10-K/A 1 d99153a1e10vkza.txt AMENDMENT NO. 1 TO FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to ______ Commission File Number: 0-28180 SPECTRALINK CORPORATION (Name of Registrant as specified in its charter) DELAWARE 84-1141188 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 5755 CENTRAL AVENUE BOULDER, COLORADO 80301 (303) 440-5330 (Address and telephone number of principal executive offices) Securities registered under Section 12(b) of the Exchange Act: NONE Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK, $.01 PAR VALUE (Title of class) Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within the past 60 days prior to the date of filing: $128,359,521 as of February 28, 2002, based on the close price. Non-affiliates are persons who are not officers, directors or to the registrant's knowledge, stockholders who own greater than 5% of the outstanding stock of the registrant. Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 19,118,635 shares of common stock, $.01 par value, were outstanding as of February 28, 2002. DOCUMENTS INCORPORATED BY REFERENCE Items 10, 12 and 13 of Part III of this Form 10-K are incorporated by reference from the issuer's definitive proxy statement to be filed with the Securities and Exchange Commission no later than 120 days after the end of the issuer's fiscal year. PART III ITEM 11. EXECUTIVE COMPENSATION. SpectraLink is filing this Amendment No. 1 to its Form 10-K for the year ended 2001 because SpectraLink noted that the table "Aggregate Options Exercised in the Last Fiscal Year and Fiscal Year End Option Values" column titled "Value Realized(1)" reflected the fair market value of the Common Stock on the exercise date, but it did not deduct the per share exercise price. The "Value Realized (1)" column in the "Aggregate Options Exercised in the Last Fiscal Year and Fiscal Year End Option Values" table in this amendment is based on the fair market value of the Common Stock on the exercise date, less the per share exercise price. As a result the values realized in the exercise of stock options by the listed executives as reflected in this amendment, are less than the values realized that were previously reported. EXECUTIVE COMPENSATION The following table sets forth certain information regarding the compensation earned for services rendered in all capacities to SpectraLink during each of 2001, 2000 and 1999 to SpectraLink's Chief Executive Officer and each of the other SpectraLink executive officers whose salary and bonus for 2001 exceeded $100,000. SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Securities Underlying Name and Options All Other Principal Position Year Salary Bonus Other Granted (#) Compensation ------------------ ---- ------ ----- ----- ----------- ------------ Bruce M. Holland 2001 $ 230,000 $ 82,225 $ 0 100,000 ------ Chief Executive Officer 2000 196,000 114,268 0 100,000 ------ and President 1999 164,000 58,596 0 60,000 ------ Nancy K. Hamilton 2001 193,500 44,021 0 75,000 ------ Vice President of Finance 2000 165,000 61,215 0 40,000 ------ & Administration, 1999(1) 80,192 59,105(2) 0 175,000 ------ Chief Financial Officer Gary L. Bliss 2001 193,500 44,021 0 75,000 ------ Vice President of 2000 165,000 61,215 0 75,000 ------ Engineering 1999 148,999 33,878 0 40,000 ------ Michael P. Cronin 2001 220,040 53,296 9,981 85,000 ------ Vice President of Sales & 2000 201,202 111,917 9,000 75,000 ------ Marketing 1999 161,999 28,938 1,844 40,000 ------ John H. Elms 2001 183,000 41,633 0 65,000 ------ Vice President of 2000 155,000 57,505 0 20,000 ------ Operations 1999(3) 85,396 94,141(4) 0 175,000 ------
(1) Ms. Hamilton began working for SpectraLink in June 1999. (2) Includes $25,000 signing bonus. (3) Mr. Elms began working for SpectraLink in April 1999 and became a corporate officer in November 1999. (4) Includes $70,000 bonus in lieu of relocation allowance. 2 OPTION GRANTS The following table contains information concerning the stock options granted during 2001 to the executive officers named in the Summary Compensation Table. OPTION GRANTS IN THE LAST FISCAL YEAR Individual Grants
Potential Realizable Value at Assumed Number of Percent of Annual Rates of Stock Price Securities Total Options Appreciation for Option Term (2) Underlying Granted to ------------------------------------- Options Employees in Exercise or Base Expiration Name Granted (#)(1) Fiscal Year Price/Share Date 5% 10% ---- -------------- ------------ ---------------- ----------- -- --- Bruce M. Holland 12,116(3) 1.7% $ 11.206 02/20/06 $ 21,758 $ 63,013 87,884(4) 12.6 10.188 02/20/11 563,061 1,426,907 Nancy K. Hamilton 12,193(3) 1.7 10.188 02/20/11 78,119 197,969 62,807(4) 9.0 10.188 02/20/11 402,396 1,019,750 Gary L. Bliss 11,540(3) 1.7 10.188 02/20/11 73,935 187,366 63,460(4) 9.1 10.188 02/20/11 406,580 1,030,353 Michael P. Cronin 11,957(3) 1.7 10.188 02/20/11 76,607 194,137 73,043(4) 10.5 10.188 02/20/11 467,977 1,185,945 John H. Elms 12,150(3) 1.7 10.188 02/20/11 77,843 197,270 52,850(4) 7.6 10.188 02/20/11 338,603 858,086
