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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Filed by a Party other than the Registrant o
Check the appropriate box:
| o | Preliminary Proxy Statement | |
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| þ | Definitive Proxy Statement | |
| o | Definitive Additional Materials | |
| o | Soliciting Material Pursuant to §240.14a-12 |
RIGHTNOW TECHNOLOGIES, INC.
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: | ||
| o | Fee paid previously with preliminary materials. | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing Party: | ||
| (4) | Date Filed: | ||
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Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders (the “Annual Meeting”) of RightNow
Technologies, Inc. to be held at 12:00 p.m. (noon) Mountain
Daylight Savings Time on Tuesday, June 14, 2011 at the
Hilton Garden Inn, 2023 Commerce Way, Bozeman, Montana 59715.
Your vote at the Annual Meeting is important to us. At the
Annual Meeting, the stockholders will be asked to elect the two
directors named in the attached Proxy Statement, to ratify the
appointment of our independent registered public accounting firm
for 2011, to conduct a stockholder advisory vote on the
compensation of our named executive officers and to conduct a
separate stockholder advisory vote to determine the frequency of
conducting future stockholder advisory votes on named executive
officer compensation. The Notice of 2011 Annual Meeting of
Stockholders and Proxy Statement describe the matters to be
presented at the Annual Meeting.
We are pleased to provide proxy materials to our stockholders
primarily over the Internet, which we believe will lower the
costs of delivering such materials while also reducing the
environmental impact of printing and mailing. We have mailed
beneficial owners of our stock a notice containing instructions
on how to access our 2011 Proxy Statement and 2010 Annual Report
on
Form 10-K
and how to vote through the Internet. The notice also includes
instructions on how to receive a paper copy of the annual
meeting materials, including the notice of annual meeting, proxy
statement, proxy card and annual report. If you received your
annual meeting materials by mail, the notice of annual meeting,
proxy statement, proxy card and annual report were enclosed.
Our board of directors recommends that stockholders vote in
favor of the election of the nominated directors named in the
attached Proxy Statement, the ratification of the appointment of
our independent registered public accounting firm for 2011, the
compensation of our named executive officers and for conducting
future stockholder advisory votes on named executive officer
compensation every year. Whether or not you plan to attend the
Annual Meeting, please vote as soon as possible through the
Internet, by phone or, if you are a record holder of our stock,
by marking, signing, dating and returning the enclosed proxy
card in the enclosed envelope. If you are a record holder of our
stock and you later decide to attend the Annual Meeting and wish
to change your vote, you may do so simply by voting in person at
the meeting. If you are a beneficial owner of our stock and wish
to vote at our Annual Meeting, you will need to obtain a legal
proxy from your bank or broker and bring this legal proxy to the
meeting. If you hold your shares in the name of a broker, bank
or other nominee, your nominee may determine to vote your shares
at its own discretion, absent instructions from you. However,
due to voting rules that may prevent your bank or broker from
voting your uninstructed shares on a discretionary basis in the
election of directors, on the proposals regarding named
executive officer compensation and on other non-routine matters,
it is important that you cast your vote. Accordingly, please
provide appropriate voting instructions to your broker or bank
to ensure your vote will count.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Greg R. Gianforte
Chairman and Chief Executive Officer
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RIGHTNOW
TECHNOLOGIES, INC.
TO BE HELD JUNE 14,
2011
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2011 Annual Meeting of
Stockholders (the “Annual Meeting”) of RightNow
Technologies, Inc., a Delaware corporation, will be held on
Tuesday, June 14, 2011, at 12:00 p.m. (noon) Mountain
Daylight Savings Time at the Hilton Garden Inn, 2023 Commerce
Way, Bozeman, Montana 59715, as more fully described in the
Proxy Statement. Matters to be voted upon at the Annual Meeting
include the following:
1. To elect the two directors named in the attached Proxy
Statement to serve for three-year terms ending at the 2014
Annual Meeting of Stockholders or until their successors are
duly elected and qualified or until their earlier resignation or
removal;
2. To ratify the appointment of KPMG LLP as our independent
registered public accounting firm for 2011;
3. To approve on an advisory basis the compensation of our
named executive officers;
4. To approve on an advisory basis the frequency of
conducting future stockholder advisory votes on named executive
officer compensation; and
5. To transact such other business as may properly come
before the meeting, or any adjournment(s) or postponement(s)
thereof.
We recommend that stockholders vote FOR Proposals 1,
2 and 3 listed above. Regarding Proposal 4, we recommend
that stockholders vote for conducting future stockholder
advisory votes on named executive officer compensation every
year.
Only stockholders of record at the close of business on
April 18, 2011 are entitled to notice of and to vote at the
Annual Meeting and any adjournment(s) or postponement(s)
thereof. Our stock transfer books will remain open between the
record date and the date of the meeting. A list of stockholders
entitled to vote at the Annual Meeting will be available for
inspection at our principal executive offices and at the Annual
Meeting.
All stockholders are cordially invited to attend the meeting in
person. Whether or not you plan to attend, please vote your
shares through the Internet, by phone or, if you are a record
holder of our stock, by marking, signing, dating and returning
the enclosed proxy card in the enclosed envelope. If you hold
your shares in the name of a broker, bank or other nominee, your
nominee may determine to vote your shares at its own discretion,
absent instructions from you. However, due to voting rules that
may prevent your bank or broker from voting your uninstructed
shares on a discretionary basis in the election of directors, on
proposals regarding named executive officer compensation and on
other non-routine matters, it is important that you cast your
vote. Accordingly, please provide appropriate voting
instructions to your broker or bank to ensure your vote will
count.
You may revoke your proxy at any time prior to the Annual
Meeting. If you are a record holder of our stock and attend the
Annual Meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the Annual Meeting will be
counted. If you are a beneficial owner of our stock and wish to
vote at our Annual Meeting, you will need to obtain a legal
proxy from your bank or broker and bring this legal proxy to the
meeting.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held on
June 14, 2011:
The Proxy Statement and Annual Report on
Form 10-K
are available at:
http://investor.rightnow.com/annual-proxy.cfm.
Sincerely,
Alan A. Rassaby
Secretary
Bozeman, Montana
May 5, 2011
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF
SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT
CAREFULLY AND VOTE AS PROMPTLY AS POSSIBLE BY PHONE, THROUGH THE
INTERNET OR, IF YOU ARE A RECORD HOLDER OF OUR STOCK, BY
MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE. PLEASE DO NOT RETURN THE ENCLOSED
PAPER BALLOT IF YOU ARE VOTING OVER THE INTERNET OR BY
TELEPHONE.
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RIGHTNOW
TECHNOLOGIES, INC.
136 Enterprise Boulevard
Bozeman, Montana 59718
PROXY
STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 2011
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 2011
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on June 14, 2011:
The Proxy Statement and Annual Report on Form 10-K are available at:
http://investor.rightnow.com/annual-proxy.cfm.
The Proxy Statement and Annual Report on Form 10-K are available at:
http://investor.rightnow.com/annual-proxy.cfm.
QUESTIONS
AND ANSWERS
| Q: | What is the purpose of these proxy materials? |
The enclosed proxy is solicited on behalf of the board of
directors of RightNow Technologies, Inc. (“RightNow”),
a Delaware corporation, for use at the 2011 Annual Meeting of
Stockholders to be held on Tuesday, June 14, 2011 (the
“Annual Meeting”) and at any adjournment(s) or
postponement(s) thereof. The Annual Meeting will be held at
12:00 p.m. (noon) Mountain Daylight Savings Time at the
Hilton Garden Inn, 2023 Commerce Way, Bozeman, Montana 59715.
These proxy materials or a notice regarding the Internet
availability of these materials were mailed on or about
May 5, 2011 to our stockholders entitled to vote at the
Annual Meeting.
| Q: | Why am I receiving these proxy materials? Who is entitled to vote? |
These proxy materials or a notice regarding the Internet
availability of these materials were sent to holders of stock in
RightNow as of April 18, 2011, the record date (the
“Record Date”) for determination of stockholders
entitled to notice of and to vote at the Annual Meeting. As a
stockholder, you are invited to attend the Annual Meeting and
are requested to vote on the matters presented in this Proxy
Statement. Even if you plan to attend the Annual Meeting, please
follow the instructions in your proxy materials to vote by proxy
to ensure your vote is counted.
| Q: | What information is contained in this Proxy Statement? |
This Proxy Statement contains information on the voting process,
the matters to be voted on, our corporate governance, the
compensation of our directors and named executive officers, and
other required information.
| Q: | What matters will be voted on at the Annual Meeting? How does the board of directors recommend I vote? |
Regarding the following matters that are scheduled to be brought
to a vote at the Annual Meeting, our board of directors
recommends you vote your shares:
| 1. | FOR the election of the two directors named in this Proxy Statement to serve for three-year terms ending at the 2014 Annual Meeting of Stockholders or until their successors are duly elected and qualified or until their earlier resignation or removal; | |
| 2. | FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2011; | |
| 3. | FOR the approval, by non-binding advisory vote, of the compensation of our named executive officers; and |
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| 4. | FOR the approval, by non-binding advisory vote, of conducting future stockholder advisory votes on named executive officer compensation every year. |
| Q: | What is the difference between a stockholder of record and a beneficial stockholder? Are all stockholders able to vote in person at the Annual Meeting? |
Stockholders of record have their shares registered in
their name with our transfer agent, BNY Mellon Shareowner
Services. As of the Record Date, there were approximately 75
holders of record according to information provided by our
transfer agent. These holders of record at the close of business
on the Record Date are entitled to vote at the Annual Meeting.
Beneficial stockholders own their shares and voting
rights through a bank or broker. The bank or broker is
considered the holder of record and the shares are said to be
held in “street name.” If this is your case, your bank
or broker will have forwarded to you a notice of the Internet
availability of these proxy materials or, if requested by you,
paper copies of these proxy materials. The notice should include
directions on how to instruct your bank or broker to vote your
shares. If you are a beneficial stockholder and you want to cast
your vote in person at the Annual Meeting, you will need to
obtain a “legal proxy” from your bank or broker and
bring this legal proxy to the meeting.
| Q: | How many shares must be present to conduct business? |
On April 18, 2011, the Record Date, there were
33,036,453 shares of our common stock (the “Common
Stock”) outstanding. No shares of our preferred stock are
outstanding. Each stockholder is entitled to one vote for each
share of Common Stock held by such stockholder on the Record
Date. The presence at the Annual Meeting, either in person or by
proxy, of stockholders of our outstanding stock entitled to vote
and representing a majority of the voting power of all of such
shares shall constitute a quorum for the transaction of business.
| Q: | What is the voting requirement to approve each matter? How are votes counted? |
All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes
(i.e., shares held by a broker, bank or other nominee
that are represented at the Annual Meeting, but with respect to
which such broker, bank or other nominee is not instructed to
vote on a particular proposal and does not have discretionary
voting power). Abstentions and broker non-votes are counted as
present for purposes of determining the presence or absence of a
quorum for the transaction of business, but broker non-votes
will not be counted for purposes of determining the number of
votes cast with respect to the particular proposal on which the
broker has expressly not voted.
In the election of the directors under Proposal One, the
two nominees receiving the highest number of affirmative votes
of the Common Stock present or represented by proxy and entitled
to vote at the Annual Meeting, will be elected. Stockholders may
not cumulate votes in the election of directors. Votes marked
“withheld” will not be counted towards the tabulations
of votes cast on Proposal One, will not have the effect of
negative votes and will not affect the outcome of the election
of the directors.
With regard to Proposal Two, the ratification of the
appointment of KPMG LLP, the affirmative vote of the holders of
Common Stock representing a majority of the voting power present
or represented by proxy and entitled to vote at the Annual
Meeting is being sought. Abstentions will be counted towards the
tabulations of votes cast on such proposal and will have the
same effect as negative votes.
Regarding Proposal Three, the stockholder advisory vote on
named executive officer compensation, the affirmative vote of
the holders of Common Stock representing a majority of the
voting power present or represented by proxy and entitled to
vote at the Annual Meeting is being sought. Abstentions will be
counted towards the tabulations of votes cast on such proposal
and will have the same effect as negative votes.
Proposal Four is the stockholder advisory vote on the
frequency of conducting future stockholder advisory votes on
named executive officer compensation and includes four voting
options: 1 year, 2 years, 3 years and abstain.
This stockholder advisory vote will be determined by which
option — 1, 2 or 3 years — garners the
most votes. Stockholders may not cumulate votes in
Proposal Four. Abstentions will not be counted towards
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the tabulations of votes cast on Proposal Four, will not
have the effect of negative votes and will not affect the
outcome of Proposal Four.
| Q: | If I am a beneficial stockholder, what is the effect of not casting my vote? |
If your shares are held by a bank or broker in street name, it
is important that you cast your vote if you want it to count in
the election of directors and the two stockholder advisory votes
on named executive officer compensation. Voting rules may
prevent your bank or broker from voting your uninstructed shares
on a discretionary basis in the election of directors and in the
two stockholder advisory votes on named executive officer
compensation. Accordingly, if your shares are held by a bank or
broker in street name and you do not instruct your bank or
broker how to vote in the election of directors and in the two
stockholder advisory votes on named executive officer
compensation, no votes will be cast on your behalf. Your bank or
broker will, however, continue to have discretion to vote any
uninstructed shares on the ratification of the appointment of
our independent registered public accounting firm.
| Q: | What happens if I properly execute my proxy but do not specify my vote on the matters? |
If the enclosed proxy is properly signed and returned as
instructed, the shares represented thereby will be voted at the
Annual Meeting in accordance with the instructions specified
thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted as
recommended by our board of directors. If any matter not
described in this Proxy Statement is properly presented for
action at the Annual Meeting, the persons named in the enclosed
proxy will have discretionary authority to vote according to
their best judgment.
| Q: | Can I revoke or change my vote? |
If you are a beneficial stockholder, you may change your proxy
instructions to your bank or broker if they receive them prior
to the meeting date. Please consult the rules of your bank or
broker regarding changing your voting instructions. Please note,
however, that if your shares are held of record by a broker,
bank or other nominee and you wish to vote in person at the
Annual Meeting, you must obtain from the record holder a legal
proxy issued in your name.
If you are a stockholder of record, you may revoke or change
your proxy at any time before the Annual Meeting by filing with
our corporate secretary, at our principal executive offices at
136 Enterprise Boulevard, Bozeman, Montana 59718, a notice of
revocation or another signed proxy with a later date. If you are
a stockholder of record, you may also revoke your Proxy by
attending the Annual Meeting and voting in person.
| Q: | Who will bear the costs of the solicitation of this proxy? |
We will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy
Statement, the proxy and any additional solicitation materials
furnished to the stockholders. Copies of solicitation materials
will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially
owned by others so that they may forward this solicitation
material to such beneficial owners. In addition, we may
reimburse such persons for their costs in forwarding the
solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a
solicitation by telephone, facsimile, Internet or other means by
our directors, officers or employees. No additional compensation
will be paid to these individuals for any such services. We may
retain a proxy solicitor to assist in the distribution of
proxies and proxy solicitation materials, and in the
solicitation of proxies. Generally, the fee for such services is
approximately $15,000 plus expenses. If we do elect to retain a
proxy solicitor, we will pay the proxy solicitor reasonable and
customary fees. Except as described above, we do not presently
intend to solicit proxies other than by mail.
| Q: | Where can I find the voting results of the Annual Meeting? |
The voting results of our Annual Meeting will be disclosed in a
Current Report on
Form 8-K
that will be filed with the Securities and Exchange Commission
(“SEC”) within four business days after the Annual
Meeting and will be available on our website at
http://investor.rightnow.com/sec.cfm
and at
http://www.sec.gov/.
The inclusion of our web site address in this Proxy Statement
does not include or incorporate by reference the information on
our web site into this Proxy Statement.
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| Q: | What are the deadlines for receipt of stockholder proposals? |
Stockholders may present proposals for action at a future
meeting only if they comply with the requirements of the proxy
rules established by the SEC and our Bylaws. Pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended, some
stockholder proposals may be eligible for inclusion in the proxy
statement for our 2012 Annual Meeting of Stockholders (the
“2012 Annual Meeting”). These stockholder proposals,
along with proof of ownership of our stock in accordance with
Rule 14a-8(b)(2),
must be received by us not later than January 6, 2012,
which is 120 calendar days prior to the anniversary date of the
mailing of this Proxy Statement. Stockholders are also advised
to review our Bylaws which contain additional advance notice
requirements, including requirements with respect to advance
notice of stockholder proposals (other than non-binding
proposals presented under
Rule 14a-8)
and director nominations. Under our current Bylaws, the deadline
for submitting such stockholder proposals or a nomination for
director is March 16, 2012, which is not more than 90
calendar days prior to the anniversary date of the Annual
Meeting.
In addition, the proxy solicited by the board of directors for
the 2012 Annual Meeting will confer discretionary authority to
the proxy holders to vote on any stockholder proposal presented
at that meeting, unless we receive notice of such proposal not
later than March 21, 2012, which is 45 calendar days prior
to the anniversary date of the mailing of this Proxy Statement.
Stockholder proposals must be in writing and should be addressed
to our corporate secretary, at our principal executive offices
at 136 Enterprise Boulevard, Bozeman, Montana 59718. It is
recommended that stockholders submitting proposals direct them
to our corporate secretary and utilize certified mail, return
receipt requested in order to provide proof of timely receipt.
The Chairman of the Annual Meeting reserves the right to reject,
rule out of order or take other appropriate action with respect
to any proposal that does not comply with these and other
applicable requirements, including conditions set forth in our
Bylaws and conditions established by the SEC.
