UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 1)
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2007
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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Commission File Number 001-34017
PACKETEER, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE
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77-0420107
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(State of incorporation)
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(I.R.S. Employer
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Identification No.)
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10201 NORTH DE ANZA BLVD.
CUPERTINO, CALIFORNIA 95014
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(408) 873-4400
Securities registered pursuant to Section 12(b) of the Act:
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Title of Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value
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The Nasdaq Stock Market LLC
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes
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No
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
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No
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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 the 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.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act
Rule 12b-2). Yes
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No
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Based on the closing sale price of the common stock on the Nasdaq Global Select Market
(formerly the Nasdaq National Market) on June 29, 2007, the aggregate market value of the voting
common stock held by non-affiliates of the Registrant was $245,941,492. Shares of common stock held
by each officer and director and by each person known by the Registrant to own 10% or more of the
outstanding common stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive determination for other
purposes.
The number of shares outstanding of Registrant’s common stock, $0.001 par value, was
36,465,131 at February 27, 2008.
DOCUMENTS INCORPORATED BY REFERENCE
None
EXPLANATORY NOTE
This Amendment on Form 10-K/A (this “Amendment”) amends the Registrant’s Annual Report on Form
10-K for the year ended December 31, 2007. We are filing this Amendment for the following reasons:
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To include information required by Part III;
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To include an exhibit that was inadvertently omitted (the “Omitted Exhibit”) from our
Annual Report on Form 10-K filed on March 4, 2008; and
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In connection with the filing of this Amendment and pursuant to the rules of the
Securities and Exchange Commission, to include with this Amendment certain currently
dated certifications. Accordingly, Item 15 of Part IV has also been amended to reflect
the filing of the Omitted Exhibit and these currently dated certifications.
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Except as discussed above, we have not modified or updated the disclosures previously presented.
Accordingly, this Amendment does not reflect events occurring after the filing of our original Form
10-K filed on March 4, 2008.
PART III
Item 10.
Directors and Executive Officers of the Registrant
Our executive officers and directors and information concerning their ages and background as
of April 1, 2008 are listed below:
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Name
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Age
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Title
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Dave Côté
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President, Chief Executive Officer and Director
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Manuel R. Freitas
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Vice President, Operations and Customer Support
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Nelu Mihai
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Vice President, Engineering
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Greg Pappas
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Vice President, Human Resources
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Ray Smets
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Vice President, Worldwide Sales and Marketing
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David A. Winikoff
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Vice President, Product Management
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David C. Yntema
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Chief Financial Officer and Secretary
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Steven J. Campbell
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Chairmen of the Board of Directors
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Craig W. Elliot
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Director
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Joseph A. Graziano
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Director
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L. William Krause
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Director
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Bernard F. (Bud) Mathaisel
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Director
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Peter Van Camp
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Director
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Gregory E. Myers
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Director
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Executive Officers
Dave Côté
has served as our President, Chief Executive Officer and director since October
2002. His term as a director will expire at the 2010 Annual Meeting of Shareholders. From April
1997 to October 2002, Mr. Côté served as Vice President of Worldwide Marketing and Communication
ASSPs (Application-Specific Standard Products) for Integrated Device Technology, Inc., a
semiconductor company. From January 1995 to November 1996, Mr. Côté served as Vice President of
Marketing and Customer Support for ZeitNet Inc., which was acquired by Cabletron in 1996. From 1979
to 1995, he served in various marketing and sales positions, most recently as Director of Marketing
at SynOptics, Inc. (now Nortel Networks). Mr. Côté holds a B.S. from the University of California
at Davis and an M.B.A. from California State University at Sacramento.
Manuel R. Freitas
has served as our Vice President, Operations and Customer Support since May
2000. Mr. Freitas served as an independent operations management consultant from April 1999 until
November 1999 and then again from February 2000 through May 2000. From November 1999 to February
2000, he served as Vice President of Customer Operations for Vividence Corporation, an Internet
services company. From February 1990 to March 1999, Mr. Freitas served in various positions at
Adobe Systems, Inc., including Vice President of Worldwide Customer Operations from October 1995 to
March 1999, interim Vice President of Sales and Support for the Americas from April 1998 to
November 1998 and Director of OEM and Developer Support from February 1990 to September 1995. Prior
to joining Adobe, Mr. Freitas served in product management, field operations management, and sales
management positions at Schlumberger Technologies from 1980 to 1989. Mr. Freitas holds a B.A. in
business administration from William Patterson College.
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Nelu Mihai
has served as our Vice President, Engineering since January 2006. Mr. Mihai served
as Senior Vice President of Engineering and Operations at Cloudshield Technologies, a provider of
servers for network traffic inspection, from April 2003 to March 2004. From April 2004 to January
2006, Mr. Mihai was a consultant for early stage private software, telecom, security and network
semiconductor companies. In 2002, he co-founded SLA partners, an international consulting firm.
From December 1999 to December 2001 he served as Chief Executive Officer and Chief Operating
Officer of CPlane Inc, a telecommunication software company. Prior to 1999, he worked for six years
at Bell Labs and AT&T, his last position there being Division Manager. Before 1994, he served in
different positions at various Silicon Valley startup companies specializing in real time operating
systems and at nuclear research institutes in Western Europe. Mr. Mihai holds a M.S. in computer
engineering from Polytechnic University of Bucharest and a Ph.D in computer science from the
Institute of Atomic Physics, Bucharest, with the doctorate work done at CERN Geneva, Switzerland.
Greg Pappas
has served as our Vice President of Human Resources since November 2005. From July
2004 through October 2005, Mr. Pappas served as Vice President of Human Resources of Extended
Systems, Inc., a mobility software company. From June 2000 through July 2004, Mr. Pappas served as
Vice President of Human Resources for GlobalEnglish Corporation, an Internet e-learning company.
Prior to joining GlobalEnglish, from November 1998 through June 2000 Mr. Pappas served as Vice
President of Human Resources for Inference Corporation, a knowledge management software company
acquired by E-Gain Corporation. Mr. Pappas holds a B.S. in human resource administration from
Kennedy-Western University.
Ray Smets
has served as our Vice President of Worldwide Sales and Marketing since September
2007. From February 2007 to September 2007, Mr. Smets served as Vice President of Marketing for the
Broadband Solutions Group within Motorola’s Connected Home Solutions business. Mr. Smets joined
Motorola through the acquisition of Netopia, Inc., a software company, in February of 2007. At
Netopia, Mr. Smets was the Senior Vice President of Sales and Marketing. Prior to joining Netopia
in January 2006, Mr. Smets served from October 2002 to August 2004 as President of the Network
General, Inc. subsidiary of McAfee Security, Inc., a security software company, and as a consultant
for McAfee from August 2004 until December 2005. Before joining McAfee, Mr. Smets served for over
15 years in executive roles at BellSouth Corporation, including as President of BellSouth.net Inc.
and Vice President of Network Transformation of BellSouth’s Telecommunications Group. Mr. Smets
holds a B.S. in computer engineering from the University of Florida and an M.B.A. from
Nova-Southeastern University.
David A. Winikoff
has served as our Vice President of Product Management since June 2007.
From March 2004 until June 2007, Mr. Winikoff was Vice President, Product Management of Siemens
Enterprise Communications, Inc., the unified communications business unit of Siemens USA. Prior to
holding that position, Mr. Winikoff worked in a variety of capacities within certain of Siemens
AG’s various corporate affiliates, including as Director, Applications Product Management from
June 2003 to March 2004; Director, Voice-over IP Platform Product Management from March 2002 to
June 2003; Director, Messaging/Mobility Product Management from September 1999 to March 2002, Group
Manager, Industry from January 1998 to January 1999 and Group Product Manager for Hicom from
October 1991 to January 1998. Mr. Winikoff joined Siemens Enterprise Networks in May 1992 through
its acquisition of ROLM Company, a joint venture of Siemens and IBM, where he served as Product
Manager from 1990 to 1991. Prior to that, Mr. Winikoff was Manager, Marketing Education at IBM
Corporation from 1986 to 1990, Senior Software Engineer at Teledex Corporation from 1984 to 1985
and a Product Development Engineer at ROLM Corporation from 1979 to 1984. He holds a B.S. in
computer science and engineering from the Massachusetts Institute of Technology and an MBA in
international marketing from Santa Clara University.
David C. Yntema
has served as our Chief Financial Officer and Secretary since January 1999.
From May 1994 through August 1998, Mr. Yntema served as Chief Financial Officer and Vice President,
Finance and Administration of VIVUS, Inc., a pharmaceutical company. Prior to joining VIVUS, Mr.
Yntema served as Chief Financial Officer for EO, Inc., a handheld computer company; MasPar Computer
Corporation, a massively parallel computer company; and System Industries, a storage subsystem
company; and has held a variety of other financial and general management positions. Mr. Yntema
holds a B.A. in economics and business administration from Hope College and an M.B.A. from the
University of Michigan and is a certified public accountant.
There are no family relationships among any of our directors or executive officers.
Non-Management Directors
Directors whose terms expire at the 2008 Annual Meeting of Stockholders
Steven J. Campbell
has served as Chairman of the Board of Directors since our inception in
January 1996 and served as our Chief Executive Officer from January 1996 through April 1996. Mr.
Campbell was a founder of StrataCom, Inc., a network switching
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equipment company which was acquired by Cisco Systems in July 1992. At StrataCom, Mr. Campbell
was employed from January 1986 to June 1986 as Chief Executive Officer, and then from June 1986 to
1990 as Vice President of Engineering and Operations. He headed the PBX development at Rolm
Communications, Inc., a telecommunications company, from 1978 through 1983 and held various
positions at Intel Corporation from 1972 through 1978. Mr. Campbell holds a B.S. in electrical
engineering from Oregon State University and an M.S. in electrical engineering from Santa Clara
University.
Craig W. Elliott
has served as a director since April 1996. From April 1996 until his
retirement in May 2002, Mr. Elliott served as President and Chief Executive Officer of Packeteer.
Prior to joining Packeteer, Mr. Elliott served as International General Manager of Apple, Inc.’s
Online Internet Division from January 1991 to March 1996. From November 1987 to May 1990, Mr.
Elliott served as Apple’s Product Business Manager in charge of Networking and Communication
Products. Mr. Elliott holds a B.S. from Iowa State University.
Joseph A. Graziano
has served as a director since February 1996. From June 1989 to December
1995, Mr. Graziano was Executive Vice President and Chief Financial Officer of Apple, Inc. and
served as a director of Apple from June 1993 until October 1995. From May 1987 to June 1989, Mr.
Graziano served as Chief Financial Officer of Sun Microsystems, Inc. From October 1981 to May 1985,
he was Chief Financial Officer of Apple Computer, Inc. Mr. Graziano holds a B.S. in accounting,
received an honorary doctorate of business from Merrimack College and is a certified public
accountant.
Directors whose terms expire at the 2009 Annual Meeting of Stockholders
L. William Krause
has served as a director since March 2001. Mr. Krause has been President of
LWK Ventures, a private investment firm, since 1991. In addition, Mr. Krause served as Chairman of
the Board of Caspian Networks, Inc., an IP networking systems provider, from April 2002 to
September 2006 and as CEO from April 2002 until June 2004. From September 2001 to February 2002,
Mr. Krause was Chairman and Chief Executive Officer of Exodus Communications, Inc., which he guided
through Chapter 11 Bankruptcy to a sale of assets. He also served as President and Chief Executive
Officer of 3Com Corporation, a global data networking company, from 1981 to 1990, and as its
Chairman from 1987 to 1993 when he retired. Mr. Krause currently serves as a director of Brocade
Communication Systems, Inc., Core-Mark Holding, Inc., Sybase, Inc., and Trizetto Group, Inc. Mr.
Krause holds a B.S. in electrical engineering and received an honorary doctorate of science from
The Citadel.
Bernard F. (Bud) Mathaisel
has served as a director since December 2004. Since June 2007, Mr.
Mathaisel has been Senior Vice President and Chief Information Officer at Achievo Corporation.
From August 1999 through September 2006, Mr. Mathaisel was Chief Information Officer of Solectron
Corporation where he also held the title of Corporate Vice President from 1999 to 2004 and Senior
Vice President from 2004 to 2006. Prior to joining Solectron, Mr. Mathaisel served as CIO of Ford
Motor Company. Prior to Ford, Mr. Mathaisel was a national partner at Ernst & Young LLP where he
founded and directed their Center for Business Innovation. Mr. Mathaisel has also held executive
positions at Walt Disney Company and Temple, Barker and Sloane, Inc. Mr. Mathaisel holds a B.S. in
aeronautics and astronautics and an M.S. in operations research from Massachusetts Institute of
Technology.
Peter Van Camp
has served as a director since May 2001. Mr. Van Camp serves as the Executive
Chairman of Equinix, Inc., an Internet infrastructure services company, where he also served as
Chief Executive Officer from May 2000 through April 2007. Prior to joining Equinix in May 2000, he
served as President, Americas Region forUUNet, an Internet services company and a division of
WorldCom, Inc., beginning in January 1997. From October 1982 until January 1997, Mr. Van Camp
served as Vice President of Sales and subsequently President of CompuServe Network Services, the
corporate data networking division of CompuServe, Inc., a network services company. Mr. Van Camp
holds a B.S. in accounting with a concentration in computer science from Boston College.
Directors whose terms expire at the 2010 Annual Meeting of Stockholders
Gregory E. Myers
has served as a director since July 2006. From January 1999 to December 2005,
Mr. Myers served as Vice President of Finance and Chief Financial Officer of Symantec Corporation,
a provider of Internet security technology. Prior to his role as Symantec’s Chief Financial
Officer, Mr. Myers served Symantec in various senior finance positions, beginning in September
1993. Since November 2007, Mr. Myers has also served on the Board of Directors of Altera
Corporation. Mr. Myers served as a member of Maxtor Corporation’s Board of Directors from August
2003 until its sale to Seagate Technology in May 2006. He also served on the Board of Directors of
Inktomi Corporation, an Internet software company, before it was acquired by Yahoo! Inc. in March
2003. Currently, Mr. Myers is a private investor. Mr. Myers holds a B.S. degree from Cal-State
University, Hayward and holds an M.B.A. from Santa Clara University.
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CORPORATE GOVERNANCE
Director Independence
The Board of Directors has determined that, other than Mr. Côté, our current President and
Chief Executive Officer, each of the members of the Board of Directors is an independent director
for purposes of applicable Nasdaq rules.
