10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005 or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-24799

THE CORPORATE EXECUTIVE BOARD COMPANY

(Exact name of registrant as specified in its charter)

Delaware	52-2056410
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
2000 Pennsylvania Avenue, NW	20006
Suite 6000	(Zip Code)
Washington, D.C.
(Address of principal executive offices)

(202) 777-5000
(Registrant’s telephone number, including area code)

Not applicable.
(Former name, former address and former fiscal year, if changed, since last report.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ       No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ       No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 22, 2005, we had outstanding 39,893,317 shares of Common Stock, par value $0.01 per share.

THE CORPORATE EXECUTIVE BOARD COMPANY
INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004.	3
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004.	4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004.	5
Notes to Condensed Consolidated Financial Statements.	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	13
Item 4. Controls and Procedures.	13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	14
Item 3. Defaults Upon Senior Securities.	14
Item 4. Submission of Matters to a Vote of Security Holders.	14
Item 5. Other Information.	14
Item 6. Exhibits.	14

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE CORPORATE EXECUTIVE BOARD COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	June 30, 2005			December 31, 2004
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	287,251		$	113,996
Marketable securities		18,260			50,292
Membership fees receivable, net		56,664			97,106
Deferred income taxes, net		24,133			26,121
Deferred incentive compensation		8,317			9,277
Prepaid expenses and other current assets		8,581			8,107
Total current assets		403,206			304,899
Deferred income taxes, net		3,912			3,466
Marketable securities		204,275			252,689
Property and equipment, net		16,741			17,397
Total assets	$	628,134		$	578,451
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued liabilities	$	20,452		$	17,450
Accrued incentive compensation		17,204			18,213
Deferred revenues		193,635			205,494
Total current liabilities		231,291			241,157
Other liabilities		10,589			9,833
Total liabilities		241,880			250,990
Stockholders’ equity:
Common stock, par value $0.01; 100,000,000 shares authorized and 41,380,982 and 39,991,749 shares issued, and 39,891,317 and 38,930,648 shares outstanding as of June 30, 2005 and December 31, 2004, respectively		413			399
Additional paid-in capital		276,015			214,987
Retained earnings		181,945			155,619
Accumulated elements of comprehensive income (loss)		722			1,763
Treasury stock, 1,489,665 and 1,061,101 shares, at cost, at June 30, 2005 and December 31, 2004, respectively		(72,841	)		(45,307	)
Total stockholders’ equity		386,254			327,461
Total liabilities and stockholders’ equity	$	628,134		$	578,451

See accompanying notes to condensed consolidated financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2005		2004		2005		2004
Revenues	$	87,351	$	67,198	$	168,959	$	131,177
Cost of services		30,088		22,232		56,145		43,632
Gross profit		57,263		44,966		112,814		87,545
Costs and expenses:
Member relations and marketing		23,478		18,563		44,962		36,444
General and administrative		9,385		7,739		18,734		14,977
Depreciation		1,921		1,592		3,370		3,340
Stock option and related expenses (1)		—		408		511		408
Total costs and expenses		34,784		28,302		67,577		55,169
Income from operations		22,479		16,664		45,237		32,376
Other income, net		3,154		2,341		6,173		4,509
Income before provision for income taxes		25,633		19,005		51,410		36,885
Provision for income taxes		8,587		6,272		17,222		12,172
Net income	$	17,046	$	12,733	$	34,188	$	24,713
Earnings per share:
Basic	$	0.43	$	0.33	$	0.87	$	0.66
Diluted	$	0.41	$	0.32	$	0.84	$	0.63
Dividends per share	$	0.10	$	0.075	$	0.20	$	0.15
Weighted average shares used in the calculation of earnings per share:
Basic		39,926		38,151		39,475		37,697
Diluted		41,194		39,684		40,886		39,301
(1) Composition of Stock option and related expenses:
Cost of services	$	—	$	184	$	337	$	184
Member relations and marketing		—		100		129		100
General and administrative		—		124		45		124
Total	$	—	$	408	$	511	$	408

See accompanying notes to condensed consolidated financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six months ended
	June 30,
	2005			2004
Cash flows from operating activities:
Net income	$	34,188		$	24,713
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation		3,370			3,340
Deferred income taxes		17,222			11,388
Amortization of marketable securities premiums, net		1,240			1,460
Changes in operating assets and liabilities:
Membership fees receivable, net		40,442			19,778
Deferred incentive compensation		960			943
Prepaid expenses and other current assets		(873	)		(2,910	)
Accounts payable and accrued liabilities		3,004			2,996
Accrued incentive compensation		(976	)		(1,724	)
Deferred revenues		(11,859	)		(4,186	)
Other liabilities		756			4
Net cash flows provided by operating activities		87,474			55,802
Cash flows from investing activities:
Purchases of property and equipment, net		(3,024	)		(6,007	)
Maturities and sales (purchases) of marketable securities, net		78,608			(40,184	)
Net cash flows provided by (used in) investing activities		75,584			(46,191	)
Cash flows from financing activities:
Proceeds from the exercise of common stock options		44,905			55,175
Proceeds from the issuance of common stock under the employee stock purchase plan		655			418
Purchase of treasury shares		(27,534	)		(18,731	)
Payment of dividends		(7,862	)		(5,725	)
Reimbursement of common stock offering costs		35			225
Payment of common stock offering costs		(2	)		(121	)
Net cash flows provided by financing activities		10,197			31,241
Net increase in cash and cash equivalents		173,255			40,852
Cash and cash equivalents, beginning of period		113,996			118,568
Cash and cash equivalents, end of period	$	287,251		$	159,420

See accompanying notes to condensed consolidated financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Description of operations

     The Corporate Executive Board Company (the “Company”) provides “best practices” research, decision support tools and executive education focusing on corporate strategy, operations and general management issues. Best practices research supports senior executive decision making by identifying and analyzing specific management initiatives, processes and strategies that have been determined to produce the best results in solving common business problems or challenges. For a fixed annual fee, members of each research program have access to an integrated set of services, including best practices research studies, executive education seminars, customized research briefs and Web-based access to the program’s content database and decision support tools.

Note 2. Condensed consolidated financial statements

     The accompanying condensed consolidated financial statements included herein have been prepared by the Company in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete consolidated financial statements are not included herein. It is recommended that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and related notes as reported on the Company’s Form 10-K filed with the SEC on March 4, 2005.

     In management’s opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated financial position, results of operations, and cash flows at the dates and for the periods presented have been included. The condensed consolidated balance sheet presented as of December 31, 2004 has been derived from the financial statements that have been audited by the Company’s independent registered public accounting firm. The results of operations for the three and six months ended June 30, 2005, may not be indicative of the results that may be expected for the year ending December 31, 2005, or any other period within calendar year 2005.

Note 3. New accounting pronouncements

      In December 2004, the FASB issued Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 123-R, Share-Based Payment (SFAS No. 123-R), as a revision to SFAS No. 123 Accounting for Stock-Based Compensation, issued in October 1995. SFAS No. 123-R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123-R eliminates the alternative of using the intrinsic value method as described in Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations (collectively, “APB No. 25“) and requires entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards (with limited exceptions) to the extent such awards are not expected to be forfeited. Under the provisions of SFAS No. 123-R, if applicable, the amount of tax benefit relating to stock option compensation included in operating cash flows for periods prior to the effective date, will be reported in financing cash flows once the statement becomes effective. SFAS No. 123-R further allows for either prospective recognition of compensation expense or retrospective recognition.

     Further, in March 2005, the SEC issued Staff Accounting Bulleting No. 107 regarding the interaction between SFAS No. 123-R and certain SEC rules and regulations and provided the staff's views regarding the valuation of share-based payment arrangements for public companies. In particular, SAB 107 provides guidance related to share-based payment transactions with non-employees, valuation methods (including assumptions such as expected volatility and expected term), the accounting for certain redeemable financial instruments issued under share-based payment arrangements, the classification of compensation expense, non-GAAP financial measures, first-time adoption of SFAS No. 123-R in an interim period, capitalization of compensation cost related to share-based payment arrangements, the accounting for income tax effects of share-based payment arrangements upon adoption of SFAS No. 123-R, the modification of employee share options prior to adoption of SFAS No. 123-R and disclosures in Management's Discussion and Analysis (“MD&A”) subsequent to adoption of the SFAS No. 123-R.

