of the Board since November 1995. From June 1997 to March 2000, Mr. Goda served as Chairman of the Board, President and Chief Executive Officer of Objectshare Inc., a software company. From October 1991 to October 1995, Mr. Goda served as Chief Executive Officer of Simulation Sciences, Inc., a software company. From July 1989 to September 1991, he served as Chief Executive Officer of Meridian Software Systems. Mr. Goda brings to the Board extensive knowledge of Powerwave’s operations from his tenure on the Board since 1995. In addition, Mr. Goda’s experience in leadership and management roles at technology companies in the software industry enables him to offer an understanding and front-line exposure to many issues facing public companies. Mr. Goda also has been active in public company director education and is Director Emeritus of the Forum for Corporate Directors, a non-profit company whose mission is to assist directors and C-level executives to set the highest standards in corporate governance.
Carl W. Neun, 68, has been a member of the Board since February 2000 and was appointed as Chairman of the Board in October 2007. From 1993 to January 2000, Mr. Neun was Senior Vice President and Chief Financial Officer of Tektronix, Inc. From 1987 to 1993, he was Senior Vice President of Administration and Chief Financial Officer of Conner Peripherals, Inc. Mr. Neun has over ten years of financial experience in key leadership roles at public companies, including thirteen years as a Chief Financial Officer. Mr. Neun brings extensive financial management experience at technology companies and has been determined to be an “audit committee financial expert” as defined by the regulations promulgated by the Securities and Exchange Commission (“SEC”). Mr. Neun also brings directorial experience serving on the board of directors of Plannar Systems, Inc. and prior service on the board of directors of Radisys Corporation.
Directors are elected at each of our annual meetings to serve until the next annual meeting, or until their successors are duly elected and qualified.
Public Company Directorships During Past Five Years
Mr. Beguwala currently serves on the board of directors of one other publicly traded company, Skyworks Solutions, Inc., a manufacturer of analog and mixed signal semiconductors, and has held such position since 2002.
Mr. Bradley previously served on the board of directors of one other publicly traded company, RadiSys Corporation, a provider of advanced solutions for the communications networking and commercial systems markets, from 2003 to January 2011.
Mr. Clendenin currently serves on the board of directors of one other publicly traded company, Acuity Brands, Inc., a provider of lighting products and lighting related solutions, and has held such position since 2001. Mr. Clendenin previously served on the board of directors at three other publicly traded companies, The Home Depot from 1996 to 2008, The Kroger Co. from 1986 to 2007 and Equifax Incorporated from 1982 to 2008.
Mr. Neun currently serves on the board of directors of one other publicly traded company, Planar Systems, Inc., a provider of specialty display solutions and has held such position since 2000. Mr. Neun previously served on the board of directors of one other publicly traded company, Radisys Corporation, from 2000 through March 2012. Radisys is a provider of advanced solutions for communications networking and commercial systems markets.
None of our other directors have held any public company directorships in the past five years.
5
Table of Contents
Executive Officers
Ronald J. Buschur Mr. Buschur’s biography is set forth under the heading “Directors” above.
J. Marvin MaGee, 59, is presently Chief Operating Officer of Powerwave. Mr. MaGee joined the Company in May 2007 as Senior Vice President, Operations and became Chief Operating Officer in December 2007. Mr. MaGee was employed by Celestica, Inc., a Toronto-based contract manufacturing service provider from 1997 through 2006, and was Executive Vice President of the World Wide Operations from 2005 through 2006 and from 2000 through 2002. Between 2002 and 2005, Mr. MaGee was Chief Operating Officer and President for Celestica. Mr. MaGee also served as Celestica’s Senior Vice President of North American Operations between 1997 and 1999. Prior to joining Celestica, Mr. MaGee was employed by IBM for 18 years in various management roles in Canada and the United States.
Kevin T. Michaels, 53, is presently Chief Financial Officer and Secretary of Powerwave. Mr. Michaels joined the Company in June 1996 as Vice President, Finance and Chief Financial Officer and was appointed Secretary in June 1996. Mr. Michaels was named Senior Vice President, Finance in February 2000. Prior to joining the Company, Mr. Michaels worked for AST Research, Inc. for eight years, most recently as Vice President, Treasurer from October 1995 to June 1996. From July 1991 to October 1995, Mr. Michaels was Treasurer of AST Research, Inc. and from June 1988 to June 1991, he was Assistant Treasurer.
Khurram P. Sheikh, 41, is presently Chief Technology Officer of Powerwave with responsibility for research and development, product development and global business units for the Company. Mr. Sheikh is also Chairman of the Technical and Strategic Advisory Board of Powerwave. Mr. Sheikh joined the Company in August 2007 as Chief Product and Development Officer and was promoted to his current position in December 2010. Mr. Sheikh was employed by Time Warner Cable from August 2005 through 2007, as Vice President, Wireless Strategy and Development where he was responsible for the cable and media company’s entry into the wireless space. Between 2000 and 2005, Mr. Sheikh was Chief Technology Advisor for various divisions within Sprint where he led the next generation advanced technology efforts for the company. Mr. Sheikh is widely recognized in the industry for his pioneering efforts in the development of mobile wireless broadband or “4G” wireless technology including WiMAX and LTE. Mr. Sheikh received advanced graduate degrees in Electrical Engineering with specialization in wireless communications from Stanford University and has also completed executive development courses at the Harvard Business School. Mr. Sheikh sits on the Board of Governors of 4G America and the Board of Affiliates of the Wireless Communications Network Group at the University of Texas at Austin.
Family Relationships
There are no family relationships between any of our directors, nominees for director and executive officers.
Legal Proceedings
There are no legal proceedings involving any of our directors, nominees for director or executive officers that require disclosure pursuant to Item 401(f) of Regulation S-K.
Corporate Governance Guidelines and Code of Ethics
The Board has adopted Corporate Governance Guidelines, which set forth a framework within which the Board, assisted by its committees, oversees the affairs of the Company. The Corporate Governance Guidelines address, among other things, the composition and functions of the Board, director independence, and re-election of directors.
The Company has also adopted a Code of Business Conduct and Ethics (“Code of Ethics”) which is applicable to all employees, officers and directors of the Company, including our principal executive officer, principal financial officer and principal accounting officer or controller or persons performing similar functions. The Code of Ethics is intended to qualify as a “Code of Ethics” for purposes of the rules of the SEC.
The Corporate Governance Guidelines, the Code of Business Conduct and Ethics and the charters of the various committees of the Board are available on the Company’s Investor Relations website under the “Corporate Governance” link at www.powerwave.com/investorrelations and in print without charge to any stockholder who makes a request in writing to Powerwave Technologies, Inc., 1801 E. St. Andrew Place, Santa Ana, CA 92705, Attn: Corporate Secretary. We will satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, any applicable provision (related to elements listed under Item 406(b) of Regulation S-K) of the Code of Ethics by posting such information on our website.
Meetings of the Board
The Board met nine times during fiscal year 2011. Each director attended all meetings of the Board and all meetings of the committees on which they served. In addition to Board meetings, the directors communicate informally with management on a variety of topics, including suggestions for Board or committee meeting agenda items, recent developments, and other matters of interest to the directors. The Board has unrestricted access to management at all times.
6
Table of Contents
The Board has established a policy that its non-management directors meet regularly in executive session, without members of management present. The Chairman of the Board Carl W. Neun, presides over executive sessions of the non-management directors.
Audit Committee
The Company has a standing Audit Committee and the current members of this committee are Ken J. Bradley, John L. Clendenin, Carl W. Neun and Richard Burns, all of whom are independent under both Section 10A of the Securities Act of 1934, as amended (“Exchange Act”) and under the NASDAQ listing rules. The Audit Committee operates pursuant to a written charter. A copy of our Audit Committee charter is posted on our website at www.powerwave.com. Our Board of Directors has determined that Carl W. Neun is an audit committee financial expert as such term is defined in Item 407(d)(5) of Regulation S-K. For Mr. Neun’s relevant experience, see his biography listed in “Directors” above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Powerwave’s directors and executive officers, and persons who own more than ten percent of a registered class of the Powerwave’s equity securities, to file reports of ownership with the SEC and NASDAQ. Directors, executive officers and greater than ten percent beneficial owners are required by SEC regulations to furnish Powerwave with copies of all Section 16(a) reports they file.
To Powerwave’s knowledge, based solely on a review of filings with the SEC and written representations by each director and executive officer that no other reports were required, we believe that all of our directors and executive officers have complied with the reporting requirements of Section 16(a) of the Exchange Act during fiscal 2011, except that Richard Burns inadvertently filed a Form 4 late on August 24, 2011 with respect to open market purchases of Powerwave common stock on May 20, 2011, May 23, 2011, May 24, 2011, June 3, 2011, June 13, 2011 and June 15, 2011. The aggregate number of shares of Powerwave common stock purchased by Mr. Burns reported in the late Form 4’s was 2,800 shares.
Material Changes in Procedures by which Security Holders May Recommend Nominees for the Board
There have been no changes in the procedures by which our security holders may recommend nominees for the Board.
7
Table of Contents
| ITEM 11. | Executive Compensation |
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of the Board oversees Powerwave’s compensation plans and policies, approves compensation of our executive officers and administers our stock compensation plans. This Compensation Discussion and Analysis discusses the key features of our executive compensation program and the approach taken by the Compensation Committee in setting our fiscal 2011 compensation for our named executive officers. Our named executive officers for fiscal 2011 were:
| • | Ronald J. Buschur, President and Chief Executive Officer |
| • | J. Marvin MaGee, Chief Operating Officer |
| • | Kevin T. Michaels, Chief Financial Officer and Secretary |
| • | Khurram P. Sheikh, Chief Technology Officer |
| • | Basem Anshasi, Vice President, Worldwide Sales * |
| * | On October 28, 2011, Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer considered to be an executive officer. |
Executive Summary
We seek to align the interests of our named executive officers with the interests of our shareholders by tying a significant portion of their total annual compensation to our financial performance as measured by certain factors measured during fiscal 2011, including the achievement of pro-forma EBITDA targets. Consistent with our compensation policy, our executive compensation program provides a mix of salary, benefits and incentives that over time we believe properly align the interests of our named executive officers with the interests of our shareholders. These include a mix of base salary, annual performance based cash incentives and long-term equity incentive awards.