(1) All options were granted under SpectraLink's Stock Option Plans. Generally, options granted under SpectraLink's Stock Option Plan become exercisable over a four-year period (25% after the first twelve months and 2.083% each month thereafter) and have terms ranging from eight to ten years, so long as the optionee's employment with SpectraLink continues. Incentive stock options are granted at no less than fair market value as determined by the Board of Directors, provided that grants to 10% stockholders have an exercise price not less than 110% of fair market value and have five-year terms. Non-qualified stock options have an exercise price of not less than 85% of fair market value. (2) This column reflects the potential realizable value of each grant assuming that the market value of SpectraLink's Common Stock appreciates at five percent or ten percent annually from the date of grant over the term of the option. There is no assurance provided to any executive officer or any other holder of SpectraLink's securities that the actual stock price appreciation over the option term will be at the assumed five percent or ten percent levels or at any other defined level. Unless the market price of the Common Stock does in fact appreciate over the option term, no value will be realized from the option grants made to the Named Executive Officers. (3) Incentive stock option. (4) Non-qualified stock option. 3 OPTION EXERCISES AND HOLDINGS The following table sets forth information concerning the number of shares acquired and the value realized upon exercise of stock options during 2001 by the executive officers named in the Summary Compensation Table. The table includes the number of shares covered by both exercisable and unexercisable stock options as of December 31, 2001. Also reported are the values of in-the-money options that represent the positive difference between the exercise price of the outstanding stock option and the fair market value of the shares subject to the option at year end. These values, unlike the amounts in the column entitled Value Realized, have not been, and may never be, realized. AGGREGATE OPTIONS EXERCISED IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Number Number of Unexercised Options Held Value of Unexercised, In-the-Money of Shares at December 31, 2001 Options at December 31, 2001 (2) Acquired Value ---------------------------------- ---------------------------------- Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable ---- ----------- ------------ ----------- ------------- ----------- ------------- Bruce M. Holland(3) 387,499 $2,951,180 9,167 173,334 $ 98,450 $1,352,982 Nancy K. Hamilton 95,728 1,081,414 32,813 161,459 320,668 1,491,698 Gary L. Bliss 0 N/A 251,770 128,230 3,278,542 1,017,420 Michael P. Cronin 155,249 1,861,512 39,271 136,980 331,659 1,069,964 John H. Elms 99,894 1,176,041 13,229 136,877 125,656 1,357,019
(1) Based on the fair market value of the Common Stock on the exercise date, less the per share exercise price. (2) Based on the fair market value of the underlying shares of Common Stock of $17.13 per share, the closing price on December 31, 2001, as reported by NASDAQ, less the per share exercise price. (3) All sales of SpectraLink stock by Mr. Holland during fiscal year 2001 were pursuant to Rule 10b5-1 Plans adopted by Mr. Holland in March 2001. Under the Plans, sales of shares are effected on Mr. Holland's behalf at regular intervals pursuant to pre-set terms. Pursuant to such terms, sales were made beginning in May 2001 and continues through the date of this proxy. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION For fiscal 2001, the entire Board of Directors determined the compensation of the executive officers of SpectraLink. Since October 11, 1995, SpectraLink's Compensation Committee has made recommendations to the Board regarding compensation of executive officers. Mr. Holland, a member of the Board of Directors and the Chief Executive Officer and President of SpectraLink, has participated in the deliberations of the Board of Directors concerning executive officer compensation, other than his own compensation. DIRECTOR COMPENSATION Each non-employee director (currently three people) receives an annual payment of $5,000 for serving as a director of SpectraLink. In addition, each non-employee director is reimbursed for his expenses in attending board and committee meetings and receives $1,000 for each Board of Director or Committee meeting, or $200 for any telephonic Board or Committee meeting, attended by the director. Each non-employee director also receives an annual stock option grant as follows: an initial grant of an option to purchase 20,000 shares of Common Stock, exercisable at the fair market price of the Common Stock on the date of grant, with vesting at the rate of 50% of the option at the first anniversary following the date of grant and monthly thereafter over the following twelve months (i.e., 4.17% per month). Any new non-employee director will receive this 20,000 share option upon becoming a director of SpectraLink. Thereafter, each non-employee director will be granted an annual stock option exercisable to purchase 5,000 shares of Common Stock exercisable at the fair market price of the Common Stock on the date of grant, with vesting at the rate of 50% of the option at the first anniversary following the date of grant and monthly thereafter over the following twelve months (i.e., 4.17% per month). 