     The Company is currently evaluating the transition methods of adopting SFAS No. 123-R and the impacts of SAB 107 and SFAS No. 123-R. Accordingly, the Company has continued to use APB No. 25 for the three and six months ended June 30, 2005 and 2004, and will adopt SFAS No. 123-R effective January 1, 2006. See Note 9 for the supplemental disclosure of stock-based compensation as required by SFAS No. 123, as amended by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation Transition and Disclosure (“SFAS No. 148”).

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Note 4. Sales and public offerings of common stock

     In March 2005, certain of the Company’s shareholders sold 1.3 million shares of the Company’s common stock in transactions that were exempt from registration. In May 2004, certain of the Company’s shareholders sold 1.9 million shares of its common stock in a registered public offering. The common stock sold in March 2005 and May 2004 consisted primarily of common stock obtained by employees and directors from the exercise of common stock options. The Company did not directly receive any proceeds from the sale of its common stock; however, it did receive cash from the exercise of the common stock options. In addition, the Company recognized approximately $511,000 and $408,000 in compensation expense reflecting additional Federal Insurance Corporation Act (“FICA”) taxes as a result of the taxable income that the employees recognized upon the exercise of non-qualified common stock options in conjunction with the sale in March 2005 and May 2004, respectively. The additional FICA taxes are included within “Stock option and related expenses” in the condensed consolidated statements of income for the six months ended June 30, 2005 and 2004.

Note 5. Earnings per share

     Basic earnings per share was computed by dividing net income by the number of weighted average common shares outstanding during the period. Diluted earnings per share was computed by dividing net income by the number of weighted average common shares outstanding during the period increased by the dilutive effects of potential common shares, also known as common share equivalents, outstanding during the period. The number of potential common shares outstanding has been determined in accordance with the treasury-stock method. Common share equivalents consist of common shares issuable upon the exercise of outstanding common stock options. A reconciliation of basic to diluted weighted average common shares outstanding is as follows (in thousands):

	Three months				Six months
	ended June 30,				ended June 30,
	2005		2004		2005		2004
Basic weighted average common shares outstanding		39,926		38,151		39,475		37,697
Dilutive common shares outstanding		1,268		1,533		1,411		1,604
Diluted weighted average common shares outstanding		41,194		39,684		40,886		39,301

Note 6. Comprehensive income (loss)

     Comprehensive income (loss) is defined as net income (loss) plus the net-of-tax impact of foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. Comprehensive income for the three months ended June 30, 2005 and 2004 was $18.5 million and $8.4 million, respectively. Comprehensive income for the six months ended June 30, 2005 and 2004 was $33.1 million and $21.4 million, respectively. The accumulated elements of other comprehensive income (loss), net of tax, included within stockholders’ equity on the consolidated balance sheets are comprised of the net change in unrealized gains (losses) on available-for-sale marketable securities and foreign currency translation adjustments. Unrealized gains (losses), net of tax, on available-for-sale marketable securities amounted to $(0.4) million and $(3.1) million during the six months ended June 30, 2005 and 2004, respectively. The tax expense (benefit) associated with unrealized gains (losses) on available-for-sale marketable securities included within comprehensive income (loss) is $(0.2) million and $(1.7) million for the six months ended June 30, 2005 and 2004, respectively.

Note 7. Supplemental cash flows disclosures

     For the six months ended June 30, 2005 and 2004, the Company recognized $15.5 million and $15.2 million, respectively, in stockholders’ equity for tax deductions associated with the exercise of non-qualified common stock options and disqualifying dispositions of incentive stock options. Estimated income tax payments for the six months ended June 30, 2005 and 2004 were $0 and $793,000, respectively.

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Note 8. Stockholders’ equity

     In February 2005, the Company announced that its Board of Directors authorized a share repurchase of up to an additional $100 million of the Company’s common stock, which when combined with the remaining balance of the existing share repurchase authorization from February 2003 of $75 million, provided the Company the opportunity to repurchase up to approximately $130 million of its shares as of the date of the additional share repurchase authorization. Repurchases will be made from time to time in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. The Company has funded, and expects to continue to fund its share repurchases with cash on hand and cash generated from operations. As of June 30, 2005 and December 31, 2004, the Company has repurchased 1,489,665 shares and 1,061,101 shares, respectively, of the Company’s common stock at a total cost of $72.8 million and $45.3 million, respectively.

     In the six months ended June 30, 2005, the Board of Directors declared quarterly dividends of $0.10 per share, which were paid on March 31, 2005 and June 30, 2005 to stockholders of record at the close of business on March 10, 2005 and June 15, 2005, respectively. For the six months ended June 30, 2005, the Company paid dividends to stockholders of record totaling $7.9 million. See Note 10 for information on the declaration of the third quarter dividend.

Note 9. Stock-based compensation

     At June 30, 2005, the Company had several stock-based employee compensation plans. These plans provide for the granting of stock options, stock appreciation rights and restricted stock to employees and non-employee members of the Company’s Board of Directors. The Company accounts for these plans using the intrinsic value method of expense recognition and measurement prescribed by APB No. 25. Accordingly, no stock-based compensation cost is reflected in net income, as reported, as all stock options granted under the Company’s stock-based employee compensation plans have an exercise price equal to the market value of the underlying common stock on the date of grant.

     SFAS No. 123, as amended, established an alternative method of expense recognition for stock-based compensation awards to employees based on fair values. Pro forma information regarding net income is required by SFAS No. 123, as amended, and has been determined as if the Company had accounted for its employee stock options under the fair value method as prescribed by SFAS No. 123, as amended.

     The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended, to stock-based employee compensation. For purposes of pro forma disclosures, the estimated fair value of options is amortized to expense over the vesting period.

	Three months						Six months
	ended June 30,						ended June 30,
	2005			2004			2005			2004
				(In thousands, except per share amounts)
Net income, as reported	$	17,046		$	12,733		$	34,188		$	24,713
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		4,536			2,787			7,997			7,693
Pro forma net income	$	12,510		$	9,946		$	26,191		$	17,020
Earnings per share:
Basic — as reported	$	0.43		$	0.33		$	0.87		$	0.66
Basic — pro forma	$	0.31		$	0.26		$	0.66		$	0.45
Diluted — as reported	$	0.41		$	0.32		$	0.84		$	0.63
Diluted — pro forma	$	0.31		$	0.25		$	0.64		$	0.44
Assumptions:
Risk-free interest rate		3.7	%		3.9	%		4.3	%		3.5	%
Dividend yield		0.6	%		0.5	%		0.6	%		0.6	%
Expected life of option (in years)		4.5			5			4.4			5
Expected volatility		30	%		38	%		30	%		39	%
Weighted-average fair value of options granted	$	19.70			—		$	19.49		$	17.50

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     Under the SFAS No. 123, as amended, pro forma disclosure provisions, the fair value of options granted subsequent to December 15, 1994, has been estimated using the Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price characteristics that are significantly different from those of traded options. Because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock rights.

Note 10. Subsequent events

     In July 2005, the Board of Directors declared a quarterly dividend of $0.10 per share. The Company will fund its dividend payments with cash on hand and cash generated from operations. The dividend is payable on September 30, 2005 to stockholders of record at the close of business on September 15, 2005.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     This Quarterly Report on Form 10-Q of The Corporate Executive Board Company contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth below and in our filings with the U.S. Securities and Exchange Commission, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Factors that could cause actual results to differ materially from those indicated by forward-looking statements include, among others, our dependence on renewals of our membership-based services, our inability to know in advance if new products will be successful, difficulties we may experience in anticipating market trends, our need to attract and retain a significant number of highly skilled employees, restrictions on selling our products and services to the health care industry, continued consolidation in the financial institutions industry, which may limit our business with such companies, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to litigation related to the content of our products, our potential exposure to loss of revenue resulting from our unconditional service guarantee, various factors that could affect our estimated income tax rate or our ability to use our existing deferred tax assets, whether the Washington, D.C. Office of Tax and Revenue withdraws our QHTC status and possible volatility of our stock price. These factors are discussed more fully in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our filings with the U.S. Securities and Exchange Commission, including, but not limited to, our 2004 Annual Report on Form 10-K.

