trueblue_def14a.htm
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-11(c)
or §240.14a-12 |
TRUEBLUE, INC.
(Name of Registrant as Specified In Its
Charter)
TRUEBLUE, INC.
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
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Date
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Tacoma, Washington
March
31, 2010
Dear
Shareholders:
It is a pleasure to invite
you to your Company’s 2010 annual meeting of shareholders, to be held at
TrueBlue’s corporate headquarters, 1015 A Street, Tacoma, Washington, 98402, on
Wednesday, May 12, 2010, at 10:00 a.m. (Pacific Daylight Time).
Under the Securities and
Exchange Commission rules that allow companies to furnish proxy materials to
shareholders electronically, TrueBlue has decided to deliver our proxy materials
to most shareholders over the Internet. This delivery process allows us to
provide shareholders with the information they need, while at the same time
conserving resources and lowering costs to the Company. On March 31, 2010, we
mailed to our shareholders a Notice of Internet Availability of Proxy Materials
(the “Notice”) containing instructions on how to access our 2010 proxy statement
and 2009 annual report to shareholders. The Notice also provides instructions on
how to vote online or by telephone and includes instructions on how to receive a
paper copy of the proxy materials by mail.
The matters to be acted upon
are described in the accompanying Notice of Annual Meeting of Shareholders and
Proxy Statement.
I look forward to seeing our
shareholders at the meeting. We will report on TrueBlue’s operations and respond
to questions you may have.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan
to attend, it is important that your shares be represented. Please vote over the
internet, by telephone, or by requesting and mailing a proxy card as soon as
possible in order to ensure that your vote is counted. If you are a shareholder
of record and attend the meeting you will, of course, have the right to vote
your shares in person.
Very truly yours, |
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/s/ Joseph P. Sambataro,
Jr. |
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Joseph P. Sambataro, Jr. |
Chairman of the
Board |
TRUEBLUE, INC.
1015 A Street
Tacoma, Washington
98402
__________
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
Wednesday, May 12,
2010
The annual meeting of the
shareholders of TrueBlue, Inc., a Washington corporation (the “Company”), will
be held at TrueBlue’s corporate headquarters, 1015 A Street, Tacoma, Washington,
98402, on Wednesday, May 12, 2010, at 10:00 a.m. (Pacific Daylight Time) for the
following purposes:
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to elect
the directors named in the accompanying proxy statement to serve until the
next annual meeting of shareholders, and until their respective successors
are elected and qualified;
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to
ratify the selection of Deloitte & Touche LLP to serve as the
independent registered public accounting firm of the Company for the
fiscal year ending December 31, 2010;
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to
approve the Company’s 2010 Employee Stock Purchase
Plan;
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to
approve amendments to the Company’s 2005 Long-Term Equity Incentive Plan;
and
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to
transact such other business as may properly come before the
meeting.
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Important notice regarding the availability of Proxy
Materials for the Annual Meeting of Shareholders to be held on May 12,
2010: Our proxy statement is
attached. Financial and other information concerning TrueBlue is contained in
our annual report to shareholders for the 2009 fiscal year. The proxy statement
and our 2009 annual report to shareholders are available on our website at
www.TrueBlueInc.com. Additionally, and in accordance with Securities and
Exchange Commission rules, you may access our proxy materials and vote your
shares at www.proxyvote.com.
YOUR
VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU
ARE URGED TO VOTE OVER THE INTERNET, BY TELEPHONE, OR BY REQUESTING AND
RETURNING A PROXY CARD AS PROMPTLY AS POSSIBLE IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO
REVOKE IT LATER OR, IF YOU ARE A SHAREHOLDER OF RECORD, VOTE YOUR SHARES IN
PERSON IN THE EVENT THAT YOU SHOULD ATTEND THE MEETING.
Only shareholders of record
at the close of business on March 10, 2010, will be entitled to notice of, and
to vote at, the annual meeting and any adjournments thereof. Brokers cannot vote
for Items 1, 3 or 4 without your instructions.
By Order of the Board of Directors |
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/s/ James E.
Defebaugh |
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James E. Defebaugh |
Secretary |
Tacoma, Washington
March
31, 2010
TRUEBLUE, INC.
1015 A Street
Tacoma, Washington
98402
____________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, May 12,
2010
____________________________
The Board of Directors of TrueBlue, Inc., a
Washington corporation, is soliciting your proxy to vote your shares at the 2010
Annual Meeting of Shareholders of the Company to be held at 10:00 a.m. (Pacific
Daylight Time) on Wednesday, May 12, 2010, at the corporate headquarters of
TrueBlue, Inc., 1015 A Street, Tacoma, Washington, and at any adjournment
thereof. This proxy statement contains the required information under the rules
of the Securities and Exchange Commission and is designed to assist you in
voting your shares.
Revocation of Proxies. If you execute a proxy, you will retain the right to
revoke it at any time before it is voted. You may revoke or change your proxy
before it is voted by: (i) sending a written revocation to the Corporate
Secretary of the Company at P.O. Box 2910, Tacoma, Washington 98401; (ii)
submitting a proxy with a later date; (iii) delivering a written request in
person to return the executed proxy; or, (iv) if you are a shareholder of
record, attending and voting at the annual meeting. Your right to revoke your
proxy is not limited by or subject to compliance with a specified formal
procedure, but you should give written notice to the Secretary of the Company at
or before the annual meeting so that the number of shares represented by proxy
can be recomputed.
Voting of Proxies. If you properly request, execute, and return a proxy
card, vote over the internet, or by telephone, the individuals named on the
proxy card (your proxies) will vote your shares in the manner you indicate. We
urge you to specify your choices by marking the appropriate boxes on a proxy
card, or following the instructions carefully for voting over the internet or by
telephone. If you sign and return the proxy card without indicating your
instructions, your shares will be voted FOR PROPOSAL 1 (the election of
directors nominated by the Board of Directors), FOR PROPOSAL 2 (ratification of
selection of independent registered public accounting firm), FOR PROPOSAL 3
(adoption of the 2010 Employee Stock Purchase Plan), FOR PROPOSAL 4 (approval of
amendments to the 2005 Long-Term Equity Incentive Plan) and, with respect to any
other business that may come before the meeting, as recommended by the Board of
Directors. In the vote on proposals, you may vote “For” or “Against” or
“Abstain” from voting (for the election of Directors, you may do this for any
Director nominee that you specify).
Quorum. A quorum is necessary to hold a valid meeting. If
shareholders entitled to cast at least a majority of all the votes entitled to
be cast at the annual meeting are present in person or by proxy, a quorum will
exist. Proxies received but marked as abstentions and Broker Non-Votes
(discussed below) will be treated as shares that are present and entitled to
vote for purposes of determining a quorum.
Broker Non-Votes. If you are a beneficial owner whose shares are held
of record by a broker, you must instruct the broker how to vote your shares. If
you do not provide voting instructions, your shares will not be voted on any
proposal on which the broker does not have discretionary authority to vote. This
is called a “Broker Non-Vote.” In these cases, the broker can register your
shares as being present at the Annual Meeting for purposes of determining the
presence of a quorum but will not be able to vote on those matters for which
specific authorization is required under the rules of the New York Stock
Exchange (“NYSE”). There is an important change this year regarding Broker
Non-Votes and Director elections. See below for information about the
change.
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If you are a beneficial
owner whose shares are held of record by a broker, your broker has discretionary
voting authority under NYSE rules to vote your shares on the ratification of
Deloitte & Touche LLP, even if the broker does not receive voting
instructions from you. However, your broker does not have discretionary
authority to vote on the election of Directors or on the two benefit plan
proposals without instructions from you, in which case a Broker Non-Vote will
occur and your shares will not be voted on these matters.
Important Change: An NYSE rule change that is
effective for the 2010 Annual Meeting no longer permits brokers to vote in the
election of Directors if the holder of record has not received instructions from
the beneficial owner. This represents a change from prior years, when brokers
had discretionary voting authority in the election of Directors. Accordingly, it
is particularly important that beneficial owners instruct their brokers how they
wish to vote their shares.
Voting Requirements to Approve Each Proposal.
As described in more detail under
“Proposal 1, Election of Directors,” the Company has adopted majority voting
procedures for the election of Directors in uncontested elections. As this is an
uncontested election, each of the nominees for election as Directors will be
elected by the vote of the majority of the votes cast. A majority of votes cast
means that the number of shares cast “For” a director’s election exceeds the
number of votes cast “Against” that director. There is no cumulative voting for
the Company’s directors. The proposal to ratify the appointment of Deloitte
& Touche LLP as the Company’s independent registered accounting firm will be
approved under Washington law if the number of votes cast “For” the matter
exceeds the number of votes cast “Against” the matter. The proposal to adopt the
Company’s 2010 Employee Stock Purchase Plan will be approved under Washington
law if the number of votes cast “For” the matter exceeds the number of votes
cast “Against” the matter. The proposal to approve amendments to the Company’s
2005 Long-Term Equity Incentive Plan will be approved under Washington law if
the number of votes cast “For” the matter exceeds the number of votes cast
“Against” the matter. However, NYSE rules require that certain equity
compensation plans and material amendments to such plans, such as the proposed
amendments to the 2005 Long-Term Equity Incentive Plan, must be approved by a
majority of the votes cast on the proposal, provided that the total votes cast
on the proposal constitute a majority of the shares entitled to vote on the
proposal.
Effect of Abstentions and Broker
Non-Votes. Abstentions and Broker
Non-Votes will have no practical effect in the election of directors, in the
ratification of appointment of Deloitte & Touche LLP, or the adoption of the
2010 Employee Stock Purchase Plan because abstentions and Broker Non-Votes do
not represent votes cast “For” or “Against” the respective proposal. For
purposes of the vote on the approval of amendments to the 2005 Long-Term Equity
Incentive Plan, (i) abstentions will have the same effect as votes “Against” the
proposal because the NYSE takes the position that abstentions are votes cast,
and (ii) Broker Non-Votes will have the same effect as votes “Against” the
proposal unless holders of more than 50% in interest of all shares entitled to
vote on the proposal cast votes, in which event Broker Non-Votes will not have
any effect on the result of the vote.
Record Date. Shareholders of record at the close of business on
March 10, 2010, are entitled to vote at the annual meeting. On March 10, 2010,
the Company had 43,824,473 shares of common stock outstanding. Each share of
common stock entitles the holder thereof to one vote.
If on the close of business
on the record date, your shares were registered directly in your name with our
transfer agent, then you are a shareholder of record. As a shareholder of
record, you may vote in person at the meeting or vote by proxy as referenced
above in the section titled “Voting of Proxies.”
If on the close of business
on the record date, your shares were held, not in your name, but rather in an
account at a brokerage firm, bank or other agent, then you are the beneficial
owner of shares held in “street name” and these proxy materials are being made
available or being forwarded to you by your broker, bank or other agent.
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The broker, bank or other
agent holding your account is considered to be the shareholder of record for
purposes of voting at the annual meeting. As a beneficial owner, you have the
right to direct your broker, bank or other agent on how to vote the shares in
your account. You are also invited to attend the annual meeting. However, since
you are not the shareholder of record, you may not vote your shares in person at
the meeting unless you request and obtain a valid legal proxy issued in your
name from your broker, bank or other agent.
Discretionary Authority. If any nominee for director is unable to serve or
for good cause will not serve, or if any matters not specified in this proxy
statement come before the meeting, eligible shares will be voted as recommended
by the Board of Directors specified by the named proxies pursuant to
discretionary authority granted in the proxy. At the time this proxy statement
was printed, we were not aware of any other matters to be voted on.
Solicitation of Proxies. Proxies may be solicited by officers, directors and
regular supervisory and executive employees of the Company, none of whom will
receive any additional compensation for their services.
Mailing and Forwarding of Proxy
Materials. On or about March 31,
2010, we mailed to our shareholders a Notice of Internet Availability of Proxy
Materials (the “Notice”) directing shareholders to a web site where they can
access our 2010 proxy statement and fiscal 2009 annual report and view
instructions on how to vote via the Internet or by telephone. If you received
the Notice only and would like to receive a paper copy of the proxy materials,
please follow the instructions printed on the Notice to request that a paper
copy be mailed to you. We will arrange with brokerage firms and other
custodians, nominees and fiduciaries to forward proxy solicitation material to
certain beneficial owners of the common stock and will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses that they incur as a result of forwarding the proxy
materials.
Executive Offices. The principal executive office of the Company is
located at 1015 A Street, Tacoma, Washington 98402. The mailing address of the
principal executive office is P.O. Box 2910, Tacoma, Washington 98401. The
telephone number for the Company is (253) 383-9101.
PROPOSAL 1. ELECTION OF DIRECTORS
Majority Voting
The Company’s directors are
elected each year at the annual meeting of shareholders to serve until their
successors are elected and qualified, or until they resign or are removed or are
otherwise disqualified to serve. The Company’s Board of Directors currently
consists of eight directors.
A nominee for director in an
uncontested election, such as this one, will be elected if the votes cast in
favor of a nominee’s election exceed the votes cast opposing the nominee’s
election. Abstentions and Broker Non-Votes are not considered “votes cast.”
Likewise, a share otherwise present at the meeting as to which a shareholder
gives no authority or direction to vote is also not considered a “vote cast.” In
a “contested election” (as defined in Article II, Section 2.3 of the Company’s
bylaws), the nominees for election as directors who receive the greatest number
of votes cast will be elected directors.
A nominee for director in an
uncontested election who does not receive a majority vote but who was a director
at the time of the election shall not be elected, but shall continue to serve as
a holdover director until the earliest of: (a) 90 days after the date on which
an inspector determines the voting results as to that director pursuant to
Section 23B.07.290 of the Washington Business Corporation Act; (b) the date on
which the Board of Directors appoints an individual to fill the office held by
such director, which appointment shall constitute the filling of a vacancy by
the Board of Directors; or (c) the date of the director’s resignation. Any
vacancy resulting from the non-election of a
- 5 -
director under these
circumstances may be filled by the Board of Directors as provided in Article II,
Section 2.11 of the Bylaws. The Governance and Nominating Committee will
consider promptly whether to fill the position of a nominee failing to receive a
majority vote and make a recommendation to the Board of Directors about filling
the position. The Board of Directors will act on the Governance and Nominating
Committee’s recommendation and within ninety (90) days after the certification
of the shareholder vote will disclose publicly its decision. Except as provided
in the next sentence, a director who failed to receive a majority vote for
election will not participate in the Governance and Nominating Committee
recommendation or Board of Directors decision about filling his or her office.
If no director receives a majority vote in an uncontested election, then the
incumbent directors (x) will nominate a slate of directors and hold a special
meeting for the purpose of electing those nominees as soon as practicable, and
(y) may in the interim fill one or more director positions with the same
director(s) who will continue in office until their successors are
elected.
The Nominees
The Board of Directors has
nominated the following persons for election as directors, all of whom are
currently directors. The
Board of Directors recommends a vote “FOR” each of the
nominees. Proxies cannot be voted
for a greater number of persons than the number of nominees named. The
biographies of each of the nominees and continuing directors below contains
information regarding the person’s service as a director, business experience,
director positions held currently or at any time during the last five years, and
information regarding involvement in certain legal or administrative
proceedings, if applicable. Each biographic summary is followed by a brief
summary of certain experiences, qualifications, attributes or skills that led
the Corporate Governance and Nominating Committee (the “Governance Committee”)
and the Board to determine that each nominee should serve as a director for the
Company beginning at the 2010 Annual Meeting. The summaries do not include all
of the experiences, qualifications, attributes or skills of the nominees.
General information regarding the nomination process is included in the
Corporate Governance Section under the “Nominations for Directors”
heading.