The Board of Directors has an Audit Committee, a Compensation Committee and a Corporate
Governance and Nominating Committee. Our Board of Directors has determined that each member of the
Audit Committee satisfies the additional independence requirements for audit committee members set
forth in applicable Nasdaq and SEC rules. Our Board of Directors has also determined that each
member of the Compensation Committee satisfies the additional independence requirements for our
Compensation Committee members set forth in the charter of the Compensation Committee posted on our
website at
http://www.packeteer.com/company/investors/corpgov.cfm.
Director Attendance at Meetings
The Board of Directors held fourteen meetings during 2007. Each of the standing committees of
the Board of Directors held the number of meetings indicated below. Each of our directors attended
at least 75% of the total number of meetings of the Board of Directors and all of the committees of
the Board of Directors on which such director served during 2007.
The following table sets forth the members of each of the standing committees during 2007 and
the number of meetings held by each such committee:
Committees of the Board of Directors
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Nominating
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and Corporate
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Name of Director
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Audit
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Compensation
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Governance
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Dave Côté
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Steven J. Campbell
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Member
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Craig W. Elliott
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Member (1)
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Joseph A. Graziano
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Chairman and
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Member
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Financial Expert
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L. William Krause
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Chairman
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Chairman
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Bernard F. (Bud) Mathaisel
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Member
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Gregory E. Myers
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Member
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Peter Van Camp
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Member
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Number of Meetings:
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5
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13
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(1)
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Mr. Elliott resigned as a member of the Compensation Committee on
January 4, 2007 and rejoined the Compensation Committee on October 18,
2007.
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Director Attendance at Annual Meetings of Stockholders
We make every effort to schedule our annual meeting of stockholders at a time and date to
maximize attendance by our directors taking into account their schedules. All of our directors are
expected to make every effort to attend our annual meeting of stockholders absent an unavoidable
and irreconcilable conflict. Messrs. Côté, Elliott, and Van Camp were present at our 2007 annual
meeting of stockholders and Messrs. Krause, Mathaisel, Myers, and Graziano participated by
conference telephone.
Board Committees
Audit Committee.
The Audit Committee functions under a charter that is available on our
website at:
http://www.packeteer.com/company/investors/corpgov.cfm.
The primary functions of the
Audit Committee include: (i) overseeing our accounting and financial reporting processes and the
audits of our financial statements, including monitoring the adequacy of our system of financial
reporting and internal accounting controls and procedures; (ii) reviewing the qualifications,
independence and performance, and approving the terms of engagement, of our independent registered
public accounting firm; (iii) reviewing and pre-approving any audit and permissible non-audit
services that may be performed by our independent registered public accounting firm;
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(iv) reviewing
and approving any related party transactions; (v) reviewing with our management and the independent
registered public
accounting firm our interim and year-end operating results; (vi) reviewing our critical
accounting policies and the application of accounting principles; and (vii) preparing any reports
required under SEC rules.
The Board of Directors has determined that all of the members of the Audit Committee possess
the level of financial literacy required by applicable Nasdaq and SEC rules and that Mr. Graziano
is an audit committee financial expert as defined by SEC rules. In addition, each of the members of
the Audit Committee, including Mr. Graziano, satisfies the independence requirements for audit
committee members set forth in applicable Nasdaq and SEC rules.
Additional information regarding the Audit Committee is set forth in the Report of the Audit
Committee below.
Compensation Committee.
The Compensation Committee functions under a charter that is available
on our website at:
http://www.packeteer.com/company/investors/corpgov.cfm.
The purpose of the
Compensation Committee is to assist the Board of Directors in carrying out its responsibilities
with respect to: (i) reviewing and approving the compensation of our executive officers, including
the Chief Executive Officer; (ii) reviewing director compensation; (iii) administering our equity
incentive plans; and (iv) preparing any reports required under SEC rules.
More specifically, the Compensation Committee’s scope and authority with respect to executive
officer compensation include: (i) review and approval of all compensation for the Chief Executive
Officer, including incentive-based and equity-based compensation, in consultation with the Board of
Directors; (ii) review and approval of annual performance goals and objectives relevant to Chief
Executive Officer compensation and review of his performance in light of these goals and
objectives; (iii) the making of recommendations to the Board of Directors regarding incentive-based
and equity-based compensation plans in which executive officers participate; (iv) review and
approval of salaries, incentive-based awards and equity-based awards for our executive officers;
(v) oversight of the evaluation of management; (vi) administration of our incentive-based or
equity-based compensation plans consistent with the provisions of such plans; (vii) approval of all
employment, severance or change in control agreements, or other supplemental benefits applicable to
executive officers; (viii) periodic review of and rendering of advice to the Board of Directors
concerning regional and industry-wide compensation practices and trends to assess the adequacy and
competitiveness of our director and executive officer compensation; and (ix) periodic review of
changes to director compensation and recommendation of such changes to the Board of Directors. The
Compensation Committee charter provides for delegation of any of our Compensation Committee’s
duties or responsibilities to subcommittees or to one member of the committee.
When considering and determining the compensation paid to our executive officers, the
Compensation Committee typically begins its annual process in the fall and finalizes new
compensation arrangements in January of the following year. The Compensation Committee typically
meets at regular and special meetings with our Vice President of Human Resources, a representative
of the Compensation Committee’s compensation consultant and outside legal counsel. During a portion
of each meeting, the Compensation Committee meets in executive session.
In making its decisions regarding executive compensation, the Compensation Committee seeks
input and specific recommendations from our Chief Executive Officer regarding the performance and
compensation for executive officers other than the Chief Executive Officer. The Vice President of
Human Resources may also recommend equity plan guidelines for all employees, compensation
adjustments, plan design or policy changes and provide other information, as necessary, to the
Compensation Committee.
The Compensation Committee engaged Compensia, an independent management compensation
consulting firm, in June 2006 to assist with the development of our executive compensation
programs, Board of Director compensation and employee equity compensation. In connection with the
development of the 2007 executive compensation program, Compensia reviewed, analyzed and presented
to the Compensation Committee competitive market data and alternative compensation strategies.
Compensia has continued to assist with respect to our 2008 program.
Compensia generally attends meetings of the Compensation Committee and also communicates with
the Compensation Committee outside of meetings. Compensia reports to the Compensation Committee
rather than to management, although Compensia may meet with management from time to time for
purposes of gathering information that management may provide to the Compensation Committee.
Currently, Compensia does not provide any other services to Packeteer and receives compensation
only with respect to the services provided to the Compensation Committee. The Compensation
Committee has authority under its charter to retain, approve fees for and terminate advisors,
consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities.
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Our Board of Directors has determined that each current member of the Compensation Committee
satisfies the additional independence requirements for our Compensation Committee members set forth
in the charter of the Compensation Committee. On January 24, 2007, the Board of Directors approved
revisions to the charter setting forth new independence standards for Compensation Committee
members. In anticipation of these changes, Mr. Elliott, a member of the Compensation Committee
during 2006, resigned on January 4, 2007. Mr. Elliott rejoined the Compensation Committee during
October 2007, consistent with the new independence standards for Compensation Committee members.
For more information on our Compensation Committee and its philosophy, please refer to the
section entitled “Compensation Discussion and Analysis.” The Report of the Compensation Committee
is included immediately following the Compensation Discussion and Analysis.
Corporate Governance and Nominating Committee.
The Corporate Governance and Nominating
Committee functions under a charter that is available on our website at:
http://www.packeteer.com/company/investors/corpgov.cfm.
The primary functions of the Corporate
Governance and Nominating Committee include: (i) identifying and selecting or recommending director
nominees for each election of directors; (ii) developing and recommending to the Board of Directors
criteria for selecting qualified director candidates; (iii) considering committee member
qualifications, appointment and removal, (iv) recommending codes of conduct and compliance
mechanisms applicable to Packeteer; and (v) providing oversight in the evaluation of the Board of
Directors and each committee.
Director Nominations
When considering the nomination of directors for election at an annual meeting, the Corporate
Governance and Nominating Committee reviews annually the results of an evaluation performed by the
Board of Directors, and the needs of the Board of Directors for various skills, experience or other
characteristics. The Corporate Governance and Nominating Committee’s assessment of the Board of
Directors’ needs includes issues of diversity, age, skills such as an understanding of technology,
finance, marketing, manufacturing and international business, and expected contributions to the
Board of Directors.
When reviewing a potential candidate for nomination as director, including an incumbent who
intends to stand for re-election, the Corporate Governance and Nominating Committee considers the
perceived needs of the Board of Directors, the candidate’s relevant background, experience, skills
and expected contributions, and the qualification standards established from time to time by the
Corporate Governance and Nominating Committee. With respect to such standards, it is the Corporate
Governance and Nominating Committee’s goal to assemble a Board of Directors that has a diversity of
experience at policy-making levels in business, government, education and technology, and in areas
that are relevant to our global activities. In addition, the Corporate Governance and Nominating
Committee believes that members of the Board of Directors should possess the highest personal and
professional ethics, integrity and values, and be committed to representing the long-term interests
of our stockholders. They must have an inquisitive and objective perspective and mature judgment.
They must also have experience in positions with a high degree of responsibility and be leaders in
the companies or institutions with which they are affiliated. In addition to the benefits of
diverse viewpoints, the Corporate Governance and Nominating Committee may also take into account
the benefits of a constructive working relationship among directors. Members of the Board of
Directors are expected to rigorously prepare for, attend, and participate in all Board of Directors
and applicable committee meetings. Other than the foregoing, there are no stated criteria for
director nominees, although the Corporate Governance and Nominating Committee may also consider
such other factors as it may deem, from time to time, are in the best interests of Packeteer and
our stockholders.
The Corporate Governance and Nominating Committee considers candidates for directors proposed
by directors, management or stockholders, and evaluates any such candidates against the criteria
and pursuant to the policies and procedures set forth above. If the Corporate Governance and
Nominating Committee believes that the Board of Directors requires additional candidates for
nomination, it engages, as appropriate, a third party search firm to assist in identifying
qualified candidates. As part of the nominating process, all incumbent directors and non-incumbent
nominees are required to submit a completed form of directors’ and officers’ questionnaire and all
incumbent directors may be required to participate in a self-assessment process. The nomination
process may also include interviews and additional background and reference checks for
non-incumbent nominees, at the discretion of the Corporate Governance and Nominating Committee.
In addition, stockholders may recommend or nominate directors for election at an annual
meeting, provided the advance notice requirements set forth in our Bylaws have been met. Candidates
recommended by stockholders will be evaluated against the same criteria and pursuant to the same
policies and procedures applicable to the evaluation of candidates proposed by directors or
management.
8
Communications with Directors
Any stockholder who wishes to contact our Chairman of the Board of Directors or any of the
other members of the Board of Directors may do so in writing by mail to: Chairman of the Board of
Directors, c/o Corporate Secretary, Packeteer, Inc., 10201 North De Anza Boulevard, Cupertino,
California 95014; or by email to our Corporate Secretary:
dyntema@packeteer.com
. The
Corporate Secretary shall maintain a log of such communications and transmit as soon as practicable
such communications to the identified director addressee(s), unless there are safety or security
concerns that mitigate against further transmission of the communication, as determined by the
Corporate Secretary in consultation with our corporate counsel. The Board of Directors or
individual directors so addressed shall be advised of any communication withheld for safety or
security reasons as soon as practicable.
Code of Business Conduct and Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics, which outlines the
principles of legal and ethical business conduct under which we do business. The Code of Business
Conduct and Ethics is applicable to all of our directors, officers and employees. The Code is
available at
http://www.packeteer.com/company/investors/corpgov.cfm.
Any substantive amendment or
waiver of the Code relating to executive officers or directors will be made only after approval by
a committee comprised of a majority of our independent directors and will be promptly disclosed on
our website within four business days.
Corporate Governance Principles
In July 2006, we adopted Corporate Governance Principles that address the role of the Board of
Directors, composition of the Board of Directors, criteria for Board of Directors membership, the
policy for Director stock ownership, and other Board of Directors governance matters. These
principles are available on our website at
http://www.packeteer.com/company/investors/corpgov.cfm.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee for 2007 were Messrs. Krause (Chairman), Van Camp
and Elliott. Except for Mr. Elliot, who served as President and Chief Executive Officer of
Packeteer from April 1996 until his retirement in May 2002, none of the members of the Compensation
Committee have ever been employees or officers of Packeteer.
During 2007, no member of the Compensation Committee had any relationship with us requiring
disclosure under Item 404 of Regulation S-K and none of our executive officers served on the
compensation committee (or its equivalent) or board of directors of another entity any of whose
executive officers served on our Compensation Committee or Board of Directors.
For information on the compensation paid to the members of the Board of Directors, please see
the section entitled “Compensation of Directors” under the heading “Executive Compensation.”
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and
directors and persons who beneficially own more than 10% of our Common Stock to file initial
reports of beneficial ownership and reports of changes in beneficial ownership with the SEC. Such
persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed
by such person.
Based upon (i) the copies of Section 16(a) reports which we have received from such persons
for their 2007 transactions in the Common Stock and their Common Stock holdings and (ii) the
written representations received from one or more of such persons that
no Form 5 reports were required to be filed by them for 2007, the Company believes that all
reporting requirements under Section 16(a) for such year were met in a timely manner by its
directors and executive officers and each holder of more than 10% of the outstanding Common Stock,
except that each director submitted a Form 4 on August 21, 2007 for his annual option grant awarded
on May 23, 2007
REPORT OF THE AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to Packeteer’s audited
financial statements for the year ended December 31, 2007, which include the consolidated balance
sheets as of December 31, 2007 and 2006, and the related consolidated statements of operations,
stockholders’ equity and comprehensive income and cash flows for each of the years in the
three-year period ended December 31, 2007, and the notes thereto.
The Audit Committee oversees Packeteer’s financial reporting process on behalf of the Board of
Directors, reviews the financial information issued to stockholders and others, including a
discussion of the quality, not just the acceptability of the accounting principles, the
reasonableness of significant judgments and the clarity of discussions in the financial statements,
and monitors the systems of internal control and the audit process. Management has the primary
responsibility for the financial statements and the reporting process, including internal control
systems. KPMG LLP is responsible for expressing an opinion as to the conformity of our audited
financial statements with generally accepted accounting principles.
Review with Management
The Audit Committee has reviewed and discussed Packeteer’s audited financial statements with
management.
Review and Discussions with Independent Registered Public Accounting Firm
The Audit Committee has discussed with KPMG LLP, the Company’s independent registered public
accounting firm, the matters required to be discussed by Statement on Auditing Standards 114 (The
Auditor’s Communication with Those Charged with Governance) as adopted by the Public Company
Accounting Oversight Board in Rule 3600T.
