DEF 14A 1 d316921ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

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DefinitiveProxy Statement

      
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SolicitingMaterial Pursuant to Rule §240.14a-12

      

THE HACKETT GROUP, INC.

(Name of Registrant as Specified In Its Charter)

 

          

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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THE HACKETT GROUP, INC.

1001 Brickell Bay Drive, Suite 3000

Miami, Florida 33131

March 22, 2012

Dear Shareholder:

You are cordially invited to attend the 2012 Annual Meeting of Shareholders of The Hackett Group, Inc. (the “Company”) to be held on May 4, 2012 at 11:00 a.m. (local time) at the Company’s headquarters located at 1001 Brickell Bay Drive, Suite 3000, Miami, Florida.

At this meeting you will be asked to:

 

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vote for the election of two directors;

 

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hold an advisory vote on executive compensation; and

 

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ratify the appointment of BDO USA, LLP as the Company’s independent registered certified public accounting firm for the fiscal year ending December 28, 2012.

These matters are discussed in detail in the attached Proxy Statement.

It is important that your shares be represented at the meeting whether or not you plan to attend. Included with these soliciting materials is a proxy card for voting, an envelope with postage prepaid in which to return your proxy, instructions for voting by telephone or on the Internet and our Annual Report to Shareholders.

On March 23, 2012, we will mail to our shareholders a notice containing instructions on how to access our 2011 Annual Report and Proxy Statement and vote online. The notice also contains instructions on how you can receive a paper copy of your annual meeting materials, including the notice of annual meeting, Proxy Statement and proxy card.

We look forward to receiving your vote and seeing you at the meeting.

 

Sincerely,

LOGO

Ted A. Fernandez

Chairman and Chief Executive Officer

The date of this Proxy Statement is March 22, 2012, and it is first being made available to shareholders via the Internet and the U.S. Mail on or about March 23, 2012.

THE HACKETT GROUP, INC.

1001 Brickell Bay Drive, Suite 3000

Miami, Florida 33131

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 4, 2012

The 2012 Annual Meeting of Shareholders of The Hackett Group, Inc. (the “Company”) will be held on May 4, 2012, at 11:00 a.m. (local time) at the Company’s headquarters located at 1001 Brickell Bay Drive, Suite 3000, Miami, Florida, for the following purposes:

 

  1. To elect two directors to the Board of Directors;

 

  2. To hold an advisory vote on executive compensation;

 

  3. To ratify the appointment of BDO USA, LLP as the Company’s independent registered certified public accounting firm for the fiscal year ending December 28, 2012; and

 

  4. To transact such other business as may properly come before the meeting or any postponement or adjournment thereof.

The Board of Directors has fixed the close of business on March 15, 2012 as the record date to determine the shareholders entitled to notice of and to vote at the annual meeting. Only holders of common stock of record at the close of business on that date will be entitled to notice of and to vote at the annual meeting or any postponement or adjournment thereof. A list of the Company’s shareholders entitled to vote at the annual meeting will be open to the examination of any shareholder for any purpose related to the meeting during ordinary business hours for ten days prior to the annual meeting at the Company’s offices and at the location of the annual meeting on May 4, 2012. All shareholders are cordially invited to attend the annual meeting.

On March 23, 2012, we will mail to our shareholders a notice containing instructions on how to access our Annual Report and Proxy Statement and vote online. The notice also contains instructions on how you can receive a paper copy of your annual meeting materials, including the notice of annual meeting, Proxy Statement and proxy card.

 

By Order of the Board of Directors,

LOGO

Frank A. Zomerfeld

Secretary

Miami, Florida

March 22, 2012

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 4, 2012 – this Proxy Statement and The Hackett Group, Inc.’s 2011 Annual Report are available at www.edocumentview.com/hckt.

Whether or not you plan to attend the annual meeting, we ask that you do the following. If you are receiving this document via the U.S. Mail, please complete, date, sign and return the enclosed proxy card in the postage prepaid envelope or vote by telephone or through the Internet as instructed on the proxy card. If you sign and return your proxy card without specifying a choice, your shares will be voted in accordance with the recommendations of the Board of Directors. If you are receiving this document via Internet delivery only, please vote by telephone or through the Internet as instructed on the notice you received via the U.S. Mail. You may, if you wish, revoke your proxy at any time before it is voted by filing with the Secretary of the Company, Frank A. Zomerfeld, a written revocation or a duly executed proxy bearing a later date, or by attending the annual meeting and voting in person. If you submit your proxy by telephone or through the Internet, you may also revoke it by submitting a new proxy using the same procedures at a later date. The telephone and Internet voting facilities for shareholders of record will close at 1:00 a.m. Central Time on the day of the meeting.

THE HACKETT GROUP, INC.

1001 Brickell Bay Drive, Suite 3000

Miami, Florida 33131

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

MAY 4, 2012

SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

This Proxy Statement and the accompanying Notice of Annual Meeting and proxy card are being furnished and made available, on or about March 23, 2012, to the shareholders of The Hackett Group, Inc. (the “Company”), in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board”) to be voted at the 2012 Annual Meeting of Shareholders to be held on May 4, 2012 at 11:00 a.m. (local time) at the Company’s Headquarters located at 1001 Brickell Bay Drive, Suite 3000, Miami, Florida, and any postponement or adjournment thereof.

If the form of proxy enclosed or provided via the Internet is properly executed and returned to the Company or voted via telephone or the Internet in time to be voted at the annual meeting, the shares represented thereby will be voted in accordance with the instructions thereon or submitted via the telephone or Internet.

Executed but unmarked proxies will be voted:

 

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“FOR” Proposal 1 to elect the Board’s nominees for directors;

 

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“FOR” Proposal 2 to approve the advisory vote on executive compensation; and

 

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“FOR” Proposal 3 to ratify the appointment of BDO USA, LLP as the Company’s independent registered certified public accounting firm for the fiscal year ending December 28, 2012.

If any other matters are properly brought before the annual meeting, proxies will be voted in the discretion of the proxy holders. The Company is not aware of any such matters that are proposed to be presented at the annual meeting.

On March 23, 2012, the Company will mail to its shareholders a notice containing instructions on how to access the Company’s 2011 Annual Report and Proxy Statement and vote online. The notice also contains instructions on how you can receive a paper copy of your annual meeting materials, including the notice of annual meeting, Proxy Statement and proxy card.

Shareholders receiving this document and accompanying proxy card and annual report via the Internet may submit their proxies by telephone or through the Internet as instructed in the notice delivered via the U.S. Mail. If shareholders choose to receive this document and accompanying proxy card via the U.S. Mail, those shareholders may submit a signed proxy card or they may submit their proxy by telephone or through the Internet as instructed on the proxy card. Telephone and Internet proxies must be used in conjunction with, and will be subject to, the information and terms contained on the proxy card. These procedures may not be available to shareholders that hold their shares through a broker, nominee, fiduciary or other custodian. If your shares are held in this manner, please check your proxy card or contact your broker, nominee, fiduciary or other custodian to determine whether you will be able to vote by telephone or through the Internet.

The cost of soliciting proxies in the form enclosed herewith will be borne entirely by the Company. In addition to the solicitation of proxies by mail, proxies may be solicited by directors, officers and regular employees of the Company, without extra remuneration, by personal interviews, telephone or otherwise. The Company will request persons, firms and corporations holding shares in their name or in the names of their

 

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nominees, which are beneficially owned by others, to send proxy materials to and obtain proxies from the beneficial owners and will reimburse the holders for their reasonable expenses in doing so.

The securities that may be voted at the annual meeting consist of shares of the Company’s common stock. Each outstanding share of common stock entitles its owner to one vote on each matter as to which a vote is taken at the annual meeting. The close of business on March 15, 2012 has been fixed by the Board as the record date (the “Record Date”) for determination of shareholders entitled to vote at the annual meeting. On the Record Date, 41,257,650 shares of common stock were issued and outstanding and entitled to vote. The presence, in person or by proxy, of at least a majority of the shares of common stock issued and outstanding and entitled to vote on the Record Date is necessary to constitute a quorum at the annual meeting. Shares can be voted only if the shareholder is present in person or by proxy. Whether or not you plan to attend in person, you are encouraged to sign and return the enclosed proxy card or vote by telephone or through the Internet as instructed on the proxy card or in the notice mailed to you.

Assuming the presence of a quorum at the annual meeting, the following voting standards will apply to the various proposals:

 

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A plurality of the votes cast in person or represented by proxy at the annual meeting is required for election of the directors in Proposal 1.

 

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The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote is required to approve the proposal on executive compensation in Proposal 2. Proposal 2 is an advisory vote, which means that it is nonbinding on the Company. However, the Compensation Committee of the Board will take into account the outcome of the vote when considering future executive compensation decisions.

 

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The affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote is required to ratify the appointment of the Company’s independent registered certified public accounting firm for the fiscal year ending December 28, 2012 in Proposal 3.

Abstentions and broker non-votes will be treated as shares that are present, in person or by proxy, and entitled to vote for purposes of determining the presence of a quorum at the annual meeting. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner. Abstentions and broker non-votes will not have any effect on the approval of Proposal 1. Because abstentions will be counted for purposes of determining the shares present or represented at the annual meeting and entitled to vote, abstentions will have the same effect as a vote “against” Proposals 2 and 3. Broker non-votes will not have any effect on the approval of Proposals 2 and 3.

The presence of a shareholder at the annual meeting will not automatically revoke such shareholder’s proxy. Shareholders may, however, revoke a proxy at any time prior to its exercise by filing with the Secretary of the Company a written notice of revocation, by delivering to the Company a duly executed proxy bearing a later date or by attending the annual meeting and voting in person. If you submitted your proxy by telephone or through the Internet, you may also revoke it by submitting a new proxy using the same procedures at a later date. The telephone and Internet voting facilities for shareholders of record will close at 1:00 a.m. Central Time on the day of the meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE

FOR THE APPROVAL OF PROPOSALS 1, 2 AND 3.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

General

The Company’s articles of incorporation provide that the Board shall consist of not fewer than five directors nor more than fifteen directors. The Company’s bylaws provide that the number of directors, within such limits, shall be determined by resolution of the Board. The Board currently is composed of seven directors. The Board is divided into three classes. One class is elected each year for a term of three years.

Two directors will be elected at the annual meeting. The Board has nominated David N. Dungan and Richard N. Hamlin, both existing directors, for the positions. If elected, Messrs. Dungan and Hamlin will each serve a three-year term expiring at the annual meeting in 2015. You can find more information about Messrs. Dungan and Hamlin below.

Unless otherwise instructed on the proxy, it is the intention of the proxy holders to vote the shares represented by each properly executed proxy for the election of both nominees. The Board believes that both nominees will stand for election and will serve if elected. However, if either nominee fails to stand for election or is unable to accept election, proxies will be voted by the proxy holders for the election of such other person as the Board may recommend. Directors are elected by a plurality of the votes cast at the annual meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF

MESSRS. DUNGAN AND HAMLIN AS DIRECTORS.

Information as to the Nominees and Continuing Directors

The following table sets forth certain information regarding the Board’s nominees for election as directors and those directors who will continue to serve as such after the annual meeting.

 

Name

    Age(1)      Director
Since(2)		     

Position held with the Company

    Term
Expires		  

NOMINEES

            

David N. Dungan

      58         2000       Vice Chairman and Chief Operating Officer      2012   

Richard N. Hamlin(3)

      64         2003            2012   

CONTINUING DIRECTORS

            

Ted A. Fernandez

      55         1997       Chairman and Chief Executive Officer      2013   

Terrance M. Graunke

      52         2009            2013   

Alan T.G. Wix(3)

      70         1999            2013   

John R. Harris(3)

      64         2006            2014   

Edwin A. Huston(3)

      73         2001            2014   

 

(1) The ages shown are as of March 15, 2012.
(2) The dates shown reflect the year in which these persons were first elected as directors of the Company.
(3) Member of the Audit, Compensation and Nominating and Corporate Governance Committees.

The principal occupations and other public company directorships for the past five years or more of the two nominees for director and the five directors whose terms of office will continue after the annual meeting are set forth below.

Nominees

David N. Dungan is a founder of the Company. He served as a Managing Director from the Company’s inception until March 2000 when he became a director and was named Chief Operating Officer (“COO”). Mr. Dungan was named Vice Chairman in February of 2006. Prior to founding the Company, Mr. Dungan served

 

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as the National Partner-in-Charge of the World Class Finance Practice of KPMG LLP’s (“KPMG’s”) Strategic Services Consulting Division from May 1994 to February 1997. Mr. Dungan joined KPMG in 1986 and, until May 1994, held various executive positions with that firm.