We believe that our compensation program reflects our pay-for-performance philosophy. During fiscal 2011, our revenue declined by 25% as compared to fiscal 2010. In addition, during the second half of fiscal 2011 our revenues fell by over 55% as compared to the first half of 2010. The reduction in revenues was due to several factors, including significant slowdowns in spending by network operators in several markets, including North America, Western and Eastern Europe and the Middle East. In addition, we experienced a significant reduction in demand from our original equipment manufacturing customers. In fiscal 2011, we reported a net loss from operations of $77.6 million as compared to net income of $3.7 million for fiscal 2010. The following table highlights the year over year comparison of the key financial metric used in evaluating our performance for purposes of determining performance based cash incentives for our named executive officers:
| Performance Measure |
FY 2010 Target |
FY 2010 Achievement |
FY 2011 Target |
FY 2011 Achievement |
||||||||||||
| Pro forma EBITDA (1) |
$ | 51,013,000 | $ | 59,804,000 | $ | 80,400,000 | ($ | 25,623,000 | ) | |||||||
| (1) | EBITDA means, with respect to any fiscal period, the consolidated net earnings (or loss) for such period, minus extraordinary gains for such period (such as foreign exchange translation gains or gains on repurchase of debt), plus, for such period, (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) non-cash stock compensation expense, (v) restructuring and impairment charges and expenses, and (vi) extraordinary losses (such as foreign exchange translation losses), all at the sole discretion of the Board. Pro-forma EBITDA also excludes any incentive accrual for such period. |
Taking into account our poor financial and operating performance, and the financial performance measure described above, which is utilized in determining our performance based cash incentives, the total annual cash compensation for the named executive officers as a group decreased by 37% in fiscal 2011 compared to last year, principally because no performance based cash incentives were paid in fiscal 2011 due to our failure to achieve the pro-forma EBITDA goals for fiscal 2011. In addition, total annual compensation for fiscal 2011 for the named executive officers as a group decreased by approximately 75% compared to fiscal 2010.
8
Table of Contents
The grant date fair value of equity awards granted to the named executive officers in fiscal 2011 decreased by 97% compared to fiscal 2010 driven primarily by: (1) a decrease in our stock price (in fiscal 2011, fiscal 2010 options were granted at an average of $12.85 per share and fiscal 2011 options were granted at an average of $1.70 per share), and (2) a decrease in the number of stock options granted to the named executive officers in fiscal 2011 as compared to fiscal 2010. In fiscal 2010, the Company changed its annual grant cycle to the fourth quarter of a fiscal year and this resulted in two option grants to the named executive officers in fiscal 2010, one for fiscal 2009 performance and one for fiscal 2010 performance.
The following table sets forth direct compensation paid to our named executive officers during the last three fiscal years. It provides for each of these years: (a) cash compensation comprised of salary, performance based cash incentive payments and perquisites; (b) the grant date fair value of annual equity awards granted during the fiscal year; and (c) total annual compensation, comprised of fixed compensation, performance based cash incentives and the grant date fair value of annual equity awards during the fiscal year. This table is not a substitute for the Summary Compensation Table and is intended to provide additional information that we believe is useful in analyzing compensation for the three fiscal years presented.
9
Table of Contents
| Annual Compensation for Named Executive Officers |
||||||||||||||||||||||||||||||||||
| Annual Compensation | ||||||||||||||||||||||||||||||||||
| Cash Compensation | ||||||||||||||||||||||||||||||||||
| Name and Position |
Fiscal Year |
Base
Salary Compensation (1) |
Performance Based Incentive Compensation |
Other Compensation |
Total Annual Cash Compensation |
Annual Equity Awards (2) |
Total Equity and Cash Compensation |
Percentage Change from 2010 to 2011 |
||||||||||||||||||||||||||
| Ronald J. Buschur |
2011 | $ | 684,626 | $ | — | $ | 29,431 | $ | 714,057 | $ | 74,055 | $ | 788,112 | (80.0 | %) | |||||||||||||||||||
| 2010 | 600,058 | 525,000 | 24,254 | 1,149,312 | 2,808,763 | 3,958,075 | ||||||||||||||||||||||||||||
| 2009 | 611,641 | — | 24,462 | 636,103 | 204,820 | 840,923 | ||||||||||||||||||||||||||||
| J. Marvin MaGee |
2011 | 512,765 | — | 25,958 | 538,723 | 34,911 | 573,634 | (73.9 | %) | |||||||||||||||||||||||||
| 2010 | 500,103 | 393,750 | 23,618 | 917,471 | 1,283,070 | 2,200,541 | ||||||||||||||||||||||||||||
| 2009 | 509,690 | — | 24,420 | 534,110 | 163,856 | 697,966 | ||||||||||||||||||||||||||||
| Kevin T. Michaels |
2011 | 457,868 | — | 32,885 | 490,753 | 26,448 | 517,201 | (71.3 | %) | |||||||||||||||||||||||||
| 2010 | 450,058 | 354,375 | 29,439 | 833,872 | 968,133 | 1,802,005 | ||||||||||||||||||||||||||||
| 2009 | 458,767 | — | 32,239 | 491,006 | 102,410 | 593,416 | ||||||||||||||||||||||||||||
| Khurram P. Sheikh |
2011 | 435,799 | — | 32,885 | 468,684 | 34,911 | 503,595 | (74.4 | %) | |||||||||||||||||||||||||
| 2010 | 425,061 | 297,500 | 29,439 | 752,000 | 1,217,743 | 1,969,743 | ||||||||||||||||||||||||||||
| 2009 | 433,292 | — | 32,239 | 465,531 | 156,962 | 622,493 | ||||||||||||||||||||||||||||
| Basem Anshasi (3) |
2011 | 347,299 | — | 32,885 | 380,184 | — | 380,184 | (62.0 | %) | |||||||||||||||||||||||||
| 2010 | 352,099 | 111,300 | 29,424 | 492,823 | 507,167 | 999,990 | ||||||||||||||||||||||||||||
| 2009 | 330,942 | — | 32,223 | 363,165 | 10,924 | 374,089 | ||||||||||||||||||||||||||||
| Total for five officers |
2011 | 2,438,357 | — | 154,044 | 2,592,401 | 170,325 | 2,762,726 | (74.7 | %) | |||||||||||||||||||||||||
| 2010 | 2,327,379 | 1,681,925 | 136,174 | 4,145,478 | 6,784,876 | 10,930,354 | ||||||||||||||||||||||||||||
| 2009 | 2,344,332 | — | 145,583 | 2,489,915 | 638,972 | 3,128,887 | ||||||||||||||||||||||||||||
| (1) | The 2009 salaries include an extra week of compensation based on the fact that 2009 was a 53-week fiscal year. 2010 and 2011 were 52-week fiscal years. |
| (2) | Amounts in this column reflect the grant date fair value of awards granted in fiscal 2011, 2010 and 2009 for financial statement reporting purposes in accordance with ASC Topic 718. These amounts do not represent cash payments made to the named executives. Assumptions used in the calculation of these amounts are included in Note 13 to our consolidated financial statements, without giving effect to estimated forfeitures. |
| (3) | On October 28, 2011 Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer considered to be an executive officer. |
Philosophy and Overview of Compensation
The Compensation Committee is responsible for establishing our compensation philosophy and policies applicable to our named executive officers. Our executive compensation philosophy is designed to:
| • | Attract, motivate and retain talented executives needed to optimize shareholder value; |
| • | Align the financial interests of our executive officers with those of our shareholders to create long-term shareholder value; |
| • | Provide objective, measurable performance criteria on which to base annual compensation and cash performance incentives and enhance our pay-for-performance strategy. |
We believe that our named executive officers should be aligned as a team and accountable for overall corporate performance. In addition, we believe that attracting and retaining human talent is a critical element of our ability to achieve our strategic goals. The labor markets in which we compete for human talent, internationally, nationally and locally, are very competitive and to be successful we believe we need to offer compensation programs that are competitive with other telecommunications and technology companies. In addition, our executive compensation programs are based on the belief that the interests of our executive officers should be closely aligned with our shareholders. In support of this belief, a meaningful portion of each executive officer’s compensation is placed at-risk and is linked to the accomplishment of specific results that are expected to lead to the creation of value for our shareholders from both a short-term and long-term perspective. The long-term orientation of the total compensation is reflected by the substantial link of compensation to long-term stock performance through the equity based awards described in more detail later in this section.
10
Table of Contents
Role of the Compensation Committee
The Compensation Committee has the responsibility for making recommendations to the Board relating to the compensation paid to our named executive officers. The Compensation Committee typically determines each executive officer’s target total annual cash compensation (base salary and performance based cash incentives) and target total compensation (base salary, performance based cash incentives and long-term equity incentive awards) after reviewing similar information from a group of peer companies. This review occurs in the fourth quarter with respect to compensation decisions for the following fiscal year.
The Compensation Committee has not adopted any formal policies or targets for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Compensation Committee reviews information from a variety of sources, including input from an independent compensation consultant, and relies on the collective experience of its members in determining the appropriate level and mix of incentive compensation. While the elements of compensation are considered separately, the Compensation Committee takes into account the total compensation package afforded by the Company to the named executive officers.
Peer Group Companies
The Compensation Committee periodically uses peer group data to compare Powerwave’s compensation levels to market compensation levels, taking into consideration factors such as the size and industry of the other companies, as well as the individual executive’s level of responsibility.
The following companies were included in our comparison peer group for executive compensation purposes:
| • | Adtran, Inc. |
| • | Anaren, Inc. |
| • | Arris Group, Inc. |
| • | Aviat Networks, Inc. |
| • | Brocade Communications Systems, Inc. |
| • | Commscope Inc. |
| • | Comtech Telecommunications Corporation |
| • | CTS Corporation |
| • | EMS Technologies, Inc. |
| • | Extreme Networks, Inc. |
| • | Emulex Corporation |
| • | Harmonic, Inc. |
| • | Mindspeed Technologies, Inc. |
| • | Polycom, Inc. |
| • | Skyworks Solutions, Inc. |
The peer group companies include similarly sized publicly traded U.S.-based technology hardware companies with revenue generally between one-fifth and five times our revenue at the time the peer group companies were selected. Peer group data is gathered with respect to base salary, total annual cash compensation and target annual equity awards (including stock options and restricted stock). It does not include deferred compensation benefits or generally available benefits such as health care coverage or 401(k) plan matching contributions.