The Audit Committee has received from the auditors a formal written statement describing all
relationships between the auditors and Packeteer that might bear on the auditors’ independence
consistent with Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), discussed with the auditors any relationships that may impact their objectivity and
independence, and satisfied itself as to the auditors’ independence.
Conclusion
Based upon the review and discussions referred to above, the Audit Committee recommended to
the Board of Directors that the Company’s audited financial statements be included in its Annual
Report on Form 10-K for the year ended December 31, 2007.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Steven J. Campbell
Joseph A. Graziano, Chairman
Bernard F. (Bud) Mathaisel
Gregory E. Myers
9
Item 11.
Executive Compensation
Compensation Discussion and Analysis
Overview
The Compensation Committee is empowered to discharge the Board’s responsibilities relating to
compensation and benefits for our executive officers. The Compensation Committee seeks to set
compensation and benefits such that the total compensation paid to our executive officers is
reasonable, competitive and reflective of corporate and individual performance.
Philosophy and Objectives
The Compensation Committee believes that the most effective executive compensation program is
one that delivers compensation opportunities at levels generally consistent with market competitive
practice, but provides for differentiated levels of actual compensation based on individual and
company performance. Further, the Compensation Committee believes in creating a strong alignment
between the interests of our executives and our stockholders by linking a significant portion of
executive compensation to growth in the market value of our stock. We operate in a very competitive
industry and are located in Silicon Valley where competition for executives is intense. Therefore,
we have the additional objective of offering compensation programs that preserve our ability to
attract and retain superior executives and providing competitive compensation to key employees
relative to the compensation paid to similarly situated executives of our peer companies.
While the Compensation Committee and management review competitive market practices identified
through the benchmarking exercise described below, we do not target compensation to specific,
predetermined market levels. In determining appropriate base salary levels for each executive, the
Compensation Committee evaluates competitive market data along with individual performance,
expected contribution and experience and overall company performance. Short-term incentive
opportunities are designed so that on-target performance relative to our business plan will result
in cash compensation in the middle of the competitive range, with the opportunity to do better or
worse based on actual results. Long-term incentives are designed to balance rewards for generating
positive shareholder returns and for achieving longer-term operational goals. Longer-term
operational objectives are set so that achievement of the goals will out-perform industry peers.
Compensation Process
The Compensation Committee generally begins each annual process in the fall and finalizes new
compensation arrangements in January of the following year. The Compensation Committee typically
meets at regular and special meetings with our Vice President of Human Resources, a representative
of the Compensation Committee’s compensation consultant and outside legal counsel.
Role of the Compensation Consultant
The Compensation Committee engaged Compensia, an independent management compensation
consulting firm, in June 2006 to assist with the development of our executive compensation
programs. In connection with the development of the 2007 executive compensation program, Compensia
reviewed, analyzed and presented to the Compensation Committee competitive market data and
alternative compensation strategies. Compensia has continued to assist with respect to our 2008
program.
Role of Management
In making its decisions, the Compensation Committee seeks input and specific recommendations
from our Chief Executive Officer regarding the performance and compensation for executive officers
other than the Chief Executive Officer. The Vice President of Human Resources may also recommend
equity plan guidelines for all employees, compensation adjustments, plan design or policy changes
and provide other information, as necessary, to the Compensation Committee.
Performance Review Process
The Compensation Committee reviews the performance of all executives, including the Chief
Executive Officer, annually. In reviewing the performance of the Chief Executive Officer, the
Committee solicits feedback from the other non-executive members of the Board and from the Chief
Executive Officer’s direct reports. For the other executives, the Chief Executive Officer provides
the Compensation Committee with a review of each individual’s performance and contributions over
the past year.
10
Competitive Market Study
In making annual compensation decisions, the Compensation Committee requests that Compensia
evaluate compensation elements relative to a peer group of publicly-traded networking and
technology industry companies of similar size and organizational
scope. The peer group of companies is reviewed annually by the Committee to ensure that the
comparators are reasonable from a business and size perspective. The companies comprising the peer
group for 2007 are:
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Blue Coat Systems
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MRV Communications
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Secure Computing
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Extreme Networks
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NetScout Systems
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Sierra Wireless
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F5 Networks
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Novatel Wireless
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SonicWALL
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Foundry Networks
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Riverbed Technology
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Websense
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In addition to data collected from the public filings of the Companies in the peer group ,
Compensia also considers supporting data from industry compensation surveys and data from its
proprietary database. The consultant consolidates the various data sets into a single market study
that is representative of the peer group pay practices, which is then used by management and the
Compensation Committee as a single reference point in reviewing and setting compensation.
Compensation Elements
In order to align executive compensation with our compensation philosophy, our executive
officer compensation package contains three primary elements: base salary, cash bonuses and
equity-based awards. In addition, we provide our executive officers a variety of benefits that are
available generally to all salaried employees in the geographic location in which they are based.
Each component of our executive compensation program is designed to reward different aspects of
performance. The Compensation Committee sets executive officer base salary compensation at a level
that it believes enables us to attract and retain strong executive talent. Our short-term incentive
compensation program is designed to provide short-term incentives to our executives through cash
bonus awards. Pay-outs, if earned, are made on a semi-annual basis and are determined based upon
our achievement of designated corporate financial goals, including revenue and operating income
results, compared to our financial plan for the related period. Our long-term incentive
compensation program is designed primarily to provide long-term performance incentives and
retention value through equity-based awards that reward our executives for increasing stockholder
value over time. The elements of our executive compensation package generally do not
differentiate between the executives listed in the Summary Compensation Table below, referred to in
this Annual Report as our Named Executive Officers, and our other executive officers, with the
exceptions of severance benefits payable to our Chief Executive Officer and Chief Financial Officer
and certain change in control benefits payable to our Chief Executive Officer.
Compensation Mix
A significant percentage of total compensation is incentive-based. Below is a depiction of the
target mix of elements in the 2007 compensation packages for our Chief Executive Officer and Named
Executive Officers approved by the Compensation Committee at the beginning of 2007. The
Compensation Committee determines the allocation between the various compensation elements on an
annual basis, after reviewing information provided by its consultant. There is no pre-established
plan or target for such allocation. Rather, the Compensation Committee establishes an annual policy
based on its goal to align our executive compensation program with relevant strategic objectives.
11
Base Salary
Our executive base salaries are based upon individual and company performance and the
individual’s expected contribution and experience, as well as the annual evaluation of the market
study. In the process of determining base compensation for 2007, the Compensation Committee
considered data prepared by its consultant reflecting that, on average, our executive base salaries
generally trailed the median of the market study by 8% at the end of 2006. In determining the base
salary increase for the Chief Executive Officer, the Compensation Committee considered the
competitive market data, the Company’s performance in 2006 and feedback gathered during the
performance review process. For the other named executive officers, the Compensation Committee
considered the same factors as they did for the Chief Executive Officer, as well as the performance
of each executive’s area of responsibility and the Chief Executive Officer’s salary increase
recommendation. Effective January 2007, each of our executive officers received an increase in base
salary from 2006 which ranged between 2.2% and 10.7 %.
Short Term Incentive Compensation
Semi-Annual Awards
Our short term incentive compensation is structured as a performance-based cash bonus plan.
The cash bonuses for all of our executive officers are based on an assigned target incentive rate,
expressed as a percentage of each officer’s annual base salary. The cash bonuses are awarded on the
basis of our performance by comparing our actual revenue and operating income results against the
approved 2007 business plan revenue and operating income goals established semi-annually by the
Board of Directors. The Compensation Committee believes revenue and operating income to be the best
measures of financial success and believes that performance at or above revenue and operating
income goals will ultimately translate into improved stockholder value. The revenue and operating
income goals for 2007 performance represented a considerable stretch beyond our corresponding
results for 2006. Although the Compensation Committee realized that achievement of the 2007 goals
would be challenging, it also believed that the goals were appropriate based on the 2007 business
plan.
If earned, bonuses are paid semi-annually and are based on the assigned target incentive
amount for the applicable six month period. The target incentive amount for each such period is
equal to one-half of the officer’s annual base salary multiplied by the target incentive rate. For
example, if the officer’s annual base salary is $100,000 and the target incentive rate is 50%, then
in each semi-annual period the target incentive amount would be $25,000. The bonus actually earned
for each semi-annual period is adjusted upward or downward based on our actual revenue and
operating income performance in comparison to a revenue goal and operating income goal. Our
Compensation Committee believes that semi-annual cash bonuses are reasonable and effective tools
for incentivizing executive performance to achieve our financial performance goals.
12
For all executive officers, 67% of the aggregate bonus earned for a period is based on
achievement of the revenue goal and the remaining 33% is based on achievement of the operating
income goal. The Compensation Committee chose revenue as the primary
metric in order to incentivize and reward revenue growth, and selected positive operating
income as a secondary metric in order to encourage fiscal responsibility. For each semi-annual
period, we must achieve at least 80% of our revenue goal and positive operating income in order for
executives to receive any bonus. Achievement of both goals at target levels results in a
semi-annual bonus payment equal to the target incentive amount for the period. The threshold for a
minimum payment under the revenue component is 80% of the revenue goal. At this level of
performance, such minimum payment is 50% of the target amount payable under the revenue component.
Achievement of the revenue goal in excess of 80% will increase the amount payable under the revenue
component on a linear basis, subject to a performance cap of 120% resulting in a maximum payment
equal to 150% of the target amount payable under the revenue component. The threshold for a minimum
payment under the operating income component is 95% of the operating income goal. At this level of
performance, such minimum payment is 50% of the target amount payable under the operating income
component. Any achievement of the operating income goal above 100% will not increase the amount
payable under the operating income component beyond the target level payment.
In setting target incentive rates for 2007, the Compensation Committee determined that our
Chief Executive Officer’s target incentive rate did not provide a compensation opportunity
consistent with that of Chief Executive Officers at our peer companies and that pre-existing target
incentives for each of our executives were within the appropriate range with the exception of our
Chief Financial Officer and the Vice President of Engineering, whose target incentive rate
increased from 40% to 50%. Our Chief Executive Officer’s target incentive rate was
increased from
70% to 100%.
Based upon the above, the 2007 executive compensation elements approved by the Compensation
Committee for the Named Executive Officers, and the target incentive amounts actually earned by
such persons under the 2007 performance-based cash bonus plan, were as follows:
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2007 Base
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2007 Annual
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Salary
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2007
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Target
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2007 Annual
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Rate
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Target
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Incentive
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Incentive
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(Annualized)
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Incentive
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Amount
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Award Earned
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Officer Name
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Position
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($)
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Rate
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($)
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($)(1)
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Dave Côté
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CEO & President
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415,000
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100
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%
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415,000
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205,675
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David C. Yntema
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Chief Financial
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Officer
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290,000
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50
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%
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145,000
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71,862
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Manuel R. Freitas
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VP Operations and
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Customer Support
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235,000
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40
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%
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94,000
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46,587
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Nelu Mihai
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VP Engineering
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250,000
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50
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%
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125,000
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61,950
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Greg Pappas
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VP Human Resources
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215,000
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40
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%
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86,000
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42,622
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Former Officers:
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Arturo Cázares
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VP Worldwide Sales
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235,000
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90
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%(2)
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52,875
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(2)
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(2
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Alan Menezes
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VP Marketing
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230,000
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40
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%
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92,000
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(3
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)
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13
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(1)
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Reflects annual target incentive earned for 2007 performance. During
the first half of 2007, no bonuses were
earned as we did not achieve our minimum financial targets during that
period. For the second half of 2007, bonuses were earned based upon
the Company’s achievement of positive operating income and 99.5%
of the revenue goal. Actual bonus compensation for performance in the
second half of 2007 was paid in early 2008.
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(2)
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Our formula for determining Mr. Cázares’ short-term incentive compensation differed from other
executive officers as indicated below as it was intended to emphasize performance of the sales
organization and reward him for this performance against our revenue
goals:
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(a) Mr. Cázares’ Annual Target Incentive Amount of $52,875 represents 25% of his Target
Incentive Rate multiplied by his base salary rate and was intended to be a cash bonus to be based
on our achievement of the operating income goal and to be paid semi-annually. Mr. Cázares was no
longer an employee effective April 30, 2007, however, and was therefore ineligible to receive a
bonus under our performance-based cash bonus plan for either the semi-annual period ended June 30
or December 31, 2007.
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(b) In addition to the Annual Target Incentive Amount, Mr. Cázares was eligible to earn
short-term incentive compensation under the sales commission plan in an amount equal to 75% of the
Target Incentive Rate multiplied by his base salary, or $158,625. For 2007, Mr. Cázares earned
$96,134 under the sales commission plan.
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(3)
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Mr. Menezes was no longer an employee effective September 17, 2007
and was therefore ineligible to receive a bonus under our
performance-based cash bonus plan for the semi-annual period ended
December 31, 2007. For payments made to Mr. Menezes in connection
with his departure, please see the Summary Compensation Table below.
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Other Bonus Payments
We may also grant one time performance bonuses based on individual contributions and
responsibilities rather than financial metrics. During 2007, no such performance bonuses were
granted.
Long-Term Incentive Compensation
Annual Equity Program
Through 2006, our long-term incentive compensation program included only stock options subject
to time based vesting. During the latter part of 2006, the Compensation Committee began working
with its consultant to consider adjustments in our long-term incentive compensation approach.
Starting in 2007, the Compensation Committee modified the long-term incentive compensation program
to include a combination of stock options subject to time based vesting and performance share
awards subject to vesting based upon long-term financial performance. When determining the
appropriate allocation between these awards, the Compensation Committee sought to achieve a balance
between the Company’s primary focus on share value appreciation represented by option awards and
the secondary focus on long-term revenue and operating income performance represented by
performance share awards. For 2007, this goal resulted in a mix of award types in which the annual
stock option award generally constitutes approximately 65% of the aggregate target award, and the
performance share award (if vested at target levels as described below) generally constitutes
approximately 35% of the aggregate target award.
Option Awards
The Compensation Committee utilizes stock option awards with the objective of providing
executives with compensation tied to improvements in the market price of our Common Stock. These
grants are designed to align the interests of the executive officer with those of the stockholders
and provide each individual with a significant incentive to manage Packeteer from the perspective
of an owner with an equity stake in the company. For 2007, annual grants were approved at our
regularly scheduled Board of Directors meeting on January 24, 2007. Each option permits the officer
to acquire shares of our Common Stock at a price per share equal to the closing price per share of
our Common Stock as reported on Nasdaq Global Select Market on January 24, 2007. Contingent upon
the officer’s continued employment, one-quarter of the options vest after 12 months following the
grant date and the balance vest monthly
over the following three years. Accordingly, the option will provide a return to the executive
officer only if the officer remains employed by us during the vesting period, and then only if the
market price of the shares appreciates over the option term.