We have not been notified by any stockholder of his or her
intent to present a stockholder proposal from the floor at this
year’s Annual Meeting. The enclosed proxy grants the proxy
holders discretionary authority to vote on any matter properly
brought before this year’s Annual Meeting.
| Q: | What should I do if I have received more than one copy of the proxy materials? |
If you own our stock through multiple banks
and/or
brokers, you will receive proxy materials for each. If you are a
stockholder of record and are on record under multiple names,
you will receive proxy materials for each name. Please return
each voting instruction and proxy card that you receive so that
all of your shares will be voted.
| Q: | I share an address with another holder of your stock and we received only one copy of the proxy materials. How can I receive a second copy? |
The SEC has approved a policy called “householding”
that allows issuers, banks and brokers to consolidate proxy
materials when multiple stockholders live at the same address.
Stockholders may request a paper copy of the proxy materials and
the 2010 annual report by writing to our corporate secretary, at
our principal executive offices at 136 Enterprise Boulevard,
Bozeman, Montana 59718.
NOTE WITH
RESPECT TO FORWARD-LOOKING STATEMENTS
We have made certain forward-looking statements in this Proxy
Statement that relate to expectations concerning matters that
are not historical facts. Words such as “projects,”
“believes,” “will,” “may,”
“anticipates,” “plans,” “expects,”
“intends” and similar words and expressions are
intended to identify forward-looking statements. Although we
believe that such forward-looking statements are reasonable,
there can be no assurance that such expectations will prove to
be correct. Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ
materially from such expectations. All forward-looking
statements attributable to us are expressly qualified in their
entirety by such language. We do not undertake any obligation to
update any forward-looking statements, whether as a result of
new information, future events or otherwise.
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MATTERS
TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE:
ELECTION
OF DIRECTORS
General
Our certificate of incorporation provides for a classified board
of directors consisting of three classes of directors, each
serving staggered three-year terms and each as nearly equal in
number as possible as determined by our board of directors. As a
result, a portion of our board of directors will be elected each
year. Our board of directors currently consists of seven
persons. Messrs. Avis, Gianforte and Kendra have been
designated Class I directors whose terms expire at the 2013
Annual Meeting of Stockholders. Messrs. Lansing and Snyder
have been designated Class II directors whose terms expire
at the 2011 Annual Meeting. Messrs. Allen and Singh have
been designated Class III directors whose terms expire at
the 2012 Annual Meeting.
The class whose term of office expires at this year’s
Annual Meeting currently consists of two directors. On the
recommendation of the Nomination and Governance Committee, our
board of directors, including its independent directors,
selected and approved Messrs. Lansing and Snyder as
nominees for election in the class being elected at the Annual
Meeting to serve for a term of three years, expiring at the 2014
Annual Meeting of Stockholders, or until their successors are
duly elected and qualified or until their earlier resignation or
removal. If the nominees are elected, our board of directors
will consist of seven persons.
The nominees for election are currently members of our board of
directors and have agreed to serve if elected. Management has no
reason to believe that the nominees will be unavailable to
serve. In the event the nominees named herein are unable to
serve or decline to serve at the time of the Annual Meeting, the
persons named in the enclosed proxy will exercise discretionary
authority to vote for substitutes. Unless otherwise instructed,
the proxy holders will vote the proxies received by them FOR
the nominees named below.
Directors
and Nominees
The names of our directors and nominees, their ages and
positions as of March 31, 2011 and biographical information
about them are as follows:
|
Name
|
Age
|
Position
|
||||
|
Greg R. Gianforte
|
49 | Chairman and Chief Executive Officer | ||||
|
Richard E. Allen(1)(2)
|
53 | Director | ||||
|
Gregory M. Avis(1)(3)
|
52 | Director | ||||
|
Thomas W. Kendra(1)(3)
|
56 | Director | ||||
|
William J. Lansing(2)(3)
|
52 | Director | ||||
|
S. Steven Singh(2)
|
49 | Director | ||||
|
Allen E. Snyder(2)
|
56 | Director | ||||
| (1) | Member of Audit Committee. | |
| (2) | Member of Compensation Committee. | |
| (3) | Member of Nomination and Governance Committee. |
Nominees
for Terms Ending Upon the 2014 Annual Meeting of
Stockholders
William J. Lansing, 52, has served on our board of
directors since April 2000. He has served as chief executive
officer and director of a number of companies. From 2009 to
2010, he served as chief executive officer, president and
director of Infospace, Inc., a developer of metasearch products.
Mr. Lansing was the chief executive officer, president and
a director of ValueVision Media, Inc., a direct marketing
company, from December 2003 until October 2007. Mr. Lansing
was a general partner of General Atlantic Partners, LLC, a
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private equity investment firm, from 2001 to December 2003. From
March 2000 to September 2001, Mr. Lansing was the chief
executive officer and a director of NBC Internet, Inc., an
internet portal company. From 1998 to March 2000,
Mr. Lansing served in various positions for Fingerhut
Companies, Inc., a direct marketing company, including president
and chief executive officer. From November 1996 to May 1998,
Mr. Lansing served as vice president of corporate business
development for General Electric Company, a global technology,
services and finance company, and was a member of General
Electric’s Corporate Executive Council. From January 1996
to October 1996, he served as chief operating officer of
Prodigy, Inc., an on-line service company. From 1986 through
1995, Mr. Lansing was first an associate and later a
principal at McKinsey & Company, a management
consulting company. Mr. Lansing serves on the board of
directors of Fair Isaac Corporation, a decision analytics
company. Mr. Lansing holds a B.A. degree in English from
Wesleyan University and a J.D. degree from Georgetown
University. We believe Mr. Lansing’s qualifications to
serve on our board of directors include his experience as a
chief executive officer of three public companies (Infospace,
Inc., ValueVision Media, Inc., and NBC Internet, Inc.), his
experience on six public company boards of directors (Infospace,
Inc., ValueVision Media, Inc., NBC Internet, Inc., Digital
River, Inc., Fair Isaac Corporation, and RightNow Technologies,
Inc.), his extensive background in developing product and
marketing strategy for consumer and technology companies, and
his financial expertise, in part based on his chief executive
operating roles, in part through his experience as a member of
the audit committee of a public company board (Fair Isaac
Corporation), and from formal academic training in corporate
finance and accounting. Mr. Lansing also attended the
Stanford Law School Directors’ College in 2010.
Allen E. Snyder, 56, has served on our board of directors
since July 2008. He brings 30 years of high-technology
management experience to our board of directors. Mr. Snyder
has been the chief executive officer and a director of Aepona
Ltd., a leading supplier of telecom service layer products and
solutions, since April 2008. A telecom and IT industry veteran,
Mr. Snyder served as the president and chief executive
officer from July 2007 to February 2008 at Carrier Access
Corporation, a provider of consolidated access technologies, and
as president and chief operating officer from November 2006 to
July 2007. Mr. Snyder also held several executive
management positions at Openwave Systems, Inc., a provider of
software and services in the telecommunications industry,
including executive vice president and chief operating officer
from 2005 to 2006, executive vice president of the server
business from 2003 to 2005, senior vice president worldwide
customer operations from 2002 to 2003 and senior vice president
of customer advocacy from 2000 to 2002. In his role as chief
operating officer at Openwave Systems, Mr. Snyder was
responsible for all product development and customer-facing
operations and his oversight included worldwide sales,
partnerships, product strategy, product development and service
and support for 1,000 of Openwave’s 1,400 employees.
Before joining Openwave, Mr. Snyder served as senior vice
president of support services, which included sales, service
delivery and business management, at Oracle Corporation, a
developer and provider of information management systems
software. Before Oracle, he was vice president of operations,
worldwide customer services at Digital Equipment Corporation
(now Hewlett-Packard Company), a computer manufacturing company.
Mr. Snyder received an associate degree in electrical
engineering from the Community College of USAF and an executive
management development certificate from Northeastern University.
We believe Mr. Snyder’s qualifications to serve on our
board of directors include his experience on the board of
directors of two public companies (Carrier Access Corporation
and RightNow Technologies, Inc.) and three private companies,
his operations experience as a chief executive officer with
Carrier and Aepona, 14 years experience as an executive and
five years experience with the Remuneration Committee for Aepona.
Continuing
Directors for Terms Ending Upon the 2012 Annual Meeting of
Stockholders
Richard E. Allen, 53, has served on our board of
directors since May 2004. Mr. Allen was the chief financial
officer of J.D. Edwards (now Oracle Corporation), an enterprise
application software company, from January 1990 to September
2003, and had held several senior management positions and
titles since joining J.D. Edwards in August 1985. Mr. Allen
served as a member of J.D. Edwards’ board of directors from
September 1991 to July 2003. Prior to joining J.D. Edwards,
Mr. Allen served as controller for Luff Exploration, an oil
and gas exploration and production company, from 1982 to 1985,
and as a senior accountant with Coopers & Lybrand, a
public accounting firm, from 1979 to 1982. Mr. Allen also
serves on the board of directors of three privately held
companies. Mr. Allen holds a B.S. degree in business
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administration with a concentration in accounting from Colorado
State University. We believe Mr. Allen’s
qualifications to serve on our board of directors include his
experience as a chief financial officer for 13 years and
his experience serving as a director of several public
(HireRight, Inc., Maxtor Corporation and RightNow Technologies,
Inc) and private companies. Mr. Allen also attended the
Stanford Law School Directors’ College in 2010.
S. Steven Singh, 49, has served on our board of
directors since October 2009. Mr. Singh is currently the
chief executive officer of Concur Technologies, Inc., helping
organizations to globally control costs by automating the
processes they use to manage employee spending. Mr. Singh
has served as Concur’s chief executive officer since 1996,
as director since 1993 and as chairman of the board of directors
since September 1999. From 1993 to 1996, Mr. Singh served
as general manager of the contract management division at
Symantec Corporation, an international technology firm focused
on protecting information and computer systems. Mr. Singh
serves as chairman of the National Business Travel Association
Foundation Board, serves on the board of directors of AdReady
and is a member of the Washington Roundtable and the Voyager
Capital Advisory Board. We believe Mr. Singh’s
qualifications to serve on our board of directors include his
significant expertise as chief executive officer and a director
of a public technology company that delivers its services in a
Software-as-a-Service (“SaaS”) model (Concur
Technologies, Inc.) and his significant sales and marketing
background related to technology services. Mr. Singh also
attended the Stanford Law School Directors’ College in 2009.
Continuing
Directors for Terms Ending Upon the 2013 Annual Meeting of
Stockholders
Greg R. Gianforte, 49, is our founder, chairman and chief
executive officer. Prior to founding RightNow in September 1995,
he was the vice president of North American sales of McAfee,
Inc. (formerly Network Associates, Inc.), a provider of network
security and tools. Before joining McAfee, Inc.,
Mr. Gianforte founded Brightwork Development, a developer
of network management applications, in 1986, and served as
president of Brightwork until 1994 when Brightwork was acquired
by McAfee, Inc. Mr. Gianforte also beneficially owns,
indirectly, a membership interest in Genesis Partners, LLC, from
whom we lease our principal offices. Mr. Gianforte serves
on the board of directors of several privately held companies.
He holds a B.E. degree in electrical engineering and an M.S.
degree in computer science from Stevens Institute of Technology.
We believe Mr. Gianforte’s qualifications to serve on
our board of directors include his 25 years experience as a
leader in the computer industry, including as a founder of
Brightwork and RightNow Technologies, and as our chairman since
1995 and our chief executive officer since 1999.
Gregory M. Avis, 52, has served on our board of directors
since December 2000. Mr. Avis is a founding managing
director of Summit Partners, a private equity and venture
capital firm, having co-founded the firm in 1984. Mr. Avis
currently serves on the board of directors of one privately held
company. Mr. Avis holds a B.A. degree, cum laude, in
political economy from Williams College and an M.B.A. degree
with Distinction from Harvard University. We believe
Mr. Avis’ qualifications to serve on our board of
directors include his experience on over 40 boards of directors,
including 15 public companies (most recently Ditech Networks,
Inc. and IMPAC Medical Systems, Inc.), for many of which he has
served on the audit committee, and his experience as a venture
capitalist by profession, which involves analyzing and
critiquing financial statements.
Thomas W. Kendra, 56, has served on our board of
directors since March 2007. Mr. Kendra was the executive
vice president of the enterprise products and solutions business
line at CA, Inc. (formerly Computer Associates), a provider of
information technology management software, and was a member of
CA’s executive leadership team from 2009 to 2010.
Mr. Kendra currently serves on the executive board of
directors for ACG Silicon Valley, a global association committed
to growth and development for businesses. Mr. Kendra was
the group president of the security and compliance group at
Symantec Corporation, an international technology firm focused
on protecting information and computer systems, until July of
2008. Prior to this position, he was the group president of
worldwide sales and services. Before joining Symantec in January
2004, he spent 26 years at International Business Machines
Corporation (IBM), an information technology company, where he
was a member of their senior leadership team. During his career
at IBM, he held executive positions in software, hardware and
support. His positions at IBM included vice president of
worldwide server sales; vice president of marketing and sales
for the database division; vice president of software for the
Western United
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States; and director of support and services for IBM’s
U.S. software business. Mr. Kendra received a bachelor
of science in business administration from Indiana University in
Bloomington. We believe Mr. Kendra’s qualifications to
serve on our board of directors include his data security
experience at Symantec, his merger and acquisition experience at
IBM, Symantec and CA, his experience with human resources
activities in organizations with over 8,000 individuals, his
operations experience as an executive and his extensive
experience abroad including living in Tokyo, Japan for nearly
two and a half years while responsible for IBM’s Asia
Pacific/Japan software business. Mr. Kendra also attended
the Stanford Law School Directors’ College in 2008.
There are no family relationships among any of our directors,
nominees or executive officers.
Corporate
Governance Guidelines
Our board of directors has adopted the corporate governance
guidelines summarized below as a framework for our corporate
governance.
Role of the Board of Directors. Our
board of directors, which is elected by our stockholders,
oversees our management and our business. Our board of directors
selects the senior management team, which is responsible for
operating our business, and monitors the performance of senior
management.
Independent Directors. The majority of
our directors should be independent of management. Each of our
directors other than our chief executive officer currently
qualifies as an independent director in accordance with the
published listing requirements of The Nasdaq Stock Market LLC,
or Nasdaq. The Nasdaq independence definition includes a series
of objective tests, such as that the director is not also one of
our employees and has not engaged in various types of business
dealings with us. In addition, as further required by the Nasdaq
rules, our board of directors has made a subjective
determination as to each independent director that no
relationships exist which, in the opinion of our board of
directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. In
making these determinations, our directors reviewed and
discussed information provided by the directors and us with
regard to each director’s business and personal activities
as they may relate to us and our management, including
transactions in the ordinary course of business between us and
entities with which some of our directors are associated.
Lead Independent Director. In order to
facilitate communication with our independent directors, we
believe that it is desirable for one of our independent
directors to serve as the lead director. The specific
responsibilities of our lead independent director include:
(a) advising the chairman of the board as to an appropriate
schedule of board meetings; (b) providing the chairman of
the board with input as to the preparation of the agendas for
the board and committee meetings; (c) advising the chairman
of the board as to the quality, quantity and timeliness of the
information submitted by our management that is necessary or
appropriate for the non-employee directors to effectively and
responsibly perform their duties; (d) developing the
agendas for and serving as chairperson of the executive session
of our board’s non-employee directors; and (e) serving
as principal liaison between our non-employee directors and our
chairman of the board on sensitive issues. Our chief executive
officer also serves as chairman of our board of directors.
Mr. Lansing, a non-employee director, was elected to serve
in a lead independent director capacity in June 2008.
Director Resignation Policy. In order
to ensure appropriate representation on our board of directors,
our board of directors has adopted a policy regarding
resignation upon a director’s retirement or change in
principal occupation or business association from the position
the director held at an outside company on the latter of:
(a) the effective date of the policy; (b) the date
when the director was last elected to our board of directors;
and (c) the date, if any, our board of directors last
rejected an offer by the director to resign under the policy.
Upon such a change in position, a director shall offer his or
her resignation as a board member to our nomination and
governance committee, which committee will then recommend that
our board of directors accept or reject the offer of resignation
based on a review of the individual’s change in position
and any effect it may have on the director’s service on our
board of directors in all circumstances.
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Succession Plan. The Company has a
board approved succession plan for the chief executive officer
and all members of its executive management team which includes
identifying and developing internal candidates, wherever
appropriate. If no internal candidate appears ready, one or more
executive recruiting firms may be retained to identify external
candidates. The criteria for a person to succeed the chief
executive officer
and/or other
members of the executive management team are evaluated at least
annually.
Director Education. Director education
is a critical component of good corporate governance. Directors
are expected to stay attuned to their evolving roles and
responsibilities. Continuing education will enable directors to
better perform their duties. We have adopted a policy under
which directors are supported in their pursuit of education
relevant to their duties and corporate governance.
Messrs. Allen and Lansing attended the Stanford Law
School’s Directors’ College in 2010. Mr. Singh
attended the same Directors’ College in 2009 prior to
joining our board of directors. Mr. Kendra attended the
same Directors’ College in 2008.
CEO Stock Ownership Policy. It is the
policy of our board of directors that our chief executive
officer own shares of our common stock of a value equivalent to
at least six times that of his or her annual base salary.
In the case of a non-founder chief executive officer, he or she
will be required to attain this level of share ownership after
twelve years as our chief executive officer.
Periodic Review of Guidelines. These
guidelines are reviewed periodically by our nomination and
governance committee and our board will make changes when
appropriate based on recommendations from the committee.
Board
Structure and Committees
Our chief executive officer chairs our board of directors. We
believe that the combination of the two roles contributes to
streamlined decision making and avoids role confusion. Our board
of directors has established an audit committee, a compensation
committee and a nomination and governance committee. Our board
of directors and its committees set schedules to meet throughout
the year, and also can hold special meetings and act by written
consent from time to time as appropriate. The independent
directors of our board of directors also hold separate regularly
scheduled executive session meetings at least twice a year at
which only independent directors are present. Our board of
directors has delegated various responsibilities and authority
to its committees as generally described below. The committees
regularly report on their activities and actions to the full
board of directors. Each member of each committee of our board
of directors qualifies as an independent director in accordance
with the Nasdaq standards described above. Each committee of our
board of directors has a written charter approved by our board
of directors. Copies of each charter are posted on our web site
at
http://www.rightnow.com
under the Investor Relations section. The inclusion of our web
site address in this proxy statement does not include or
incorporate by reference the information on our web site into
this proxy statement.
Audit Committee. The audit committee of
our board of directors reviews and monitors our corporate
financial statements and reporting and our internal and external
audits, including, among other things, our internal controls and
audit functions, the results and scope of the annual audit and
other services provided by our independent auditors and our
compliance with legal matters that have a significant impact on
our financial statements. Our audit committee also consults with
our management and our independent auditors prior to the
presentation of financial statements to stockholders and, as
appropriate, initiates inquiries into aspects of our financial
affairs. Our audit committee has established procedures for the
receipt, retention and treatment of complaints regarding
accounting, internal accounting controls or auditing matters,
and for the confidential, anonymous submission by our employees
of concerns regarding questionable accounting or auditing
matters. In addition, our audit committee is directly
responsible for the appointment, retention, compensation and
oversight of the work of our independent auditors, including
approving services and fee arrangements. In accordance with our
audit committee’s charter and our policies regarding
related person transactions, all related person transactions are
approved by our audit committee and board of directors before we
enter into
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them. Please see the information set forth under the heading
“Policies and Procedures for Related Person
Transactions” in this Proxy Statement for additional
details about our policies regarding related person
transactions. The current members of our audit committee are
Messrs. Allen (chair), Avis and Kendra. Our audit committee
held eight meetings during 2010.
In addition to qualifying as independent under the Nasdaq rules,
each member of our audit committee can read and has an
understanding of fundamental financial statements, and each
qualifies as independent under special standards established by
the SEC for members of audit committees.
Our audit committee includes at least one member who has been
determined by our board of directors to meet the qualifications
of an audit committee financial expert in accordance with SEC
rules. Mr. Allen is the independent director who has been
determined to be an audit committee financial expert. This
designation is a disclosure requirement of the SEC related to
Mr. Allen’s experience and understanding with respect
to certain accounting and auditing matters. The designation does
not impose on Mr. Allen any duties, obligations or
liability that are greater than are generally imposed on him as
a member of our audit committee and our board of directors, and
his designation as an audit committee financial expert pursuant
to this SEC requirement does not affect the duties, obligations
or liability of any other member of our audit committee or board
of directors.
Compensation Committee. The
compensation committee of our board of directors reviews and
approves our compensation policies and all forms of compensation
to be provided to our executive officers and directors,
including, among other things, annual salaries, bonuses, stock
options and other incentive compensation arrangements. Where the
form of compensation is performance based, the committee
approves the design and content of the compensation plan to
ensure that the plan incents appropriate behavior and does not
encourage excessive risk taking. In the case of the annual cash
incentive plan, which applies to all employees at director level
and above, including executive officers, our compensation
committee has satisfied itself that financial targets proposed
by management are realistic and appropriate, taken advice from
its own compensation consultant and approved caps on cash
incentives payable in connection with earnings targets in order
to discourage unwarranted expense reductions. Sales policies are
designed to minimize the risk of payment of commissions for
contracts involving unacceptable credit risk.
The compensation committee may form and delegate any of its
responsibilities to a subcommittee so long as such subcommittee
consists solely of at least two independent members of the
compensation committee. In addition, our compensation committee
administers our stock option plans, including reviewing and
granting stock options, with respect to our executive officers
and directors, and from time to time assists our board of
directors in administering our stock option plans with respect
to all of our other employees. Our compensation committee also
reviews and approves various other of our compensation policies
and matters. The current members of our compensation committee
are Messrs. Allen, Lansing, Singh and Snyder (chair). Our
compensation committee held five meetings during 2010.
Nomination and Governance
Committee. The nomination and governance
committee of our board of directors reviews and reports to our
board of directors on a periodic basis with regard to matters of
corporate governance, and reviews, assesses and makes
recommendations on the effectiveness of our corporate governance
policies. In addition, our nomination and governance committee
reviews and makes recommendations to our board of directors
regarding the size and composition of our board of directors and
the appropriate qualities and skills required of our directors
in the context of the then current
make-up of
our board of directors. This includes an assessment of each
candidate’s independence, viewpoints, personal and
professional integrity, financial literacy or other professional
or business experience relevant to an understanding of our
business, ability to think and act independently and with sound
judgment and ability to serve our long-term interests as well as
those of our stockholders. These factors, and others as
considered useful by our nomination and governance committee,
are reviewed in the context of an assessment of the perceived
needs of our board of directors at a particular point in time.
As a result, the priorities and emphasis of our nomination and
governance committee and of our board of directors may change
from time to time to take into account changes in business and
other trends and the portfolio of skills and experience of
current and prospective directors. The board seeks to have a
membership that is both diversified and committed to diversity.
The board and the nomination and governance committee will not
discriminate on the basis of race, color, age, gender,
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sexual orientation, national origin, religion, marital status,
medical condition, physical or mental disability, military
service, pregnancy, childbirth and related medical conditions or
any other protected classification in selecting nominees. Our
board of directors has adopted a diversity policy to ensure that
the membership on our board of directors continues to maintain
these standards. Our nomination and governance committee leads
the search for and selects, or recommends that our board of
directors select, candidates for election to our board of
directors (subject to legal rights, if any, of third parties to
nominate or appoint directors). Consideration of new director
candidates typically involves a series of committee discussions,
review of information concerning candidates and interviews with
selected candidates. Candidates for nomination to our board of
directors typically have been suggested by other members of our
board of directors or by our chief executive officer. From time
to time, our nomination and governance committee may engage the
services of a third-party search firm to identify director
candidates. The members of our nomination and governance
committee are Messrs. Avis, Kendra and Lansing (chair). Our
nomination and governance committee held one meeting during 2010.
Although our nomination and governance committee does not have a
formal policy on stockholder nominations, it will consider
candidates proposed in writing by stockholders, provided such
proposal meets the eligibility requirements for submitting
stockholder nominations for inclusion in our next proxy
statement and is accompanied by certain required information
about the candidate, in accordance with the procedures set forth
in Article III, Section 3.02 of our Bylaws and in the
charter of our nomination and governance committee. If an
eligible stockholder wishes to recommend a nominee, he or she
should submit such recommendation in writing to the chair of our
nomination and governance committee, care of our corporate
secretary, by the deadline set forth above under “Q: What
are the deadlines for receipt of stockholder proposals?”
The charter of our nomination and governance committee and
Article III, Section 3.02 of our Bylaws require that
such recommendation specify the following information:
(a) the name and address of the nominee; (b) the name
and address of the stockholder making the nomination;
(c) the number of shares of our common stock entitled to
vote at such meeting held by the stockholder; (d) a
representation that the nominating stockholder is a stockholder
of record entitled to vote at such meeting and intends to appear
in person or by proxy at such meeting to nominate the person
specified in the notice; (e) the nominee’s
qualifications for membership on our board of directors;
(f) all of the information that would be required in a
proxy statement soliciting proxies for the election of the
nominee as a director; (g) a description of all direct or
indirect arrangements or understandings between the nominating
stockholder and the nominee and any other person or persons
(naming such person or persons) pursuant to whose request the
nomination is being made by the stockholder; (h) all other
companies to which the nominee is being recommended as a nominee
for director; and (i) a signed consent of the nominee to
cooperate with reasonable background checks and personal
interviews, and to serve as a director, if elected. Candidates
proposed by stockholders will be evaluated by our nomination and
governance committee using the same criteria as for all other
candidates. Our nomination and governance committee has not
received any nominations from any of our stockholders in
connection with this Annual Meeting. On the recommendation of
our nomination and governance committee, our board of directors,
including its independent directors, selected and approved the
nomination of Messrs. Lansing and Snyder for election at
the Annual Meeting, each of whom is standing for re-election by
our stockholders.
Annual Self-Evaluations. Each of our
committees evaluates its own performance as a committee
annually. The evaluations include committee effectiveness and
compliance with their respective charters. The results of such
evaluations and recommended changes are reported to the board of
directors. The nomination and governance committee oversees an
annual review of the performance of the full board and the
diversity, experience and qualifications of our directors, and
oversees the annual self-evaluation process of each board
committee.
Board and Committee Meetings. Our board
of directors held 12 meetings during 2010 and acted by written
consent on three occasions in 2010. Each director participated
in 75% or more of the aggregate of (i) the total number of
meetings of our board of directors and (ii) the total
number of meetings held by all committees of our board of
directors on which such director served during 2010. All of our
current directors attended our annual meeting of stockholders in
2010.
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Although we do not have a formal policy regarding attendance by
members of our board of directors at our annual meetings of
stockholders, directors are encouraged to attend, except where
the failure to attend is due to unavoidable circumstances or
conflicts.
Code of
Ethics and Business Conduct
Our board of directors has adopted a code of ethics and business
conduct that applies to all of our employees, officers
(including our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions) and directors. Our nomination and
governance committee reviews the Code of Ethics annually. The
full text of our code of ethics and business conduct is posted
on our web site at
http://www.rightnow.com
under the Investor Relations section. We intend to disclose
future amendments to certain provisions of our code of ethics
and business conduct, or waivers of such provisions, applicable
to our directors and officers (including our principal executive
officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions),
at the same location on our web site identified above. The
inclusion of our web site address in this Proxy Statement does
not include or incorporate by reference the information on our
web site into this Proxy Statement.
Stockholder
Communications
Our board of directors has implemented a process by which
stockholders may send written communications to the attention of
the board, any committee of the board or any individual board
member, in care of our corporate secretary at 136 Enterprise
Boulevard, Bozeman, Montana 59718. This centralized process
assists the board in reviewing and responding to stockholder
communications in an appropriate manner. The name of any
specific intended board recipient should be noted in the
communication. Our corporate secretary is primarily responsible
for collecting, organizing and monitoring communications from
stockholders and, where appropriate depending on the facts and
circumstances outlined in the communication, providing copies of
such communications to the intended recipients. Communications
will be forwarded to directors if they relate to appropriate and
important substantive corporate or board matters. Communications
that are of a commercial or frivolous nature or otherwise
inappropriate for the board’s consideration will not be
forwarded to the board. Any communications not forwarded to the
board will be retained for a period of twelve months and made
available to any of our independent directors upon their general
request to view such communications. In addition, our corporate
secretary will provide all non-forwarded communications to the
chairman of our nomination and governance committee at least
annually. There were no changes in this process in 2010.
Required
Vote
The nominees receiving the highest number of affirmative votes
of the outstanding shares of the Common Stock present or
represented by proxy and entitled to be voted for the nominees,
shall each be elected as director. Each proxy cannot be voted
for a greater number of persons than two.
Recommendation
of Our Board of Directors
Our board of directors recommends that stockholders vote FOR
the election of the nominees listed above.
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PROPOSAL TWO:
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has selected the firm of KPMG LLP, our
independent registered public accounting firm during 2010, to
serve in the same capacity for 2011, and we are asking
stockholders to ratify this appointment. Stockholder
ratification of such selection is not required by our Bylaws or
other applicable legal requirement. However, our board of
directors is submitting the selection of KPMG LLP to
stockholders for ratification as a matter of good corporate
practice. In the event that stockholders fail to ratify the
selection, our audit committee will reconsider whether or not to
retain that firm. Even if the selection is ratified, our audit
committee in its discretion may direct the appointment of a
different independent registered public accounting firm at any
time during the year if our audit committee believes that such a
change would be in our and our stockholders’ best interests.
A representative of KPMG LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if
he or she desires to do so and will be available to respond to
appropriate questions.
Principal
Accountant Fees and Services
The aggregate fees billed by KPMG LLP, our independent
registered public accounting firm, for the years ended
December 31, 2009 and 2010 were as follows:
|
Services Rendered
|
2009 | 2010 | ||||||
|
Audit Fees(1)
|
$ | 729,388 | $ | 827,251 | ||||
|
Audit-Related Fees(2)
|
— | — | ||||||
|
Tax Fees(3)
|
$ | 213,000 | $ | 185,000 | ||||
|
All Other Fees(4)
|
— | — | ||||||
|
Total
|
$ | 942,388 | $ | 1,012,251 | ||||
| (1) | Fees billed for the audit of our annual financial statements for the years ended December 31, 2009 and 2010. Audit services for 2009 and 2010 include fees for the audit of annual financial statements, including internal control over financial reporting, quarterly reviews, statutory audits of foreign subsidiaries and consents on Form S-8. | |
| (2) | None. | |
| (3) | Tax fees for compliance, planning and expatriate tax services. | |
| (4) | None. |
Determination
of Independence
Our audit committee has determined that the fees received by
KPMG LLP for the non-audit services listed above are compatible
with maintaining KPMG LLP’s independence.
Audit
Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
Our audit committee pre-approves all audit and permissible
non-audit services provided by our independent auditors. These
services may include audit services, audit-related services, tax
services and other services. Our audit committee has adopted a
policy for the pre-approval of services provided by the
independent auditors. Under the policy, pre-approval is
generally provided at or near the beginning of the year to which
the services pertain. Our audit committee may delegate
pre-approval authority to one or more of its members. Such a
member must report any decisions to our audit committee at the
next scheduled meeting.
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Vote
Sought
The affirmative vote of the holders of a majority of the shares
of Common Stock present or represented and entitled to vote at
the meeting is being sought to ratify the selection of KPMG LLP
as our independent registered public accounting firm for 2011.
Recommendation
of Our Board of Directors
Our board of directors recommends that stockholders vote FOR
the ratification of the selection of KPMG LLP to serve as our
independent registered public accounting firm for 2011.
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PROPOSAL THREE:
ADVISORY
VOTE ON THE
COMPENSATION OF NAMED EXECUTIVE OFFICERS
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the
“Dodd-Frank
Act”) enables our stockholders to vote to approve, on a
non-binding advisory basis, the compensation of our named
executive officers as disclosed in this Proxy Statement in
accordance with applicable SEC rules.
Our goal for our executive compensation program is to attract,
motivate and retain a talented, entrepreneurial and creative
team of executives who will provide leadership for our success,
and thereby increase stockholder value. We believe that our
executive compensation program, which emphasizes variable
incentive pay and long-term equity awards, satisfies this goal,
has supported and contributed to our recent and long-term
success and is strongly aligned with the long-term interests of
our stockholders. We urge stockholders to read the section
titled “Executive Compensation” below for additional
details about our executive compensation programs, including
information about the compensation of our named executive
officers in 2010.
We are asking our stockholders to indicate their support for our
named executive officer compensation as described in this Proxy
Statement. This proposal, commonly known as a
“say-on-pay”
proposal, gives our stockholders the opportunity to express
their views on our named executive officers’ compensation.
This vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named
executive officers and the philosophy, policies and practices
described in this Proxy Statement. Accordingly, we will ask our
stockholders to vote FOR the following resolution at the
Annual Meeting:
“RESOLVED, that the stockholders of RightNow Technologies,
Inc. approve, on an advisory basis, the compensation of the
named executive officers, as disclosed in RightNow’s Proxy
Statement for the 2011 Annual Meeting of Stockholders pursuant
to the compensation disclosure rules of the SEC.”
This
say-on-pay
vote is advisory, and therefore, is not binding on us, our
compensation committee or our board of directors. Our board of
directors and our compensation committee value the opinions of
our stockholders, and to the extent there is any significant
vote against the named executive officer compensation as
disclosed in this Proxy Statement, we will review and consider
the results of this advisory vote in future compensation
deliberations.
Under the rules of the NYSE, brokers are prohibited from giving
proxies to vote on executive compensation matters unless the
beneficial owner of such shares has given voting instructions on
the matter. This means that if your broker is the record holder
of your shares, you must give voting instructions to your broker
with respect to Proposal Three if you want your broker to
vote your shares on this Proposal.
Vote
Sought
The affirmative advisory vote of the holders of a majority of
the shares of Common Stock present or represented and entitled
to vote at the meeting is being sought to approve the
compensation of our named executive officers as disclosed in
this Proxy Statement.
Recommendation
of Our Board of Directors
Our board of directors recommends that stockholders vote FOR
the approval of the compensation of our named executive officers
as disclosed in this Proxy Statement.
15
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PROPOSAL FOUR:
ADVISORY
VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
Under the Dodd-Frank Act, public companies are generally
required to include in their proxy solicitations at least once
every six years an advisory vote on whether an advisory vote on
named executive officer compensation (such as the
say-on-pay
proposal that is included in Proposal Three) should occur
every one, two or three years. It is management’s belief,
and the recommendation of our board of directors, that this
non-binding advisory vote should occur every year.
We believe we have effective executive compensation practices,
as described in more detail elsewhere in this Proxy Statement.
Our board of directors believes that providing our stockholders
with an advisory vote on named executive officer compensation
every year, however, will provide us with greater opportunity
for timely feedback on our executive compensation programs. For
this reason, our board of directors recommends that stockholders
vote to hold an advisory vote on named executive officer
compensation every year.
You may cast your vote on your preferred voting frequency by
choosing the option of one year, two years or three years, or
you may abstain from voting when you vote in response to the
resolution set forth below.
“RESOLVED, that the option of once every year, two years,
or three years, that receives the highest number of votes cast
for this resolution will be determined to be the
stockholders’ preferred frequency with which RightNow
Technologies, Inc. is to hold a stockholder advisory vote
regarding the executive compensation of our named executive
officers, as disclosed pursuant to the SEC’s compensation
disclosure rules.”
The option of one year, two years or three years that receives
the highest number of votes cast by stockholders will be the
frequency for the advisory vote on the compensation of our named
executive officers that has been selected by stockholders.
However, because the vote on this Proposal Four is only
advisory in nature and is not binding on us or our board of
directors, our board of directors will review and consider the
results of the vote, but may decide that it is in our best
interests and the best interests of our stockholders to hold an
advisory vote on the compensation of our named executive
officers more or less frequently than the option approved by our
stockholders.
Under the rules of the NYSE, brokers are prohibited from giving
proxies to vote on executive compensation matters unless the
beneficial owner of such shares has given voting instructions on
the matter. This means that if your broker is the record holder
of your shares, you must give voting instructions to your broker
with respect to Proposal Four if you want your broker to
vote your shares on this Proposal.
Vote
Sought
The advisory vote of the holders of the shares of Common Stock
present or represented and entitled to vote at the meeting is
being sought on to the frequency of conducting stockholder
advisory votes on the compensation of named executive officers.
The four voting options are 1 year, 2 years,
3 years and abstain. The stockholder advisory vote will be
determined by which option, 1, 2 or 3 years, garners the
most votes.
Recommendation
of Our Board of Directors
Our board of directors recommends that stockholders vote for
conducting future stockholder advisory votes on the compensation
of named executive officers EVERY YEAR.
16
Table of Contents
OTHER
MATTERS
We know of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters
properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they
represent as our board of directors may recommend. Discretionary
authority with respect to such other matters is granted by the
execution of the enclosed proxy.
17
Table of Contents
AUDIT
COMMITTEE REPORT
The information contained in this Audit Committee Report
shall not be deemed to be “soliciting material” or to
be “filed” or incorporated by reference into any
future filings with the Securities and Exchange Commission, or
subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934, as amended, except to the extent that we
specifically incorporate it by reference into a document filed
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended.
The audit committee carries out its responsibilities pursuant to
its written charter, and the members of the 2010 audit committee
of RightNow’s board of directors have prepared and
submitted this audit committee report. Each audit committee
member is considered independent because each member satisfies
the independence requirements for board members prescribed by
the applicable rules of Nasdaq and
Rule 10A-3
of the Securities Exchange Act of 1934, as amended.
Among other things, the audit committee oversees RightNow’s
financial reporting process on behalf of the board of directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the system of
internal control over financial reporting. In fulfilling its
oversight responsibilities, the audit committee reviewed and
discussed with management RightNow’s audited financial
statements in the Annual Report on
Form 10-K
for the year ended December 31, 2010, including a
discussion of the quality, not just the acceptability, of the
accounting principles; the reasonableness of significant
judgments; the clarity of disclosures in the financial
statements; and management’s assessment of RightNow’s
internal control over financial reporting.
The audit committee also reviewed with the independent auditors,
who are responsible for expressing an opinion on the conformity
of those audited financial statements with generally accepted
accounting principles, their judgments as to the quality, not
just the acceptability, of RightNow’s accounting principles
and such other matters as are required to be discussed with
audit committees by Statement on Auditing Standards No. 61,
Communication With Audit Committees, as may be modified
or supplemented. In addition, the audit committee discussed with
the independent auditors their independence from management and
RightNow, and has received the written disclosures and the
letter from the independent auditors required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent auditor’s communications with the
audit committee concerning independence. Throughout the year and
prior to the performance of any such services the audit
committee also considered the compatibility of potential
non-audit services with the auditors’ independence.
The audit committee discussed with RightNow’s independent
auditors their overall approach, scope and plans for the audit.
At the conclusion of the audit, the audit committee met with the
independent auditors, with and without management present, to
discuss the results of their examination, their evaluation of
RightNow’s internal control over financial reporting and
the overall quality of RightNow’s financial reporting.
In reliance on the reviews and discussions referred to above,
the audit committee recommended to the board of directors (and
the board has approved) that the audited financial statements be
included in the Annual Report on
Form 10-K
for the year ended December 31, 2010 for filing with the
Securities and Exchange Commission.
The audit committee has also recommended the selection of KPMG
LLP to continue as RightNow’s independent auditors for 2011.
Submitted by the Audit Committee of
the Board of Directors
Richard E. Allen, Chair
Gregory M. Avis
Thomas W. Kendra
18
Table of Contents
Executive
Officers
The names of our executive officers, their ages and positions as
of March 31, 2011 and biographical information about them
are as follows:
|
Name
|
Age
|
Position
|
||||
|
Greg R. Gianforte
|
49 | Chairman and Chief Executive Officer | ||||
|
Jeffrey C. Davison
|
46 | Chief Financial Officer, Senior Vice President and Treasurer | ||||
|
Wayne Huyard
|
51 | President and Chief Operating Officer | ||||
|
Alan A. Rassaby
|
55 | Senior Vice President, General Counsel and Secretary | ||||
The following is a brief description of the capacities in which
each of our executive officers who is not also a director has
served, and other biographical information. The biography of
Mr. Gianforte appears earlier in this Proxy Statement under
“Proposal One: Election of Directors —
Continuing Directors for Terms Ending Upon the 2013 Annual
Meeting of Stockholders.”
Jeffrey C. Davison, 46, is responsible for our finance
organization as senior vice president, chief financial officer
and treasurer. He joined us in 1999 as controller, and a year
later was promoted to vice president of sales operations and
served in that role until April 2006, when he was promoted to
vice president of finance and operations. In January 2008,
Mr. Davison was promoted to our chief financial officer.
Previously, Mr. Davison was the controller for Powerhouse
Technologies, Inc., a gaming technology company. A graduate of
Montana State University with a B.S. degree in accounting, he
also has prior experience with PacifiCorp, a diversified utility
company, and KPMG LLP, an accounting firm, and is a certified
public accountant.
Wayne Huyard, 51, joined us in June 2010, and currently
serves as our president and chief operating officer with
responsibilities for global sales and service, marketing,
technology operations and development. Prior to joining us,
Mr. Huyard spent 23 years in telecommunications with
senior leadership responsibilities. At Verizon Communications
Inc., Mr. Huyard was the executive vice president of global
sales from January 2006 to January 2007. From 1984 until he
joined Verizon, Mr. Huyard was at MCI Inc. (formerly
WorldCom, MCI WorldCom and MCI Communications), a
telecommunications company, where his roles included president
worldwide sales & marketing. Mr. Huyard also
spent three years in private equity portfolio company management
at Cerberus Capital Management L.P. from March 2007 to June
2009. He is a seasoned business professional with broad
experience in consumer, business and government markets, both
domestic and international. Mr. Huyard holds a B.S. degree
in business administration from Elizabethtown College.
Alan A. Rassaby, 55, leads our legal, risk management and
corporate services initiatives as senior vice president, general
counsel and secretary. Prior to joining us in 2000,
Mr. Rassaby was the senior vice president, legal and
administration for Powerhouse Technologies, a gaming technology
company, and senior vice president and general counsel of Anchor
Gaming after Anchor’s acquisition of Powerhouse. From 1994
to 1998, Mr. Rassaby was an Australian-based partner in
Phillips Fox Lawyers, one of the largest firms in the Asia
Pacific basin, where he specialized in representing technology
and health care clients. Mr. Rassaby is a member of the
Oregon State Bar, as well as the New South Wales and Victorian
Bar in Australia. Mr. Rassaby holds Arts and Law degrees
from the University of New South Wales in Australia and a Master
of Laws from the London School of Economics and Political
Science of London University.
Our executive officers are elected by our board of directors on
an annual basis and serve at the discretion of our board of
directors until their successors have been duly elected and
qualified or until their earlier resignation or removal.
19
Table of Contents
Executive
Compensation
Compensation
Discussion and Analysis
The following discussion and analysis of our compensation
practices and related compensation information should be read in
conjunction with the Summary Compensation table and other tables
included in this Proxy Statement, as well as our financial
statements and management’s discussion and analysis of
financial condition and results of operations included in our
Annual Report on
Form 10-K
for the year ended December 31, 2010. The following
discussion includes statements of judgment and forward-looking
statements that involve risks and uncertainties. These
forward-looking statements are based on our current
expectations, estimates and projections about our industry, our
business, compensation, management’s beliefs and certain
assumptions made by us, all of which are subject to change.
Forward-looking statements can often be identified by words such
as “anticipates,” “expects,”
“intends,” “plans,” “predicts,”
“believes,” “seeks,” “estimates,”
“may,” “will,” “should,”
“would,” “could,” “potential,”
“continue,” “ongoing,” similar expressions,
and variations or negatives of these words and include, but are
not limited to, statements regarding projected performance and
compensation. Actual results could differ significantly from
those projected in the forward-looking statements as a result of
certain factors, including, but not limited to, the risk factors
discussed in our Annual Report on
Form 10-K
for the year ended December 31, 2010. We assume no
obligation to update the forward-looking statements or such risk
factors.
Introduction
Role of
Compensation Committee
It is the responsibility of the compensation committee of our
board of directors to oversee our general compensation policies;
to determine the compensation to be paid to our chief executive
officer; to make recommendations to the board of directors with
respect to the compensation to be paid each year to our other
executive officers; to oversee our compensation policies and
practices as they relate to our risk management; and to
establish, review and approve director compensation. The three
broad components of our executive officer compensation are base
salary, cash incentive awards and long-term equity-based
incentive awards. The compensation committee periodically
reviews total compensation levels and the allocation of
compensation among these three components for each of our
executive officers in the context of our overall compensation
philosophy. The compensation committee also periodically reviews
the total compensation paid to each of our directors, having
regard to each director’s level of contribution. Our
directors are currently compensated entirely through
equity-based awards. Below is a description of the policies and
processes that govern the compensation paid to our executive
officers and directors, as reflected in the accompanying
compensation tables.
General
Compensation Philosophy for Executive Officers
We operate in a highly competitive and rapidly changing sector
within the high technology industry where competition for
executive talent is intense. The compensation committee believes
that our compensation programs for executive officers should:
a) be designed to attract, motivate and retain talented
executives, b) be competitive and c) reward
individuals based on the achievement of designated financial
performance targets and on the individual executive’s
contributions. Within this philosophy, the compensation
committee’s objectives are to:
| • | Offer a total compensation program that takes into consideration the compensation practices of other high technology companies of similar size with which we compete for executive talent; | |
| • | Provide annual cash incentive awards that take into account our overall financial performance relative to designated corporate objectives; and | |
| • | Strengthen the alignment of the interests of executive officers with those of stockholders by providing significant equity-based, long-term incentive awards. |
20
Table of Contents
We design our executive compensation to support a pay for
performance culture. In setting the mix of cash compensation
between base salary and cash incentive awards, we generally
allocate a lower percentage of cash to base salary and a higher
percentage to cash incentive awards, than is common in
comparable companies. This means our executive officers should
expect to receive generous cash compensation relative to
similarly qualified executives in comparable companies provided
we are able to meet our financial operating targets.
Compensation
Components and Process
We believe executive compensation should both reflect market
changes and reward high performance. The compensation
committee’s conclusions on the compensation levels for our
executive officers are based in part on executive compensation
data drawn from nationally recognized surveys and from peer
companies, and in part from a review of individual performance
during the previous year.
When evaluating market data for compensation comparison
purposes, the compensation committee seeks to obtain data from
organizations considered to be comparable to us from a variety
of perspectives, in order to ensure comparisons include both
relevant competitive labor markets for talent as well as
business competitors. For 2010, the compensation committee
engaged Compensia, a nationally recognized compensation
consulting company, to provide data on market compensation
levels for executives in comparable positions at comparable
companies. Compensia reported directly to our compensation
committee and performed no other services for us during this
period. Our compensation committee members interacted directly
with representatives from Compensia. During the process of
determining 2010 compensation levels for our executives, our
senior vice president and general counsel, Alan Rassaby, acted
as liaison between the compensation committee and Compensia, and
communicated to Compensia any requests made by our compensation
committee for additional or refined information. We expect that
in 2011, the liaison role will be undertaken jointly by
Mr. Rassaby and our newly appointed senior vice president
of Human Resources, Ms. Julie Rich.
For market data on total direct compensation for 2010, which
includes base salary, annual cash incentive and long-term equity
based incentives, published survey data were considered from two
sources: 1) Radford’s 2009 Hi-technology Compensation
Survey, scoped for companies with annual revenues between
$50 million and $199 million; and 2) data from
publicly-traded peer companies. The Radford data was blended
with peer data applying a 50% weighting, wherever peer group
sample sizes were statistically reliable.
In 2008 and 2009, we obtained compensation information from a
larger number of publicly-traded peer companies to provide a
secondary data point in determining market rates for total
compensation. For 2010, we opted for a smaller group of peer
companies that we believed provided a better basis for
comparison than the larger group used in previous years. The
peer group generally was comprised of enterprise software and
software-as-a-service companies that were comparable in revenue,
numbers of employees, and market capitalization. In developing a
list of 18 publicly-traded peer companies for 2010, we removed
24 companies, primarily because their market capitalization
or revenues made them poor benchmarks for comparison. We also
added four companies whose businesses were considered
sufficiently similar to our business to provide a reasonable
basis for comparison. The 2010 peer companies consisted of:
|
Advent Software, Inc. Art Technology Group, Inc. Concur Technologies, Inc. Kenexa LivePerson Inc. Manhattan Associates Inc. NetSuite Inc. Omniture, Inc. Open TV Corp |
Pegasystems Inc. Radiant Systems, Inc. Renaissance Learning Inc. S1 Corp SuccessFactors, Inc. Synchronoss Technologies Inc. Taleo Corp Ultimate Software Group Inc. Unica Corp |
We believe the combination of published survey data and data
from the proxy filings of peer companies allows us to assess
relevant external market pay practices and to understand the
range of pay practices occurring in comparable markets. These
external market pay practices help inform us on the
competitiveness
21
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of our compensation programs. The objective of this process is
to gain a general understanding of compensation practices at
other companies for the same or similar positions, rather than
to identify a target or benchmark range of payment. Our
compensation committee does not target compensation to fall
within a specified range against the data, either for an
individual officer or for the executive officers as a group, as
the compensation committee believes that this is only one of
many factors that go into the determination of compensation.
Rather, the published survey data and data from the proxy
filings of peer companies provide us with market checks to
ensure that our compensation is sufficiently attractive to
enable us to attract, motivate and retain executives. Our
compensation committee also considers the scope of each
executive officer’s experience and responsibilities, the
executive’s performance during the previous year, and tally
sheet data showing the history of compensation and stock option
awards for each executive officer. Relevant experience, broad
scope of responsibility and strong performance during the
previous year will likely correlate with higher compensation.
The historical tally sheets provide the compensation committee
with an understanding of the executive’s historical
compensation progression. For example, an executive who has
recently received a substantial pay increase might be progressed
more slowly than an executive who has not received a
compensation adjustment for some time.
In determining the amounts payable under individual components
of an executive officer’s remuneration, the compensation
committee seeks to develop a compensation package that is
attractive and competitive in terms of total compensation,
having regard both to cash and equity. The compensation
committee also carefully considers the mix between the
individual components. The compensation committee believes that
a significant portion of an executive officer’s potential
income should be at risk if we fail to meet our financial plan.
Accordingly, the compensation committee tries to ensure that
there is an appropriate balance between base, cash incentive and
long-term equity incentive components to ensure a risk/reward
profile that is consistent with our compensation philosophy.
Finally, in determining the mix of components, we take into
account market data for each position, recognizing that some
positions are more highly leveraged than others (that is, a
greater portion of total compensation is at risk).
Each of our executive officers, except for our chief executive
officer, undergoes an annual performance review with his or her
supervisor. During such review, the executive officer and his or
her supervisor assess performance during the year against
objectives set at the beginning of the year, taking into account
other factors that may not have been anticipated when the
objectives were first set. The executive officer and his or her
supervisor next agree on a personal business plan for the
following year. The personal business plan is intended to align
with our corporate strategic goals and is used to determine if
the executive officer has met performance objectives when
determining cash incentive plan attainment. This is the same
process that we follow to review the performance of all of our
employees.
During 2009, our chief financial officer, chief operating
officer and our general counsel reported directly to our chief
executive officer, Mr. Gianforte. All of our other
executive officers reported directly to our then chief operating
officer, Ms. Carstensen. Mr. Gianforte and
Ms. Carstensen conducted a performance review with each of
their reporting executive officers early in January 2010.
Additionally, Mr. Gianforte met with Ms. Carstensen to
review the performance of each of her reporting officers. To
assist our compensation committee in reviewing executive officer
performance in 2009 for 2010 compensation purposes, our chief
executive officer and chief operating officer provided the
compensation committee with their analyses of the 2009
performance and potential of each executive officer reporting to
them, and made recommendations based on how well each executive
officer executed on his or her personal business plan while also
taking into account compensation paid by our market peer
companies. The compensation committee then made a recommendation
to our board on the 2010 compensation to be paid to each
executive officer, which the board considered and subsequently
approved. This is the same process that we followed in setting
each executive officer’s 2011 compensation, except that
Mr. Gianforte provided the compensation committee with his
analysis of the 2010 performance and potential of all executive
officers.