Richard N. Hamlin is a consultant and investor. He served as the Chief Financial Officer of CommerceQuest, Inc. from July 2002 to August 2003. Mr. Hamlin retired in June 2000 as a partner of KPMG Consulting, a position he held from January 2000. Mr. Hamlin served as a partner of KPMG from 1979 until January 2000, including service on KPMG’s board of directors from 1994 to 1998. Mr. Hamlin was a member of the board of directors of eTelecare Global Solutions from February 2006 to August 2009. Mr. Hamlin served as the Chairman and Trustee of the Dakota Minnesota Eastern Railroad, a wholly-owned subsidiary of Canadian Pacific Railroad, from October 2007 through November 2008.

Continuing Directors

Ted A. Fernandez is a founder of the Company. He has served as Chairman of its Board and Chief Executive Officer (“CEO”) since inception. Mr. Fernandez served as the National Managing Partner of KPMG’s Strategic Services Consulting Division from May 1994 to January 1997. Mr. Fernandez also served as a member of KPMG’s Management Committee from 1995 to 1997. From 1979 to 1994, Mr. Fernandez held several industry, executive and client service positions with KPMG.

Terence M. Graunke was appointed to the Company’s Board on November 10, 2009, in connection with its acquisition of Archstone Consulting. Mr. Graunke is the chairman and co-founder of Lake Capital Management LLC (“Lake Capital”), a private investment firm headquartered in Chicago. Mr. Graunke has served as Chairman since 1998. Mr. Graunke serves on the boards of numerous portfolio companies of Lake Capital Partners LLC, an affiliate of Lake Capital. Mr. Graunke also sits on the board of directors of the Max McGraw Wildlife Foundation.

Alan T.G. Wix is a Director of BDC Partnership Ltd. Mr. Wix was the Chairman of Fiva Marketing, Ltd. from April 2003 to December 2008. Mr. Wix served as the Chairman of the Board of Farsight PLC from April 1999 until June 2005. Mr. Wix served as the Chief Executive Officer of Farsight PLC from April 1999 until June 2002. Mr. Wix retired in August 1998 as Managing Director Core IT Development of Lloyds TSB, a position he held from January 1993. From April 1990 to January 1993, Mr. Wix held the position of Head of Development at Lloyds TSB. Prior to being elevated to that position, Mr. Wix held a variety of positions within the information systems division of Lloyds TSB.

John R. Harris is an operating partner with glendonTodd Capital and Chief Executive Officer of Chemical Information Services which provides information services to sourcing professionals. Mr. Harris has served in these roles since January 2011. He is the former President and Chief Executive Officer of eTelecare Global Solutions, a provider of outsourced customer care services. Mr. Harris served in these roles from February 2006 until October 2009. Mr. Harris served as Chief Executive Officer of Seven Worldwide Inc., a digital content management company, from December 2003 to January 2005. From July 2002 to December 2003, he served as Chief Executive Officer and President of Delinea Corporation, an application and business process management company serving the energy industry. From August 2001 to July 2002, Mr. Harris served as Chief Executive Officer and President of Exolink. From September 1999 to September 2001, he served as Chairman and Chief Executive Officer of Ztango, Inc. Mr. Harris previously spent 25 years with Electronic Data Systems (“EDS”), during which he held a variety of executive leadership positions including Group Executive and President of EDS’s four strategic business units serving the telecommunications and media industries. He also served as EDS’s Corporate Vice President, Marketing & Strategy. Mr. Harris is a member of the board of directors of Premiere Global Services, Inc., BancTec Corporation, DG FastChannel and Startek Corporation.

Edwin A. Huston served as the Vice Chairman of Ryder System, Inc. (“Ryder”), an international logistics and transportation solutions company, from March 1999 until retiring on June 30, 2000. Mr. Huston served as Senior Executive Vice President, Finance and Chief Financial Officer of Ryder from January 1987 until he

 

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became Vice Chairman. Mr. Huston is a director of Tennenbaum Opportunities Fund V, LLC. During the past five years Mr. Huston also served on the board of directors of Enterasys Networks, Kaman Corporation and Unisys Corporation.

Other Executive Officer

The principal occupation during the past five years or more of the Company’s other executive officer is set forth below.

Robert A. Ramirez, 45, is the Company’s Executive Vice President, Finance and Chief Financial Officer (“CFO”), a position he has held since August 2007. Mr. Ramirez served as Corporate Controller of the Company from July 2006 through July 2007. Mr. Ramirez served as Senior Director, Finance and Practice Controller of the Company from October 2005 to July 2006 when he was named Corporate Controller. Mr. Ramirez held a variety of other positions within the Company’s business intelligence, finance transformation and retail consulting practices from 1998 to 2005.

Corporate Governance and Other Matters

Board Composition

The Board consists of seven members, a majority of which are considered “independent directors” under the current listing standards of the NASDAQ Stock Market (“NASDAQ”). The Company’s independent directors are Terence M. Graunke, Richard N. Hamlin, John R. Harris, Edwin A. Huston and Alan T.G. Wix. The Board currently has three committees, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.

Leadership Structure

The roles of Chairman of the Board and Chief Executive Officer have been unified since the Company was founded. The Company believes that its Board leadership structure demonstrates to its employees, clients and shareholders that the Company is under strong leadership with a single person setting the tone and having primary responsibility for managing its operations. It provides an effective connection between management’s role of identifying, assessing and managing risks and the Board’s role of risk oversight. Mr. Fernandez has an in-depth knowledge of the issues, opportunities and challenges that the Company faces. The Board believes that he is best positioned to develop agendas and highlight issues that ensure that the Board’s time and attention are focused on the most critical matters impacting the Company. The Board also believes that the unification of the roles of Chairman and Chief Executive Officer is appropriate for the Company at this time. The Board has not appointed a “lead” director. The Board recognizes that different board leadership structures may be appropriate for companies in different situations and understands that no one structure is appropriate for all companies. While the Board intends to review the appropriate leadership structure for the Company from time to time, the Board believes that the Company has been, and is currently, well-served by its current leadership structure.

The Board’s Role in Risk Oversight

Through its committees, the Board plays an active role in risk oversight. The Board delegates certain risk oversight functions to its Audit Committee. These functions are to assist the Board in its responsibility for oversight of (a) the quality and integrity of the Company’s consolidated financial statements and its financial reporting and disclosure practices, (b) the Company’s systems of internal controls regarding finance and accounting compliance, (c) the independence and performance of the Company’s outside auditor, and (d) the Company’s ethical compliance programs. The Board has delegated compensation program risk oversight to its Compensation Committee. The Compensation Committee is charged with understanding the Company’s various compensation programs and understanding how the programs are aligned with the Company’s goals and objectives. The Board delegates to its Nominating and Corporate Governance Committee the authority to develop

 

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and implement the Company’s director nomination guidelines and to recommend nominees for election, thus ensuring that the Board contains the appropriate mix of experience, qualifications, attributes and skills necessary to effectively exercise its oversight function. The Nominating and Corporate Governance Committee is also responsible for developing and implementing the Company’s corporate governance guidelines. Finally, the Board as a whole has the responsibility to review and approve the Company’s annual operating plan. In connection with that process, the Board typically inquires as to the greatest areas of risk associated with the annual operating plan and the Company’s operating model taken as a whole, and confirms that these risks are appropriately mitigated.

Specific Experience, Qualifications, Attributes and Skills of Current Board Members Including Director Nominees

Specific experience, qualifications, attributes and skills that the Board believes qualify each current director for his or her position on the Board are summarized below. This description is not intended as an exclusive description of the types of expertise or contributions provided by each director.

Ted A. Fernandez—Mr. Fernandez founded the Company in 1997 based on a strategy he developed from his extensive history in the professional services industry which included an eighteen year career with KPMG. His career at KPMG culminated in the role of the National Managing Partner of KPMG’s Strategic Services Consulting Division from May 1994 to January 1997. Mr. Fernandez also served as a member of KPMG’s Management Committee from 1995 to 1997. He brings an in-depth knowledge of the professional services industry, especially business consulting, and organizational leadership within that industry. He also provides extensive financial and accounting experience to the Board. Mr. Fernandez provides the Board with day to day knowledge of the Company’s business and markets. He also provides broad and deep experience with strategic plan development and execution.

David N. Dungan—Along with Mr. Fernandez, Mr. Dungan founded the Company in 1997. Mr. Dungan joined KPMG in 1986 and, until May 1994, held various executive positions with KPMG. Mr. Dungan served as the National Partner-in-Charge of the World Class Finance Practice of KPMG, LLP’s Strategic Services Consulting Division from May 1994 to February 1997. Mr. Dungan provides the Board with broad financial and operational experience managing and leading a professional services firm focused on business consulting.

Terence M. Graunke—Mr. Graunke is chairman and co-founder of Lake Capital, a private investment firm that makes investments in mid-sized businesses. He co-founded Lake Capital in 1998 as a vehicle to acquire interests in service-based companies creating significant enterprise value by applying the firm’s capital, as well as strategic and operating expertise to enhance growth, profitability and market position. Since 1998, Lake Capital has owned and built more than twenty companies, including start-up business consultancy firms. Lake Capital enterprises are located across the United States and have operations that extend to Canada and Europe. Mr. Graunke brings to the Board an extensive history of evaluating, purchasing and managing professional services firms in the Company’s industry. He also brings a history of board participation in the Company’s business segment with an emphasis on business services and international experience through the management of Lake Capital’s interests abroad.

Richard N. Hamlin—Mr. Hamlin provides the Board with extensive financial and accounting experience gained over a more than thirty-year career as a Certified Public Accountant at KPMG. Mr. Hamlin served as a partner of KPMG for twenty-one years which included service on KPMG’s board of directors from 1994 to 1998 and later became a partner of KPMG Consulting. Mr. Hamlin’s experience provides additional depth of capability to the Audit Committee. Mr. Hamlin is designated an “audit committee financial expert” as defined by regulations of the Securities and Exchange Commission (the “SEC”). Mr. Hamlin also possesses a history of board participation on a public company board as a former member of the board of directors and Chairman of the Audit Committee of eTelecare Global Solutions. Mr. Hamlin also provides operational perspective from outside of the business consulting segment having served as the Chairman and Trustee of the Dakota Minnesota Eastern Railroad, a wholly-owned subsidiary of Canadian Pacific Railroad.

 

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John R. Harris—Mr. Harris has an extensive history of senior executive leadership positions and board participation in the information technology, media, telecommunications and outsourcing industries having spent twenty-five years in various roles with EDS including Group Executive and President of EDS’s four strategic business units serving the telecommunications and media industries and Corporate Vice President, Marketing & Strategy. He also has in-depth experience in public company operations and management having served as the President and Chief Executive Officer of eTelecare Global Solutions, a provider of outsourced customer care services. Mr. Harris also provides significant public company board experience through his service as a director of BancTec Corporation and through his prior service on the boards of Applied Graphic Technologies and Genuity. He continues to provide additional operational perspective through his participation as a director of DG Fast Channel, Startek Corporation and Premiere Global Services, Inc.

Edwin A. Huston—Mr. Huston provides the Board with in-depth finance experience from his educational background in finance to progressively senior roles at Ryder, an international logistics and transportation services provider, over a thirty-year period. Mr. Huston’s experience provides additional depth of capability to the Audit Committee. Mr. Huston is designated an “audit committee financial expert” as defined by SEC regulations. Mr. Huston has also served on the boards and audit committees of several other companies during the past five years, including Unisys Corporation, Enterasys Networks, Inc., Kaman Corporation and the Tennenbaum Opportunity Fund on whose board he currently serves. Mr. Huston’s senior-level operational background at Ryder also provides the Board with additional perspective on strategic planning.

Alan T.G. Wix—Mr. Wix brings to the Board an extensive history of senior executive leadership at a major financial institution, having retired in August 1998 as Managing Director Core IT Development of Lloyds TSB. He has in-depth operational experience leading a significant division of an institution with global reach. He also has extensive experience as a purchaser of technology and business consulting services and as such provides perspective on customer experience. Mr. Wix is a native of the United Kingdom and spent his professional career in the United Kingdom. He continues to make his home there. His knowledge of the European marketplace provides valuable international perspective to the Board.