14
The size of the option award granted to each executive officer in 2007 was set by the
Compensation Committee at a level that was intended to create a meaningful opportunity for stock
ownership based upon the individual’s current position, the individual’s personal performance in
recent periods, the individual’s potential for future responsibility and promotion over the option
term, comparison of award levels in prior years and comparison of award levels earned by executives
at our peer companies and similarly-sized companies in our broad industry group. The Compensation
Committee also took into account the number of unvested options held by the executive officer in
order to maintain an appropriate level of retention value for that individual. The relative weight
given to each of these factors varied from individual to individual. The Compensation Committee
also reviewed compensation survey data for Packeteer’s industry prepared and analyzed by its
consultant. In January 2007, the Compensation Committee approved a stock option award for the Chief
Executive Officer of 100,000 shares, and awards for executive officers ranging from 40,000 shares
to 75,000 shares.
The Compensation Committee may also grant additional option awards under the Company’s 1999
Stock Incentive Plan or 1999 Plan. On July 27, 2007, the Compensation Committee approved
supplemental retention stock option grants to executive officers in amounts ranging from 40,000 to
50,000 shares. The Chief Executive Officer was not awarded any stock options. The Compensation
Committee determined to make these grants after separate discussions with the Vice President of
Human Resources and non-employee members of the Board of Directors regarding executive performance,
morale and retention issues. Given the competitive nature of the Silicon Valley, the purpose of
the grants was to help maintain sufficient executive team continuity in order to facilitate the
Company’s recovery from below plan results.
All stock option awards to our employees, including executive officers, have been granted at
fair market value on the date of grant and are reflected in our consolidated financial statements.
We do not have any program, plan or obligation that requires us to grant equity compensation on
specified dates. However, we typically schedule a Compensation Committee meeting and make annual
grants on the date of our regular Board of Directors meeting in January of each year, as well as on
the hire date for new employees.
Performance Share Awards
The Compensation Committee utilizes performance share awards with the objective of
incentivizing current executive officers to accomplish the Company’s long-term revenue and
operating income objectives. Each performance share awarded represents the right to receive one
share of our Common Stock following the end of a three-year performance period, subject to
applicable vesting terms. The right vests based on the achievement of a specific revenue growth
rate and average annual operating margin goals and continued employment of the executive through a
specified vesting date following the end of the performance period. The Compensation Committee, in
determining the applicable performance share metrics, considered market data, peer group
information, industry reports, and the Company’s business model relative to operating income. If
our performance against these financial measures falls below certain minimum levels, no performance
shares will vest. If our performance against these measures is at target levels, our executives
will vest in the target number of shares subject to the awards, which range from 20,000 to 50,000.
If our performance against these financial measures exceeds target levels, the number of
performance shares vesting will exceed 100% of the target number of shares, subject to a maximum of
250%. When it established the 2007 performance share program, the Compensation Committee believed
that the metrics it established for vesting of the performance share awards would be a challenge
for the Company, but achievable. The Company did not record any compensation expense for 2007 with
respect to the performance share awards.
Compensation Committee Philosophy on Change in Control and Severance Benefits
In July 2006, the Compensation Committee approved certain change in control benefits for our
executives and certain additional severance benefits for Dave Côté, our Chief Executive Officer,
and David C. Yntema, our Chief Financial Officer. For a summary and quantification of the change in
control and the severance benefits, please see the discussion under the section entitled “Executive
Compensation — Potential Payments upon a Termination or Change in Control” below. The Compensation
Committee determined to provide change in control arrangements in order to mitigate some of the
risk that exists for executives working in an environment where there is a meaningful likelihood
that we may be acquired. Our change in control and severance arrangements are intended to attract
and retain qualified executives who may have attractive alternatives absent these arrangements. The
change in control arrangements are also intended to mitigate a potential disincentive to
consideration and execution of an acquisition, particularly where the services of these executive
officers may not be required by the acquirer.
15
In developing the terms of the agreements, the Compensation Committee, with the help of its
consultant, evaluated the practices of the peer group in July 2006. Approximately 85% of the
companies in such peer group disclosed that they had provided change in control benefits to
executive officers, and the Compensation Committee designed this policy to be conservative relative
to the practices in this peer group. Similarly, the Compensation Committee determined that
severance benefits for our Chief Executive Officer and Chief Financial Officer were appropriate for
these positions based on competitive market data provided by its consultant. While the Compensation
Committee determined that it was appropriate to approve change in control and severance benefits
for our executives, it awarded benefits that it believes are aligned at the lower end of the
spectrum of competitive practices. For example, accelerated vesting of equity awards only occurs in
limited circumstances, such as a termination or resignation in specified circumstances following a
change in control or if awards are not assumed by the acquiring or successor company in a change of
control. Only two of our executive officers, our Chief Executive Officer and Chief Financial
Officer, are entitled to severance benefits other than those relating to a change in control.
Separately, cash payments awarded in connection with any qualified termination or resignation are
determined as a multiple of base salary alone, rather than multiples of base salary and bonus. No
gross up for excise taxes are payable in connection with severance or change in control benefits.
Additionally, the Compensation Committee believes that the terms “cause” and “resignation for good
reason” in our change in control and severance benefit arrangements and our performance award
agreements are carefully defined to support reasonable transition considerations and our goal of
retaining our executives through an acquisition.
Other Benefits
Executive officers are eligible to participate in all of our employee benefit plans, such as
our 1999 employee stock purchase plan; medical, dental, vision, group life, disability, and
accidental death and dismemberment insurance; and our 401(k) plan, in each case on the same basis
as other employees. Except in limited circumstances, it is our policy not to provide any special
perquisites or benefits to executive officers.
Tax Considerations
The Compensation Committee considers the impact of Section 162(m) of the Internal Revenue Code
in determining the mix of elements of executive compensation. This section limits the deductibility
of non-performance based compensation paid to each of our Named Executive Officers to $1 million
annually. The stock options and performance share awards granted to our executive officers under
our 1999 Plan are intended to be treated under current federal tax law as performance-based
compensation exempt from the limitation on deductibility. Salaries and bonuses paid under our
annual bonus program do not qualify as performance-based compensation for purposes of Section
162(m). The Compensation Committee intends to consider the impact of Section 162(m) on the
deductibility of future executive compensation, but reserves the right to provide for compensation
to executive officers that may not be fully deductible.
COMPENSATION COMMITTEE REPORT
We, the Compensation Committee of the Board of Directors of Packeteer, have reviewed and
discussed the Compensation Discussion and Analysis contained in its Annual Report on Form 10-K for
the year ended December 31, 2007 with management. Based on such review and discussion, we have
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in
this Annual Report on Form 10-K for the year ended December 31, 2007.
THE COMPENSATION COMMITTEE
L. William Krause, Chairman
Craig W. Elliott
Peter Van Camp
16
Summary Compensation Table
The following table sets forth information concerning the compensation earned during the years
ended December 31, 2007 and 2006 by our Chief Executive Officer, our Chief Financial Officer, our
three other most highly-compensated executive officers and two former executive officers who would
have been included among the three other most highly compensated executive officers had they
continued to serve as executive officers through December 31, 2007. These individuals are referred
to in this Annual Report as our “Named Executive Officers.”
2007 SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Compensation
|
|
Compens-
|
|
|
|
|
|
|
|
|
|
Salary (1)
|
|
Bonus (2)
|
|
Stock
|
|
Awards (4)
|
|
(2)
|
|
ation (5)
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
Awards (3)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Dave Côté
|
|
|
2007
|
|
|
|
415,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
839,187
|
|
|
|
205,675
|
|
|
|
2,134
|
|
|
|
1,461,996
|
|
|
President and Chief
Executive Officer
|
|
|
2006
|
|
|
|
375,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,022,105
|
|
|
|
212,223
|
|
|
|
1,929
|
|
|
|
1,611,257
|
|
|
David C. Yntema
|
|
|
2007
|
|
|
|
290,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
501,117
|
|
|
|
71,862
|
|
|
|
4,148
|
|
|
|
867,127
|
|
|
Chief Financial Officer
|
|
|
2006
|
|
|
|
265,000
|
|
|
|
7,500
|
|
|
|
—
|
|
|
|
425,510
|
|
|
|
85,698
|
|
|
|
3,785
|
|
|
|
787,493
|
|
|
Manuel R. Freitas
|
|
|
2007
|
|
|
|
235,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
380,299
|
|
|
|
46,587
|
|
|
|
2,154
|
|
|
|
664,040
|
|
|
Vice President
Operations and Customer
Support
|
|
|
2006
|
|
|
|
225,000
|
|
|
|
14,089
|
(6)
|
|
|
—
|
|
|
|
425,510
|
|
|
|
72,762
|
|
|
|
2,060
|
|
|
|
739,421
|
|
|
Nelu Mihai(7)
|
|
|
2007
|
|
|
|
250,000
|
|
|
|
|
|
|
|
—
|
|
|
|
478,981
|
|
|
|
61,950
|
|
|
|
1,228
|
|
|
|
792,159
|
|
|
Vice President,
Engineering
|
|
|
2006
|
|
|
|
215,256
|
|
|
|
7,500
|
|
|
|
—
|
|
|
|
477,363
|
|
|
|
69,554
|
|
|
|
1,084
|
|
|
|
770,757
|
|
|
Greg Pappas
|
|
|
2007
|
|
|
|
215,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
392,936
|
|
|
|
42,622
|
|
|
|
674
|
|
|
|
651,232
|
|
|
Vice President Human
Resources
|
|
|
2006
|
|
|
|
195,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
373,398
|
|
|
|
69,061
|
|
|
|
374
|
|
|
|
637,833
|
|
|
Former Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arturo Cázares
|
|
|
2007
|
|
|
|
174,468
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
|
475,670
|
|
|
|
—
|
|
|
|
127,640
|
(9)
|
|
|
775,518
|
|
|
Former Vice President
Worldwide Sales
|
|
|
2006
|
|
|
|
387,993
|
(10)
|
|
|
6,000
|
|
|
|
—
|
|
|
|
692,037
|
|
|
|
25,875
|
|
|
|
492
|
|
|
|
1,112,397
|
|
|
Alan Menezes (11)
|
|
|
2007
|
|
|
|
144,782
|
|
|
|
—
|
|
|
|
—
|
|
|
|
643,307
|
|
|
|
—
|
|
|
|
73,410
|
(12)
|
|
|
861,499
|
|
|
Former Vice President
Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Unless otherwise noted, reflects the annual base salaries paid to the Named Executive
Officers in the indicated year.
|
|
|
|
(2)
|
|
Performance-based bonuses are generally paid under our performance-based cash bonus
plan and the amounts of such bonuses are reported under the Non-Equity Incentive Plan
Compensation column. Additional discretionary bonuses awarded by the Compensation
Committee, if any, are reported under the Bonus column. Unless otherwise noted, the
amounts reported under the Bonus column represent discretionary cash bonuses awarded to
several executive officers for contributions made during 2006 in connection with the
acquisition and integration of Tacit Networks. These discretionary bonuses were
approved by the Compensation Committee on January 31, 2007.
|
|
|
|
(3)
|
|
It was estimated at December 31, 2007 that no shares would ultimately vest and no
related compensation expense was recorded during 2007. See Note 7 of the Notes to the
Consolidated Financial Statements included with this Annual Report for additional
information.
|
|
|
|
(4)
|
|
Dollar amount of compensation expense related to stock options recognized for financial
statement reporting purposes in accordance with FAS 123(R). The assumptions used in the
calculation of these amounts are included in Note 7 to our Consolidated Financial
Statements included with this Annual Report.
|
|
|
|
(5)
|
|
Unless otherwise noted, represents premiums paid for group term life insurance benefits.
|
|
|
|
(6)
|
|
Represents (a) $6,000 in a discretionary cash bonus for performance related to the
Tacit acquisition and (b) $8,089 in an additional discretionary bonus awarded to Mr.
Freitas in recognition of additional management duties he performed in 2005 and 2006
while we were searching for a Vice President, Engineering. This additional
discretionary bonus was awarded by the Chief Executive Officer pursuant to authority
granted by our Compensation Committee.
|
|
|
|
(7)
|
|
Mr. Mihai commenced employment with Packeteer in January 2006.
|
|
|
|
(8)
|
|
Represents (a) $78,334 in annual salary and (b) $96,134 in commissions earned in 2007.
|
17
|
(9)
|
|
Includes $349 in premiums paid for group term life insurance benefits while Mr. Cázares
was our employee and $27,114 of accrued vacation pay. Mr. Cázares resigned his
employment with us effective April 30, 2007 and pursuant to a separation agreement, Mr.