In the case of our chief executive officer, the chairman of the
compensation committee obtained input from each board member
(other than Mr. Gianforte) on Mr. Gianforte’s
performance during 2009, augmenting verbal discussion with a
written multiple question format and a five point rating scale.
The compensation committee also took into account our chief
executive officer’s success in meeting the corporate goals
and
22
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objectives approved by the board at the beginning of 2009. The
compensation committee then approved the 2010 compensation to be
paid to our chief executive officer. This is the same process
that we followed in setting our chief executive officer’s
2008 and 2009 compensation. We also followed this process in
setting our chief executive officer’s 2011 compensation.
On October 8, 2010, we appointed Mr. Wayne Huyard as
our president and chief operating officer, replacing
Ms. Carstensen who had been our chief operating officer.
Prior to this appointment, our compensation committee obtained
advice from Compensia about an appropriate compensation package
for Mr. Huyard. Compensia reviewed market data for this
position using the same methodology as had been employed for
other executive officers. Our compensation committee then
recommended a compensation package to our board, which
subsequently approved Mr. Huyard’s compensation for
the remainder of 2010 and for 2011.
Summary
Compensation Table
|
Change in |
||||||||||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||||||||||
|
Value and |
||||||||||||||||||||||||||||||||||||
|
Nonqualified |
||||||||||||||||||||||||||||||||||||
|
Non-Equity |
Deferred |
|||||||||||||||||||||||||||||||||||
|
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||||||||||
|
Salary |
Bonus |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
Total |
|||||||||||||||||||||||||||||
|
Name and Principal Position
|
Year | ($) | ($) | ($) | ($)(4) | (5) | ($) | ($)(6) | ($) | |||||||||||||||||||||||||||
|
Greg R. Gianforte
|
2010 | $ | 350,000 | $ | — | $ | — | $ | 1,145,500 | $ | 386,400 | $ | — | $ | 10,487 | $ | 1,892,387 | |||||||||||||||||||
|
CEO
|
2009 | 325,000 | — | — | 568,738 | 253,942 | — | 10,082 | 1,157,762 | |||||||||||||||||||||||||||
| 2008 | 325,000 | — | — | — | 160,498 | — | 9,231 | 494,729 | ||||||||||||||||||||||||||||
|
Jeffrey C. Davison
|
2010 | 240,000 | — | — | 395,000 | 206,080 | — | 10,487 | 851,567 | |||||||||||||||||||||||||||
|
CFO, Senior VP and Treasurer
|
2009 | 225,000 | — | — | 386,742 | 103,577 | — | 7,350 | 722,669 | |||||||||||||||||||||||||||
| 2008 | 197,846 | — | — | 409,410 | 65,799 | — | 9,231 | 682,286 | ||||||||||||||||||||||||||||
|
Marcus Bragg
|
2010 | 255,305 | — | — | 355,500 | 278,620 | — | 3,347 | 892,772 | |||||||||||||||||||||||||||
|
Former VP and General Manager
|
2009 | 225,000 | — | — | 363,992 | 213,019 | — | 2,872 | 804,883 | |||||||||||||||||||||||||||
|
Americas(1)
|
2008 | 212,000 | — | — | 354,142 | 217,403 | — | 2,655 | 786,200 | |||||||||||||||||||||||||||
|
Susan J. Carstensen
|
2010 | 256,539 | — | — | 671,500 | 241,980 | — | 10,487 | 1,180,506 | |||||||||||||||||||||||||||
|
Former COO and VP(2)
|
2009 | 240,000 | — | — | 386,742 | 159,323 | — | 7,350 | 793,415 | |||||||||||||||||||||||||||
| 2008 | 238,564 | — | — | 545,880 | 105,278 | — | 9,231 | 898,953 | ||||||||||||||||||||||||||||
|
Wayne Huyard
|
2010 | 127,273 | — | — | 1,788,000 | 89,350 | — | — | 2,004,623 | |||||||||||||||||||||||||||
|
President and COO(3)
|
||||||||||||||||||||||||||||||||||||
|
Alan A. Rassaby
|
2010 | 235,000 | — | — | 474,000 | 148,120 | — | 10,487 | 867,607 | |||||||||||||||||||||||||||
|
Senior VP and
|
2009 | 225,000 | — | — | 386,742 | 91,419 | — | 10,082 | 713,243 | |||||||||||||||||||||||||||
|
General Counsel
|
2008 | 225,000 | — | — | 163,764 | 59,219 | — | 9,231 | 457,214 | |||||||||||||||||||||||||||
| (1) | Mr. Bragg resigned his office of vice president and general manager Americas October 15, 2010 due to an operational reorganization. The above figures for Mr. Bragg include his compensation earned during part of 2008 and 2010 as a non-executive officer. | |
| (2) | Ms. Carstensen resigned her office as chief operating officer and vice president October 8, 2010. The above figures for Ms. Carstensen include her compensation earned during part of 2010 as a non-executive officer. | |
| (3) | Mr. Huyard was appointed president and chief operating officer October 8, 2010. The above figures for Mr. Huyard include his compensation earned during part of 2010 as a non-executive officer. Prior to 2010, Mr. Huyard was not employed by us; therefore 2009 and 2008 compensation data was not included. | |
| (4) | Excludes the effect of forfeiture assumptions. The fair value of option awards shown are calculated in accordance with Topic 718, Compensation-Stock Compensation, and represent the aggregate grant date fair value of option awards granted during the year. See Note 1(r) and Note 10, Stock-Based Compensation, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed March 9, 2011 for the relevant assumptions used to determine the valuation of our option awards. | |
| (5) | See the discussion under Annual Cash Incentive Plan for further description of our cash-based incentive plan awards. | |
| (6) | Includes matching contributions by us under our 401(k) savings plan. All full-time equivalent employees are eligible for our 401(k) savings plan. Also includes airfare, meals and lodging for spouse attendance at our annual sales meeting. |
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Table of Contents
Principal
Elements of Executive Compensation
Base Salary. Messrs. Gianforte, Davison,
Bragg, and Rassaby, and Ms. Carstensen received a 7%, 7%,
13%, 4%, and 7% increase in base salary, respectively, at the
beginning of 2010 to bring them into better alignment with the
market for similar positions in comparable companies.
While the compensation committee did review base salaries and
evaluate the 2008 performance of all executive officers, due to
the downturn in the economy, the compensation committee decided
with one exception not to increase the base salaries of our
executive officers in 2009. The exception was our chief
financial officer, Mr. Davison, who received a 12.5%
increase solely to better align him with competitive rates for
his position.
Mr. Gianforte received an 8% increase in his base salary at
the beginning of 2008. For other named executive officers, base
salaries for 2008 were increased by a range of 2% to 16%.
Discretionary Bonus. We did not award
discretionary bonuses to our named executive officers during
2010, 2009 or 2008.
Annual Cash Incentive Plan. In parallel with
its review of base salaries for executive officers, the
compensation committee considers the design and structure of the
executive officer annual cash incentive plan. To reinforce the
attainment of our goals, we believe that a substantial portion
of the annual compensation of each executive officer should be
in the form of variable incentive pay.
Our annual cash incentive plan is heavily weighted toward the
achievement of financial targets approved by our board of
directors. Our compensation committee believes that the
achievement of annual financial metrics serves to align our
executives’ performance goals with the creation of
stockholder value. For 2010, executive officers’ annual
cash incentive potential was based on the following financial
targets, excluding effects of acquisitions (which we exclude
because they cannot be reliably factored into financial planning
at the time that the board adopts the financial targets on which
the cash incentive plan is based):
| • | Sales, which is a measure of the top line growth of the business and which, we believe, to be a leading indicator of our growth potential. We defined ‘sales’ as annual recurring revenue and professional services sales. | |
| • | Operating earnings, which is a measure of our profitability that we believe directly drives stockholder value through its impact on earnings per share. For our cash incentive plan, operating earnings is comprised of revenue less the cost of revenue less operating expenses. We use operating earnings before stock-based compensation expense because we believe the amount of stock-based compensation expense varies from period-to-period based on factors that are not, in management’s view, indicative of our underlying operating performance, and because stock based compensation is a non-cash expense. We believe this measure is important because the actions of management can have a significant impact upon operating earnings. |
Our 2008 and 2009 cash incentive plans included sales and
operating earnings targets, but also incorporated a third
element. In 2009, we also required achievement of a target for
recurring revenue per employee, while in 2008 we set a target
for cash from operations. We believe that three financial
measures introduce unnecessary complexity into the design of our
cash incentive plan, and that the critical measures upon which
we need to focus are sales and operating earnings.
The 2010 cash incentive plan for executive officers other than
the general managers was designed as follows:
| • | Incentive opportunities were established as designated dollar amounts, not as a percentage of salary; | |
| • | 80% of the overall incentive opportunity was based on the attainment of corporate goals for sales and operating earnings for each of our four quarters, and was paid in cash after the end of each quarter; |
24
Table of Contents
| • | 20% of the overall incentive opportunity was based on an assessment of the executive officer’s 2010 performance, having regard to the objectives documented in the executive’s personal business plan, and was paid in cash after the end of the year. |
In these respects, the plan design was unchanged from the design
of the 2009 plan, and is identical also to the 2008 plan design
except in one respect. In 2009 and 2010, we paid only for
achievement of quarterly financial targets, whereas in 2008 we
reserved a portion of the cash incentive for achievement of an
annual financial target. We believe this change helps us focus
better on consistent quarterly performance.
The quarterly and annual components of the 2010 incentive plan
were triggered when we achieved a minimum level of sales or
operating earnings. The compensation committee determined the
floor, target and a stretch for each metric, based on known or
expected business trends and the perceived difficulty in
attaining each goal. Achievement below the floor for sales and
operating earnings resulted in a zero percent payout, while
achievement at the floor resulted in a payout of 50% of the
executive officer’s designated dollar amount. Excluding the
20% individual performance portion of the incentive plan, the
maximum payout in the case of operating earnings was 200% at the
stretch goal, but there was no cap for sales exceeding the
stretch goal. This is a change from 2008 and 2009 when payments
were capped at 200% for each of the sales and operating earnings
stretch targets. The change reflects an evolution in our
thinking. We would rather provide ongoing incentives for sales
over-achievement in order to incent continued growth. A cap on
compensation is inconsistent with this approach. However, while
over-achievement of our operating earnings targets merits
appropriate compensation, we do not want to create a
disincentive for investments that are designed to fuel future
sales and revenue growth.
In the case of general managers, who were our executive officers
responsible for regional financial performance, we adopted
additional plan elements that were designed to reward the
general manager for regional sales growth and profitability. We
believe that the additional plan elements were necessary in
order to reflect the geographical nature of each general
manager’s role. 40% of the target incentive for general
managers was payable on the basis of our cash incentive plan,
50% was based on the regional financial plan applicable to the
general manager and 10% was based on an assessment of the
general manager’s 2010 performance, having regard to the
objectives documented in the general manager’s personal
business plan. General managers were given both a sales and
quarterly contribution margin target. A general manager who
achieved both targets was to be paid 100% of available target
pay. Achievement of a lower contribution target had the effect
of proportionately reducing the payout while achievement of a
higher contribution margin had the effect of proportionately
increasing the available incentive. Under the regional financial
plan, the floor payment started at zero, increased in a straight
line to the target, and then accelerated without a cap for
over-achievement. In these respects, the cash incentive plan for
general managers was materially the same as our 2009 plan. In
October 2010, as a result of a reorganization, the position of
general manager ceased to exist.
In general, targeted levels of performance for 2010 were set by
our compensation committee with the intention of requiring
meaningful improvements in performance over 2009 actual results.
Overall, we believe performance required to achieve a floor
payout should be attainable, performance required to earn a
payout at the target should be achievable but challenging and
performance required to qualify for stretch payouts represents
outstanding achievement. Actual goal achievement for 2010 under
our executive officer cash incentive plan, and annual incentives
earned by our named executive officers, ranged from
approximately 113% to 129% of target.
Our targets for operating earnings targets before stock-based
compensation during 2010 for the annual cash incentive plan were
$1.7 million for the first quarter of 2010,
$3.2 million for the second quarter of 2010,
$5.7 million for the third quarter of 2010 and
$7.2 million for the fourth quarter of 2010. We do not
publicly disclose the specific performance target levels and
related criteria as they relate to sales, because it constitutes
highly confidential commercial or financial information. We
believe that disclosing such target levels and related criteria
would provide competitors with insights into our operational
strategy and would therefore cause us substantial competitive
harm.
During 2011, we intend to continue with a plan design that
focuses upon achievement of sales and operating earnings, and
that rewards sales growth. The most significant change from our
approach in the 2008,
25
Table of Contents
2009 and 2010 plans is that we intend to reward our executive
officers for meeting certain financial targets through a mix of
cash and stock. We believe that the shift toward stock will help
increase the alignment between stockholders and executives.
Long-Term Equity-Based Incentive Awards. The
goal of our long-term, equity-based incentive awards is to serve
as a long-term staff retention vehicle by aligning the interests
of executive officers with stockholders and providing each
executive officer with a significant incentive to manage from
the perspective of an owner with an equity stake in the
business. The compensation committee administers our
equity-based incentive plans for executive officers, determines
the size of long-term, equity-based incentives according to each
executive’s position and sets a level it considers
appropriate to create a meaningful opportunity for stock
ownership. In addition, the compensation committee generally
takes into account an individual’s recent performance, his
or her potential for future responsibility and promotion, data
provided by its compensation consultant on comparable awards
made to individuals in similar positions at survey companies and
the number of unvested options held by each individual at the
time of any new grant. However, there is no set formula for
determining the size of a stock option award. Our chief
executive officer historically has made recommendations to our
compensation committee regarding the amount of stock options and
other compensation to grant to our other named executives based
upon his assessment of their performance, and may continue to do
so in the future. Our board has adopted a policy that our chief
executive officer must hold shares to a value that is at least
equal to six times his base salary. This policy applies
immediately to our current chief executive officer and after
12 years for a new chief executive officer. We do not
require a minimum stock ownership by executive officers other
than the chief executive officer, but the compensation committee
considers an executive officer’s existing stock holdings in
determining the size of awards. Our executive officers are not
permitted to hedge the economic risk of ownership of our stock.
Under our 2004 Equity Incentive Plan, we have the ability to
grant different forms of equity compensation, including stock
options, stock appreciation rights, restricted stock and
restricted stock units, performance awards and other stock-based
awards. To date, we have primarily chosen to use stock options
to provide long-term incentives to our executive officers,
because we believe they best align with our objectives of
providing incentives that are commensurate with total
stockholder return and employee retention. Stock options provide
actual economic value to the executive officer if he or she
remains employed by us during the vesting period, and then only
if the market price of our shares appreciates over the option
term. The fair value of option awards shown for stock options in
the summary compensation table are calculated in accordance with
Topic 718, Compensation-Stock Compensation and represent
the aggregate grant date fair value of equity awards during
2010, 2009 and 2008, respectively.
Stock options motivate executive officers by providing
substantial upside compensation even though the entire amount of
potential compensation is at risk. The compensation committee
periodically considers the use of alternative equity
compensation vehicles, and is likely to continue to review its
position on this issue. In the future, we may choose to grant
different forms of equity compensation particularly if the use
of such different forms of compensation become more prevalent at
companies with which we compete or from which we intend to
recruit personnel. Other factors that may lead us to provide
different forms of equity compensation include, but are not
limited to, the executives’ perceived value of one form of
equity compensation over another, the potential effect of
stockholder dilution and the financial statement cost of one
form of equity compensation over the other.
Stock options provided to executive officers are typically
granted at or near the beginning of each year in conjunction
with the compensation committee’s meeting to review their
individual performance, unless the executive officer is a new
hire or other individual performance considerations or changes
in responsibility are brought to the attention of our
compensation committee during the course of the year. This
review takes place, and option grants are generally made, at
regularly scheduled meetings of the compensation committee and
board of directors, unless earlier approval is required for new
hires, new performance considerations or retention purposes, or
unless a regularly scheduled meeting needs to be rearranged for
another date. We have not timed, nor do we intend to time, our
release of material non-public information for the purpose of
affecting the value of executive compensation. Our board of
directors or compensation committee may also approve
26
Table of Contents
stock option grants by unanimous written consent. In such cases,
the date of grant is the last signature date as noted on the
unanimous written consent.
Material terms of options granted to our named executive
officers in 2010 included: a) exercise price equal to the
closing market value as quoted by the Nasdaq Global Market on
the date of grant; b) vesting in a series of eight equal
installments over a four-year period, contingent on the
executive officer’s continued service; c) a term no
longer than ten years; and d) vesting acceleration in the
event of termination of employment without cause, or termination
within 12 months following a change in control.
Accordingly, options provide a return to the executive officer
only if he or she remains employed by us during the vesting
period, and then only if the market price of the shares
appreciates over the option term.
If the board of directors determined that an executive officer
has engaged in fraudulent or intentional misconduct, and if the
misconduct resulted in a significant restatement of our
financial results, we would, among other disciplinary action,
seek reimbursement of any portion of performance-based or
incentive compensation paid or awarded to the executive that is
greater than would have been paid or awarded if calculated based
on the restated financial results. This remedy would be in
addition to, and not in lieu of, other disciplinary actions and
any actions imposed by law enforcement agencies, regulators or
other authorities.
All of our executive officers received stock option grants in
2010. The size of the 2010 grants to each executive reflected
the compensation committee’s view of the executive’s
performance, level of responsibility and potential, and the
survey data for executives in similar positions. All of our
executive officers also received stock option grants in 2009 and
2008, with the exception of our chief executive officer, who
received no options in 2008. Mr. Gianforte was awarded his
first-time stock option grant in 2009 to help ensure continued
alignment between the interests of our chief executive officer
and the interests of our stockholders.