Compensation Committee

The Compensation Committee is responsible for determining the compensation of the Company’s executive officers and approving compensation and human resource programs for the Company. The current members of the Compensation Committee are Messrs. Huston (Chairman), Hamlin, Harris and Wix. The Compensation Committee is governed by a written charter, which can be found on the Company’s website at http://www.thehackettgroup.com/about/ir_governance.jsp. The Compensation Committee sits in executive session to determine the compensation of the Company’s CEO. Based on the recommendations of Mercer Human Resource Consulting (“Mercer”), an executive compensation consultant, in 2005 the Compensation Committee implemented a cash and equity incentive plan for its CEO and COO that provided significant incentive opportunities tied to the attainment of specific financial performance goals measured by annual pro-forma earnings per share. In 2006, these programs were expanded to include the Company’s other executive officer and senior practice leaders of The Hackett Group. The incentives for the practice leaders are tied to the achievement of practice operating plans. These programs were reviewed in 2011 by John Bloedorn, an executive compensation consultant formerly of Mercer and the person who served as the lead consultant for the 2005 program review. Mercer and Mr. Bloedorn were engaged directly by the Compensation Committee. For further discussion of the Company’s compensation programs and the role of the external compensation consultant engaged by the Committee, see “Compensation Discussion and Analysis” and “Role of Consultants” on page 12 and 15, respectively, of this Proxy Statement. In February 2012, the Company completed a review of the policies and practices associated with all of its compensation programs, including its executive compensation programs. As part of this assessment, the Company considered that rewards are heavily weighted towards profitability, which is based on the delivery of services for which fees are collected in a relatively short period of time. Based on this assessment, the Company does not believe that any of these policies or practices creates risks that are reasonably likely to have a material adverse effect on the Company.

 

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Nominating and Corporate Governance Committee

On February 17, 2012, the Company’s Nominating Committee was reconstituted and renamed the Nominating and Corporate Governance Committee. The Board approved, and the Committee adopted, a new written charter which can be found on the Company’s website at http://www.thehackettgroup.com/about/ir_governance.jsp. The Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become members of the Board and for recommending candidates for election or re-election to the Board, as well as administering the Board’s annual self-evaluation process. In addition to these responsibilities, the Nominating and Corporate Governance Committee is now also responsible for the development and implementation of the Company’s corporate governance guidelines. These guidelines were proposed by the Nominating and Corporate Governance Committee and approved by our Board on February 17, 2012. The Company’s corporate governance guidelines can be found on the Company’s website at http://www.thehackettgroup.com/about/ir_governance.jsp. The current members of the Nominating and Corporate Governance Committee are Messrs. Wix (Chairman), Hamlin, Harris and Huston. The Nominating and Corporate Governance Committee selects and must approve by at least a majority vote all candidates to stand for election as directors. Pursuant to the Company’s bylaws, other candidates may also be nominated by any shareholder, provided each such other nomination is submitted in writing and received by the Secretary of the Company at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, the shareholder must so deliver the notice not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. In the event that the number of directors to be elected to the Board is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased board at least 70 days prior to the first anniversary of the preceding annual meeting, then a shareholder wishing to nominate a director for the new position must deliver the notice not later than the close of business on the tenth day following the day on which public announcement of the date of the meeting is first made. For a discussion of the requirements for including information with respect to a shareholder’s nominee in the Company’s Proxy Statement, see “Shareholder Proposals for the Annual Meeting in 2013” on page 34 in this Proxy Statement.

The shareholder’s notice referred to in the preceding paragraph must set forth: (i) as to each person whom the shareholder proposes to nominate for election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Section 14(a) of the Securities Exchange Act of 1934 and the rules and regulations thereunder (together with such person’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected); and (ii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, the name and address of the shareholder, as it appears on the Company’s books, and of such beneficial owner, the class and number of shares of the Company that are owned of record and beneficially by such shareholder and beneficial owner, respectively, and a representation that the shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

The corporate governance guidelines implemented by the Nominating and Corporate Governance Committee contain criteria which it employs to identify and recommend candidates to the Board. These criteria include (i) personal and professional integrity; (2) the skills, business experience and industry knowledge useful to the oversight of the Company based on the perceived needs of the Company and the Board at any given time; (3) the ability and willingness to devote the required amount of time to the Company’s affairs, including attendance at Board and committee meetings; (4) interest, capacity and willingness, in conjunction with the members of the Board, to serve the long-term interests of the Company and its shareholders; and (5) to the extent considered appropriate by the Board, whether a director candidate may be required to be a “financial expert” as defined in relevant SEC rules. These qualities would be considered as they relate to any candidate, whether suggested by management or by one or more of the Company’s shareholders. The Company does not have a specific policy which addresses how diversity should be considered in connection with the identification of

 

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director nominees. The Committee and the Board have always taken an approach that neither favors nor disfavors any particular color, race, creed, gender or other component of a nominee’s background such as skills and qualifications. The Board evaluates all candidates equally across all relevant factors and seeks members whose background, qualifications and skills will assist the Company in accomplishing its goals.

The Company’s corporate governance guidelines contain stock ownership guidelines for our CEO and the outside members of our Board of Directors. These guidelines were adopted when the Company’s corporate governance guidelines were adopted on February 17, 2012. Pursuant to these guidelines, our CEO is required to own a number of shares of the Company common stock equal in value to six times his annual base salary. Mr. Fernandez’ base salary for 2012 is $750,000. Our outside Board members are required to own a number of shares of the Company common stock equal in value to three times their maximum annual cash compensation under the current Outside Director Compensation Program. For 2012, the maximum annual cash compensation is $40,000. Our CEO and outside Board members have five years from the date that these guidelines were adopted to achieve these goals. Our CEO and a majority of our outside Board members already satisfy these requirements. Our CEO and outside Board members are not required to purchase shares in the open market to satisfy these guidelines. Rather, they are expected to retain shares received upon vesting of restricted stock units grants or upon the vesting of stock options until the guidelines are satisfied. Once the guidelines are achieved, neither the CEO nor any outside Board member will be considered to be out of compliance with these guidelines due to fluctuations in the Company’s stock price.

Audit Committee

The Audit Committee reviews, acts on, and reports to the Board with respect to various auditing and accounting matters. The Audit Committee is directly responsible for the appointment, compensation, evaluation, retention and oversight of the Company’s independent auditors. The primary functions of the Audit Committee are to assist the Board in its responsibility for oversight of (i) the quality and integrity of the Company’s consolidated financial statements and its financial reporting and disclosure practices, (ii) the Company’s system of internal controls regarding finance and accounting compliance, (iii) the independence and performance of the Company’s independent auditors, and (iv) the Company’s ethical compliance programs. The Audit Committee performs all functions required of audit committees of public companies under applicable laws, rules and regulations and the requirements of NASDAQ.

The current members of the Audit Committee are Messrs. Hamlin (Chairman), Harris, Huston and Wix. Rules adopted by NASDAQ and the SEC impose strict independence requirements for members of audit committees. In addition to meeting NASDAQ’s tests for director independence, directors on audit committees must meet two basic criteria set forth in the SEC’s rules. First, audit committee members are barred from accepting, directly or indirectly, any consulting, advisory or other compensatory fee from the issuer or an affiliate of the issuer, other than in the member’s capacity as a member of the board of directors and any board committee. Second, an audit committee member may not be an affiliated person of the issuer or any subsidiary of the issuer apart from his or her capacity as a member of the board and any board committee. Each member of the Company’s Audit Committee meets these independence requirements, in addition to the independence criteria established by NASDAQ. The Board has determined that both Mr. Hamlin and Mr. Huston are audit committee financial experts, as that term is defined under SEC rules.

The Audit Committee is governed by a written charter approved by the Board. A copy of the charter can be found on the Company’s website at http://www.thehackettgroup.com/about/ir_governance.jsp. For further information on the Audit Committee, see the “Report of the Audit Committee” on page 29 in this Proxy Statement.

 

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Other Matters

During the fiscal year ended December 30, 2011, the Board and the Audit Committee each held 6 meetings, the Compensation Committee held 5 meetings, and the Nominating Committee held 4 meetings. During that period, no director attended fewer than 75% of the total number of all meetings of the Board and any committee on which he served. The Company’s independent directors regularly meet as a group in executive session outside of the presence of management.

The Company’s shareholders may communicate with its Board members via written correspondence mailed to the individual addresses found in the “Beneficial Ownership of Common Stock” table on page 32 of this Proxy Statement.

As is the case with all regularly scheduled meetings of the Board and its committees, all of the Company’s directors are expected to attend the annual meeting of shareholders in person. All of the Company’s directors attended the 2011 Annual Meeting of Shareholders.

The Company has adopted a Code of Conduct and Ethics that is applicable to all directors, officers and employees of the Company. It complies with the requirements of Section 406(c) of the Sarbanes-Oxley Act. More importantly, it reflects the Company’s policy of dealing with all persons, including its customers, employees, investors, regulators and vendors, with honesty and integrity. A copy of the Company’s Code of Conduct and Ethics can be found on the Company’s website at http://www.thehackettgroup.com/about/ir_governance.jsp. The Company intends to post amendments to or waivers from the Code of Conduct and Ethics that are applicable to our Chief Executive Officer, Chief Financial Officer or Controller on this website under the circumstances and within the period required under SEC rules.

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee met with management to review and discuss the Compensation Discussion and Analysis below. Based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Form 10-K for its 2011 fiscal year, and the Board has approved that recommendation.

Respectfully submitted,

Compensation Committee

Edwin A. Huston, Chairman

Richard N. Hamlin

John R. Harris

Alan T.G. Wix

 

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Philosophy and Objectives

The Company’s objectives relating to compensation are to attract and retain highly qualified executives at salaries that are competitive with companies of similar or greater size within its industry and to align the financial interests of those executives with those of its shareholders. The Company achieves these objectives by linking a substantial portion of each executive’s compensation to the achievement of financial and operational objectives in the executive’s particular business unit or the Company as a whole. The Compensation Committee has adopted a compensation program for the Company’s executive officers that addresses both long-and short-term term business objectives. By contemplating both long-term and short-term business objectives, executive officers must focus on the future growth and current profitability of the Company. The long-term objectives require executive officers to increase the strength of the Company’s distinct value proposition through the building of proprietary intellectual property that is delivered in differentiated comprehensive service offerings and to attract and develop a deep and skilled employee base that will allow the Company to exploit current and future market opportunities. The short-term objectives require executive officers to maintain the Company’s competitive position in a deliberate, thoughtful way that minimizes expenses and maximizes revenue and profitability. This should lead to increased shareholder value. The Board and the Compensation Committee are focused on operating performance, earnings growth and share price appreciation. This results in a “pay for performance” philosophy which is reflected throughout the Company’s executive compensation programs.

The main goals of the Company’s executive compensation programs are as follows:

 

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To focus executives on critical business issues;

 

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To ensure that the executive team has clear goals and accountability with respect to our financial performance;

 

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To attract and retain critical talent;

 

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To maximize shareholder value; and

 

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To provide significant incentive opportunities tied to the attainment of specific financial performance goals.

In order to attract, retain, and commit top executives to the fulfillment of superior performance results, the executive compensation programs are designed to provide superior pay opportunities in exchange for superior performance.

The Company believes that its compensation strategy supports its business strategies and provides for differentiated pay in direct concert with performance results. The Company continues to observe what it believes to be its comparative pay market which is other strategic consulting and business advisory organizations of similar or greater size as well as other professional services firms.

The Elements of Executive Compensation at the Company

The Company’s executive compensation program applies to its three named executive officers, as well as senior leaders of the Company’s significant service lines or practices and its functional department leaders. This program is designed to commit the Company’s named executive officers to the fulfillment of exceptional operating results and provides significant incentive opportunities tied to the attainment of specific financial performance goals. The design of the program has been consistent since it was created by the Compensation Committee in 2005 based on recommendations from Mercer, a human resources consulting firm which performs research and provides benchmarking of public companies of a similar size within the Company’s industry. An update review of the plan was completed in 2011 to ensure that the program remained consistent with current trends. The program is based on compensation models employed by publicly and privately held peers whose compensation structures primarily consist of cash compensation and retirement benefit-oriented plans which also

 

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were considered in the design of the Company’s program. These companies include strategic consulting and business advisory firms against which the Company regularly competes for executive-level talent. The program contains cash and equity incentive programs that include base salaries which the Company believes are market competitive for companies of similar size within its industry. Historically, cash and equity bonuses have been tied to the achievement of pro-forma earnings per share targets based on a Board approved operating plan. If the Company performance falls short of the established goals for business growth, then the bonus compensation paid in connection with this program is reduced or no bonuses are paid. Further, if share price appreciation does not follow the operating results of the Company, equity awards in the form of restricted stock units are reduced through the application of dilution caps that are discussed below. Performance-based incentive awards earned are divided by the Company’s share price on the date of grant to calculate the number of restricted stock units to be issued. Therefore, as the share price increases, the number of restricted stock units issued decreases and vice versa, but subject to the dilution cap.

Historically, the executive compensation program consisted of two primary elements: (i) annual compensation, consisting of base salaries and employee benefits; and (ii) incentive compensation, in the form of performance-based cash bonus awards and equity incentive grants issued in the form of restricted stock units. For 2012 through 2015, the compensation programs for our CEO and COO will include a performance based stock option grant. This component will replace one half of the existing restricted stock unit bonus opportunity contained in the compensation programs for our CEO and COO. The performance based stock option grant vests one-half upon the achievement of 50% growth of pro-forma earnings per share and the remaining half based on 50% growth of pro-forma earnings before interest, taxes, depreciation and amortization (“EBITDA”) growth based on a trailing twelve month period. The base year for the performance calculation will be fiscal 2011 pro-forma earnings per share and pro-forma EBITDA. The pro-forma EBITDA measurement component was included in order to insure that a substantial portion of the performance criteria for these option awards did not benefit from the potential accretion which may result from the modified Dutch auction tender offer initiated by the Company on February 22, 2012. If the performance targets are not met on or before the sixth anniversary of the grant date, the grants will expire. Upon death, disability or change in control, or in the event of a termination by the Company without cause or by the executive for good reason, these option grants would vest on a pro-rata basis based on the percentage of the targets achieved through the date of such event. After 2015, the CEO’s and COO’s compensation program will revert to the 2011 structure. (See “Executive Compensation Program Decisions for 2012” on page 16 of this Proxy Statement.)

For 2012, one half of the Goal opportunity for our named executive officers will be based on pro-forma earnings per share and one half will be based on a pro-forma EBITDA target. The Superior target will be based solely on the achievement of an enhanced pro-forma EBITDA target in addition to the pro-forma EPS target included in the Goal target. The Compensation Committee also concluded that the inclusion of the pro-forma EBITDA measurement component in the Goal and Superior targets on which cash bonuses and the remaining equity bonus opportunity are based was appropriate in order to insure that a substantial portion of the performance criteria for these option awards did not benefit from the potential accretion which may result from the modified Dutch auction tender offer initiated by the Company on February 22, 2012.

Since 2005, pro-forma earnings per share has been the measure used for performance targets for its named executive officers. The Company believes that is the best measure of true operating performance. Pro-forma earnings per share is defined as net income before taxes and income from discontinued operations and does not include restructuring costs, acquisition-related adjustments, non-cash stock compensation expense or the amortization of intangible assets. Pro-forma earnings per share is based on weighted average common and common equivalent shares outstanding and also includes a normalized tax rate of 40%. The Compensation Committee retains the right not to include the impact of certain nonrecurring events from this calculation when, in the opinion of the Compensation Committee, their inclusion would not accurately reflect the operating performance of the Company. Pro-forma EBITDA is defined as income before taxes, interest, depreciation and amortization of intangible assets, and does not include income from discontinued operations, restructuring costs, acquisition-related adjustments or non-cash stock compensation expense. The annual incentive program for the

 

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named executive officers includes the following target/threshold levels: “Commence,” “Goal” and “Superior,” which are evaluated and set annually. We believe the targets established for the executive team, including the named executive officers, are challenging. In the seven years that this program has been in effect, no bonuses were paid to our executive team for two of those years. The “Goal” target was achieved twice, including in 2011, and the “Superior” target was achieved twice. In one year, a prorated bonus was paid based on the achievement of an amount between the “Commence” target and the “Goal” target. (See “Executive Compensation Program Decisions for 2012” on page 16 of this Proxy Statement.)

Annual Compensation

Annual compensation consists of base salaries and employee benefits. These elements are intended to provide a degree of compensation certainty to the named executive officers by providing compensation that, unlike incentive compensation, is not variable based on the achievement of performance criteria.

Base Salaries

The salaries payable to the Company’s named executive officers are generally recommended to the Board by the Compensation Committee during the first quarter of each fiscal year. Each of the named executive officers is a party to an employment agreement that establishes a minimum salary level for the named executive officer. The Company believes that the base salaries which it currently pays are at market competitive levels for companies of similar size within its industry. See the “Summary Compensation Table” on page 19 of this Proxy Statement and the related footnotes for additional information about base salaries. Also refer to “Role of Consultants” on page 15 of this Proxy Statement for additional information regarding the Compensation Committee’s use of external consultants in connection with its review of the Company’s pay practices.

Employee Benefits

The named executive officers, like the rest of the Company’s employees, receive certain employee benefits. For 2011, these benefits included health insurance, dental and vision coverage, prescription drug plans, life insurance, flexible spending accounts, short-term and long-term disability and a 401(k) plan. The Company covers approximately 60% of the cost of the health benefits for its North American based employees, including its named executive officers. In other geographies, the Company’s compensation and benefit packages vary by country and are based on market standards, local custom and legal requirements in the jurisdiction. The Company does not provide for any special retirement-related benefits, such as pensions or 401(k) contribution matches for its senior executives.

Incentive Compensation

Incentive compensation consists of annual cash incentive awards and equity incentive grants. The Compensation Committee targets an even balance between the cash and equity award opportunities included in the programs. The Company then weights the equity component more heavily in the case of its CEO and COO for two reasons. First, a key feature of the equity grants for the named executive officers is that shares issued are performance based, meaning they are issued based on the achievement of the Company’s operating plan. All performance grants made under the Company’s executive compensation programs vest one third per year beginning on the first anniversary of the first day of the month in which the grant occurs. As such, vesting is also contingent on continued employment over time. The Company regards this “at risk” character as a retention tool. Second, and more importantly, the Company believes that incentive compensation that is paid in the form of equity serves as a meaningful long-term incentive that is directly correlated to the increase in the price of the Company’s common stock. A heavier weighting on the equity component ties a greater portion of the Company’s executives’ ultimate compensation to their ability to deliver increased shareholder value. For 2012 through 2015, the compensation programs for our CEO and COO will also include a performance based stock option grant that vests upon the achievement of growth targets for both pro-forma earnings per share and pro-forma EBITDA, as described above. This component will replace one half of the restricted stock bonus opportunity for the

 

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Company’s CEO and COO for 2012 through 2015 and will place additional emphasis on earnings growth which the Board believes is the greatest driver of stock price appreciation. For its CFO and other members of senior management, the Company maintains an even balance between cash and equity award opportunities in the design of their incentive compensation programs. The Company believes that the need to align shareholder value appreciation with performance incentives based on Company-wide metrics is not as important for persons below its CEO and COO given the limited scope of their responsibilities and their ability to impact overall Company results. Nonetheless, it believes that an evenly weighted cash to equity incentive opportunity for its other executives and senior management still provides adequate shareholder alignment benefits. An evenly balanced cash to equity incentive component also allows the Company to satisfy the retention objective referenced above which is of significant value to the Company. Further, the Company believes these programs to be market competitive for senior management in these positions and are essential to retention efforts since the Company does not provide any special executive retirement-related benefits, such as pensions or 401(k) contributions.

Role of Consultants

As mentioned above, in fiscal year 2005 the Compensation Committee engaged an executive compensation consulting firm to assist in its evaluation of the then existing executive compensation programs administered by the Company. The consulting firm, Mercer, was engaged directly by the Compensation Committee. The firm was instructed to meet with members of the Compensation Committee and senior management to obtain their respective views on various matters related to the compensation of the Company’s CEO and other named executive officers and to discuss the Company’s current and future business strategies. The consulting firm was instructed to make recommendations related to the executive compensation programs of the Company after comparing these programs to market data and practices for a group of peer companies. The consulting firm made recommendations regarding the Company’s executive compensation programs, including the cash and equity components of these programs. Based on these recommendations, the Compensation Committee implemented an equity incentive plan for its CEO and COO that provided significant incentive opportunities tied to the attainment of specific financial performance goals – annual pro-forma earnings per share targets—which are tied to an operating plan approved by the Board. In 2006, these programs were continued and expanded to include the Company’s other executive officer and senior practice leaders and functional department heads. The financial targets of the practice leaders are tied to the performance of the individual practices they manage.

In 2011, the Compensation Committee engaged John Bloedorn, an executive compensation consultant formerly of Mercer and the person who served as the lead consultant for the 2005 program review, to review the Company’s executive compensation programs and update the recommendations received by the Compensation Committee in 2005. The Compensation Committee has concluded that the programs remain competitive and appropriate given the Company’s scale and industry. The Compensation Committee has continued the programs for 2012 with a significant program modification for its CEO and COO that is described in detail below. (See “Executive Compensation Decisions for 2011” on page 16.) The consultant did not perform any services on behalf of management and did not have any potential business conflicts that would affect its role as an independent advisor.

Stockholder “Say on Pay” Vote

Beginning with our last annual meeting of shareholders, we are required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) to include a non-binding, advisory “Say on Pay” vote in the annual meeting proxy statement at least once every three years, and, at least once every six years, a non-binding, advisory vote on the frequency of future Say on Pay votes, with shareholders having the choice of every year, every two years or every three years. At the Company’s last annual meeting of shareholders, its shareholders approved the compensation of the Company’s executives, as disclosed in the Company’s proxy statement for the meeting, with approximately 95.3% of the votes cast in favor. The Compensation Committee considered the results of this vote in choosing to maintain the Company’s overall compensation philosophy and objectives, and in the setting the compensation of the Company’s named executive officers, in fiscal year 2012.

 

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At the Company’s last annual meeting of shareholders, its shareholders also voted on the frequency of future Say on Pay votes, with the most votes cast in favor of an annual frequency. In light of those results, the Company’s Board determined that the Company’s policy will be to include a Say on Pay vote in its annual meeting proxy materials every year until the next required frequency vote is held. (See “Proposal 2—Advisory Vote on Executive Compensation.”)

Executive Compensation Decisions for 2011

As discussed under “Incentive Compensation” on page 14 of this Proxy Statement, each participant in the Company’s executive compensation program has target cash and equity incentive opportunities expressed as a percentage of salary. The payout levels are based on target achievement that, when taken in the aggregate, should result in a certain level of operating results for the Company as a whole that warrants bonus payouts at these levels.

As the annual level of corporate performance (measured in pro-forma earnings per share) changes, so too will the number of potential restricted stock units that may be awarded in any given year. There are three levels of pro-forma earnings per share performance achievement targets (“Commence”, “Goal” and “Superior”), each with a dilution cap that limits the number of restricted stock units issued to the senior management team, in the aggregate, to a percentage of annual weighted average shares outstanding. At the “Commence” level the cap is 1.25%; at the “Goal” level the cap is 2.0%; and at the “Superior” level the cap is 2.5%. If share price appreciation does not occur following positive operating results of the Company, equity awards are reduced through the application of the dilution caps. Performance-based incentive awards earned are divided by the Company’s share price on the date of grant to calculate the equity incentive grant in the form of restricted stock units. Therefore, as the share price increases, the number of restricted stock units issued decreases and vice versa, but limited by the dilution caps. If the Company performance falls short of the Board’s goals for the business, then the bonus compensation paid in connection with these programs is reduced or eliminated. Payouts are interpolated if results fall between performance levels.

The Company continued its strong operating performance from 2010, which totaled revenue and earnings of $225.1 million and $21.8 million, respectively, in 2011. In 2011, the Company achieved revenue growth of 12% or $23.8 million, with corresponding pro-forma net earnings per share growth of 23% or $0.06 cents. However, for 2011, the compensation for our named executive officers decreased as compared to 2010, due to the targets levels set by the Compensation Committee resulting in the “Goal” level payout under the Company’s 2011 executive compensation plan.

For 2010, Mr. Fernandez’ equity bonus earned was greater than the awards granted to him due to a feature contained in our equity compensation plan that limits issuances of restricted stock units in any annual period. At its meeting on February 18, 2011, the Compensation Committee approved adding one half of the cash value of the restricted stock units earned but not awarded to Mr. Fernandez, of $309,300, to the amount that Mr. Fernandez would otherwise earn if the Company achieved its “Goal” annual operating target for 2011. This amount is included in Mr. Fernandez’ “Cash Bonus” amount for 2011 contained in the “Summary Compensation Table” on page 19 of this Proxy Statement.

Executive Compensation Program Decisions for 2012

At its meeting held on February 17, 2012, the Compensation Committee reviewed and approved base salaries and cash and equity incentive plan targets for the Company’s named executive officers, as well as for the Company’s other senior leaders. The Committee specifically approved a program for its named executive officers that would pay annual cash and equity bonuses related to 2012 performance subject to the achievement of pro-forma earnings per share and pro-forma EBITDA targets reflected in a Board approved annual operating plan consistent with prior years. However, as discussed above, the program for the Company CEO and COO for

 

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2012 includes a performance based stock option grant with vesting based on pro-forma earnings per share growth of 50% and pro-forma EBITDA growth of 50%, based on fiscal 2011 results. This new program feature is described in more detail below.

Since 2005 the compensation programs for our CEO and COO have included based salary and incentive compensation consisting of cash incentive awards and equity incentive grants in the form of restricted stock units. Cash and equity bonus opportunities were based on annual pro-forma earnings per share performance targets characterized as “Goal” or “Superior”. When evaluating the Company’s executive compensation programs for 2012, the Compensation Committee carefully considered the report delivered by its compensation consultant John Bloedorn in 2011. That report noted that many of the companies in the peer group used by Mr. Bloedorn included both a restricted stock and stock option component for their executive officers. The Compensation Committee concluded that the benefits of including a stock option grant with vesting tied to the achievement of certain growth targets will be twofold. First, the use of pro-forma EBITDA and pro-forma earnings per share growth targets will further enhance the Company’s CEO and COO’s focus on sustained increases in the Company’s profitability. Second, if the price of the Company’s common stock does not increase after the grant date, the stock options will have no value, further aligning the Company’s CEO and COO interests with the interests of its shareholders. As such, for 2012 and continuing through 2015, the Company’s CEO and COO have agreed to forgo one half of each of their restricted stock bonus opportunity measured at “Goal” in exchange for a single option grant issued to each individual which will not vest unless and until the financial targets described below are achieved. The number of options being granted was calculated by taking the Company CEO’s and COO’s existing equity bonus opportunity at “Goal” multiplied by four (which reflects the fact that this replaces one half of the restricted stock unit opportunity over a four year period), dividing that number by the fair market value of the Company’s common stock on the grant date then multiplying this number by three to reflect a restricted stock to option multiple consistent with the performance targets set, the volatility or the Company’s stock and with a previous exchange of stock options for RSU’s used by the Company. This resulted in stock option grants to our CEO and COO of 1,912,500 and 1,004,063, respectively. The exercise price of these options is $4.00, which reflects the price of the stock at the date of grant.

Fifty percent (50%) of these stock option grants vest in full upon the achievement of a pro-forma earnings per share growth target. Fifty percent (50%) of the grant vests in full upon the achievement of a pro-forma EBITDA growth target. These targets cannot be reset during the performance period. The vesting associated with each target is mutually exclusive. One target may be achieved without the other being achieved. If neither target is achieved by February 17, 2018, the stock option grants are forfeited in their entirety. In the event of a change of control, death, disability or termination of the grantee without cause the grant(s) will vest on a prorated basis based on the achievement against both targets.

Also, in recognition of his efforts in connection with the modified Dutch auction and the closing of the Company’s $50 million credit facility, 100,000 stock options were issued to Mr. Ramirez. The terms and conditions of this grant are identical to those option grants made to Messrs. Fernandez and Dungan described above.

For purposes of the Institutional Shareholder Services “Burn Rate” calculation, the Company believes that the shares represented by this grant will not be considered “issued” unless and until the performance targets are achieved. As such, these grants are not expected to affect the Company’s Burn Rate for 2012.

As noted above, for 2012 through 2015, the equity performance bonus components of the programs for the Company’s CEO and COO will include only one half of their historical restricted stock bonus opportunity components.

The Compensation Committee also concluded that, consistent with the option grants made to Messrs. Fernandez and Dungan described in detail above, the inclusion of the pro-forma EBITDA measurement component in the Goal and Superior targets on which cash bonuses and the remaining equity bonus opportunity are based was appropriate in order to insure that a substantial portion of the performance criteria for these option

 

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awards did not benefit from the potential accretion which may result from the modified Dutch auction initiated by the Company on February 22, 2012. As such, for 2012 one half of the Goal opportunity for our named executive officers will be based on pro-forma earnings per share and one half will be based on a pro-forma EBITDA target. The Superior target will be based solely on the achievement of an enhanced pro-forma EBITDA target in addition to the pro-forma EPS target included in the Goal target.

Timing of Equity Incentive Plan Awards and Discretionary Equity Awards

The Company does not have a program, plan or practice to time equity awards, including option grants, to its named executive officers or directors in coordination with the release of material non-public information. The Company consistently presents to its Compensation Committee for approval all year-end cash and equity bonus awards based on the previous year’s results at the first Compensation Committee meeting of the year. However, the timing of this approval could be changed due to extraordinary circumstances.

Chief Executive Officer Compensation

Mr. Fernandez is in his fifteenth year as Chairman of the Board and CEO, titles he has held since he founded the Company. Mr. Fernandez’s 2011 base salary was $750,000, and his base salary will remain unchanged for 2012. For information about Mr. Fernandez’s 2011 compensation, see “Executive Compensation Program Decisions for 2011” on page 16 and the “Summary Compensation Table” on page 19.

Tax and Accounting Considerations and Compensation Deductibility Policy

The Company has generally structured its performance-based compensation, including grants of equity and annual bonuses, to named executive officers who may be subject to Section 162(m) in a manner that satisfies those requirements. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for any fiscal year for compensation over $1 million paid to the Company’s CEO and three other most highly compensated executive officers other than the CFO. However, Section 162(m) exempts qualifying performance-based compensation from the deduction limit if specified requirements are met. The Compensation Committee designed the performance-based cash and equity awards for its CEO and COO to qualify for the “performance-based compensation” exception to Section 162(m) for 2011. To be qualified, performance-based compensation must meet various requirements, including shareholder approval. The Compensation Committee believes that tax deductibility is an important consideration in determining compensation for the Company’s named executive officers, but it retains the flexibility to pay compensation to senior executives based on other considerations.

Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued there-under, no assurance can be given that compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) does in fact do so.

While the accounting treatment for different equity vehicles does not materially impact the Compensation Committee’s decision regarding the issuance of stock options versus restricted stock units, the Compensation Committee does recognize that the granting of stock options, in most instances, will result in a higher and more volatile expense item on the Company’s profit and loss statement than would exist if restricted stock units are issued instead.

Compensation Recovery

Under the Sarbanes-Oxley Act, in the event of misconduct that results in a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments from our CEO and CFO. In addition, we intend to implement a claw-back policy in accordance with the requirements of the Dodd-Frank Act and the related regulations when those regulations are issued pursuant to that Act.

 

18

SUMMARY COMPENSATION TABLE

 

Name and Principal Position

    Year      Salary
($)		      Cash
Bonus
($)(1)		      Equity
(Restricted
Stock)
Incentive
Compensation
Awards
($)(2)		      Stock
Option
Awards
($)		      All
Other
Compensation
($)(4) 		    Total
($)		  

Ted A. Fernandez

(Chairman, Chief

Executive Officer)

      2011         750,000         1,059,300         1,275,000         —           3,265        3,087,565   
     2010         750,000         2,091,625         1,440,000         —           2,813        4,284,438   
     2009         750,000         —           —           —           2,393        752,393   

David N. Dungan

(Vice Chairman, Chief

Operating Officer)

      2011         525,000         420,000         669,375         —           2,714        1,617,089   
     2010         525,000         1,157,390         1,080,767         —           2,374        2,765,531   
     2009         525,000         —           —           —           2,073        527,073   

Robert A. Ramirez

(Executive Vice President,

Finance and Chief Financial Officer)

      2011         300,000         150,000         150,000         —           3,234        603,234   
     2010         300,000         247,950         247,950         —           2,750        798,650   
     2009         275,000         60,000         60,000         —           11,256 (3)      406,256   

 

(1) See “Compensation Discussion and Analysis” on page 12 of this Proxy Statement for a discussion of how the cash (non-equity) incentive amounts are determined. Also see the “Plan-Based Awards” table below for additional detail on cash and equity incentive compensation earned based on fiscal 2011 performance.
(2) Amounts shown in this column are based on the aggregate grant date fair value computed in accordance FASB ASC Topic 718 for grants of restricted stock units and performance-based restricted stock units to the named executive officers in the applicable fiscal year.
(3) Includes $9,222 which represents the payout of vacation time earned during 2009 that Mr. Ramirez could not utilize due to work commitments.
(4) Each of our named executive officers participates in the Company’s group life, health, dental, vision and disability, flexible spending accounts and prescription drug benefits that are available to all of the Company’s employees in North America and do not discriminate in scope, terms or operation in favor of the Company’s named executive officers. These amounts represent the amount that the Company contributes to the cost of these coverages.

PLAN-BASED AWARDS

FOR FISCAL YEAR 2011

The following table sets forth information on the equity grant awards issued to the named executive officers under the Company’s executive compensation plan for fiscal 2011. The table also includes performance-based cash awards issued to the named executive officers for fiscal 2011 under the Company’s executive compensation plan.

 

Name

    Grant
Date		      Cash
(Non-Equity)
Incentive
Compensation
Awards
($)		      Equity (Restricted
Stock Unit)
Incentive
Compensation (#)		      Grant Date
Fair Value of
Stock Awards
($)		  

Ted A. Fernandez

      February 17, 2012         1,059,300         326,923         1,275,000   

David N. Dungan

      February 17, 2012         420,000         171,635         669,375   

Robert A. Ramirez

      February 17, 2012         150,000         38,462         150,000   

 

(1) See “Compensation Discussion and Analysis” on page 12 of this Proxy Statement for a discussion of the performance criteria and how awards are determined. One third of each equity grant vests annually beginning with the first anniversary of the grant date.

 

19

Equity Compensation Plan Information

The Company maintains The Hackett Group, Inc. 1998 Stock Option and Incentive Plan and The Hackett Group, Inc. Employee Stock Purchase Plan.

The table below sets forth the following information as of December 30, 2011 for (i) all compensation plans previously approved by the Company’s shareholders and (ii) all compensation plans not previously approved by the Company’s shareholders:

 

  •  

The number of securities to be issued upon the exercise of outstanding options, warrants, rights and restrict stock units and the vesting of unvested restricted stock units;

 

  •  

The weighted-average exercise price of such outstanding options, warrants and rights; and

 

  •  

The number of securities remaining available for future issuance under the plans, other than securities to be issued upon the exercise of such outstanding options, warrants and rights and the vesting of restricted stock units.

 

Plan Category

    Number of Securities
to be Issued Upon
Exercise of Outstanding
Options and Unvested
Restricted Stock Units,
Warrants and Rights
(#)		     Weighted-Average
Exercise Price of
Outstanding Options
and Unvested
Restricted
Stock Units,
Warrants and Rights
($)		      Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column 1)
(#)		  

Restricted stock units issued under equity compensation plans approved by shareholders(1)

      2,970,830        —           3,148,377 (2) 

Stock options issued under equity compensation plans approved by shareholders(1)

      867,375        5.53         3,323,243   

Equity compensation plans not approved by shareholders

      —          —           —     
  

 

 

       

 

 

  

Total

      3,838,205 (4)         6,471,620 (3) 
  

 

 

       

 

 

  

 

(1) The equity compensation plans approved by the Company’s shareholders are the Company’s 1998 Stock Option and Incentive Plan (the “Plan”) and the Company’s Employee Stock Purchase Plan. The Plan authorizes the issuance of compensation equity awards in the form of restricted stock units and stock options. Since fiscal year 2005, the Company’s primary equity compensation plan component has been restricted stock units. As such, the Company believes it is important to highlight in this table statistical information related to the restricted stock units issued, outstanding and unvested and available for issuance under the Plan.
(2) As of the Record Date, the number of shares available for issuances pursuant to awards of restricted stock or restricted stock units was 1,842,772.
(3) This amount does not include 471,068 shares available for issuance under the Company’s Employee Stock Purchase Plan.
(4) As of the Record Date, the number of issued and unvested restricted stock units was 3,114,286 and the number of outstanding stock options, both vested and unvested was 3,867,438. These stock options had an average weighted exercise price of $4.33 and an average remaining term of 5.09 years.

 

20

Historical Share Grant and Delivery/Vesting Table

The table below is provided to highlight the timing of both the issuance and delivery of performance-based and non-performance-based restricted stock and restricted stock units. Generally, all restricted stock and restricted stock units issued to the Company’s employees have time-vesting requirements. Performance-based issuances are granted upon the achievement of annual performance targets and delivered after the satisfaction of additional time-vesting requirements. The Company believes this additional disclosure is important to evaluate the dilutive impact of its equity compensation programs.

 

     Shares Granted (#)      Shares Delivered/Vested (#)  
     2009      2010      2011      2009      2010      2011  

Restricted stock issued for acquisitions(1)

      940,787         73,750         —           80,927         127,579         208,417   

Performance based restricted stock units(2)

      934,391         452,633         1,593,442         385,417         647,776         741,420   

Non performance related restricted stock units(3)

      559,636         380,763         302,780         416,749         258,698         255,585   

Stock options

      —           —           —           —           —           —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      2,434,814         907,146         1,896,222         883,093         1,034,053         1,205,422   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Average weighted shares outstanding

               38,240,460         40,348,749         39,895,422   

 

(1) Common stock subject to vesting requirements
(2) Units subject to achievement of performance and delivery subject to vesting requirements
(3) Units subject to vesting requirements

The Company believes that its issuances are within the allowable three year average burn rate level provided by Institutional Shareholder Services for companies in its industry. This is inclusive of the 940,787 restricted shares issued for acquisitions during the period covered by the table.

Narrative Disclosure to Summary Compensation Table and Plan-Based Awards Table

Mr. Fernandez

Mr. Fernandez entered into an employment agreement with the Company effective as of June 2, 1998, as amended on November 10, 2004 and as further amended on June 10, 2005. It was further amended as of December 30, 2008 to comply with Section 409A of the Internal Revenue Code. The agreement is for a three-year term (with an automatic renewal for one additional year on the first and each subsequent anniversary thereafter unless either party gives contrary notice) and currently provides for an annual salary of $750,000 plus a bonus to be determined and paid pursuant to a bonus plan to be adopted by the Board for each fiscal year. The agreement also contains certain confidentiality, non-competition and non-solicitation provisions. Mr. Fernandez’s employment agreement also includes the following provisions: (i) upon a change of control, regardless of termination, Mr. Fernandez will receive two hundred percent of his annual salary paid in lump sum and full vesting of all issued and outstanding equity grants, including restricted stock units and stock options and no further payments would be due upon termination; (ii) upon termination by the Company without cause, or upon termination by Mr. Fernandez for “good reason,” Mr. Fernandez will receive one year’s annual salary paid in lump sum and full vesting of all issued and outstanding equity grants, including restricted stock units and stock options; (iii) upon termination for disability, Mr. Fernandez will receive one year’s annual salary paid in lump sum and full vesting of all issued and outstanding equity grants, including restricted stock units and stock options; and (iv) upon termination due to death, Mr. Fernandez will receive full vesting of all issued and outstanding equity grants, including restricted stock units and stock options. Pursuant to the amended agreement, the term “annual salary,” for all purposes, is defined as Mr. Fernandez’s salary plus bonus for the most recent twelve months.

 

21

Mr. Dungan

Mr. Dungan entered into an employment agreement with the Company effective as of December 26, 2001, as amended on November 10, 2004 and on March 24, 2006. It was further amended as of December 30, 2008 to comply with Section 409A of the Internal Revenue Code. Mr. Dungan’s agreement is for a three-year term (with an automatic renewal for one additional year on the first and each subsequent anniversary thereafter unless either party gives contrary notice) and currently provides for an annual salary of $525,000, plus a bonus to be determined and paid pursuant to a bonus plan to be adopted by the Board for each fiscal year. The agreement contains certain confidentiality, non-competition and non-solicitation provisions. The agreement also includes the following provisions: (i) upon a change of control, regardless of termination, Mr. Dungan will receive two hundred percent of his annual salary paid in lump sum and full vesting of all issued and outstanding equity grants, including restricted stock units and stock options and no further payments would be due upon termination; (ii) upon termination by the Company without cause, or upon termination by Mr. Dungan for “good reason,” Mr. Dungan will receive one year’s annual salary paid in lump sum and full vesting of all issued and outstanding equity grants, including restricted stock units and stock options; (iii) upon termination for disability, Mr. Dungan will receive one year’s annual salary paid in lump sum and full vesting of any issued and outstanding equity grants, including restricted stock units and stock options; and (iv) upon termination due to death, Mr. Dungan will receive full vesting of all issued and outstanding equity grants, including restricted stock units and stock options. Pursuant to the amended agreement, the term “annual salary,” for all purposes, is defined as Mr. Dungan’s salary plus bonus for the most recent twelve months.

Mr. Ramirez

Mr. Ramirez entered into an employment agreement with the Company effective as of August 1, 2007. Mr. Ramirez’s employment agreement has a three-year term (with an automatic renewal for one additional year thereafter on each subsequent anniversary unless either party gives contrary notice) and provides for a current annual salary of $300,000, plus a bonus pursuant to a bonus plan to be adopted by the Board for each fiscal year. In the event Mr. Ramirez is terminated by the Company without cause, or Mr. Ramirez terminates his employment with “good reason,” Mr. Ramirez will be entitled to a severance payment at the rate of his annual salary and benefits for a six-month period from the date of termination. In the event Mr. Ramirez finds new employment after termination, the Company may eliminate or reduce such severance payments and benefits. In addition, the Company’s employment agreement with Mr. Ramirez contains provisions regarding confidentiality, proprietary information and work product, non-competition and non-solicitation. If Mr. Ramirez’s employment is terminated by the Company without cause or by Mr. Ramirez with “good reason,” in either case in anticipation of, in connection with or within one year after a “change of control” (as defined), his salary will be continued for one year, his benefits will be continued for one year (subject to cessation if Mr. Ramirez is entitled to similar benefits from a new employer) and restricted stock, restricted stock units and stock options then held by him will become fully vested.

 

22

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

(Does not include equity awards granted after fiscal year-end. See the “Plan-Based Awards” table on page 19 of this Proxy Statement for information on post-year-end 2011 payments and grants and “Executive Compensation Decisions for 2012” on page 16 of this Proxy Statement.)

 

     Outstanding Option Awards      Outstanding Restricted
Stock Awards		  

Name

    Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)		      Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)		      Option
Exercise
Price
($)		      Option
Expiration Date		      Number of
Shares or
Units of Stock
That Have
Not Vested
(#)		      Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)		  

Ted A. Fernandez(1)

      300,000         —           6.25         February 4, 2014         533,333         1,994,665   

David N. Dungan(2)

      150,000         —           6.25         February 4, 2014         377,997         1,413,709   

Robert A. Ramirez(3)

      —           —           —              99,971         373,892   

 

(1) Represents 533,333 performance-based restricted stock units granted in 2009 and 2011 for 2008 and 2010 fiscal year performance. Excludes 326,923 restricted stock units granted on February 17, 2012 for 2011 fiscal year performance, one third of which vest annually on the anniversary of the date of grant. 266,667 of these stock units will vest in 2012. Does not include 1,912,500 unvested performance-based stock options granted on February 8, 2012. See “Executive Compensation Decisions for 2012” on page 16 of this Proxy Statement.
(2) Represents 377,997 performance-based restricted stock units granted in 2009 and 2011 for 2008 and 2010 fiscal year performance. Excludes 171,635 restricted stock units granted on February 17, 2012 for 2011 fiscal year performance, one third of which vest annually on the anniversary of the date of grant. 177,855 of these stock units will vest in 2012. Does not include 1,004,063 unvested performance-based stock options granted on February 8, 2012. See “Executive Compensation Decisions for 2012” on page 16 of this Proxy Statement.
(3) Represents 85,319 performance-based restricted stock units granted in 2009 and 2011 for 2008 and 2010 fiscal year performance. Also includes 14,652 restricted stock units granted in 2010 at the discretion of the Compensation Committee. Excludes 38,462 restricted stock units granted on February 17, 2012 for 2011 fiscal year performance, one third of which vest annually on the anniversary of the date of grant. 39,403 of these stock units will vest in 2012. Does not include 100,000 unvested performance-based stock options on granted February 17, 2012. See “Executive Compensation Decisions for 2012” on page 16 of this Proxy Statement.

OPTION EXERCISES AND STOCK VESTED

(During fiscal year-ended December 30, 2011)

 

     Option Awards      Outstanding Restricted Stock Awards  

Name

    Number of Shares
Acquired on Exercise
(#)		      Value Realized
on Exercise
($)		      Number of Shares
Acquired on Vesting
(#)		      Value Realized
on Vesting
($)		  

Ted A. Fernandez

      —           —           249,771         894,349   

David N. Dungan

      —           —           138,913         497,475   

Robert A. Ramirez

      —           —           38,799         138,220   

 

23

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The tables below quantify (in U.S. Dollars) the potential payments upon termination or a change in control of the Company for each of the named executive officers actively employed by the Company at the end of fiscal 2011. All amounts are calculated assuming a fiscal year-end 2011 termination date of December 30, 2011.

 

Mr. Fernandez’s Benefits and Payments

Upon Termination

    Death
($)		     Disability
($)		     By the
Company for
Cause
($)		     By the
Executive for
Good Reason
($)		     Change in
Control
($)		  

Compensation:

           

Base Salary

      —          750,000        —          750,000        1,500,000   

Annual Bonus

      —          —          —          1,059,300        2,118,600   

Stock Options and Restricted Stock Units (unvested and accelerated)

      3,217,357 (1)      3,217,357 (1)      —   (1)      3,217,357 (1)      3,217,357 (1) 

Benefits and Perquisites:

           

Health Insurance Premiums

      15,773        15,773        —          15,773        15,773   

Life, Accidental Death and Disability Premiums

      1,118        1,118        —          1,118        1,118   

Life Insurance Premium

      10,600        10,600        —          10,600        10,600   

Gross-up Payment

      —          —          —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

      3,244,848        3,994,848        —          5,054,148        6,863,448   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Mr. Dungan’s Benefits and Payments

Upon Termination

    Death
($)		     Disability
($)		     By the
Company for
Cause
($)		     By the
Executive for
Good Reason
($)		     Change in
Control
($)		  

Compensation:

           

Base Salary

      —          525,000        —          525,000        1,050,000   

Annual Bonus

      —          —          —          420,000        840,000   

Stock Options and Restricted Stock Units (unvested and accelerated)

      2,055,624 (1)      2,055,624 (1)      —   (1)      2,055,624 (1)      2,055,624 (1) 

Benefits and Perquisites:

           

Health Insurance Premiums

      10,957        10,957        —          10,957        10,957   

Life, Accidental Death and Disability Premiums

      —          —          —          —          —     

Life Insurance Premium

      5,606        5,606        —          5,606        5,606   

Gross-up Payment

      —          —          —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

      2,072,187        2,597,187        —          3,017,187        3,962,187   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Mr. Ramirez’s Benefits and Payments

Upon Termination

    Death
($)		     Disability
($)		     By the
Company for
Cause
($)		     By the
Executive for
Good Reason
($)		     Change in
Control
($)		  

Compensation:

           

Base Salary

      —          —          —          150,000        300,000   

Annual Bonus

      —          —          —          —          —     

Stock Options and Restricted Stock Units (unvested and accelerated)

      517,740 (1)      517,740 (1)      —          517,740 (1)      517,740 (1) 

Benefits and Perquisites:

           

Health Insurance Premiums

      15,773        15,773        —          15,773        15,773   

Life, Accidental Death and Disability Premiums

      690        690        —          690        690   

Life Insurance Premium

      4,271        4,271        —          4,271        4,271   

Gross-up Payment

      —          —          —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

      538,474        538,474        —          688,474        838,474   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

24

 

(1) Does not include any value ascribed to issued but unearned and unvested performance stock option grants that would vest on a pro-rata basis based on achievements against pro-forma earnings per share and pro-forma EBITDA targets upon death, disability, termination without cause or for good reason or upon a change of control. (See “Executive Compensation Program Decisions” for 2012 on page 16.)

In certain cases the tax laws deny an income tax deduction to a company for payments that are contingent upon a change in control. Benefits under the contracts will be delayed or modified if such delays or modifications are necessary to comply with the rules governing deferred compensation plans under Section 409A of the Internal Revenue Code.