Cázares received $97,917 in severance and $2,260 in COBRA benefits. For more
information regarding Mr. Cázares’ separation agreement, see the section entitled
“Potential Payments upon Termination or Change in Control — Benefits Paid to Former
Officers upon Separation.”
|
|
|
|
(10)
|
|
Represents (a) $230,000 in annual salary and (b) $157,993 in commissions earned in 2006.
|
|
|
|
(11)
|
|
Mr. Menezes commenced employment with Packeteer in February 2007.
|
|
|
|
(12)
|
|
Includes $430 in premiums paid for group term life insurance benefits while Mr. Menezes
was our employee and $1,712 of accrued vacation pay. Mr. Menezes resigned his
employment with us effective September 17, 2007 and pursuant to a separation agreement,
Mr. Menezes received $67,083 in severance and $4,185 in COBRA benefits. For more
information regarding Mr. Menezes’ separation agreement, see the section entitled
“Potential Payments upon Termination or Change in Control — Benefits Paid to Former
Officers upon Separation.”
|
Grants of Plan-Based Awards
The following table sets forth certain information with respect to stock and option awards and
other plan-based awards granted during the years ended December 31, 2007 to our Named Executive
Officers:
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts Under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan
|
|
Equity Incentive Plan Awards (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Exercise or
|
|
Grant Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Base Price of
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
Option
|
|
and Option
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Options
|
|
Awards
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
($) (3)
|
|
($)
|
|
($) (4)
|
|
(#) (5)
|
|
(#)
|
|
(#) (6)
|
|
(#)(7)
|
|
($/Sh)
|
|
($) (8)
|
|
Dave Côté
|
|
|
1/24/2007
|
|
|
|
139,025
|
|
|
|
415,000
|
|
|
|
554,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,125
|
|
|
|
50,000
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
621,000
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
12.78
|
|
|
|
657,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Yntema
|
|
|
1/24/2007
|
|
|
|
48,575
|
|
|
|
145,000
|
|
|
|
193,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
|
40,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
496,800
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
12.78
|
|
|
|
493,430
|
|
|
|
|
|
7/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
150,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manuel R. Freitas
|
|
|
1/24/2007
|
|
|
|
31,490
|
|
|
|
94,000
|
|
|
|
125,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
20,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
248,400
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
12.78
|
|
|
|
263,163
|
|
|
|
|
|
7/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
150,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nelu Mihai
|
|
|
1/24/2007
|
|
|
|
41,875
|
|
|
|
125,000
|
|
|
|
166,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,063
|
|
|
|
25,000
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
310,500
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
12.78
|
|
|
|
328,954
|
|
|
|
|
|
7/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
7.16
|
|
|
|
188,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg Pappas
|
|
|
1/24/2007
|
|
|
|
28,810
|
|
|
|
86,000
|
|
|
|
114,810
|
|
|
|
11,250
|
|
|
|
20,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
248,400
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
12.78
|
|
|
|
263,163
|
|
|
|
|
|
7/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
150,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arturo Cázares (9)
|
|
|
1/24/2007
|
|
|
|
0
|
|
|
|
58,750
|
|
|
|
58,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,063
|
|
|
|
25,000
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
310,500
|
|
|
|
|
|
1/24/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
12.78
|
|
|
|
328,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Menezes (10)
|
|
|
2/14/2007
|
|
|
|
30,820
|
|
|
|
92,000
|
|
|
|
122,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
185,000
|
|
|
|
12.94
|
|
|
|
1,232,215
|
|
|
|
|
|
7/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
150,469
|
|
18
|
(1)
|
|
We award short term incentive compensation under our
performance-based cash bonus plan as described under the section
entitled “Compensation Discussion and Analysis — Short Term
Incentive Compensation — Semi-Annual Awards.” The amounts under the
Threshold, Target and Maximum columns assume that identical
performance levels are achieved in both semi-annual periods. The
actual amount paid to each Named Executive Officer in 2007 under the
performance-based cash bonus plan is set forth above in the Summary
Compensation Table under the Non-Equity Incentive Plan Compensation
column.
|
|
|
|
(2)
|
|
We award long term incentive compensation in the form of performance
share awards as described under the section entitled “Compensation
Discussion and Analysis — Long Term Incentive Compensation —
Performance Share Awards.” It was estimated at December 31, 2007
that no shares would ultimately vest and no related compensation
expense was recorded during 2007. See Note 7 of the Notes to the
Consolidated Financial Statements included with this Annual Report
for additional information.
|
|
|
|
(3)
|
|
Assumes achievement of 80% of the revenue goal and positive operating
income at a level less than 95% of the operating income goal for both
semi-annual periods. See the section entitled “Compensation
Discussion and Analysis — Short Term Incentive Compensation —
Semi-Annual Awards” for more information.
|
|
|
|
(4)
|
|
Assumes achievement of 120% of revenue goal and 100% of the operating
income goal for both semi-annual periods. See the section entitled
“Compensation Discussion and Analysis — Short Term Incentive
Compensation — Semi-Annual Awards” for more information.
|
|
|
|
(5)
|
|
Assumes achievement of revenue and operating income goals at minimum
levels for vesting of performance shares at a rate of 56.25% of the
target number of shares. See the section entitled “Compensation
Discussion and Analysis — Long Term Incentive Compensation —
Performance Share Awards” for more information.
|
|
|
|
(6)
|
|
Assumes achievement of revenue and operating income goals at maximum
levels for vesting of performance shares at a rate of 250% of the
target number of shares. See the section entitled “Compensation
Discussion and Analysis — Long Term Incentive Compensation —
Performance Share Awards” for more information.
|
|
|
|
(7)
|
|
Options to purchase our Common Stock vest and become exercisable at
the rate of: (a) 25% of the shares upon completion of 12 months of
service following the date of grant and (b) the remainder of the shares
in 36 equal monthly installments upon completion of each
additional month of service thereafter. See the section entitled
“Executive Compensation — Potential Payments upon a Termination or
Change in Control” for a description of applicable acceleration
features.
|
|
|
|
(8)
|
|
Reflects the grant date fair value of each equity award in accordance
with FAS 123(R). The assumptions used in the calculation of this
amount are included in Note 7 to our Consolidated Financial
Statements included in this Annual Report.
|
|
|
|
(9)
|
|
Mr. Cázares was no longer an employee effective April 30, 2007 and
was therefore ineligible to receive a bonus under our
performance-based cash bonus plan for either the semi-annual period
ended June 30 or December 31, 2007. For other payments made to Mr.
Cázares’ in connection with his departure, please see the Summary
Compensation Table above. Additionally, the performance share award
and unvested options to purchase 370,000 shares of our common stock
held by Mr. Cázares were cancelled.
|
|
|
|
(10)
|
|
Mr. Menezes was no longer an employee effective September 17, 2007
and was therefore ineligible to receive a bonus under our
performance-based cash bonus plan for either the semi-annual period
ended June 30 or December 31, 2007. For other payments made to Mr.
Menezes in connection with his departure, please see the Summary
Compensation Table above. Additionally, unvested options to purchase
225,000 shares of our common stock held by Mr. Menezes were
cancelled.
|
19
Outstanding Equity Awards at Year-End
The following table sets forth certain information with respect to the unexercised options
held by our Named Executive Officers as of December 31, 2007:
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards (1)
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
Plan Awards:
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Market or Payout
|
|
|
|
Number of
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
Number of Unearned
|
|
Value of Unearned
|
|
|
|
Securities
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
Shares, Units or
|
|
Shares, Units or
|
|
|
|
Underlying
|
|
Unexercised
|
|
|
|
|
|
|
|
|
|
|
Other Rights That
|
|
Other Rights That
|
|
|
|
Unexercised Options
|
|
Options (#)
|
|
Option Exercise
|
|
Option Expiration
|
|
|
Have Not Vested
|
|
Have Not Vested
|
|
Name
|
|
(#) Exercisable (2)
|
|
Unexercisable(3)
|
|
Price ($)
|
|
Date (4)
|
|
|
(#)(5)
|
|
($)(6)
|
|
Dave Côté
|
|
|
350,000
|
|
|
|
0
|
|
|
|
3.50
|
|
|
|
10/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
0
|
|
|
|
8.36
|
|
|
|
1/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,395
|
|
|
|
2,605
|
|
|
|
19.40
|
|
|
|
1/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,625
|
|
|
|
37,375
|
|
|
|
14.00
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,708
|
|
|
|
57,292
|
|
|
|
9.51
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
100,000
|
|
|
|
12.78
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,125
|
|
|
|
173,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Yntema
|
|
|
30,000
|
|
|
|
0
|
|
|
|
48.06
|
|
|
|
1/26/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
16.88
|
|
|
|
1/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,541
|
|
|
|
0
|
|
|
|
4.71
|
|
|
|
10/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
0
|
|
|
|
8.36
|
|
|
|
1/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,166
|
|
|
|
834
|
|
|
|
19.40
|
|
|
|
1/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,750
|
|
|
|
16,250
|
|
|
|
14.00
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,958
|
|
|
|
26,042
|
|
|
|
9.51
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
75,000
|
|
|
|
12.78
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
7/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
|
138,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manuel R. Freitas
|
|
|
45,000
|
|
|
|
0
|
|
|
|
12.00
|
|
|
|
5/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
16.88
|
|
|
|
1/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,166
|
|
|
|
834
|
|
|
|
19.40
|
|
|
|
1/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,750
|
|
|
|
16,250
|
|
|
|
14.00
|
|
|
|
1/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,458
|
|
|
|
26,042
|
|
|
|
9.51
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
40,000
|
|
|
|
12.78
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
7/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
69,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nelu Mihai
|
|
|
78,854
|
|
|
|
91,146
|
|
|
|
9.51
|
|
|
|
1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
12.78
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
50,000
|
|
|
|
7.16
|
|
|
|
7/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,063
|
|
|
|
86,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg Pappas
|
|
|
85,937
|
|
|
|
79,063
|
|
|
|
8.35
|
|
|
|
11/7/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
40,000
|
|
|
|
12.78
|
|
|
|
1/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
40,000
|
|
|
|
7.16
|
|
|
|
7/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
69,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Officers:
|
|
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Arturo Cázares (7)
|
—
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|
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—
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—
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—
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Alan Menezes (8)
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|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
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—
|
|
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|
—
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|
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(1)
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|
Options vest and become exercisable at the rate of: (a) 25% of the shares upon completion of 12 months of service measured from the date of grant and
(b) the remainder of the shares in 36 equal monthly installments upon completion of each additional month of service thereafter. See the section
entitled “Executive Compensation — Potential Payments upon a Termination or Change in Control” for a description of applicable acceleration features.
|
20
|
|
|
|
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(2)
|
|
Represents stock options that are fully vested and unexercised as of December 31, 2007. Stock options become exercisable only as they vest
|
|
|
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(3)
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Represents stock options that remain unvested and unexercisable as of December 31, 2007.
|
|
|
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(4)
|
|
Each option expires ten years after the date of grant.
|
|
|
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(5)
|
|
Represents the number of shares subject to performance share awards that would vest if our performance against relevant corporate measures for the performance
period is at threshold levels. See the section entitled “Compensation Discussion and Analysis — Long-Term Incentive Compensation — Performance Share Awards”
for more information.
|
|
|
|
(6)
|
|
Valued at the $6.16 closing market price of our Common Stock at December 31, 2007.
|
|
|
|
(7)
|
|
In connection with Mr. Cázares’ resignation from employment with us effective April 30, 2007, his fully unvested performance share award and unvested options to
purchase 370,000 shares of our Common Stock held by Mr. Cázares were cancelled.
|
|
|
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(8)
|
|
In connection with Mr. Menezes’ resignation from employment with us effective September 17, 2007, unvested options to purchase 225,000 shares of our Common
Stock held by Mr. Menezes were cancelled.
|
Option Exercises and Stock Vested
The following table sets forth certain information concerning option exercises by our Named
Executive Officers during the year ended December 31, 2007:
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
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|
|
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|
|
Option Awards
|
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Name
|
|
Acquired on Exercise (#)
|
|
Exercise ($)(1)
|
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Dave Côté
|
|
|
57,000
|
|
|
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556,371
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|
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David C. Yntema
|
|
|
0
|
|
|
|
0
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|
Manuel R. Freitas
|
|
|
40,459
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|
|
|
191,310
|
|
|
Nelu Mihai
|
|
|
5,000
|
|
|
|
20,111
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|
|
Greg Pappas
|
|
|
0
|
|
|
|
0
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|
|
Former Officers:
|
|
|
|
|
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|
Arturo Cázares
|
|
|
0
|
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|
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0
|
|
|
Alan Menezes
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
(1)
|
|
Based on the difference between the market price of our Common Stock on
the date of exercise and the exercise price.
|
21
Potential Payments upon Termination or Change in Control
Corporate Transaction in which Options and Performance Share Awards are Not Assumed
Each outstanding option granted under our 1999 Plan, including options held by our Named
Executive Officers, will automatically vest in full upon a “corporate transaction” if the option is
not assumed or otherwise continued in effect by the successor corporation or replaced with an
equivalent cash incentive program. In addition, the vesting of the target number of shares subject
to each such performance share award granted to our Named Executive Officers in January 2007 will
accelerate in full upon a “corporate transaction” if the award is not assumed or continued by our
successor or replaced by our successor with a substantially equivalent award.
Under the 1999 Plan and the agreements governing the performance share awards, a “corporate
transaction” is generally defined as the occurrence of:
|
|
•
|
|
an acquisition of beneficial ownership of more than 50% of our
outstanding voting stock by a stockholder-approved merger,
|
|
|
|
|
•
|
|
a merger in which voting stock is transferred to the persons who
acquired control pursuant to either (i) the completion of a tender or
exchange offer for more than 50% of our outstanding voting stock or
(ii) a change in the majority of the Board of Directors effected
through one or more contested elections for membership on the Board of
Directors; or
|
|
|
|
|
•
|
|
a sale of substantially all of our assets.
|
Estimated Benefit to our Named Executive Officers upon a Corporate Transaction in which Options and
Performance Share Awards are Not Assumed
The following table provides an estimate of the incremental benefit our Named Executive
Officers would receive from the accelerated vesting of their options and performance share awards
upon a corporate transaction in which the options and performance share awards are not assumed or
otherwise continued in effect or replaced by the successor, and assumes that the triggering event
for such accelerated vesting occurred on December 31, 2007, the last business day of our most
recently completed fiscal year. This table does not reflect the value of equity awards granted
after December 31, 2007.
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|
Value of Acceleration of
|
|
|
|
Value of Acceleration of
|
|
Vesting of Performance
|
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Name
|
|
Vesting of Options ($)(1)
|
|
Shares ($)(2)
|
|
Dave Côté
|
|
|
0
|
|
|
|
308,000
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|
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David C. Yntema
|
|
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0
|
|
|
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246,400
|
|
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Manuel R. Freitas
|
|
|
0
|
|
|
|
123,200
|
|
|
Nelu Mihai
|
|
|
0
|
|
|
|
154,000
|
|
|
Greg Pappas
|
|
|
0
|
|
|
|
123,200
|
|
|
|
|
|
|
(1)
|
|
Reflects 100% acceleration of vesting of options that were unvested on
December 31, 2007. Value of acceleration is calculated as the
difference between the closing market price per share of our Common
Stock on December 31, 2007 of $6.16 and the exercise price per share
of unvested options having an exercise price per share less than
$6.16.
|
|
|
|
(2)
|
|
Reflects acceleration of vesting of 100% of the 2007 target
performance share awards that were unvested at December 31, 2007.
Value of acceleration is calculated using the closing market price per
share of our Common Stock on December 31, 2007 of $6.16.
|
Involuntary Termination or Resignation for Good Reason Following a Change in Control
Change of Control Agreements for Named Executive Officers Other than the Chief Executive Officer
and Chief Financial Officer
In March 2007, we entered into Change in Control Agreements with each of our Named Executive
Officers other than Dave Côté, our Chief Executive Officer, and David Yntema, our Chief Financial
Officer, reflecting benefits that were initially approved by
22
the Compensation Committee in July
2006. Pursuant to these Change in Control Agreements, if during a “change in control period,” the Named Executive Officer is involuntarily terminated without “cause” or resigns for
“good reason,” he will be entitled to the following benefits provided that he executes a release of
claims:
|
|
•
|
|
a lump sum cash severance payment equal to 18 months of base salary;
|
|
|
|
|
•
|
|
continuation of health insurance, life insurance and long-term
disability benefits for 12 months following termination;
|
|
|
|
|
•
|
|
accelerated vesting in full of any outstanding stock option or other
equity award that was granted with an exercise price equal to or
greater than the fair market value of the underlying shares on the
grant date; and
|
|
|
|
|
•
|
|
accelerated vesting of 50% of the then unvested portion of any
outstanding restricted stock, restricted stock unit, performance share
(other than the performance share awards,
discussed further below) or other outstanding equity award that does
not have an exercise price or that was granted with an exercise price
less than fair market value of the underlying shares on the grant
date.
|
The following are summaries of terms defined in the Change in Control Agreements:
“Change in control” is generally defined as the occurrence of:
|
|
•
|
|
any acquisition of beneficial ownership of more than 50% of our outstanding voting stock;
|
|
|
|
|
•
|
|
an acquisition of Packeteer by merger;
|
|
|
|
|
•
|
|
a change in the majority of our Board of Directors effected through one or more
contested elections for membership on the Board of Directors, or a Board Turn-over; or
|
|
|
|
|
•
|
|
a sale of substantially all of our assets.
|
“Change in Control Period” means the period commencing upon the date of the change in control and ending on the date 12 months thereafter.