Grants of
Plan-Based Awards
|
All |
||||||||||||||||||||||||||||||||
|
Other |
||||||||||||||||||||||||||||||||
|
Stock |
All |
|||||||||||||||||||||||||||||||
|
Awards: |
Other |
|||||||||||||||||||||||||||||||
|
Number |
Option |
Grant |
||||||||||||||||||||||||||||||
|
of |
Awards: |
Exercise |
Date |
|||||||||||||||||||||||||||||
|
Shares |
Number |
or Base |
Fair |
|||||||||||||||||||||||||||||
|
Estimated Future Payouts Under |
of |
of |
Price of |
Value |
||||||||||||||||||||||||||||
|
Non-Equity Incentive Plan |
Stock |
Securities |
Option |
of |
||||||||||||||||||||||||||||
| Awards |
or |
Underlying |
Awards |
Option |
||||||||||||||||||||||||||||
|
Grant |
Threshold |
Target |
Maximum |
Units |
Options |
($/Sh) |
Awards |
|||||||||||||||||||||||||
|
Name
|
Date | ($) | ($) | ($)(1) | (#) | (#) | (2) | ($)(3) | ||||||||||||||||||||||||
|
Greg R. Gianforte
|
2/8/10 | $ | — | $ | 300,000 | $ | N/A | — | 145,000 | $ | 14.91 | $ | 1,145,500 | |||||||||||||||||||
|
CEO
|
||||||||||||||||||||||||||||||||
|
Jeffrey C. Davison
|
2/8/10 | — | 160,000 | N/A | — | 50,000 | 14.91 | 395,000 | ||||||||||||||||||||||||
|
CFO, Senior VP and Treasurer
|
||||||||||||||||||||||||||||||||
|
Marcus Bragg
|
2/8/10 | — | 200,000 | N/A | — | 45,000 | 14.91 | 355,500 | ||||||||||||||||||||||||
|
Former VP and General Manager Americas(4)
|
||||||||||||||||||||||||||||||||
|
Susan J. Carstensen
|
2/8/10 | — | 190,000 | N/A | — | 85,000 | 14.91 | 671,500 | ||||||||||||||||||||||||
|
Former COO and VP(4)
|
||||||||||||||||||||||||||||||||
|
Wayne Huyard
|
7/6/10 | — | — | — | — | 100,000 | 14.54 | 743,000 | ||||||||||||||||||||||||
|
President and COO(5)
|
10/8/10 | — | 235,000 | N/A | — | 100,000 | 19.68 | 1,045,000 | ||||||||||||||||||||||||
|
Alan A. Rassaby
|
2/8/10 | — | 115,000 | N/A | — | 60,000 | 14.91 | 474,000 | ||||||||||||||||||||||||
|
Senior VP and General Counsel
|
||||||||||||||||||||||||||||||||
| (1) | There was no maximum under our Non-Equity Incentive Plan Awards. Refer to Annual Cash Incentive Plan section above for more details. | |
| (2) | The exercise price of the option award is equal to the closing price of our common stock as reported by the Nasdaq Global Market on the date of grant. |
27
Table of Contents
| (3) | See Note 1(r) and Note 10, Stock-Based Compensation, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed March 9, 2011 for the relevant assumptions used to determine the valuation of our option awards. | |
| (4) | Target payouts under non-equity incentive plan for Mr. Bragg and Ms. Carstensen while serving in capacity as vice president and general manager Americas, and chief operating officer, respectively. This assumes that target financial measures are achieved. | |
| (5) | Mr. Huyard was appointed president and chief operating officer on October 8, 2010. Target payout under non-equity incentive plan is expressed as an annualized amount. This assumes that target financial measures are achieved. Option grants include a grant prior to Mr. Huyard’s appointment as president and chief operating officer. |
Outstanding
Equity Awards at Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||||||||||
|
Incentive |
||||||||||||||||||||||||||||||||||||
|
Plan |
||||||||||||||||||||||||||||||||||||
|
Equity |
Awards: |
|||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
Market or |
||||||||||||||||||||||||||||||||||
|
Incentive |
Plan |
Payout |
||||||||||||||||||||||||||||||||||
|
Plan |
Awards: |
Value of |
||||||||||||||||||||||||||||||||||
|
Awards: |
Number |
Market |
Number of |
Unearned |
||||||||||||||||||||||||||||||||
|
Number |
of |
Value of |
Unearned |
Shares, |
||||||||||||||||||||||||||||||||
|
of |
Shares or |
Shares or |
Shares, |
Units |
||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Securities |
Units of |
Units of |
Units |
or Other |
||||||||||||||||||||||||||||||
|
Securities |
Securities |
Underlying |
Stock |
Stock |
or Other |
Rights |
||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Unexercised |
Option |
That |
That |
Rights |
That Have |
|||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Unearned |
Exercise |
Option |
Have Not |
Have Not |
That Have |
Not |
||||||||||||||||||||||||||||
|
Options (#) |
Options (#) |
Options |
Price |
Expiration |
Vested |
Vested |
Not |
Vested |
||||||||||||||||||||||||||||
|
Name
|
Exercisable(1) | Unexercisable(1) | (#) | ($) | Date(2) | (#) | ($) | Vested (#) | ($) | |||||||||||||||||||||||||||
|
Greg R. Gianforte
|
46,875 | 78,125 | — | $ | 8.38 | 2/10/19 | — | — | — | — | ||||||||||||||||||||||||||
|
CEO
|
18,125 | 126,875 | — | 14.91 | 2/08/20 | — | — | — | — | |||||||||||||||||||||||||||
|
Jeffrey C. Davison
|
10,000 | — | — | 13.87 | 10/05/15 | — | — | — | — | |||||||||||||||||||||||||||
|
CFO, Senior VP and Treasurer
|
30,000 | — | — | 14.17 | 4/17/16 | — | — | — | — | |||||||||||||||||||||||||||
| 4,375 | 625 | — | 16.66 | 2/07/17 | — | — | — | — | ||||||||||||||||||||||||||||
| 46,875 | 28,125 | — | 10.93 | 2/05/18 | — | — | — | — | ||||||||||||||||||||||||||||
| 31,875 | 53,125 | — | 8.38 | 2/10/19 | — | — | — | — | ||||||||||||||||||||||||||||
| 6,250 | 43,750 | — | 14.91 | 2/08/20 | — | — | — | — | ||||||||||||||||||||||||||||
|
Marcus Bragg
|
10,000 | — | — | 16.31 | 5/31/16 | — | — | — | — | |||||||||||||||||||||||||||
|
Former VP and General
|
3,500 | 500 | — | 16.66 | 2/07/17 | — | — | — | — | |||||||||||||||||||||||||||
|
Manager Americas
|
250 | 750 | — | 14.33 | 6/06/18 | — | — | — | — | |||||||||||||||||||||||||||
| — | 500 | — | 14.51 | 7/23/18 | — | — | — | — | ||||||||||||||||||||||||||||
| — | 25,000 | — | 14.18 | 9/03/18 | — | — | — | — | ||||||||||||||||||||||||||||
| — | 50,000 | — | 8.38 | 2/10/19 | — | — | — | — | ||||||||||||||||||||||||||||
| — | 39,375 | — | 14.91 | 2/08/20 | ||||||||||||||||||||||||||||||||
|
Susan J. Carstensen
|
23,333 | — | — | 1.50 | 2/13/12 | — | — | — | — | |||||||||||||||||||||||||||
|
Former COO and VP
|
133,333 | — | — | 1.50 | 1/29/13 | — | — | — | — | |||||||||||||||||||||||||||
| 40,000 | — | — | 12.81 | 2/09/15 | — | — | — | — | ||||||||||||||||||||||||||||
| 40,000 | — | — | 19.25 | 1/19/16 | — | — | — | — | ||||||||||||||||||||||||||||
| 26,250 | 3,750 | — | 16.66 | 2/07/17 | — | — | — | — | ||||||||||||||||||||||||||||
| 62,500 | 37,500 | — | 10.93 | 2/05/18 | — | — | — | — | ||||||||||||||||||||||||||||
| 31,875 | 53,125 | — | 8.38 | 2/10/19 | — | — | — | — | ||||||||||||||||||||||||||||
| 10,625 | 74,375 | — | 14.91 | 2/08/20 | — | — | — | — | ||||||||||||||||||||||||||||
|
Wayne Huyard
|
— | 100,000 | — | 14.54 | 7/06/20 | — | — | — | — | |||||||||||||||||||||||||||
|
President and COO
|
— | 100,000 | — | 19.68 | 10/08/20 | — | — | — | — | |||||||||||||||||||||||||||
|
Alan Rassaby,
|
1,935 | — | — | 1.50 | 4/30/13 | — | — | — | — | |||||||||||||||||||||||||||
|
Senior VP and General Counsel
|
66,666 | — | — | 7.35 | 6/21/14 | — | — | — | — | |||||||||||||||||||||||||||
| 30,000 | — | — | 12.81 | 2/14/15 | — | — | — | — | ||||||||||||||||||||||||||||
| 30,000 | — | — | 19.25 | 1/19/16 | — | — | — | — | ||||||||||||||||||||||||||||
| 26,250 | 3,750 | — | 16.66 | 2/07/17 | — | — | — | — | ||||||||||||||||||||||||||||
| 18,750 | 11,250 | — | 10.93 | 2/05/18 | — | — | — | — | ||||||||||||||||||||||||||||
| 31,875 | 53,125 | — | 8.38 | 2/10/19 | — | — | — | — | ||||||||||||||||||||||||||||
| 7,500 | 52,500 | — | 14.91 | 2/08/20 | — | — | — | — | ||||||||||||||||||||||||||||
| (1) | Options become exercisable in eight equal installments every six months following the date of grant. | |
| (2) | The expiration date of each option award is ten years after the date of grant. |
28
Table of Contents
Option
Exercises and Stock Vested
| Option Awards | Stock Awards | |||||||||||||||
|
Number of |
Number of |
|||||||||||||||
|
Shares |
Shares |
|||||||||||||||
|
Acquired |
Value Realized |
Acquired |
||||||||||||||
|
on Exercise |
on Exercise |
on Vesting |
Value Realized |
|||||||||||||
|
Name
|
(#) | ($)(1) | (#) | on Vesting ($) | ||||||||||||
|
Greg R. Gianforte
|
— | $ | — | — | $ | — | ||||||||||
|
CEO
|
||||||||||||||||
|
Jeffrey C. Davison
|
— | — | — | — | ||||||||||||
|
CFO, Senior VP and Treasurer
|
||||||||||||||||
|
Marcus Bragg
|
77,957 | 1,126,850 | — | — | ||||||||||||
|
Former VP & General Manager — Americas
|
||||||||||||||||
|
Susan J. Carstensen
|
— | — | — | — | ||||||||||||
|
Former COO and VP
|
||||||||||||||||
|
Wayne Huyard
|
— | — | — | — | ||||||||||||
|
President and COO
|
||||||||||||||||
|
Alan A. Rassaby
|
1,646 | 22,633 | — | — | ||||||||||||
|
Senior VP — General Counsel
|
||||||||||||||||
| (1) | Represents the difference between the exercise price and the fair market value of our common stock on the date of exercise. |
Perquisites
Our executives are entitled to the same perquisites as all
employees and generally do not receive additional perquisites
because they hold executive positions. All employees that
participate in our 401(k) plan receive a matching contribution
from us in the amount of 50% of the first 6% of the
participant’s compensation that has been contributed to the
plan. Each year, we hold a sales meeting at an off-site location
for our top performers. Participants may be accompanied by their
spouse or a guest, the cost of which is paid by us. In 2010,
five of our named executive officers made the trip and were
accompanied by their spouses. All full-time employees are
eligible to participate in our Employee Stock Purchase Plan,
which in 2010, 2009 and 2008 provided a 5% discount from market
price on the last day of the purchase period. Our health and
life insurance plans are the same for all employees. We
typically offer reimbursement to newly hired executive officers
for relocation costs.
Post-Employment
Compensation
We do not provide pension arrangements, non-qualified deferred
compensation or post-retirement health coverage for our
executives. Our executive officers, like all of our full-time
employees in the United States, are eligible to participate in
our 401(k) contributory defined contribution plan. In any plan
year, we will contribute to each participant’s account a
matching contribution equal to 50% of the first 6% of the
participant’s compensation that has been contributed to the
plan. All of our executive officers participated in the plan and
received matching contributions during 2010, 2009 and 2008,
except Mr. Bragg who did not participate during these three
years and Mr. Huyard, who did not participate during 2010.
Employment
Contracts, Termination of Employment and
Change-In-Control
Agreements
Employment Contracts. We do not have
employment contracts with any of our named executive officers.
Termination Without Cause or For Good Reason Following Change
in Control. On April 20, 2004, our board of
directors adopted a policy applicable to all of the members of
our executive officers in the event of a change or loss of
position within 12 months following a
change-in-control
transaction. Under the policy, our chief executive officer will
be entitled to receive a minimum of twelve months’ salary
and bonus as severance and any then-unvested options that were
granted to him after April 20, 2004 will be accelerated in
full and become fully vested. The policy also provides that any
executive officers other than our chief executive officer will
be entitled to receive a minimum of six months’ salary and
bonus as severance in the form of salary
29
Table of Contents
continuation, and any then-unvested options that were granted to
him or her after April 20, 2004, and while he or she was an
executive officer, will be accelerated in full and become fully
vested. Each executive officer has an employment offer letter
that contains similar language to the policy. In addition, all
of our option agreements with our named executive officers in
respect of options under our 2004 Equity Incentive Plan provide
that upon the occurrence of a
change-in-control
transaction, all of the executive officer’s unvested option
shares will be completely vested, unless the option is assumed
by the acquirer. If assumed by the acquirer, the option will
become completely vested if within twelve months of the
change-in-control
transaction the executive officer is terminated without cause or
terminates his or her employment for good reason. A
change-in-control
transaction includes (i) a transaction or series of
transactions in which any person, entity or group becomes the
beneficial owner of 50% or more of the combined voting power of
our outstanding securities, (ii) a transaction in which our
directors cease to constitute a majority of the board of
directors, (iii) a consolidation or merger in which we are
not the surviving entity or in which our stockholders do not
have the same proportionate ownership in the surviving entity
after the merger as they did immediately prior to the merger,
the sale, lease, exchange or other transfer of all or
substantially all of our assets, our liquidation or dissolution
or (iv) any transaction that a majority of our directors
determines constitutes a
change-in-control.
Cause includes termination of employment based upon (i) the
willful and continued failure substantially to perform
one’s duties and obligations (other than due to physical or
mental incapacity or good reason), (ii) a conviction or
plea bargain in connection with the actual or alleged commission
of a felony or gross misdemeanor involving moral turpitude,
fraud or misappropriation of funds or (iii) the willful
engagement in misconduct which causes us, our employees or our
clients substantial monetary or other injury. Good reason
includes terminating one’s employment based upon
(i) being assigned employment duties or responsibilities
which are not substantially comparable in responsibility and
status to the employment duties and responsibilities held
immediately prior to the
change-in-control
transaction, (ii) a reduction in base salary as in effect
immediately prior to the
change-in-control
transaction or (iii) being required to relocate offices
more than 50 miles from one’s office location
immediately prior to the
change-in-control
transaction.
On February 25, 2011, our board of directors revised this
policy. The revised policy applies to executive officers in the
event of a change or loss of position within 3 months
before and 18 months following a
change-in-control
transaction. Under the revised policy, our chief executive
officer will be entitled to receive a minimum of 24 months
base salary, our president and chief operating officer will be
entitled to receive a minimum of 18 months base salary, and
our other executive officers will be entitled to receive a
minimum of 12 months base salary as severance. All of our
executive officers will also receive reimbursement of their
COBRA premiums for up to 18 months. Other aspects of the
pre-existing policy described above will continue, including
accelerated vesting of stock options. However, under the revised
policy, we would be able to reduce payments to an executive
officer to the extent necessary to avoid payment of an excise
tax in connection with the operation of Section 280G of the
Internal Revenue Code. We believe that the revised policy is
more consistent with market practice, and is reasonable under
the circumstances.
Terminations Without Cause — No Change of
Control. Employment offer letters for
Ms. Carstensen and Messrs. Bragg, Davison, Huyard and
Rassaby, provide that if the executive officer’s employment
is terminated other than for cause, he or she will be entitled
to receive six months salary and bonus as severance in the form
of salary continuation, and will be entitled to a 12.5%
accelerated vesting of then unvested option shares under
outstanding stock options. On February 25, 2011, our board
of directors adopted a new policy in respect of severance
payable to executive officers whose employment is terminated
other than for cause. Under the policy, our chief executive
officer will receive a minimum of 18 months base salary,
and accelerated vesting of 37.5% of then unvested stock option
shares under future stock options grants, together with
continuing health benefits subject to the COBRA maximum of
18 months. Our chief operating officer and president will
receive a minimum of 12 months base salary, and accelerated
vesting of 25% of then unvested stock option shares under future
stock options grants, together with reimbursement of his COBRA
premiums for up to 18 months. Other executive officers will
receive a minimum of 12 months base salary, and accelerated
vesting of 12.5% of then unvested stock option shares under
future stock options grants, together with continuing health
benefits subject to the COBRA maximum of 12 months. We
believe that the new policy is more consistent with market
practice and will maximize our ability to attract new executives
and retain our existing executives.
30
Table of Contents
Summary Termination Table. The following table
summarizes each executive officer’s present estimated
entitlement to severance and the potential value of stock option
acceleration upon a termination other than for cause, and a
termination other than for cause or for good reason following a
change in control, as if such termination occurred on
January 1, 2011. The potential value of accelerated stock
option vesting is based on the closing price of our stock on
January 1, 2011, is in addition to the value of vested
stock options shown in the “Option Exercises and Stock
Vested” table.
|
Termination Other than for Cause — |
Termination within 12 Months after |
|||||||||||||||||||||||||||||||
| No Change of Control | a Change in Control | |||||||||||||||||||||||||||||||
|
Number |
Number |
|||||||||||||||||||||||||||||||
|
of |
Value |
of |
||||||||||||||||||||||||||||||
|
Value of |
Options |
of |
Options |
|||||||||||||||||||||||||||||
|
Accelerated |
Subject to |
Accelerated |
Subject to |
|||||||||||||||||||||||||||||
|
Option |
Accelerated |
Option |
Accelerated |
|||||||||||||||||||||||||||||
|
Name
|
Cash | Vesting(1) | Vesting | Total ($) | Cash | Vesting(2) | Vesting | Total ($) | ||||||||||||||||||||||||
|
Greg R. Gianforte
|
$ | N/A | 0 | 0 | 0 | $ | 650,000 | $ | 2,305,956 | 205,000 | $ | 2,955,956 | ||||||||||||||||||||
|
Jeffrey C. Davison
|
200,000 | 194,778 | 15,703 | 394,778 | 200,000 | 1,558,225 | 125,625 | 1,758,225 | ||||||||||||||||||||||||
|
Marcus Bragg
|
250,000 | 170,221 | 14,516 | 420,221 | 250,000 | 1,361,765 | 116,125 | 1,611,765 | ||||||||||||||||||||||||
|
Susan J. Carstensen
|
212,500 | 245,980 | 21,094 | 458,480 | 212,500 | 1,967,844 | 168,750 | 2,180,344 | ||||||||||||||||||||||||
|
Wayne Huyard
|
270,000 | 164,000 | 25,000 | 434,000 | 270,000 | 1,312,000 | 200,000 | 1,582,000 | ||||||||||||||||||||||||
|
Alan Rassaby
|
175,000 | 180,224 | 15,078 | 355,224 | 175,000 | 1,441,794 | 120,625 | 1,616,794 | ||||||||||||||||||||||||
| (1) | Represents the value of “in the money”, accelerated options that vest upon termination other than for cause as of December 31, 2010 as if exercised at $23.67, which was the closing price of our stock on that date. | |
| (2) | Represents the value of “in the money”, accelerated options that vest upon termination other than for cause as of December 31, 2010 as if exercised at $23.67, which was closing price of our stock on that date. The percentage of options subject to acceleration is described above in Termination Without Cause or For Good Reason Following Change in Control for all officers. |
We believe that the payment of compensation and the acceleration
of unvested options in these circumstances is a common practice
in comparable companies, and is justifiable from both a
recruitment and retention perspective. We also believe that the
amount of severance is within the range typically seen in
comparable companies, and that we would experience difficulties
attracting and retaining executives in the absence of severance
arrangements that are at least as attractive as those that we
offer.
Principal
Elements of Director Compensation
Compensation
of Directors
We have a policy to reimburse directors for reasonable expenses
incurred in connection with their attendance at board and
committee meetings, but we currently do not provide our
directors with cash compensation for their services as members
of our board of directors or any committee of our board of
directors.
On March 3, 2010, our board of directors, on the
recommendation of our compensation committee, amended our 2004
Equity Incentive Plan to eliminate the automatic grant program
for directors. The compensation committee concluded that a grant
program that automatically provides for a fixed number of
options to be awarded to directors was too inflexible and
unresponsive to market conditions. For 2010, the compensation
committee recommended that a periodic market review take place
of the total direct compensation payable to directors in peer
companies, and that director compensation should be determined
in light of that review. For 2010, our compensation committee
determined that directors should be granted a mixture of stock
options and restricted stock units (“RSUs”) according
to a formula that rewards leadership of, and participation in,
our board and its various committees.
31
Table of Contents
In 2010, the compensation committee retained a compensation
consultant, Compensia, to provide comparative information
regarding cash and non-cash remuneration provided to directors
of other public companies. Compensia reviewed the compensation
practices for directors at 18 publicly-traded peer companies as
mentioned above in the section titled “Compensation
Components and Process.” The compensation committee reached
the following conclusions in 2010 with regard to director
compensation. First, director compensation should be evaluated
having regard to compensation paid to directors of peer
companies. A plan that compensates directors by awarding a fixed
number of stock options each year without regard to the actual
value of the award or the market trends is therefore
undesirable. Second, we should continue our practice of
compensating directors solely through equity, rather than
introduce a cash component. Third, the equity component should
be comprised of a mix of RSUs and stock options. Fourth, the
annual equity awards should vest over twelve months with a
provision for acceleration upon a change in control.
On March 3, 2010, the compensation committee approved that
each director receive 20,000 stock options and 2,000 RSUs, plus
a number of additional RSUs that vary depending on whether the
director serves as a lead director, a committee chair or a
committee member, such grants to be effective on the date of the
Annual Meeting of Stockholders. Messrs. Allen and Lansing
were granted an additional 1,200 RSUs in connection with their
roles as audit committee chair and lead independent director,
respectively. Messrs. Avis and Kendra were granted an
additional 600 RSUs in connection with their roles as audit
committee members. Messrs. Allen, Lansing, and Singh were
granted an additional 350 RSUs in connection with their roles as
compensation committee members and Mr. Snyder was granted
an additional 700 RSUs in connection with his role as
compensation committee chair. Messrs. Avis and Kendra were
granted an additional 200 RSUs in connection with their roles as
nomination and governance committee members, and
Mr. Lansing was granted an additional 400 RSUs in
connection with his role as nomination and governance committee
chair. The stock options and RSUs were granted on June 7,
2010, and the stock options have an exercise price of $13.61 and
the RSUs have a grant date price of $13.61, which was the fair
market value of our common stock on the date of grant. Material
terms of options and RSUs granted to our directors in 2010
included: a) in the case of options, an exercise price
equal to the closing market value as quoted by the Nasdaq Global
Market on the date of grant; b) in the case of options, a
term no longer than ten years; c) vesting in a series of
four equal installments over a 12 month period, contingent
on the director’s continued service; and d) vesting
acceleration in the event of a change in control.
Director
Compensation
|
Change in |
||||||||||||||||||||||||
|
Pension Value |
||||||||||||||||||||||||
|
Non-Equity |
and |
|||||||||||||||||||||||
|
Fees |
Incentive |
Nonqualified |
||||||||||||||||||||||
|
Earned or |
Equity |
Plan |
Deferred |
All Other |
||||||||||||||||||||
|
Paid in |
Awards |
Compensation |
Compensation |
Compensation |
||||||||||||||||||||
|
Name(1)
|
Cash ($) | ($)(2)(3) | ($) | Earnings | ($) | Total ($) | ||||||||||||||||||
|
Richard E. Allen
|
$ | — | $ | 183,120 | $ | — | $ | — | $ | — | $ | 183,120 | ||||||||||||
|
Gregory M. Avis(4)
|
— | 172,912 | — | — | — | 172,912 | ||||||||||||||||||
|
Thomas W. Kendra
|
— | 172,912 | — | — | — | 172,912 | ||||||||||||||||||
|
William J. Lansing
|
— | 188,564 | — | — | — | 188,564 | ||||||||||||||||||
|
S. Steven Singh
|
— | 166,788 | — | — | — | 166,788 | ||||||||||||||||||
|
Allen E. Snyder
|
— | 171,551 | — | — | — | 171,551 | ||||||||||||||||||
| (1) | Greg R. Gianforte, the chairman of our board of directors, has been omitted from this table because he receives no additional compensation for serving on our board. | |
| (2) | Excludes the effect of forfeiture assumptions. The fair value of equity awards shown is calculated in accordance with Topic 718, Compensation-Stock Compensation, and represents the aggregate grant date fair value of option awards granted during the year. See Note 1(r) and Note 10, Stock-Based Compensation, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed March 9, 2011 for the relevant assumptions used to determine the valuation of our option awards. |
32
Table of Contents
| (3) | Aggregate option awards outstanding and exercisable, and vested RSUs, respectively, that have been granted to each of our non-employee directors named above, as of December 31, 2010, the last day of our most recent fiscal year, are as follows: Mr. Allen 160,000 options and 1,776 RSU’s; Mr. Avis 85,000 options and 1,400 RSU’s; Mr. Kendra 85,000 options and 1,400 RSU’s; Mr. Lansing 153,000 options and 1,976 RSU’s; Mr. Singh 20,000 options and 1,176 RSU’s; and Mr. Snyder 72,500 shares and 1,350 RSU’s. | |
| (4) | Of the outstanding and exercisable option awards held by Mr. Avis, 75,000 options were deemed to be held by Mr. Avis for the benefit of Summit Partners, L.P. Summit Partners, L.P. determines when the options are to be exercised, and is entitled to the shares issued upon exercise, and therefore may beneficially own such options. Mr. Avis is a member of Summit Master Company, LLC, which is the general partner of Summit Partners, L.P. Mr. Avis disclaims beneficial ownership of the options, except to the extent of his pecuniary interest therein. An additional 10,000 options and 1,400 RSU’s were beneficially owned by Mr. Avis. |
Impact of
Accounting and Tax Treatment of Compensation
Section 162(m) of the Internal Revenue Code disallows a tax
deduction to publicly held companies for compensation paid to
certain of their executive officers to the extent that such
compensation exceeds $1.0 million per covered officer in
any fiscal year. The limitation applies only to compensation
that is not considered to be performance-based.
Non-performance-based compensation paid to our executive
officers during 2010 did not exceed the $1.0 million limit
per officer, and we do not expect the non-performance-based
compensation to be paid to our executive officers during 2011 to
exceed that limit. Because it is unlikely that the cash
compensation payable to any of our executive officers in the
foreseeable future will approach the $1.0 million limit, we
do not expect to take any action to limit or restructure the
elements of cash compensation payable to our executive officers
so as to qualify that compensation as performance-based
compensation under Section 162(m). We will reconsider this
decision should the individual cash compensation of any
executive officer ever approach the $1.0 million level.
Compensation
Committee Interlocks and Insider Participation
During 2010, the compensation committee of our board of
directors consisted of Messrs. Allen, Lansing, Singh and
Snyder. None of the compensation committee members has at any
time been one of our officers or employees or an officer or
employee of any of our subsidiaries. None of our executive
officers has ever served as a member of the board of directors
or compensation committee of any other entity that has or has
had one or more executive officers serving as a member of our
board of directors or compensation committee.
Compensation
Committee Report
The compensation committee of the board of directors has
reviewed and discussed our compensation discussion and analysis
with management. Based on this review and discussion, the
compensation committee recommended to the board of directors
that the compensation discussion and analysis be included in our
definitive proxy statement on Schedule 14A for our 2011
Annual Meeting of Stockholders, and be incorporated by reference
in our annual report on
Form 10-K
for the year ended December 31, 2010, each as filed with
the Securities and Exchange Commission.
The foregoing report was submitted by the compensation committee
of the board of directors and shall not be deemed soliciting
material or filed with the Commission or subject to
Regulation 14A promulgated by the Commission or
Section 18 of the Securities Exchange Act of 1934.
Respectfully
submitted,
Allen E. Snyder, Chair
Richard E. Allen
William J. Lansing
S. Steve Singh
33
Table of Contents
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The following table provides information concerning beneficial
ownership of our Common Stock as of March 31, 2011 by:
(a) each stockholder, or group of affiliated stockholders,
that we know owns more than 5% of our outstanding Common Stock;
(b) each of our named executive officers; (c) each of
our directors; and (d) all of our current directors and
executive officers as a group.
The following table lists the number of shares and percentage of
shares beneficially owned based on 33,031,953 shares of
Common Stock outstanding as of March 31, 2011. Beneficial
ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and generally includes
voting power
and/or
investment power with respect to the securities held. Shares of
common stock subject to options currently exercisable or
exercisable within 60 days of March 31, 2011 are
deemed outstanding and beneficially owned by the person holding
such options for purposes of computing the number of shares and
percentage beneficially owned by such person, but are not deemed
outstanding for purposes of computing the percentage
beneficially owned by any other person. Except as indicated in
the footnotes to this table, and subject to applicable community
property laws, the persons or entities named have sole voting
and investment power with respect to all shares of our common
stock shown as beneficially owned by them.
Unless otherwise indicated, the principal address of each of the
stockholders below is
c/o RightNow
Technologies, Inc., 136 Enterprise Boulevard, Bozeman, Montana
59718.
|
Shares Beneficially |
||||||||
| Owned | ||||||||
|
Name and Address of Beneficial Owner
|
Number | Percent | ||||||
|
Greg R. Gianforte(1)(2)
|
4,127,080 | 12.5 | % | |||||
|
Susan Gianforte(2)
|
3,970,059 | 12.0 | % | |||||
|
Richard E. Allen(3)
|
178,550 | 0.5 | % | |||||
|
Gregory M. Avis(4)
|
32,800 | 0.1 | % | |||||
|
Marcus A. Bragg(5)
|
36,250 | 0.1 | % | |||||
|
Susan J. Carstensen(6)
|
415,416 | 1.2 | % | |||||
|
Jeffrey C. Davison(7)
|
156,250 | 0.5 | % | |||||
|
Wayne Huyard(8)
|
25,000 | 0.1 | % | |||||
|
Thomas W. Kendra(9)
|
87,300 | 0.3 | % | |||||
|
William J. Lansing(10)
|
331,950 | 1.0 | % | |||||
|
Alan A. Rassaby(11)
|
210,903 | 0.6 | % | |||||
|
S. Steven Singh(12)
|
32,350 | 0.1 | % | |||||
|
Allen E. Snyder(13)
|
89,850 | 0.3 | % | |||||
|
All current directors and executive officers as a
group(10 persons)(14)
|
5,272,033 | 15.5 | % | |||||
|
Gianforte Family Charitable Trust(15)
|
3,112,050 | 9.4 | % | |||||
|
BlackRock, Inc.(16)
|
3,000,216 | 9.1 | % | |||||
|
Frontier Capital Management Co., LLC(17)
|
1,741,361 | 5.3 | % | |||||
|
William Blair & Company, L.L.C.(18)
|
1,683,241 | 5.1 | % | |||||
| (1) | Includes 98,750 shares underlying options exercisable as of or within 60 days of March 31, 2011 and 58,271 shares held directly by Greg R. Gianforte. | |
| (2) | Includes 2,501,778 shares held by Greg and Susan Gianforte, co-trustees of the Greg Gianforte Revocable Trust dated May 23, 2005 and Greg and Susan Gianforte, co-trustees of the Susan Gianforte Revocable Trust dated May 23, 2005, Tenants in Common. Includes 105,040 shares held by the Second East Gallatin River Trust of Greg R. Gianforte, an irrevocable grantor retained annuity trust. Includes 420,416 shares held by the Gianforte Charitable Remainder Unitrust #1 and 942,825 shares held by the Gianforte Charitable Remainder Unitrust #2. Does not include 3,112,050 shares of common stock held by the Gianforte Family Charitable Trust, a tax-exempt private foundation. Mr. and Mrs. Gianforte and Richard Gianforte |
34
Table of Contents
| are trustees of such tax exempt private foundation, but disclaim beneficial ownership of the common stock registered in the name of such tax exempt private foundation. | ||
| (3) | Includes 165,000 shares underlying options exercisable as of or within 60 days of March 31, 2011, 887 restricted stock units that will vest on June 7, 2011 and 12,663 shares held directly by Richard E. Allen. Mr. Allen’s principal address is 7135 Polo Ridge Drive, Littleton, CO 80128. | |
| (4) | Includes 15,000 shares underlying options exercisable as of or within 60 days of March 31, 2011, 700 restricted stock units that will vest on June 7, 2011 and 17,100 shares held directly by Gregory M. Avis. Mr. Avis’ principal address is 499 Hamilton Avenue, Palo Alto, CA 94301. | |
| (5) | Includes 36,250 shares underlying options exercisable as of or within 60 days of March 31, 2011. | |
| (6) | Includes 248,750 shares underlying options exercisable as of or within 60 days of March 31, 2011 and 166,666 shares held directly by Susan J. Carstensen and her spouse. | |
| (7) | Includes 156,250 shares underlying options exercisable as of or within 60 days of March 31, 2011. | |
| (8) | Includes 25,000 shares underlying options exercisable as of or within 60 days of March 31, 2011. | |
| (9) | Includes 81,000 shares underlying options exercisable as of or within 60 days of March 31, 2011, 700 restricted stock units that will vest on June 7, 2011 and 5,600 shares held directly by Thomas W. Kendra. Mr. Kendra’s principal address is 101 Kennedy Court, Los Gatos, CA 95032. |
| (10) | Includes 138,000 shares underlying options exercisable as of or within 60 days of March 31, 2011, 987 restricted stock units that will vest on June 7, 2011 and 192,963 shares held directly by William J. Lansing and his spouse. The principal address of William J. Lansing is 22 Starwood Drive, Woodside, CA 94062. | |
| (11) | Includes 209,257 shares underlying options exercisable as of or within 60 days of March 31, 2011 and 1,646 shares held directly by Alan A. Rassaby. | |
| (12) | Includes 30,000 shares underlying options exercisable as of or within 60 days of March 31, 2011, 587 restricted stock units that will vest on June 7, 2011 and 1,763 shares held directly by S. Steven Singh. The principal address of S. Steven Singh is 18400 NE Union Hill Road, Redmond, WA 98052. | |
| (13) | Includes 82,500 shares underlying options exercisable as of or within 60 days of March 31, 2011, 675 restricted stock units that will vest on June 7, 2011 and 6,675 shares held directly by Allen E. Snyder. Mr. Snyder’s principal address is P.O. Box 1499, Monument, CO 80132. | |
| (14) | Includes the information set forth in notes 1 through 4 and in notes 7 through 13 above. | |
| (15) | Based solely on a Schedule 13G filed with the Securities and Exchange Commission on February 23, 2011. Mr. and Mrs. Gianforte and Richard Gianforte are trustees of the Gianforte Family Charitable Trust, a tax exempt private foundation, but disclaim beneficial ownership of the common stock registered in the name of such tax exempt private foundation. The principal address of the Gianforte Family Charitable Trust is 1320 Manley Road, Bozeman, MT 59715. | |
| (16) | Based solely on a Schedule 13G filed with the Securities and Exchange Commission on February 8, 2011. According to the Schedule 13G, BlackRock, Inc. has sole power to vote or direct the vote and has sole power to dispose or to direct the disposition of these shares. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of such securities. The subsidiaries of BlackRock, Inc. that acquired such securities are BlackRock Japan Co. Ltd., BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Advisors, LLC, BlackRock Capital Management, Inc., BlackRock Investment Management, LLC and State Street Research & Management Company. For purposes of the reporting requirements of the Securities Exchange Act of 1934, BlackRock, Inc. is deemed to be a beneficial owner of such securities. BlackRock, Inc. is a parent holding company with a principal address of 40 East 52nd Street, New York, NY 10022. | |
| (17) | Based solely on a Schedule 13G filed with the Securities and Exchange Commission on February 15, 2011. According to the Schedule 13G, Frontier Capital Management Company, LLC (“Frontier”) has sole power to vote or direct the vote with respect to 1,143,831 shares and has sole power to dispose or to direct the disposition of 1,741,361 shares. For the purposes of the reporting requirements of the Securities Exchange Act of 1934, Frontier is deemed to be the beneficial owner of such securities. Frontier is an investment advisor with a principal address of 99 Summer Street, Boston, MA 02110. |
35
Table of Contents
| (18) | Based solely on a Schedule 13G filed with the Securities and Exchange Commission on February 8, 2011. According to the Schedule 13G, William Blair & Company, L.L.C. has sole power to vote or direct the vote and has sole power to dispose or to direct the disposition of these shares. For purposes of the reporting requirements of the Securities Exchange Act of 1934, William Blair & Company, L.L.C. is deemed to be a beneficial owner of such securities. William Blair & Company, L.L.C. is a financial services company with a principal address of 222 W. Adams, Chicago, IL 60606. |
Securities
Authorized for Issuance Under Equity Compensation
Plans
The following table gives certain information as of
December 31, 2010 about our equity compensation plans.
|
Number of Shares |
||||||||||||
|
Number of Shares to be |
Weighted-Average |
Remaining Available for |
||||||||||
|
Issued Upon Exercise |
Exercise Price of |
Issuance Under Equity |
||||||||||
|
of Outstanding |
Outstanding |
Compensation Plans |
||||||||||
|
Options, Warrants |
Options, Warrants, |
(Excluding Shares in |
||||||||||
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Plan Category
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and Rights | and Rights | Column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
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Equity compensation plans approved by stockholders(1)
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6,242,333 | (2) | $ | 12.02 | 3,043,983 | (3) | ||||||
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Equity compensation plans not approved by stockholders
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— | — | ||||||||||
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Total
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6,242,333 | $ | 12.02 | 3,043,983 | ||||||||
| (1) | Consists of the 2004 Equity Incentive Plan, as amended, the 2004 Employee Stock Purchase Plan, as amended, and the 1998 Long-Term Incentive and Stock Option Plan. No additional option grants are being made under the 1998 Long-Term Incentive and Stock Option Plan after August 5, 2004. | |
| (2) | Excludes purchase rights currently accruing under the 2004 Employee Stock Purchase Plan which was approved by stockholders and had a total reserve of 850,500 shares as of December 31, 2010. Under the Purchase Plan, as amended, each eligible employee may purchase up to 5,000 shares of our common stock (through payroll deductions in an amount not to exceed 15% of their compensation for each pay period during a purchase period) on August 15 and February 15 each year at a purchase price per share established by the administrator prior to the first business day of each purchase period. In no event, however, will the purchase price for any purchase period be less than the lesser of 85% of the fair market value of our common stock on the first business day and the last business day of that purchase period. For the purchase period ending August 15, 2011 the administrator has set the maximum permitted payroll deduction at 10% of salary and established a purchase price equal to the lesser of 85% of the fair market value on February 16, 2011 or 85% of the fair market value on August 15, 2011. | |
| (3) | Consists of shares available for future issuance under the 2004 Employee Stock Purchase Plan and the 2004 Equity Incentive Plan, as amended. As of December 31, 2010, an aggregate of 611,074 shares of common stock were available for issuance under the 2004 Employee Stock Purchase Plan and an aggregate of 2,432,909 shares of common stock were available for issuance under the 2004 Equity Incentive Plan. The number of shares of common stock reserved under our 2004 Employee Stock Purchase Plan automatically increases on the first day of each year in an amount equal to the lesser of (a) 500,000 shares or (b) 2% of the number of shares of our common stock outstanding on the last day of the preceding year or (c) such lesser number as determined by our board of directors. The number of shares of common stock reserved under our 2004 Equity Incentive Plan will automatically be increased on the first day of each year, in an amount equal to the lesser of (a) 1,000,000 shares or (b) 4% of the number of shares of our common stock outstanding on the last day of the preceding year or (c) such lesser amount as determined by our board of directors. On January 1, 2011, the additional reserve for the 2004 Equity Incentive Plan was automatically increased by 1,000,000 shares, and the reserve for the 2004 Employee Stock Purchase Plan was automatically increased by 100 shares as determined by the board on December 3, 2010. Since the effective date of the 2004 Employee Stock Purchase Plan, 239,426 shares of common stock have been purchased thereunder. During the current purchase period, up to 420,282 shares of common stock are available for purchase under the 2004 Employee Stock Purchase Plan. |
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Certain
Relationships and Related Party Transactions
Since January 1, 2010, there has not been, nor has there
been proposed, any transaction, arrangement or relationship or
series of similar transactions, arrangements or relationships,
including those involving indebtedness not in the ordinary
course of business, to which we or our subsidiaries were or are
a party, or in which we or our subsidiaries were or are a
participant, in which the amount involved exceeded or exceeds
$120,000 and in which any of our directors, nominees for
director, executive officers, beneficial owners of more than 5%
of any class of our voting securities or any member of the
immediate family of any of the foregoing persons, had or will
have a direct or indirect material interest, other than as
described above under the heading “Compensation Discussion
and Analysis” and other than the transactions described
below. Each of the transactions described below was reviewed and
approved or ratified by our audit committee.
Office Leases with Genesis Partners, LLC. We
lease from Genesis Partners, LLC 29,724 square feet of
office space at 40 Enterprise Boulevard, Bozeman, Montana;
12,912 square feet of office space at 110 Enterprise
Boulevard, Bozeman, Montana; 9,184 square feet of office
space at 77 Discovery Drive, Bozeman, Montana; and
29,148 square feet of additional office space for our
principal executive offices space at 136 Enterprise Boulevard,
Bozeman, Montana. Greg Gianforte, our Chairman and Chief
Executive Officer, and Steve Daines, our Vice President Asia
Pacific, beneficially own, directly or indirectly, 50% and 25%
membership interests in Genesis Partners, respectively. The
remaining 25% of Genesis Partners is beneficially owned by
Mr. Daines’ father, Clair Daines, who is a commercial
real estate developer and builder. The 40 Enterprise Boulevard
lease has a
120-month
term that started April 1, 2011, with an option to extend
for one additional
60-month
period. The 110 Enterprise Boulevard lease was renewed for a
start date of June 13, 2010 for a term of 60 months,
with an option to extend an additional
60-month
term. The 136 Enterprise Boulevard lease has a
120-month
term that started February 22, 2007, with two options to
extend each for an additional
60-month
period, and the right to terminate after 102 months of
occupancy with 24 months prior written notice of
termination. The 77 Discovery Drive lease has a
60-month
term that started April 1, 2010, with an option to extend
for an additional
60-month
term. We have signed a lease that will replace the current 77
Discovery Drive lease when an addition to the building is
available for occupancy, estimated to be July 1, 2012. The
new lease shall be for 34,210 square feet of office space
at 77 Discovery Drive and for a term of 120 months with an
option to extend for one additional
60-month
period. Our current rent is $36,561 per month for the 40
Enterprise Boulevard lease excluding insurance, taxes, common
area maintenance and utilities. Our current rent is $11,786 per
month for the 77 Discovery Drive lease; $16,570 per month for
the 110 Enterprise Boulevard lease; and $37,217 for the 136
Enterprise Boulevard lease, including insurance, taxes and
common area maintenance, but excluding utilities. We believe
that the terms of these leases are no less favorable to us than
they would have been if obtained from unaffiliated third parties.
Indemnification Agreements. We have entered
into indemnification agreements with each of our current
directors and executive officers. These agreements require us to
indemnify these individuals to the fullest extent permitted
under Delaware law against liabilities that may arise by reason
of their service to us and to advance expenses incurred as a
result of any proceeding against them as to which they could be
indemnified. We also intend to enter into indemnification
agreements with our future directors and executive officers.
Policies and Procedures for Related Person
Transactions. Under Item 404 of SEC
Regulation S-K,
a related person transaction is any actual or proposed
transaction, arrangement or relationship or series of similar
transactions, arrangements or relationships, including those
involving indebtedness not in the ordinary course of business,
since the beginning of our last fiscal year, to which we or our
subsidiaries were or are a party, or in which we or our
subsidiaries were or are a participant, in which the amount
involved exceeded or exceeds $120,000 and in which any of our
directors, nominees for director, executive officers, beneficial
owners of more than 5% of any class of our voting securities or
any member of the immediate family of any of the foregoing
persons, had or will have a direct or indirect material interest.
Pursuant to its written charter, our audit committee is
responsible for reviewing and approving, prior to our entry into
any such transaction, all related person transactions and
potential conflict of interest situations involving any of our
directors, nominees for director, executive officers, beneficial
owners of more than 5% of any class of our voting securities or
any member of the immediate family of any of the foregoing
persons. In
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addition, our Code of Ethics and Business Conduct requires that
our officers and employees use good judgment to adhere to high
ethical standards with respect to situations that create an
actual or potential conflict between such person’s personal
interests and the interests of RightNow.
Our audit committee also has adopted written policies and
procedures for related person transactions that require the
audit committee to review any proposed transaction with related
persons to determine if it rises to the level of a related
person transaction covered by Item 404 of
Regulation S-K
and, if it does, then such related person transaction must be
approved or ratified by the disinterested members of the audit
committee. Our management must disclose to the audit committee
all material information regarding actual and proposed related
person transactions known to them that involve our directors,
nominees for director, executive officers, beneficial owners of
more than 5% of any class of our voting securities and any
member of the immediate family of any of the foregoing persons.
A related person will not be deemed to have a material interest
in a transaction if the interest arises only: (a) from the
person’s position as a director of another corporation or
organization that is a party to the transaction; or
(b) from the direct or indirect ownership by such person
and all other related persons, in the aggregate, of less than a
ten percent equity interest in another person or entity (other
than a partnership) which is a party to the transaction; or
(c) from a combination of both (a) and (b); or
(d) from the person’s position as a limited partner in
a partnership in which the person and all other related persons,
have an interest of less than ten percent, and the person is not
a general partner of and does not hold another position in the
partnership. Additionally, our general counsel reviews our sales
pipeline every three months to identify customer prospects that
are associated with any of our directors, nominees for director,
executive officers, beneficial owners of more than 5% of any
class of our voting securities and any member of the immediate
family of any of the foregoing persons, which must thereafter be
approved by our audit committee prior to accepting any such
orders if it would constitute a related person transaction.
Our audit committee has determined that the following categories
of transactions shall be deemed preapproved by the audit
committee, notwithstanding the fact that they are related person
transactions:
| • | compensation to executive officers determined by our compensation committee; | |
| • | compensation to directors determined by our compensation committee or our board of directors; and | |
| • | transactions in which all security holders receive proportional benefits. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Act of 1934 requires our
executive officers and directors and persons who own more than
ten percent of a class of our equity securities registered under
the Exchange Act, to file with the SEC reports of ownership and
changes in ownership of common stock and other equity securities
of RightNow. Executive officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish
us with copies of all Section 16(a) forms they file. Based
solely on review of these forms, we believe that during 2010,
each of our executive officers, directors and holders of ten
percent or more of our common stock timely filed all reports
required to be filed pursuant to Section 16(a) of the
Exchange Act.
38
Table of Contents
ANNUAL
REPORT
We filed with the Securities and Exchange Commission an Annual
Report on
Form 10-K
on March 9, 2011. A copy of the Annual Report on
Form 10-K
has been mailed concurrently with this proxy statement to all
record holders of our stock entitled to notice of and to vote at
the Annual Meeting, and is also posted on our web site at
http://investor.rightnow.com/annual-proxy.cfm.
No separate annual report to the stockholders was prepared by
us. The Annual Report on
Form 10-K
is not incorporated into this proxy statement and is not
considered proxy solicitation material. Our Annual Report on
Form 10-K,
as well as certain other reports, proxy statements and other
information regarding us, are available on the Securities and
Exchange Commission’s web site at
http://www.sec.gov.
In addition, we will provide without charge a copy of our Annual
Report on
Form 10-K
to any stockholder upon written request addressed to our
corporate secretary at RightNow Technologies, Inc., 136
Enterprise Boulevard, Bozeman, Montana 59718, and will furnish
upon request any exhibits to the
Form 10-K
upon the payment by the requesting stockholder of our reasonable
expenses in furnishing such exhibits.
By Order of the Board of Directors
of RightNow Technologies, Inc.
Alan A. Rassaby
Secretary
Dated May 5, 2011
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VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
| KEEP THIS PORTION FOR YOUR RECORDS | ||||
| DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| For All |
Withhold All |
For All Except |
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. |
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| The Board of Directors recommends that you vote FOR the following: |
o |
o |
o |
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1. |
Election of Directors | |||||||||
| Nominees | ||||||||||
01
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William J. Lansing | 02 Allen E. Snyder | ||||||||
| The Board of Directors recommends you vote FOR proposals 2 and 3. | ||||||||||
| For | Against | Abstain | ||||||
2 |
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2011. | o | o | o | ||||
3
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To approve on an advisory basis the compensation of our named executive officers. | o | o | o |
| The Board of Directors recommends you vote 1 YEAR on the following proposal: | |||||||||||
| 1 year | 2 years | 3 years | Abstain | ||||||||
4 |
To approve on an advisory basis the frequency of conducting future stockholder advisory votes on named executive officer compensation. | o | o | o | o | ||||||
| NOTE: In accordance with the discretion of the proxy holders, to act upon all matters incident to the conduct of the meeting and upon other matters as may properly come before the meeting, or any adjournment or postponement thereof. | |||||||||||
Please sign exactly as your name(s) appear(s) hereon. When
signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should
each sign personally. All holders must sign. If a corporation or
partnership, please sign in full corporate or partnership name,
by authorized officer.
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | ||||||||||
Table of Contents
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, 10K Wrap is/are available at www.proxyvote.com.
RIGHTNOW TECHNOLOGIES, INC.
Annual Meeting of Stockholders June 14, 2011 12:00 PM
This proxy is solicited by the Board of Directors
The undersigned revokes all previous proxies, acknowledges receipt of the Notice of the Annual Meeting of
Stockholders to be held Tuesday, June 14, 2011 and the Proxy Statement and appoints Alan A. Rassaby and
Jeffrey C. Davison, and each of them, the Proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of RIGHTNOW TECHNOLOGIES, INC. (the “Company”) which the undersigned is
entitled to vote, either on his or her own behalf or on behalf of any entity or entities, at the 2011 Annual Meeting
of Stockholders of the Company to be held at the Hilton Garden Inn, 2023 Commerce Way, Bozeman, Montana
59715, on Tuesday, June 14, 2011 at 12:00 p.m. Mountain Daylight Savings Time (the “Annual Meeting”), and at
any adjournment or postponement thereof, with the same force and effect as the undersigned might or could do
if personally present thereat. The shares represented by the Proxy shall be voted in the manner set forth on this
proxy card.
Stockholders to be held Tuesday, June 14, 2011 and the Proxy Statement and appoints Alan A. Rassaby and
Jeffrey C. Davison, and each of them, the Proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of RIGHTNOW TECHNOLOGIES, INC. (the “Company”) which the undersigned is
entitled to vote, either on his or her own behalf or on behalf of any entity or entities, at the 2011 Annual Meeting
of Stockholders of the Company to be held at the Hilton Garden Inn, 2023 Commerce Way, Bozeman, Montana
59715, on Tuesday, June 14, 2011 at 12:00 p.m. Mountain Daylight Savings Time (the “Annual Meeting”), and at
any adjournment or postponement thereof, with the same force and effect as the undersigned might or could do
if personally present thereat. The shares represented by the Proxy shall be voted in the manner set forth on this
proxy card.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is
made, this proxy will be voted in accordance with the Board of
Directors’ recommendations and in accordance with the discretion of the proxy holders on any other matters to properly come before the annual meeting or any
adjournment or postponement thereof.
Directors’ recommendations and in accordance with the discretion of the proxy holders on any other matters to properly come before the annual meeting or any
adjournment or postponement thereof.
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Continued and to be signed on reverse side