Steven C. Cooper, 47, has served as a Director and the Company’s
Chief Executive Officer since 2006, and has served as President since 2005. From
2001 to 2005, Mr. Cooper served as the Company’s Executive Vice President and
Chief Financial Officer and from August 2000 to February 2001 as the Vice
President of Finance; and from April 1999 to August 2000 as the Company’s
Corporate Controller. Prior to joining the Company in 1999, Mr. Cooper held
various senior management positions with Deloitte, providing professional
services, and Albertsons, Inc., a NYSE-listed retail company.
Mr. Cooper has extensive
experience in accounting, finance, operations and strategic planning for the
Company as well as in his prior career. Mr. Cooper is the only management member
of the Board, thus his participation on the Board fulfills a critical
communication and leadership role.
Thomas E. McChesney, 63, has served as a Director of the Company since
1995. From 2004 to 2009, Mr. McChesney was President of SR Footwear, LLC. From
1998 to 2005, he was Director of Investment Banking with Blackwell Donaldson and
Company. Mr. McChesney was previously a director of Nations Express, Inc. and is
currently a Director of ConnectSoft, Inc.
Mr. McChesney contributes
his long experience as a Director of the Company, including 13 years as the
Chair of our Compensation Committee, together with extensive financial and
entrepreneurial experience as an executive and board member in the financial
services industry as well as a wide variety of other enterprises.
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Gates McKibbin, 63, has served as a Director of the Company since
2001. Since 1996, Ms. McKibbin has been self-employed as a consultant developing
comprehensive strategy and leadership programs for large, nationally respected
organizations. Prior to 1996, Ms. McKibbin held numerous executive and
consulting positions.
Ms. McKibbin has a Ph.D. in
Organizational Theory and Research, spends significant time visiting and
consulting with management and staff at all levels throughout the Company and
provides the Board with her unique and insightful observations especially those
involving human relations, strategic and organizational change and leadership
development.
Joseph P. Sambataro, Jr., 59, has served as a Director since 2000 and as
Chairman of the Board since October 2008. Mr. Sambataro served as the Company’s
Chief Executive Officer from 2001 until 2006, and served as the Company’s
President from 2001 until 2005. Mr. Sambataro joined the Company in 1997 and
served as Chief Financial Officer, Treasurer and Assistant Secretary until 2001
and as Executive Vice President until March 2001. Prior to joining the Company,
he worked with BDO Seidman, LLP, KPMG Peat Marwick and in senior management of
biotechnology firms in Seattle.
Mr. Sambataro’s long and
successful tenure as CEO and CFO for the Company during its formative years
combined with his effective leadership and coaching skills, financial and
accounting expertise and unique ability to develop consensus are among the
contributions he makes to the Board and the primary reasons why he serves as our
Chairman.
Bonnie W. Soodik, 59, has served as a Director since her appointment
in March 2010. Ms. Soodik’s career spanned 30 years with The Boeing Company,
where she most recently served as a Senior Vice President, Office of Internal
Governance and a member of the Boeing Executive Council. Ms. Soodik also served
in various Vice President roles within Boeing and McDonnell Douglas Corporation
where she began her career in 1977.
Ms. Soodik has experience
from a broad number of functions at Boeing, from operations to human resources
and has overseen governance, compliance and regulatory affairs. Her experience
with such a large organization provides a valuable resource to the
Company.
William W. Steele, 73, has served as a Director of the Company since
August 2001, Chair of the Governance Committee since June 2003 and the Lead
Independent Director since October 2008. Mr. Steele is currently a Director,
Audit Committee member, and Chairman of the Executive Committee of ABM
Industries, a large facilities services contractor traded on the New York Stock
Exchange. In the course of his 43-year career with ABM Industries, Mr. Steele
was appointed its President in 1991 and its Chief Executive Officer in 1994, and
served in those capacities until his retirement in October of 2000.
Mr. Steele’s long term
operating, executive, strategic and continuing board experience with ABM, a
multi-unit service company that shares many attributes with our Company, is
invaluable to the Board in its decision making and leadership processes. As
Chair of our Governance Committee and Lead Independent Director, Mr. Steele is a
student and champion of good governance and best practices.
Robert J. Sullivan, 79, has served as a Director of the Company since
1994, and as Chairman of the Board from 2000 to 2008. Mr. Sullivan’s career
included 12 years at American Express Company and related companies, where he
served as a Financial Officer and Division General Manager. He served three
years as Chief Financial Officer of Cablevision, Inc., and was General Manager
of the Long Island cable television system. He also spent 10 years as a
financial consultant to small businesses, including TrueBlue from 1993 to
1994.
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Mr. Sullivan has the longest
term experience with the Company and extensive accounting, finance and
management experience. Mr. Sullivan began his career as a Certified Public
Accountant with a Big Four firm, is an audit committee financial expert and has
served as a member of the Audit Committee since its inception.
Craig E. Tall, 64, has served as a Director of the Company since
2006. Mr. Tall was employed by Washington Mutual from 1985 to 2008, and was a
member of Washington Mutual’s Executive Committee from 1985 through 2004. Mr.
Tall served as the Vice Chair of Corporate Development for Washington Mutual
from 1999 to 2008. Mr. Tall’s management responsibilities included a variety of
assignments, such as mergers and acquisitions, commercial banking, consumer
finance, managing Washington Mutual’s life insurance company, strategic
planning, real estate, special credits and venture capital fund. Before joining
Washington Mutual, Mr. Tall was president of Compensation Programs, Inc., a
national employee benefits consulting firm.
Mr. Tall’s extensive and
high level experience in the financial services industry as well as his
executive and board involvement with numerous other businesses and organizations
enables Mr. Tall to make very significant contributions to the Board’s decision
making processes especially in strategic planning and financial matters. The
depth and breadth of Mr. Tall’s experience and skills are also evident by the
fact that he qualifies as an audit committee financial expert, serves as Chair
of our Audit Committee and as a member of our Compensation
Committee.
The Governance Committee and the Board of Directors
Recommends A Vote FOR the Election of Each
Nominee Named
Above.
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has
appointed Deloitte & Touche LLP as the independent registered public
accounting firm to audit the Company’s consolidated financial statements for the
fiscal year ending December 31, 2010. Representatives of Deloitte & Touche
LLP will be present at the annual meeting to make a statement, if they desire to
do so, and respond to appropriate questions by shareholders. The ratification of
the Board’s selection of Deloitte & Touche LLP as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2010,
will be approved if the number of votes cast in favor of the ratification
exceeds the numbers of votes cast against ratification.
Proxies will be voted “FOR” the ratification of the appointment of Deloitte
& Touche LLP as the Company’s independent registered public accounting firm
for fiscal 2010 unless other instructions are indicated on your
proxy. In the event shareholders
do not ratify the appointment, the Audit Committee will reconsider the
appointment. The Audit Committee reserves the right to change its independent
registered public accounting firm without seeking shareholder approval if it
determines that such change is in the best interests of the
Company.
The Board of Directors Recommends A Vote FOR the
Ratification of Deloitte & Touche LLP as the
Company’s Independent
Registered Public Accounting Firm.
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Fees Paid to Independent Registered Public Accountant
for Fiscal Years 2009 and 2008
Deloitte & Touche LLP was the independent
registered public accounting firm which audited the Company’s consolidated
financial statements for the fiscal year ending December 25, 2009. Services
provided to the Company and its subsidiaries by Deloitte & Touche LLP
(“Deloitte”) in fiscal 2009, and by PricewaterhouseCoopers LLP (“PwC”) in fiscal
2008 are described in the following table:
|
2009 |
|
2008 |
Audit fees: (1) |
$ |
748,520 |
|
$ |
1,309,290 |
Audit-related fees: (2) |
$ |
0 |
|
$ |
189,911 |
Tax fees: (3) |
$ |
39,247 |
|
$ |
62,446 |
All
other fees: (4) |
$ |
15,953 |
|
$ |
3,900 |
____________________
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(1) |
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Audit fees for the 2009 and 2008 fiscal years were for services
rendered for the audits of the consolidated financial statements included
in the Company’s Annual Reports on Form 10-K, quarterly reviews of the
financial statements included in the Company’s Quarterly Reports on Form
10-Q, reviews of internal controls over financial reporting pursuant to
Section 404 of the Sarbanes-Oxley Act and other Securities and Exchange
Commission filings including consents, comfort letters, and other
assistance required to complete the year-end audit of the consolidated
financial statements.
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(2) |
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All audit-related fees for the 2009 and 2008 fiscal years were for
due diligence related to mergers and acquisitions
activity.
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(3) |
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Tax fees include consultation on tax compliance, tax advice, and
tax planning.
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(4) |
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All other fees for the 2009 and 2008 fiscal years include
subscriptions to accounting research services and other
projects.
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The services described above were approved by the
Audit Committee pursuant to the policy described below; the Audit Committee did
not rely on any of the exceptions to pre-approval under Rule 2-01(c)(7)(i)(C)
under Regulation S-X.
Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Registered Public Accounting
Firm
The Audit Committee pre-approves all audit and
non-audit services provided by the independent registered public accounting firm
prior to the engagement of the independent accountants with respect to such
services. The Company’s independent accountants may be engaged to provide
non-audit services only after the Audit Committee has first considered the
proposed engagement and has determined in each instance that the proposed
services are not prohibited by applicable regulations, and that the accountants’
independence will not be materially impaired as a result of having provided such
services. In making this determination, the Audit Committee shall take into
consideration whether a reasonable investor, knowing all relevant facts and
circumstances would conclude that the accountants’ exercise of objective and
impartial judgment on all issues encompassed within the accountants’ engagement
would be materially impaired. The Audit Committee may delegate its approval
authority to pre-approve services provided by the independent accountants to one
or more of the members of the Audit Committee, provided that any such approvals
are presented to the Audit Committee at its next scheduled meeting.
Termination of PricewaterhouseCoopers LLP; Engagement
of Deloitte & Touche LLP
On February 25, 2009, the Company dismissed PwC as
its independent registered public accounting firm and appointed Deloitte to be
engaged as the Company’s new independent registered public accounting firm. The
decision to change independent registered public accounting firms was made by
the Audit Committee of the Company’s Board of Directors.
- 9 -
The Company disclosed these events in a Current
Report on Form 8-K filed with the SEC on March 2, 2009 (the “Form 8-K”), which
included the following information:
The reports of PwC on the Company’s financial
statements as of and for the years ended December 28, 2007 and December 26, 2008
contained no adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principle. During the
fiscal years ended December 28, 2007 and December 26, 2008 and through February
25, 2009, there were (1) no disagreements with PwC on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of PwC,
would have caused PwC to make reference thereto in their reports on the
financial statements for such years, and (2) no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)). PwC provided to the Company a letter
addressed to the SEC stating that it agreed with the statements of the Company
made in the Form 8-K in response to Item 304(a).
During the fiscal years ended December 28, 2007 and
December 26, 2008 and through February 25, 2009, the Company did not consult
with Deloitte regarding either (1) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company’s financial statements, or (2) any
matter that was either the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is described in Item
304(a)(1)(v) of Regulation S-K.
PROPOSAL 3. APPROVAL OF THE 2010 EMPLOYEE STOCK
PURCHASE PLAN
At the Meeting, the shareholders will be requested to
approve the Company’s 2010 Employee Stock Purchase Plan, a copy of which is
attached as Exhibit A (the “Purchase Plan”). The Board of Directors recommends
that shareholders vote for approval of the Purchase Plan so that the Company can
provide employees the opportunity to purchase the Company’s stock through
payroll deductions at an attractive price. The Purchase Plan is intended to
qualify as an “employee stock purchase plan” under Section 423 of the Internal
Revenue Code of 1986, as amended (the “Code”).
The Board of Directors recommends a vote “FOR”
approval of the 2010 Employee Stock Purchase Plan.
Description Of The Purchase
Plan. The purpose of the Purchase Plan is to provide eligible employees
of the Company who wish to become shareholders in the Company a convenient
method of doing so. The Board of Directors believes that employee participation
in the ownership of the business will be to the mutual benefit of both the
employees and the shareholders.
Number Of Shares Reserved
For The Purchase Plan. The number of shares that may be issued under the
Purchase Plan shall not exceed 1,000,000 shares of the Company’s common stock,
subject to adjustment in the event of stock dividends, stock splits, combination
of shares, recapitalizations, or other changes in the outstanding common stock.
No shares will be issued under the 1996 Employee Stock Purchase Plan following
the effective date of the Purchase Plan.
Eligible Employees.
Full-time employees of the Company or certain of its subsidiaries are eligible
if they meet certain conditions. To be eligible, the employee must have
completed six months of employment and the employee’s customary employment must
be greater than 20 hours per week and more than five months in any calendar
year. Any employee who owns (or would own through participation in the Purchase
Plan) shares representing 5% or more of the total combined voting power or value
of all classes of shares of the Company or its subsidiary corporations is not
permitted to participate in the Purchase Plan. As of the date of this proxy
statement approximately 2,200 employees were eligible to be selected to receive
awards under the Purchase Plan.
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Offering Periods.
Each offering period is a three-month period. The first offering shall commence
on July 1, 2010. Thereafter, offerings shall commence on the first day of each
subsequent three-month offering period and continue until the Purchase Plan is
terminated according to its terms. In addition to the regular three-month
offering periods under the Purchase Plan, the Company may create subplans within
the Purchase Plan with differing offering periods.
Price Per Share. The
purchase price per share shall be the lesser of: (1) 85% of the fair market
value of the stock on the offering date; or (2) 85% of the fair market value of
the stock on the last business day of the offering. Fair market value shall mean
the closing bid price as reported on the New York Stock Exchange. As of March
19, 2010, the closing price of a share of the Company’s common stock on the New
York Stock Exchange was $15.90.
Payroll Deductions And
Purchase Of Shares. Each eligible employee will be allowed to deduct 2%
to 10% of his or her base pay for purchase of shares under the Purchase Plan.
Base pay means regular straight time earnings, plus bonuses, overtime payments,
payments for incentive compensation, and commissions. Amounts deducted from each
participating employee will be credited to an account held by the Company and
accumulated for the purpose of purchasing stock under the Purchase Plan. On each
date of exercise, the entire amount in each participating employee’s account is
used to purchase shares of common stock. The funds allocated to an employee’s
account shall remain the property of the respective employee at all times but
may be commingled with the general funds of the Company. No participant may: (i)
purchase stock the fair market value of which exceeds $25,000 during any
calendar year, or (ii) purchase more than 2,500 shares in any Offering
Period.
Withdrawing From
Participation. Upon termination of employment for any reason whatsoever,
including but not limited to death or retirement, the balance in the account of
a participating employee shall be paid to the employee or his or her estate. An
employee may withdraw from an offering at any time before the first day of the
last month of the offering period. Upon withdrawal, the amount in the employee’s
account will be refunded. An employee may suspend participation in an offering
by reducing his or her payroll deduction percentage election to 0% for the
remainder of the offering. In such a case, the amount accumulated in the
employee’s account prior to the suspension is not refunded, but is used to
purchase shares as described in the preceding paragraph. An employee who has
withdrawn from or suspended participation in an offering may not again
participate in the Purchase Plan until the next offering commences.
Amendment Or Discontinuance
Of The Purchase Plan. The Board shall have the right to amend, modify, or
terminate the Purchase Plan at any time without notice. Amendments of the
Purchase Plan will not, except for adjustments related to changes in the
Company’s capitalization, increase the total number of shares to be offered
unless shareholder approval is obtained.
Administration. The
Purchase Plan will be administered by the Board which has the power to make,
administer, and interpret such rules and regulations as it deems necessary to
administer the Purchase Plan.