“Cause” for involuntary termination is generally defined as any of the following actions by
the executive:
|
|
•
|
|
theft, dishonesty, misconduct, breach of fiduciary duty for personal profit, or
falsification of any of our documents or records;
|
|
|
|
|
•
|
|
material failure to abide by our code of conduct or other policies;
|
|
|
|
|
•
|
|
misconduct that results in a required accounting restatement;
|
|
|
|
|
•
|
|
unauthorized use, misappropriation, destruction or diversion of any of our tangible or
intangible assets or corporate opportunity;
|
|
|
|
|
•
|
|
any intentional act which has a material detrimental effect on our reputation or business;
|
|
|
|
|
•
|
|
repeated failure or inability to perform any reasonable assigned duties after written
notice, and a reasonable opportunity to cure, such failure or inability;
|
|
|
|
|
•
|
|
any material breach of any employment, non-disclosure, non-competition, non-solicitation
or other similar agreement which is not cured pursuant to the terms of such agreement;
|
|
|
|
|
•
|
|
failure to cooperate in a corporate investigation; or
|
|
|
|
|
•
|
|
conviction (including any plea of guilty or nolo contendere) of any criminal act
involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the
executive’s ability to perform his duties on our behalf.
|
“Good reason”
for resignation is generally defined as the occurrence, during a change of control period, of any of the following conditions without executive’s informed written
consent, which condition remains in effect ten business days after executive’s written notice of
such condition:
|
|
•
|
|
a material, adverse change in the executive’s title, duties or responsibilities;
|
|
|
|
|
•
|
|
a decrease in the executive’s base salary rate or target bonus amount;
|
|
|
|
|
•
|
|
a relocation of the executive’s work place that increases the executive’s
regular commute by more than 50 miles one-way; or
|
23
|
|
•
|
|
a material breach by us or our successor of the agreement providing for change
in control benefits following the consummation of a change in control.
|
In addition to the foregoing benefits, each executive officer will continue to be indemnified
to the fullest extent permitted by applicable law against liability arising out of his service as
an officer and will be entitled to advancement of fees and expenses incurred to the fullest extent
permitted by law. We or our successor will be required to continue coverage of the former executive
officer under a policy of directors’ and officers’ liability insurance for six years.
Pursuant to the Change in Control Agreements, each Named Executive Officer has agreed to
continue to abide by the terms of our confidentiality and proprietary rights agreement and to
non-solicitation of our employees and customers for 12 months following an involuntary termination
of employment without cause or a resignation for good reason during a change in control period. The Change in Control Agreements have a three year term that will automatically be
extended if it would otherwise expire during the period between a public announcement of a
definitive agreement for a change in control and the earlier of the termination of such definitive
agreement or twelve months following the change in control. The extended term will then
automatically expire upon the earlier of such termination or twelve months following the change in
control.
Severance and Change of Control Agreements for Chief Executive Officer and our Chief Financial
Officer
In March 2007, we entered into a Severance and Change in Control Agreement with each of
Messrs. Côté and Yntema, reflecting severance benefits that were initially approved by the
Compensation Committee in July 2006.
These Severance and Change in Control Agreements supersede the severance and change in control
provisions contained in Mr. Côté’s employment agreement and
Mr. Yntema’s offer letter. Pursuant to
these Severance and Change in Control Agreements, if, during a change in control period, Mr. Côté or Mr. Yntema is involuntarily terminated without cause or resigns for good
reason, he will be entitled to the same benefits to which other executives are entitled under the
Change in Control Agreements in the same circumstances, provided he executes a release of claims
against us, except that Mr. Côté will be entitled to a lump sum cash severance payment equal to
24 months of base salary rather than 18 months. The Severance and Change in Control Agreements also
contain the additional terms included in the Change in Control Agreements outlined above, and
utilize the same definitions of “change in control,” “change in control period,” “cause” and “good reason.”
Performance Share Award Agreements for All Named Executive Officers
Pursuant to the terms of the agreements governing the performance share awards granted to our
Named Executive Officers in January 2007, if a Named Executive Officer is involuntarily terminated
without cause upon or within 12 months following a corporate transaction, the shares subject to the award
will vest in a number equal to the target number of shares subject to the award multiplied by the
greater of (i) 50% or (ii) the percentage of the performance period that has elapsed as of the
Named Executive Officer’s termination date. Unlike the options held by Named Executive Officers,
there will be no acceleration of vesting of the shares subject to the performance share awards in
connection with a Named Executive Officer’s resignation for any reason. The performance share award
agreements utilize the same definition of “cause” used in the Change in Control Agreements, but the
definition of “corporate transaction” used in the 1999 Plan is utilized rather than the definition
of “change of control” used in the Change of Control Agreements.
Estimated Benefits Payable to our Named Executive Officers upon Involuntary Termination or
Resignation for Good Reason Following a Change in Control
The following table provides an estimate of the incremental benefits that would be paid or
provided to a Named Executive Officer if such executive is involuntarily terminated without cause
or resigns for good reason during a change in control period, subject to the
limitations with respect to performance share awards described in the footnotes thereto, and
assumes that the triggering event for such payments occurred on December 31, 2007. This
table does
not include the value of (i) any accrued benefits that were earned and payable as of that
date,
including bonuses deemed earned by the executive pursuant to the terms of the Change in Control
Agreements, (ii) any accrued benefits that are generally available to salaried employees which do
not discriminate in scope, terms or operation in favor of executive officers, or (iii) any equity
awards granted after December 31, 2007.
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Health, Life
|
|
|
|
|
|
Acceleration
|
|
|
|
|
|
|
|
|
|
Insurance
|
|
Value of
|
|
of Vesting of
|
|
|
|
|
|
Lump Sum Cash
|
|
and Long-Term
|
|
Acceleration of
|
|
Performance
|
|
Total
|
|
|
|
Payment
|
|
Disability Benefits
|
|
Vesting of
|
|
Shares
|
|
Payments
|
|
Name(1)
|
|
($)(2)
|
|
($)(3)
1
|
|
Options ($)(4)
|
|
($) (5)
|
|
($)
|
|
Dave Côté
|
|
|
830,000
|
(6)
|
|
|
14,527
|
|
|
|
0
|
|
|
|
154,000
|
|
|
|
998,527
|
|
|
David C. Yntema
|
|
|
435,000
|
|
|
|
10,148
|
|
|
|
0
|
|
|
|
123,200
|
|
|
|
568,348
|
|
|
Manual R. Freitas
|
|
|
352,500
|
|
|
|
10,136
|
|
|
|
0
|
|
|
|
61,600
|
|
|
|
424,236
|
|
|
Nelu Mihai
|
|
|
375,000
|
|
|
|
14,522
|
|
|
|
0
|
|
|
|
77,000
|
|
|
|
466,522
|
|
|
Greg Pappas
|
|
|
322,500
|
|
|
|
14,463
|
|
|
|
0
|
|
|
|
61,600
|
|
|
|
398,563
|
|
|
|
|
|
|
(1)
|
|
See the section entitled “Benefits Paid to Former Officers upon
Separation” below for disclosure related to Mr. Cazares and Mr.
Menezes.
|
|
|
|
(2)
|
|
Unless otherwise noted, consists of a lump sum cash payment equal to
18 months of 2007 base salary at the monthly base salary rate in
effect immediately prior to the assumed termination date of
December 31, 2007.
|
|
|
|
(3)
|
|
Consists of 12 months of continued health insurance, life insurance
and long-term disability benefits. The value of these benefits is
based on the premium cost as in effect on December 31, 2007.
|
|
|
|
(4)
|
|
Reflects 100% acceleration of vesting of options that were unvested on
December 31, 2007. Value of acceleration is calculated as the
difference between the closing market price per share of our Common
Stock on December 31, 2007 of $6.16 and the exercise price per share
of unvested options having an exercise price per share less than
$6.16.
|
|
|
|
(5)
|
|
Reflects acceleration of vesting of 50% of the 2007 target performance
share awards that were unvested at December 31, 2007. Value of
acceleration is calculated using the closing market price per share of
our Common Stock on December 31, 2007 of $6.16. Value would be
recognized only upon an involuntary termination upon or within 12 months
following a “corporate transaction” as defined in our 1999 Plan and
summarized under the heading “Corporate Transaction in which Options
and Performance Share Awards Are Not Assumed” above. There is no
acceleration of vesting of 2007 performance share awards in connection
with an executive’s resignation for any reason, or for an involuntary
termination upon or within 12 months of an acquisition of beneficial ownership
of more than 50% of our outstanding voting stock pursuant to a tender
or exchange offer or a Board Turn-Over.
|
|
|
|
(6)
|
|
Consists of a lump sum cash payment equal to 24 months of 2007 base
salary at the monthly base salary rate in effect immediately prior to
the assumed termination date of December 31, 2007.
|
Involuntary Termination Other than Following a Change of Control
Other than the Severance and Change in Control Agreements with our Chief Executive Officer and
our Chief Financial Officer, we do not have arrangements with any of our Named Executive Officers
providing for the payment of benefits upon the termination of employment by us other than within
12 months following our change in control. Pursuant to the Severance and Change in Control
Agreements, each of Messrs. Côté and Yntema are entitled to the following cash severance payment
from us if his employment is terminated by us without cause other
than during a
change in control period, provided that he executes a release of claims against us:
|
|
•
|
|
In the case of Mr. Côté, a lump sum cash severance payment equal to 12 months of his base salary; and
|
|
|
|
|
•
|
|
In the case of Mr. Yntema, a lump sum cash severance payment equal to nine months of his base salary.
|
25
Estimated Benefits Payable to our Named Executive Officers upon Involuntary Termination Other than
Following a Change in Control
The following table provides an estimate of the incremental benefits that would be paid to a
Named Executive Officers if the executive is terminated by us without
cause other than during a change in control period, and assumes that the triggering event for such payments
occurred on December 31, 2007. This table does not include the value of (i) any accrued benefits
that were earned and payable as of that date, including bonuses deemed earned by the executive
pursuant to the terms of the Severance and Change in Control Agreements, or (ii) any accrued
benefits that are generally available to salaried employees which do not discriminate in scope,
terms or operation in favor of executive officers.
|
|
|
|
|
|
|
|
|
Lump Sum Cash
|
|
Name
|
|
Payment ($)(1)
|
|
Dave Côté
|
|
|
415,000
|
|
|
David C. Yntema
|
|
|
217,500
|
|
|
|
|
|
|
(1)
|
|
Consists of a lump sum cash payment equal to 12 months of 2007 base
salary in the case of Mr. Côté and nine months of 2007 base salary for
Mr. Yntema, in each case at the monthly base salary rate in effect
immediately prior to the assumed termination date of December 31,
2007.
|
Options and Performance Share Awards Granted to our Executive Officers after December 31, 2007
In
2008, we granted stock options and performance share awards to our
Named Executive Officers that
are not included in the above tables. Unlike the stock options and similar to the 2007 performance
share awards, the 2008 performance share awards are not covered by the Change in Control Agreements
and Severance and Change in Control Agreements. Instead, pursuant to the terms of the agreements
governing the 2008 performance share awards:
|
|
•
|
|
50% of the target number of shares subject thereto will accelerate in vesting upon a
corporate transaction that closes before February 28, 2009;
|
|
|
|
|
•
|
|
in the event of a corporate transaction that closes February 28, 2009 or later, (i)
if the awards are not assumed, continued or replaced, 100% of the target number of
shares subject thereto will accelerate in vesting; and (ii) if the awards are assumed,
continued or replaced, and the executive is involuntarily terminated without cause upon
or within 12 months following such transaction, a percentage of the Earned Performance
Shares (as defined therein) subject thereto equal to the greater of (a) 50% or (b) the
percentage of the period since the last vesting date to the final vesting date that has
elapsed at the date of termination will vest.
|
There will be no acceleration of vesting of the shares subject to the 2008 performance share
awards in connection with an executive’s resignation for any reason. The performance share award
agreements utilize the definition of “cause” used in the Change in Control Agreements, and the
definition of “corporate transaction” used in the 1999 Plan.
Benefits Paid to Former Officers upon Separation
In April 2007, we entered into a separation agreement with Arturo Cázares, our former Vice
President, Worldwide Sales, pursuant to which he resigned his employment with us effective April
30, 2007. The principal terms of the agreement provided for our continuation of Mr. Cázares’ base
salary and a commission of $12,000 per month through September 30, 2007 in the aggregate amount of
$97,917 and our payment of his COBRA premiums in the aggregate amount of $2,260. In September
2007, we entered into a separation agreement with Alan Menezes, our former Vice President,
Marketing, pursuant to which he resigned his employment with us effective September 17, 2007. The
principal terms of the agreement provided for our continuation of Mr. Menezes base salary through
December 31, 2007 in the aggregate amount of $67,083 and our payment of his COBRA premiums in the
aggregate amount of $4,185. In connection with the foregoing agreements, each of Messrs. Cázares
and Menezes provided a release of any claims he may have had against us and acknowledged his
continuing obligations under a proprietary information and inventions agreement with us not to use
or disclose any of our confidential or proprietary information without prior written authorization
from us.
