Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. TRANSCEND SERVICES INC (858452) 10-K/A published on Apr 26, 2012 at 12:21 pm
Reporting Period: Dec 30, 2011
Joseph G. Bleser has served as a director of the Company since February 2007. He has been the Managing Member of J Bleser, LLC, a financial consulting firm, since July 1998. Mr. Bleser served as our Chief Financial Officer, Treasurer and Secretary from January 2004 through April 2005. Prior to July 1998, Mr. Bleser had over fifteen years experience as chief financial officer and holding other financial executive positions in three separate publicly-traded companies and ten years of experience in public accounting with Arthur Andersen LLC, an international public accounting firm. Mr. Bleser serves on the Board of Directors of MiMedx Group, Inc. (OTCBB: MDXG.OB) and serves on its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Mr. Bleser also served on the Board of Directors and as Chairman of the Audit Committee of the publicly-traded company Matria Healthcare, Inc., a health enhancement company that provided disease and maternity management programs and informatics to health plans and employers, from October 2004 through the date of its sale in May 2008. Mr. Bleser is a Certified Public Accountant.
We used a similar process to set base salaries for our named executive officers for 2012. During 2011 and 2010, our Chief Financial Officer (“CFO”) conducted a survey of salaries and bonuses paid to executive officers by our publicly-traded competitors and other public companies in similar industries. The competitors surveyed during 2011 were MedQuist, Inc. and Nuance Communications, Inc., and the competitors surveyed during 2010 were MedQuist, Inc., MedAssets, Inc. and Nuance Communications, Inc. For both 2011 and 2010, these competitors had revenues significantly in excess of ours, but based on industry similarities, management believed it was appropriate to compare each of these competitors' executive compensation for the respective fiscal years. The non-competitor public companies surveyed during 2011 were Computer Programs and Systems, Inc., HealthStream, Inc., MedAssets, Inc., Medidata Solutions, Inc., Mediware Information Systems, Inc., Merge Healthcare Incorporated, and Omnicell, Inc. The non-competitor public companies surveyed during 2010 were Computer Programs and Systems, Inc., Medidata Solutions, Inc., HealthStream, Inc., Mediware Information Systems, Inc., Merge Healthcare Incorporated, Night Hawk Radiology Holdings, Inc. and Omnicell, Inc. In both years, these companies were chosen because they operated in similar industries and, in general, their annual revenues were similar to ours.
In 2010 and 2011, our CFO also compared our executive officers' compensation, including base salaries, other short-term cash compensation and long-term equity-based incentives to an executive compensation survey conducted for each year by a national consulting firm. The consulting firm did not provide advice or consulting services to the Company or the Compensation Committee. The survey results were adjusted by the consulting firm using a regression analysis on the data to more closely approximate companies with annual revenue similar to ours. The consulting firm neither developed the parameters to adjust the 2011 or 2010 executive compensation survey results nor provided advice on the results of the survey. Our CFO specifically reviewed the results for “all organizations” and organizations categorized under “general business services”. There were approximately 250 companies included in the “all organizations” category and approximately 40 companies in the “general business services” category.
We award cash incentives to executive officers, including our named executive officers, who meet short-term performance objectives that are based on a combination of corporate and individual performance. Our objective is that short-term cash incentives will represent a maximum of 50%-100% of each executive officer's base salary. For 2011, none of our named executive officers received a short-term cash incentive (normally paid in the first quarter of 2012). For 2012, each executive officer is eligible to receive a cash incentive award under our bonus plan based on the achievement of specified objective performance targets for 2012, payable in the first quarter of 2013. Each named executive officer is eligible to receive a bonus at a target rate of 50% of annual salary, with the potential to achieve 120% of the target rate (60% of annual salary) upon specified over-achievement of objectives. In addition, the Board may award up to $50,000 to each executive officer on a discretionary basis upon achievement of an objective “stretch” goal. We believe that our cash incentives are consistent with our survey data and are sufficient to attract and retain talented individuals.
Corporate performance objectives typically represent 75%-100% of total potential short-term cash incentives for each named executive officer, and individual performance objectives comprise the remaining portion of the goal. The performance of each named executive officer was (for 2011) and will be (for 2012) measured against two or more of the following corporate performance objectives:
In the event of a change of control, and if the agreement effectuating the change of control does not provide for the assumption or substitution of all of our outstanding options, with respect to any stock options awarded under the stock incentive plans, the Compensation Committee, in its sole discretion, may take any or all of the following actions: (i) accelerate the vesting and/or exercisability of any such option, (ii) cancel any such option that is not vested and/or which has not become exercisable as of the date of the change of control, (iii) cancel any such option in exchange for cash or property, (iv) provide the holder with an opportunity to exercise the option prior to the effective date of the change of control, or (v) cancel any such option and notify the holder if the fair market value of the shares that could be purchased under the options does not exceed the aggregate exercise price of the options. In the case of restricted stock awards, in the event of a change of control, with respect to any awards issued under the stock incentive plans, the Compensation Committee, in its sole discretion, may, take any or all of the following actions: (i) accelerate the vesting and/or exercisability of any such award, (ii) cancel any such award that is not vested and/or which has not become exercisable as of the date of the change of control, (iii) cancel any such award in exchange for cash or property, (iv) provide the holder with an opportunity to exercise the award prior to the effective date of the change of control, or (v) cancel any such award and notify the holder if the fair market value of the shares that could be purchased under the award does not exceed the aggregate exercise price of the award.
In accordance with its charter, the Compensation Committee is responsible for reviewing compensation for directors serving on the Board and its committees. For their first term of service, newly appointed non-employee directors are granted a restricted stock award, with the number of shares of restricted stock determined by dividing $100,000 by the closing price of our common stock on the date of appointment. Non-employee directors that are re-elected to the Board are awarded a number of shares of restricted stock determined by dividing $50,000 by the closing price of our common stock on the date of re-election. For each of these restricted stock awards, one-third of the restricted shares vest on each of the first three anniversary dates of the award. On June 1, 2011, Messrs. Bleser, Clayton, Edwards, Huff, and Thoele were each granted a restricted stock award of 1,916 shares of our common stock, with one-third vesting June 1, 2012, one-third on June 1, 2013 and one-third on June 1, 2014. In addition, each non-employee director receives (i) a cash retainer of $3,500 per quarter, with the Chairman of the Audit Committee receiving an additional quarterly retainer of $2,000, and the Chairmen of the Compensation Committee and the Nominating and Corporate Governance Committee each receiving an additional quarterly retainer of $1,000; (ii) a $1,000 fee for participating in each meeting of the Board, other than telephonic meetings for which the fee is $500 per meeting; and (iii) a $500 fee for participating in each meeting of a Committee of the Board. No fees are paid to Mr. Gerdes, the Chairman of the Board, who is also our Chief Executive Officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION