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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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CALLIDUS
SOFTWARE INC.
160 West Santa Clara
Street, Suite 1500
San Jose, CA 95113
To our stockholders:
You are cordially invited to attend the 2009 annual meeting of
stockholders of Callidus Software Inc. to be held on Tuesday,
June 2, 2009, at 10:00 a.m. Pacific Time at our
headquarters located at 160 West Santa Clara Street,
Suite 1500, San Jose, California 95113. Details
regarding the business to be conducted at the annual meeting are
described in the following notice of annual meeting and proxy
statement. Also enclosed in this mailing are three other
documents: our annual report, which contains information about
our business and includes our fiscal 2008 audited financial
statements; a proxy card for you to record your vote; and a
return envelope for your proxy card.
Your vote is important. Whether or not you plan to attend the
annual meeting, please complete and return the enclosed proxy
card as soon as possible. Voting by written proxy will ensure
your representation at the annual meeting. Please review the
instructions on the proxy card regarding voting by written
proxy, as well as the question and answer section in the first
part of the proxy statement.
Sincerely,
V. HOLLY ALBERT,
Senior Vice President, General Counsel and Secretary
San Jose, California
April 24, 2009
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU
ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE AS PROMPTLY AS
POSSIBLE.
CALLIDUS
SOFTWARE INC.
160 West Santa Clara
Street, Suite 1500
San Jose, CA 95113
(408) 808-6400
NOTICE OF 2009 ANNUAL MEETING
OF STOCKHOLDERS
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TIME AND DATE:
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10:00 a.m., Pacific Time, on June 2, 2009
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PLACE:
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Callidus Software Inc.
160 West Santa Clara Street, Suite 1500
San Jose, CA 95113
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ITEMS OF BUSINESS:
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(1) To elect our Class III directors;
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(2) To ratify the appointment of KPMG LLP as our
independent auditors for the fiscal year ending
December 31, 2009; and
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(3) To transact such other business as may properly come
before the meeting or any adjournment or postponement thereof.
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WHO CAN VOTE:
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You are entitled to vote if you were a stockholder of record at
the close of business on the record date, April 8, 2009.
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VOTING BY PROXY:
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Please submit a proxy as soon as possible so that your shares
can be voted at the annual meeting in accordance with your
instructions. For specific instructions on voting, please refer
to the instructions on the enclosed proxy card.
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2008 ANNUAL REPORT:
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A copy of our annual report is enclosed.
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DATE OF MAILING:
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This notice, the attached proxy statement, the accompanying
proxy card and our annual report are first being mailed to
stockholders on or about April 24, 2009.
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By Order of the Board of Directors
V. Holly Albert,
Senior Vice President, General Counsel and Secretary
San Jose, California
April 24, 2009
CALLIDUS
SOFTWARE INC.
2009
ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
TABLE OF
CONTENTS
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PROXY
STATEMENT 2009 ANNUAL MEETING OF STOCKHOLDERS
CALLIDUS
SOFTWARE INC.
(Solicited on behalf of the Board
of Directors)
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING,
THE PROXY MATERIALS AND VOTING YOUR SHARES
WHAT IS A
PROXY?
The board of directors of Callidus Software Inc. is soliciting
your vote at our 2009 annual meeting of stockholders. A proxy is
your legal designation of another person to vote the stock you
own. That other person is called a proxy. If you designate
someone as your proxy in a written document, that document also
is called a proxy or a proxy card. Ronald J. Fior and V. Holly
Albert have been designated as proxies for our 2009 annual
meeting of stockholders.
WHO CAN
VOTE AT THE MEETING?
The record date for our 2009 annual meeting of stockholders is
April 8, 2009. The record date was established by our board
of directors. Stockholders of record at the close of business on
the record date are entitled to:
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receive notice of the meeting; and
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vote at the meeting and any adjournments or postponements of the
meeting.
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On the record date, 29,885,295 shares of our common stock
were outstanding. Each stockholder is entitled to one vote for
each share of common stock held on the record date.
WHAT IS
THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF
RECORD AND HOLDING SHARES AS BENEFICIAL OWNER
(OR IN STREET NAME)?
Most stockholders are considered beneficial owners
of their shares, that is, they hold their shares through a
broker, bank or other nominee rather than directly in their own
name. As summarized below, there are some distinctions between
shares held of record and those owned beneficially or in
street name.
Stockholder of Record: If your shares are
registered directly in your name with our transfer agent, you
are considered the stockholder of record with
respect to those shares and we are sending the proxy materials
directly to you. As our stockholder of record, you have the
right to grant your voting proxy directly to us or to vote in
person at the annual meeting. We have enclosed a proxy card for
your vote.
Beneficial Owner: If your shares are held in a
stock brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in
street name, and these proxy materials are being forwarded to
you by your broker, bank, or nominee (who is considered the
stockholder of record with respect to those shares). As the
beneficial owner, you have the right to direct your broker,
bank, or nominee as to how to vote your shares if you follow the
instructions you receive from your broker, bank, or nominee. You
are also invited to attend the annual meeting. However, since
you are not the stockholder of record, you may not vote these
shares in person at the annual meeting unless you request,
complete, and deliver the proper documentation provided by your
broker, bank or nominee and bring it with you to the meeting.
WHAT ARE
THE DIFFERENT METHODS THAT I CAN USE TO VOTE MY SHARES OF COMMON
STOCK?
By Written Proxy: Stockholders of record can
vote their shares by marking, signing and timely returning the
enclosed proxy card. Street name or beneficial holders must
follow the directions provided by their broker, bank, or other
nominee in order to direct such broker, bank or nominee as to
how to vote their shares.
By Telephone and Internet Proxy: Street name
or beneficial holders may vote by telephone or the Internet if
their banks, brokers or nominees make those methods available,
by following the instructions provided to them with the proxy
materials.
In Person: All stockholders may vote in person
at the meeting. Street name or beneficial holders must obtain a
legal proxy from their broker, bank or nominee prior to the
annual meeting in order to vote in person.
HOW MANY
SHARES MUST BE PRESENT TO HOLD THE MEETING?
A majority of our outstanding shares as of the record date must
be present at the annual meeting in order to hold the annual
meeting and conduct business. This is called a quorum. Shares
are counted as present at the annual meeting if the holder of
the shares:
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is present and votes in person at the annual meeting; or
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has timely and properly submitted a proxy card.
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HOW ARE
ABSTENTIONS COUNTED?
Stockholders may choose to abstain or refrain from voting their
shares on one or more issues presented for a vote at the annual
meeting. However, for purposes of determining the presence of a
quorum, abstentions are counted as present.
WHAT ARE
THE CHOICES WHEN VOTING FOR DIRECTOR NOMINEES, AND WHAT VOTE IS
NEEDED TO ELECT DIRECTORS?
In the vote on the election of our director nominees,
stockholders may:
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vote in favor of all nominees;
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withhold votes as to all nominees; or
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withhold votes as to specific nominees.
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Assuming a quorum is present, directors will be elected by a
plurality of the votes cast.
Majority Vote Policy: Our corporate governance
guidelines, which are summarized later in this proxy statement,
set forth the procedures if a director-nominee is elected, but
receives a majority of withheld votes. In an
uncontested election, any nominee for director who receives a
greater number of votes withheld from his or her
election than votes for such election is required to
promptly tender his or her resignation to the board of directors
following certification of the shareholder vote.
The Nominating and Corporate Governance Committee is required to
make recommendations to the board of directors with respect to
any such letter of resignation. The board of directors is
required to take action with respect to this recommendation and
to disclose their decision-making process. Full details of this
Policy are set out in our corporate governance guidelines which
are available on our website located at
http://www.callidussoftware.com/callidus/investor-relations/governance/and
under Vote Required in Proposal One
Election of Directors below.
THE BOARD
RECOMMENDS A VOTE FOR ALL OF THE DIRECTOR
NOMINEES.
WHAT ARE
THE CHOICES WHEN VOTING ON THE RATIFICATION OF THE SELECTION OF
AUDITORS, AND WHAT VOTE IS NEEDED TO RATIFY THEIR
SELECTION?
In the vote on the ratification of the selection of KPMG LLP as
our independent auditors, stockholders may:
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vote in favor of ratification;
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vote against ratification; or
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abstain from voting on ratification.
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Assuming a quorum is present, the selection of KPMG LLP as our
independent auditors will be ratified if the affirmative vote of
a majority of the shares represented and entitled to vote on the
matter at the meeting is obtained.
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In the event that the stockholders do not ratify the selection
of KPMG LLP, the appointment of the independent auditors will be
reconsidered by the Audit Committee of the board of directors.
THE BOARD
RECOMMENDS A VOTE FOR THE RATIFICATION OF KPMG LLP AS
OUR INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31,
2009.
WHAT IF A
STOCKHOLDER DOES NOT SPECIFY A CHOICE FOR A MATTER WHEN
RETURNING A PROXY?
Stockholders should specify their choice for each matter on the
enclosed proxy card. If no specific instructions are given,
proxies that are signed and returned will be voted FOR the
election of all director nominees and FOR the proposal to ratify
the selection of KPMG LLP as our independent auditors.
WHAT DOES
IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that your shares are registered differently or you have
multiple accounts. Please vote all of these shares by completing
and returning each proxy card you receive.
WILL MY
SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
Your shares may be voted if they are held in the name of a
brokerage firm, even if you do not provide the brokerage firm
with voting instructions. Brokerage firms have the authority
under NASDAQ rules to vote shares for which their customers do
not provide voting instructions on certain routine
matters.
We believe that the uncontested election of directors and the
ratification of the selection of KPMG LLP as our independent
auditors are considered routine matters for which brokerage
firms may vote shares that are held in the name of brokerage
firms and which are not voted by the applicable stockholder.
HOW DO I
CHANGE OR REVOKE MY PROXY?
You may change or revoke your proxy at any time before it is
voted. Proxies for shares held of record may be changed or
revoked by timely (i) filing with our Secretary a written
notice of revocation bearing a later date than the proxy,
(ii) duly executing a later dated proxy relating to the
same shares and delivering it to our Secretary, or
(iii) attending the annual meeting and voting in person
(although attendance at the annual meeting will not in and of
itself constitute a revocation of a proxy). Any notice of
revocation or subsequent proxy must be delivered prior to
commencement of the vote at the meeting. Any written notice of
revocation or subsequent proxy for shares held of record should
be delivered to: Callidus Software Inc., 160 West
Santa Clara Street, Suite 1500, San Jose,
California 95113, Attention: Secretary.
HOW DO I
PROPOSE ACTIONS FOR CONSIDERATION OR NOMINATE INDIVIDUALS TO
SERVE AS DIRECTORS AT NEXT YEARS ANNUAL MEETING OF
STOCKHOLDERS?
Stockholders may submit proposals for consideration at a future
annual meeting of stockholders, including director nominations.
The manner in which you may present a proposal or nominate a
candidate for the board of directors is described in our bylaws.
You may contact our Secretary at our corporate headquarters for
a copy of the relevant bylaw provisions regarding the
requirements for making stockholder proposals and nominating
director candidates. Our bylaws are also available on our
website located at
http://www.callidussoftware.com/callidus/investor-relations/governance.
When submitting a candidate for nomination to the board of
directors to the Secretary, you should submit all information
relating to such potential nominee required under
Regulation 14A of the Securities Exchange Act of 1934, as
amended (Exchange Act), including biographical and
other information about the candidate, a statement of the
candidates qualifications and any other data supporting
the nomination.
Pursuant to
Rule 14a-8
under the Exchange Act, stockholders may present proper
proposals for inclusion in our proxy statement and for
consideration at our next annual meeting of stockholders by
submitting their proposals to our Secretary in a timely manner.
In order to be included in our proxy materials for our 2010
annual meeting of
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stockholders, your proposals must be received by us no later
than December 25, 2009 and have complied with the
requirements of
Rule 14a-8
of the Exchange Act.
Stockholders intending to present a proposal at our 2010 annual
meeting, but not intending to have such proposal included in our
2010 proxy materials, must comply with the requirements set
forth in our bylaws. The bylaws require, among other things,
that you must submit a written notice of intent to present such
a proposal to our Secretary at our principal executive offices
not later than the close of business on the ninetieth calendar
day, nor earlier than the close of business on the one hundred
and twentieth calendar day, prior to the first anniversary of
the preceding years annual meeting. Therefore, we must
receive notice of such proposals for the 2010 annual meeting on
or after February 2, 2010 and on or before March 4,
2010. Notices received outside of this period, along with any
proposals contained therein, will be considered untimely and the
proposals or nominees set forth therein will not be brought
before the annual meeting.
WHO BEARS
THE COST OF THIS SOLICITATION?
We will pay the entire cost of preparing, assembling, printing,
mailing and distributing these proxy materials. In addition, we
may reimburse banks, brokerage firms, and other custodians,
nominees, and fiduciaries representing beneficial owners of
shares for their expenses in forwarding solicitation materials
to such beneficial owners. Proxies may be solicited by certain
of our directors, officers and employees, personally or by mail,
telephone, facsimile, email or other means of communication
(electronic or otherwise). No additional compensation will be
paid for such services.
WHAT IF
ONLY ONE COPY OF THESE PROXY MATERIALS WAS DELIVERED TO MULTIPLE
STOCKHOLDERS WHO SHARE A SINGLE ADDRESS?
In some cases, only one copy of this proxy statement is being
delivered to multiple stockholders sharing an address unless we
have received contrary instructions from one or more of the
stockholders. We will deliver promptly, upon written or oral
request, a separate copy of this proxy statement and the
accompanying 2008 annual report to a stockholder at a shared
address to which a single copy of the document was delivered. To
request a separate delivery of these materials now or in the
future, you may submit a written request to our Secretary at
Callidus Software Inc., 160 West Santa Clara Street,
Suite 1500, San Jose, CA 95113 or a verbal request by
telephone to Investor Relations at
(408) 808-6577.
Additionally, any stockholders who are presently sharing an
address and receiving multiple copies of either the proxy
statement or the 2008 annual report and who would rather receive
a single copy of such materials may instruct us accordingly by
directing their request to us in the manner provided above.
PROPOSALS FOR
ACTION AT THE ANNUAL MEETING
Proposal One:
Election of Directors
Our bylaws provide that the board of directors may consist of
five to nine directors, the exact number of which is determined
by the board of directors from time to time. The board of
directors is currently comprised of eight directors. Our
certificate of incorporation provides that the board of
directors shall be divided into three classes, each consisting
of as nearly one third of the total number of directors as
possible. Each class of directors serves a three-year term
expiring at the annual meeting of stockholders in the year
listed in the table below:
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Class I (2010)
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Class II (2011)
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Class III (2009)
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George B. James
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William B. Binch
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Charles M. Boesenberg
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David B. Pratt
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Michele Vion
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Michael A. Braun
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Robert H. Youngjohns
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Leslie J. Stretch
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Based on the recommendation of the Nominating and Corporate
Governance Committee, the board of directors has nominated
Charles M. Boesenberg and Leslie J. Stretch for election as
Class III directors, each to serve three-year terms to
expire at the annual meeting of stockholders in 2012 or until
their successors are duly elected
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and qualified. Messrs. Boesenberg and Stretch are currently
serving as Class III directors and have each consented to
serve for a new term.
Mr. Michael A. Braun, who is currently also serving
as a Class III director, was not nominated to stand for
re-election. As a result, the board of directors has resolved
that effective as of the 2009 annual meeting of stockholders and
the resulting expiration of the terms of the Companys
Class III directors, the size of the board of directors
will be reduced to seven directors and the size of
Class III of the board of directors will be reduced to two
directors.
Directors in Class I and Class II are not being
re-elected this year and will continue in office for the
remainder of their terms, as described above, unless such
directors resign or their service as directors otherwise ceases
in accordance with our certificate of incorporation or bylaws.
Vote
Required
The two Class III directors being voted on this year are
elected by a plurality of the votes actually cast. This means
that the director nominee with the most affirmative votes for a
particular seat is elected for that seat. Abstentions have no
effect on the outcome of the vote.
In an uncontested election (i.e., an election where the only
nominees are those recommended by the board of directors), any
nominee for director who receives a greater number of votes
withheld from his or her election than votes
for such election (a Majority Withheld
Vote) is obligated to promptly tender his or her
resignation to the board of directors following certification of
the shareholder vote. This election is an uncontested election.
In the event of a tendered resignation following a Majority
Withheld Vote, the Nominating and Corporate Governance Committee
shall thereafter promptly consider the resignation offer and
recommend to the board of directors action with respect to the
tendered resignation, which may include accepting the
resignation, maintaining the director but addressing the
underlying cause of the withheld votes, resolving not to
re-nominate the director in the future, rejecting the
resignation, or any other action such committee deems to be
appropriate and in the best interest of the Company. In
considering what action to recommend with respect to the
tendered resignation, the Nominating and Corporate Governance
Committee will take into account all factors deemed relevant by
the members of the Nominating and Corporate Governance Committee
including, without limitation, any stated reasons why
shareholders withheld votes for election from such
director, the length of service and qualifications of the
director whose resignation has been tendered, the overall
composition of the board of directors, the directors
contributions to the Company, and the Companys Corporate
Governance Guidelines.
The board of directors will act on the Nominating and Corporate
Governance Committees recommendation no later than
90 days following certification of the shareholder vote. In
considering the Nominating and Corporate Governance
Committees recommendation, the board of directors will
consider the factors and possible actions considered by the
Nominating and Corporate Governance Committee and such
additional information, factors and possible actions the board
of directors believes to be relevant or appropriate.
Following the board of directors decision on the
Nominating and Corporate Governance Committees
recommendation, the Company will promptly disclose the board of
directors action with respect to the tendered resignation
(providing a description of the process by which the decision
was reached and, if applicable, the reasons for not accepting
the tendered resignation) in a
Form 8-K
filed with the Securities and Exchange Commission.
Except as indicated below, any director who tenders his or her
resignation pursuant to this provision shall not participate in
the Nominating and Corporate Governance Committee recommendation
or board of directors consideration regarding the action
to be taken with respect to the tendered resignation. If a
majority of the members of the Nominating and Corporate
Governance Committee received a Majority Withheld Vote at the
same election, then the independent directors who are on the
board of directors who did not receive a Majority Withheld Vote
will appoint a committee of the board of directors amongst
themselves solely for the purpose of considering the tendered
resignation and will recommend to the board of directors action
to be taken with respect to the tendered resignation. This
committee may, but need not, consist of all of the independent
directors who did not receive a Majority Withheld Vote. If all
of the independent directors receive Majority Withheld Votes,
all directors will participate in the consideration of the
action to be taken with respect to the tendered resignations. To
the extent that one or more directors resignations are
accepted by the board of directors, the Nominating and Corporate
Governance
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Committee will recommend to the board of directors whether to
fill such vacancy or vacancies or to reduce the size of the
board of directors.
It is the intention of the persons named as proxies herein to
vote in favor of the candidates nominated by the board of
directors unless such authority is withheld. If any nominee
should not be available for election, the proxies will be voted
in the best judgment of the persons authorized as proxies.
THE BOARD
RECOMMENDS A VOTE FOR ALL OF THE DIRECTOR
NOMINEES.
Information
Concerning Director Nominees
Charles M. Boesenberg, age 60, has served as a
director of Callidus since February 2006, as Chairman of the
Board since November 2008, and as Executive Chairman of the
Board from November 2007 to November 2008. Mr. Boesenberg
also currently serves on the boards of Rackable Systems, Inc., a
developer of scalable rack mount servers and Keynote Systems,
Inc., a provider of on-demand test and measurement products for
mobile communications and Internet performance. Prior to its
acquisition by Autonomy Corporation in March 2009,
Mr. Boesenberg served as a director for Interwoven, Inc.,
an enterprise content management provider. Prior to its
acquisition by Attachmate Corporation in June 2006,
Mr. Boesenberg served as chairman and CEO of NetIQ
Corporation, a leading provider of integrated systems and
security management software solutions, from August 2002 and
served as President and CEO of NetIQ from January 2002 to July
2002. Mr. Boesenberg also served as lead independent
director of Maxtor Corporation, a provider of hard disk drive
storage products and solutions, from January 2002 until its
merger with Seagate Corporation in 2006, and as a director of
Onyx Software Corporation, a provider of enterprise customer
processing software solutions. Mr. Boesenberg also
previously served as a member of the Boards of Directors of
Symantec Corporation, a provider of Internet security
technology, from June 1994 until September 2002, Macromedia,
Inc., a developer of software that helps create and deliver
effective user experiences on the Internet, fixed media, and
wireless and digital devices, from December 2004 to December
2005, Epicor Software, a provider of integrated enterprise
software solutions for mid-market companies, from December 2000
until May 2003. Prior to joining NetIQ, Mr. Boesenberg was
President of Post PC Ventures, a management and investment group
from March 2000 to December 2001. From December 1998 to February
2000, Mr. Boesenberg served as director, President and
Chief Executive Officer of Integrated Systems, Inc., a provider
of embedded systems software. Before joining Integrated Systems,
Mr. Boesenberg was President and Chief Executive Officer of
Magellan Corporation, which was the surviving corporation of a
merger with Ashtech, Inc., a position that he assumed in January
1995 with Ashtech. Magellan specializes in satellite navigation
and communication products. Mr. Boesenberg has held senior
executive positions with a number of technology companies
including International Business Machines Corporation and Apple
Computer, Inc. Mr. Boesenberg holds a Bachelor of Science
degree in Mechanical Engineering from the Rose Hulman Institute
of Technology and a Master of Science Degree in Business
Administration from Boston University.
Leslie J. Stretch, age 47, has served as our
President and CEO since December 2007. Previously,
Mr. Stretch was our Senior Vice President, Global Sales,
Marketing and On-Demand Business from July 2007 to November
2007, Senior Vice President, Worldwide Sales from April 2006 to
July 2007, and Vice President, Worldwide Sales from November
2005 to April 2006. Prior to joining Callidus, Mr. Stretch
served as interim CEO for The Hamsard Group, plc. in the United
Kingdom from April 2005 to September 2005. Previously,
Mr. Stretch served in a variety of roles at Sun
Microsystems, most recently as Senior Vice President of Global
Channel Sales from January 2005 to April 2005, UK Vice President
and Managing Director from February 2003 to January 2005, and UK
Sales Director from May 1996 to February 2003. Prior to joining
Sun Microsystems, Mr. Stretch served in a variety of roles
at Oracle Corporation, U.K. including Director of Retail and
Commercial Business UK from June 1995 to June 1996, Branch
Manager Western Canada from 1994 to 1995, and Branch Manager
Scotland from 1989 to 1994. Mr. Stretch holds a B.A. in
Economics and Economic History from the University of
Strathclyde and a Postgraduate Diploma in Computer Systems
Engineering from the University of Edinburgh.
Information
Concerning Directors Continuing in Office
William B. Binch, age 69, has served as a director
of Callidus since April 2005 and as our Lead Independent
Director of our board of directors since October 2008.
Mr. Binch also currently serves as the lead director of
SPSS
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Inc., since March 2001, a predictive analytics technology
company; MedeFinance Inc., since June 2004, an application
service provider of financial and analytical resources to the
healthcare industry; and Saama Technologies, Inc., since October
2000, a consulting and system integration firm specializing in
business intelligence and analytics. From 2003 to 2004,
Mr. Binch served as the Chief Executive Officer and
President of SeeCommerce, a business performance management
software company. Prior to joining SeeCommerce in 1999,
Mr. Binch served as Senior Vice President of Worldwide
Operations for Hyperion Solutions Corporation, an enterprise
software and services company, and as a senior executive at
Business Objects S.A. and Prism, Inc., both of which are
business intelligence and data warehousing companies.
Mr. Binch also previously served for five years at Oracle
Corporation, ultimately as Vice President of Strategic Accounts.
Mr. Binch holds a B.S., IE degree from the University of
Maryland.
George B. James, age 71, has served as a director of
Callidus since May 1999. Mr. James also currently serves as
director of Pacific States Industries, a private lumber
distribution company. From 1985 to 1998, Mr. James served
as Senior Vice President and Chief Financial Officer of Levi
Strauss & Company, an apparel manufacturer. Prior to
joining Levi Strauss & Company, Mr. James was
Executive Vice President and Chief Financial Officer, and later
Group President, with Crown Zellerbach Corporation, a paper mill
company, from 1982 to 1985. His previous experience also
includes ten years with Arcata Corporation, a forest product and
printing company, as Senior Vice President and Chief Financial
Officer, and three years with PepsiCo Leasing Corporation, an
equipment leasing company, as Vice President of Finance.
Mr. James also served as a member of the Board of Directors
and on the Audit Committee of The Sharper Image, a consumer
products company, from 2000 to 2008. Mr. James holds a B.A.
in Economics from Harvard College and an M.B.A. from the
Stanford Graduate School of Business.
David B. Pratt, age 69, has served as a director of
Callidus since June 2004 and served as our Interim President and
Chief Executive Officer from June 2004 to May 2005. Prior to
joining Callidus, Mr. Pratt served as Interim President and
Chief Executive Officer of AvantGo, Inc., a mobile internet
service company, from October 2002 to February 2003. From April
2002 until October 2002, he volunteered as Interim President and
Chief Executive Officer of the YMCA of the Mid-Peninsula, where
he remains a member of the board of directors. From January 2000
to March 2001, Mr. Pratt served as President and Chief
Executive Officer of gForce Systems, an enterprise software
company focusing on
e-learning.
Prior to joining gForce, Mr. Pratt was Executive Vice
President and Chief Operating Officer of Adobe Systems, Inc., a
software company, from May 1988 to January 1998. From October
1987 to April 1988, Mr. Pratt was Executive Vice President
and Chief Operating Officer of Logitech, Inc., a manufacturer of
computer input devices. Prior to Logitech, Mr. Pratt served
as Senior Vice President and Chief Operating Officer of Quantum
Corporation from February 1986 to March 1987. Mr. Pratt
currently serves on the boards of directors of The SETI
Institute and YMCA of the USA, and has in the past also served
on the boards of directors of several other corporations.
Mr. Pratt holds an M.B.A. from the University of Chicago
and a Bachelor of Science degree in Electrical Engineering from
the Massachusetts Institute of Technology.
Michele Vion, age 49, has served as a director of
Callidus since September 2005. Ms. Vion is employed at
Level 3 Communications, Inc., an international
communications company, as Group Vice President of Human
Resources since November 2008 and served previously as Senior
Vice President, Human Resources, from September 2006 to November
2008. Ms. Vion was previously employed at Sun Microsystems,
Inc., a computer networking company, in a variety of positions
including Vice President of Human Resources from 2003 to 2005,
Director of Human Resources from 2001 to 2003, and Director of
Compensation from 1999 to 2001. Prior to her employment at Sun,
Ms. Vion held senior human resource and compensation
positions at Storage Technology Corporation, a data management
and storage company, Electronic Data Systems Corporation, a
global technology services company, and JP Morgan, a global
financial services firm. Ms. Vion holds a Bachelor of Arts
in East Asian Studies and Economics from Wesleyan University.
Robert H. Youngjohns, age 57, has served as a
director of Callidus since May 2005. Mr. Youngjohns
currently serves as President of North America Sales and
Marketing and Corporate Vice President of Microsoft Corporation,
since December 2007. Previously Mr. Youngjohns served as
our President and Chief Executive Officer from May 2005 to
November 2007. From 1995 to May 2005, Mr. Youngjohns was
employed with Sun Microsystems, Inc., a computer networking
company, in a variety of roles including Executive Vice
President of Strategic Development and Sun Financing from 2004
to May 2005, Executive Vice President of Global Sales Operations
from 2002 to 2004, and Vice President of Europe, the Middle East
and Africa from 1998 to 2002. Prior to joining Sun
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Microsystems, Inc., Mr. Youngjohns spent 18 years at
IBM Corporation, an information technology company, during which
time he rose to the position of Director of IBM
Corporations EMEA RS/6000 business. Mr. Youngjohns
holds an M.A. in physics and philosophy from Oxford University.
Proposal Two:
Ratification of Appointment of Independent Auditors
On the recommendation of our Audit Committee, our board of
directors has appointed KPMG LLP, independent public
accountants, to audit our financial statements for the fiscal
year ending December 31, 2009. We are submitting this
selection to our stockholders for ratification. Although we are
not required to seek stockholder approval for this appointment,
we believe it is sound corporate practice to do so.
Representatives from KPMG LLP will be in attendance at the
annual meeting to respond to any appropriate questions and will
have the opportunity to make a statement if they so desire. If
the stockholders do not ratify the appointment of KPMG LLP, the
Audit Committee of the board of directors will reconsider the
appointment.
Vote
Required
If a quorum is present, the affirmative vote of a majority of
the shares present and entitled to vote at the annual meeting
will be required to approve the ratification of the appointment
of KPMG LLP as our independent auditors.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THIS
PROPOSAL
Auditor
Information
The fees billed or expected to be billed to us by KPMG LLP with
respect to our 2008 fiscal year are as follows:
Audit Fees: The aggregate fees billed for
services rendered by KPMG for the audit of our financial
statements for the 2008 fiscal year and the reviews of periodic
interim financial statements for the 2008 fiscal year were
approximately $1,292,200 compared to approximately $1,175,800
for the 2007 fiscal year.
Audit-Related Fees: The aggregate fees billed
for services rendered by KPMG for assurance and related services
that were reasonably related to the performance of the audit or
the review of our financial statements for the 2008 fiscal year
were approximately $10,000 compared to $120,000 for the 2007
fiscal year.
Tax Fees: The aggregate fees billed for
services rendered by KPMG for tax compliance, tax advice and tax
planning were approximately $58,000 for fiscal year 2008,
compared to approximately $58,000 for fiscal year 2007. The
Audit Committee considered whether the provision of the
foregoing services by KPMG was compatible with maintaining
KPMGs independence and determined that they were.
All fees billed in each of the last two fiscal years for
products and services provided by KPMG are described above and
all audit-related services and tax services were pre-approved by
the Audit Committee.
INFORMATION
ABOUT THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Our board of directors, which is elected by our stockholders, is
responsible for directing and overseeing our business and
affairs. In carrying out its responsibilities, the board of
directors selects and monitors our top management, provides
oversight of our financial reporting processes and determines
and implements our corporate governance policies.
Our board of directors and management have been and remain
committed to good corporate governance to ensure that we are
managed for the long-term benefit of our stockholders. To that
end, during the past year, our board of directors and management
have periodically reviewed our corporate governance policies and
practices to ensure that they remain consistent with the
requirements of the Sarbanes-Oxley Act of 2002, the rules of the
Securities and Exchange Commission and the listing standards of
the NASDAQ Global Market. In doing so, our board of directors
also reviewed current best practices of similarly situated
public companies.
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We have in place a variety of policies and practices to promote
good corporate governance. Consistent with our corporate
governance guidelines and the rules of the NASDAQ Global Market,
our board of directors has determined that a majority of the
members of our board of directors is independent and
that all members of the Audit and Qualified Legal Compliance,
Compensation, and Nominating and Corporate Governance Committees
also satisfy such independence criteria. Since 2007, the
compensation of our Chief Executive Officer has been approved by
the members of the board of directors based upon the
recommendation of the Compensation Committee and such other
information as the board of directors chooses to consider. At
the direction of our board of directors, we also have:
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periodically reviewed and made any necessary updates to the
charters for our Audit, Compensation and Nominating and
Corporate Governance Committees;
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established disclosure control policies and procedures in
accordance with the requirements of the Sarbanes-Oxley Act of
2002 and the rules and regulations of the SEC;
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established a procedure for receipt and treatment of anonymous
and confidential complaints or concerns regarding audit or
accounting matters; and
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established a code of business conduct and ethics applicable to
our officers, directors and employees.
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In addition, we have adopted a set of corporate governance
guidelines, as referred to above. The Nominating and Corporate
Governance Committee of our board of directors is responsible
for reviewing our corporate governance guidelines from time to
time and reporting and making recommendations to the board of
directors concerning corporate governance matters. Among the
matters addressed by the corporate governance guidelines are:
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Director Independence Independent directors shall
constitute at least a majority of our board of directors.
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Monitoring Board Effectiveness The corporate
governance guidelines require that the board of directors
conduct an annual self-evaluation of the functioning of the
board of directors and its committees.
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Chairman of the Board and Lead Independent Director
The roles and responsibilities of the Chairman of the board of
directors and the Lead Independent Director are generally
described in the corporate governance guidelines, as described
under the sections entitled, Chairman of the Board of
Directors and Lead Independent Director, below.
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Executive Sessions of Directors The Chairman and the
non-employee directors regularly meet without management
present, and such sessions are led by Mr. Boesenberg,
Chairman of the board of directors, and the independent
chairpersons of the applicable committees of the board of
directors. Meetings of Independent directors are led by
Mr. Binch, Lead Independent Director.
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Board Access to Independent Advisors Our board of
directors as a whole, and each of its committees separately,
have authority to retain independent consultants, counselors or
advisors as each deems necessary or appropriate.
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Board Committees All members of the Audit,
Compensation, and Nominating and Corporate Governance Committees
are required to be independent in accordance with applicable
NASDAQ criteria.
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Copies of our corporate governance guidelines, code of business
conduct and ethics and committee charters can be found on our
website at
http://www.callidussoftware.com/callidus/investor-relations/governance/.
Meetings
of the Board of Directors
Our board of directors held twenty-three regular and special
meetings and authorized one action by unanimous written consent
in 2008. Each director attended at least 75% of all meetings of
the board of directors held during the period in which he or she
was a director in 2008. Under our corporate governance
guidelines, directors are expected to be active and engaged in
discharging their duties and to keep themselves informed about
our business and operations. Directors are also expected to make
every effort to attend our annual meeting of stockholders, all
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meetings of the board of directors and all meetings of the
committees on which they serve. All seven of our directors
holding office at the time attended our 2008 annual meeting of
stockholders.
Code of
Business Conduct and Ethics
Callidus has adopted a code of business conduct and ethics that
applies to all of our directors, officers and employees,
including our chief executive officer, principal financial
officer and principal accounting officer. During 2008, no
waivers were granted from any provision of the code of business
conduct and ethics.
A copy of our code of business conduct and ethics is available
on our Internet website at
http://www.callidussoftware.com/callidus/investor-relations/governance/
and may also be obtained without charge by contacting our
Secretary at Callidus Software Inc., 160 West
Santa Clara Street, Suite 1500, San Jose, CA
95113. We intend to post any amendments to or waivers from our
code of business conduct and ethics (to the extent applicable to
our chief executive officer, principal financial officer or
principal accounting officer) on the website referred to above.
Independence
of Directors
The board of directors has determined that as of the date of
this proxy statement each of William B. Binch, Michael A. Braun,
George B. James, David B. Pratt and Michele Vion is
independent within the meaning of
Rule 4200(a)(15) of the Nasdaq Global Market listing
standards. In making the independence determination, the board
of directors considered certain arms-length transactions with
service providers with which Mr. Binch and Ms. Vion
are affiliated.
Stockholder
Communications with the Board of Directors
Stockholders and other parties interested in communicating
directly with the board of directors may do so by writing to:
Board of Directors,
c/o Callidus
Software Inc., 160 West Santa Clara Street,
Suite 1500, San Jose, CA 95113 or by submitting an
e-mail to
boardofdirectors@callidussoftware.com. The Lead Independent
Director is available for periodic consultation and direct
communication with major stockholders of the Company.
Stockholders and others may also direct their correspondence
solely to the Chairperson of the Audit Committee or to our
Secretary. Concerns relating to accounting, internal controls or
auditing matters are immediately brought to the attention of our
Audit Committee and handled in accordance with procedures
established by the Audit Committee with respect to such matters.
Committees
of the Board of Directors
The board of directors uses committees to work on certain issues
in more detail than would be reasonable at a meeting of the full
board of directors. Each committee reviews the progress and
results of its meetings with the full board of directors and
makes recommendations to the board of directors as and when
appropriate. The board of directors presently has three standing
committees: an Audit Committee (which also serves as our
Qualified Legal Compliance Committee), a Compensation Committee
and a Nominating and Corporate Governance Committee. Each
director who served on a committee attended at least 75% of all
meetings of each such committee held during the period in 2008
during which he or she was a member of such committee. Each of
the three standing committees of the board of directors
described below operates pursuant to a written committee charter
that is available to stockholders on our Internet website at
http://www.callidussoftware.com/callidus/investor-relations/governance/.
Audit
Committee and Qualified Legal Compliance Committee
The Audit Committee and Qualified Legal Compliance Committee
currently consist of:
George B. James (Chair)
William B. Binch
David B. Pratt
The Audit Committee met twelve times and took no actions by
unanimous written consent in 2008. Messrs. James, Binch and
Pratt were members of our Audit Committee at the end of 2008.
Mr. James serves
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as Chairperson of the Audit Committee. Each of
Messrs. James, Binch, and Pratt is independent
as defined under Marketplace Rules 4200(a)(15) and
4350(d)(2) of the Nasdaq Global Market listing standards and
meets the independence requirements of
Rule 10A-3(b)(i)
under the Exchange Act. The board of directors has determined
that each of Messrs. James, Binch and Pratt qualify as
financial experts as defined by the rules of the
Securities and Exchange Commission. Pursuant to its charter,
which was amended and restated on March 5, 2009 and a copy
of which is available on our Internet website at
http://www.callidussoftware.com/callidus/investor-relations/governance/,the
Audit Committee is responsible for the oversight of the quality
and integrity of our financial statements, our compliance with
legal and regulatory requirements, the qualifications and
independence of our independent auditors, the performance of our
independent auditors and other significant financial matters. In
discharging its duties, the Audit Committee is expected to:
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have the sole authority to appoint, retain, compensate, oversee
and terminate the independent auditors;
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review and approve the scope of the annual audit;
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review and pre-approve the engagement of our independent
auditors to perform audit and non-audit services and the related
fees;
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review the integrity of our financial reporting process;
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review our financial statements and disclosures and filings with
the Securities and Exchange Commission;
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review funding and investment policies;
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review and approve an annual report of the Audit Committee for
inclusion in our annual proxy statement;
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review disclosures from our independent auditors regarding
Independence Standards Board Standard No. 1;
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review and, if appropriate, approve related party
transactions; and
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review and assess annually our Audit Committees
performance and the adequacy of its charter.
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The members of our Audit Committee also act as our Qualified
Legal Compliance Committee, or QLCC, which is
responsible for reviewing any reports made to our QLCC by
attorneys representing us or our subsidiaries of a material
violation or breach arising under United States federal or state
laws. As no such violations or breaches were reported to us in
the last fiscal year, the QLCC did not meet in 2008. The QLCC
has the authority and responsibility to adopt written procedures
for the confidential receipt, retention and consideration of any
report of violations and determine whether an investigation is
necessary. The QLCC also has authority to initiate
investigations and recommend that we implement appropriate
measures in response to such reported violations. The Audit
Committee, acting as the QLCC, reports to the board of directors
at least once a year on any reports received and investigations
conducted. The QLCC acts only by majority vote.
A report of the Audit Committee for fiscal year 2008 is included
in this proxy statement.
Compensation
Committee
The Compensation Committee currently consists of:
Michele Vion (Chair)
William B. Binch
David B. Pratt
The Compensation Committee met eight times and took two actions
by written consent in 2008. The board of directors has
determined that each of the members of the Compensation
Committee, is a non-employee director as defined in
Rule 16b-3
promulgated under the Exchange Act, an outside
director as defined pursuant to Section 162(m) of the
Internal Revenue Code of 1986 and independent as
defined under Rule 4200(a)(15) of the Nasdaq Global Market
listing standards.
Among the Compensation Committees specific
responsibilities are the following:
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overseeing our compensation and benefits policies generally;
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evaluating the performance of our executives and reviewing our
management succession plans;
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overseeing and setting compensation for our executive officers
other than our President and CEO and advising and making
compensation recommendations to the board of directors for our
President and CEO and directors;
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reviewing and approving a discussion and analysis on executive
compensation for inclusion in our annual proxy statement;
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reviewing and approving any employment, severance and change of
control agreements with our senior executives, as well as any
other compensation arrangements; and
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reviewing and assessing annually our Compensation
Committees performance and the adequacy of its charter.
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A copy of the Compensation Committee charter, which was amended
and restated on March 5, 2009, can be accessed
electronically at
http://www.callidussoftware.com/callidus/investor-relations/governance/.