26
Compensation of Directors
The following table sets forth information concerning the compensation earned during 2007 by
each person who served as a director during 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
or Paid in
|
|
Option Awards
|
|
|
|
|
|
Cash(2)
|
|
(3)(4)(5)
|
|
Total
|
|
Name(1)
|
|
($)
|
|
($)
|
|
($)
|
|
Steven J. Campbell
|
|
|
32,000
|
|
|
|
90,764
|
|
|
|
122,764
|
|
|
Craig W. Elliott
|
|
|
24,000
|
|
|
|
90,764
|
|
|
|
114,764
|
|
|
Joseph A. Graziano
|
|
|
46,000
|
|
|
|
90,764
|
|
|
|
136,764
|
|
|
L. William Krause
|
|
|
44,000
|
|
|
|
90,764
|
|
|
|
134,764
|
|
|
Bernard F. (Bud) Mathaisel
|
|
|
32,000
|
|
|
|
113,453
|
|
|
|
145,453
|
|
|
Gregory E. Myers
|
|
|
32,000
|
|
|
|
108,142
|
|
|
|
140,142
|
|
|
Peter Van Camp
|
|
|
28,000
|
|
|
|
90,764
|
|
|
|
118,764
|
|
|
|
|
|
|
(1)
|
|
See the Summary Compensation Table for disclosure related to Dave
Côté, who is also our Chief Executive Officer and President.
Mr. Côté is our only employee director and does not receive any
additional compensation for his services as a member of our Board of
Directors.
|
|
|
|
(2)
|
|
See narrative below for a description of our standard cash
compensation arrangements for directors in 2007.
|
|
|
|
(3)
|
|
See narrative below for a description of our standard equity
compensation arrangements for directors in 2007.
|
No initial option grants were awarded in 2007. Each annual option granted in 2007 under the
Automatic Option Grant Program then in effect had an exercise price per share equal to the closing
price per share on the Nasdaq Global Select Market on the grant date, and has a maximum term of ten
years, subject to earlier termination should the optionee cease to serve as a member of the Board
of Directors. Each annual option granted to a non-employee director in 2007 under the Automatic
Option Grant Program then in effect was immediately exercisable for all the shares subject to the
option, but any shares purchased under the option are subject to repurchase by us, at the exercise
price paid per share, upon the optionee’s cessation of service on the Board of Directors prior to
vesting in those shares. The shares subject to each annual option granted will vest in a series of
two equal annual installments upon the optionee’s completion of each year of service as a member of
the Board of Directors over the two-year period measured from the option grant date. The shares
subject to each annual option granted in 2007 to a non-employee director under the Automatic Option
Grant Program then in effect will immediately vest in full upon a change in control or ownership as
described in the 1999 Plan or upon the optionee’s death or disability while a member of the Board
of Directors.
|
|
|
|
|
(4)
|
|
Dollar amount of compensation expense related to stock options
recognized for financial statement reporting purposes in accordance
with FAS 123(R). The assumptions used in the calculation of this
amount are included in Note 7 to our Consolidated Financial Statements
included in this Annual Report.
|
|
|
|
(5)
|
|
For each non-employee member of our Board of Directors, below is the
aggregate grant date fair value of each option award granted to each
non-employee member of our Board of Directors in 2007 computed in
accordance with FAS 123(R) and the aggregate number of option awards
outstanding on December 31, 2007. Assumptions used in the calculation
of the grant date fair value are included in Note 7 to our
Consolidated Financial Statements included in this Annual Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Aggregate Grant
|
|
Option Awards
|
|
|
|
Granted in 2007
|
|
Date Fair Value
|
|
Outstanding
|
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
Steven J. Campbell
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
101,000
|
|
|
Craig W. Elliott
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
475,000
|
|
|
Joseph A. Graziano
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
101,000
|
|
|
L. William Krause
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
94,500
|
|
|
Bernard F. (Bud) Mathaisel
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
75,000
|
|
|
Gregory E. Myers
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
45,000
|
|
|
Peter Van Camp
|
|
|
15,000
|
|
|
|
89,333
|
|
|
|
110,000
|
|
27
Director Compensation Policy
2007 Cash and Equity Compensation
For 2007, each non-employee member of the Board of Directors was eligible to receive cash
compensation in 2007 as follows:
•
an annual retainer of $20,000, payable at the rate of $5,000 per quarter;
•
for each member of the Audit Committee, an additional annual retainer of $12,000,
payable at the rate of $3,000 per quarter; for each member of the Compensation Committee,
an additional annual retainer of $8,000, payable at the rate of $2,000 per quarter; and for
each member of the Corporate Governance and Nominating Committee, an annual retainer of
$6,000, payable at the rate of $1,500 per quarter; and
•
for the chair of the Audit Committee, an additional annual retainer of $8,000, payable
at the rate of $2,000 per quarter; for the chair of the Compensation Committee, an
additional annual retainer of $6,000, payable at the rate of $1,500 per quarter; and for
the chair of the Corporate Governance and Nominating Committee, an annual retainer of
$4,000, payable at the rate of $1,000 per quarter.
Under the Automatic Option Grant Program for non-employee directors in effect in 2007 under
the 1999 Plan, our non-employee directors were eligible to receive option grants in 2007 as
follows:
|
|
•
|
|
for each individual who first joined the Board of Directors as a non-employee
director, an automatic grant, at the time of such initial election or appointment, of
an initial option to purchase 30,000 shares of our Common Stock, provided such person
was not previously in our employ; and
|
|
|
|
|
•
|
|
for each incumbent who was to continue to serve as a non-employee director after the
date of the annual stockholders meeting, whether or not such individual was standing for
re-election at that annual meeting, an automatically grant, on the date of that annual
meeting, of an option to purchase 15,000 shares of our Common Stock.
|
No initial option grants were awarded in 2007. Each annual option granted in 2007 under the
Automatic Option Grant Program then in effect has an exercise price per share equal to the closing
price per share on the Nasdaq Global Select Market on the grant date, and has a maximum term of
ten years, subject to earlier termination should the optionee cease to serve as a member of the
Board of Directors. Each annual option granted to a non-employee director in 2007 under the
Automatic Option Grant Program then in effect is immediately exercisable for all the shares subject
to the option, but any shares purchased under the option are subject to repurchase by us, at the
exercise price paid per share, upon the optionee’s cessation of service on the Board of Directors
prior to vesting in those shares. The shares subject to each annual option granted in 2007 will
vest in a series of two equal annual installments upon the optionee’s completion of each year of
service as a member of the Board of Directors over the two-year period measured from the option
grant date. The shares subject to each annual option granted in 2007 will immediately vest in full
upon a change in control or ownership as described in the 1999 Plan or upon the optionee’s death or
disability while a member of the Board of Directors.
2008 Cash and Equity Compensation
Beginning in 2008, each non-employee member of the Board of Directors will be eligible to
receive cash compensation in a year as follows:
•
an annual retainer of $35,000, payable at the rate of $8,750 per quarter;
•
for each member of the Audit Committee, an additional annual retainer of $12,000,
payable at the rate of $3,000 per quarter; for each member of the Compensation Committee,
an additional annual retainer of $8,000, payable at the rate of $2,000 per quarter; and for
each member of the Corporate Governance and Nominating Committee, an annual retainer of
$6,000, payable at the rate of $1,500 per quarter; and
•
for the non-employee chair of the Board of Directors, an additional annual retainer of
$10,000, payable at the rate of $2,500 per quarter; for the chair of the Audit Committee,
an additional annual retainer of $20,000, payable at the rate of $5,000 per quarter; for
the chair of the Compensation Committee, an additional annual retainer of $14,000, payable
at the rate of $3,500 per quarter; and for the chair of the Corporate Governance and
Nominating Committee, an annual retainer of $10,000, payable at the rate of $2,500 per
quarter.
Under the Non-Employee Director Grant Program for non-employee directors under the 1999 Plan
(which beginning in 2008 fully replaced the Automatic Option Grant Program that was in effect in
2007), our non-employee directors will be eligible to receive equity awards in a year as follows:
•
for each individual who first joins the Board of Directors as a non-employee director, an
automatic grant, on the date of such initial election or appointment, of a restricted stock
unit award for 16,500 shares of our Common Stock, provided such person was not previously in
our employ; and
28
•
for each incumbent who is to continue to serve as a non-employee director after the date of
each annual stockholders meeting (beginning with the 2008 annual stockholders meeting),
whether or not such individual was standing for re-election at that particular annual
meeting, an automatic grant, on the date of that annual meeting, of a restricted stock unit
award for 8,300 shares of our Common Stock.
Each initial award of restricted stock units granted under the Non-Employee Director Grant
Program will vest in a series of three equal annual installments upon the participant’s completion
of each year of service as a member of the Board of Directors over the three year period measured
from the date of grant of the restricted stock unit award. Each annual award of restricted stock
units granted under the Non-Employee Director Grant Program will vest upon the participant’s
completion of a year of service as a member of the Board of Directors over the one year period
measured from the date of grant of the restricted stock unit award. The shares subject to each
restricted stock unit award granted under the Non-Employee Director Grant Program will immediately
vest in full upon a change in control or ownership as described in the 1999 Plan or upon the
optionee’s death or disability while a member of the Board of Directors.
Additional Benefits Provided to Our Directors
Under the terms of indemnification agreements that we enter into with each of our directors,
we are obligated to indemnify each director against certain claims and expenses for which the
director might be held liable in connection with past or future service on the Board of Directors.
In addition, our Certificate of Incorporation provides that, to the greatest extent permitted by
the Delaware General Corporation Law, its directors shall not be liable for monetary damages for
breach of fiduciary duty as a director.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
1
The following table sets forth information known to us with respect to the beneficial
ownership of our Common Stock as of April 1, 2008 of (i) each beneficial owner of 5% or more of the
outstanding shares of our Common Stock; (ii) each director or director nominee; (iii) each of the
Named Executive Officers; and (iv) all of our directors and executive officers as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Number of
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Beneficially
|
|
Percent of
|
|
Name of Beneficial Owner (1)
|
|
Held (2)
|
|
Class(3)
|
|
Royce & Associates, LLC(4)
|
|
|
4,049,700
|
|
|
|
11.1
|
|
|
1414 Avenue of the Americas
New York, NY 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elliot Management Corp.(5)
|
|
|
3,559,117
|
|
|
|
9.8
|
|
|
712 5
th
Avenue
New York, New York 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC(6)
|
|
|
3,280,825
|
|
|
|
9.0
|
%
|
|
82 Devonshire Street
Boston MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington Management Company, LLP(7)
|
|
|
2,140,700
|
|
|
|
5.9
|
|
|
75 State Street
Boston, MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tamro Capital Partners LLC(8)
|
|
|
2,040,323
|
|
|
|
5.6
|
|
|
1660 Duke Street, Suite 200
Alexandria, VA 22314
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Number of
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Beneficially
|
|
Percent of
|
|
Name of Beneficial Owner (1)
|
|
Held (2)
|
|
Class(3)
|
|
Dave Côté(9)
|
|
|
726,805
|
|
|
|
2.0
|
%
|
|
Steven J. Campbell(10)
|
|
|
434,396
|
|
|
|
1.2
|
%
|
|
Craig W. Elliott(11)
|
|
|
500,150
|
|
|
|
1.4
|
%
|
|
Joseph A. Graziano(12)
|
|
|
268,500
|
|
|
|
*
|
|
|
L. William Krause(13)
|
|
|
92,000
|
|
|
|
*
|
|
|
Bernard F. Mathaisel(14)
|
|
|
78,500
|
|
|
|
*
|
|
|
Gregory E. Myers(15)
|
|
|
27,500
|
|
|
|
*
|
|
|
Peter Van Camp(16)
|
|
|
107,500
|
|
|
|
*
|
|
|
Manuel R. Freitas(17)
|
|
|
195,943
|
|
|
|
*
|
|
|
Nelu Mihai(18)
|
|
|
115,555
|
|
|
|
*
|
|
|
Greg Pappas (19)
|
|
|
127,764
|
|
|
|
*
|
|
|
David C. Yntema(20)
|
|
|
392,141
|
|
|
|
1.1
|
|
|
Arturo Cázares
|
|
|
0
|
|
|
|
*
|
|
|
Alan Menezes
|
|
|
0
|
|
|
|
*
|
|
|
All directors and officers
as a group (16 persons)(21)
|
|
|
3,072,754
|
|
|
|
8.4
|
|
|
|
|
|
|
*
|
|
Less than 1%.
|
|
|
|
(1)
|
|
Except as otherwise indicated, the address of each person listed on
the table is c/o Packeteer, Inc., 10201 North De Anza Boulevard,
Cupertino, California 95014.
|
|
|
|
(2)
|
|
The persons named in this table have sole voting and/or investment
power with respect to all shares of Common Stock shown as beneficially
owned by them unless as otherwise noted below. Under the rules of the
Securities and Exchange Commission, a person is deemed to be the
beneficial owner of shares that can be acquired by such person by
exercise of options within 60 days.
|
|
|
|
(3)
|
|
Calculated on the basis of 36,476,323 Common Stock outstanding as of
April 1, 2008, provided that any additional shares of Common Stock
that a stockholder has the right to acquire within 60 days after April
1, 2008 are deemed to be outstanding for the purpose of calculating
that stockholder’s percentage beneficial ownership. Such shares,
however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
|
|
|
|
(4)
|
|
Based on a Schedule 13G filed with the SEC on February 4, 2008.
|
|
|
|
(5)
|
|
Based on a Schedule 13D filed with the SEC as of
March 5, 2008. Includes 1,423,647 shares owned by Elliott
Associates, L.P. and 2,135,470 shares with the shared power to vote
owned by Elliott International, L.P. and Elliott International
Capital Advisors Inc.
|
|
|
|
(6)
|
|
Based on a Schedule 13G filed with the SEC on February 13, 2008, amending the statement on
Schedule 13G previously filed by FMR Corp., the predecessor of FMR LLC FMR amending .
|
|
|
|
|
|
13G previously filed by FMR Corp., the predecessor of FMR LLC.
|
|
|
|
(7)
|
|
Based on a Schedule 13G filed with the SEC on February 14, 2008. Includes 1,372,200 shares as to
which Wellington Management Company, LLP had the shared power to vote or to direct the vote.
|
|
|
|
(8)
|
|
Based on a Schedule 13G filed with the SEC on February 14, 2008. Includes 1,324,644 shares as to
which Tamro Capital Partners LLC had sole voting power.
|
|
|
|
(9)
|
|
Includes 1,806 shares held by Mr. Côté and 724,999 shares subject to stock options exercisable
within 60 days of April 1, 2008.
|
|
|
|
(10)
|
|
Includes 340,896 shares held by the Steven J. Campbell Rev Trust DTD 5/22/2000, of which
Mr. Campbell is trustee, and 93,500 shares subject to stock options exercisable within 60 days of
April 1, 2008.
|
|
|
|
(11)
|
|
Includes 24,650 shares held by the Craig W. Elliot & Lisa A. Elliott TR Elliott Family Revocable
Trust UA 11/09/99, of which Mr. Elliott is trustee, 467,500 shares subject to stock options
exercisable within 60 days of April 1, 2008, and 8,000 shares held by the Elliott Children’s
Trust for the benefit of Mr. Elliott’s minor children, of which Wells Fargo is trustee.