Overview

     The Company provides “best practices” research, decision support tools and executive education focusing on corporate strategy, operations and general management issues. Best practices research supports senior executive decision making by identifying and analyzing specific management initiatives, processes and strategies that have been determined to produce the best results in solving common business problems or challenges. For a fixed annual fee, members of each of our research programs have access to an integrated set of services, including best practices research studies, executive education seminars, customized research briefs and Web-based access to the program’s content database and decision support tools.

     Memberships, which are principally annually renewable agreements, are generally payable by members at the beginning of the contract term. Billings attributable to memberships in our research programs initially are recorded as deferred revenues and then recognized pro rata over the membership contract term, which is typically twelve months. At any time, a member may request a refund of its membership fee for a research program. Refunds are provided on a pro rata basis relative to the remaining term of the membership.

     Our growth strategy is to cross-sell additional research programs to existing members, to add new members and to develop new research programs and decision support tools. The implementation of our growth strategy can be seen in our operating results. One measure of our business is our annualized Contract Value, which the Company calculates as the aggregate annualized revenue attributed to all agreements in effect at a given point in time, without regard to the remaining duration of any such agreement. Our experience has been that a substantial portion of members renew subscriptions for an equal or higher level each year. Contract Value has increased 29.8% to $331.6 million at June 30, 2005, from $255.5 million at June 30, 2004.

     Our operating costs and expenses consist of cost of services, member relations and marketing, general and administrative expenses, depreciation, and stock option and related expenses. Cost of services represents the costs associated with the production and delivery of our products and services, including compensation of research personnel and in-house faculty, the production of published materials, the organization of executive education seminars and all associated support services. Member relations and marketing expenses include the costs of acquiring new members, the costs of maintaining and renewing existing members, compensation expense (including sales commissions), travel and all associated support services. General and administrative expenses include the costs of human resources and recruiting, finance and accounting, management information systems, facilities management, new product development and other administrative functions. Depreciation expense includes the cost of depreciation of our property and equipment, which consists of furniture, fixtures and equipment, capitalized software and Web site development costs and leasehold improvements. Stock option and related expenses includes additional payroll taxes for compensation expense relating to the taxable income recognized by employees upon the exercise of non-qualified common stock options. The statements in this MD&A section of Form 10-Q do not include any impact related to the expensing of stock options according to SFAS No. 123-R. The expensing of stock options would increase operating expenses and would potentially affect the tax rate.

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Results of Operations

     The following table sets forth certain financial data as a percentage of revenues for the periods indicated:

	Three months						Six months
	ended June 30,						ended June 30,
	2005			2004			2005			2004
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of services		34.4			33.1			33.2			33.3
Gross profit		65.6			66.9			66.8			66.7
Costs and expenses:
Member relations and marketing		26.9			27.6			26.6			27.8
General and administrative		10.7			11.5			11.1			11.4
Depreciation		2.2			2.4			2.0			2.5
Stock option and related expenses		—			0.6			0.3			0.3
Total costs and expenses		39.8			42.1			40.0			42.1
Income from operations		25.7			24.8			26.8			24.7
Other income, net		3.6			3.5			3.7			3.4
Income before provision for income taxes		29.3			28.3			30.4			28.1
Provision for income taxes		9.8			9.3			10.2			9.3
Net income		19.5	%		18.9	%		20.2	%		18.8	%

Three and Six Months Ended June 30, 2005 and June 30, 2004

     Revenues. Revenues increased 30.0% to $87.4 million for the three months ended June 30, 2005, from $67.2 million for the three months ended June 30, 2004. Revenues increased 28.8% to $169.0 million for the six months ended June 30, 2005, from $131.2 million for the six months ended June 30, 2004. The largest driver of the increase in revenues during the three and six months ended June 30, 2005 was the cross-selling of additional subscriptions to existing members. Other drivers contributing to the increase in revenues for the three and six months ended June 30, 2005 included the introduction of new research programs, the addition of new members and price increases.

     Cost of services. Cost of services increased 35.3% to $30.1 million for the three months ended June 30, 2005, from $22.2 million for the three months ended June 30, 2004. Cost of services increased 28.7% to $56.1 million for the six months ended June 30, 2005, from $43.6 million for the six months ended June 30, 2004. The increase in cost of services was principally due to compensation costs for new research and executive education staff and an increase in external consulting expenses to support the growth of our existing programs. Cost of services as a percentage of revenues increased to 34.4% for the three months ended June 30, 2005, from 33.1% for the three months

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ended June 30, 2004. Cost of services as a percentage of revenues remained relatively consistent for the six months ended June 30, 2005 and 2004. The year-over-year changes in the cost of services as a percentage of revenue for the three months ended June 30, 2005 and 2004 are due to a shift in the timing of our publishing and executive education seminar schedule relative to the period ending June 30, 2004. Cost of services as a percentage of revenues may fluctuate from quarter to quarter due to the timing of the completion and delivery of best practices research studies, the timing of executive education seminars, the introduction of new membership programs and the fixed nature of a portion of the production costs of best practices research studies, as these costs are not significantly affected by growth in the number of membership subscriptions. Accordingly, the cost of services as a percentage of revenues for the three and six months ended June 30, 2005 may not be indicative of future quarterly or annual results.

     Gross profit. Historically, the gross profit as a percentage of revenues, or gross profit margin, has fluctuated based upon the growth in revenues offset by the costs of delivering best practices research studies, the timing of executive education seminars, the volume of customized research briefs, the hiring of personnel and the introduction of new membership programs. Accordingly, the gross profit margin for the three and six months ended June 30, 2005, may not be indicative of future results. A number of factors that impact gross profit margin are discussed in the “Cost of services” description above.

     Member relations and marketing. Member relations and marketing costs increased 26.5% to $23.5 million for the three months ended June 30, 2005 from $18.6 million for the three months ended June 30, 2004. Member relations and marketing costs increased 23.4% to $45.0 million for the six months ended June 30, 2005 from $36.4 million for the six months ended June 30, 2004. The year-over-year increase in member relations and marketing costs is principally due to the increase in marketing personnel and related costs, the increase in member relations personnel and related costs to support the Company’s expanding membership base, and the increase in commission expense associated with increased revenues. Member relations and marketing costs as a percentage of revenues decreased to 26.9% for the three months ended June 30, 2005, from 27.6% for the three months ended June 30, 2004, reflecting marketing and member services productivity gains and the timing of new hires within the financial quarter. Member relations and marketing costs as a percentage of revenues decreased to 26.6% for the six months ended June 30, 2005, from 27.8% for the six months ended June 30, 2004, due primarily to the changes in member relations and marketing costs noted above.

     General and administrative. General and administrative expenses increased 21.3% to $9.4 million for the three months ended June 30, 2005, from $7.7 million for the three months ended June 30, 2004. General and administrative expenses increased 25.1% to $18.7 million for the six months ended June 30, 2005, from $15.0 million for the six months ended June 30, 2004. The increase in general and administrative expenses is driven by an increase in staff and related costs, the use of external consultants to support our organizational growth and an increase in the use of external personnel search firms. In addition, we incurred costs in 2004 that were not incurred in 2005 that included the use of external financial, legal and information technology consultants to support our organization’s compliance with certain regulatory requirements and one-time, lease termination costs associated with our move to a new office facility within London, England. General and administrative expenses as a percentage of revenues decreased to 10.7% for the three months ended June 30, 2005, from 11.5% for the three months ended June 30, 2004. General and administrative costs as a percentage of revenues decreased to 11.1% for the six months ended June 30, 2005, from 11.4% for the six months ended June 30, 2004. The year-over-year decrease of the three and six months ending June 30, 2005 is due primarily to the changes in general and administrative costs noted above.