For more information regarding the Compensation Committees
processes and use of consultants, see the compensation
discussion and analysis included in this proxy statement below.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee currently
consists of:
William B. Binch (Chair)
George B. James
Michele Vion
The Nominating and Corporate Governance Committee met three
times and took no actions by written consent in 2008. The board
of directors has determined that each of the members of the
Nominating and Corporate Governance Committee, is
independent as defined under Rule 4200(a)(15)
of the Nasdaq Global Market listing standards. Pursuant to its
charter, the Nominating and Corporate Governance Committee is
responsible for, among other things:
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making recommendations to our board of directors regarding
nominees to the board of directors proposed for election by our
stockholders as well as individuals to be considered to fill any
vacancies that may occur on the board of directors;
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evaluating and recommending to our board of directors any
revisions to our corporate governance guidelines;
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establishing criteria for membership on the board of directors
and its committees, including criteria as to director
independence;
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overseeing the process for evaluating the performance of our
board of directors and its committees;
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evaluating the current composition, organization and governance
of our board of directors and its committees, determining future
requirements and making recommendations to our board of
directors for approval;
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reviewing policies related to related party transactions and
conflicts of interest; and
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reviewing and evaluating annually the Nominating and Corporate
Governance Committees performance, including compliance
with its charter.
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Consideration
of Director Nominees
Stockholder Nominees. The bylaws of Callidus
permit stockholders to nominate directors for consideration at
an annual stockholder meeting. For a description of the process
for nominating directors in accordance with our bylaws, see
Questions and Answers about the Annual Meeting, the Proxy
Materials and Voting Your Shares How Do I Propose
Actions for Consideration or Nominate Individuals to Serve as
Directors at Next Years Annual
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Meeting of Stockholders? The policy of the Nominating and
Corporate Governance Committee is to consider properly submitted
stockholder nominations for candidates for membership on the
board of directors as described below under Identifying
and Evaluating Nominees for Directors. In evaluating such
nominations, the Nominating and Corporate Governance Committee
seeks to achieve a balance of knowledge, experience and
capabilities on the board of directors and compliance with the
membership criteria set forth below under Director
Qualifications.
Director Qualifications. Our corporate
governance guidelines contain board of directors membership
criteria that apply to nominees recommended by our Nominating
and Corporate Governance Committee for a position on our board
of directors. The qualifications to be considered by the
Nominating and Corporate Governance Committee include judgment,
diversity, age, skills, background and experience in light of
the board of directors present composition and the current
challenges and needs of the board of directors and its
committees. The Nominating and Corporate Governance Committee
also takes into account the independence, financial literacy and
financial expertise standards required under our corporate
governance guidelines, the board of directors committees
charters and applicable laws and regulations and the ability of
the candidate, in light of the candidates present
activities and our corporate governance guidelines, to devote
the necessary time and attention to serving as a director and a
committee member. Each director must represent the interests of
all stockholders.
Identifying and Evaluating Nominees for
Directors. The Nominating and Corporate
Governance Committee utilizes a variety of methods for
identifying and evaluating nominees for director. The Nominating
and Corporate Governance Committee regularly assesses the
appropriate size of the board of directors and whether any
vacancies on the board of directors are expected due to
retirement or otherwise. In the event that vacancies are
anticipated or otherwise arise, the Nominating and Corporate
Governance Committee decides whether to fill such vacancies and,
if so, considers various potential candidates to fill each
vacancy. Candidates may come to the attention of the Nominating
and Corporate Governance Committee through current board of
directors members, professional search firms engaged by us,
stockholders or other persons. These candidates are evaluated at
regular or special meetings of the Nominating and Corporate
Governance Committee and may be considered at any point during
the year. As described above, the Nominating and Corporate
Governance Committee considers certain properly submitted
stockholder nominations for candidates for the board of
directors. If any materials are provided by a stockholder in
connection with the nomination of a director candidate, such
materials are forwarded to the Nominating and Corporate
Governance Committee. In evaluating director nominations, the
Nominating and Corporate Governance Committee seeks to achieve a
balance of knowledge, experience and capability on the board of
directors.
Chairman
of the Board
In November 2007, our board of directors created the position of
Executive Chairman of the board of directors and elected Charles
M. Boesenberg to such role for one year. Effective
November 1, 2008, our board of directors determined that
the Chairman of the board of directors would no longer be an
executive officer. Accordingly, the board of directors chose to
remove the word Executive from the Chairmans
title. Thereafter, the board of directors elected
Mr. Boesenberg to a new term in office as Chairman of the
board of directors. Because of his role as an executive officer
through October 2008, the board of directors has determined that
Mr. Boesenberg is not independent within the meaning of
Rule 4200(a)(15) of the Nasdaq Global Market listing
standards. The duties of the Chairman of the board of directors,
who is selected from among all of the non-employee members of
the board of directors, include: (i) the review and
approval of all agendas of the board of directors in
consultation with the Chief Executive Officer and Lead
Independent Director of the board of directors,
(ii) presiding over meetings of the board of directors,
(iii) approving meeting schedules to assure that there is
sufficient time for discussion of all items, (iv) serving
as a liaison between our Chief Executive Officer and our board
of directors, and (v) leading the board of directors
annual evaluation process of the Chief Executive Officer.
Lead
Independent Director of the Board
In October 2008, our board of directors elected William B. Binch
to the position of Lead Independent Director of the board of
directors. The Lead Independent Director is selected from among
our independent directors. Mr. Binch is an independent
director within the meaning of Rule 4200(a)(15) of the
Nasdaq Global Market listing standards. Previously, from
November 2007 to October 2008, Mr. Braun acted as the Lead
Independent Director of
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the board of directors. The duties of the Lead Independent
Director of the board of directors include: (i) working
directly with the Chairman to develop agendas for meetings of
the board of directors, (ii) leading the review process of
the Chairman, (iii) serving as a liaison between the
independent directors and the Chairman and Chief Executive
Officer, (iv) being available for periodic consultation and
direct communication with major stockholders of the Company,
(v) calling and presiding over meetings of the independent
directors, (vi) overseeing corporate governance matters,
including being the Chairman of the Nominating and Corporate
Governance Committee, as well as, evaluating the performance of
the board of directors and its committees, and
(vii) reviewing the findings of the evaluation with
directors and members of the Companys executive management
team.
Executive
Sessions
Executive sessions of directors without Company executive
management present are held regularly. The sessions are
scheduled and led by either the Chairman or the Lead Independent
Director of the board of directors
and/or the
applicable independent chairperson of the committee of the board
of directors. Any director can request that an additional
executive session be scheduled.
INFORMATION
REGARDING COMPENSATION OF DIRECTORS
AND EXECUTIVE OFFICERS
Director
Compensation
We believe that a combination of cash and equity compensation is
appropriate to attract and retain the individuals we desire to
serve on our board of directors and that this approach is
comparable to the policies of our peers. We consider the
compensation outlined below suitable for our non-employee
directors.
Director
Cash Compensation
Prior to April 2008, the cash compensation component of our
non-employee director compensation had been that each of our
directors who is not an officer or employee of Callidus was paid
a quarterly retainer of $5,000, a fee of $1,000 plus expenses
for each meeting of the board of directors attended and a fee of
$750 plus expenses for each committee meeting attended.
Commencing April 2008, we eliminated meeting-based director fees
in favor of an annual retainer of $30,000, payable to each
non-employee director other than our Chairman. We also
eliminated annual equity awards to the chairpersons of each of
the committees of our board of directors and instead began
paying additional annual cash retainers of $20,000, $15,000, and
$8,000 for the chairs of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee,
respectively. Finally, we began paying each committee member
(other than the respective chairpersons of the committees)
annual cash retainers of $10,000, $8,000, and $6,000, for
membership on the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee, respectively.
Each of the foregoing annual cash retainers is payable in
quarterly installments.
In addition, effective December 1, 2008, we began paying
our Chairman an annual retainer of $80,000, payable quarterly.
We also pay our Lead Independent Director an annual retainer of
$20,000, which retainer is also paid quarterly.
Our cash compensation policies are designed to encourage
frequent and active interaction between directors and our
executives both during and between formal meetings as well as
compensate our directors for their time and effort.
Director
Equity Compensation
We believe it is important to align the long-term interests of
the non-employee directors with those of the Company and its
stockholders and that awarding equity compensation to our
non-employee directors is an appropriate means to achieve this
alignment.
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Effective April 2008, we modified the equity compensation
awarded to non-employee directors upon their initial election or
appointment to our board of directors. Under our revised policy,
upon first becoming a non- employee director, each director
receives a non-qualified stock option to purchase
25,000 shares of our common stock that vests over four
years (25% after one year and monthly thereafter) and a
restricted stock unit award of 7,500 shares of our common
stock that vests over a period of three years (33.3% after one
year and quarterly thereafter).
Each non-employee director receives an annual grant of an
immediately vested non-qualified stock option to purchase
15,000 shares immediately following each annual
stockholders meeting. In March 2009, we modified the
annual equity compensation awarded to non-employee directors
such that in addition to the option to purchase
15,000 shares, each will receive a restricted stock unit
award of 5,000 shares of our common stock that are issued
only upon the termination of their membership on our board of
directors.
We adopted the modifications to non-employee directors
equity compensation in April 2008 and March 2009 based on our
review of such compensation among our peer group (as described
below in Compensation Discussion and Analysis), and our
conclusion that the value of equity compensation we offered
non-employees was substantially less than the average in our
peer group. Given the importance of recruiting and retaining
highly qualified non-employee directors, we determined that it
was important to modify equity compensation to remain
competitive.
We believe our current policy for equity awarded to our
non-employee directors will better align the interests of our
directors with the interests of the Company and our stockholders
by increasing ownership of our common stock by our non-employee
directors.
The table below shows the compensation earned by each of our
non-employee directors during the fiscal year ended
December 31, 2008.
DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid in
|
|
Stock Awards
|
|
Option Awards
|
|
|
Name
|
|
Cash ($)
|
|
($)(1)
|
|
($)(1)(2)
|
|
Total ($)
|
|
William B. Binch
|
|
$
|
59,728
|
|
|
$
|
0
|
|
|
$
|
25,860
|
|
|
$
|
85,588
|
|
Charles M. Boesenberg
|
|
$
|
6,667
|
|
|
$
|
0
|
|
|
$
|
28,572
|
|
|
$
|
35,239
|
|
Michael A. Braun
|
|
$
|
68,419
|
|
|
$
|
0
|
|
|
$
|
25,860
|
|
|
$
|
94,279
|
|
George B. James
|
|
$
|
54,250
|
|
|
$
|
0
|
|
|
$
|
25,860
|
|
|
$
|
80,110
|
|
David B. Pratt
|
|
$
|
40,323
|
|
|
$
|
0
|
|
|
$
|
25,860
|
|
|
$
|
66,183
|
|
Michele Vion
|
|
$
|
50,314
|
|
|
$
|
0
|
|
|
$
|
25,860
|
|
|
$
|
76,174
|
|
Robert H. Youngjohns
|
|
$
|
30,500
|
|
|
$
|
0
|
|
|
$
|
13,144
|
|
|
$
|
43,644
|
|
|
|
|
(1) |
|
Amounts represent the dollar amount recognized as compensation
expense during 2008 utilizing the provisions of Statement of
Financial Accounting Standards (SFAS) No. 123R,
Share-based Payments. See Note 8 of the
consolidated financial statements in the Companys Annual
Report on Form
10-K for the
year ended December 31, 2008 regarding assumptions
underlying valuation of equity awards. |
|
(2) |
|
Amounts in this column may represent options granted during and
before 2008, as applicable. Utilizing the provisions of
SFAS No. 123R, the full grant date fair value of the
option award made to each of the directors in 2008 was as
follows: William B. Binch $25,860; Charles M. Boesenberg
$23,151; Michael A. Braun $25,860; George B. James $25,860;
David B. Pratt $25,860; Michele Vion $25,860; and Robert H.
Youngjohns $13,144. At December 31, 2008 the aggregate
number of option awards outstanding for each director was as
follows: William B. Binch 86,561; Charles M. Boesenberg 94,080;
Michael A. Braun 246,706; George B. James 194,667; David B.
Pratt 315,767; Michele Vion 71,168; and Robert H. Youngjohns
788,295. No stock awards were outstanding. |
We have entered into change of control agreements with each of
our non-employee directors, which provide that in the event of a
change of control of Callidus, all options and restricted stock
unit awards held by each director at the time of a change of
control will immediately become vested.
15
Compensation
Committee Interlocks and Insider Participation
None of our executive officers serve as a member of the board of
directors or compensation committee of any entity that has one
or more executive officers serving as a member of our board of
directors or Compensation Committee.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
set forth below with management and, based on such review and
discussions, the Compensation Committee recommended to the board
of directors that the Compensation Discussion and Analysis set
forth below be included in the Companys Proxy Statement
pursuant to Schedule 14A, filed in accordance with
Section 14(a) of the Securities Exchange Act of 1934, as
amended.
THE COMPENSATION COMMITTEE
Michele Vion, Chair
William B. Binch
David B. Pratt
COMPENSATION
DISCUSSION AND ANALYSIS
The following discussion and analysis focuses on the
compensation paid to the individuals who served as our Chief
Executive Officer and Chief Financial Officer during fiscal
2008, as well as the other individuals included in the Summary
Compensation Table elsewhere in this proxy statement,
collectively referred to as the named executive
officers, although in actuality much of the discussion
applies to all of our senior executives.
Our
Compensation Committee
The Compensation Committee of the board of directors is
responsible for overseeing our executive compensation program,
including through reviewing and approving or recommending to our
board of directors the compensation arrangements for our Chief
Executive Officer and other members of senior management. In
addition, the Compensation Committee works with management in
its review and approvals of various other compensation policies
and matters, and oversees our equity incentive plans, including
reviewing and approving (or recommending to the board of
directors for approval) all equity awards to our senior
executive officers. The Compensation Committee has engaged an
outside compensation consulting firm, Radford Surveys +
Consulting, an Aon Consulting Company (Radford) to
advise the Committee and the board of directors on executive and
equity compensation matters, including guidance on peer company
practices, which the Compensation Committee used in its overall
assessment and setting of executive compensation targets for
2008. The consulting firm reports directly to the Compensation
Committee, which has sole authority to direct its work, and to
the Chairperson of the Compensation Committee in particular.
Objectives
of the Executive Compensation Program
The executive compensation program seeks to encourage and reward
executive contributions that are beneficial to us and our
stockholders. Our Compensation Committee believes that our
long-term success is closely tied to our ability to compete in
extremely competitive markets for talented executives who are
motivated to help us succeed. To successfully compete in a tight
market for executive talent, our Compensation Committee has
designed and continually reviews and refines our executive
compensation program with an intention to accomplish the
following goals:
|
|
|
|
|
maintain and enhance our ability to attract and retain highly
qualified executives;
|
|
|
|
encourage performance that aligns executive compensation rewards
to our top business priorities;
|
|
|
|
foster a mindset among the executive team that the rewards of
our compensation plan are fair and consistent;
|
|
|
|
focus the senior executive management team on our operating
goals by tying a substantial portion of their compensation to
performance targets to which they are held accountable.
|
16
Our executive compensation program is designed to promote the
attainment of strategic annual and long-term business objectives
to increase shareholder value. Our executive compensation
consists primarily of cash compensation (both base salary and
performance-based bonus) and equity compensation providing
long-term incentives.
Determining
Executive Compensation
The Compensation Committees review of individual senior
executive compensation includes an assessment of prior and
current compensation and peer group practice. The amounts and
elements of our cash and equity components of our executive
compensation program are naturally similar to those of many
technology companies. This is primarily the result of industry
trends and expectations of senior executives in the markets we
target for hiring and retention. In addition, the amounts of
equity grants (in the form of stock options and, beginning in
2008, restricted stock units) are made by taking into account
our retention as well as long-term goals established by our
board of directors.
As part of its analysis and design of the executive compensation
program, the Compensation Committee reviews pay data for senior
executives in companies of similar size (based on revenues) and
complexity from the software and other high-technology
industries that it considers to be our peer group for
compensation purposes. The peer group approved by the
Compensation Committee for evaluation of 2008 compensation
consisted of the following companies:
|
|
|
|
|
Actuate Corporation
Advent Software, Inc.
Ansoft Corporation
Ariba, Inc.
Chordiant Software, Inc.
Interwoven, Inc.
iPass, Inc.
|
|
Kana Software, Inc.
Kenexa Corporation
Netmanage, Inc.
Pegasystems Inc.
Phoenix Technologies Ltd.
Saba Software, Inc.
Secure Computing Corporation
|
|
SumTotal Systems
SupportSoft, Inc.
Synplicity, Inc.
Taleo Corporation
The Ultimate Software Group, Inc.
Vignette Corporation
|
Cash
Compensation (Base Salary and Performance Bonuses)
For all senior executives, cash compensation consists of a base
salary and a performance-based cash bonus component tied to
business operating targets. For fiscal year 2008, these targets
were established by our board of directors in January and July
and achievement was measured and paid quarterly. After reviewing
Radfords market information and discussing with our Chief
Executive Officer effective ways to align business strategy with
our executive compensation plan, the Compensation Committee sets
total target cash compensation (which is comprised of base
salary plus the executives target performance bonus) at a
rate that it considers competitive with market practice and that
will motivate our senior executives to excel.
Total target cash compensation generally falls between the
median and the upper third quartile of peer group data and is
primarily driven by performance-based incentives designed to
motivate executives to exceed the business plan targets by
creating a direct link between achievement of our financial
performance and individual executive rewards. In determining
total target cash compensation for a specific senior executive,
the Compensation Committee considers other factors, including
the scope of the senior executives particular job, his or
her performance in the job, the expected value of the senior
executives future impact or contribution to our success
and growth, our recent financial performance and market
competitiveness. In addition, the Committee considers
recommendations from our Chief Executive Officer regarding
particular motivating factors for specific executive officers
other than himself.
In 2008 for senior executive positions whose performance was
more directly tied to corporate revenue and profit generation,
such as our Chief Executive Officer and Senior Vice President of
Global Sales, the Compensation Committee determined that their
total cash compensation should generally be weighed more heavily
on Company performance-based metrics tied to revenue and profit
contribution. As such, these senior executives typically have
more of their total target cash compensation at risk
than others, and so their total target cash compensation is on
the higher range of the third quartile of the peer group listed
above, with even higher amounts of compensation for above-target
performance. For other senior executives, the total target cash
compensation in 2008 was at the lower
17
range of the third quartile, but if we met or exceeded the
performance targets, the total cash compensation was intended to
increase toward the 75th percentile. The Compensation
Committee apportioned the allocation between base salary and
performance bonus based on various criteria, including in
particular:
|
|
|
|
|
market data provided by our independent consultant;
|
|
|
|
internal review of each senior executives compensation,
both individually and relative to other senior
executives; and
|
|
|
|
individual senior executive goals and performance.
|
Base
Salary
In setting base salaries, the Compensation Committee reviews
Radfords recommendations for market ranges with respect to
base salary compensation of officers in comparable corporate
positions, comparable industries, and comparable sized
companies. Merit-based increases of senior executive salaries
are considered annually and are awarded based on recommendations
of our Chief Executive Officer after assessment of each member
of the executive teams performance as part of his regular
performance review process, and the board of directors
assessment of our Chief Executive Officers performance.
The average increase in base salaries in 2008 over 2007 for our
named executive officers was 3.8%.
Performance
Bonuses
The Executive Incentive Bonus Plan was created as a means to
recognize and reward the link between the achievement of
Callidus corporate objectives and the senior
executives contributions to its success. The plan is
designed to motivate the senior executive team to achieve
business targets by placing compensation at risk if
we do not meet our objectives. The individual target bonus
amounts are approved at the beginning of the calendar year by
the Compensation Committee (or the board of directors as it
relates to our Chief Executive Officer) with performance targets
typically established by the board of directors on a semi-annual
basis.
Depending on the senior executives position and market
analysis, the target bonus amounts for 2008 ranged from 55% to
100% of the base salary earned during the performance period. In
general, the Compensation Committee and the board of directors
set target levels based on business plan objectives established
near the beginning of the year and attempt to set the target
levels consistently from year-to-year based on challenging but
achievable growth and profitability projections. These targets
may not correlate to our publicly disclosed guidance because the
operating targets for purposes of the bonus plan reflect ranges
of expected performance. For example, the Compensation Committee
may decide to set target bonus amounts at a higher
or lower level as they deem appropriate.
For 2008, the Compensation Committee determined that quarterly
review and payment of the performance-based cash bonuses was
appropriate to maintain executive motivation and allow the board
of directors to make needed adjustments to performance targets,
if any, to align with changes in our business objectives and
business offerings. In October 2008, the amounts for each of the
compensation metric targets were revised downward to reflect the
unusual global economic times. The Compensation Committee
retains the right to make discretionary bonus payments under the
Executive Incentive Bonus Plan based on meritorious
circumstances.
Generally, performance-based cash compensation is awarded only
if we achieve the minimum threshold performance which, when set,
is intended to be a realistic performance level representing a
substantial portion of target levels. For each
quarter of 2008, the minimum threshold for each of the
performance target components was 90%. If we exceed the
threshold(s), but do not reach the target level, then actual
performance-based cash payments are based upon the difference
between the established targets and actual performance and are
pro rated accordingly.
In 2008, at target, the percentage of the cash performance
targets were weighted equally, one-third revenue, one-third
annual contract value, and one-third operating income. In
addition to the target objectives, the Compensation Committee
set out overachievement goals (internally known as stretch
objectives) to motivate the
18
executives to exceed the targets, for which they received
payouts above the target bonus amounts for the first three
months of 2008.
The target bonuses established by the Compensation Committee for
the named executive officers under the 2008 Executive Incentive
Bonus Plan are set out in the following table.
Target Bonus
(as a% of Base Salary)
|
|
|
|
|
Position
|
|
Target Achievement
|
|
|
President and Chief Executive Officer
|
|
|
100
|
%
|
Senior Vice President Worldwide Sales
|
|
|
100
|
%
|
Other Senior Executive Officers
|
|
|
55-75
|
%
|
The following table shows the pre-established goals for each of
our performance metrics (expressed as a range from the minimum
threshold target required for payment of any bonus to the
maximum overachievement goal) for each fiscal quarter during
2008, as well as the resulting payout for each executive officer
for the quarter (expressed as a percentage of any
individuals target bonus). Where payout percentages are
zero, we did not meet the threshold level of performance for any
of the metrics.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Goals (Range from Threshold to
Overachievement)
|
|
|
|
|
|
Total Bonuses
|
|
|
|
|
|
|
Annual Contract
|
|
|
Operating
|
|
|
Actual Payout (as a
|
|
|
(Named Executive
|
|
FY08 Period
|
|
Revenue
|
|
|
Values(1)
|
|
|
Income/(Loss)(1)
|
|
|
% of Target Bonus)
|
|
|
Officers)
|
|
|
First quarter
|
|
$
|
25-30M
|
|
|
$
|
2.9-3.5M
|
|
|
$
|
(1.3M)-1.9M
|
|
|
|
147
|
%
|
|
$
|
442,196
|
|
Second quarter
|
|
$
|
29-35M
|
|
|
$
|
4.3-5.3M
|
|
|
$
|
(.1M)-$4M
|
|
|
|
0
|
%
|
|
$
|
0
|
|
Third quarter
|
|
$
|
25-30M
|
|
|
$
|
3-5.5M
|
|
|
$
|
(1M)-$2M
|
|
|
|
67
|
%
|
|
$
|
202,451
|
|
Fourth quarter
|
|
$
|
24-29M
|
|
|
$
|
3-5M
|
|
|
$
|
(1.2M)-$1.6M
|
|
|
|
68
|
%
|
|
$
|
205,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
71
|
%
|
|
$
|
849,665
|
|
|
|
|
(1) |
|
The amounts stated are not based on Generally Accepted
Accounting Principles (GAAP). In calculating the amounts stated,
the Committee adjusts for items such as stock-based compensation
expense, restructuring expense, amortization of acquired
intangible assets and tax benefits or expenses. |
For the fourth quarter, the target ranges in the table reflect
the Compensation Committees adjustment of goals during
October 2008 as a result of global economic conditions. In
addition, for the fourth quarter, the Compensation Committee
reviewed the circumstances involving a loss related to a
disputed account and a customers bankruptcy filing for
which we took a bad debt expense. The Compensation Committee
weighed these events against other considerations such as our
full-year overall performance and determined to exclude these
transactions from its performance compensation assessment.
Accordingly, the Compensation Committee determined that our
performance exceeded the revenue target for performance bonuses,
exceeded the threshold for operating income, but failed to
achieve the threshold for annual contract value. As such, the
Compensation Committee approved payment of 68.3% of the eligible
target bonuses.
Equity
Compensation
The Committee believes that our equity compensation program is
important for rewarding our executives and other key employees
for long-term performance in a manner that reflects value
received by our stockholders, while encouraging retention by
subjecting stock option grants and restricted stock unit awards
to vesting, typically over four years and three years,
respectively.
In making decisions regarding equity compensation, the Committee
considers the dilutive impact on stockholders. In 2008, we
limited the number of shares awarded via equity grants and
awards such that the target for net dilution of issued and
outstanding shares would approximate 5%. In order to accomplish
this goal, in 2007 we began awarding employees restricted stock
units in smaller quantities as compared to prior stock option
grants. These restricted stock units typically vest in quarterly
installments over three years.
19
In 2008, the majority of our named executive officers received
annual refresh stock option grants based on reviews by the
Compensation Committee which included input from the Chief
Executive Officer and examination of the market and peer group
data and guidance received from Radford. These stock option
grants vest monthly over 4 years, standard for our
follow-on stock option grants.
Beginning in 2008, we started granting a combination of
restricted stock units as well as stock options to the executive
officers. Because restricted stock units are awarded in smaller
share amounts to reflect the fact that they have no exercise
price like stock options, they limit dilution of our common
stock, and add retention value to the program by offering
incentives to executive officers even in a down market.
Generally, these restricted stock units would vest in quarterly
installments over three years as mentioned above. However, in
light of the departure of our prior President and Chief
Executive Officer, Robert Youngjohns, in November 2007, the
Compensation Committee determined that a stronger, short-term
retention incentive was required for executive officers in order
to ensure continuity of our management team during this
transition. Accordingly, the Compensation Committees
awards of restricted stock units to executive officers other
than our new President and Chief Executive Officer, Leslie
Stretch, in January 2008 were structured to vest in full upon
the executives continued employment with us on the
one-year anniversary of the award date.
The board of directors also chose to encourage the retention and
performance of our President and Chief Executive Officer by
granting him two restricted stock unit awards in January 2008.
Under the terms of the first award for 120,000 shares,
one-third of the shares vested on the first anniversary of the
award date with the remaining number of shares vesting quarterly
over two additional years.