We operate in an industry that in recent years has experienced market slowdowns and customer consolidations which have led to increased pricing pressure, reduced customer demand and a need to reevaluate and reduce operating costs. In order to attract and retain skilled executives in this challenging environment, and taking into account competition for skilled and experienced executives, the Compensation Committee’s believes that it is important to offer compensation that is at least at the median when compared to its
11
Table of Contents
peer companies. Currently, the Compensation Committee does not have a specific percentile target for total cash compensation or total compensation when compared to its peer group companies. In fiscal 2011, although some named executive officer base salaries were at the 75th percentile of peer group companies, total cash compensation for the named executive officers was below the median when compared to peer group companies since no cash incentives were paid for fiscal 2011. Equity compensation has been targeted slightly above the median of peer group companies as a percent of the Company’s outstanding equity, rather than at grant date fair value to avoid granting too many shares when our stock price falls and granting too few shares when the stock price increases. In fiscal 2011, the grant date fair value of the option grants to the named executive officers was well below the median of the peer companies. The Compensation Committee retains the discretion to deviate from the peer company data to take into account factors such as Powerwave’s performance, an executive’s individual performance and experience and the scope of an executive’s position and responsibilities, as well as grant timing. Accordingly, the peer group company data is the starting point in the determination of the compensation to be paid to our executive officers, but we do not rely solely on such peer group benchmarking information in establishing the compensation package paid to our executive officers.
Role of Executive Officers
As part of the process for determining the compensation of our executive officers, the Chief Executive Officer makes recommendations to the Compensation Committee for base salary, performance based cash incentive award adjustments and equity awards for the executive officers, excluding the Chief Executive Officer. Following a review of the recommendations of the Chief Executive Officer, the performance of the Company, the performance of the executives during the prior year, and the peer group data mentioned above, the Compensation Committee, then approves compensation adjustments, if any, for each executive officer. The Compensation Committee reviews the Chief Executive Officer’s performance during the prior year versus various financial and subjective performance measures, the Company’s overall performance and the independent salary and competitive data as mentioned above in order to determine any adjustment with regard to the Chief Executive Officer’s base salary and performance based cash incentive and any long term equity award.
The Compensation Committee typically meets six or more times a year. In 2011, the Compensation Committee had nine meetings. The Company’s Chief Executive Officer, Chairman of the Board, Vice President, Human Resources and Vice President, Legal Affairs are typically present at Compensation Committee meetings. Members of management, including the Chief Executive Officer, are not present during deliberations of the Compensation Committee with respect to their own individual compensation.
Role of Compensation Consultants
The Compensation Committee has the authority to engage its own consultants and other independent advisors to assist in creating and administering our executive compensation policies. In fiscal 2010, Fredric W. Cook & Co., Inc. was engaged by the Compensation Committee to perform a market survey of executive compensation, and they compiled the peer group information described above. The peer group information was updated by Frederic W. Cook & Co., Inc. in November 2011. In addition to compiling peer group information and market comparative data, Fredric W. Cook & Co., Inc. also makes recommendations to the Compensation Committee regarding the composition of the peer group and for compensation of the named executive officers based on the peer group data and the Compensation Committee’s objectives. The Compensation Committee considers the recommendations of Frederic W. Cook & Co., Inc. as one factor on making compensation decisions with respect to the named executive officers. Other than providing periodic background on the executive compensation market, making recommendations and assisting with compensation planning, Frederic W. Cook & Co., Inc. does not perform any additional services for Powerwave.
12
Table of Contents
Elements of Executive Compensation
Compensation for all of our executive officers is a mix of the principal components summarized in the following table and described in greater detail below:
| Component of Compensation |
Primary Purpose | |
| Base Salary |
Provide the security of a competitive fixed cash payment for services rendered. | |
| Performance-Based Cash Incentives |
Pay-for-performance and achievement of company financial objectives, which may be measured quarterly, every six months or annually. | |
| Long-Term Equity Awards |
Create a strong financial incentive to build long-term shareholder value, as well as rewarding past performance, recognizing promotions, and retention purposes. |
Base Salary
We generally set base salaries that we provide to our named executive officers at a level that is at least the median of base salaries offered by similarly situated companies based on an assessment of the peer group data described above. However, individual base salaries may vary from such level based on:
| • | Industry experience, knowledge and qualifications, including academic and professional degrees; |
| • | The salary levels for comparable positions within the telecommunications industry including, in certain cases, the salary being received by an executive officer candidate at such person’s current employer; |
| • | The base salaries being provided to similarly-titled executive officers at Powerwave; |
| • | Our performance and macroeconomic factors; |
| • | The complexity or difficulty of the job duties of the executive; and |
| • | The degree to which retention of an individual executive is deemed critical to our current and future success. |
Salaries paid to executive officers are reviewed annually and proposed adjustments are based upon an assessment of the nature of the position, our performance, the individual’s contribution to corporate goals and achievements, experience and tenure of the executive officer, comparable market salary data, growth in our size and complexity, and changes in the executive’s responsibilities. The Compensation Committee approves all changes to executive officers’ salaries.
In December 2010, the Compensation Committee reviewed the base salaries of our named executive officers in the context of an executive compensation review done by Frederic W. Cook & Co., Inc., the Compensation Committee’s independent compensation consultant. The consultant’s role was to provide data for context and facilitate decisions that implemented the Company’s desired compensation strategy. Based on the compensation review and the Committee’s view of competitive market factors, and in light of the improved Company performance in fiscal 2010, the Compensation Committee decided to increase the base salary of Mr. Buschur from $600,000 to $700,000 and to increase the base salaries of our other named executive officers, Messrs. MaGee, Sheikh, Michaels and Anshasi each by 3%. The Committee noted in its review that the base salaries of the named executive officers (with the exception of Mr. Anshasi) had not been increased since 2006 and that the financial performance of the Company in fiscal 2010 had improved. The above salary increases were effective March 1, 2011.
Performance Based Cash Incentive Plan
It is the Compensation Committee’s objective to have a substantial portion of each of our named executive officer’s cash compensation be contingent upon our short-term financial operating performance. The purpose of this objective is to directly align any cash incentives paid to our executive officers with our pay-for-performance strategy and reward positive financial performance. The Company strives to set cash incentive targets above expected performance levels. In fiscal 2011, we maintained a performance-based cash incentive plan for our executive officers which was intended to provide incentive to our executive officers in the form of cash payments for achieving certain objective performance goals based on six-month pro-forma EBITDA targets (defined as earnings before interest, taxes, depreciation and amortization). The Compensation Committee selected pro-forma EBITDA as the performance measure because the Compensation Committee believes that EBITDA is a good measure of a company’s operating cash flow based on
13
Table of Contents
objective data from the Company’s income statement. The Committee chose to utilize a pro forma version of EBITDA in order to allow it to exclude any distorting accounting and financing effects on the Company’s earnings, including non-cash amortization, translation expenses and restructuring charges. The performance target for the first six-month period was established at the beginning of the fiscal year on the basis of an annual budget and was approved by the Compensation Committee and the performance target for the second six-month period was established in June 2011 (prior to the start of the second six-month performance period). Each executive officer has an annual target bonus amount that is based on a percentage of his or her base salary. The annual target bonus amounts for our named executive officers for 2011 were as follows:
| Name |
Percentage of Base Salary | Target Incentive ($) | ||||
| Ronald J. Buschur |
100 | % | $700,000 | |||
| J. Marvin MaGee |
90 | % | 463,500 | |||
| Kevin T. Michaels |
90 | % | 417,150 | |||
| Khurram P. Sheikh |
80 | % | 350,200 | |||
| Basem Anshasi (1) |
40 | % | 131,016 | |||
| (1) | On October 28, 2011 Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer an executive officer. |
The above targets vary to reflect the varying responsibilities of the executives and their tenure with Powerwave. If the pro-forma EBITDA targets are fulfilled for each of the two six-month periods, each executive officer would earn 50% of his or her annual target incentive amount. For every one percent a six-month performance target is exceeded by the Company, the individual bonus is increased by 2.5 percent, up to a maximum of 125% of the target incentive amount for that period. Also, if the actual pro-forma EBITDA is less than the target, an individual bonus will be reduced by 5% for every 1% below the target so that if less than 81% of the target is achieved, then no incentive will be earned. Any earned incentive for the first six-month period is paid out at the end of the six-month period with twenty-five percent (25%) of each executives officer’s earned incentive bonus held back until the end of the year and payable following the end of the year. This is done to give the Compensation Committee the discretion to adjust payouts based on Company performance for the entire fiscal year. Determination of the completion of a six-month pro-forma EBITDA target is subject to the discretion of the Compensation Committee. The Compensation Committee retains the discretion to cause all or any portion of a deferred incentive to be reduced based on overall Company performance.
The performance targets for fiscal 2011 were as follows:
| First Six-Month Period |
Second Six-Month Period |
|||||||
| Pro-forma EBITDA (1) |
$ | 33,400,000 | $ | 47,000,000 | ||||
| (1) | EBITDA means, with respect to any fiscal period, the consolidated net earnings (or loss) for such period, minus extraordinary gains for such period (such as foreign exchange translation gains or gains on repurchase of debt), plus, for such period, (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) non-cash stock compensation expense, (v) restructuring and impairment charges and expenses, and (vi) extraordinary losses (such as foreign exchange translation losses), all at the sole discretion of the Board of Directors. The pro-forma EBITDA also excludes any incentive accrual for such period. |
In fiscal 2011, no performance based cash incentives were paid to the named executive officers as the Company did not achieve the performance targets for either six-month performance period.
Stock Options and Stock Awards
We believe that providing an equity incentive is important to tie a significant portion of our named executive officer’s compensation directly to the long-term performance of our Common Stock and thereby tying our executive officer’s incentives to creating long-term shareholder value. In addition, we believe that this helps to create an incentive for sustained long-term growth. Equity incentives also provide an important employee retention tool. Stock option grants are determined by reference to market data and vary among our executive officers based on their position and level of responsibility. In general, Powerwave targets equity awards for its named executive officers at the midpoint between the median and the 75th percentile of peer group companies, depending on performance and share availability under Powerwave’s equity incentive plans. This grant is measured as a percent of shares outstanding, rather than grant date fair value and the grant date fair value of the fiscal 2011 option grants was below the median. The Compensation Committee determines each year if annual grants or stock awards will be made based on a review of
14
Table of Contents
competitive market pressures and compensation levels. All stock option grants have an exercise price equal to the closing price of Powerwave’s Common Stock on the date of Compensation Committee approval of the grant. The Company uses options because it views them as long-term performance based, since the stock price must increase for executives to earn any tangible reward. Options generally vest 25% after 12 months following the grant date with the remaining 75% vesting in equal monthly installments over the next 36 months. Vesting ceases on termination of employment. Newly hired executives receive their stock option award on their first day of employment with Powerwave. Newly promoted executives receive their stock option award on the date the Board or Compensation Committee approves their award in connection with such promotion.
As part of our annual performance and compensation review process, the Compensation Committee makes grants of annual equity awards in the last quarter of a fiscal year in connection with our year-end performance review process. The fiscal 2011 grant was part of a three-year program described below and did not vary from the original intent that was stated in December 2010.
The following table details the stock options granted to our named executive officers during fiscal 2011:
| Name |
Options |
|||
| Ronald J. Buschur |
70,000 | (1) | ||
| J. Marvin MaGee |
33,000 | (1) | ||
| Kevin T. Michaels |
25,000 | (1) | ||
| Khurram P. Sheikh |
33,000 | (1) | ||
| Basem Anshasi (2) |
— | |||
| (1) | These options were granted in December 2011. Vesting is time based over four years, with 25% vesting after 12 months and the remaining 75% vesting in equal monthly installments over the next 36 months. |
| (2) | On October 28, 2011 Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer an executive officer. |
Three Year Option Grant Program. In December 2010, with the assistance of Frederic W. Cook & Co. Inc., the Compensation Committee developed a three year stock option grant program for the named executive officers with an annual option grant level that is based on the 60th percentile of the peer group companies. The design provided the officers with 60th percentile options over three years, but provided more of them upfront and fewer of them later in order to augment retention and provide a powerful current long-term growth incentive. This resulted in a baseline annual stock option grant target for each year in the three year program. In December 2010, in order to provide immediate retention and significant long-term incentive to the named executive officers, the Compensation Committee elected to double the baseline grant in year one (the fiscal 2011 grant that was made in December 2010) with the intent of granting options equal to 50% of the baseline grant in years two and three. Over three years, the number of options granted is the same as with an annual release schedule.
December 2011 Stock Option Grants. The December 2011 option grants to the named executive officers were part of the three-year option grant program adopted in December 2010 and reflect 50% of the annual baseline grant under the three year program. The grants were intended to strengthen the executive officer’s alignment with creating long-term shareholder value. Option grants in fiscal 2011 were not augmented above levels originally intended and that were disclosed in the Company’s Amendment No. 1 to Annual Report on Form 10-K filed with the SEC on April 29, 2011.
The following table illustrates the three year stock option grant program for the named executive officers.
| Annual 60th Percentile |
||||||||||||||||||||
| Number | Expected | 3-Yr | ||||||||||||||||||
| Name |
Options | 2011(1) | 2012(1) | 2013(1) | Total | |||||||||||||||
| Ronald J. Buschur |
140,000 | 280,000 | 70,000 | 70,000 | 420,000 | |||||||||||||||
| J. Marvin MaGee |
65,000 | 130,000 | 33,000 | 33,000 | 196,000 | |||||||||||||||
| Kevin T. Michaels |
50,000 | 100,000 | 25,000 | 25,000 | 150,000 | |||||||||||||||
| Khurram P. Sheikh |
65,000 | 130,000 | 33,000 | 33,000 | 196,000 | |||||||||||||||
| (1) | Grants made at the end of the previous year (e.g., 2012 grant released in December 2011) |
15
Table of Contents
Option Committee Authority. The Chief Executive Officer and the Chief Financial Officer of Powerwave comprise the members of our Option Committee, and are empowered by the Board and the Compensation Committee to grant options to employees below the level of Senior Vice President up to a maximum grant amount of 50,000 shares per employee. All grants for employees in excess of this amount are submitted to the Compensation Committee or the Board for approval, and all grants by the Option Committee are reviewed quarterly by the Board of Directors. The cumulative maximum number of options that may be granted by the Option Committee without further Board approval is 300,000 shares.
We do not have any ownership guidelines or policies requiring our executive officers to hold shares of Common Stock acquired on option exercise or restricted share vesting for any additional period of time.
Other Elements of Executive Compensation
Medical Insurance. We provide to each named executive officer the same health, dental and vision insurance coverage as Powerwave may from time to time make available to its other employees. We pay all of the premiums for this insurance for our executive officers.
Stock Purchase Plan. Powerwave’s Extended and Restated 1996 Employee Stock Purchase Plan (the “ESPP”), which qualifies under Section 423 of the Internal Revenue Code, permits participants, including our executive officers to purchase Powerwave Common Stock on favorable terms. ESPP participants are granted a purchase right to acquire shares of Common Stock at a price that is 85% of the stock price on either the first day of the six month period or on the last day of the six month period, whichever is lower. The purchase dates occur on the last business days of July and January each year. To pay for the shares, each participant may authorize periodic payroll deductions from 1% to 15% of his or her cash compensation, subject to certain limitations imposed by the Internal Revenue Code. All payroll deductions collected from the participant in a six month period are automatically applied to the purchase of Common Stock on that period’s purchase date provided the participant remains an eligible employee and has not withdrawn from the ESPP.
401(k) Plan. We maintain a savings plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan is a tax qualified savings plan under which all employees, including our named executive officers, are able to contribute the lesser of up to 100% of their annual salary or the limit set by the IRS. For fiscal 2011, Powerwave matched 100% of the first 3% and 50% of the next 2% of pay that is contributed by a participant. All contributions to the 401(k) plan, as well as any matching contributions are fully vested on contribution.
Termination or Change in Control Compensation. We do not have employment agreements with any of our named executive officers. We have entered into Change of Control Agreements and Severance Agreements with Ronald J. Buschur and Kevin T. Michaels and Change of Control Agreements with J. Marvin MaGee, Khurram Sheikh and Basem Anshasi. These agreements are intended to promote stability and continuity of senior management during the uncertain period that accompanies a corporate transaction and to secure a release from future claims against the Company when there is an involuntary termination without cause that is not related to a corporate transaction. All change-in-control cash severance payments are “double trigger,” requiring both consummation of a transaction and involuntary termination without cause or termination for “good reason.” Information regarding the applicable payments under such agreements is provided under the heading “Potential Payments on Termination or Change in Control.”
Tax and Accounting Implications
Deductibility of Executive Compensation
The Compensation Committee has reviewed our executive compensation plans to determine if revisions may be necessary due to the provisions of Section 162(m) of the Internal Revenue Code, which generally disallows a tax deduction to public corporations for compensation paid to any of the corporation’s executive officers in excess of $1,000,000 during any fiscal year. It is the current policy of the Compensation Committee to preserve, to the extent reasonably possible and consistent with the best interests of Powerwave and our shareholders, our ability to obtain a corporate tax deduction for compensation paid to our executive officers. The Compensation Committee continually reviews our existing executive compensation plans and will propose changes, if necessary and reasonable, to ensure compliance with the provisions of Section 162(m) which allow performance-based compensation to be excluded from the deduction limits.
Tax Penalties
We believe that our executive officers will not be subject to any tax penalties under Internal Revenue Code Section 409A as a result of participating in any of our compensation programs or agreements.
16
Table of Contents
Accounting for Stock-Based Compensation
On January 2, 2006, we began accounting for stock-based compensation in accordance with accounting guidance now codified as Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation.” In determining stock-based awards in fiscal 2011, the Compensation Committee generally considered the potential expense of these programs recorded in accordance with ASC Topic 718. The Compensation Committee concluded that the awards were in the best interests of stockholders given competitive practices in our industry and among our peer companies, the awards’ potential expense, our performance, and the impact of the awards on employee motivation and retention.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Amendment No. 1 to Powerwave’s Annual Report on Form 10-K for the fiscal year ended January 1, 2012.
Compensation Committee
Eugene L. Goda, Chairman
Moiz M. Beguwala
David L. George
The material in this report is not “soliciting material” and is not deemed filed with the SEC and is not to be incorporated by reference in any filing of Powerwave under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Compensation Committee Interlocks and Insider Participation
During fiscal 2011, all of the members of the Compensation Committee consisted of independent directors and none of the members of the Compensation Committee either was or previously had been an officer or employee of the Company, any of its subsidiaries or otherwise had a relationship with the Company requiring disclosure under Items 404 or 407(e)(4)(iii) of Regulation S-K.
17
Table of Contents
Summary Compensation Table
The following table sets forth summary information concerning the compensation earned by each of our named executive officers for services rendered in all capacities for fiscal 2011, 2010 and 2009 respectively.
| Name and Position |
Fiscal Year |
Salary (1) |
Stock Awards (2) |
Option Awards (3) |
Non-Equity Incentive Plan Compensation (4) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings |
All Other Compensation (5) |
Total | ||||||||||||||||||||||||
| Ronald J. Buschur |
2011 | $ | 684,626 | $ | — | $ | 74,055 | $ | — | $ | — | $ | 29,431 | $ | 788,112 | |||||||||||||||||
| President and Chief Executive Officer |
2010 | $ | 600,058 | $ | — | $ | 2,808,763 | $ | 525,000 | $ | — | $ | 24,254 | $ | 3,958,075 | |||||||||||||||||
| 2009 | 611,641 | — | 204,820 | — | — | 24,462 | 840,923 | |||||||||||||||||||||||||
| J. Marvin MaGee |
2011 | 512,765 | — | 34,911 | — | — | 25,958 | 573,634 | ||||||||||||||||||||||||
| Chief Operating Officer |
2010 | 500,103 | — | 1,283,070 | 393,750 | — | 23,618 | 2,200,541 | ||||||||||||||||||||||||
| 2009 | 509,690 | — | 163,856 | — | — | 24,420 | 697,966 | |||||||||||||||||||||||||
| Kevin T. Michaels |
2011 | 457,868 | — | 26,448 | — | — | 32,885 | 517,201 | ||||||||||||||||||||||||
| Chief Financial Officer and Secretary |
2010 | 450,058 | — | 968,133 | 354,375 | — | 29,439 | 1,802,005 | ||||||||||||||||||||||||
| 2009 | 458,767 | — | 102,410 | — | — | 32,239 | 593,416 | |||||||||||||||||||||||||
| Khurram P. Sheikh |
2011 | 435,799 | — | 34,911 | — | — | 32,885 | 503,595 | ||||||||||||||||||||||||
| Chief Technology Officer |
2010 | 425,061 | — | 1,217,743 | 297,500 | — | 29,439 | 1,969,743 | ||||||||||||||||||||||||
| 2009 | 433,292 | — | 156,962 | — | — | 32,239 | 622,493 | |||||||||||||||||||||||||
| Basem Anshasi |
2011 | 347,299 | (6) | — | — | — | — | 32,885 | 380,184 | |||||||||||||||||||||||
| Vice President, Worldwide Sales (7) |
2010 | 352,099 | — | 507,167 | 111,300 | — | 29,424 | 999,990 | ||||||||||||||||||||||||
| 2009 | 330,942 | — | 10,924 | — | — | 32,223 | 374,089 | |||||||||||||||||||||||||
| (1) | The fiscal 2009 salaries include an extra week of compensation based on the fact that fiscal 2009 was a 53-week fiscal year. Fiscal 2010 and 2011 were 52-week fiscal years. |
| (2) | We did not grant any stock awards in fiscal 2011, 2010 or 2009. |
| (3) | Amounts in this column reflect the grant date fair value of awards granted in fiscal 2011, 2010 and 2009 for financial statement reporting purposes in accordance with ASC Topic 718. These amounts do not represent cash payments made to the named executive officers. Assumptions used in the calculation of these amounts are included in Note 13 to our consolidated financial statements without giving effect to estimated forfeitures. |
| (4) | Amounts in this column were paid pursuant to a cash incentive plan. |
| (5) | See the following separate table for details of “All Other Compensation.” |
| (6) | Includes $21,216 paid to Mr. Anshasi under a sales commission plan. |
| (7) | On October 28, 2011 Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer considered an executive officer. |
18
Table of Contents
The following table details the components of “All Other Compensation” summarized in the table above.
| All Other Compensation | ||||||||||||||||||||||||||||||||||||
| Name and Position |
Fiscal Year |
Insurance Premium Payments (1) |
401(k) Matching Contributions |
Pension Contribution |
Auto Allowance |
Severance Payments |
Change of Control Payments |
Relocation Payments |
Total | |||||||||||||||||||||||||||
| Ronald J. Buschur |
2011 | $ | 23,085 | $ | 6,346 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 29,431 | |||||||||||||||||||
| 2010 | 19,639 | $ | 4,615 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 24,254 | |||||||||||||||||||||
| 2009 | 17,539 | 6,923 | — | — | — | — | — | 24,462 | ||||||||||||||||||||||||||||
| J. Marvin MaGee |
2011 | 16,158 | 9,800 | — | — | — | — | — | 25,958 | |||||||||||||||||||||||||||
| 2010 | 13,818 | 9,800 | — | — | — | — | — | 23,618 | ||||||||||||||||||||||||||||
| 2009 | 9,720 | 14,700 | — | — | — | — | — | 24,420 | ||||||||||||||||||||||||||||
| Kevin T. Michaels |
2011 | 23,085 | 9,800 | — | — | — | — | — | 32,885 | |||||||||||||||||||||||||||
| 2010 | 19,639 | 9,800 | — | — | — | — | — | 29,439 | ||||||||||||||||||||||||||||
| 2009 | 17,539 | 14,700 | — | — | — | — | — | 32,239 | ||||||||||||||||||||||||||||
| Khurram P. Sheikh |
2011 | 23,085 | 9,800 | — | — | — | — | — | 32,885 | |||||||||||||||||||||||||||
| 2010 | 19,639 | 9,800 | — | — | — | — | — | 29,439 | ||||||||||||||||||||||||||||
| 2009 | 17,539 | 14,700 | — | — | — | — | — | 32,239 | ||||||||||||||||||||||||||||
| Basem Anshasi (2) |
2011 | 23,085 | 9,800 | — | — | — | — | — | 32,885 | |||||||||||||||||||||||||||
| 2010 | 19,624 | 9,800 | — | — | — | — | — | 29,424 | ||||||||||||||||||||||||||||
| 2009 | 17,523 | 14,700 | — | — | — | — | — | 32,223 | ||||||||||||||||||||||||||||
| (1) | Includes both employer and employee insurance premiums that are paid by Powerwave on behalf of the named executive officers. |
| (2) | On October 28, 2011 Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer an executive officer. |
19
Table of Contents
| (3) | Grants of Plan-Based Awards |
The following table sets forth, for fiscal 2011, certain information regarding grants of plan-based and performance-based awards to our named executive officers.
| Name |
Grant Date |
Estimated Future Payouts Under Cash Incentive Plan Awards |
All
Other Stock Awards: Number of Shares of Stock or Units |
All
Other Option Awards: Number of Securities Underlying Options (2) |
Exercise or Base Price of Option Awards |
Grant Date Fair Value of Stock and Option Awards (3) |
||||||||||||||||||||||||
| Threshold (1) | Target (1) | Maximum (1) | ||||||||||||||||||||||||||||
| Ronald J. Buschur |
N/A | $ | 17,500 | $ | 700,000 | $ | 875,000 | — | — | — | — | |||||||||||||||||||
| 12/16/2011 | — | — | — | — | 70,000 | $ | 1.70 | $ | 74,055 | |||||||||||||||||||||
| J. Marvin MaGee |
N/A | 11,588 | 463,500 | 579,375 | — | — | — | — | ||||||||||||||||||||||
| 12/16/2011 | — | — | — | — | 33,000 | 1.70 | 34,911 | |||||||||||||||||||||||
| Kevin T. Michaels |
N/A | 10,429 | 417,150 | 521,438 | — | — | — | — | ||||||||||||||||||||||
| 12/16/2011 | — | — | — | — | 25,000 | 1.70 | 26,448 | |||||||||||||||||||||||
| Khurram P. Sheikh |
N/A | 8,755 | 350,200 | 437,750 | — | — | — | — | ||||||||||||||||||||||
| 12/16/2011 | — | — | — | — | 33,000 | 1.70 | 34,911 | |||||||||||||||||||||||
| Basem Anshasi(4) |
N/A | 3,275 | 131,016 | 163,770 | — | — | — | — | ||||||||||||||||||||||
| N/A | — | — | — | — | — | — | — | |||||||||||||||||||||||
| (1) | Represents the possible payout amounts under our 2011 Executive Officer Cash Incentive Plan, which are dependent upon the Company’s achievement of the performance conditions established by the Compensation Committee with respect to fiscal 2011. The threshold amount is the minimum payout which represents 2.5% of the annual target on a six-month basis. No payments were made to the named executive officers under the 2011 Executive Officer Cash Incentive Plan due to the Company’s failure to achieve the pro-forma EBITDA goals for fiscal 2011. |
| (2) | Vesting of options is time based over four years, with 25% vesting after 12 months and the remaining 75% vesting in equal monthly installments over the next 36 months. |
| (3) | The grant date fair value is computed in accordance with ASC Topic 718 “Accounting for Stock Compensation.” Under the fair value recognition provision of ASC Topic 718, stock-based compensation cost is estimated at the grant date based on the fair value of the award. Assumptions used in the calculation of these amounts are included in Note 13 to our consolidated financial statements, without giving effect to estimated forfeitures. |
| (4) | On October 28, 2011 Mr. Anshasi accepted a new position leading government sales in the Middle East region and is no longer an executive officer. |
20
Table of Contents
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth summary information regarding the outstanding equity awards to our named executive officers as of January 1, 2012:
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options |
Number of Securities Underlying Unexercised Options |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options |
Option Exercise Price |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested |
Market Value of Shares or Units of Stock That Have Not Vested (1) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
||||||||||||||||||||||||||||
| Name |
Exercisable | Un-exercisable | ||||||||||||||||||||||||||||||||||
| Ronald J. Buschur |
20,000 | — | — | 27.05 | 08/05/2012 | — | — | — | — | |||||||||||||||||||||||||||
| 40,000 | — | — | 32.85 | 10/17/2013 | — | — | — | — | ||||||||||||||||||||||||||||
| 40,000 | — | — | 25.05 | 07/21/2014 | — | — | — | — | ||||||||||||||||||||||||||||
| 40,000 | — | — | 37.35 | 09/12/2016 | — | — | — | — | ||||||||||||||||||||||||||||
| 35,416 | 14,584 | (2) | — | 2.40 | 02/06/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 35,416 | 14,584 | (3) | — | 2.10 | 02/10/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 45,833 | 54,167 | (4) | — | 5.45 | 02/10/2020 | — | — | — | — | |||||||||||||||||||||||||||
| 70,000 | 210,000 | (5) | — | 12.85 | 12/18/2020 | — | — | — | — | |||||||||||||||||||||||||||
| — | 70,000 | (6) | 1.70 | 12/16/2021 | — | — | — | — | ||||||||||||||||||||||||||||
| Kevin T. Michaels |
15,000 | — | — | 27.05 | 08/05/2012 | — | — | — | — | |||||||||||||||||||||||||||
| 15,000 | — | — | 32.85 | 10/17/2013 | ||||||||||||||||||||||||||||||||
| 40,000 | — | — | 25.05 | 07/21/2014 | — | — | — | — | ||||||||||||||||||||||||||||
| 24,000 | — | — | 37.35 | 09/12/2016 | — | — | — | — | ||||||||||||||||||||||||||||
| 24,000 | — | — | 32.45 | 08/07/2017 | — | — | — | — | ||||||||||||||||||||||||||||
| 17,708 | 7,292 | (2) | — | 2.40 | 02/06/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 17,708 | 7,292 | (3) | — | 2.10 | 02/10/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 11,458 | 13,542 | (4) | — | 5.45 | 02/10/2020 | — | — | — | — | |||||||||||||||||||||||||||
| 25,000 | 75,000 | (5) | — | 12.85 | 12/18/2020 | — | — | — | — | |||||||||||||||||||||||||||
| — | 25,000 | (6) | 1.70 | 12/16/2021 | — | — | — | — | ||||||||||||||||||||||||||||
| J. Marvin MaGee |
40,000 | — | — | 33.45 | 05/07/2017 | — | — | — | — | |||||||||||||||||||||||||||
| 12,000 | — | — | 32.45 | 08/07/2017 | ||||||||||||||||||||||||||||||||
| 8,333 | 11,667 | (2) | — | 2.40 | 02/06/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 25,039 | 11,667 | (3) | — | 2.10 | 02/10/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 8,333 | 21,667 | (4) | — | 5.45 | 02/10/2020 | — | — | — | — | |||||||||||||||||||||||||||
| 32,500 | 97,500 | (5) | — | 12.85 | 12/18/2020 | — | — | — | — | |||||||||||||||||||||||||||
| — | 33,000 | (6) | 1.70 | 12/16/2021 | — | — | — | — | ||||||||||||||||||||||||||||
| Khurram P. Sheikh |
37,000 | — | — | 34.00 | 08/13/2017 | — | — | — | — | |||||||||||||||||||||||||||
| 38,958 | 16,042 | (2) | — | 2.40 | 02/06/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 13,634 | 5,616 | (3) | — | 2.10 | 02/10/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 9,166 | 10,834 | (4) | — | 5.45 | 02/10/2020 | — | — | — | — | |||||||||||||||||||||||||||
| 32,500 | 97,500 | (5) | — | 12.85 | 12/18/2020 | — | — | — | — | |||||||||||||||||||||||||||
| — | 33,000 | (6) | 1.70 | 12/16/2021 | — | — | — | — | ||||||||||||||||||||||||||||
| Basem Anshasi |
2,000 | — | — | 25.85 | 03/16/2012 | — | — | — | — | |||||||||||||||||||||||||||
| 8,250 | 750 | (7) | — | 13.65 | 04/30/2013 | — | — | — | — | |||||||||||||||||||||||||||
| 4,166 | 834 | (8) | — | 24.40 | 08/12/2013 | — | — | — | — | |||||||||||||||||||||||||||
| 5,000 | — | — | 40.90 | 07/17/2016 | — | — | — | — | ||||||||||||||||||||||||||||
| 2,000 | — | — | 37.35 | 09/12/2016 | — | — | — | — | ||||||||||||||||||||||||||||
| 5,000 | — | — | 32.45 | 08/07/2017 | — | — | — | — | ||||||||||||||||||||||||||||
| 7,500 | 2,500 | (9) | — | 3.10 | 12/12/2018 | — | — | — | — | |||||||||||||||||||||||||||
| 3,541 | 1,459 | (2) | — | 2.40 | 02/06/2019 | — | — | — | — | |||||||||||||||||||||||||||
| 11,458 | 13,542 | (4) | — | 5.45 | 02/10/2020 | — | — | — | — | |||||||||||||||||||||||||||
| 12,000 | 36,000 | (5) | — | 12.85 | 12/18/2020 | — | — | — | — | |||||||||||||||||||||||||||
21
Table of Contents
| (1) | Value calculated by multiplying the closing market price of our Common Stock on January 1, 2012, or $2.08, by the number of shares. |
| (2) | The shares underlying the option vest at a rate of 25% on February 6, 2010, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on February 6, 2013. |
| (3) | The shares underlying the option vest at a rate of 25% on February 10, 2010, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on January 30, 2013. |
| (4) | The shares underlying the option vest at a rate of 25% on February 10, 2011, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on February 10, 2020. |