Termination Of The Purchase
Plan. The Purchase Plan will terminate at the earliest of the following:
(1) dissolution of the Company or the effective date of a merger or
consolidation wherein the Company is not to be the surviving corporation (other
than a merger to a related entity), provided that prior to such event the
Company may permit a participating employee to purchase shares with monies in
his or her account; (2) the date the Board terminates the Purchase Plan; and (3)
the date when all shares reserved under the Purchase Plan have been
purchased.
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Benefits Under The Purchase
Plan. Benefits to be received by participants under the Purchase Plan,
including our executive officers, are not currently determinable because
participation in the Purchase Plan is voluntary and the benefits are subject to
the market price of the Company’s common stock at future dates.
Federal Income Tax
Consequences Relating to the Purchase Plan. The Purchase Plan is intended
to qualify as an “employee stock purchase plan” under Section 423 of the Code.
The following discussion summarizes the principal anticipated federal and state
income tax consequences of purchases of stock under the Purchase Plan to
participants and to the Company. This summary is not intended as tax advice and
participants in the Purchase Plan should consult with their personal tax
advisors with respect to the individual tax consequences of their participation
in the Purchase Plan.
The payroll deductions withheld from a participant’s
pay under the Purchase Plan will be taxable income to the participant and must
be included in the participant’s gross income for federal income tax purposes in
the year which such amounts otherwise would have been received.
If a Purchase Plan participant is an employee of the
Company at all times during the period beginning with the date of grant and
ending on the day three months before an option awarded under the Purchase Plan
is exercised (a “qualified employee”), no federal income tax liability to the
employee will result on the grant or exercise of such option. Instead, the
employee will be liable for federal income tax on a sale or disposition of the
stock acquired on exercise of such option.
If a qualified employee holds stock acquired as the
result of exercise of an option awarded under the Purchase Plan for at least (i)
two years after the option was granted, and (ii) one year after the stock was
acquired (the “required holding periods”), gain recognized on a disposition of
such stock will be taxed to him as follows: an amount of such gain equal to the
lesser of (1) the excess of the fair market value of the stock at the time the
option was granted over the purchase price and (2) the amount by which the fair
market value of the stock at the time of disposition exceeds the purchase price,
will be treated as ordinary compensation income. Any additional gain on such
disposition will be taxed as long-term capital gain. If the sale price is less
than the purchase price, then no ordinary income will be realized on such
disposition and the employee will realize a long-term capital loss.
If an employee sells such stock before the expiration
of the required holding periods, he will recognize ordinary compensation income
equal to the difference between the purchase price and the fair market value of
the stock at the date the option was exercised. If the stock is sold for a price
greater than the fair market value of the stock at the date the option was
exercised, any gain in excess of that described in the previous sentence will be
capital gain (long-term capital gain if the disposition occurs more than one
year after exercise). Conversely, if the sale price is less than the fair market
value of the stock at the date of exercise, the employee will be allowed a
capital loss equal to any such difference (but will still be required to
recognize compensation income equal to the difference between the purchase price
and fair market value on the date of exercise).
Should an employee die while owning stock acquired
under the Purchase Plan, ordinary income must be reported on his or her final
federal income tax return in an amount equal to the lesser of (1) the amount by
which the fair market value of the stock at the time the option was granted
exceeded the purchase price, or (2) the amount by which the fair market value of
the stock at the time of the employee’s death exceeds the purchase
price.
Even though an employee who has held stock acquired
under the Purchase Plan for the required holding periods must treat part of his
or her gain on the disposition of his stock as ordinary income, the Company may
not claim a deduction for such amount. However, where an employee disposes of
stock before the end of the required holding periods, an amount equal to the
income which the employee must report as ordinary income will be allowed as a
deduction to the Company in the year of the early disposition.
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The foregoing describes the treatment of Purchase
Plan participants who are qualified employees. A Purchase Plan participant who
is not a qualified employee will not be taxable on the grant of an option under
the Purchase Plan but will be taxable on the exercise of such an option on an
amount equal to the excess of the fair market value of the stock acquired at the
time the option was exercised over the purchase price. Such amount will be
treated as ordinary compensation income and will be added to the participant’s
tax basis in the shares. Any gain recognized on the disposition of such stock
will be treated as capital gain (long-term capital gain if the disposition
occurs more than one year after exercise). The Company will be allowed a
deduction at the time of exercise equal to the compensation income recognized by
the employee.
PROPOSAL 4. APPROVAL OF AMENDMENTS TO THE TRUEBLUE,
INC. 2005 LONG-TERM EQUITY INCENTIVE PLAN
Introduction and Summary of Proposed
Amendments
The Company currently maintains the TrueBlue, Inc.
2005 Long-Term Equity Incentive Plan (the “2005 Plan”), which our shareholders
approved on May 18, 2005. Under the 2005 Plan, the Company has reserved a number
of shares of the Company’s common stock (“Common Stock”) for issuance to
employees, officers, directors and consultants in the form of stock options,
shares of Common Stock, shares of restricted Common Stock, restricted stock
units and stock appreciation rights (“SARs”).
The purposes of the 2005 Plan are to (i) attract and
retain talented employees, officers, directors, and consultants and (ii) promote
the growth and success of our business by aligning the long-term interests of
employees, officers, directors, and consultants with those of our shareholders
by providing an opportunity to acquire an interest in our business, and by
providing rewards for exceptional performance and long-term incentives for
future contributions to our success.
In order to provide a sufficient pool of equity for
the Company to attract and retain talent over the next several years, the
Company intends to adopt, subject to shareholder approval, amendments to the
2005 Plan that would increase the number of authorized shares of Common Stock to
the pool of shares available for awards and make certain other amendments. The
Company refers to the 2005 Plan as modified by these amendments as the “Amended
and Restated 2005 Plan”. The Amended and Restated 2005 Plan is substantially
identical in design to the current 2005 Plan, other than amendments
to:
- increase the number of authorized shares
of Common Stock by 2,000,000;
- change the manner of counting the
available shares for use (described in more detail below); and
- revise the plan to reduce the Company’s
ability to grant, amend or administer awards in a manner that will subject such awards to the burdensome
requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (discussed in
more detail below under the heading “Federal Income Tax Consequences”).
Currently, for purposes of counting shares available
for grant, the 2005 Plan distinguishes between “full-value” awards (e.g.,
restricted stock, restricted stock units and SARs) and stock options. Each share
subject to a “full-value” award is counted as if 1.5 shares were granted from
the available shares under the 2005 Plan, and each share granted pursuant to an
option is counted as a grant of one share. The theory supporting the 1.5
multiple for full-value shares is that such a share is worth more than a share
that may be acquired upon the exercise of a stock option, and that more shares
are therefore required to deliver the same value through a stock option as can
be delivered with a “full-value” award. Because the Company expects future
grants to be comprised mostly of “full-value” awards, retaining this counting
method would require that the Company ask for more shares to be
- 13 -
authorized for grant than
the Company will actually award, thereby unnecessarily inflating the potential
dilution represented by the Amended and Restated 2005 Plan. The Amended and
Restated 2005 Plan also includes an amendment to prohibit the re-granting of
shares that are used to pay option exercise prices or withheld to pay taxes on
awards.
The Company’s Board of Directors recommends a vote
“FOR” approval of the Amended and
Restated 2005 Long-Term Equity Compensation
Plan.
Plan Features and Grant Practices That Protect
Shareholder Interests
The Amended and Restated 2005 Plan and the Company’s
grant practices include a number of features intended to protect the interest of
the Company’s shareholders:
- The plan is administered by the
Compensation Committee, a committee composed entirely of independent directors.
- The plan includes a fixed number of
shares available for grant that will not automatically increase because of an “evergreen” feature.
- The potential dilution (current number of
shares available for grant plus shares granted and outstanding divided by the total number of common shares
outstanding), after giving effect to the proposed 2,000,000 share increase, is approximately
12.3%.
- The Compensation Committee continues to
control the dilutive effect of equity issued under the plan by controlling the number of shares issued on an
annual basis (run-rate). In recent years, the 3 year average annual share usage of actual shares has
been less than 1.8% of the Company’s issued and outstanding shares.
- The Compensation Committee has recently
implemented the use of performance share units for awards to executives, which awards will only vest
if certain Company performance measures are achieved (see Compensation Discussion &
Analysis below for further information).
- The Company has adopted stock ownership
guidelines for directors and executive officers that require them to retain a certain amount of shares
of Common Stock (see Compensation Discussion & Analysis below for further information).
- The Amended and Restated 2005 Plan will
contain an amendment that prohibits the Company from re-using shares that are tendered or surrendered to
pay the exercise cost or tax obligation of grants (such a practice is an example of a “liberal share
counting” provision that is disfavored by many institutional investors). The only shares that are
re-used in the Amended and Restated 2005 Plan are for awards that have been canceled, forfeited,
expired, or for awards settled in cash.
- The exercise price of options awarded
must be at least 100% of the fair market value on the date of the award.
- Awards may not be re-priced without
shareholder approval.
- All of the Company’s current equity
compensation grants are made under a shareholder approved plan.
The current 2005 Plan was last approved by
shareholders in 2005 with an approval rating of over 76%. Additional information
on the 2005 Plan and grant practices can be found elsewhere in this proxy
statement under the headings “Compensation Discussion & Analysis,”
“Executive Compensation,” “Equity Compensation Plan Information” and in Note 14
to the financial statements contained in our 2009 annual report on Form
10-K.
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Plan Benefits Table.
Because awards made under the Amended and Restated 2005 Plan are discretionary,
awards are generally not determinable at this time. Under the heading “Equity
Compensation Plan Information” below in this proxy statement, we have provided
information about shares of Common Stock that may be issued under our equity
compensation plans as of December 25, 2009.
Summary of the Amended and Restated 2005
Plan
The following is a summary of the material terms of
the Amended and Restated 2005 Plan, with key differences from the current 2005
Plan identified where applicable. The following is a summary only and is
qualified in its entirety by reference to the Amended and Restated 2005 Plan. A
copy of the Amended and Restated 2005 Plan, reflecting the amendments that will
be made if this Proposal 4 is approved, is attached to this proxy statement as
Exhibit B.
Administration. As
under the current 2005 Plan, the Compensation Committee (the “Committee”) will
administer the Amended and Restated 2005 Plan. The Committee will have authority
to determine when and to whom awards will be granted, including the type,
amount, form of payment and other terms and conditions of each award, consistent
with the provisions of the Amended and Restated 2005 Plan. In addition the
Committee has the authority to interpret the Amended and Restated 2005 Plan and
the awards granted under the plan, and establish rules and regulations for the
administration of the plan. The Committee may delegate the administration of the
plan to the one or more subcommittees consisting of members of the Committee or
other independent directors.
Eligible
Participants.
Any employee, officer, consultant
or director providing services to the Company or to any affiliate of the Company
is eligible to be selected to receive awards under the Amended and Restated 2005
Plan. As of the date of this proxy statement approximately 2,300 employees,
officers and directors were eligible as a class to be selected to receive awards
under the current 2005 Plan.
Shares Available for
Awards. The aggregate number of shares of the Common Stock that may be
issued as awards under the current 2005 Plan is 5,500,000 shares, which includes
shares of Common Stock that were available for issuance under the Company’s
formerly used stock incentive plans. As of March 31, 2010, approximately
1,400,000 shares remained available for issuance under the 2005 plan. Under the
Amended and Restated 2005 Plan, there would be added an additional 2,000,000
shares of Common Stock, such that the total available number of shares available
for issuance after the Amended and Restated 2005 Plan is approved will be
approximately 3,400,000. The maximum aggregate number of shares of Common Stock
that may be issued over the life of the 2005 Plan and the Amended and Restated
2005 Plan is 7,500,000, subject to adjustment as set forth below. The aggregate
number of shares of Common Stock which may be granted to any one participant in
any one year under the Amended and Restated 2005 Plan is 1 million. The maximum
aggregate number of shares of Common Stock which may be granted as incentive
stock options is 4 million. The Committee may adjust the aggregate number of
shares reserved for issuance under the Amended and Restated 2005 Plan in the
case of a stock dividend or other distribution, including a stock split, merger,
extraordinary dividend, or other similar corporate transaction or event, in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be provided under the Amended and Restated 2005 Plan.
If any shares of Common Stock related to an award
granted under one of the Company’s formerly used stock incentive plans or the
Amended and Restated 2005 Plan are forfeited or become unexercisable, or if any
award terminates without the delivery of any shares, the shares of Common Stock
previously set aside for such awards will be available for future awards under
the Amended and Restated 2005 Plan. A provision of the current 2005 Plan is
included in the Amended and Restated 2005 Plan to prohibit the re-granting of
shares of Common Stock that are used to pay option exercise prices or withheld
to pay taxes on awards. Currently, the aggregate
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number of shares of Common
Stock that may be issued under the 2005 Plan are reduced by (i) 1.5 shares for
each share delivered in settlement of any award of restricted stock, restricted
stock unit or SARs (i.e., so called “full-value” awards) and (ii) one share for
each share delivered in settlement of an option. Under the Amended and Restated
2005 Plan, there will be no such differentiation of treatment and each share
under any type of award will be counted as a grant of one share.
Stock
Options. The
holder of an option will be entitled to purchase a number of shares of Common
Stock at a specified exercise price (which may not be less than the fair market
value of the underlying shares on the date of grant) during a specified time
period, all as determined by the Committee. The option exercise price may be
payable either in cash or, at the discretion of the Committee, in shares of our
Common Stock.
Restricted Stock and
Restricted Stock Units.
The holder of restricted stock
will own shares of Common Stock subject to forfeiture to the Company if the
holder does not satisfy certain requirements (including, for example, continued
employment with the Company) for a specified period of time. The holder of
restricted stock units will have the right, subject to any restrictions imposed
by the Committee, to receive shares of Common Stock, or a cash payment equal to
the fair market value of those shares, at some future date determined by the
Committee, provided that the holder has satisfied certain requirements
(including, for example, continued employment with the Company until such future
date).
Internal Revenue Code
Section 162(m). Section 162(m) of the Code generally places a $1 million
annual limit on a company’s tax deduction for compensation paid to the principal
executive officer or any of the three most highly compensated officers other
than the principal executive officer or principal financial officer, referred to
as the “covered individuals.” This limitation does not apply, however, to
“qualified performance-based compensation.” Because stock options or SARs
granted under the Amended and Restated 2005 Plan must have an exercise price
equal at least to fair market value at the date of grant, are granted to covered
individuals by the Committee consisting of at least two outside directors, and
the Amended and Restated 2005 Plan limits the number of shares that may be the
subject of awards granted to any key associate during any calendar year,
compensation from the exercise of stock options or SARs should be treated as
“qualified performance-based compensation” for purposes of Section
162(m).
In addition, the Amended and Restated 2005 Plan
authorizes the Committee to make awards of restricted stock shares or restricted
stock units that are conditioned on the satisfaction of performance criteria.
For those awards intended to meet the requirements of the “qualified
performance-based compensation” exception to Section 162(m), the Committee must
establish the applicable performance conditions prior to or within a specified
period after the start of the applicable performance period. The Committee may
select from the following performance criteria for this purpose:
- cash flow;
- earnings per share;
- earnings before interest, taxes,
and amortization;
- return on equity;
- total shareholder return;
- share price performance;
- return on capital;
|
- return on assets or net
assets;
- revenue;
- revenue growth;
- earnings growth;
- operating income;
- operating profit;
- profit margin;
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- return on operating revenue;
- return on invested capital;
- market price;
- brand recognition;
- customer satisfaction;
- operating efficiency; or
- productivity
|
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Any of the above performance criteria may be used to
measure the performance of the Company as a whole or any business unit or
division of the Company.