DIRECTOR COMPENSATION

(For the fiscal year ended December 30, 2011)

Director Compensation for 2011. Directors who are officers or employees of the Company or any subsidiary of the Company receive no additional compensation for serving on the Board or any of its committees. For 2011, each outside director received an annual $15,000 cash retainer. Outside directors also received a cash fee of $4,000 for each regularly scheduled Board meeting attended in person and a cash fee of $1,500 for each regularly scheduled Board meeting attended by telephone. Committee members also received a cash fee of $1,000 for each regularly scheduled committee meeting attended. Both Board and committee members also received a cash fee of $750 for each special meeting attended. All directors are reimbursed for travel expenses incurred in connection with attending Board and committee meetings.

For 2011, the Company’s outside directors also received an annual restricted stock unit grant equal in value to $60,000 on the date of grant. All restricted stock units granted under this program vest in three equal annual installments beginning on the first anniversary of the grant and will also vest upon termination of service. The Board reserves the right to make additional stock option or restricted stock unit grants to directors who are not officers of the Company on a discretionary basis during any fiscal year. Upon reaching ten years of service on the Board, a member receives a restricted stock unit grant equal in number of units to his or her annual service grant for that year.

 

Name

    Fees
Earned or
Paid in
Cash
($)		      Restricted
Stock
Awards
(1)($)		     Stock
Option
Awards
(1)($)		      Total
($)		  

Terence M. Graunke

      32,500         60,000        —           92,500   

Richard N. Hamlin

      40,000         60,000        —           100,000   

John R. Harris

      40,000         60,000        —           100,000   

Edwin A. Huston

      40,000         120,000 (2)      —           160,000   

Alan T.G. Wix

      40,000         60,000        —           100,000   

 

(1) Amounts shown in these columns are based on the aggregate grant date fair value as computed in accordance with FASB ASC Topic 718 for restricted stock unit and stock option awards during fiscal 2011. The aggregate number of stock awards and the aggregate number of option awards outstanding at fiscal year-end appears in the following “Outstanding Director Equity Awards at 2011 Fiscal Year-End” table on page 26.
(2) Includes Mr. Huston’s ten year service grant issued in 2011.

Director Compensation for 2012. For 2012, directors who are officers or employees of the Company or any subsidiary of the Company receive no additional compensation for serving on the Board or any of its committees. The Company’s outside directors will receive an annual restricted stock unit grant equal in value to $60,000 on the date of grant. All restricted stock units granted under this program will continue to vest in three equal annual installments beginning on the first anniversary of the grant and will also vest upon termination of service. The

 

25

Board reserves the right to make additional stock option or restricted stock unit grants to directors who are not officers of the Company on a discretionary basis during any fiscal year. Upon reaching ten years of service on the Board, a member receives a restricted stock unit grant equal in number of units to his or her annual service grant for that year. Beginning with grants that occur in 2012, each of our outside directors will be allowed to elect to defer the receipt of their shares upon vesting for three years, five years or until death, disability or termination of service on our Board.

Also for 2012, each outside director will continue to receive an annual $15,000 cash retainer. Outside directors also will receive a cash fee of $4,000 for each regularly scheduled Board meeting attended in person and a cash fee of $1,500 for each regularly scheduled Board meeting attended by telephone. Committee members also will receive a cash fee of $1,000 for each regularly scheduled committee meeting attended, whether in person or otherwise. Both Board and committee members will also receive a cash fee of $750 for each special meeting attended, whether in person or otherwise. For 2012, the cash component of our Outside Compensation Program will not exceed $40,000 per year. All directors will continue to be reimbursed for travel expenses incurred in connection with attending Board and committee meetings.

OUTSTANDING DIRECTOR EQUITY AWARDS

AT 2011 FISCAL YEAR-END

 

Name

    Restricted Stock  Awards
(vested/unvested)
(#)		   Stock Option Awards
(exercisable/
unexercisable)
(#)

Terence M. Graunke

    — /23,759(1)   — / —

Richard N. Hamlin

    — /30,297(1)   35,000 /—

John R. Harris

    — /28,025(1)   — / —

Edwin A. Huston

    — /45,828(1)   38,750 /—

Alan T.G. Wix

    — /29,161(1)   31,700 /—

 

(1) Does not include 15,385 restricted stock units granted on February 17, 2012 in connection with the Company’s Outside Director Compensation Plan one third of which vest annually on the anniversary of the date of grant.

Compensation Committee Interlocks

The Compensation Committee consists of Messrs. Huston (Chairman), Hamlin, Harris and Wix. No current or former member of the Compensation Committee is, or has ever been, an officer or employee of the Company. None of the Company’s directors and none of their family members are employed as an executive of another company where any of the Company’s executives serve on the compensation committee of which the director is an executive.

 

26

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are providing our shareholders an opportunity to indicate whether they support our named executive officer compensation as described in this Proxy Statement. This advisory vote, commonly referred to as “Say on Pay,” is not intended to address any specific item of compensation, but instead relates to the Compensation Discussion and Analysis, the tabular disclosures regarding named executive officer compensation, and the narrative disclosures accompanying the tabular presentation. These disclosures allow you to view our executive compensation program and the application of our compensation philosophies for the years presented.

The Company’s objectives relating to executive compensation are to attract and retain highly qualified executives at salaries that are competitive with companies of similar or greater size within its industry, and to align the financial interests of those executives with those of its shareholders by linking a substantial portion of each executive’s compensation to the achievement of financial objectives for the Company as a whole. The Board and the Compensation Committee are focused on operating performance, earnings growth and share price appreciation.

Our executive compensation programs reflect the Company’s “pay for performance” approach to compensation. In the Board’s view, the growth of earnings per share is the most direct way to measure performance that should result in long-term share value appreciation. Another key aspect of the executive compensation is that a meaningful part of total compensation is paid with performance based restricted stock that not only requires the achievement of performance targets and also has a three-year vesting period. The vesting requirement of the equity portion of the compensation program (i) extends the value of current year compensation to a three-year period, (ii) creates a strong incentive for the executives to increase shareholder value, and (iii) serves as a powerful executive retention. Lastly, the executive compensation program also considers that the Company provides no special retirement (pension or 401(k) match) benefits for senior executives.

The Company grew pro-forma earnings per share by 23% in 2011 which resulted in performance awards at “Goal”. These results were on top of the 440% pro-forma earnings per share growth in 2010 which resulted in performance awards in excess of the “Superior” targets for the Company’s named executive officers. Our 2011 executive compensation was approximately 40% lower than 2010 compensation.

The Company’s Compensation Committee has established challenging performance targets for 2012 given the volatile but gradually improving global market conditions. The Company’s pro-forma earnings per share and pro-forma EBITDA performance must improve at least 15% from 2011 actual results in order for our named executive officers to earn their “Goal” cash and restricted stock unit performance incentive awards. Further, the Company’s pro-forma earnings per share and pro-forma EBITDA performance must improve at least 30% from 2011 actual results in order for the Company’s named executive officers to earn their “Superior” cash and restricted stock unit performance incentive awards.

For 2012 and continuing through 2015, the Company’s CEO and COO have agreed to forgo one half of each of their restricted stock bonus opportunity measured at “Goal” in exchange for a performance based stock option grant issued to each individual in 2012 which will not fully vest unless both pro-forma earnings per share and pro-forma EBITDA improve by 50% from 2011 levels as described above. (See “Compensation Decisions for 2012” on page 16 of this Proxy Statement.) Further, unless the price of the Company’s common stock achieves a certain level which represents significant appreciation over current levels, neither executive will receive the level of compensation that they would have received if the Company had retained one hundred percent of their restricted stock unit bonus opportunity and the Company achieved “Goal” targets for each of 2012 through 2015.

 

27

For the reasons discussed above, the Board unanimously recommends that shareholders vote in favor of the following resolution:

“Resolved, that the shareholders approve the compensation of the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and the related footnotes and narrative disclosures.”

Although this vote is advisory and is not binding on the Company, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote is required to approve the Proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS

VOTE “FOR” PROPOSAL 2:

THE APPROVAL OF THE RESOLUTION APPROVING THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

 

28

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board currently consists of Messrs. Hamlin (Chairman), Harris, Huston and Wix. The Audit Committee is composed of “independent” directors as defined in standards promulgated by the SEC and NASDAQ. The Board determined that Messrs. Hamlin and Huston are audit committee financial experts under the SEC rules. The Company’s Audit Committee is governed by a written charter approved by the Board. A copy of the Audit Committee’s updated charter, which was adopted and became effective on February 27, 2009, can be found on the Company’s website at http://www.thehackettgroup.com/about/ir_governance.jsp. All members of the Audit Committee share equally the responsibility for the performance of the functions set forth below.

The Audit Committee reviewed with BDO USA, LLP (“BDO”) all matters required to be discussed by Statement of Auditing Standards No. 61 “Communications with Audit Committees,” as amended. In addition, the Audit Committee has discussed with BDO its independence from management and the Company, and it received the written disclosures and letter delivered to the Audit Committee by BDO as required by applicable requirements of the Public Company Accounting Oversight Board regarding BDO’s communications with the Audit Committee concerning independence, and considered the compatibility of non-audit services with BDO’s independence.

The Audit Committee discussed with BDO the overall scope and plans for the Company’s audit. The Audit Committee meets with BDO, without management present when appropriate, to discuss the results of their quarterly reviews and annual examination, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held 6 meetings during fiscal year 2011.

The Audit Committee has approved all audit and non-audit services provided by BDO in 2011. See “Pre-approval of Non-Audit Services” below.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In performing its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 30, 2011 with management and with representatives of BDO. The Audit Committee also reviewed, and discussed with management and representatives of BDO, management’s assessment and report and BDO’s assessment and report and attestation on the effectiveness of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 30, 2011, for filing with the SEC.

Pre-approval of Non-Audit Services

All audit-related services, tax services and other services were pre-approved by the Audit Committee, which concluded that the provision of such services by BDO was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee’s Policy for Pre-Approval of Non-Audit Services provides for pre-approval of audit-related, tax and other services specifically described by the Audit Committee on an annual basis. In addition, individual engagements anticipated to exceed pre-established thresholds must be separately approved. If the entire Audit Committee is not able to convene so that permitted non-audit services desired to be performed by the Company’s independent auditors can be reviewed and approved on a timely basis, the Audit Committee Chairman is authorized to approve such services and make a verbal report to the full Audit Committee as to the nature and cost of such services at the next Audit Committee meeting following such approval.

Respectfully submitted,

Audit Committee

Richard N. Hamlin, Chairman

John R. Harris

Edwin A. Huston

Alan T.G. Wix

 

29

PROPOSAL 3

TO RATIFY THE APPOINTMENT OF BDO USA, LLP AS THE COMPANY’S INDEPENDENT REGISTERED CERTIFIED PUBLIC

ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 28, 2012

The Audit Committee of the Board has appointed BDO USA, LLP (“BDO”) as the independent registered certified public accounting firm to audit the Company’s consolidated financial statements for the fiscal year ending December 28, 2012 and will review the appointment at its August 2012 meeting. During fiscal year 2011, BDO served as the Company’s independent registered certified public accounting firm and also provided other audit-related services. See “Fees Paid to Independent Accountants” below.

The appointment of BDO is being presented to the shareholders for ratification. If the appointment is not ratified, the Audit Committee of the Board will consider whether it should select a different independent registered certified public accounting firm when it convenes its August 2012 meeting.

The Company’s Bylaws do not require that the shareholders ratify the appointment of BDO as its independent auditors. This proposal is being submitted to the shareholders because the Company believes it is a matter of good corporate practice.

The Company expects that representatives of BDO will be present at the annual meeting. They will be given an opportunity to make a statement if they desire to do so, and it is expected that they will be available to respond to appropriate questions.

Fees Paid To Independent Accountants

The following table sets forth fees for professional services provided by BDO for the audit of the Company’s consolidated financial statements for fiscal years 2011 and 2010, and fees billed for audit-related services, tax services, and all other services rendered by BDO during fiscal years 2011 and 2010:

 

     2011      2010  

Audit Fees (1)

    $ 543,800       $ 537,800   

Audit-Related Fees (2)

    $ 18,000       $ 18,000   

Tax Fees (3)

    $ —         $ —     

All Other Fees (4)

    $ —         $ —     

 

(1) Represents aggregate fees for professional services provided in connection with the audit of the Company’s annual consolidated financial statements, reviews of its quarterly consolidated financial statements and audit services provided in connection with other statutory or regulatory filings. Fees also include the report and attestation on the effectiveness of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
(2) Represents fees for services in connection with audits of the Company’s benefit plans, mergers and acquisitions and recently issued accounting pronouncements.
(3) Represents fees for services provided in connection with the Company’s tax compliance.
(4) Represents fees for services provided to the Company not otherwise included in the categories seen above.

The accompanying proxy will be voted in favor of the proposal unless the shareholder indicates to the contrary on the proxy. The Proposal will be approved by the vote of a majority of the shares present in person or by proxy and entitled to vote on the Proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3:

TO RATIFY THE APPOINTMENT OF BDO USA, LLP AS THE COMPANY’S INDEPENDENT REGISTERED CERTIFIED PUBLIC

ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 28, 2012

 

30

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Review, Approval or Ratification of Related Person Transactions

In accordance with the charter for the Audit Committee of the Board, the members of the Audit Committee, all of whom are independent directors, review and approve in advance any transaction which involves “related persons”, that is, parties whose relationship with the Company may enable them to negotiate terms more favorable than those available to other, more independent parties and all other transactions to the extent required by NASDAQ or applicable law to be approved by an audit committee or comparable body. For purposes of these procedures, the individuals and entities that are considered “related persons” include:

 

  •  

Any of our directors, nominees for director and executive officers;

 

  •  

Any person known to be the beneficial owner of five percent or more of our common stock (a “5% Stockholder”); and

 

  •  

Any immediate family member, as defined in Item 404(a) of Regulation S-K, of a director, nominee for director, executive officer and 5% Stockholder. We will report all such material related person transactions under applicable accounting rules, federal securities laws and SEC rules and regulations.

 

31

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth certain information regarding the beneficial ownership of common stock as of March 15, 2012: (i) by each person (or group of affiliated persons) known by the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) by each of the named executive officers; (iii) by each director and nominee of the Company; and (iv) by all of the Company’s directors and executive officers as a group.

 

Name of Beneficial Owner

    Amount and
Nature of
Beneficial
Ownership
(#)(1)		      Percent of
Class
(%)(1)		  

Ted A. Fernandez(2)(4)

      3,293,752         8.0   

David N. Dungan(2)(5)

      1,942,419         4.7   

Robert A. Ramirez(2)(6)

      184,053         —     

Terence M. Graunke(3)(7)

      4,979,690         12.1   

Richard N. Hamlin(2)(8)

      142,921         —     

John R. Harris(2)(9)

      66,193         —     

Edwin A. Huston(2)(10)

      129,807         —     

Alan T.G. Wix(2)(11)

      81,596         —     

Columbia Wanger Asset Management, L.P.(12)

      6,579,500         15.9   

FMR, LLC(13)

      2,245,613         5.4   

All current directors and current named executive officers as a group (8 persons)

      10,820,431         26.2   

 

* Represents less than 1%.
(1) The persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable, and except as indicated in the other footnotes to this table. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to restricted stock units, options or warrants held by that person that are currently vested or exercisable, or that will vest or become exercisable within 60 days after March 15, 2012 (or upon the occurrence of an event, such as change of control, resignation for good reason or involuntary termination without cause) are deemed outstanding. The Company also includes in these amounts all unvested but earned performance restricted stock units held by our named executive officers and members of our Board as it believes this results in a more accurate representation of overall share ownership. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
(2) The address for each of Messrs. Dungan, Fernandez, Hamlin, Harris, Huston, Ramirez and Wix is 1001 Brickell Bay Drive, Suite 3000, Miami, Florida 33131.
(3) The address for Mr. Graunke is in care of Lake Capital Management LLC, 676 North Michigan Ave., Suite 3900, Chicago, Illinois 60611.
(4) Includes 593,589 unvested performance-based restricted stock units that would vest upon a change of control, Mr. Fernandez’s resignation for good reason or involuntary termination. Includes 157,091 shares which are held in trust for the benefit of Mr. Fernandez’s children. Also includes 300,000 vested options to purchase common stock. Does not include 1,912,500 unvested performance-based stock options.
(5) Includes 371,177 unvested performance-based restricted stock units that would vest upon a change of control, Mr. Dungan’s resignation for good reason or involuntary termination. Includes 191,150 shares held through the DJD Family Limited Partnership, and 350,000 shares held in the Jeanine G. Dungan Trust dated August 5, 1998. Also includes 150,000 vested options to purchase common stock. Does not include 1,004,063 unvested performance-based stock options.
(6) Includes 91,704 unvested performance based restricted stock units that would vest upon a change of control, Mr. Ramirez’s resignation for good reason or involuntary termination. Does not include 100,000 unvested performance-based stock options.

 

32

(7) Mr. Graunke joined the Company’s Board on November 10, 2009, in connection with of its acquisition of Archstone Consulting. As of the Record Date, Lake Capital and certain of its affiliates (the “Lake Affiliates”), Archstone Holdings LLC and certain of its affiliates (the “Archstone Affiliates”), Mr. Graunke and Paul G. Yovovich (the “Reporting Persons”) have the shared power to vote or direct the vote and shared power to dispose or direct the disposition of 4,949,648 of shares of common stock. The number of shares reported above includes 30,042 unvested restricted stock units issued to Lake Capital in recognition for Mr. Graunke’s service on the Board that would vest upon termination of service on the Board. The address of the principal business and principal office of each of the Reporting Persons is 676 N. Michigan Ave, Suite 3900, Chicago, Illinois 60611.
(8) Includes 35,000 vested options to purchase common stock and 30,892 unvested restricted stock units granted pursuant to the Company’s Outside Director Compensation program that would vest upon termination of service on the Board. Also includes 1,300 shares held by Mr. Hamlin’s wife in an individual retirement account.
(9) Includes 30,159 unvested restricted stock units granted pursuant to the Company’s Outside Director Compensation program that would vest upon termination of service on the Board.
(10) Includes 38,750 vested options to purchase common stock and 30,525 unvested restricted stock units granted pursuant to the Company’s Outside Director Compensation program that would vest upon termination of service on the Board.
(11) Includes 31,700 vested options to purchase common stock and 30,525 unvested restricted stock units granted pursuant to the Company’s Outside Director Compensation program that would vest upon termination of service on the Board.
(12) The information reported is based on Form 13G/A filed with the SEC on February 10, 2012 by Columbia Wanger Asset Management, LLC. (“WAM”) an investment advisor as defined in Rule 13d-1(b)(1)(ii)(E) of the Act. The statement discloses that, as of the time of the filing, WAM, a registered investment adviser had sole voting power with respect to 5,861,500 shares of common stock and dispositive power with respect to 6,579,500 shares of common stock. This amount includes shares held by Columbia Acorn Trust (“Acorn Trust”) a Massachusetts business trust that is advised by WAM. The address of WAM and Acorn Trust is 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606.
(13) The information reported is based on Form 13G/A filed with the SEC on February 14, 2012 by FMR LLC (”FMR”). The statement discloses that, as of the time of the filing, (i) FMR a parent holding company or control person as defined in Rule 13d-1(b)(1)(ii)(G) of the Act had sole voting power with respect to 1,806,761 shares of common stock and sole dispositive power with respect to 2,245,613 shares of common stock. The address for FMR is 82 Devonshire Street, Boston, Massachusetts 02109. For additional disclosure regarding the persons affiliated with FMR and their voting and dispositive powers with regard to the Company’s common stock please refer to the Form 13G/A filed with the SEC on February 14, 2012.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers and holders of more than 10% of the common stock to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Based upon a review of filings with the SEC, the Company believes that all of its directors and executive officers complied during fiscal year 2011 with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, except for one late Form 4 filed on behalf of Mr. Ramirez and Mr. Wix.

 

33

SHAREHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 2013

Any proposal or proposals by a shareholder intended to be included in the Company’s Proxy Statement and form of proxy relating to the 2013 Annual Meeting of Shareholders must be received by the Company no later than November 26, 2012, pursuant to the proxy solicitation rules of the SEC. Nothing in this paragraph shall be deemed to require the Company to include in its Proxy Statement and proxy relating to the 2013 Annual Meeting of Shareholders any shareholder proposal which may be omitted from the Company’s proxy materials pursuant to applicable regulations of the SEC in effect at the time such proposal is received.

Pursuant to the Company’s bylaws, all other shareholder proposals to be presented at the 2013 Annual Meeting of Shareholders must be submitted in writing and received by the Secretary of the Company at the principal executive offices of the Company not earlier than February 7, 2013 and not later than March 8, 2013; provided, however, that in the event that the date of the 2013 Annual Meeting of Shareholders is advanced by more than 30 days or delayed by more than 60 days from the anniversary of the 2012 Annual Meeting, the shareholder must so deliver the notice not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. The shareholder’s notice with respect to such proposal must comply with the requirements set forth in the Company’s bylaws.

WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION

Upon written request the Company will provide, without charge, a copy of its Annual Report on Form 10-K for its fiscal year ended December 30, 2011. For a copy of the Company’s Form 10-K, please contact Josie Estevez-Lugo at 1001 Brickell Bay Drive, Suite 3000, Miami, FL 33131, telephone (305) 375-8005, facsimile (305) 379-8810.

 

34

OTHER BUSINESS TO BE TRANSACTED

As of the date of this Proxy Statement, the Board knows of no other matters that may come before the annual meeting. However, if any other matters properly come before the meeting, it is the intention of the proxy holders to vote or act in accordance with their best judgment with respect to such matters.

By Order of the Board of Directors,

LOGO

Frank A. Zomerfeld

Secretary

 

35

LOGO

   LOGO
  

 

Electronic Voting Instructions

 

Available 24 hours a day, 7 days a week!

 

Instead of mailing your proxy, you may choose one of the voting methods
outlined below to vote your proxy.

 

VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR.

 

Proxies submitted by the Internet or telephone must be received by

1:00 a.m., Central Time, on May 4, 2012.

     LOGO     

 

Vote by Internet

 

•    Go to www.investorvote.com/hckt

 

•    Or scan the QR code with your smartphone

 

•    Follow the steps outlined on the secure website

  

 

Vote by telephone

     •   Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
     •   Follow the instructions provided by the recorded message
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.   x        

 

LOGO

q  IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.  q

 

 

 

A   Proposals — The Board recommends a vote FOR all nominees, and FOR Proposals 2 and 3.

 

1. 

  

Election of  Directors:

   For   Withhold       For   Withhold             +
 

 

01 - David N. Dungan

  

 

¨

  

 

¨

    

 

02 - Richard N. Hamlin

  

 

¨

  

 

¨

            

 

      For   Against   Abstain         For   Against   Abstain  

 

2. 

  

 

Say on Pay - An advisory vote on the approval of executive officer compensation.

    

 

¨

  

 

¨

  

 

¨

  

 

3.

  

 

To ratify the appointment of BDO USA LLP as The Hackett Group, Inc.’s independent registered public accounting firm for 2012.

    

 

¨

  

 

¨

  

 

¨

  

 

B   Non-Voting Items        

 

Change of Address — Please print your new address below.

     Comments — Please print your comments below.   Meeting Attendance  
              Mark the box to the right if you plan to attend the Annual Meeting.   ¨

 

C   Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below    

 

Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.

 

Date (mm/dd/yyyy) — Please print date below.     Signature 1 — Please keep signature within the box.     Signature 2 — Please keep signature within the box.
    /    /                    

 

LOGO

2012 Annual Meeting Admission Ticket

2012 Annual Meeting of

The Shareholders of The Hackett Group, Inc.

Friday, May 4, 2012 11:00 A.M. Local Time

The Hackett Group, Inc.’s Company Headquarters

1001 Brickell Bay Drive, Suite 3000

Miami, Florida 33131

Upon arrival, please present this admission ticket

and photo identification at the registration desk.

Important notice regarding the Internet availability of

proxy materials for the Annual Meeting of shareholders.

The proxy statement and The Company’s Annual Report on Form 10-K are available at:

www.edocumentview.com/hckt

 

 

 

q  IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.  q

 

 

 

LOGO

 

 

Proxy — The Hackett Group, Inc.

 

 

 

Notice of 2012 Annual Meeting of Shareholders

Proxy Solicited by Board of Directors for Annual Meeting – May 4, 2012

Ted A. Fernandez or Robert A. Ramirez, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of The Hackett Group, Inc. to be held on May 4, 2012 or at any postponement or adjournment thereof.

Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees and FOR Proposals 2 and 3.

In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.

(Items to be voted appear on reverse side.)