     Depreciation. Depreciation expense increased 20.7% to $1.9 million for the three months ended June 30, 2005, from $1.6 million for the three months ended June 30, 2004. Depreciation expense increased 0.9% to $3.4 million for the six months ended June 30, 2005, from $3.3 million for the six months ended June 30, 2004. The increase in depreciation expense was principally due to the additional investment in leasehold improvements for additional office space in Washington, D.C. and for the new office space in London, England in the prior year and new computer equipment and software to support organizational growth.

     Stock option and related expenses. The Company recognized no stock option and related expense for the three months ended June 30, 2005. The Company recognized $408,000 in compensation expense for the three months ended June 30, 2004, reflecting additional FICA taxes as a result of the taxable income that employees recognized upon the exercise of non-qualified common stock options, primarily in conjunction with the sale of our common stock in the registered public offering in May 2004. The Company recognized $511,000 and $408,000 in compensation expense for the six months ended June 30, 2005 and 2004, respectively, reflecting additional FICA taxes as a result of the taxable income that the employees recognized upon the exercise of non-qualified common stock options, primarily in conjunction with the sale of our common stock in March 2005 and May 2004, respectively. See further discussion of the sale of our common stock in the “Liquidity and Capital Resources” section below.

     Other income, net. Other income, net increased 34.7% to $3.2 million for the three months ended June 30, 2005, from $2.3 million for the three months ended June 30, 2004. Other income, net increased 36.9% to $6.2 million for the six months ended June 30, 2005, from $4.5 million for the six months ended June 30, 2004. The growth in other income, net, was principally from interest income

11

associated with the increased levels of cash, cash equivalents and marketable securities. Cash, cash equivalents and marketable securities increased as a result of cash flows from operating activities and cash flows from investing activities as further discussed in the “Liquidity and Capital Resources” section below.

     Provision for income taxes. The Company recorded a provision for income taxes of $8.6 million and $6.3 million for the three months ended June 30, 2005 and 2004, respectively. The Company recorded a provision for income taxes of $17.2 million and $12.2 million for the six months ended June 30, 2005 and 2004, respectively. The increase in the provision for income taxes for the three and six months ended June 30, 2005, as compared to 2004, is primarily due to the increase in net income and the related tax effect. The increase in the effective income tax rate to 33.5% for the three and six months ended June 30, 2005 from 33.0% for the three and six months ended June 30, 2004, reflects a slight decrease in the estimated income tax benefit that the Company receives from certain Washington, D.C. and federal income tax incentives.

Liquidity and Capital Resources

     Cash flows from operating activities. The Company has financed our operations to date through funds generated from operating activities. Membership subscriptions, which are principally annually renewable agreements, are generally payable by members at the beginning of the contract term. The combination of revenue growth, profitable operations and advance payment of membership subscriptions has historically resulted in net positive cash flows provided by operating activities. The Company generated net cash flows from operating activities of $87.5 million and $55.8 million for the six months ended June 30, 2005 and 2004, respectively. For the six months ended June 30, 2005, operating cash flows were generated principally by the collection of membership fees receivable, net income, the utilization of tax benefits created by the exercise of common stock options, and an increase in accounts payable and accrued liabilities, offset by the decrease in deferred revenues and accrued incentives. For the six months ended June 30, 2004, operating cash flows were generated within the period principally by net income, the collection of membership fees receivable, the utilization of tax benefits created by the exercise of common stock options, offset by the increase in prepaid expenses and other current assets and a decrease in deferred revenues and accrued incentive compensation. As of June 30, 2005, the Company had cash, cash equivalents and marketable securities of $509.8 million. The Company expects that our current cash, cash equivalents and marketable securities balances and anticipated net positive cash flows from operations will satisfy working capital, financing, and capital expenditure requirements for the next twelve months.

     Cash flows from investing activities. The Company generated net cash flows from investing activities of $75.6 million during the six months ended June 30, 2005 and used net cash flows in investing activities of $46.2 million during the six months ended June 30, 2004. During the six months ended June 30, 2005, net cash flows from investing activities were generated by maturities and sales of available-for-sale marketable securities of $78.6 million, partially offset by the purchase of property and equipment totaling $3.0 million. During the six months ended June 30, 2004 net cash flows from investing activities were used to purchase available-for-sale marketable securities, net of sales and maturities, of $40.2 million, and leasehold improvements for additional office space in Washington, D.C. and London, England and computer equipment and software totaling $6.0 million.

     Cash flows from financing activities. The Company generated net cash flows from financing activities of $10.2 million and $31.2 million during the six months ended June 30, 2005 and 2004, respectively. Net cash generated from financing activities during the six months ending June 30, 2005 was principally attributed to the receipt of proceeds of $44.9 million from the exercise of common stock options, primarily in conjunction with the sale of 1.3 million shares of our common stock in March 2005, partially offset by the repurchase of our common stock during the period, which totaled $27.5 million, and the payment of dividends during the period, which totaled $7.9 million. Net cash generated from financing activities during the six months ending June 30, 2004 was primarily attributed to the receipt of $55.2 million in cash from the exercise of common stock options, primarily in conjunction with the sale of 1.9 million shares of our common stock in a registered public offering in May 2004, partially offset by the repurchase of our common stock during the period, which totaled $18.7 million, and the payment of dividends during the period, which totaled $5.7 million.

     The Board of Directors declared a quarterly dividend of $0.10 per share in July 2005 which will be payable in September 2005. See further discussion of the quarterly dividend in “Note 10 — Subsequent events” to the condensed consolidated financial statements which can be found in this Form 10-Q under the heading “Item 1. Financial Statements.”

     During the six months ended June 30, 2005, the Company had no material changes, outside of the ordinary course of business, in our non-cancelable contractual financial obligations. At June 30, 2005 and December 31, 2004, the Company had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing or other debt arrangements or for other contractually narrow or limited purposes.

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Critical Accounting Policies

     Our accounting policies, which are in compliance with U.S. generally accepted accounting principles, require us to apply methodologies, estimates and judgments that have a significant impact on the results the Company reports in our financial statements. In our Annual Report on Form 10-K we have discussed those policies that we believe are critical and require the use of complex judgment in their application. Since the date of that Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions applied under them.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     We are exposed to interest rate risk primarily through our portfolio of cash, cash equivalents and marketable securities, which is designed for safety of principal and liquidity. Cash and cash equivalents consist of highly liquid U.S. Treasury obligations with maturities of less than three months. Marketable securities consist primarily of U.S. Treasury notes and bonds and insured Washington, D.C. tax exempt notes and bonds. We perform periodic evaluations of the relative credit ratings related to the cash, cash equivalents and marketable securities. This portfolio is subject to inherent interest rate risk as investments mature and are reinvested at current market interest rates. We currently do not use derivative financial instruments to adjust our portfolio risk or income profile.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures: The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report based on the evaluation of these controls and procedures required by Rules 13a-15(b) or 15d-15(b) of the Exchange Act. The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Based on their evaluation, such officers have concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company required to be included in the Company’s periodic filings under the Exchange Act. During the period covered by this quarterly report, there have been no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

     From time to time, the Company is subject to certain legal proceedings and claims in the ordinary course of business. The Company is currently not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on the Company’s business, financial condition or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

     Issuer Purchases of Equity Securities

					Total Number of
					Shares		Approximate $
			Average		Purchased as		Value of Shares
	Total		Price		Part of a		That May Yet Be
	Number of		Paid Per		Publicly		Purchased
	Shares Purchased		Share		Announced Plan		Under the Plans
April 1, 2005 to April 30, 2005		115,000	$	64.45		115,000	$	106,063,206
May 1, 2005 to May 31, 2005		57,616	$	67.76		57,616	$	102,159,112
June 1, 2005 to June 30, 2005		—	$	—		—	$	102,159,112
Total		172,616	$	65.55		172,616

     In February 2003, we announced that our Board of Directors authorized a share repurchase of up to $75 million of our common stock. In February 2005, we announced that our Board of Directors authorized a share repurchase of up to an additional $100 million of our common stock, which when combined with the remaining balance of the existing share repurchase authorization, provided us the opportunity to repurchase up to approximately $130 million of our shares as of the date of the additional share repurchase authorization. Repurchases will be made from time to time in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. We have funded, and expect to continue to fund, our share repurchases with cash on hand and cash generated from operations. As of June 30, 2005 and December 31, 2004, we have repurchased 1,489,665 shares and 1,061,101 shares, respectively, of our common stock at a total cost of $72.8 million and $45.3 million, respectively.