4 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee reviews and acts on matters relating to compensation levels and benefit plans for executive officers and key employees. The Compensation Committee also recommends grants of stock awards, stock options, stock appreciation rights and other awards to be made under existing incentive compensation plans. General Compensation Policy. The fundamental policy of the Compensation Committee is to provide the executive officers with competitive compensation opportunities based upon their contribution to the development and financial success of SpectraLink and their personal performance. The Compensation Committee's objective is to have a portion of each executive officer's compensation contingent on SpectraLink's performance as well as on the executive officer's own level of performance. Accordingly, the compensation package for each executive officer is comprised of three elements: (1) base salary, which principally reflects an executive officer's performance and is designed primarily to be competitive with salary levels in the industry; (2) bonus, which principally reflects SpectraLink's performance; and (3) long-term incentive compensation, which strengthens the mutuality of interests between executive officers and stockholders. Factors. The principal factors that the Compensation Committee considered in ratifying the components of each executive officer's compensation package for 2001 are summarized below. The Compensation Committee may apply entirely different factors in advising the chief executive officer and the board of directors with respect to executive compensation for future years. o Base Salary. The suggested base salary for each executive officer is determined on the basis of experience, personal performance, the salary levels for comparable positions within and without the industry, and internal base salary comparability considerations. The weight given to each of these factors differs from individual to individual, as the Compensation Committee deems appropriate. o Bonus. The suggested bonus for each executive officer is determined on the basis of SpectraLink's performance, personal performance, and the bonus levels for comparable positions within and without the industry. The Compensation Committee established maximum annual bonus amounts for each executive officer based on the bonus levels for comparable positions, and earned bonus amounts are based on performance results. The weight given to each of these factors differs from individual to individual, as the Compensation Committee deems appropriate. In addition, the Compensation Committee may from time to time award additional cash bonuses when it determines those bonuses to be in SpectraLink's best interest. o Long-Term Incentive Compensation. Long-term incentives are provided primarily through grants of stock options. The grants are designed to align the interests of each executive officer with those of the stockholders and to provide each individual with a significant incentive to manage SpectraLink from the perspective of an owner with an equity stake. Each option grant allows the executive officer to acquire shares of Common Stock at a fixed price per share, typically equal to the market price on the grant date, over a specified period of time of up to ten years. Options generally become exercisable in installments over a 48-month period, contingent upon an executive officer's continued employment with SpectraLink. Accordingly, an option grant generally provides a return to the executive officer only if the executive remains employed by SpectraLink during the vesting period, and then only if the market price of the underlying shares appreciates. The number of shares subject to each option grant is set at a level intended to create a meaningful opportunity for stock ownership based on the executive officer's current position, the base salary associated with that position, the size of comparable awards made to individuals in similar positions within the industry, the executive officer's potential for increased responsibility and promotion over the option term, and the executive officer's personal performance in recent periods. The Compensation Committee also considers the number of unvested options held by the executive officer in order to maintain an appropriate level of equity incentive for that executive officer. The Compensation Committee does not adhere to any specific guidelines as to the relative option holdings of executive officers. CEO Compensation - SEC regulations require the board of directors to disclose the bases for compensation paid to Mr. Bruce Holland, President and Chief Executive Officer, in 2001 and to discuss the relationship between SpectraLink's performance and Mr. Holland's performance in 2001. In advising the Board with respect to Mr. Holland's compensation, the Compensation Committee seeks to establish a level of base salary competitive with that paid by companies of comparable size within the industry and by companies outside of the industry with which SpectraLink competes for executive talent. The base salary established for Mr. Holland for 2001 on the basis of the foregoing criteria was intended to provide a level of compensation which was not affected to any significant degree by SpectraLink's performance factors. The bonus established for Mr. Holland for 2001 was based on SpectraLink's pretax performance. COMPENSATION COMMITTEE Carl D. Carman Burton J. McMurtry 5 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SPECTRALINK CORPORATION By: /s/ BRUCE M. HOLLAND ------------------------------- Bruce M. Holland, President and CEO Date: August 15, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures Title Date ---------- ----- ---- /s/ BRUCE M. HOLLAND Principal Executive Officer August 15, 2002 --------------------------------------- and Director Bruce M. Holland /s/ NANCY K. HAMILTON Principal Financial Officer August 15, 2002 --------------------------------------- and Principal Accounting Officer Nancy K. Hamilton /s/ CARL D. CARMAN Director August 15, 2002 --------------------------------------- Carl D. Carman /s/ ANTHONY V. CAROLLO, JR. Director August 15, 2002 --------------------------------------- Anthony V. Carollo, Jr. /s/ BURTON J. MCMURTRY Director August 15, 2002 --------------------------------------- Burton J. McMurtry
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