Under the terms of the second award for 60,000 shares, all
of the shares vest on the fifth anniversary of the award date,
but early vesting of up to 20,000 shares could occur during
each of the first three years based on our financial
performance. The performance targets used to determine annual
vesting acceleration of the second award were an aggregate of
the quarterly performance targets established under our
Executive Incentive Bonus Plan discussed above.
In January 2009, the board of directors determined that our
performance in 2008 had exceeded the threshold annual targets
but failed to meet the target goals such that approximately 71%
acceleration was approved under the terms of the second award.
As such, in January 2009, 14,150 shares of the
20,000 shares eligible for accelerated vesting for fiscal
2008 under the second award were released to our President and
Chief Executive Officer.
The exercise price of all stock option grants is no less than
the closing price of our common stock on the NASDAQ Global
Market on the date of grant. To avoid any appearance of
impropriety concerning the timing of grants, our Compensation
Committee has implemented a policy to grant all equity awards
for senior executives on the last trading day of the month in
which the grant is approved, except that awards to senior
executives (other than new hire grants) are not granted during a
blackout period or a trading freeze period under our Policy and
Procedure on Insider Trading. These policies have been
formalized and included in our Equity Award Administration
Policy which can be found on our website at
http://www.callidussoftware.com/callidus/investor-relations/governance/.
Other
Benefits
Change in Control and Severance. Our senior
executive officers have agreements providing potential severance
benefits and change in control protections. The Compensation
Committee believes that these severance and change in control
arrangements mitigate some of the risk that exists for
executives working in a smaller company. These arrangements are
intended to attract and retain qualified executives who could
have other job alternatives that may appear to them to be less
risky absent these arrangements. Because of the significant
acquisition activity in the high technology industry, there is a
possibility that we could be acquired in the future.
Accordingly, the Compensation Committee believes that the
severance packages and change of control provisions provide an
incentive for these executives to continue to help successfully
execute such a transaction from its early stages until closing,
in support of a board of directors approved transaction that is
considered in the shareholders best interest.
Other. Our senior executive officers otherwise
participate in employee benefit plans that are provided to our
other employees, including our Employee Stock Purchase Plan,
401(k) plan and health and welfare benefits.
20
Generally, we do not provide additional benefits or perquisites
to our executives that are not available to all of our employees.
Accounting
and Tax Considerations
Statement of Financial Accounting Standards (SFAS)
No. 123R, Share-based Payments requires us to
expense stock options in our income statement over the stock
options vesting period. As a result, in order to limit the
amount of expense, we currently grant stock options with maximum
terms of five years, instead of ten years as we had granted
prior to our adoption of SFAS No. 123R in 2006.
We generally intend to maximize the deductibility of executive
compensation so long as the deductibility is compatible with the
objectives of our compensation policies, including retention of
high-performing individuals and maintaining competitive
compensation. Section 162(m) of the Internal Revenue Code
limits the tax deductibility by us of compensation in excess of
$1 million paid to our chief executive officer, chief
financial officer or any of our three other most highly
compensated executive officers, unless the compensation is
performance-based as defined by the Internal Revenue
Code. To date, the application of Section 162(m) to us has
not resulted in material loss of tax deduction. The Committee
has not adopted a policy that all compensation must qualify as
deductible under Section 162(m). For example, our
performance bonus plan does not qualify as
performance-based compensation under
Section 162(m), and we grant equity compensation that does
not qualify as performance-based for purposes of
Section 162(m).
Section 280G of the Internal Revenue Code disallows a
companys tax deduction for what are defined as
excess parachute payments in connection with a
change in control, and Section 4999 of the Internal Revenue
Code imposes a 20% excise tax on certain persons who receive
excess parachute payments. We currently do not provide any
executive officer or director with a
gross-up or
other reimbursement for tax amounts the individual might pay
pursuant to Sections 280G and 4999 of the Internal Revenue
Code.
Executive
Compensation
The following table sets forth all compensation awarded, earned
or paid to our Chief Executive Officer, Chief Financial Officer
and the other three most highly compensated executive officers
for the last fiscal year, for services rendered to us in all
capacities during the last three fiscal years, to the extent the
individual was a named executive officer for such fiscal year.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
Salary
|
|
Stock Awards
|
|
Option Awards
|
|
Incentive Plan
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
Compensation ($)(2)
|
|
($)
|
|
Leslie J. Stretch
|
|
|
2008
|
|
|
$
|
350,000
|
|
|
$
|
244,348
|
|
|
$
|
418,105
|
|
|
$
|
247,641
|
|
|
$
|
1,260,094
|
|
President and
|
|
|
2007
|
|
|
$
|
285,833
|
|
|
$
|
|
|
|
$
|
201,242
|
|
|
$
|
222,701
|
|
|
$
|
709,776
|
|
Chief Executive
|
|
|
2006
|
|
|
$
|
240,000
|
|
|
$
|
|
|
|
$
|
204,896
|
|
|
$
|
317,636
|
|
|
$
|
762,532
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Fior
|
|
|
2008
|
|
|
$
|
286,650
|
|
|
$
|
194,035
|
|
|
$
|
244,028
|
|
|
$
|
152,113
|
|
|
$
|
876,826
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
273,000
|
|
|
$
|
|
|
|
$
|
229,991
|
|
|
$
|
117,860
|
|
|
$
|
620,851
|
|
Finance and Operations,
|
|
|
2006
|
|
|
$
|
260,000
|
|
|
$
|
|
|
|
$
|
218,805
|
|
|
$
|
174,362
|
|
|
$
|
653,167
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Graves
|
|
|
2008
|
|
|
$
|
252,550
|
|
|
$
|
182,858
|
|
|
$
|
242,222
|
|
|
$
|
133,726
|
|
|
$
|
811,357
|
|
Senior Vice President, Engineering, Chief Technology Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
Salary
|
|
Stock Awards
|
|
Option Awards
|
|
Incentive Plan
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
Compensation ($)(2)
|
|
($)
|
|
Bryan P. Burkhart
|
|
|
2008
|
|
|
$
|
250,000
|
|
|
$
|
208,655
|
|
|
$
|
152,181
|
|
|
$
|
176,886
|
|
|
$
|
787,722
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
230,000
|
|
|
$
|
13,576
|
|
|
$
|
85,206
|
|
|
$
|
369,153
|
|
|
$
|
697,935
|
|
Global Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. Holly Albert
|
|
|
2008
|
|
|
$
|
262,600
|
|
|
$
|
175,985
|
|
|
$
|
162,472
|
|
|
$
|
139,299
|
|
|
$
|
740,356
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel, Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts represent the dollar amount recognized as compensation
expense during the year indicated utilizing the provisions of
SFAS No. 123R. See Note 8 of the consolidated
financial statements in the Companys Annual Report on
Form 10-K
for 2008 regarding assumptions underlying valuation of equity
awards. Amounts may represent awards granted during or before
the years indicated. |
|
(2) |
|
Reflects amounts earned during the year indicated for
performance by the applicable executive under the Companys
Executive Incentive Bonus Plan, except in the case of
Mr. Burkhart who was promoted to Senior Vice President,
Global Sales in November 2007. The amounts indicated in this
column as they relate to Mr. Burkhart in 2007 represent
sales commissions earned under his 2007 Vice President Sales,
Americas Sales Commission Plan. Commencing January 1, 2008,
Mr. Burkhart became eligible under the Companys
Executive Incentive Bonus Plan and is no longer eligible to
receive sales commissions under any sales commission plan. |
Grants of
Plan-Based Awards
The following table sets forth information concerning grants of
stock options and non-equity incentive plan awards made to our
named executive officers during 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
Board of
|
|
|
|
|
|
|
|
Stock
|
|
All Other
|
|
|
|
Grant Date
|
|
|
|
|
Directors
|
|
Estimated Future Payouts
|
|
Awards:
|
|
Option
|
|
Exercise or
|
|
Fair Value
|
|
|
|
|
or Compensation
|
|
Under Non-Equity
|
|
Number of
|
|
Awards: Number
|
|
Base Price
|
|
of Stock
|
|
|
|
|
Committee
|
|
Incentive Plan Awards(2)
|
|
Shares
|
|
of Securities
|
|
of Option
|
|
and
|
|
|
|
|
Action
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
of Stock or
|
|
Underlying
|
|
Awards
|
|
Option
|
Name
|
|
Grant Date(1)
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
Units
|
|
Options(6)
|
|
($/Sh)
|
|
Awards ($)
|
|
Leslie J. Stretch
|
|
|
1/31/2008
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000(3
|
)
|
|
|
|
|
|
|
|
|
|
$
|
295,800
|
|
|
|
|
1/31/2008
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000(4
|
)
|
|
|
|
|
|
|
|
|
|
$
|
591,600
|
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
$
|
297,500
|
|
|
$
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Fior
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,000(5
|
)
|
|
|
|
|
|
|
|
|
|
$
|
211,990
|
|
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
$
|
4.93
|
|
|
$
|
171,270
|
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
$
|
243,653
|
|
|
$
|
286,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Graves
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
$
|
4.93
|
|
|
$
|
171,270
|
|
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,000(5
|
)
|
|
|
|
|
|
|
|
|
|
$
|
182,410
|
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
$
|
214,200
|
|
|
$
|
252,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan P. Burkhart
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000(5
|
)
|
|
|
|
|
|
|
|
|
|
$
|
192,270
|
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
$
|
212,500
|
|
|
$
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V. Holly Albert
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
$
|
4.93
|
|
|
$
|
171,270
|
|
|
|
|
1/31/2008
|
|
|
|
1/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000(5
|
)
|
|
|
|
|
|
|
|
|
|
$
|
192,270
|
|
|
|
|
1/23/2008
|
|
|
|
|
|
|
$
|
223,125
|
|
|
$
|
262,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to our board of directors-approved policy, stock
options and restricted stock units are awarded to Executive
Officers, including the named executive officers listed above,
on the last trading day of the month in which the award is
approved as long as a Blackout Period or Trading Freeze Period
under our Insider Trading Policy is not in effect. |
22
|
|
|
(2) |
|
The amounts shown in the column entitled Threshold
reflect the minimum payment level under our 2008 Executive
Incentive Bonus Plan to be paid only upon achievement of 90% of
the revenue, annual contract value and operating income
performance targets in each quarter of 2008. Lesser amounts
could be paid if only one or two of the three performance
metrics were achieved in any quarterly period. The amounts under
Target assume that 100% of the performance targets
were achieved. There was no maximum payment level set in 2008,
although payments could be above the Target amounts
if performance exceeded the targets. |
|
(3) |
|
All of the shares subject to this restricted stock unit award
vest on the fifth anniversary of the award date, but early
vesting of up to 20,000 shares could occur during each of
the first three years based on our financial performance. As
described in the section entitled Compensation
Discussion and Analysis above, the board of directors
approved the vesting of 14,150 shares under this award in
January 2009. |
|
(4) |
|
This restricted stock unit vested one-third of the total number
of shares on January 31, 2009, the first anniversary of the
award date, with the remaining shares vesting in equal quarterly
installments over the two years thereafter. |
|
(5) |
|
Actual amounts paid for 2008 are set forth in the Summary
Compensation Table above. Each of these restricted stock unit
awards was subject to full vesting on the first anniversary of
the date of award, which vesting did in fact occur on
January 31, 2009. |
|
(6) |
|
The amounts reflect the number of shares of Company common stock
granted to each named executive officer in the form of a
non-qualified stock option grant. Each option granted was
subject to vesting over 48 equal monthly installments from the
date of grant and had a maximum five year term. |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
Option
|
|
Units of Stock that
|
|
Stock that
|
|
|
Option
|
|
Unexercised Options
|
|
Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
have
|
|
have not
|
Name
|
|
Grant Date
|
|
(#) Excercisable
|
|
(#) Unexcercisable
|
|
Price ($)
|
|
Date
|
|
not Vested
|
|
Vested ($)
|
|
Leslie J. Stretch
|
|
|
11/30/2005
|
(1)
|
|
|
132,708
|
|
|
|
57,292
|
|
|
$
|
4.15
|
|
|
|
11/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2007
|
(2)
|
|
|
57,500
|
|
|
|
62,500
|
|
|
$
|
7.53
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2007
|
(2)
|
|
|
108,333
|
|
|
|
291,667
|
|
|
$
|
6.26
|
|
|
|
11/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
$
|
358,800
|
|
|
|
|
1/31/2008
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
$
|
179,400
|
|
Ronald J. Fior
|
|
|
10/15/2002
|
(5)
|
|
|
15,000
|
|
|
|
|
|
|
$
|
0.84
|
|
|
|
10/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12/23/2002
|
(2)
|
|
|
15,000
|
|
|
|
|
|
|
$
|
0.84
|
|
|
|
12/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
8/26/2003
|
(2)
|
|
|
60,000
|
|
|
|
|
|
|
$
|
4.17
|
|
|
|
8/26/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2004
|
(6)
|
|
|
80,000
|
|
|
|
|
|
|
$
|
3.92
|
|
|
|
9/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2005
|
(7)
|
|
|
97,916
|
|
|
|
2,084
|
|
|
$
|
4.51
|
|
|
|
2/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2006
|
(8)
|
|
|
82,500
|
|
|
|
27,500
|
|
|
$
|
4.38
|
|
|
|
1/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2007
|
(2)
|
|
|
57,500
|
|
|
|
62,500
|
|
|
$
|
7.53
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(2)
|
|
|
22,916
|
|
|
|
77,084
|
|
|
$
|
4.93
|
|
|
|
1/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,000
|
|
|
$
|
128,570
|
|
Michael L. Graves
|
|
|
2/28/2007
|
(1)
|
|
|
114,583
|
|
|
|
135,417
|
|
|
$
|
3.16
|
|
|
|
2/29/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(2)
|
|
|
22,916
|
|
|
|
77,084
|
|
|
$
|
4.08
|
|
|
|
1/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,000
|
|
|
$
|
110,630
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
Option
|
|
Units of Stock that
|
|
Stock that
|
|
|
Option
|
|
Unexercised Options
|
|
Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
have
|
|
have not
|
Name
|
|
Grant Date
|
|
(#) Excercisable
|
|
(#) Unexcercisable
|
|
Price ($)
|
|
Date
|
|
not Vested
|
|
Vested ($)
|
|
Bryan P. Burkhart
|
|
|
12/23/2002
|
(2)
|
|
|
625
|
|
|
|
|
|
|
|
0.84
|
|
|
|
12/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2004
|
(2)
|
|
|
35,000
|
|
|
|
|
|
|
|
15.36
|
|
|
|
1/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
10/18/2004
|
(2)
|
|
|
10,000
|
|
|
|
|
|
|
|
3.80
|
|
|
|
10/18/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2005
|
(2)
|
|
|
81,250
|
|
|
|
18,750
|
|
|
|
3.70
|
|
|
|
9/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
8/31/2006
|
(2)
|
|
|
17,500
|
|
|
|
12,500
|
|
|
|
4.69
|
|
|
|
8/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
10/31/2006
|
(2)
|
|
|
5,416
|
|
|
|
4,584
|
|
|
|
5.72
|
|
|
|
10/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2007
|
(2)
|
|
|
10,625
|
|
|
|
19,375
|
|
|
|
9.80
|
|
|
|
7/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
11/30/2007
|
(2)
|
|
|
27,083
|
|
|
|
72,917
|
|
|
|
6.26
|
|
|
|
11/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2007
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,834
|
|
|
$
|
17,444
|
|
|
|
|
1/31/2008
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000
|
|
|
$
|
116,610
|
|
V. Holly Albert
|
|
|
8/31/2006
|
(1)
|
|
|
116,666
|
|
|
|
83,334
|
|
|
$
|
4.69
|
|
|
|
8/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2007
|
(2)
|
|
|
11,979
|
|
|
|
13,021
|
|
|
$
|
7.53
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(2)
|
|
|
22,916
|
|
|
|
77,084
|
|
|
$
|
4.93
|
|
|
|
1/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000
|
|
|
$
|
116,610
|
|
|
|
|
(1) |
|
Option vests over a period of four years, with 25% of the number
of shares vesting on the first anniversary of the date of grant
and the remaining 75% vesting in equal monthly installments over
the three years thereafter. |
|
(2) |
|
Option vests over a period of four years in equal monthly
installments commencing on the date of grant. |
|
(3) |
|
Restricted stock unit award vests over a period of three years,
with one-third vesting on the first anniversary of the date of
award and the remaining two-thirds vesting in eight quarterly
installments thereafter. |
|
(4) |
|
Restricted stock unit award vests on the fifth anniversary of
the date of award provided that up to 20,000 shares may
vest in each of the first three years after the date of award if
and to the extent Company financial performance targets are met. |
|
(5) |
|
Option vested over a period of four years in equal monthly
installments commencing on September 16, 2002. |
|
(6) |
|
Option vested 100% on September 1, 2007, subject to
accelerated vesting, in whole or in part, if certain Company
stock performance targets are met as further described in the
section entitled Equity Compensation of the
Compensation Discussion and Analysis above. |
|
(7) |
|
Option vests over a period of four years in equal monthly
installments commencing on January 1, 2005. |
|
(8) |
|
Option vests over a period of four years in equal monthly
installments commencing on December 6, 2005. |
|
(9) |
|
Restricted stock unit award vests in full on the first
anniversary of the date of award. |
|
(10) |
|
Restricted stock unit award vests over a period of three years
in twelve quarterly installments commencing on the date of award. |
24
Option
Exercises and Stock Vested
The following table sets forth certain information regarding
options exercised and stock vesting for our named executive
officers during 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
Option Awards
|
|
Number of Shares
|
|
|
|
|
|
|
Number of Shares
|
|
Value Realized
|
|
Acquired on
|
|
Value Realized on
|
|
|
Name
|
|
Acquired on Exercise
|
|
on Exercise ($)
|
|
Vesting
|
|
Vesting ($)(1)
|
|
|
|
Leslie J. Stretch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Fior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan P. Burkhart
|
|
|
|
|
|
|
|
|
|
|
3,333
|
|
|
$
|
15,274
|
|
|
|
|
|
V. Holly Albert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael L. Graves
|
|
|
|
|
|
|
|
|
|
|
13,000
|
|
|
$
|
63,830
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects the closing price of our common stock on the vesting
date multiplied by the number of shares that vested on that date. |
Employment Contracts, Change of Control Arrangements and
Severance Agreements of Named Executive Officers
Change
of Control Arrangements
We have change of control agreements with Messrs. Stretch,
Fior, Burkhart, and Graves, and Ms. Albert. All of these
agreements, except that of Mr. Fior, provide that any
options granted and restricted stock units awarded to such
individuals will become immediately vested if the individual is
terminated without cause or resigns for good reason (as those
terms are defined in the change of control agreements) within
18 months after the change of control. Mr. Fiors
agreement furthermore provides that in the event of a change of
control of Callidus, any options granted to him prior to
March 14, 2006 will immediately become vested and
exercisable.
|
|
|
|
|
Under the terms of each of the change of control agreements, the
term good reason includes: (i) any reduction in
base salary or annual target bonus, (ii) any material
reduction in any other benefits, (iii) any material
reduction in duties or authority, or (iv) a requirement to
relocate more than 35 miles.
|
If in 2008 there had been a change of control and one or more of
the named executive officers had been terminated effective as of
December 31, 2008, we estimate that the value of the
acceleration of the options under the change of control
agreements would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
Value of Stock Option Awards
|
|
Value of Stock Awards
|
Name
|
|
Outstanding(1)
|
|
Outstanding(2)
|
|
Leslie J. Stretch
|
|
$
|
|
|
|
$
|
538,200
|
|
Ronald J. Fior
|
|
$
|
|
|
|
$
|
128,570
|
|
Michael Graves
|
|
$
|
|
|
|
$
|
110,630
|
|
Bryan P. Burkhart
|
|
$
|
|
|
|
$
|
134,054
|
|
Holly Albert
|
|
$
|
|
|
|
$
|
116,610
|
|
|
|
|
(1) |
|
Accelerated vesting of stock option award amounts was determined
by measuring the intrinsic value of the unvested stock options
as of December 31, 2008, by subtracting the exercise price
of the option from the closing price of our stock as of
December 31, 2008 and multiplying the difference by the
number of unvested shares. For each of our named executive
officers, the value of their unvested options as of
December 31, 2008 is zero as a consequence of the price of
our stock being less than the exercise price of all outstanding
options held by such officers. |
|
(2) |
|
Accelerated vesting of restricted stock unit award amounts was
determined by measuring the closing price of our stock as of
December 31, 2008 by the number of unvested shares. |
25
Severance
Arrangements
On November 1, 2005, we entered in an offer of employment
with Leslie J. Stretch pursuant to which he commenced employment
with us, initially as our Vice President, Worldwide Sales.
Effective December 1, 2007, our board of directors
appointed Mr. Stretch President and Chief Executive
Officer. In connection with Mr. Stretchs promotion,
we amended the terms and conditions of his employment. Under the
terms of his amended offer of employment, if Mr. Stretch is
terminated without cause and he signs a release, he will receive
12 months of his then current base salary, target bonus and
health benefits. In addition, if the termination is in
connection with a change of control, 100% of his unvested equity
awards will vest, as described in the section Change of
Control Agreements above.
Pursuant to offer letters or our current standard severance
policy for senior vice presidents, upon an involuntary
termination for reasons other than cause, we would pay each of
our named executive officers who signs a release seven months of
their base salary and an amount equal to the cost of their COBRA
health benefits contributions.
The following table identifies the amounts we estimate that the
named executive officers in the table below would have been
entitled to receive had they been terminated without cause
effective as of December 31, 2008, (not including the value
of equity vesting if the termination occurred in connection with
a change in control, which is described above):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
Target Bonus
|
|
Health Benefits
|
|
Total Severance
|
Name
|
|
Equivalent
|
|
Equivalent
|
|
(1)
|
|
Benefits
|
|
Leslie J. Stretch
|
|
$
|
350,000
|
|
|
$
|
350,000
|
|
|
$
|
17,703
|
|
|
$
|
717,703
|
|
Ronald J. Fior
|
|
$
|
167,213
|
|
|
|
|
|
|
$
|
10,327
|
|
|
$
|
177,539
|
|
Michael L. Graves
|
|
$
|
147,321
|
|
|
|
|
|
|
$
|
10,327
|
|
|
$
|
157,647
|
|
Bryan P. Burkhart
|
|
$
|
145,833
|
|
|
|
|
|
|
$
|
10,327
|
|
|
$
|
156,160
|
|
V. Holly Albert
|
|
$
|
153,183
|
|
|
|
|
|
|
$
|
7,083
|
|
|
$
|
160,266
|
|
|
|
|
(1) |
|
The amount indicated in the column entitled Health
Benefits is based on an estimate of the cost of COBRA
contributions for continued health care coverage. |
Equity
Compensation Plan Information
The following table summarizes information about common stock
that may be issued upon the exercise of options, warrants and
rights under all of our equity compensation plans as of
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
|
|
|
for Future Issuance
|
|
|
Number of Securities
|
|
Weighted Average
|
|
Under Equity
|
|
|
to be Issued upon
|
|
Exercise Price of
|
|
Compensation Plans
|
|
|
Exercise of
|
|
Outstanding
|
|
(Excluding Securities
|
|
|
Outstanding Options,
|
|
Options, Warrants
|
|
Reflected in First
|
|
|
Warrants and Rights
|
|
and Rights
|
|
Column)
|
|
Equity compensation plans approved by stockholders(1)(2)
|
|
|
5,892,054
|
|
|
$
|
5.18
|
|
|
|
2,744,965
|
|
Equity compensation plans not approved by stockholders(3)
|
|
|
625,000
|
|
|
$
|
3.45
|
|
|
|
0
|
|
Total
|
|
|
6,517,054
|
|
|
$
|
5.01
|
|
|
|
2,744,965
|
|
|
|
|
(1) |
|
The number of shares of common stock available under the
Employee Stock Purchase Plan increases on July 1 of each year by
the lesser of (i) 1,200,000 shares, (ii) 2.0% of
the outstanding shares of common stock on the last day
immediately preceding such date or (iii) a lesser amount
determined by the board of directors. |
|
(2) |
|
The number of shares available under the 2003 Stock Incentive
Plan increases on July 1 of each year by the lesser of
(i) 2,800,000 shares, (ii) 5.0% of the
outstanding shares of common stock on the last day immediately
preceding such date or (iii) an amount determined by the
board of directors. |
|
(3) |
|
Reflects a Non-Qualified Stock Option Agreement with
Mr. Robert H. Youngjohns, our former President and CEO,
entered into in accordance with his employment agreement as an
inducement grant outside of our stockholder approved
plan. Under the terms of the Option Agreement,
Mr. Youngjohns had the option to |
26
|
|
|
|
|
purchase 1,000,000 shares of our common stock at an
exercise price of $3.45 per share, which was the closing price
of our common stock on May 31, 2005, the date of grant, on
the Nasdaq Global Market. With the termination of his employment
in November 2007, Mr. Youngjohns, who remains a member of
our board of directors, retained the right to exercise his then
vested 625,000 shares under the option. The option must be
exercised upon the earlier of 90 days after the termination
of his services as a member of the board of directors or the
maximum term of the option, 10 years from the date of grant. |
OWNERSHIP
OF CALLIDUS SOFTWARE INC. COMMON STOCK
The following table sets forth information known to us with
respect to the beneficial ownership of our common stock as of
March 31, 2009 by the following:
|
|
|
|
|
each person known by us to own beneficially more than 5% of our
common stock;
|
|
|
|
each of the directors and named executive officers
individually; and
|
|
|
|
all directors and executive officers as a group.
|
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission, which generally
attribute beneficial ownership of securities to each person who
possesses, either solely or shared with others, the power to
vote or dispose of those securities. These rules also treat as
outstanding all shares of capital stock that a person would
receive upon exercise of stock options or warrants held by that
person that are immediately exercisable or exercisable within
60 days of the determination date, which in the case of the
following table is March 31, 2009. Shares issuable pursuant
to stock options and warrants exercisable within 60 days
are deemed outstanding and held by the holder of such options or
warrants for computing the percentage of the person holding such
options or warrants, but are not deemed outstanding for
computing the percentage of any other person. The percentage of
beneficial ownership for the following table is based on
29,885,295 shares of common stock outstanding as of
March 31, 2009. To our knowledge, except as indicated in
the footnotes to this table and pursuant to applicable community
property laws, the persons named in the table have sole voting
and investment power with respect to all shares of common stock.
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially
|
|
|
Owned
|
Name
|
|
Number
|
|
Percent
|
|
S Squared Technology Corp.(1)
|
|
|
2,532,883
|
|
|
|
8.5
|
%
|
515 Madison Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
Brenner West Capital Advisors, LLC(2)
|
|
|
1,745,600
|
|
|
|
5.8
|
|
110 East 42nd Street, Suite 1419
|
|
|
|
|
|
|
|
|
New York, NY 10017
|
|
|
|
|
|
|
|
|
Invesco Private Capital, Inc.(3)
|
|
|
1,701,406
|
|
|
|
5.7
|
|
1360 Peachtree Street NE
|
|
|
|
|
|
|
|
|
Atlanta, GA 30309
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.(4)
|
|
|
1,685,723
|
|
|
|
5.6
|
|
100 E. Pratt Street
|
|
|
|
|
|
|
|
|
Baltimore, Maryland 21202
|
|
|
|
|
|
|
|
|
Barclays Global Investors NA(5)
|
|
|
1,576,368
|
|
|
|
5.3
|
|
400 Howard Street
|
|
|
|
|
|
|
|
|
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
William B. Binch(6)
|
|
|
113,561
|
|
|
|
*
|
|
Charles M. Boesenberg(7)
|
|
|
152,619
|
|
|
|
*
|
|
Michael A. Braun(8)
|
|
|
261,706
|
|
|
|
*
|
|
George B. James(9)
|
|
|
209,667
|
|
|
|
*
|
|
David B. Pratt(10)
|
|
|
352,260
|
|
|
|
1.2
|
|
27
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially
|
|
|
Owned
|
Name
|
|
Number
|
|
Percent
|
|
Michele Vion(11)
|
|
|
68,668
|
|
|
|
*
|
|
Robert H. Youngjohns(12)
|
|
|
830,442
|
|
|
|
2.8
|
|
Leslie J. Stretch(13)
|
|
|
469,491
|
|
|
|
1.6
|
|
Ronald J. Fior(14)
|
|
|
542,777
|
|
|
|
1.8
|
|
Michael Graves(15)
|
|
|
208,263
|
|
|
|
*
|
|
Bryan P. Burkhart(16)
|
|
|
325,104
|
|
|
|
1.1
|
|
V. Holly Albert(17)
|
|
|
224,096
|
|
|
|
*
|
|
All directors and executive officers as a group
(16 persons)(18)
|
|
|
4,161,430
|
|
|
|
14.0
|
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Based on Schedule SC 13G filed with the Securities and
Exchange Commission on February 2, 2009. Securities are
held by S Squared Technology, LLC (SST), S Squared
Capital II Management, LLC (SSCIIM), both
Delaware limited liability companies, S Squared Technology
Partners, L.P. (SSTP), a Delaware limited
partnership, and Seymour L. Goldblatt (Seymour) and
Kenneth A. Goldblatt (Kenneth), both United States
citizens. SST, SSCIIM and SSTP are registered investment
advisers. Seymour is the President of each of SST, SSCIIM and
SSTP and owns a majority of the interests in SST. Kenneth owns a
majority of the interests in each of SSCIIM and SSTP. SST,
SSCIIM or SSTP act as investment advisers for the accounts of
multiple private investment funds. SST has sole voting power and
sole dispositive power with respect to 1,672,300 shares.
SSCIIM has sole voting power and sole dispositive power with
respect to 460,683 shares. SSTP has sole voting power and
sole dispositive power with respect to 399,900 shares.
Seymour and Kenneth each have sole voting and dispositive power
with respect to all 2,532,883 shares held by SST, SSCIIM,
and SSTP. |
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(2) |
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Based on Schedule SC 13G filed with the Securities and
Exchange Commission on February 17, 2009, Brenner West
Capital Advisors, LLC has shared voting power and shared
dispositive power with respect to all of the
1,745,600 shares. |
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(3) |
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Based on Schedule SC 13G/A filed with the Securities and
Exchange Commission on February 17, 2009, Invesco Private
Capital, Inc. has shared voting power and shared dispositive
power with respect to all of the 1,741,406 shares. |
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(4) |
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Based on Schedule SC 13G/A filed with the Securities and
Exchange Commission on February 12, 2009, T. Rowe Price
Associates, Inc. has sole voting power with respect to
685,723 shares and sole dispositive power with respect to
all of the 1,685,723 shares. The Company is advised that
the securities are owned by various individual and institutional
investors which T. Rowe Price Associates, Inc. (Price
Associates) serves as investment advisor with power to
direct investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Securities
Exchange Act of 1934, Prices Associates is deemed to be a
beneficial owner of such securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of
the securities. |
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(5) |
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Based on Schedule SC 13G filed with the Securities and
Exchange Commission on February 5, 2009, Barclays Global
Investors, NA and Barclays Global Fund Advisors
collectively have sole voting power with respect to 1,536,475
and sole dispositive power with respect to 1,576,368 shares. |
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(6) |
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Includes 86,561 shares of common stock that may be acquired
upon the exercise of stock options exercisable within
60 days after March 31, 2009, and 4,000 shares
held beneficially in the name of a family trust to which
Mr. Binch has voting power as a trustee. |
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(7) |
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Includes 67,517 shares of common stock that may be acquired
upon the exercise of stock options exercisable within
60 days after March 31, 2009. |
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(8) |
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Includes 246,706 shares of common stock that may be
acquired upon the exercise of stock options exercisable within
60 days after March 31, 2009. |
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(9) |
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Includes 194,667 shares of common stock that may be
acquired upon the exercise of stock options exercisable within
60 days after March 31, 2009. |
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(10) |
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Includes 315,767 shares of common stock that may be
acquired upon the exercise of stock options exercisable within
60 days after March 31, 2009, and 30,000 shares
held beneficially in the name of a family trust to which
Mr. Pratt has voting power as a trustee. |
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(11) |
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Includes 68,668 shares of common stock that may be acquired
upon the exercise of stock options exercisable within
60 days after March 31, 2009. |
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(12) |
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Includes 788,295 shares of common stock that may be
acquired upon the exercise of stock options exercisable within
60 days after March 31, 2009. |
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(13) |
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Includes 378,332 shares of common stock that may be
acquired upon the exercise of stock options exercisable, and
15,209 shares that may be acquired upon vesting of a
restricted stock unit award, each within 60 days after
March 31, 2009. |
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(14) |
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Includes 465,208 shares of common stock that may be
acquired upon the exercise of stock options exercisable, and
5,000 shares that may be acquired upon vesting of a
restricted stock unit award, each within 60 days after
March 31, 2009. |
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(15) |
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Includes 39,097 shares held beneficially in the name of a
family trust to which Mr. Graves has voting power as a
trustee and 169,166 shares of common stock that may be
acquired upon the exercise of stock options exercisable, and
5,000 shares that may be acquired upon vesting of a
restricted stock unit award, each within 60 days after
March 31, 2009. |
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(16) |
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Includes 214,582 shares of common stock that may be
acquired upon the exercise of stock options exercisable, and
5,000 shares that may be acquired upon vesting of a
restricted stock unit award, each within 60 days after
March 31, 2009. |
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(17) |
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Includes 181,145 shares of common stock that may be
acquired upon the exercise of stock options exercisable, and
5,000 shares that may be acquired upon vesting of a
restricted stock unit award, each within 60 days after
March 31, 2009. |
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(18) |
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See footnotes (6)-(17) above. |
Certain
Relationships and Related Transactions
Policies
and Procedures for the Review and Approval of Related Party
Transactions.
We regularly review all relationships and transactions in which
the Company and our directors and executive officers or their
immediate family members are participants to determine whether
such persons have a direct or indirect material interest. The
Companys legal and financial departments are primarily
responsible for the development and implementation of processes
and controls to obtain information from the directors and
executive officers with respect to related person transactions
and determining whether a transaction is or may involve related
parties. The legal and financial departments analyze whether a
related person has a direct or indirect material interest in the
transaction based on the totality of facts and circumstances. In
addition, the Audit Committee reviews and approves any related
person transactions that it determines are appropriate for the
Company to undertake.
Related
Party Transactions.
SEC rules require disclosure of transactions in which we are a
participant and the amount exceeds $120,000, and in which a
related party has a direct or indirect material interest. There
have been no such transactions since the beginning of our last
fiscal year.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act of 1934, as amended,
requires our officers and directors and persons who beneficially
own more than 10% of a registered class of our equity securities
to file with the Securities and Exchange Commission reports of
ownership and changes in ownership on Forms 3, 4 and 5 with
respect to our securities. Such officers, directors and 10%
stockholders are also required by Securities and Exchange
Commission rules to furnish us with copies of all
Section 16(a) reports they file. Based solely upon our
review of copies of reports
29
provided to us and written representations from our executive
officers and directors with respect to our 2008 fiscal year, we
believe that all reports required by Section 16(a) during
fiscal 2007 were timely filed, with the following exceptions:
two reports on Form 4 were late reporting the award of
restricted stock units to each of Messrs. Apfelberg and
Saling. Such forms have since been filed.
Audit
Committee Report
The Audit Committee of the Board of Directors (for the purposes
of this report, the Committee) is composed of three
independent outside directors. The Committee has prepared the
following report on its activities with respect to
Callidus audited financial statements for the fiscal year
ended December 31, 2008 (the audited financial
statements).
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The Committee has reviewed and discussed the audited financial
statements with Callidus management and KPMG LLP
(KPMG), Callidus independent auditors;
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The Committee has also discussed with KPMG the matters required
to be discussed by the statement on Auditing Standards No. 61,
as amended, as adopted by the Public Company Accounting
Oversight Board in Rule 3200T;
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The Committee has received the written disclosures and the
letter from KPMG required by Independence Standards Board
Standard No. 1, as modified or supplemented, and has
discussed with KPMG its independence from Callidus. The
Committee also considered whether the provision of non-audit
services by the independent auditors was compatible with
maintaining the accountants independence and has discussed
with them their independence; and
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Based on the review and discussions referred to above and
relying thereon, the Committee has recommended to the board of
directors that the audited financial statements be included in
Callidus annual report on
Form 10-K
for the fiscal year ended December 31, 2008, for filing
with the Securities and Exchange Commission.
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THE AUDIT COMMITTEE
George B. James, Chair
William B. Binch
David B. Pratt
30
ADDITIONAL
INFORMATION
Other
Matters
We know of no other matters to be submitted at the annual
meeting of stockholders. If any other matters properly come
before the annual meeting of stockholders, it is the intention
of the proxy holders to vote the shares they represent as the
board of directors may recommend.
THE BOARD OF DIRECTORS
V. HOLLY ALBERT,
Senior Vice President, General Counsel and Secretary
Dated:
April 24, 2009
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders to be held on
June 2, 2009.
Copies of this proxy statement and our annual report for the
fiscal year ended December 31, 2008 are available by
visiting
http://proxydocs.callidussoftware.com/.
You may also obtain copies of these materials free of charge
by writing to Callidus Software Inc., 160 West
Santa Clara Street, Suite 1500, San Jose,
California 95113, Attention: Secretary.
31
ANNUAL MEETING OF STOCKHOLDERS OF CALLIDUS SOFTWARE INC. June 2, 2009 NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIAL: The 2008 Annual Report, 2009 Notice of Stockholders Meeting, Proxy
Statement, and Proxy Card are available at http://proxydocs.callidussoftware.com Please sign,
date and mail your proxy card in the envelope provided as soon as possible. Please detach along
perforated line and mail in the envelope provided. 20230000000000000000 0 060209 THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2. PLEASE SIGN, DATE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE x FOR AGAINST ABSTAIN 1. To elect two Directors to serve until the 2012 annual meeting of
stockholders: NOMINEES: FOR ALL NOMINEES O Charles M. Boesenberg O Leslie J. Stretch [Graphic
Appears Here] 2. To ratify the appointment of KPMG LLP as our independent auditors for the fiscal
year ending December 31, 2009. 3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof. WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL
EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual
nominee(s), mark FOR ALL EXCEPT and fill in the circle next to each nominee you wish to withhold,
as shown here: To change the address on your account, please check the box on the right and
indicate your new address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method. The shares represented by this proxy
card will be voted in accordance with your instructions if the card is signed and returned. If your
card is signed and returned without instructions, your shares will be voted in favor of all
director nominees and in favor of proposal 2. If you do not mail a proxy card or attend the annual
meeting and vote by ballot, your shares will not be voted. In the event that any other matter may
properly come before the annual meeting, or any adjournment or postponement thereof, each proxy is
authorized to vote on such matter in his discretion. You hereby revoke all previous proxies given
to vote at the annual meeting or any adjournment or postponement thereof. By signing and returning
this proxy card, you also hereby acknowledge the receipt of the notice of annual meeting of
stockholders, proxy statement and 2008 annual report of Callidus Software Inc. Signature of
Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names
appear on this Proxy. When shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in partnership name by authorized person. |
CALLIDUS SOFTWARE INC. Notice of Annual Meeting of Stockholders To be held June 2, 2009 THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS You are cordially invited to attend the 2009
annual meeting of stockholders of Callidus Software Inc., a Delaware corporation, which will be
held on June 2, 2009 at 10:00 a.m., local time, at the offices of Callidus Software Inc., 160 West
Santa Clara Street, Suite 1500, San Jose, California, 95113. Whether or not you plan to attend the
annual meeting, we ask that you sign and return the enclosed proxy card as promptly as possible to
ensure that your shares will be represented. A self-addressed envelope has been enclosed for your
convenience. If you attend the meeting, you may withdraw any previously given proxy and vote your
shares in person. By signing and returning this proxy card, you are hereby appointing Ronald J.
Fior and V. Holly Albert, and each of them acting individually, as proxies, with the powers you
would possess if personally present, and with full power of substitution, to vote all of your
shares in Callidus Software Inc. at the annual meeting and at any adjournment or postponement
thereof, upon all matters that may properly come before the meeting, including the matters
described in the proxy statement. (Continued and to be signed on the reverse side.) 14475 |