Item 3. Defaults Upon Senior Securities.

     None.

Item 4. Submission of Matters to a Vote of Security Holders.

     None.

Item 5. Other Information.

     None.

Item 6. Exhibits.

     (a) Exhibits:

Exhibit No.	Description
10.1	The Corporate Executive Board Deferred Compensation Plan
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a — 14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a — 14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certifications pursuant to 18 U.S.C. Section 1350.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 9, 2005

The Corporate Executive Board Company

By:	/s/ Timothy R. Yost
Timothy R. Yost
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

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EX-10.1

EXHIBIT 10.1

THE CORPORATE EXECUTIVE BOARD
DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

Page

ARTICLE I TITLE AND DEFINITIONS			1
	1.1	Definitions	1
ARTICLE II PARTICIPATION			4
ARTICLE III DEFERRAL ELECTIONS			4
	3.1	Elections to Defer Compensation	4
	3.2	Investment Elections	6
ARTICLE IV DEFERRAL ACCOUNTS AND TRUST FUNDING			6
	4.1	Deferral Accounts	6
	4.2	Company Contribution Account	7
	4.3	Trust Funding	7
ARTICLE V VESTING			8
ARTICLE VI DISTRIBUTIONS			8
	6.1	Distribution of Deferred Compensation and Discretionary Company Contributions	8
	6.2	Reserved	10
	6.3	Hardship Distribution	10
	6.4	Inability to Locate Participant	10
ARTICLE VII ADMINISTRATION			10
	7.1	Committee	10
	7.2	Committee Action	10
	7.3	Powers and Duties of the Committee	11
	7.4	Construction and Interpretation	11
	7.5	Information	11
	7.6	Compensation, Expenses and Indemnity	12
	7.7	Quarterly Statements	12
	7.8	Disputes	12
ARTICLE VIII MISCELLANEOUS			13
	8.1	Unsecured General Creditor	13
	8.2	Restriction Against Assignment	13
	8.3	Withholding	14
	8.4	Amendment, Modification, Suspension or Termination	14
	8.5	Governing Law	15
	8.6	Receipt or Release	15
	8.7	Payments on Behalf of Persons Under Incapacity	15
	8.8	Limitation of Rights and Employment Relationship	15
	8.9	Headings	15

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THE CORPORATE EXECUTIVE BOARD

DEFERRED COMPENSATION PLAN

     The Corporate Executive Board Company (the “Company”) has determined that it is in the best interests of the Company to establish The Corporate Executive Board Deferred Compensation Plan (the “Plan”) for a select group of management or highly compensated employees in order to serve as a vehicle for attracting, incentivizing, and retaining high quality executive employees. As of the Effective Date set forth herein, this Plan has been adopted to read as follows:

ARTICLE I

TITLE AND DEFINITIONS

     1.1 Definitions.

          Whenever the following words and phrases are used in this Plan, with the first letter capitalized, they shall have the meanings specified below.

          (a)     “Account” or “Accounts” shall mean all of such accounts as are specifically authorized for inclusion in this Plan.

          (b)      “Base Salary” shall mean a Participant’s annual base salary and such commissions and bonuses as may be designated as deferrable as Base Salary by the Committee and which do not otherwise meet the definition of Incentive Compensation. Base Salary shall exclude all other bonus, incentive and all other remuneration for services rendered to the Company and shall be determined prior to reduction for any salary contributions to a plan established pursuant to Sections 125, 132 or 401(k) of the Code. In the case of a Participant who is a member of the Board of Directors, the term “Base Salary” shall also include any director fees or director retainers otherwise payable to such Participant.

          (c)     “Beneficiary” or “Beneficiaries” shall mean the person or persons, including a trustee, personal representative or other fiduciary, last designated in writing by a Participant in accordance with procedures established by the Committee to receive the benefits specified hereunder in the event of the Participant’s death. No beneficiary designation shall become effective until it is filed with the Committee. Any designation shall be revocable at any time through a written instrument filed by the Participant with the Committee with or without the consent of the previous Beneficiary. No designation of a Beneficiary other than the Participant’s spouse shall be valid unless consented to in writing by such spouse. If there is no such designation or if there is no surviving designated Beneficiary, then the Participant’s surviving spouse shall be the Beneficiary. If there is no surviving spouse to receive any benefits payable in accordance with the preceding sentence, the Participant’s estate, as represented by the duly appointed and currently acting personal representative of the Participant’s estate (which shall include either the Participant’s probate estate or living trust) shall be the Beneficiary. In any case where there is no such personal representative of the Participant’s estate duly appointed and

acting in that capacity within ninety (90) days after the Participant’s death (or such extended period as the Committee determines is reasonably necessary to allow such personal representative to be appointed, but not to exceed one hundred eighty (180) days after the Participant’s death), then Beneficiary shall mean the person or persons who can verify by affidavit or court order to the satisfaction of the Committee that they are legally entitled to receive the benefits specified hereunder. In the event any amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead be paid (a) to that person’s living parent(s) to act as custodian, (b) if that person’s parents are then divorced, and one parent is the sole custodial parent, to such custodial parent, or (c) if no parent of that person is then living, to a custodian selected by the Committee to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides. If no parent is living and the Committee decides not to select another custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and currently acting within sixty (60) days after the date the amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the minor. Payment by Company pursuant to any unrevoked Beneficiary designation, or to the Participant’s estate if no such designation exists, of all benefits owed hereunder shall terminate any and all liability of Company.

          (d)      “Board of Directors” or “Board” shall mean the Board of Directors of Company.

          (e)      [Reserved]

          (f)      “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (g)      “Committee” shall mean the Compensation Committee of the Board, which shall administer the Plan in accordance with Article VII.

          (h)      “Company” shall mean The Corporate Executive Board Company.

          (i) “Company Contribution Account” shall mean the bookkeeping account maintained by the Committee for each Participant that is credited with an amount equal to the Participant’s Company Discretionary Contribution Amount, if any, and Company Matching Contribution Amount, if any, and earnings and losses on such amounts pursuant to Section 4.2.

          (j) “Company Discretionary Contribution Amount” shall mean such discretionary amount if contributed by the Company for a Participant for a Plan Year. Such amount may differ from Participant to Participant in amount, including no contribution and including differences expressed as different percentages of Compensation.

          (k)      “Company Matching Contribution Amount” shall mean such amount, if any, contributed by the Company for each Participant for a Plan Year. Such amount may differ from Participant to Participant in amount, including no contribution and including differences expressed as different percentages of Compensation.

          (l)      “Compensation” shall mean Base Salary and Incentive Compensation.

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          (m)      “Deferral Account” shall mean the bookkeeping account maintained by the Committee for each Participant that is credited with amounts equal to (1) the portion of the Participant’s Compensation that he or she elects to defer, and (2) earnings and losses pursuant to Section 4.1.

          (n)      “Disabled” or “Disability” shall mean the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three months under a disability program covering employees of the Company. The Committee shall determine whether or not a Participant has become Disabled for purposes of the Plan.

          (o)      “Distributable Amount” shall mean the vested balance in the Participant’s Deferral Account and Company Contribution Account.

          (p)      “Effective Date” shall be July 1, 2005

          (q)      “Eligible Employee” shall mean (i) those employees who job titles are listed in Exhibit A attached hereto and (ii) any outside director of the Company.

          (r)      “Fund” or “Funds” shall mean one or more of the investment funds selected by the Committee pursuant to Section 3.2(b).

          (s)      “Hardship Distribution” shall mean a severe financial hardship to the Participant resulting from an unforeseeable emergency. An unforeseeable emergency shall mean a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that would constitute an unforseeable emergency will depend upon the facts of each case, but, in any case, a Hardship Distribution may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant’s assets, to the extent the liquidation of assets would not itself cause severe financial hardship, or (iii) by cessation of deferrals under this Plan.