The performance conditions will be stated in the form
of an objective, nondiscretionary formula, and the Committee will certify in
writing the attainment of those performance conditions prior to any payment or
distributions with respect to awards so that options and SARs granted under the
Amended and Restated 2005 Plan qualify for the exclusion for performance-based
compensation, and to permit the Committee to grant other awards under the
Amended and Restated 2005 Plan that are intended to qualify for the exclusion,
the Amended and Restated 2005 Plan is being submitted to the Company’s
shareholders for approval. A vote in favor of approving the Amended and Restated
2005 Plan will be a vote approving all the material terms and conditions of the
plan for purposes of the performance-based exemption under Section 162(m) as
described above.
Stock Appreciation
Rights. Participants may be granted tandem SARs (consisting
of SARs with underlying options) and stand-alone SARs. The holder of a tandem
SAR is entitled to elect between the exercise of the underlying option for
shares of Common Stock or the surrender of the option in exchange for the
receipt of a payment (in cash, Common Stock or both) equal to the excess of the
fair market value on the surrender date over the aggregate exercise price
payable for such shares. The holder of stand-alone SARs will be entitled to
receive (in cash, Common Stock or both) the excess of the fair market value (on
the exercise date) over the exercise price for such shares.
Termination of
Employment. Unless otherwise provided in the applicable award agreement
or any severance agreement, vested options granted under the Amended and
Restated 2005 Plan will expire, terminate, or otherwise be forfeited as
follows:
- ninety (90) days after the date of
termination of a participant’s employment, other than in the circumstances described below;
- immediately upon termination of a
participant for cause (as may be defined in a subplan or award agreement);
- twelve (12) months after the date on
which a participant suffers Disability (as defined in the Amended and Restated 2005 Plan); and
- twelve (12) months after the death of a
participant if such participant’s employment had not previously been terminated.
Duration, Termination and
Amendment. The Amended and Restated 2005 Plan will terminate on the tenth
anniversary of the date the Company’s shareholders approve the plan, unless
terminated by the Board or the Committee earlier, or extended by an amendment
approved by the Company’s shareholders. No awards may be made after the
termination date. However, unless otherwise expressly provided in an applicable
award agreement, any award granted under the Amended and Restated 2005 Plan
prior to the expiration may extend beyond the end of such period through the
award’s normal expiration date.
The Board and the Committee may generally amend or
terminate the Plan as determined to be advisable. Shareholder approval may also
be required for certain amendments by the Code, the rules of NYSE, or rules of
the SEC. The Board or the Committee has specific authority to amend the Amended
and Restated 2005 Plan without shareholder approval to comply with legal,
regulatory and listing requirements and to avoid unanticipated consequences
determined to be inconsistent with the purpose of the Amended and Restated 2005
Plan or any award agreement.
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Prohibition on Repricing
Awards. Without the approval of the Company’s shareholders,
no option or SAR may be amended to reduce its exercise price or grant price and
no option or SAR may be canceled and replaced with an option or SAR having a
lower exercise price.
Transferability of
Awards. Unless otherwise provided by the Committee, awards
under the Amended and Restated 2005 Plan may only be transferred by will or the
laws of descent and distribution. The Committee may permit further
transferability pursuant to conditions and limitations that it may
impose.
Federal Income Tax
Consequences. The federal income tax consequences of awards under the
Amended and Restated 2005 Plan to the Company and the Company’s employees,
officers, directors, and consultants are complex and subject to change. The
following discussion is only a summary of the general rules applicable to the
Amended and Restated 2005 Plan.
Under Section 409A of the Code, enacted as part of
the American Jobs Creation Act of 2004, recipients of certain equity
compensation awards (including certain types of stock appreciation rights and
restricted stock units) may be subject to a burdensome taxation regime. If
Section 409A were to apply to awards under the Amended and Restated 2005 Plan,
the affected participants may be required to recognize ordinary income for tax
purposes earlier than the times otherwise applicable as described in the
discussion below and to pay substantial penalties.
While it may be possible for awards under the 2005
Plan to be subject to the burdensome requirements of Section 409A, the Amended
and Restated 2005 Plan has been amended to significantly reduce the Company’s
ability to make such awards. Furthermore, at this time the Company does not
intend to grant, amend or administer any awards in a manner that will not comply
with the 409A requirements.
Options.
Options granted under the Amended
and Restated 2005 Plan may be either incentive stock options or nonqualified
stock options. Incentive stock options are options which are designated as such
by the Company and which meet certain requirements under Section 422 of the Code
and the regulations thereunder. Any option which does not satisfy these
requirements will be treated as a nonqualified stock option.
Incentive Stock
Options. If an option granted under the Amended and Restated 2005 Plan is
treated as an incentive stock option, the optionee will not recognize any income
upon either the grant or the exercise of the option, and the Company will not be
entitled to a deduction for federal tax purposes. Upon a sale of the shares, the
tax treatment to the optionee and the Company will depend primarily upon whether
the optionee has met certain holding period requirements at the time he or she
sells the shares. In addition, as discussed below, the exercise of an incentive
stock option may subject the optionee to alternative minimum tax
liability.
If an optionee exercises an incentive stock option
and does not dispose of the shares received within two years after the date the
option was granted or within one year after the transfer of the shares to him or
her, any gain realized upon the disposition will be characterized as long-term
capital gain and, in such case, the Company will not be entitled to a federal
tax deduction.
If the optionee disposes of the shares either within
two years after the date the option is granted or within one year after the
transfer of the shares to him or her, the disposition will be treated as a
disqualifying disposition and an amount equal to the lesser of (1) the fair
market value of the shares on the date of exercise minus the exercise price, or
(2) the amount realized on the disposition minus the exercise price, will be
taxed as ordinary income to the optionee in the taxable year in which the
disposition occurs. (However, in the case of gifts, sales to related parties,
and certain other transactions, the full difference between the fair market
value of the stock
- 18 -
and the purchase price will
be treated as compensation income). The excess, if any, of the amount realized
upon disposition over the fair market value at the time of the exercise of the
option will be treated as long-term capital gain if the shares have been held
for more than one year following the exercise of the option.
The exercise of an incentive stock option may subject
an optionee to alternative minimum tax liability. The excess of the fair market
value of the shares at the time an incentive stock option is exercised over the
purchase price of the shares is included in income for purposes of the
alternative minimum tax even though it is not included in taxable income for
purposes of determining the regular tax liability of an employee. Consequently,
an optionee may be obligated to pay alternative minimum tax in the year he or
she exercises an incentive stock option.
In general, the Company will not be entitled to a
federal income tax deduction upon the grant, exercise, or termination of an
incentive stock option. However, in the event an optionee sells or otherwise
disposes of the stock received on the exercise of an incentive stock option in a
disqualifying disposition, the Company will be entitled to a deduction for
federal income tax purposes in an amount equal to the ordinary income, if any,
recognized by the optionee upon disposition of the shares, provided that the
deduction is not otherwise disallowed under the Code.
Nonqualified Stock
Options. Nonqualified stock options granted under the Amended and
Restated 2005 Plan do not qualify as “incentive stock options” and will not
qualify for any special tax benefits to the optionee. An optionee generally will
not recognize any taxable income at the time he or she is granted a nonqualified
option. However, upon exercise, the optionee will recognize ordinary income for
federal tax purposes measured by the excess of the then fair market value of the
shares over the exercise price. The income realized by the optionee will be
subject to income and other employee withholding taxes.
The optionee’s basis for determination of gain or
loss upon the subsequent disposition of shares acquired upon the exercise of a
nonqualified stock option will be the amount paid for such shares plus any
ordinary income recognized as a result of the exercise of such option. Upon
disposition of any shares acquired pursuant to the exercise of a nonqualified
stock option, the difference between the sale price and the optionee’s basis in
the shares will be treated as a capital gain or loss and generally will be
characterized as long-term capital gain or loss if the shares have been held for
more than one year at the time of their disposition.
In general, the Company will not be entitled to a
federal income tax deduction upon the grant or termination of a nonqualified
stock option or a sale or disposition of the shares acquired upon the exercise
of a nonqualified stock option. However, upon the exercise of a nonqualified
stock option, the Company will be entitled to a deduction for federal income tax
purposes equal to the amount of ordinary income that an optionee is required to
recognize as a result of the exercise, provided that the deduction is not
otherwise disallowed under the Code.
Restricted Stock and
Restricted Stock Units. Generally, the holder of restricted stock will
recognize ordinary compensation income at the time the stock becomes vested. The
amount of ordinary compensation income recognized will be equal to the excess,
if any, of the fair market value of the stock on the date it becomes vested over
any amount paid by the holder in exchange for stock.
In the case of restricted stock units, the holder
will recognize ordinary compensation income at the time the stock is received
equal to the excess of value of the stock on the date of receipt over any amount
paid by the holder in exchange for stock. If the holder of a restricted stock
unit receives the cash equivalent of the stock issuable under the restricted
stock unit in lieu of actually receiving the stock, the recipient will recognize
ordinary compensation income at the time of the receipt of such cash in the
amount of the cash received. In the case of both restricted stock and restricted
stock units, the income recognized by the holder will generally be subject to
U.S. income tax withholding and employment taxes.
- 19 -
In the year that the recipient of a stock award
recognizes ordinary taxable income in respect of restricted stock or a
restricted stock unit, the Company will be entitled to a deduction for federal
income tax purposes equal to the amount of ordinary income that the recipient is
required to recognize, provided that the deduction is not otherwise disallowed
under the Code.
Stock Appreciation
Rights. As discussed above, the Company may grant either stand-alone SARs
or tandem SARs under the Amended and Restated 2005 Plan. Generally, the
recipient of a SAR will not recognize any taxable income at the time the SAR is
granted.
With respect to stand-alone SARs, if the holder
receives the appreciation inherent in the SARs in cash, the cash will be taxable
as ordinary compensation income to the employee at the time that it is received.
If the holder receives the appreciation inherent in the stand-alone SARs in
stock, the holder will recognize ordinary compensation income equal to the
excess of the fair market value of the stock on the day it is received over any
amounts paid by the holder for the stock.
With respect to tandem SARs, if a holder elects to
surrender the underlying option in exchange for cash or stock equal to the
appreciation inherent in the underlying option, the tax consequences to the
holder will be the same as discussed above relating to stand-alone SARs. If the
holder elects to exercise the underlying option, the holder will be taxed at the
time of exercise as if he or she had exercised a nonqualified stock option
(discussed above), i.e., the holder will recognize ordinary income for federal
tax purposes measured by the excess of the then fair market value of the shares
of stock over the exercise price.
The income recognized by the holder of a stand-alone
SAR or tandem SAR will generally be subject to U.S. income tax withholding and
employment taxes.
In general, the Company will not be entitled to a
federal income tax deduction upon the grant or termination of stand-alone SARs
or tandem SARs. However, upon the exercise of either a stand-alone SAR or a
tandem SAR, the Company will be entitled to a deduction for federal income tax
purposes equal to the amount of ordinary income that the employee is required to
recognize as a result of the exercise, provided that the deduction is not
otherwise disallowed under the Code.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The Company has adopted Corporate Governance
Guidelines (the “Guidelines”) which are available at www.TrueBlueInc.com by
first clicking “Investors,” then “Corporate Governance” and then “Guidelines.”
The Guidelines are also available in print to any shareholder who requests them.
The Guidelines were adopted by the Board to best ensure that the Board is
independent from management, that the Board adequately performs its function as
the overseer of management, and to help ensure that the interests of the Board
and management align with the interests of the shareholders.
On an annual basis, each Director and executive
officer is obligated to complete a Director and Officer Questionnaire which,
among other things, requires disclosure of any transactions with the Company in
which the Director or executive officer, or any member of his or her immediate
family, have a direct or indirect material interest.
- 20 -
Related Person Transactions
The Board has adopted a Related Person Transaction
Policy that is attached as Annex A to the Guidelines which sets forth the
policies and procedures for the review and approval or ratification of “Related
Person Transactions,” which are defined to include transactions, arrangements or
relationships in which the Company is a participant, the amount involved exceeds
$120,000, and a Related Person had or will have a direct or indirect material
interest. “Related Persons” is defined to include directors, executive officers,
director nominees, beneficial owners of more than 5% of the Company’s common
stock and members of their immediate families. A Related Person Transaction must
be reported to the Company’s General Counsel and reviewed and approved by the
Corporate Governance and Nominating Committee (the “Governance Committee”).
Under certain circumstances a transaction may be approved by the Chair of the
Governance Committee subject to ratification by the full Committee at its next
meeting. In determining whether to approve or ratify a Related Person
Transaction, the Committee, as appropriate, shall review and
consider:
- the Related Person’s interest in the
Related Person Transaction;
- the approximate dollar value of the
amount involved in the Related Person Transaction;
- the approximate dollar value of the
amount of the Related Person’s interest in the Related Person Transaction without regard to the amount of any
profit or loss;
- whether the Related Person Transaction
was undertaken in the ordinary course of business of the Company;
- whether the Related Person Transaction
with the Related Person is proposed to be, or was, entered into on terms no less favorable to the Company than
terms that could have been reached with an unrelated third party;
- the purpose of, and the potential
benefits to the Company of, the Related Person Transaction; and
- any other information regarding the
Related Person Transaction or the Related Person in the context of the proposed Related Person Transaction that
would be material to investors in light of the circumstances of the particular transaction.
After reviewing all facts and circumstances the
Governance Committee may approve or ratify the Related Person Transaction only
if it determines that the transaction is in, or is not inconsistent with, the
best interests of the Company.
Certain Relationships and Related
Transactions
None.
Director Independence
The Board affirmatively determines the independence
of each director and nominee for election as a director in accordance with
criteria set forth in the Guidelines, which include all elements of independence
set forth in the New York Stock Exchange listing standards and related
Securities and Exchange Commission Rules and Regulations. At a regularly
scheduled portion of each Board meeting or as part of the Governance Committee
meetings, the independent directors meet in executive session without management
or any non-independent Directors present.
- 21 -
Based on these standards, at its meeting held on
March 10, 2010, the Governance Committee and the Board determined that each of
the following non-employee Directors is independent and has no material
relationship with the Company, except as a Director and shareholder of the
Company:
- Thomas E. McChesney
- Gates McKibbin
- Joseph P. Sambataro, Jr.
- Bonnie W. Soodik
- Robert J. Sullivan
- William W. Steele
- Craig E. Tall
In addition, based on the New York Stock Exchange
Rules, the Board affirmatively determined that Steven C. Cooper is not
independent because he is the Chief Executive Officer of the
Company.
Leadership Structure
The Company has divided
its leadership among three directors:
- Steven C. Cooper serves as Chief
Executive Officer
- Joseph P. Sambataro, Jr. serves as the
Chairman of the Board of Directors
- William W. Steele serves as Lead
Independent Director
Although the Company’s Guidelines do not preclude one
person from serving as both the Chairman and the Chief Executive Officer, the
Board has appointed different people to fulfill these roles for approximately
ten years and believes that it is in the best interest of the shareholders and
is also an efficient allocation of the time and responsibilities for Company
leadership.
Mr. Sambataro was appointed Chairman in September
2008. At that time less than three years had passed since his service as the
Chief Executive Officer, which precluded him from satisfying the independence
requirement of the New York Stock Exchange. Accordingly, Keith Grinstein was
appointed as Lead Independent Director. Mr. Grinstein died shortly after his
appointment and in October 2008 William Steele was appointed as the Lead
Independent Director. Although the Board has now determined that Mr. Sambataro
is independent, the Board has decided to continue to have a Lead Independent
Director and to continue the allocation of responsibilities that were
established at that time.