|
|
|
|
(12)
|
|
Includes 175,000 shares held by Mr. Graziano and 93,500 shares subject to stock options
exercisable within 60 days of April 1, 2008.
|
|
|
|
(13)
|
|
Includes 5,000 shares held by Mr. Krause and 87,000 shares subject to stock options exercisable
within 60 days of April 1, 2008.
|
30
|
|
|
|
|
(14)
|
|
Includes 11,000 shares held by Mr. Mathaisel and 67,500 shares subject to stock options
exercisable within 60 days of April 1, 2008
|
|
|
|
(15)
|
|
Includes 5,000 shares held by Mr. Myers and 22,500 shares subject to stock options exercisable
within 60 days of April 1, 2008.
|
|
|
|
(16)
|
|
Includes 5,000 shares held by Mr. Van Camp and 102,500 shares subject to stock options
exercisable within 60 days of April 1, 2008.
|
|
|
|
(17)
|
|
Includes 944 shares held by Mr. Freitas and 194,999 shares subject to stock options exercisable
within 60 days of April 1, 2008.
|
|
|
|
(18)
|
|
Includes 1,806 shares held by Mr. Mihai and 113,749 shares subject to stock options exercisable
within 60 days of April 1, 2008.
|
|
|
|
(19)
|
|
Includes 11,306 shares held by Mr. Pappas and 116,458 shares subject to stock options exercisable
within 60 days of April 1, 2008.
|
|
|
|
(20)
|
|
Includes 34,434 shares held by the David C. Yntema Trust, of which Mr. Yntema is trustee, and
357,707 shares subject to stock options exercisable within 60 days of April 1, 2008.
|
|
|
|
(21)
|
|
Includes 630,842 shares held directly or indirectly by such individuals and 2,441,912 shares
subject to stock options exercisable within 60 days of April 1, 2008.
|
EQUITY
COMPENSATION PLAN INFORMATION
1
We currently maintain two compensation plans that provide for the issuance of our Common Stock
to officers and other employees, directors and consultants. These consist of the 1999 Plan and the
1999 Employee Stock Purchase Plan, or the 1999 ESPP, each of which have been approved by
stockholders. In addition, certain nonstatutory stock options granted under individual arrangements
which have not been approved by stockholders remain outstanding. The following table sets forth
information regarding outstanding options and shares reserved for future issuance under the
foregoing plans and individual arrangements as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
Number of Shares to
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
be Issued Upon
|
|
|
Weighted-Average
|
|
|
Future Issuance Under
|
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation Plans
|
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Shares
|
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column (a))
|
|
|
Plan Category(1)
|
|
(a)(2)
|
|
|
(b)
|
|
|
(c)(3)
|
|
|
Equity compensation plans
approved by security
holders
|
|
|
7,422,687
|
|
|
$
|
10.25
|
|
|
|
8,771,778
|
|
|
Equity compensation plans
not approved by security
holders
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,422,687
|
|
|
|
|
|
|
|
8,771,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The information presented in this table excludes options we assumed in connection with the acquisition of
Tacit Networks. As of December 31, 2007, 34,131 shares of our Common Stock were issuable upon exercise of
these assumed options, at a weighted average exercise price of $1.89 per share.
|
|
|
|
(2)
|
|
Represents 6,506,157 options outstanding with a weighted average exercise price of $11.69 and a total of
916,530 shares of outstanding and unvested restricted stock units (including performance-based and
service-based restricted stock units).
|
|
|
|
(3)
|
|
Includes 3,551,269 shares that are reserved for issuance under the 1999 ESPP. The shares that are reserved
for issuance under the 1999 Plan and under the 1999 ESPP automatically increase on January 1 of each calendar
year by a number of shares equal to 5% and 2%, respectively, of our outstanding shares as of the close of
business on December 31 of the preceding calendar year.
|
31
Item 13.
Certain Relationships and Related Transactions
We have entered into indemnification agreements with each of our directors and officers and
certain other employees that may, in some cases, be broader than the specific indemnification
provisions contained in the Delaware General Corporation Law. The indemnification agreements may
require us, among other things, to indemnify the directors and officers against certain
liabilities,
other than liabilities arising from willful misconduct of a culpable nature, that may arise by
reason of their status or service as directors or officers. These agreements also may require us to
advance the expenses incurred by the directors and officers as a result of any proceeding against
them as to which they could be indemnified. We have a directors’ and officers’ insurance policy to
cover our obligations under these agreements.
In accordance with our Audit Committee charter, our Audit Committee is responsible for
reviewing and approving the terms and conditions of any related party transactions. Review of any
related party transaction would include reviewing each such transaction for potential conflicts of
interests and other improprieties.
Item 14.
Principal Accountant Fees and Services
We incurred the following fees for services rendered by KPMG LLP, our independent registered
public accounting firm in the years ended December 31, 2007 and 2006:
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|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees(1)
|
|
|
1,281,700
|
|
|
|
1,617,200
|
|
|
Audit-Related Fees
|
|
|
0
|
|
|
|
0
|
|
|
Tax Fees(2)
|
|
$
|
177,541
|
|
|
$
|
199,800
|
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,393,600
|
|
|
$
|
1,817,000
|
|
|
|
|
|
|
|
|
|
|
|
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(1)
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Audit Fees consist of fees incurred for professional services rendered
for the audit of our consolidated annual financial statements and
review of the interim consolidated financial statements included in
quarterly reports, and services that are normally provided by KPMG LLP
in connection with statutory and regulatory filings or engagements.
Audit fees also include audit services related to our compliance with
Section 404 of the Sarbanes-Oxley Act of 2002 regarding our internal
controls over financial reporting.
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(2)
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Tax Fees consist of fees billed for professional services rendered for
tax compliance, tax advice and tax planning (domestic and
international). These services included assistance regarding federal,
state and international tax compliance and international tax planning.
This category includes transfer pricing studies and analysis of our
cost sharing arrangements and cost allocation methodologies with our
international subsidiaries.
|
The Audit Committee has determined that all services performed by KPMG LLP are compatible with
maintaining the independence of KPMG LLP. In accordance with SEC rules, the Audit Committee
pre-approves all audit and non-audit services provided by our independent registered public
accounting firm. These services may include audit services, audit-related services, tax services
and other services permitted by SEC rules governing auditor independence.
The Audit Committee has adopted a policy for the pre-approval of services provided by the
independent registered public accounting firm. Under the policy, the Audit Committee may also
delegate authority to pre-approve certain specified audit or permissible non-audit services to one
or more of its members. A member to whom pre-approval authority has been delegated must report his
or her pre-approval decisions, if any, to the Audit Committee at its next meeting. Unless the Audit
Committee determines otherwise, the term for any service pre-approved by a member to whom
pre-approval authority has been delegated is 12 months.
PART IV
32
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Schedules
(1) and (2) No financial statements or schedules are filed with this Annual Report on Form
10-K/A. These items were included as part of the original filing of our Annual Report on Form
10-K on March 4, 2008.
(b) Exhibits Required
The exhibits required by Item 601 of Regulation S-K and by paragraph (c) of Item 15 of Form
10-K are listed by number corresponding to the Exhibit Table of Item 601 of Regulation S-K in
the attached Exhibit Index and are filed as part of this Annual Report on Form 10-K/A or are
incorporated herein by reference.
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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PACKETEER, INC.
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By:
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/s/ DAVE CÔTÉ
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Dave Côté
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President and Chief Executive Officer
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Date: April 29, 2008
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.
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Name
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Title
|
|
Date
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|
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President and Chief Executive Officer
(Principal Executive Officer) and Director
|
|
April 29, 2008
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Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
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|
April 29, 2008
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Chairman of the Board of Directors
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April 29, 2008
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|
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|
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Director
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|
April 29, 2008
|
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|
|
|
|
|
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|
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Director
|
|
April 29, 2008
|
|
|
|
|
|
|
|
|
|
Director
|
|
April 29, 2008
|
|
|
|
|
|
|
|
|
|
Director
|
|
April 29, 2008
|
|
|
|
|
|
|
|
|
|
Director
|
|
April 29, 2008
|
|
|
|
|
|
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|
Director
|
|
April 29, 2008
|
*
/s/ DAVE CÔTÉ
Dave Côté, Attorney-in-Fact
34
EXHIBIT INDEX
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|
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
3.1(2)
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|
Registrant’s Amended and Restated Certificate of Incorporation.
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|
|
|
|
|
3.3(1)
|
|
Registrant’s Amended and Restated Bylaws.
|
|
|
|
|
|
4.1(2)
|
|
Form of Registrant’s Specimen Common Stock Certificate.
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|
|
|
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10.1(2)*
|
|
Registrant’s 1996 Equity Incentive Plan.
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|
|
|
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10.2(2)*
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|
Registrant’s 1999 Stock Incentive Plan.
|
|
|
|
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10.3(1)*
|
|
Form of Stock Option Agreement and Notice of Exercise under 1999 Stock Incentive Plan.
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|
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10.4(2)*
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|
Form of Indemnity Agreement entered into by Packeteer, Inc. with each of its executive officers and directors.
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|
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|
|
|
10.5(3)*
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|
Amendment dated May 23, 2001 to the 1999 Stock Incentive Plan.
|
|
|
|
|
|
10.6(4)*
|
|
Amendment dated May 22, 2002 to the 1999 Stock Incentive Plan.
|
|
|
|
|
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10.7(4)
|
|
Facilities Lease Agreement dated July 15, 2003, between NMSPCSLDHB, a California Limited Partnership, and
Packeteer, Inc.
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|
|
|
|
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10.8(5)*
|
|
Employment Agreement dated September 27, 2002 between Dave Côté and Packeteer, Inc.
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|
|
|
|
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10.9(6)*
|
|
Amendment dated December 15, 2004 to the 1999 Stock Incentive Plan.
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|
|
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10.10(6)
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|
Agreement and Plan of Reorganization by and among Packeteer, Inc., P Acquisition Corporation, Mentat Inc. and
Certain Shareholders of Mentat Inc.
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|
|
|
|
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10.11(7)*
|
|
Amendment dated May 24, 2005 to the 1999 Stock Incentive Plan.
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|
|
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|
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10.12(8)
|
|
Agreement and Plan of Reorganization by and among Packeteer, Inc., Oslo Acquisition Corporation, Tacit
Networks, Inc. and Vikram Gupta dated May 8, 2006.
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|
|
|
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10.13(1)*
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Form of Notice of Grant and Restricted Stock Units Agreement (for U.S. Participants).
|
|
|
|
|
|
10.14(1)*
|
|
Form of Notice of Grant and Restricted Stock Units Agreement (for Non-U.S. Participants).
|
|
|
|
|
|
10.15(9)*
|
|
Form of Notice of Grant and Performance Share Agreement under 1999 Stock Incentive Plan (2007)
|
|
|
|
|
|
10.16(9)
|
|
First Amendment of Lease dated January 31, 2007, between NMSPCSLDHB, a California Limited Partnership, and
Packeteer, Inc.
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|
|
|
|
|
10.17(9)*
|
|
Amendment dated February 5, 2007 to the 1999 Stock Incentive Plan.
|
|
|
|
|
|
10.18(10)*
|
|
Form of Change in Control Agreement dated March 26, 2007 by and between Packeteer, Inc. and each executive
officer (other than the Chief Executive and Chief Financial Officers)
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|
|
|
|
|
10.19(10)*
|
|
Severance and Change in Control Agreement dated March 26, 2007 by and between Packeteer, Inc. and Dave Côté
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|
|
|
|
|
10.20(10)*
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|
Severance and Change in Control Agreement dated March 26, 2007 by and between Packeteer, Inc. and David Yntema
|
|
|
|
|
|
10.21(1)*
|
|
Amendment and Restatement dated December 12, 2007 of the 1999 Employee Stock Purchase Plan.
|
|
|
|
|
|
10.22(1)*
|
|
Amendment dated December 12, 2007 of the 1999 Stock Incentive Plan.
|
|
|
|
|
|
10.23(1)*
|
|
Form of Notice of Grant and Restricted Stock Units Agreement (for Nonemployee Directors).
|
|
|
|
|
|
10.24(1)*
|
|
Form of Notice of Grant and Performance Share Agreement under 1999 Stock Incentive Plan (2008)
|
|
|
|
|
|
10.25(11)*
|
|
Letter Agreement by and between Packeteer, Inc. and David Winikoff dated October 17, 2007.
|
|
|
|
|
|
21.1(1)
|
|
Subsidiaries of Packeteer.
|
|
|
|
|
|
23.1(1)
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
|
|
|
|
|
24.1(1)
|
|
Power of Attorney (see page 77).
|
|
|
|
|
|
31.1(11)
|
|
Sarbanes-Oxley Section 302 Certification — CEO
|
|
|
|
|
|
31.2(11)
|
|
Sarbanes-Oxley Section 302 Certification — CFO
|
|
|
|
|
|
32.1(11)
|
|
Sarbanes-Oxley Section 906 Certification — CEO
|
|
|
|
|
|
32.2(11)
|
|
Sarbanes-Oxley Section 906 Certification — CFO
|
35
|
|
|
|
|
*
|
|
Management contract, or compensatory plan or arrangement.
|
|
|
|
(1)
|
|
Previously filed as an exhibit to, or part of, the Registrant’s Form 10-K report filed with the SEC on March 4, 2008.
|
|
|
|
(2)
|
|
Incorporated by reference from Packeteer’s Registration Statement on Form S-1 (Reg. No. 79333-79077), as amended.
|
|
|
|
(3)
|
|
Incorporated by reference from Packeteer’s 10-K dated March 22, 2002.
|
|
|
|
(4)
|
|
Incorporated by reference from Packeteer’s 10-K dated March 29, 2001.
|
|
|
|
(5)
|
|
Incorporated by reference from Packeteer’s 10-K dated March 21, 2003.
|
|
|
|
(6)
|
|
Incorporated by reference from Packeteer’s 10-K dated March 16, 2005.
|
|
|
|
(7)
|
|
Incorporated by reference from Packeteer’s 8-K dated May 26, 2005.
|
|
|
|
(8)
|
|
Incorporated by reference from Packeteer’s 10-Q dated August 9, 2006.
|
|
|
|
(9)
|
|
Incorporated by reference from Packeteer’s 10-K dated March 16, 2007.
|
|
|
|
(10)
|
|
Incorporated by reference from Packeteer’s 10-Q dated April 31, 2007.
|
|
|
|
(11)
|
|
Filed herewith
|
36
Packeteer (NASDAQ:PKTR)
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