          (t)      “Incentive Compensation” shall mean such bonuses and/or commissions as may be designated as deferrable as Incentive Compensation by the Committee and which are based on services performed for the Company over a period of at least twelve (12) months and which meet the requirements of “performance-based compensation” as defined in Section 409A(a)(4)(B)(iii) of the Code.

          (u)      “Initial Election Period” shall mean the thirty (30) day period prior to the Effective Date of the Plan, or the thirty (30) day period following the time an employee shall first be designated by the Company as an Eligible Employee.

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           (v)      “Interest Rate” shall mean, for each Fund, an amount equal to the net gain or loss on the assets of such Fund determined on a daily basis.

          (w)      “Key Employee” shall mean those employees defined under Section 416(i) of the Code without regard to paragraph (5) thereof.

          (x)      “Participant” shall mean any Eligible Employee who becomes a Participant in this Plan in accordance with Article II.

          (y)      “Payment Date” shall be the date selected by the Participant to receive or to commence receipt of benefits under the Plan, subject to the rules set forth under the Plan or the date on which the rules of the Plan otherwise provide for a payment to the Participant or the Participant’s Beneficiary.

          (z)      “Plan” shall be The Corporate Executive Board Deferred Compensation Plan.

          (aa)      “Plan Year” shall be March 1 to February 28. The first Plan Year shall be July 1 to February 28.

          (bb)      “Scheduled Withdrawal Date” shall mean the distribution date elected by the Participant for an in-service withdrawal of amounts from the Participant’s Accounts which were deferred in a given Plan Year, and earnings and losses attributable thereto, as set forth on the election form for such Plan Year.

          (cc)      “Trust” shall mean the grantor trust initially established between the Company and First American Trust, FSB.

          (dd)      “Trustee” shall mean First American Trust, FSB.

ARTICLE II

PARTICIPATION

     An Eligible Employee shall become a Participant in the Plan by completing certain electronic enrollment procedures, including any required insurance applications.

ARTICLE III

DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation.

          (a)      Initial Election Period. Subject to the provisions of Article II, each Eligible Employee may elect to defer Compensation by filing with the Committee an election that conforms to the requirements of this Section 3.1, following certain electronic election procedures established by the Committee, no later than the last day of his or her Initial Election Period.

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          (b)      General Rule. The amount of Compensation which an Eligible Employee may elect to defer is such Compensation earned on or after the time at which the Eligible Employee elects to defer in accordance with Sections 1.1(u) and 3.1(a) and shall be a percentage which shall not exceed One Hundred Percent (100%) of the Eligible Employee’s Compensation, provided that the total amount deferred by a Participant shall be limited in any calendar year, if necessary, by the amounts needed to satisfy Social Security Tax (including Medicare), income tax and employee benefit plan withholding requirements all as determined in the sole and absolute discretion of the Committee. The minimum contribution which may be made in any Plan Year by an Eligible Employee shall not be less than Five Thousand Dollars ($5,000), provided such minimum contribution can be satisfied from any element of Compensation. Notwithstanding the previous sentence, the minimum contribution shall be reduced for the first Plan Year to the amount of Three Thousand Dollars ($3,000).

          (c)      Duration of Compensation Deferral Election. In the case of an Eligible Employee who first becomes eligible to participate in the Plan as of the Effective Date, such Eligible Employee’s initial election to defer Compensation must be prior to the Effective Date and is to be effective with respect to Compensation earned after such deferral election is processed. Such election shall be irrevocable for a Plan Year and shall continue in effect unless and until modified for subsequent Plan Years. The Committee may, in its discretion and on a year by year basis, permit a Participant to make separate elections in respect of (i) the component of Base Salary which does not consist of bonus and/or commissions and (ii) the component of Base Salary which does consist of bonus and/or commissions. A Participant may increase, decrease or terminate a deferral election with respect to Base Salary for any subsequent Plan Year by filing a new election not less than fifteen (15) days prior to the beginning of the next calendar year. A Participant may increase, decrease or terminate a deferral election with respect to Incentive Compensation for any subsequent Plan Year by filing a new election not less than six months prior to the end of twelve (12) month performance period on which such Incentive Compensation is based. In the case of an employee who becomes an Eligible Employee after the Effective Date, such Eligible Employee shall have thirty (30) days after the date he or she has become an Eligible Employee to make an Initial Election with respect to Compensation. Such election shall be for the remainder of the Plan Year, in the event the Plan Year has commenced. In the event that an election which is made in respect of a Plan Year covers a component of Base Salary which is earned in part during such Plan Year and in part during the immediately succeeding Plan Year, such election shall not apply to any portion of such component of Base Salary at the time such component of Base Salary becomes otherwise payable in such immediately succeeding Plan Year. Instead, any deferral relating to such component of Base Salary must instead be made (i) through a separate election during the calendar year preceding the calendar year in which such component of Base Salary otherwise becomes payable or (ii) through a continuation of the original election into such subsequent Plan Year through a failure to modify or revoke such original election.

          (d)      Elections other than Elections during the Initial Election Period. Subject to the limitations of Section 3.1(b) above, any Eligible Employee who has terminated a prior Compensation deferral election may elect to again defer Compensation, by filing an election, on a form provided by the Committee, to defer Compensation as described in Sections 3.1(b) and

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3.1(c) above. An election to defer Compensation must be filed in a timely manner in accordance with Section 3.1(c).

     3.2 Investment Elections.

          (a)      At the time of making the deferral elections described in Section 3.1, the Participant shall designate, on a form provided by the Committee, the types of investment funds in which the Participant’s Account will be deemed to be invested for purposes of determining the amount of earnings to be credited to that Account. In making the designation pursuant to this Section 3.2, the Participant may specify that all or any percentage of his or her Account be deemed to be invested, in whole percentage increments, in one or more of the types of investment funds provided under the Plan as communicated from time to time by the Committee. A Participant may change the designation made under this Section 3.2 by filing an election, on a form provided by the Committee, which change shall be made effective as soon as reasonably practicable after receipt by the Committee of such form. If a Participant fails to elect a type of fund under this Section 3.2, he or she shall be deemed to have elected the money market type of investment fund.

          (b)      Although the Participant may designate the type of investment funds used to measure the earnings or losses to be credited to the Participant’s Accounts, the Committee shall have the right to change the range and type of available investment funds for these purposes at any time and from time to time. The Committee shall select from time to time, in its sole and absolute discretion, commercially available investments of each of the types communicated by the Committee to the Participant pursuant to Section 3.2(a) above to be the Funds. The Interest Rate of each such commercially available investment fund shall be used to determine the amount of earnings or losses to be credited to the Participant’s Account under Article IV.

ARTICLE IV

DEFERRAL ACCOUNTS AND TRUST FUNDING

     4.1 Deferral Accounts.

          The Committee shall establish and maintain a Deferral Account for each Participant under the Plan. Each Participant’s Deferral Account shall be further divided into separate subaccounts (“investment fund subaccounts”), each of which corresponds to an investment fund elected by the Participant pursuant to Section 3.2(a). A Participant’s Deferral Account shall be credited as follows:

          (a)      As soon as administratively feasible after amounts are withheld and deferred from a Participant’s Compensation, the Committee shall credit the investment fund subaccounts of the Participant’s Deferral Account with an amount equal to Compensation deferred by the Participant in accordance with the Participant’s election under Section 3.2(a); that is, the portion of the Participant’s deferred Compensation that the Participant has elected to be deemed to be invested in a certain type of investment fund shall be credited to the investment fund subaccount corresponding to that investment fund;

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          (b)      Each business day, each investment fund subaccount of a Participant’s Deferral Account shall be credited with earnings or losses in an amount equal to that determined by multiplying the balance credited to such investment fund subaccount as of the prior day plus contributions credited that day to the investment fund subaccount minus withdrawals debited that day to the investment fund subaccount by the Interest Rate for the corresponding Fund selected by the Company pursuant to Section 3.2(b).