The Lead Independent Director presides at meetings of
the Board and the shareholders in the absence of the Chairman and specifically
during all executive sessions of the independent directors except where he has a
conflict or elects to delegate such responsibility to another independent
director. In addition, the Lead Independent Director is responsible
for:
- maintaining effective communications
between the independent directors and the Chairman and the Chief Executive Officer including the right to
direct the distribution of information to the independent directors and the calling of special meetings of
committees and, if not a member of the committee, participate on an ex officio and non-voting basis in any such committee
meetings;
- representing the independent directors in
meetings and discussions with institutional or other major shareholders or stakeholders;
- 22 -
- reviewing and approving agendas for and
the scheduling of Board, committee and shareholder meetings;
- generally representing the Board during
emergency situations and whenever such representation in his reasonable judgment requires or will benefit from
participation by the Lead Independent Director.
The Chairman generally presides at and, with
consultation and input from the Chief Executive Officer and all other directors,
proposes the agendas for meetings of the Board and the shareholders except in
the case of executive sessions of independent directors or where the Chairman
has a conflict or elects to delegate such responsibility to another director.
The Chairman also meets or confers with the Chief Executive Officer on a regular
basis and is responsible for maintaining effective communications between the
Board and the Chief Executive Officer. The Chairman and the Lead Independent
Director may participate on an ex
officio and non-voting basis in
all committees of the Board subject to each committee’s right to exclude such
participation for other good governance purposes.
Risk Assessment
The Board believes its administration of its risk
oversight function has not negatively affected the Board’s leadership structure.
The Board is actively involved in oversight of risks that could affect the
Company. This oversight is conducted primarily through committees of the Board,
as disclosed in the descriptions of each of the committees below and in the
charters of each of the committees, but the full Board has retained
responsibility for general oversight of risks. The Board satisfies this
responsibility through full reports by each committee chair regarding the
committee’s considerations and actions, as well as through regular reports
directly from officers responsible for oversight of particular risks within the
Company.
Nominations for Directors
Qualifications of Nominees
Our Guidelines include the criteria our Board
believes are important in the selection of director nominees. While the Board
has not established any minimum qualifications for nominees, the Board does
consider the composition of the Board as a whole, the requisite characteristics
(including independence, diversity, experience in industry, finance,
administration and operations) of each candidate, and the skills and expertise
of its current members while taking into account the overall operating
efficiency of the Board and its committees. With respect to diversity, we
broadly construe diversity to mean not only diversity of race, gender and
ethnicity, but also diversity of opinions, perspectives, and professional and
personal experiences. Nominees are not discriminated against on the basis of
race, religion, national origin, sexual orientation, disability or any other
basis proscribed by law. Service on other boards and other commitments by
directors will be considered by the Governance Committee and the Board when
reviewing Board candidates and in connection with the Board’s annual
self-assessment process for current members of the Board.
Change in Director’s Principal Business
Association
Each time a director’s principal occupation or
business association changes substantially, the director is required to tender a
proposed resignation from the Board to the chair of the Governance Committee
(or, in the case of the chair of the Governance Committee’s occupation or
association changing, to the Chairman of the Board and the Lead Independent
Director, if one has been elected). The Governance Committee shall review the
director’s continuation on the Board, and recommend to the Board whether, in
light of all the circumstances, the Board should accept such proposed
resignation or request that the director continue to serve.
- 23 -
Nominee Identification and
Evaluation
The Governance Committee may employ a variety of
methods for identifying and evaluating nominees for director. The Governance
Committee regularly assesses the size of the Board, the need for particular
expertise on the Board, the need for diversity on the Board, and whether any
vacancies on the Board are expected due to retirement or otherwise. In the event
that vacancies are anticipated or arise, the Governance Committee considers
various potential candidates for director which may come to the Governance
Committee’s attention through current Board members, professional search firms,
shareholders or other persons. These candidates will be evaluated at regular or
special meetings of the Governance Committee and may be considered at any time
during the year.
The Governance Committee will consider candidates
recommended by shareholders when the nominations are properly submitted.
Following verification of the shareholder status of persons proposing
candidates, the Governance Committee will make an initial analysis of the
qualifications of any candidate recommended by shareholders or others pursuant
to the criteria summarized above to determine whether the candidate is qualified
for service on the Board before deciding to undertake a complete evaluation of
the candidate. If a shareholder or professional search firm in connection with
the nomination of a director candidate provides any materials, such materials
will be forwarded to the Governance Committee as part of its review. If the
Governance Committee determines that additional consideration is warranted, it
may engage a third-party search firm to gather additional information about the
prospective nominee’s background and experience and to report its findings to
the Governance Committee. Other than the verification of compliance with
procedures and shareholder status, and the initial analysis performed by the
Governance Committee, the Governance Committee will treat a potential candidate
nominated by a shareholder like any other potential candidate during the review
process. In connection with this evaluation, the Governance Committee will
determine whether to interview the prospective nominee. If warranted, one or
more members of the Governance Committee, and others as appropriate, will
interview prospective nominees in person or by telephone. After completing this
evaluation and interview, the Governance Committee will make a recommendation to
the full Board as to the persons who should be nominated by the Board, and the
Board will determine the nominees after considering the recommendation and
report of the Governance Committee.
Nominations by Shareholders
The Governance Committee will consider director
candidates recommended by shareholders on the same basis as are candidates
recommended by the Governance Committee. On September 11, 2008, the Company
adopted a Bylaw regarding shareholder proposals and nominations for director and
certain other matters. Any shareholder wishing to nominate a candidate should
deliver the name and address of the shareholder as they appear on the Company’s
books (or if the shareholder holds for the benefit of another, the name and
address of such beneficial owner) in a letter addressed to the Chair of the
Governance Committee in care of the Company’s Secretary not earlier than the
close of business on the 120th day
and not later than the close of business on the 90th day
prior to the first anniversary of the 2010 annual meeting (nominations for the
2011 annual meeting must be submitted between January 12, 2011 and February 11,
2011). In addition, the submitting shareholder should provide the following
information:
- the class or series and number of shares
of the Company which are, directly or indirectly, owned beneficially and/or of record;
- any option, warrant, convertible
security, stock appreciation right, or similar right with an exercise
or conversion privilege or a
settlement payment or mechanism at a price related to any class or series
of shares of the Company or with a
value derived in whole or in part from the value of any class or series
- 24 -
of shares of the Company, whether or not such
instrument or right shall be subject to settlement in the underlying class or
series of capital stock of the Company or otherwise (a “Derivative Instrument”)
that is directly or indirectly owned beneficially and any other direct or
indirect opportunity to profit or share in any profit derived from any increase
or decrease in the value of shares of the Company;
- any proxy, contract, arrangement,
understanding, or relationship pursuant to which the shareholder has a right to vote or has granted a right to vote
any shares of any security of the Company;
- any short interest in any security of the
Company;
- any rights to dividends on the shares of
the Company owned beneficially by the shareholder that are separated or separable from the underlying shares
of the Company;
- any proportionate interest in shares of
the Company or Derivative Instruments held, directly or indirectly, by a general or limited partnership or
limited liability company or similar entity in which the shareholder is a general partner or, directly
or indirectly, beneficially owns an interest in a general partner, is the manager, managing member or
directly or indirectly beneficially owns an interest in the manager or managing member of a limited
liability company or similar entity;
- any performance-related fees (other than
an asset-based fee) that the shareholder is entitled to which is based on any increase or decrease in the value of
shares of the Company or any Derivative Instruments; and
- the information called for above for any
members of the shareholder’s immediate family sharing the same household.
For each person whom the shareholder proposes to
nominate for election or re-election to the Board of Directors, the shareholder
should also provide:
- all information relating to the
shareholder that would be required to be disclosed in a proxy statement
or other filings required to be made in
connection with solicitations of proxies for election of directors
in a contested election pursuant to Section
14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s
written consent to being named in the proxy statement as a nominee and to serving as a director
if elected); and
- a description of all direct and indirect
compensation and other material monetary agreements, arrangements and understandings during the past
three years, and any other material relationships, between or among the shareholder and respective
affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed
nominee, and his or her respective affiliates and associates, or others acting in concert therewith,
on the other hand, including, without limitation all information that would be required to be disclosed
pursuant to Rule 404 promulgated under Regulation S-K if the shareholder making the nomination or on
whose behalf the nomination is made, if any, or any affiliate or associate thereof or person
acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a
director or executive officer of such registrant.
- 25 -
To be eligible to be a nominee for election or
re-election as a director of the Company, pursuant to a nomination by a
shareholder, a person must deliver (in accordance with the time periods
prescribed) to the Secretary at the principal executive offices of the Company a
written questionnaire with respect to the background and qualification of such
person and the background of any other person or entity on whose behalf the
nomination is being made (which questionnaire shall be provided by the Secretary
upon written request) and a written representation and agreement (in the form
provided by the Secretary upon written request) that such person:
- is not and will not become a party
to:
- any agreement, arrangement or
understanding with, and has not given any commitment or assurance to, any
person or entity as to how such person, if elected as a director of the
Company, will act or vote on any issue or question (a “Voting Commitment”)
that has not been disclosed to the Company, or
- any Voting Commitment that could limit or
interfere with such person’s ability to comply, if elected as a director of
the Company, with such person’s fiduciary duties under applicable law;
- is not and will not become a party to any
agreement, arrangement or understanding with any person or entity other than the Company with respect to
any direct or indirect compensation, reimbursement or indemnification in connection with service or
action as a director that has not been disclosed therein; and
- in such person’s individual capacity and
on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance,
if elected as a director of the Company, and will comply with all applicable publicly disclosed
corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and
guidelines of the Company.
Additional information may be requested to assist the
Governance Committee in determining the eligibility of a proposed candidate to
serve as a director. This may include requiring that a prospective nominee
complete a director and officer questionnaire and provide any follow-up
information requested. In addition, the notice must meet all other requirements
contained in TrueBlue’s Bylaws.
Shareholder Communications
Any shareholder or interested party who wishes to
communicate with our Board of Directors or any specific directors, including
non-management directors, may write to:
Board of Directors,
TrueBlue, Inc.
c/o Corporate Secretary,
P.O. Box 2910,
Tacoma, WA
98401.
The mailing envelope must contain a clear notation
indicating that the enclosed letter is a “Board Communication” or “Director
Communication.” All such letters must indicate whether or not the author is a
shareholder and clearly state whether the intended recipients are all members of
the Board or just certain specified individual directors. The Corporate
Secretary will make copies of all such letters and circulate them to the
appropriate director or directors. If the Company develops any other procedures,
they will be posted on the Company’s corporate website. Procedures addressing
the reporting of other concerns by shareholders, employees or other third
parties are set forth in our Code of Business Conduct and Ethics (described
below).
- 26 -
Code of Business Conduct and
Ethics
Our Code of Business Conduct and Ethics is applicable
to all directors and employees of the Company. Our Code of Business Conduct and
Ethics is available at www.TrueBlueInc.com by clicking on “Investors,” then
“Corporate Governance” and then “Code of Business Conduct.” Shareholders may
also request a free printed copy of the Code of Business Conduct and Ethics
from:
TrueBlue, Inc., c/o
Investor Relations,
P.O. Box
2910,
Tacoma, WA 98401.
The Company intends to disclose any amendments to the
Code of Business Conduct and Ethics (other than technical, administrative or
non-substantive amendments), and any waivers of a provision of the Code of
Business Conduct and Ethics for directors or executive officers, on the
Company’s website at www.TrueBlueInc.com. Information on the Company’s website,
however, does not form a part of this proxy statement.
New York Stock Exchange
Certification
The certification of the Chief Executive Officer
required by the New York Stock Exchange Listing Standards, Section 303A.12(a),
relating to TrueBlue’s compliance with the New York Stock Exchange Corporate
Governance Listing Standards, was submitted to the New York Stock Exchange on
June 10, 2009. In addition, the Company’s CEO and CFO certifications required
under Section 302 of the Sarbanes-Oxley Act are filed as exhibits to the
Company’s Annual Report on Form 10-K.
Meetings and Committees of the
Board
The Board
Each Director is expected to devote sufficient time,
energy and attention to ensure diligent performance of his or her duties and to
attend all Board, committee and shareholders’ meetings. The Board met 12 times
during 2009, 11 of which were regular meetings, and one was a special meeting.
All Directors attended at least 75% of the meetings of the Board and of the
committees on which they served during the fiscal year ended December 25, 2009.
Directors are expected to attend the annual meetings and special meetings of
shareholders, if any. All of the Directors attended the 2009 Annual Meeting of
Shareholders on May 13, 2009.
Committees of the Board
The Board has three standing committees to facilitate
and assist the Board in the execution of its responsibilities. The committees
are currently the Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee. In accordance with New York Stock Exchange
listing standards, all the committees are comprised solely of non-employee,
independent Directors. Charters for each committee are available on the
Company’s website at www.TrueBlueInc.com by first clicking on “Investors” and
then “Corporate Governance.” The charter of each committee is also available in
print to any shareholder who requests it. The table below shows current
membership for each of the standing Board committees.
- 27 -
Membership of Board Committees
Audit |
|
Compensation |
|
Governance |
Craig
E. Tall (1) |
|
Thomas
E. McChesney (1) |
|
William
W. Steele (1) |
Gates
McKibbin |
|
William
W. Steele |
|
Thomas
E. McChesney |
Robert
J. Sullivan |
|
Craig
E. Tall |
|
Gates
McKibbin |
Bonnie
Soodik (2) |
|
|
|
Joseph
P. Sambataro |
|
|
|
|
Bonnie
W. Soodik (2) |
|
|
|
|
Robert
J. Sullivan |
|
|
|
|
Craig
E. Tall |
____________________
(1) |
|
Chair |
|
(2) |
|
Member
after her appointment to the Board in March
2010 |
Audit Committee
The Audit Committee had three members and met seven
times in fiscal 2009. After her appointment to the Board of Directors on March
10, 2010, Ms. Soodik joined the Audit Committee. The Audit Committee is
comprised solely of non-employee directors, all of whom the Board has determined
are independent pursuant to the New York Stock Exchange rules and the
independence standards set forth in Rule 10A-3 of the Exchange Act. The
Governance Committee and the Board have determined that all the members of the
Audit Committee are financially literate pursuant to the New York Stock Exchange
rules. The Board also has determined that Messrs. Tall and Sullivan of the Audit
Committee are Audit Committee Financial Experts within the meaning stipulated by
the Securities and Exchange Commission. The Board has adopted a charter for the
Audit Committee which is available at www.TrueBlueInc.com by first clicking on
“Investors” and then “Corporate Governance.” The charter is also available in
print to any shareholder who requests it.
Nominating and Corporate Governance
Committee
The Nominating and Corporate Governance Committee
(“Governance Committee”) had six members and met four times in fiscal 2009.
After her appointment to the Board of Directors on March 10, 2010, Ms. Soodik
joined the Governance Committee. The Committee is comprised solely of
non-employee directors, all of whom the Board has determined are independent
pursuant to the New York Stock Exchange rules. The Board has adopted a charter
for the Governance Committee, which is available on the Company’s website at
www.TrueBlueInc.com by first clicking on “Investors” and then “Corporate
Governance.” The charter is also available in print to any shareholder who
requests it.
Compensation Committee
The Compensation Committee has three members and met
seven times in fiscal 2009. The Compensation Committee is comprised solely of
non-employee directors, all of whom the Board has determined are independent
pursuant to the New York Stock Exchange rules. The Board has adopted a charter
for the Compensation Committee, which is available on the Company’s website at
www.TrueBlueInc.com by first clicking on “Investors” and then “Corporate
Governance.” The charter is also available in print to any shareholder who
requests it. Additional information regarding the Compensation Committee and its
procedures and processes for the consideration and determination of executive
and director compensation are included under the Compensation Discussion and
Analysis section of this proxy statement.