| (5) | The shares underlying the option vest at a rate of 25% on December 18, 2011, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on December 18, 2020. |
| (6) | The shares underlying the option vest at a rate of 25% on December 16, 2012, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on December 16, 2015. |
| (7) | The shares underlying the option vest at a rate of 25% on April 30, 2009, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on April 30, 2012. |
| (8) | The shares underlying this option vest at a rate of 25% on August 12, 2009, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on August 12, 2012. |
| (9) | The shares underlying the option vest at a rate of 25% on December 12, 2009, and the remaining 75% vests in equal monthly installments over the following three years so that the option will be fully vested on December 12, 2012. |
Option Exercises and Stock Vested
The following table summarizes the option exercises and vesting of stock awards for each of our named executive officers for the year ended January 1, 2012:
| Name |
Option Awards | Stock Awards | ||||||||||||||
| Number of Shares Acquired on Exercise |
Value Realized on Exercise (1) |
Number of Shares Acquired on Vesting |
Value Realized on Vesting (2) |
|||||||||||||
| Ronald J. Buschur |
— | $ | — | — | $ | — | ||||||||||
| J. Marvin MaGee |
33,294 | 629,649 | — | — | ||||||||||||
| Kevin T. Michaels |
— | — | — | — | ||||||||||||
| Khurram P. Sheikh |
— | — | 2,813 | 43,813 | ||||||||||||
| Basem Anshasi |
— | — | — | — | ||||||||||||
| (1) | The value is determined by multiplying the number of shares acquired upon exercise of the options by the result of subtracting the exercise price of the options from the closing price of our Common Stock on the date of exercise. |
| (2) | The value is determined by multiplying the number of shares acquired upon vesting of the shares by the closing price of our common stock on the date of vesting. |
22
Table of Contents
Potential Payments Upon Termination or Change in Control
We have entered into agreements with our named executive officers that provide certain benefits upon the termination of their employment under certain conditions. Those agreements are summarized as follows:
Severance Agreements with Messrs. Buschur and Michaels
Effective August 1, 2003, Powerwave entered into severance agreements with Ronald J. Buschur and Kevin T. Michaels. Mr. Buschur’s severance agreement, as amended to date, provides that if his employment is terminated without “cause” or if he voluntarily resigns for “good reason” (as such terms are defined below), he shall be entitled to (i) a lump-sum payment equal to three times his “total annual compensation,” and (ii) continued group health insurance for a period of 36 months. For purposes of this agreement, “total annual compensation” is defined as base salary for the year in which employment terminates plus the greater of Mr. Buschur’s target performance based cash incentive for the year in which employment terminates or the actual performance based cash incentive paid in the prior year. Mr. Michaels executed an identical severance agreement, as amended to date, except that the severance payment amount is two times his total annual compensation, and the period of continued health coverage is 24 months. Both of these agreements were amended and restated on August 13, 2008 to conform with the regulations under Internal Revenue Code Section 409A.
Change of Control Agreements with Messrs, Buschur, Michaels, MaGee, Sheikh and Anshasi
Effective August 1, 2003, Powerwave also entered into change of control agreements with Mr. Buschur and Mr. Michaels. Mr. Buschur’s change in control agreement, as amended to date, provides that if in anticipation of, in connection with, or within two years following a “change in control,” Mr. Buschurs’ employment is terminated without “cause”, or if Mr. Buschur voluntarily resigns for “good reason”, then Mr. Buschur shall be entitled to (i) a lump-sum payment equal to three times his total annual compensation, (ii) continued health insurance for a period of 36 months, and (iii) the immediate vesting of all unvested stock options held by Mr. Buschur. For purposes of this agreement, the term “total annual compensation” has the same definition as provided in the severance agreement. Mr. Michaels executed an identical change in control agreement, except that the lump sum payment is two times his total annual compensation, and the period of continued health insurance coverage is 24 months. Both of these agreements were amended and restated on August 13, 2008 to conform with the regulations under Internal Revenue Code Section 409A.
Effective May 2007, Powerwave entered into a Change in Control Agreement with Marvin MaGee, which provides that if in anticipation of, or within 18 months following, a “change in control” of Powerwave Mr. MaGee’s employment is terminated without “cause” or if Mr. MaGee voluntarily resigns with “good reason”, then he shall be entitled to (i) a lump sum payment equal to 18 months of his then annual salary, (ii) continued health coverage for a period of 18 months, and (iii) outplacement assistance for 18 months. This agreement was amended and restated in December 2008 to conform with the regulations under Internal Revenue Code Section 409A.
Effective August 2007, Powerwave entered into a Change in Control Agreement with Khurram Sheikh, which provides that if in anticipation of, or within 18 months following, a “change in control” of Powerwave, Mr. Sheikh’s employment is terminated without “cause” or if Mr. Sheikh voluntarily resigns with “good reason”, then he shall be entitled to (i) a lump sum payment equal to 18 months of his then annual salary, (ii) continued health coverage for a period of 18 months, and (iii) outplacement assistance for 18 months. This agreement was amended and restated in December 2008 to conform with the regulations under Internal Revenue Code Section 409A.
Effective December 2008, Powerwave entered into a Change in Control Agreement with Basem Anshasi which provides that if in anticipation of, or within 18 months following, a “change in control” of Powerwave, Mr. Anshasi’s employment is terminated without “cause” or if Mr. Anshasi voluntarily resigns with “good reason”, then he shall be entitled to (i) a lump sum payment equal to 18 months of his then annual salary (ii) continued health coverage for a period of 18 months; and (iii) outplacement assistance for 18 months.
For purposes of the severance and change of control agreements, “cause” means: (i) the continued, unreasonable refusal or the omission by the employee to perform any material duties required of him by the Company, if such duties are consistent with duties customary for his position; (ii) any material act or omission by the employee involving malfeasance or gross negligence in the performance of his duties to, or material deviation from any of the policies or directives of the Company; (iii) conduct on the part of the employee which constitutes the breach of any statutory or common law duty of loyalty to the Company, including the unauthorized disclosure of material confidential information or trade secrets of the Company; or (iv) any illegal act by the employee which materially and adversely affects the business of the Company or any felony committed by the employee, as evidenced by conviction thereof, provided that the Company may suspend the employee with pay while any allegation of such illegal or felonious act is investigated.
23
Table of Contents
The term “good reason” means any of the following, without the employee’s written consent: (i) a material reduction by the Company in the employee’s compensation that is not made in connection with an across the board reduction of all the Company’s executive salaries; (ii) the assignment of duties to the employee which reflect a material adverse change in authority, responsibility or status with the Company or any successor; (iii) a material relocation of the employee to a location more than 30 miles from the location where the employee was regularly assigned to immediately prior to the employee’s termination of employment or a change in control, whichever occurs first; or (iv) a failure by the Company to pay any material portion of the employee’s compensation within ten (10) days of the date due.
These agreements define “change in control” as the occurrence of any of the following events: (i) the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial ownership of more than fifty percent of the outstanding securities of Powerwave; (ii) a merger or consolidation in which Powerwave is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which Powerwave in incorporated; (iii) the sale, transfer or other disposition of all or substantially all of the assets of Powerwave; (iv) a complete liquidation or dissolution of Powerwave; (v) any reverse merger in which Powerwave is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such merger; or (vi) the date a majority of the members of the board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors before the date of appointment or election.
All of the change of control agreements and severance agreements require the execution of a release of claims in favor of Powerwave as a pre-condition to the receipt of payments.
The following table sets forth potential payments payable to our named executive officers upon termination of employment without “cause,” termination for “good reason,” or a termination of employment without “cause” or for “good reason” in connection with a change in control that occurred on January 1, 2012, the last day of fiscal 2011. The table assumes that each named executive officer’s salary and service levels will be the same on the date of termination as they were on the last day of fiscal 2011. The amounts set forth for insurance, health benefits and similar policies also assume the continued availability of such policies on terms which are equivalent to those in effect as of the last day of fiscal 2011.