          (c)      In the event that a Participant elects for a given Plan Year’s deferral of Compensation to have a Scheduled Withdrawal Date, all amounts attributed to the deferral of Compensation for such Plan Year shall be accounted for in a manner which allows separate accounting for the deferral of Compensation and investment gains and losses associated with such Plan Year’s deferral of Compensation.

     4.2 Company Contribution Account.

          If the Company elects to credit a Company Discretionary Contribution Amount or a Company Matching Contribution Amount on behalf of a Participant, the Committee shall establish and maintain a Company Contribution Account for such Participant. Each Participant’s Company Contribution Account shall be further divided into separate investment fund subaccounts corresponding to the investment fund elected by the Participant for the purpose of determining the earnings or losses to be credited under the Participant’s Company Contribution Account pursuant to Section 3.2(a). A Participant’s Company Contribution Account shall be credited as follows:

          (a)      As soon as administratively feasible after a Company Discretionary Contribution Amount or Company Matching Contribution Amount is contributed by the Company, the Committee shall credit the investment fund subaccounts of the Participant’s Company Contribution Account with an amount equal to the Company Discretionary Contribution Amount, if any, applicable to that Participant, that is, the proportion of the Company Discretionary Contribution Amount, if any, or Company Matching Contribution Amount, if any, which the Participant elected to be deemed to be invested in a certain type of investment fund shall be credited to the corresponding investment fund subaccount; and

          (b)      Each business day, each investment fund subaccount of a Participant’s Company Contribution Account shall be credited with earnings or losses in an amount equal to that determined by multiplying the balance credited to such investment fund subaccount as of the prior day plus contributions credited that day to the investment fund subaccount minus withdrawals debited that day to the investment fund subaccount by the Interest Rate for the corresponding Fund selected by the Company pursuant to Section 3.2(b).

     4.3 Trust Funding.

          The Company has created a Trust with First American Trust, FSB as the Trustee. The Company shall contribute to the Trust (1) an amount equal to the amount deferred by each Participant; (2) the aggregate amount of any Company Discretionary Contribution Amounts; and (3) the aggregate amount of any Company Matching Contribution Amounts.

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           Although the principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Plan Participants and Beneficiaries as set forth therein, neither the Participants nor their Beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets of the Trust prior to the time such assets are paid to the Participants or Beneficiaries as benefits and all rights created under this Plan shall be unsecured contractual rights of Plan Participants and Beneficiaries against the Company. Any assets held in the Trust will be subject to the claims of the Company’s general creditors under federal and state law in the event of insolvency as defined in Section 3.1 of the Trust.

ARTICLE V

VESTING

     A Participant shall be 100% vested in his or her Deferral Account. A Participant shall be vested in accordance with the vesting schedule with respect to Company Discretionary Contribution Amount and Company Matching Contribution Amount announced at the time such contributions, if any, are made by the Company.

ARTICLE VI

DISTRIBUTIONS

     6.1 Distribution of Deferred Compensation and Discretionary Company Contributions.

          (a)      Distribution Not Due To Scheduled Withdrawal Date. Except for Participants who are Key Employees pursuant to Section 1.1(w), in the case of a Participant who terminates employment with the Company for any reason other than death and who has an Account balance of Five Thousand Dollars ($5,000) or more, the Distributable Amount shall be paid to the Participant in the form of a lump sum payment on the Participant’s Payment Date. An optional form of benefit may be elected by the Participant, on the form provided by Company, during his or her Initial Election Period (subject to subsequent amendments as discussed in the next paragraph). Except for Participants who are Key Employees pursuant to Section 1.1(w), the optional form of benefits shall be substantially equal annual installments over a period not to exceed fifteen (15) years beginning on the Participant’s Payment Date.

          In the case of a Participant who terminates employment with Company, who is not a Key Employee under Section 1.1(w), and has an Account balance of less than Five Thousand Dollars ($5,000), the Distributable Amount shall be paid to the Participant in a lump sum distribution on the Participant’s Payment Date.

          In the case of a Participant who terminates employment with the Company for any reason other than death and who is a Key Employee under Section 1.1(w), the Distributable Amount under this Section 6.1(a) shall be paid or payments shall commence to the Participant no sooner than six (6) months following the date from which such Participant

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terminates employment with the Company. This six (6) month restriction shall not apply to a termination of employment due to death.

          The Participant’s Account shall continue to be credited with earnings pursuant to Section 4.1 of the Plan until all amounts credited to his or her Account under the Plan have been distributed.

          (b)      Distribution Due To Scheduled Withdrawal Date. In the case of a Participant who has elected a Scheduled Withdrawal Date for a distribution while still in the employ of the Company, such Participant shall receive his or her Distributable Amount, but only with respect to those deferrals of Compensation, vested Matching Contribution Amounts, if any, and vested Company Discretionary Contribution Amounts, if any, and earnings on such deferrals of Compensation, Matching Contribution Amounts and Company Discretionary Contribution Amounts as shall have been elected by the Participant to be subject to the Scheduled Withdrawal Date in accordance with Section 1.1(bb) of the Plan. A Participant’s Scheduled Withdrawal Date with respect to deferrals of Compensation, Matching Contribution Amounts and Company Discretionary Contribution Amounts deferred in a given Plan Year can be no earlier than two (2) years from the last day of the Plan Year for which the deferrals of Compensation, Matching Contribution Amounts and Company Discretionary Contribution Amounts are made. Participants may elect to have such amounts paid in the form of a lump sum distribution or annual installments not to exceed five (5) years. Such lump sum distribution will be paid or such installments will commence in March of the year specified. A Participant may extend the Scheduled Withdrawal Date for any Plan Year, provided such extension occurs at least one (1) year before the Scheduled Withdrawal Date and provided that the first payment with respect to which such election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have commenced or have been made. In the event a Participant terminates employment with Company prior to a Scheduled Withdrawal Date, other than by reason of death or Disability the portion of the Participant’s Account associated with a Scheduled Withdrawal Date, which has not occurred prior to such termination, shall be distributed in a lump sum as soon as practicable after such death or Disability. Finally, if a Participant Account balance associated with a Scheduled Withdrawal Date is less than Five Thousand Dollars ($5,000) as of the Scheduled Withdrawal Date, such amount shall be paid to the Participant (and after his or her death to his or her Beneficiary) in a lump sum distribution on the Scheduled Withdrawal Date.

          (c)      Distribution for Termination of Employment due to Death. In the case of a Participant who dies while employed by the Company, his or her vested balance in his or her Account shall be paid as soon as practicable to his or her Beneficiary in a lump sum payment, less any applicable withholding.

          (d)      Post-Termination Death Benefit. In the event a Participant dies after his or her termination of employment and still has a vested balance in his or her Account, the vested balance of such Account shall be paid as soon as practicable to the Participant’s Beneficiary in a lump sum payment, less any applicable withholding.

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     6.2 [Reserved.]

     6.3 Hardship Distribution.

          A Participant shall be permitted to elect a Hardship Distribution from his or her vested Accounts in accordance with Section 1.1(s) of the Plan prior to the Payment Date, subject to the following restrictions:

          (a)       The election to take a Hardship Distribution shall be made by filing a form provided by and filed with the Committee prior to the end of any calendar month.

          (b)      The Committee shall have made a determination that the requested distribution constitutes a Hardship Distribution in accordance with Section 1.1(s) of the Plan.

          (c)      The amount determined by the Committee as a Hardship Distribution shall be paid in a single cash lump sum as soon as practicable after the end of the calendar month in which the Hardship Distribution election is made and approved by the Committee.

     6.4 Inability to Locate Participant.

          In the event that the Committee is unable to locate a Participant or Beneficiary within two years following the required Payment Date, the amount allocated to the Participant’s Deferral Account shall be forfeited. If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without interest or earnings.

ARTICLE VII

ADMINISTRATION

     7.1 Committee.

          The members of the Committee shall consist of the members of the Compensation Committee of the Board of Directors, as such Compensation Committee may be constituted from time to time.

     7.2 Committee Action.

          The Committee shall act at meetings by affirmative vote of a majority of the members of the Committee. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a written consent to the action is signed by all members of the Committee and such written consent is filed with the minutes of the proceedings of the Committee. A member of the Committee shall not vote or act upon any matter which relates solely to himself or herself as a Participant. The Chair or any other member or members of the Committee designated by the Chair may execute any certificate or other written direction on behalf of the Committee.

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     7.3 Powers and Duties of the Committee.

          (a)      The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with its terms, shall be charged with the general administration of the Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

       (1)     To select the Funds in accordance with Section 3.2(b) hereof;

       (2)     To construe and interpret the terms and provisions of this Plan, including any ambiguity;

       (3)     To compute and certify to the amount and kind of benefits payable to Participants and their Beneficiaries;

       (4)     To maintain all records that may be necessary for the administration of the Plan;

       (5)     To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

       (6)     To make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof;

       (7)     To appoint a Plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe; and

       (8)     To take all actions necessary for the administration of the Plan, including determining whether to hold or discontinue the policies.

     7.4 Construction and Interpretation.

          The Committee shall have full discretion to construe and interpret the terms and provisions of this Plan, which interpretations or construction shall be final and binding on all parties, including but not limited to the Company and any Participant or Beneficiary. The Committee shall administer such terms and provisions in a uniform and nondiscriminatory manner and in full accordance with any and all laws applicable to the Plan.

          7.5 Information.

     To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants, their death or other events which cause termination of their participation in this Plan, and such other pertinent facts as the Committee may require.

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     7.6 Compensation, Expenses and Indemnity.

          (a)      The members of the Committee shall serve without compensation for their services hereunder.

          (b)      The Committee is authorized at the expense of the Company to employ such legal counsel as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of the Plan shall be paid by the Company.

          (c)      To the extent permitted by applicable state law, the Company shall indemnify and hold harmless the Committee and each member thereof, the Board of Directors and any delegate of the Committee who is an employee of the Company against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under or incident to the Plan, other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by the Company or provided by the Company under any bylaw, agreement or otherwise, as such indemnities are permitted under state law.

     7.7 Quarterly Statements.

          Under procedures established by the Committee, a Participant shall have access to an electronic statement with respect to such Participant’s Accounts on a quarterly basis.

     7.8 Disputes.

     (a)      Claim.

          A person who believes that he or she is being denied a benefit to which he or she is entitled under this Plan (hereinafter referred to as “Claimant”) must file a written request for such benefit with the Committee, setting forth his or her claim. The request must be addressed to the Chair of the Committee.

     (b)      Claim Decision.

          Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Committee may, however, extend the reply period for an additional ninety (90) days for special circumstances.

          If the claim is denied in whole or in part, the Committee shall inform the Claimant in writing, using language calculated to be understood by the Claimant, setting forth: (A) the specified reason or reasons for such denial; (B) the specific reference to pertinent provisions of this Plan on which such denial is based; (C) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation of why such material or such information is necessary; (D) appropriate information as to the steps to be

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taken if the Claimant wishes to submit the claim for review; and (E) the time limits for requesting a review under subsection (c).

          (c)      Request For Review.

          Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Committee review its prior determination. Such request must be addressed to the Chair of the Committee. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Committee. If the Claimant does not request a review within such sixty (60) day period, he or she shall be barred and estopped from challenging the Committee’s determination.

          (d)      Review of Decision.

          Within sixty (60) days after the Committee’s receipt of a request for review, after considering all materials presented by the Claimant, the Committee will inform the Participant in writing, in a manner calculated to be understood by the Claimant, the decision setting forth the specific reasons for the decision containing specific references to the pertinent provisions of this Plan on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Committee will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

ARTICLE VIII

MISCELLANEOUS

     8.1      Unsecured General Creditor.

          Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company. No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. Any and all of the Company’s assets shall be, and remain, the general unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors. It is the intention of the Company that this Plan be unfunded for purposes of the Code and for purposes of Title 1 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

     8.2 Restriction Against Assignment.

          The Committee shall cause all amounts payable hereunder to be paid only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant’s Accounts shall be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a Participant’s Accounts be subject to

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execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, commute, assign, pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily, the Committee, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

     8.3 Withholding.

          The Committee shall cause to be deducted from each payment made under the Plan or any other Compensation payable to the Participant (or Beneficiary) all taxes which are required to be withheld by the Company in respect to such payment or this Plan. The Committee shall have the right to reduce any payment (or compensation) by the amount of cash sufficient to provide the amount of said taxes.

     8.4 Amendment, Modification, Suspension or Termination.

          The Committee may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Accounts. In addition, no amendment may be made to the Plan to increase or mandate Company Discretionary Contribution Amounts and/or Company Matching Contribution Amounts absent approval by the Board. In the event that this Plan is terminated due to a “Change in Control,” the amounts allocated to a Participant’s Accounts shall be distributed to the Participant in a lump sum within thirty (30) days following the date of termination of the Plan. For these purposes, the term “Change in Control” shall mean either: (a) the “acquisition” by a “person” or “group” (as those terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated thereunder), other than by Permitted Holders, of beneficial ownership (as defined in Exchange Act Rule 13d-3) directly or indirectly, of any securities of the Company or any successor of the Company immediately after which such person or group owns securities representing more than fifty percent (50%) of the total fair market value or the combined voting power of the Company or any successor of the Company; (b) within any twelve (12) month period, the individuals who were directors of the Company as of July 1, 2005 (the “Incumbent Directors”) ceasing for any reason other than death or disability to constitute at least a majority of the Board of Directors of the Company, provided that any director who was not a director as of July 1, 2005 shall be deemed to be an Incumbent Director if such director was appointed or elected to the Board of Directors of the Company by, or on the recommendation or approval of, at least a majority of directors who then qualified as Incumbent Directors, provided further that any director appointed or elected to the Board of Directors of the Company to avoid or settle a threatened or actual proxy contest shall in no event be deemed to be an Incumbent Director; (c) approval by the stockholders of the Company of any merger, consolidation or reorganization involving the Company, unless either (A) the stockholders of the Company immediately before such merger, consolidation or reorganization own, directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty

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percent (50%) of the combined voting power of the company(ies) resulting from such merger, consolidation or reorganization in substantially the same proportion as their ownership immediately before such merger, consolidation or reorganization, or (B) the stockholders of the Company immediately after such merger, consolidation or reorganization include Permitted Holders; (d) approval by the stockholders of the Company of a transfer of fifty percent (50%) or more of the assets of the Company, unless the person to which such transfer is made is either (A) a Subsidiary of the Company, (B) wholly owned by all of the stockholders of the Company, or (C) wholly owned by Permitted Holders; or (e) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

     8.5 Governing Law.

          This Plan shall be construed, governed and administered in accordance with the laws of the State of Delaware, except where pre-empted by federal law.

     8.6 Receipt or Release.

          Any payment to a Participant or the Participant’s Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Committee and the Company. The Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

     8.7 Payments on Behalf of Persons Under Incapacity.

          In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Committee and the Company.

     8.8 Limitation of Rights and Employment Relationship.

          Neither the establishment of the Plan and Trust nor any modification thereof, nor the creating of any Fund or Account, nor the payment of any benefits shall be construed as giving to any Participant, or Beneficiary or other person any legal or equitable right against the Company or the trustee of the Trust except as provided in the Plan and Trust; and in no event shall the terms of employment of any Employee or Participant be modified or in any way be affected by the provisions of the Plan and Trust.

     8.9 Headings.

          Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

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EXHIBIT A

     Effective July 1, 2005, employees with job titles of Senior Director, Practice Manager or above shall be eligible to participate in the Plan.

A-1

EX-31.1

Exhibit 31.1

Certification

I, Thomas L. Monahan III, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Corporate Executive Board Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2005

/s/ Thomas L. Monahan III
Thomas L. Monahan III
Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Timothy R. Yost, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Corporate Executive Board Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2005

/s/ Timothy R. Yost    
Timothy R. Yost
Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, in his capacity as an officer of The Corporate Executive Board Company (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

• The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• The information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas L. Monahan III
Thomas L. Monahan III
Chief Executive Officer
August 9, 2005

/s/ Timothy R. Yost
Timothy R. Yost
Chief Financial Officer
August 9, 2005