- 28 -
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act, requires the
Company’s officers and directors and certain other persons to timely file
certain reports regarding ownership of, and transactions in, the Company’s
securities with the Securities and Exchange Commission. Copies of the required
filings must also be furnished to the Company. Based solely on its review of
such forms received by it, or representations from certain reporting persons,
the Company believes that during 2009 all applicable Section 16(a) filing
requirements were met, and that all such filings were timely except that a late
Form 4 was filed for Norman Frey on May 19, 2009, for the reporting of a lapse
of restricted shares.
AUDIT COMMITTEE REPORT
The Audit Committee is comprised of four independent
members of the Board of Directors. Members of the Audit Committee during 2009
included Mr. Tall, who currently chairs the committee, and Mr. Sullivan and Ms.
McKibbin. Ms. Soodik joined the Audit Committee after her appointment to the
Board of Directors on March 10, 2010. The Board of Directors has affirmatively
determined that each member of the committee is “financially literate” under the
listing standards of the New York Stock Exchange, and that Mr. Tall and Mr.
Sullivan are each an “audit committee financial expert” as such term is defined
in Item 407 of Regulation S-K.
The Audit Committee met seven times in 2009. Over the
course of these meetings, the Audit Committee met with the Company’s Chief
Executive Officer, Chief Financial Officer, Chief Information Officer, General
Counsel, Chief Compliance Officer, other senior members of the finance
department, the Director of Internal Audit, and independent auditors. These
meetings included private, executive sessions between the Audit Committee and
the Company’s independent auditors, Chief Financial Officer, and Director of
Internal Audit. During its meetings, the Audit Committee reviewed and discussed,
among other things:
- the status of any significant issues in
connection with the quarterly reviews and annual audit of the Company’s financial statements;
- the Company’s annual internal and
external audit plans and the internal and external staffing resources
available to carry out the Company’s audit
plans;
- the Company’s significant accounting
policies and estimates;
- the Company’s progress toward evaluating
and documenting its internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002;
- the impact of new accounting
pronouncements;
- the impact of recent developments in
corporate governance;
- current tax matters affecting the
Company;
- the Company’s enterprise risk management
efforts; and
- the Company’s management information
systems.
The Audit Committee has reviewed and discussed with
management and the independent auditors the Company’s audited financial
statements as of and for the year ended December 25, 2009. This discussion
included, among other things:
- critical accounting policies and
practices used in the preparation of the Company’s financial
statements;
- significant items involving management’s
estimates and judgments, including workers compensation reserves, tax matters, allowances for doubtful
accounts, goodwill and intangible assets, and legal and regulatory contingencies;
- alternative treatments within GAAP of the
Company’s annual financial information;
- 29 -
- the effect of regulatory and accounting
initiatives on the Company’s financial statements, including the adoption of significant accounting
pronouncements;
- any significant audit adjustments
proposed by the independent auditors and management’s response; and
- confirmation that there were no matters
of significant disagreement between management and the independent auditors arising during the
audit.
In addition to the meetings discussed above, the
Audit Committee, or its chair, reviewed with management, and the Company’s
independent auditors, the Company’s financial statements for each quarter of
2009 prior to the quarterly release of earnings.
The Audit Committee has discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the
Auditing Standards Board of the American Institute of Certified Public
Accountants, as adopted by the Public Company Accounting Oversight Board
(“PCAOB”) in Rule 3200T. The Audit Committee has received and reviewed the
written disclosures and the letter from the independent auditors required by
PCAOB Rule 3526, Communication with Audit Committees Concerning
Independence, and has discussed
with the independent accountants the independent accountants’
independence.
The Audit Committee has considered whether the
provision of non-audit services by the Company’s principal auditor is compatible
with maintaining auditor independence and has concluded that such services are
compatible with maintaining the independence of the auditors. Based on the
reviews and discussions referred to above, the Audit Committee believes that
Deloitte & Touche has been objective and impartial in conducting the 2009
audit.
In performing all of the functions described above,
the Audit Committee acts in an oversight capacity. In that role, the Audit
Committee relies primarily on the work and assurances of our management, which
has the primary responsibility for our financial statements and reports, and of
the independent auditors who, in their report, express an opinion on the
conformity of our annual financial statements to accounting principles generally
accepted in the United States.
The Audit Committee has recommended to the Board of
Directors that the financial statements referred to above be included in the
Company’s Annual Report on Form 10-K for the year ended December 25, 2009, for
filing with the Securities and Exchange Commission.
Members of the Audit
Committee:
Craig E. Tall,
Chair
Robert J. Sullivan
Gates McKibbin
COMPENSATION OF DIRECTORS
Annual Retainers
The Chairman of the Board of Directors, if not an
employee of the Company, receives an annual retainer of $45,000. The Lead
Independent Director also receives an annual retainer of $45,000. All other
non-employee directors receive an annual cash retainer of $30,000. Committee
chairs receive an additional annual retainer payment of $10,000.
- 30 -
Meeting Fees
Each non-employee director receives meeting fees for
attendance during each regular or special Board of Directors or committee
meeting in accordance with the schedule below.
|
Meeting |
In Person |
|
Telephonic |
|
|
Board of Directors |
|
$ |
1,500 |
|
|
|
$ |
750 |
|
|
|
Audit
Committee Chair |
|
$ |
1,500 |
|
|
|
$ |
625 |
|
|
|
Audit Committee |
|
$ |
1,250 |
|
|
|
$ |
625 |
|
|
|
Compensation Committee Chair |
|
$ |
1,250 |
|
|
|
$ |
625 |
|
|
|
Compensation Committee |
|
$ |
1,250 |
|
|
|
$ |
625 |
|
|
|
Corporate Governance Chair |
|
$ |
1,250 |
|
|
|
$ |
625 |
|
|
|
Corporate Governance Committee |
|
$ |
1,250 |
|
|
|
$ |
625 |
|
|
Equity Grants
Each non-employee director receives an annual grant
of unrestricted common stock worth $100,000. The Chairman of the Board of
Directors and the Lead Independent Director each receive an additional $48,000
grant and each committee chair receives an additional $25,000 grant. Since 2007,
the Company determines the number of shares of each such annual grant of common
stock based on the closing price on the second full trading day after the
announcement of the Company’s fourth quarter and year-end financial results.
Non-employee directors appointed during the year are entitled to receive a pro
rata grant as follows: 100% if appointed prior to the first quarterly meeting,
75% if appointed prior to the second quarterly meeting, 50% if appointed prior
to the third quarterly meeting, and 25% if appointed prior to the last quarterly
meeting of the year.
Non-Employee Director
Compensation
The following table discloses the cash, equity awards
and other compensation earned by each of the Company’s non-employee directors
during the last completed fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
|
Fees |
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
Earned |
|
Stock |
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
|
or Paid |
|
Awards |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
Name |
|
in Cash |
|
(1) |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Thomas E. McChesney |
|
$ |
50,760 |
|
$ |
125,000 |
|
– |
|
– |
|
– |
|
– |
|
$ |
175,760 |
Gates McKibbin |
|
$ |
43,791 |
|
$ |
100,000 |
|
– |
|
– |
|
– |
|
– |
|
$ |
143,791 |
Joseph P. Sambataro, Jr. |
|
$ |
65,354 |
|
$ |
148,000 |
|
– |
|
– |
|
– |
|
– |
|
$ |
213,354 |
William W. Steele |
|
$ |
78,292 |
|
$ |
173,000 |
|
– |
|
– |
|
– |
|
– |
|
$ |
251,292 |
Robert J. Sullivan |
|
$ |
50,653 |
|
$ |
100,000 |
|
– |
|
– |
|
– |
|
– |
|
$ |
150,653 |
Craig E. Tall |
|
$ |
67,584 |
|
$ |
125,000 |
|
– |
|
– |
|
– |
|
– |
|
$ |
192,584 |
____________________
|
(1) |
|
This column
represents the grant date fair value of shares awarded to each of the
non-employee directors in 2009 in accordance with FASB ACS Topic
718. |
- 31 -
Equity Retainer and Deferred Compensation Plan for
Non-Employee Directors.
Each non-employee director is able to participate in
the Equity Retainer and Deferred Compensation Plan for Non-Employee Directors.
Under this plan, a director may elect to modify the manner in which he or she
receives the annual retainer from the Company. First, directors are given the
option to make an irrevocable election to convert up to 100% of his or her cash
retainer to an equity retainer, and then further elect to receive up to 50% of
the equity retainer in the form of Stock Options, rather than unrestricted
common stock. In addition, a director may make an irrevocable election to defer
all or part of the stock award of his or her equity retainer to a time after he
or she leaves the Board of Directors.
Director Stock Ownership
Guidelines
Each director is expected to own shares of the
Company’s common stock having a value of not less than three times the
director’s base annual cash compensation. For the purpose of determining
compliance the Company will value its shares and determine the number of shares
required on an annual basis with the value of the shares to be determined on a
trailing twelve month average daily stock price. New directors are allowed three
years in which to reach the ownership guidelines.
- 32 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information
regarding the beneficial ownership of common stock of the Company as of March
12, 2010, for (i) each person known to the Company to own beneficially 5% or
more of our common stock; (ii) each director of the Company; (iii) each
individual identified as a Named Executive Officer (“NEO”) of the Company
pursuant to Item 402 of Regulation S-K; and (iv) all NEOs and directors of the
Company as a group. Except as otherwise noted, the named beneficial owner has
sole voting and investment power. As of March 12, 2010, the Company had no other
classes of outstanding equity securities.
|
|
|
|
Amount and Nature of |
|
|
|
|
|
|
Beneficial Ownership |
|
Percent |
Name & Address of Beneficial
Owner** |
|
Title of Class |
|
(Number of Shares) (1) |
|
of Class |
Steven C. Cooper (2) |
|
Common Stock |
|
297,285 |
|
* |
Joseph P. Sambataro, Jr. (3) |
|
Common Stock |
|
231,858 |
|
* |
Noel S. Wheeler (4) |
|
Common Stock |
|
126,446 |
|
* |
Derrek L. Gafford (5) |
|
Common Stock |
|
118,744 |
|
* |
James E. Defebaugh (6) |
|
Common Stock |
|
106,377 |
|
* |
Wayne Larkin (7) |
|
Common Stock |
|
102,521 |
|
* |
William W. Steele (8) |
|
Common Stock |
|
88,824 |
|
* |
Thomas E. McChesney (9) |
|
Common Stock |
|
48,859 |
|
* |
Gates McKibbin (10) |
|
Common Stock |
|
41,710 |
|
* |
Craig E. Tall (11) |
|
Common Stock |
|
24,008 |
|
* |
Robert J. Sullivan (12) |
|
Common Stock |
|
19,254 |
|
* |
Bonnie W. Soodik (13) |
|
Common Stock |
|
6,614 |
|
* |
All officers and directors as a group
(12 individuals) |
|
Common Stock |
|
1,200,641 |
|
2.7% |
BlackRock, Inc. (14) |
|
Common Stock |
|
5,171,420 |
|
11.8% |
Lord, Abbett & Co, LLC
(15) |
|
Common Stock |
|
4,486,549 |
|
10.24% |
Royce & Associates, LLC (16) |
|
Common Stock |
|
3,844,081 |
|
8.77% |
Capital Research Global Investors
(17) |
|
Common Stock |
|
3,088,600 |
|
7.0% |
Artisan Partners Holdings, LP (18) |
|
Common Stock |
|
2,503,500 |
|
5.7% |
____________________
|
(1) |
|
Beneficial ownership is calculated in accordance with Rule
13d-3(d)(1) of the Exchange Act, and includes (i) shares held outright and
restricted shares; (ii) share units accrued under the Company’s 401(k)
plan; and, (iii) shares issuable upon exercise of options, warrants and
other securities convertible into or exchangeable for shares, which were
exercisable on or within 60 days after March 12, 2010. |
|
|
|
(2) |
|
Includes 175,816 shares held outright, 6,248 shares accrued under
the 401(k) plan and options for 115,221 shares. |
|
|
|
(3) |
|
Includes 95,808 shares held outright, 11,279 shares accrued under
the 401(k) plan and options for 124,771 shares. |
|
|
|
(4) |
|
Includes 72,802 shares held outright, and options for 53,644
shares. |
|
|
|
(5) |
|
Includes 44,958 shares held outright, 5,142 shares accrued under
the 401(k) plan and options for 68,644 shares. |
|
|
|
(6) |
|
Includes 45,550 shares held outright, 7,253 shares accrued under
the 401(k) plan, and options for 53,574 shares. |
|
|
|
(7) |
|
Includes 57,390 shares held outright, 427 shares accrued under the
401(k) plan, and options for 44,704 shares. |
|
|
|
(8) |
|
Includes 81,324 shares held outright, and options for 7,500
shares. |
- 33 -
|
(9) |
|
Includes 24,859 shares held outright, 9,000 shares held indirectly
in IRAs, and options for 15,000 shares. |
|
|
|
(10) |
|
Includes 23,697 shares held outright and options for 18,013
shares. |
|
|
|
(11) |
|
Includes 24,008 shares held outright. |
|
|
|
(12) |
|
Includes 19,254 shares held outright. |
|
|
|
(13) |
|
Includes 6,614 shares held outright. |
|
|
|
(14) |
|
Information provided is based solely on a Schedule 13G dated
January 8, 2010, filed on behalf of BlackRock, Inc. BlackRock, Inc. has
sole voting and sole dispositive power of 5,171,420 shares. The business
address of BlackRock, Inc. is 40 East 52nd Street, New York,
New York, 10022. |
|
|
|
(15) |
|
Information provided is based solely on a Schedule 13G dated
February 12, 2010, filed on behalf of Lord, Abbett & Co., LLC. Lord,
Abbett & Co., LLC has sole voting and sole dispositive power of
4,486,549 shares. The business address of Lord, Abbett & Co., LLC is
90 Hudson Street, New Jersey, New Jersey, 07302. |
|
|
|
(16) |
|
Information provided is based solely on a Schedule 13G dated
January 26, 2010, filed on behalf of Royce & Associates, LLC and its
subsidiaries. Royce & Associates, LLC has sole voting and sole
dispositive power of 3,844,081 shares. The business address of Royce &
Associates, LLC is 745 Fifth Avenue, New York, New York,
10151. |
|
|
|
(17) |
|
Information provided is based solely on a Schedule 13G dated
February 10, 2010, filed on behalf of Capital Research Global Investors.
Capital Research Global Investors has sole voting and sole dispositive
power of 3,088,600 shares. The business address of Capital Research Global
Investors is 333 South Hope Street, Los Angeles, California,
90071. |
|
|
|
(18) |
|
Information provided is based solely on a Schedule 13G dated
February 11, 2010, filed on behalf of Artisan Partners Holdings, LP, and
its subsidiaries. Artisan Partners Holdings, LP, has shared voting and
shared dispositive power of 2,503,500 shares. The business address of
Artisan Partners Limited Partnership is 875 East Wisconsin Avenue, Suite
800, Milwaukee, Wisconsin, 53202. |
|
|
|
|
|
* |
|
Less than 1%. |
|
|
|
** |
|
The address of the NEOs and directors is c/o TrueBlue, Inc., 1015 A
Street, Tacoma, Washington 98402. |
EXECUTIVE OFFICERS
The names, ages, and positions of the current
executive officers of the Company are listed below, along with their prior
business experience. No family relationships exist among any of the directors or
executive officers of the Company.
Robert P. Breen, 45, has served as Vice President of Strategic
Planning and Financial Analysis since 2003. Prior to that time, Mr. Breen served
as Director of Financial Planning and Analysis and held other positions within
the finance area since joining the Company in 1997. Prior to that, Mr. Breen
spent eight years in public accounting with BDO Seidman, LLP.
Steven C. Cooper, 47, has served as a Director and the Company’s
Chief Executive Officer since 2006, and has served as President since 2005. From
2001 to 2005, Mr. Cooper served as the Company’s Executive Vice President and
Chief Financial Officer.
James E. Defebaugh, 55, has served as Executive Vice President, General
Counsel and Secretary of the Company since 2006, after serving as Vice
President, General Counsel and Secretary of the Company since joining the
Company in 2005. Prior to joining the Company, Mr. Defebaugh held various
positions with Kmart Holding Corporation, including Senior Vice President and
Chief Legal Officer (2004-2005), Senior Vice President and Chief Compliance
Officer (2002-2004), Vice President and Corporate Secretary (2001-2002), and
Vice President, Legal (2001). Mr. Defebaugh also served as Vice President and
Chief Compliance Officer of Sears Holdings Corporation in 2005.
- 34 -
Derrek L. Gafford, 39, has served as the Company’s Executive Vice
President and Chief Financial Officer since 2006, after serving as Vice
President and Chief Financial Officer since 2005 and as the Company’s Vice
President of Finance and Accounting beginning in 2004. Mr. Gafford is a
Certified Public Accountant and first joined the Company in 2002 serving as Vice
President and Treasurer. Prior to joining the Company, Mr. Gafford served as
Chief Financial Officer for Metropolitan Markets, a grocery retailer, from 2001
to 2002 and held a variety of finance positions with Albertsons from 1995 to
2001.
Wayne Larkin, 44, has served as President of Labor Ready since
May 2008. Prior to this position, he had been the Executive Vice President of
Operations since 2007, and the Senior Vice President of Operations in 2006,
after serving as a Regional Vice President of Operations since 2005. Mr. Larkin
originally joined the Company as a District Manager in 1996 and then was
promoted in 1998 to Area Director of Operations. Between 1999 and 2002, Mr.
Larkin worked for Staffmark, serving first as a Business Development Manager and
then as a General Manager. Mr. Larkin rejoined the Company in 2002. Prior to
working for the Company, Mr. Larkin held various management positions with Avis
Rent-A-Car.
Billie R. Otto, 43, has served as Vice President and Chief
Information Officer since 2004. Ms. Otto has been with the Company since 1998,
serving in a number of roles, including as Vice President and Corporate
Controller prior to 2004. Prior to joining the Company, Ms. Otto worked in
public accounting with the firm now known as RSM McGladrey from 1990 to
1998.
Noel S. Wheeler, 69, has served as the Executive Vice President of
TrueBlue Operations since July 2009. Prior to this position he served as the
President of the Company’s Skilled Trades Group from May 2008 through June 2009,
and served as President and CEO of CLP Resources from 1999 until June 2009. From
1994 to 1999, he was President and COO of TRS Staffing Solutions, Inc., a
wholly-owned staffing subsidiary of Fluor Daniel, Inc. Mr. Wheeler joined Kelly
Services in 1984, where he established their international division in 1988 and
served as Senior Vice President until 1994.
COMPENSATION DISCUSSION AND
ANALYSIS
Introduction
This Compensation Discussion and Analysis provides
information about the fiscal year 2009 compensation program, and plans for 2010,
for our 2009 “named executive officers” or “NEOs” who are:
- Steven C. Cooper, President and Chief
Executive Officer
- James E. Defebaugh, Executive Vice
President, Secretary and General Counsel
- Derrek L. Gafford, Executive Vice
President and Chief Financial Officer
- Wayne Larkin, President of Labor
Ready
- Noel S. Wheeler, Executive Vice
President, TrueBlue Operations
- 35 -
Corporate Challenges in 2009 and
2010
Due to the global economic recession which began to
seriously impact the Company in the second half of 2008, the Company encountered
unique challenges entering 2009 that are expected to continue at least through
2010. Staffing companies have historically been impacted early as a recession
causes many potential customers to cease using temporary workers. In early 2009,
the Company’s internally developed forecasts projected a net loss of several
million dollars and a significant reduction in liquidity for the year. Given
this outlook the Board and management placed a priority on making changes
necessary to position the Company to achieve break-even operations by year-end
and to maintain liquidity sufficient to sustain operations. As discussed below,
individual goals and incentives were added to the short-term incentive plan for
2009, however the payment of any incentives were conditioned on break-even
operations after payment of any management bonuses. For 2010, the Compensation
Committee (the “Committee”) has approved the replacement of the stock option
portion of the equity awards in the long-term incentive plan with performance
share units. These changes are designed to provide appropriate incentives that
are intended to help the Company to remain profitable and achieve both
short-term and long-term Company objectives with the overall goal of awarding
short and long-term compensation that will be fair to both management and the
shareholders.
During 2009, management was successful in reducing
selling, general and administrative expenses by $70 million through the closure
of 105 branches, and reductions of field management personnel, corporate support
services and various program expenses. As a result of these cost cutting efforts
the Company was able to achieve net income of $8.8 million in 2009 and
significantly strengthen the Company’s liquidity position. See Management’s Discussion And Analysis Of Financial
Condition And Results Of Operations
in the Company’s 2009 Form 10-K
Annual Report for a full discussion and analysis of the challenges addressed in
2009.
The current executive compensation plans, along with
changes made in 2009 and for 2010, are discussed in the following summary and
narrative discussions.
- 36 -
Executive Summary
The following chart summarizes the key components of
the compensation program in 2009 and identifies the current status and plans for
2010:
Component |
2009 Key Features |
2009 Results and plans for
2010 |
Base
Salaries |
- 2009 base salaries were
reduced in March 2009 by 15% for the CEO and 13% for the other NEOs from 2008 levels due to significant downturn in
staffing industry
- Base salaries were re-set to
2008 levels in August 2009 in recognition of stabilization of Company business to
a profitable level of
operation
- Long-term goal is to set
base salaries at or near the median of the prevailing salary levels for peer companies indicated in compensation
review undertaken by
Committee’s compensation consultant
- Base salaries are a key
component in short and long-term incentive plans which are set at factors or
multiples of base salaries if
relevant goals are attained
|
- 2009 Compensation review
indicated that base salaries (before the temporary reductions) for NEOs were generally near the 25th percentile of the Company’s peer group
- 2010 base salaries will
remain at 2008 levels
|
Short-Term Incentive Plan |
- 2009 Plan for the CEO is
based 50% on Company performance and 50% on the annual evaluation by Governance Committee
- 2009 Plan for NEOs other
than the CEO is based 50% on Company performance and 50% on four individual performance factors
- Company performance is based
on net income and required to be positive after provision for all executive
and other management
bonuses
- CEO individual performance
bonus is based on subjective review of the degree of attainment of nine
individual goals for 2009 set by
CEO and Governance Committee
- Individual performance goals
for NEOs other than CEO
were determined on an earned or not earned basis and were capped at 100% of
target
- CEO target bonuses are set
at 30% of base salary for Company performance goals and 30% for individual performance objectives
- Other NEOs target bonuses
are set at 20% for Company performance goals and 20% for individual performance objectives
|
- Company performance in 2009
exceeded the break-even
goal and resulted in attaining 200% of target Company performance bonus
for CEO
(payout equal
to 60% of base salary) and other NEOs (payout equal to 40% of base salaries)
- The CEO earned 100% of his
individual incentive for
2009 resulting in a payments equal to 30% of base salary
- Each of the other NEOs
earned individual performance bonuses ranging from 15% to 20% of base salaries
- The 2010 Plan will have the
same target bonuses for
the CEO (30% Company performance and 30% individual performance) and other NEOs (20% Company performance and
20% individual
performance)
- 2010 Company Performance
Target will be 110% of
2009 Net Income with 50% threshold participation beginning at 72.5% of
target and reaching a
200% maximum bonus if net income reaches or exceeds 145% of target
|
Long-Term Incentive Plan |
- CEO – 2009 Plan:
- 1.5x base salary
- 50% restricted
shares
- 50% stock options
- Other NEOs:
- 1.0x base salary
- 60% restricted
shares
- 40% stock options
- 2009 awards and options
valued on February 6, 2009, two days after 2008 year-end earnings release
|
- Performance Shares/Units to
replace Option Shares in
2010
- Three year performance
targets based on a matrix
of revenue and EBITDA growth
- CEO – 2010 Plan:
- 1.5x base salary,
- 50% restricted
shares
- 50% performance
shares
- Other NEOs – 1.0x base
salary:
- 60% restricted
shares
- 40% performance
shares
- 2010 restricted shares and
performance share units
were valued on February 5, 2010 two days after 2009 year-end earnings
release
|
- 37 -
Compensation Philosophy - Objectives of the Executive
Compensation Programs
The objective of our compensation program for
executive officers is to provide significant incentives which attract, motivate,
and retain key executives and reward them for developing and pursuing the
strategies and obtaining the objectives proposed by management and set by the
Board with the overall objective of generating long-term rewards for our
shareholders. Our compensation programs are annually reviewed and modified, as
appropriate, in order to be closely integrated with Company strategies and
objectives for the ultimate purpose of growing shareholder value on a long-term
basis.
Our compensation philosophy has historically based a
significant portion of executive compensation on the Company’s overall
performance, while including within the short-term and long-term incentive plans
performance goals, measurements and discretion that take into account the
individual performance of each executive. The combination of base salaries and
the short-term and long-term incentive plans are intended to provide an
opportunity for executives to earn competitive compensation which over time will
correlate with overall Company performance. The three components are intended to
provide executive compensation that is competitive with the long-term goal of
placing the executives at or near the median for total compensation received for
comparable positions at the companies included in the surveys and studies
described below. In designing and implementing the various compensation
components the Committee focuses very carefully on achieving balanced programs
that are fair and competitive taking into account the interests of the
shareholders as well as the executives.
Changes implemented for
2009 and 2010 are discussed below.
Benchmarking and Competitive
Compensation
In recent years the Committee has followed the
practice of retaining its own compensation consultant to provide a review of its
executive compensation programs every two years. The information is considered
by the Committee but does not directly determine any of the Company’s actual
compensation arrangements. The Committee believes that on a long-term basis, in
order to attract and retain key executives, it needs to provide executive
compensation programs that provide compensation opportunities that will place
our executives at or near the median or 50th
percentile of the Company’s peer group. The Committee recognizes that our
Company is in a highly cyclical business and during difficult economic periods
it will not be possible to obtain the desired median level of compensation on a
short-term or even long-term basis unless the Company achieves sustained
long-term growth that is reflected in the increased value of its
shares.
At a November 2009 meeting the Committee received a
presentation from Mercer Human Resources Consulting relating to base salaries,
actual and target short-term incentives, long-term incentives and total direct
compensation. The presentation was based on information compiled from both
published salary surveys and a peer group compiled by Mercer based on input from
Committee members. The peer group is essentially the same as the group
identified in the Committee’s 2007 review with the deletion of ABM (due to
increased size) and Westaff Inc (no longer public). Although the peer group
differs in many respects from the Company, the companies were selected because
they are engaged in staffing or functionally similar industries which operate
national branches and share similar revenue (50% to 200% of the Company’s),
market cap, total assets and core employee demographics:
|
Administaff Company |
MPS
Group Inc. |
|
CDI
Corp |
Resources Connection Inc. |
|
Dollar
Thrifty Automotive GP |
RSC
Holdings Inc. |
|
G&K
Services Inc. |
Spherion Corp |
|
Hudson
Highland Group Inc. |
Unifirst Corp |
|
Kforce
Inc. |
Volt
Info Sciences Inc. |
- 38 -
The data from this peer group was combined with
national published surveys compiled by Mercer (Mercer Benchmark Database) and
Watson Wyatt Data Services (Top Management Compensation Report). The results of
the 2009 combined survey and peer group review are referenced in the following
descriptions of the different compensation components.
Design of Compensation Programs
Two major elements to our compensation program – the
short-term incentive plan and the long-term incentive plan – are reviewed and
determined annually. The third major element – base salary – is reviewed and
determined every two years.
Base Salaries
In 2009, base salaries for the NEOs as a group
totaled $1,716,408 or 34% of “Total Compensation” as calculated for the Summary
Compensation Table below.
The Committee’s policy is to review base salaries
every two years. As a result of a similar review in the fall of 2007 the base
salary for our Chief Executive Officer was set at $550,000 for 2008 and the base
salary for each of the other NEOs was set at $300,000. At its February 2009
meeting, the Committee concurred in a proposal by the Chief Executive Officer to
reduce his 2009 base salary by 15% and reduce the base salaries for all other
executive officers by 13%. Similarly, the Board reduced its cash retainer and
meeting fees by 15%. Both the executive base salaries and the director fees were
reinstated to the 2008 levels in August 2009 in recognition of the Company’s
return to profitability.
Based on the 2009 Mercer review, our Chief Executive
Officer’s base salary is at the 25 percentile and the other NEOs are at or close
to the 25th
percentile. At its November 2009 meeting the Committee decided to make no
changes in base salaries, thus all of the NEOs will continue at the 2008 base
salary levels. The Committee concluded that in the current difficult economic
environment the resulting salaries represented an appropriate balance between
the interests of the shareholders and the executives, especially taking into
account the current challenges faced by the Company.
Base compensation provides minimum cash compensation
necessary to attract and retain executives. Base salaries are also a key
component of the overall compensation program since it is utilized in
determining awards under both the short-term and long-term incentive plans. The
awards under those plans are determined by multiplying base compensation by a
percentage or factor in addition to other objective and subjective adjustments
as described below. Thus maintaining the current base salaries will also have
the effect of moderating the potential payouts under both the short-term and
long-term plans.
Short-Term Incentive
Plans
Our short-term incentive plan is intended to provide
incentives for achieving Company and individual goals for the immediate fiscal
year.
2009 Short-Term Incentive
Plan
In 2009, short-term incentives for the NEOs as a
group totaled $1,170,000 or 23% of “Total Compensation” as calculated for the
Summary Compensation Table below.
- 39 -
Staffing companies are especially challenged during
recessionary periods as businesses cut back on or cease using temporary help. In
recognition of the significant problems facing the Company and the staffing
industry in general due to the current economic crisis, the Committee concluded
that changes to the Short-Term Incentive Plan were necessary. Because the
Company’s internally developed forecasts projected a net loss of several million
dollars and a significant reduction in liquidity for 2009, and achieving
break-even performance would be extremely challenging, it was critical to
establish a meaningful and attainable short-term incentive plan to provide
appropriate incentives to achieve break-even or better operating
performance.
The short-term targets for 2007 and 2008 had been
based solely on company targets requiring year-to-year growth in net income. The
targets were not attained in either of those years, and other than Mr. Wheeler’s
partial bonus in 2007, no NEO received a bonus for 2007 or 2008. The short-term
incentive bonus for 2009 for each executive was based on a combination of
Company target performance and individual performance goals. Individual
performance goals were added to enhance the focus by executives on the
management of critical matters for which they had direct or shared
responsibility. Under the 2009 plan no short-term incentive bonuses, whether
based on Company or individual performance, could be earned unless the Company
was profitable after taking into account payment of any and all management
bonuses. The individual target bonuses were divided between Company and
individual performance, so that the Chief Executive Officer had a Company
performance target bonus of 30% of base salary and an individual performance
target bonus of 30% of base salary. Targets for other NEO bonuses were set at
20% of base salary for the Company performance and 20% for the individual
performance.
The Company performance target was set at break-even
and incentive payments were to be accrued only if the final effect resulted in
positive net income. Once 100% of the Company based performance targets were
attained the NEOs accrued additional short-term incentive payments which were
capped at 200% of the target for the Company based performance target. Net
income for 2009 was $8.8 million, which substantially exceeded the break-even
target and earned the maximum Company based performance incentive for 2009
resulting in aggregate payments to the NEOs of $1,170,000.