The table does not attempt to set forth the compensation that is payable to the named executive officers upon the occurrence of any particular change of control transaction. Because the disclosures in the table assume the occurrence of a termination or change of control as of a particular date and under a particular set of circumstances, and therefore make a number of important assumptions, the actual amounts to be paid to each of our named executive officers upon a termination or change of control may vary significantly from the amounts included herein. Factors that could affect these amounts include the timing of any such event, the continued availability of benefit policies at similar prices, and the type of termination event that occurs (as set forth in the first row of the table below). In addition, the Compensation Committee may, in its discretion revise, amend or add to the benefits if it deems advisable.
Additional information regarding our severance and change of control policies is set forth under the heading “Elements of Executive Compensation - Termination or Change in Control Compensation” above.
24
Table of Contents
| Name |
Trigger (1) |
Salary and Performance Based Incentive (2) |
Continuation of Benefits (3) |
Value of Option Acceleration (4) |
Value of Restricted Stock Acceleration |
Total Value | ||||||||||||||||
| Ronald J. Buschur |
Termination without Cause/for Good Reason | $ | 4,200,000 | $ | 66,758 | $ | — | $ | — | $ | 4,266,758 | |||||||||||
| Change of Control | 4,200,000 | 66,758 | 26,600 | (5) | — | 4,293,358 | ||||||||||||||||
| J. Marvin MaGee |
Termination without Cause/ for Good Reason | — | — | — | — | — | ||||||||||||||||
| Change of Control | 772,500 | 22,780 | — | — | 795,280 | |||||||||||||||||
| Kevin T. Michaels |
Termination without Cause/ for Good Reason | 1,761,300 | 44,505 | — | — | 1,805,805 | ||||||||||||||||
| Change of Control | 1,761,300 | 44,505 | 9,500 | (5) | — | 1,815,305 | ||||||||||||||||
| Khurram Sheikh |
Termination without Cause/ for Good Reason | — | — | — | — | — | ||||||||||||||||
| Change of Control | 656,625 | 33,379 | — | — | 690,004 | |||||||||||||||||
| Basem Anshasi |
Termination without Cause/ for Good Reason | — | — | — | — | — | ||||||||||||||||
| Change of Control | 491,310 | 33,379 | — | — | 524,689 | |||||||||||||||||
| (1) | Messrs. Buschur and Michaels are entitled to the benefits specified in this table if their employment is terminated without cause or if they voluntarily resign for “good reason.” In the case of a “change of control,” Messrs. Buschur and Michaels are entitled to the benefits specified in this table if in anticipation of, in connection with, or within two years following a “change of control,” their employment is terminated without cause or if they voluntarily resign for “good reason.” In the case of a “change of control” Messrs. MaGee, Sheikh and Anshasi are entitled to the benefits specified in this table if in anticipation of, in connection with or within eighteen months following a “change of control,” their employment is terminated without cause or if they voluntarily resign for good reason. |
| (2) | Represents three times annual 2011 salary and target performance based cash incentive for fiscal 2011 in the case of Mr. Buschur. Represents two times annual 2011 salary and target performance based cash incentive for fiscal 2011 in the case of Mr. Michaels. Represents one and one half times annual fiscal 2011 salary for Messrs. MaGee, Sheikh and Anshasi. |
| (3) | Represents the cost of continuing medical benefits via COBRA for three years in the case of Mr. Buschur and two years in the case of Mr. Michaels. Represents the cost of continuing medical benefits via COBRA for one and one half years for Messrs. MaGee, Sheikh and Anshasi. For purposes of this calculation, expected costs have not been adjusted for any actuarial assumptions related to mortality or increases in costs. |
| (4) | Represents the aggregate value of the accelerated vesting of the named executive officers’ unvested stock options if their employment is terminated for cause or if they voluntarily resign for “good reason” in connection with, in anticipation of or within two years following a “change of control”. The amounts shown as the value of the accelerated stock options are based on the intrinsic value of the options as of January 1, 2012. This was calculated by multiplying (i) the difference between the fair market value of the options as of January 1, 2012 (based on a closing market price of our Common Stock of $2.08 per share on January 1, 2012) and the applicable exercise price by (ii) the assumed number of option shares vesting on an accelerated basis on January 1, 2012. |
| (5) | In case of a “change of control”, if in anticipation of, in connection with, or within two years following a “change of control”, the employment of Mr. Buschur or Mr. Michaels is terminated without “cause” or if they voluntarily resign for “good reason”, then their options would accelerate. |
25
Table of Contents
Board Compensation
Non-employee Director compensation is determined annually by the Board of Directors acting upon the recommendation of the Compensation Committee. Directors who are also employees of the Company receive no additional compensation for service as a Director. The following table shows compensation for non-employee directors for fiscal 2011:
| Annual director retainer |
$ | 50,000 | ||
| Annual lead director/chairman retainer (1) |
$ | 20,000 | ||
| Annual audit committee chair (2) |
$ | 11,000 | ||
| Annual compensation committee chair (2) |
$ | 9,500 | ||
| Annual corporate governance and nominating committee chair (2) |
$ | 7,000 | ||
| Annual stock option grant |
11,000 shares | |||
| Board meeting fees (3) |
$ | 1,500 | ||
| Committee meeting fees (4) |
$ | 1,000 |
| (1) | The annual retainer for the chairman is paid in addition to the annual director retainer. |
| (2) | This amount is in addition to the committee meeting fees. |
| (3) | This amount is paid for each Board meeting attended, including phone meetings where resolutions were taken. |
| (4) | This amount is paid for each committee meeting attended, including phone meetings where resolutions were taken. |
The Company does not provide retirement benefits to non-employee directors under any current program.
Stock Options
On November 9, 2011, Messrs. Beguwala, Bradley, Burns, Clendenin, George, Goda, and Neun were each granted an option to purchase 11,000 shares of Common Stock at an exercise price of $2.08 per share under the Company’s 2010 Omnibus Incentive Plan in connection with their annual re-election to the Board. In addition, Mr. Burns on March 18, 2011 was granted an additional option to purchase 7,370 shares of Common Stock at an exercise price of $19.10 per share when he joined the Company’s Board of Directors. These options vest in twelve equal monthly installments so that they are vested in full on November 9, 2012 and March 18, 2012 respectively.
26
Table of Contents
Non-Employee Director Compensation
The following table sets forth compensation for the fiscal year ended January 1, 2012 for the Company’s independent directors:
Director Compensation for Fiscal 2011
| Name |
Fees Earned or Paid in Cash (1) |
Stock Awards |
Option Awards (2) |
Non-Equity Incentive Plan Compensation |
Change in Pension Value and Nonqualified Deferred Compensation Earnings |
All Other Compensation |
Total | |||||||||||||||||||||
| Moiz M. Beguwala |
$ | 68,000 | $ | — | $ | 12,432 | $ | — | $ | — | $ | — | 80,432 | |||||||||||||||
| Ken J. Bradley |
67,000 | — | 12,432 | — | — | — | 79,432 | |||||||||||||||||||||
| Richard Burns |
45,042 | — | 94,477 | — | — | — | 139,519 | |||||||||||||||||||||
| John L. Clendenin |
72,000 | — | 12,432 | — | — | — | 84,432 | |||||||||||||||||||||
| David L. George |
68,000 | — | 12,432 | — | — | — | 80,432 | |||||||||||||||||||||
| Eugene L. Goda |
77,000 | — | 12,432 | — | — | — | 89,432 | |||||||||||||||||||||
| Carl W. Neun |
105,250 | — | 12,432 | — | — | — | 117,682 | |||||||||||||||||||||
| (1) | Consists of the annual board retainer, board and committee meeting fees, and committee chair retainers. These amounts do not include amounts paid to independent directors to reimburse them for expenses of travel, lodging and other reasonable out-of-pocket expenses which are related to service on the Board or any committee. |
| (2) | Reflects the grant date fair value in accordance with ASC Topic 718, without giving effect to estimated forfeitures. Includes stock options for 11,000 shares of Common Stock that were granted to each independent director on November 9, 2011. In addition, Mr. Burns received an additional 7,370 shares of Common Stock on March 18, 2011 when he joined the Board of Directors. Assumptions used in the calculation of these amounts are included in Note 13 to our consolidated financial statements. As of January 1, 2012, each director had the following number of stock options outstanding: |
| Mr. Beguwala |
37,000 | |||
| Mr. Bradley |
37,000 | |||
| Mr. Burns |
18,370 | |||
| Mr. Clendenin |
33,000 | |||
| Mr. George |
33,000 | |||
| Mr. Goda |
33,000 | |||
| Mr. Neun |
24,000 |
27
Table of Contents
| ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The following table sets forth information concerning the beneficial ownership of Powerwave’s outstanding Common Stock as of April 24, 2012, except as otherwise noted, by persons who are directors, named executive officers, nominees for director or persons known to Powerwave to be beneficial owners of five percent or more of our outstanding Common Stock. The table also includes the beneficial stock ownership of all directors and executive officers of Powerwave as a group. As of April 24, 2012, the Company had a total of 31,741,931shares of Common Stock issued and outstanding.
| Name and Address of Beneficial Owner (1) |
Number of Shares Beneficially Owned (2) |
Percentage of Shares Outstanding (2) |
||||||
| Artis Capital Management LP Artis Capital Management, Inc. Stuart L. Peterson One Market Plaza Steuart St. Tower Suite 2700 San Francisco, CA 94105 |
5,411,981 | (3) | 14.6 | % | ||||
| Silver Lake Credit Fund, LP Silver Lake Financial Associates, LP SLFA (GP) LLC SL Capital Appreciation Fund LLC Silver Lake Group LLC |
2,791,495 | (4) | 8.1 | % | ||||
| Blackrock, Inc. 40 E.52nd St NY, NY 10022 |
4,964,222 | (5) | 13.5 | % | ||||
| Ronald J. Buschur |
664,913 | (6) | 2.1 | % | ||||
| Kevin T. Michaels |
316,191 | (7) | * | |||||
| J. Marvin MaGee |
179,416 | (8) | * | |||||
| Khurram P. Sheikh |
247,860 | (9) | * | |||||
| David L. George |
96,416 | (10) | * | |||||
| John L. Clendenin |
110,416 | (10) | * | |||||
| Eugene L. Goda |
66,416 | (10) | * | |||||
| Ken J. Bradley |
52,416 | (11) | * | |||||
| Carl W. Neun |
42,416 | (12) | * | |||||
| Moiz M. Beguwala |
40,416 | (11) | * | |||||
| Richard Burns |
13,786 | (13) | * | |||||
| All Directors and Executive Officers as a Group (11 persons) |
1,830,662 | (14) | 5.6 | % | ||||
| * | Less than 1% |
| (1) | Unless otherwise indicated, the business address of each holder is: c/o Powerwave Technologies, Inc., 1801 E. St. Andrew Place, Santa Ana, CA 92705. |
| (2) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock subject to options or warrants currently exercisable, or exercisable within 60 days of April 24, 2012, and shares of Common Stock subject to our outstanding 1.875% convertible notes due November 2024, our 3.875% convertible notes due October 2027 and our 2.75% senior subordinated notes due November 2041 currently convertible, or convertible within 60 days of April 24, 2012, are deemed outstanding for computing the percentage of the person holding such options, warrants or convertible notes, but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote and subject to community property laws where applicable, to the knowledge of the Company, the companies and persons named in this table have sole voting and investment power with respect to all shares of Common Stock shown to be beneficially owned by them. |
28
Table of Contents
| (3) | Based on a Schedule 13G dated January 20, 2012 filed with the SEC. The schedule 13G states that Artis Capital Management LP has sole voting and dispositive power with respect to these shares. Includes 161,883 shares of common stock issuable upon conversion of subordinated convertible notes held by Artis. Artis Capital Management LP is a registered investment adviser and is the investment adviser of funds that hold the shares for the benefit of investors in those funds. Artis Capital Management, Inc. is the general partner of Artis Capital Management LP. Stuart Peterson is the president of Artis Capital Management, Inc. and the controlling owner of Artis Capital Management LP and Artis Capital Management, Inc. Each of Artis Capital Management LP, Artis Capital Management, Inc. and Mr. Peterson disclaims beneficial ownership of these shares, except to the extent of their respective pecuniary interest therein. |
| (4) | Based on a schedule 13G filed with the SEC on February 7, 2012. Includes 2,508,814 shares of common stock issuable upon conversion of subordinated convertible notes held by Silver Lake. Silver Lake Financial Associates LP is the general partner of Silver Lake Credit Fund LP and SLFA (GP) LLC is the general partner of Silver Lake Financial Associates LP. Silver Lake Financial Associates LP and SLFA (GP) LLC disclaim beneficial ownership except to the extent of their pecuniary interest. Silver Lake Group LLC is the managing member of SL Capital Appreciation Fund and SLFA (GP) LLC and disclaims beneficial ownership except to the extent of its pecuniary interest. The address of Silver Lake Capital Appreciation Fund LP and the Silver Lake Group LLC is 2775 Sand Hill Road, Suite 100, Menlo Park, CA 94025. The address of Silver Lake Credit Fund, LP, Silver Lake Financial Associates LP, and SLFA (GP) LLC is One Market Plaza, Steuart Tower, 10th Floor, Suite 1000, San Francisco, CA 94105. |
| (5) | Based on a schedule 13G filed with the SEC on April 11, 2012. Blackrock, Inc. has sole voting and dispositive with respect to the shares. |
| (6) | Includes options exercisable for 386,665 shares within 60 days of April 24, 2012. |
| (7) | Includes options exercisable for 211,749 shares within 60 days of April 24, 2012. |
| (8) | Includes options exercisable for 157,455 shares within 60 days of April 24, 2012. |
| (9) | Includes options exercisable for 159,290 shares within 60 days of April 24, 2012. |
| (10) | Includes options exercisable for 26,416 shares within 60 days of April 24, 2012. |
| (11) | Includes options exercisable for 30,416 shares within 60 days of April 24, 2012. |
| (12) | Includes options exercisable for 17,416 shares within 60 days of April 24, 2012. |
| (13) | Includes options exercisable for 13,786 shares within 60 days of April 24, 2012 |
| (14) | Includes options exercisable for 1,086,441 shares within 60 days of April 24, 2012 (see footnotes 6-13). |
29
Table of Contents
Securities Authorized for Issuance Under Equity Compensation Plans
All stock-based award plans under which our Common Stock is reserved for issuance have previously been approved by our shareholders. We have no other equity compensation plans other than our stock-based award plans. The following table provides summary information as of January 1, 2012 for all of our stock-based award plans:
| Number of Shares
of Common Stock to be Issued upon Exercise of Outstanding Options, Warrants and Rights |
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights |
Number of Shares
of Common Stock Remaining Available for Future Issuance under our Stock Option Plans (Excluding Shares Reflected in Column 1) (1) |
||||||||||
| Equity Compensation Plans Approved by Shareholders |
3,515,667 | $ | 13.81 | 2,849,030 | ||||||||
| Equity Compensation Plans Not Approved by Shareholders |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
3,515,667 | $ | 13.81 | 2,849,030 | ||||||||
|
|
|
|
|
|
|
|||||||
| (1) | The number of securities remaining available for future issuance has also been reduced to reflect 2,811 shares of restricted stock issued under the 2005 Stock Incentive Plan. |
30
Table of Contents
| ITEM 13. | Certain Relationships and Related Transactions, and Director Independence |
Certain Relationships and Related Transactions
Since the beginning of fiscal 2011, there have been no transactions in which the Company was or is a participant in which the amount involved exceeded $120,000 and in which any related person (as that term is defined for purposes of Section 404(a) of Regulation S-K) had or will have a direct or indirect material interest and there are currently no such proposed transactions.
Review, Approval or Ratification of Transactions with Related Persons
Our policy with regard to related person transactions is that all transactions are to be reviewed by the Audit Committee that may potentially be related person transactions. The Audit Committee will generally evaluate the transaction in terms of the following standards: (i) the benefits to the Company; (ii) the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; (iii) the availability of other sources for comparable products or services; (iv) the terms and conditions of the transaction; and (v) the terms available to unrelated parties or the employees generally. The Audit Committee will then document its findings and conclusion in written minutes.
Director Independence
Our Board, assisted by our Nominating and Corporate Governance Committee, annually assesses the independence status of our directors for purposes of Board and committee memberships. Our corporate governance policies and practices require that at least a majority of the members of our Board be independent as provided by the NASDAQ listing rules. It has been determined that all of the members of our Board are independent with the exception of Ronald J. Buschur, our Chief Executive Officer and President. Our corporate governance policies and practices further require that each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee be comprised solely of independent directors. For purposes of the Audit Committee, independence is determined by reference to both the NASDAQ listing rules and Section 10A of the Exchange Act (including Rule 10A-3 promulgated thereunder). For purposes of the Compensation Committee and Nominating and Corporate Governance Committee, independence is determined by reference to the NASDAQ listing rules. It has been determined that each member of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is independent under the applicable guidelines.
31
Table of Contents
| ITEM 14. | Principal Accounting Fees and Services |
The Audit Committee regularly reviews and determines whether specific projects or expenditures with our independent auditors, Deloitte & Touche LLP and their affiliates (“Deloitte & Touche”), potentially affect their independence. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by Deloitte & Touche. Pre-approval is generally provided by the Audit Committee for up to one year, is detailed as to the particular service or category of services to be rendered, and is generally subject to a specific budget. The Audit Committee may also pre-approve additional services or specific engagements on a case-by-case basis. Management is required to provide quarterly updates to the Audit Committee regarding the extent of any services provided in accordance with this pre-approval, as well as the cumulative fees for all non-audit services incurred to date.
The following table sets forth the aggregate fees billed to us by Deloitte & Touche for the fiscal years ended January 1, 2012 and January 2, 2011:
| Fiscal Year Ended | ||||||||
| January 1, 2012 |
January 2, 2011 |
|||||||
| Audit Fees (1) |
$ | 1,253,193 | $ | 1,129,095 | ||||
| Audit Related Fees (2) |
— | — | ||||||
| Tax Fees (3) |
— | 20,489 | ||||||
|
|
|
|
|
|||||
| Total Fees |
$ | 1,253,193 | $ | 1,149,585 | ||||
|
|
|
|
|
|||||
| (1) | Includes fees for professional services rendered for the audit of Powerwave’s annual financial statements and review of Powerwave’s annual report on Form 10-K for the fiscal years 2011 and 2010, for the audit of Powerwave’s internal controls over financial reporting for fiscal years 2011 and 2010, and reviews of the financial statements included in Powerwave’s quarterly reports on Form 10-Q for the first three quarters of fiscal 2011 and 2010. All of these fees were pre-approved by the Audit Committee. |
| (2) | In fiscal 2011 and 2010 Powerwave did not incur any audit-related fees. |
| (3) | Includes fees for professional services rendered in fiscal 2011 and 2010, in connection with tax compliance (including U.S. federal and international returns) and tax consulting. |
32
Table of Contents
| ITEM 15. | Exhibits, Financial Statement Schedules |
(a)(3) Exhibits. The following exhibits are filed as part of this Amendment No. 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2012.
| Exhibit |
Description | |
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.* | |
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.* | |
| * | In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
33
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Ana, State of California, on the 30th day of April 2012.
| POWERWAVE TECHNOLOGIES, INC. | ||
| By: | /s/ KEVIN T. MICHAELS | |
| Kevin T. Michaels | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 1 to Annual Report on Form 10-K has been signed below by the following persons in the capacities and on the dates indicated.
| Signature |
Title |
Date | ||
| /s/ RONALD J. BUSCHUR Ronald J. Buschur |
President, Chief Executive Officer and Director (Principal Executive Officer) |
April 30, 2012 | ||
| /s/ KEVIN T. MICHAELS Kevin T. Michaels |
Chief Financial Officer (Principal Financial and Accounting Officer) |
April 30, 2012 | ||
| /s/ CARL W. NEUN |
Chairman of the Board of Directors | April 30, 2012 | ||
| Carl W. Neun | ||||
| /s/ JOHN L. CLENDENIN |
Director | April 30, 2012 | ||
| John L. Clendenin | ||||
| /s/ MOIZ M. BEGUWALA |
Director | April 30, 2012 | ||
| Moiz M. Beguwala | ||||
| /s/ RICHARD BURNS |
Director | April 30, 2012 | ||
| Richard Burns | ||||
| /s/ DAVID L. GEORGE |
Director | April 30, 2012 | ||
| David L. George | ||||
| /s/ EUGENE L. GODA |
Director | April 30, 2012 | ||
| Eugene L. Goda | ||||
| /s/ KEN J. BRADLEY |
Director | April 30, 2012 | ||
| Ken J. Bradley | ||||
34