The Chief Executive Officer’s individual performance
bonus was based on a review of nine performance goals which were developed with
the direction of the Governance Committee involving areas of responsibilities
such as: (i) financial performance, (ii) cost management, (iii) liquidity, (iv)
revenue growth strategy and results, and (v) strategy development and
implementation. At the end of the year the Chief Executive Officer completed a
subjective self evaluation of his performance in the nine areas. This was
provided to each member of the Governance Committee, which consists of all the
independent directors. Each independent director reviewed and provided his or
her own subjective evaluations. The Governance Committee met and discussed each
performance area, the Chief Executive Officer’s self evaluation and the
evaluations of each of the independent directors. After further review and
discussion the Governance Committee unanimously concluded that based on all the
facts and circumstances the Chief Executive Officer had performed at a level
that entitled him to receive his full individual performance bonus of
$165,000.
The individual performance targets for each of the
other NEOs were based on a review of four performance goals which were developed
by the Chief Executive Officer and approved by the Committee. For the executives
with operating responsibilities (Messrs. Larkin and Wheeler) their goals
consisted of revenue, profitability, and temporary employee accident rates for
the brands which they are responsible for (Labor Ready in the case of Larkin and
PlaneTechs, CLP, and Centerline in the case of Wheeler) and an individual
discretionary performance review by the Chief Executive Officer. For the
executives with corporate wide responsibilities (Messrs. Gafford and Defebaugh)
their goals consisted of cost management for specific cost centers under their
respective management and for all support centers, completion of a new
information system, and an individual discretionary performance
- 40 -
review by the Chief
Executive Officer. Each of the four relevant performance areas was determined on
an earned (100%) or unearned (0%) basis. Based on the Chief Executive Officer’s
recommendation, as approved by the Committee, it was determined that Mr. Wheeler
satisfied all four of his performance factors and that each of the other three
NEOs satisfied three of their four performance factors.
According to the Mercer survey total cash
compensation (base salary plus short-term incentive) for 2009 was at the 25th percentile for the
Chief Executive Officer and at or below the 25th
percentile for the other NEOs.
2010 Short-Term Incentive Plan
The Short-Term Incentive Plan for 2010 will be
similar to the Plan in effect for 2009 in that it will include both Company
based performance targets and individual based performance targets for each of
the NEOs. The Company and individual target bonuses will remain the same: 30% of
base salary based on Company performance and 30% of base salary based on
individual performance for the Chief Executive Officer and 20% of base salary
based on Company performance and 20% of base salary based on individual
performance targets for the other NEOs.
The Committee believes that it will be challenging
for the Company to maintain operations at a break-even level in 2010.
Accordingly, to the extent individual performance goals are met, the individual
performance bonuses may be paid, but only if payment does not result in a net
loss. The maximum individual incentive aggregate bonuses for the NEOs will be
$405,000, the same as in 2009. The 2010 Company performance target is net income
of $9.7 million, which will require a 10% improvement over 2009 net income, with
50% payout if net income is 72.5% of target and the 200% maximum participation
being reached if net income reaches 145% of target. The maximum aggregate
Company based performance incentive for the NEOs as a group would be $1,215,000.
Given the present outlook for the staffing industry the Committee believes that
it will be very challenging to meet the Company performance target for
2010.
The individual incentive for our Chief Executive
Officer for 2010 will be determined in substantially the same process as in
2009. At the end of the year the Governance Committee will undertake a
subjective review of his performance primarily measured against goals for 2010
which are in the process of being reviewed and approved by the Governance
Committee. The individual incentive cannot exceed 30% of the Chief Executive
Officer’s base salary.
The individual incentives for each of the other NEOs
will require satisfaction of goals for which they have direct involvement.
Messrs. Wheeler and Larkin will have multiple goals based on attaining minimum
revenue and profitability for the brands under their management, both on an
annual and quarterly basis, and based on temporary employee accident rates.
Messrs. Gafford and Defebaugh will have three goals: cost management at or below
budget for support service under their direct management, cost management at or
below budget for all corporate support services and special projects established
by the Chief Executive Officer related to their respective
responsibilities.
Long-Term Executive Equity Incentive
Plan
In 2009, the aggregate value of the equity awards
under the long-term incentive plan to the NEOs was $2,145,013, or 42% of “Total
Compensation” as calculated for the Summary Compensation Table
below.
- 41 -
The Long-Term Executive Equity Incentive Program is
designed to align the interest of the executives with that of the shareholders.
The combination of vesting requirements and stock ownership guidelines promote
retention and a long-term commitment to the Company. It has historically
provided the most significant portion of executive compensation based on grant
date valuations. Sustained growth in the value of the Company’s stock provides
the means for executives to accumulate meaningful wealth.
2007-2009 Long-Term Equity
Program
The long-term executive equity incentive awards
included in the Summary Compensation Table for the years 2007-2009, were
designed to align the long-term interests of the NEOs with the other
shareholders, and was first implemented in 2004 as part of a study by the
Committee. The annual awards during 2007-2009 consisted of annual grants of
restricted stock and stock options together with the ownership retention
guidelines discussed below. The Committee, in conjunction with its consultant,
after a review of data compiled from compensation studies from prior years,
determined that the annual equity awards should be set at multiples of base
compensation, ranging from 1.0 to 1.5 depending upon the executive position.
Annual stock and option awards have been subject to various vesting requirements
to achieve the right balance between the effective and fair compensation for
executives while furthering the goal of aligning the executives’ interest with
those of the other shareholders.
The Committee believed that the use of stock options
and restricted stock, taking into account applicable vesting requirements,
closely aligned executive compensation with the value to be received by
shareholders during the same period. The option awards provided the executive
with a benefit only if the value of Company shares increases over the exercise
price of the options, but potentially provided greater leverage since more
shares are included in an option grant than in a grant of restricted stock. The
value of the restricted stock will fluctuate with the value of Company shares
and provides a benefit and incentive even if the value of the Company’s shares
decline but has less upside potential than stock options since fewer shares are
awarded in a restricted stock award having an equivalent initial
value.
The Company values and determines the number of
shares to be received in each annual equity award based on the closing price on
the second full trading day after the announcement of the Company’s fourth
quarter and year-end financial results. The awards for 2009 were priced based on
the closing price of the Company’s common stock on February 6,
2009.
Newly named executive officers may also receive an
equity award in connection with their initial hiring or upon a promotion. In
each case the equity award is valued as of the effective date of such hiring or
promotion. There were no newly named NEOs in 2009.
The valuations of the equity awards for 2007-2009 are
based on the valuations included in the Summary Compensation Table which were
determined in accordance with FASB ASC Topic 718 based on the aggregate grant
date fair values in each of the respective years. This reflects a change
required by the Securities and Exchange Commission from the values included in
the Summary Compensation Table for prior years which was based on the expense
allocated for financial accounting purposes.
Based on the Mercer review, the long-term incentive
targets of awarding equity with a deemed value of 1.5 times base salary for our
Chief Executive Officer and awarding equity with a deemed value of 1.0 times
base salary for the other NEOs generally fall between the 25th
percentile and the market median.
- 42 -
2010 Long-Term Equity Program –
Performance Share Units
The major change for 2010 is the replacement of the
option portion of the Long-Term Equity Program with performance share units. Our
Chief Executive Officer will continue to receive a total equity award having a
deemed value equal to 1.5 times his base compensation with 50% in the form of
performance share units and 50% in the form of time-based restricted shares. The
other NEOs will continue to receive a total equity award having a deemed value
equal to 1.0 times their respective base compensation with 40% of their annual
equity award in the form of performance share units and the remaining 60% in the
form of time-based restricted shares. For the purpose of calculating the number
of performance share units to be awarded, a per unit value equal to 80% of the
grant date value of the Company’s common stock was used. This was recommended by
our compensation consultant in order to reflect the contingent nature of the
units. The restricted shares will continue to be valued at the full grant date
value and will be otherwise administered as described above for past years. The
grant date value will continue to be the closing market value on the second
trading day after the announcement of fourth quarter and year-end results, which
this year was February 5, 2010.
For accounting purposes, the Company treats
performance shares in a manner similar to restricted shares – grant awards are
recorded at the maximum number of shares that could vest, but the compensation
expense is only recorded for the amount of shares expected to vest. Management
has determined that the target number of shares will vest and be distributed to
NEOs in three years. Therefore, in accordance with FASB ASC Topic 718, we
expense one-third of the grant date value of the anticipated amount of shares
expected to vest each year during the performance period. If, during the
performance period, management’s estimate of the likely achievement of the
performance goals change, a cumulative change in the expenses will also be made
at the time of the change in the estimate.
Performance share units will vest and be converted
into Company common shares only if certain average growth rates for the
Company’s revenue and earnings before interest, taxes, depreciation and
amortization (EBITDA) are met at the completion of fiscal year 2012. Minimum,
target, and maximum conversation rates have been established according to
potential growth results for the company as set forth on the following
table:
|
|
|
Average Annual Revenue
Growth |
|
|
|
Minimum |
Target |
Maximum |
|
|
|
|
3% |
|
|
6% |
|
|
9% |
|
|
Maximum |
27% |
|
100% |
|
|
125% |
|
|
150% |
|
Target |
18% |
|
75% |
|
|
100% |
|
|
125% |
|
Minimum |
9% |
|
50% |
|
|
75% |
|
|
100% |
|
The table is based on three growth models that the
Company developed for planning purposes, with a base case used as the target, a
more aggressive model representing the maximum and a more conservative model
representing the minimum. The growth models were developed with the help of a
nationally recognized economic planning firm; however, the growth targets are
not intended in any way to represent forecasts or prediction of future results
which will be greatly influenced by the general economy and a number of factors
beyond the control of and predictability of the Company.
The number of performance share units earned at the
end of 2012 will be determined by the three year average growth in revenue and
EBITDA. If the three year average growth of revenue averages 3% and the three
year average growth of EBITDA equals 9% the participants would earn the minimum
or 50% of their respective
- 43 -
performance share units. A
three year average growth in revenue of 6% and three year average growth of
EBITDA of 18% would earn the full target award or shares equal to 100% of the
performance units. A three year average growth in revenue of 9% or more and a
three year average grown in EBITDA of 27% or more would earn the maximum or 150%
of the performance share units awarded. Growth rates falling within the matrix
will earn an interpolated percentage of the performance units
granted.
The replacement of options with performance share
units is intended to both more closely align the interests of the executives
with our shareholders and also to provide significant awards for and incentives
to achieve acceptable long-term growth in revenue and EBITDA that should be
reflected in long-term growth in the value of the Company’s shares.
Total Compensation – Internal
Equity
As part of its annual review the Committee also
concluded that the ratio between the total compensation that may be earned by
the Chief Executive Officer and the total compensation that may be earned by the
NEOs was in its opinion equitable based on the facts and circumstances known at
that time. The Mercer survey indicated that Target Total Compensation (Target
Total Cash Compensation plus Target Long-Term Incentive grant values) is
generally between the 25th
percentile and market medians for the Chief Executive Officer and the other
NEOs.
Compensation Risk Analysis
The Committee reviewed the Company’s various
compensation plans and has concluded that they are not reasonably likely to have
a material adverse effect on the Company. As discussed above, the largest
portion of the executive compensation for the NEOs is received under the
Long-Term Executive Equity Incentive Plan, which includes vesting or performance
requirements and provides meaningful benefits primarily as a result of sustained
long-term growth of the Company’s stock. The current short-term incentive plans
focus on multiple goals such as brand revenues and income, cost management and
worker safety and provide modest awards for achievement of the goals. Incentive
plans for employees other than the NEOs are based on similar balanced goals, and
are administered under the supervision of executive officers and provide awards
that are relatively modest.
Stock Ownership Guidelines
The Committee has adopted the following stock
ownership guidelines for executives that are based on a multiple of base
salary:
Level |
Guideline |
Chief Executive Officer |
Shares with a fair market value equal to three times base
salary |
Executive Vice Presidents |
Shares with a fair market value equal to two times base
salary |
Vice
Presidents |
Shares with a fair market value equal to one times base
salary |
Executives are expected to achieve their targets
within five years of becoming subject to the ownership guidelines. The
guidelines may be satisfied by shares owned outright (regardless of whether
acquired through a Company plan or other acquisition), unvested restricted
shares or shares held in the executives’ account under the Company’s employee
stock purchase or 401(k) plans. Compliance with the guidelines, as well as the
value of the Company shares, will be determined on an annual basis as of the
effective date of the grants of the Company restricted stock under the long-term
incentive program described above. Executives who have not satisfied the
applicable guideline after becoming subject to it will be required to retain 50%
of the net (after applicable taxes) amount of their shares on each vesting date
for their restricted stock awards.
- 44 -
Change in Control Agreements
In 2006, at the suggestion of a member of the
Committee, outside counsel and Mercer were engaged to assist in the development
of change in control agreements. These agreements are described in greater
detail under “Potential Payments upon Termination or Change in Control” below,
and were approved by all of the independent directors. The change in control
agreements are intended to protect the interests of the Company’s shareholders
by providing short-term security for the executives in the event management and
the Board are presented with a business combination or other opportunity that is
determined to be in the best interest of the Company’s shareholders. The
Committee designed the change in control agreements to achieve a balance between
the benefits of providing executives with security and the potential impact on
the shareholders. The major provisions included to achieve this balance
include:
- the change in control agreements require
a “double trigger,” i.e., both a change in control and either an involuntary termination by the Company or a
termination for good reason by the executive;
- the basic benefit is limited to an amount
equal to two times (three times in the case of the Chief Executive Officer) the sum of (i) the executive’s
annual base salary rate in effect for the year in which the termination date occurs, (ii) the
executive’s short-term incentive target award; plus (iii) the immediate vesting of outstanding, unvested equity
awards;
- the effective cost is further controlled
by a “modified cap” which provides that if the “parachute” amount payable would trigger an excise tax under
Section 4999 of the Internal Revenue Code then the amount required to be paid is the greater of
the cut-back parachute payment or 90% of the full parachute payment after taxes;
- the Company is not obligated to pay a
“gross up” in the event excise taxes are payable; and
- the executives agreed to restrictive
covenants including non-competition, non-solicitation, non-disparagement and confidentiality.
In addition to the three basic components of the
Company’s compensation program and the change in control agreements, the
Committee also approved and adopted the Company’s Nonqualified Deferred
Compensation Plan during 2006.
Nonqualified Deferred Compensation
Plan
The NEOs, in addition to certain other eligible
executives, are entitled to participate in the TrueBlue Nonqualified Deferred
Compensation Plan (the “Deferral Plan”). Pursuant to the Deferral Plan, eligible
employees can defer up to 50% of base salary and up to 75% of amounts received
under the short-term incentive plan. Under the Deferral Plan the Company may
make discretionary matching contributions which, if made, will be designed to
provide a benefit generally equivalent to matching benefits that the Company
generally makes available to its employees, but was not able to make under its
401(k) Plan for executive officers due to limitations that apply to highly
compensated employees. Although the Company plans to invest deferred amounts in
separate investment funds managed by third parties it is not required to do so
and all deferred amounts are subject to the risk of loss in the event that the
Company becomes insolvent. The Deferral Plan is administered by a benefits
committee consisting of Company employees and NEOs who are eligible to
participate on the same basis as other eligible employees. For the reasons
discussed above the Committee believes that the Deferral Plan is a reasonable
benefit for the NEOs and does not impose any significant risk to or burden on
the Company. In February 2009 the Board of Directors decided to suspend Company
contributions to its 401(k) Plan and the Deferral Plan.
- 45 -
Tax and Accounting Implications
Deductibility of Executive
Compensation
Section 162(m) of the Internal Revenue Code limits
the Company’s ability to deduct certain compensation over $1 million paid to the
NEOs unless such compensation is based on performance objectives meeting certain
criteria or is otherwise excluded from the limitation. The Committee believes
that it is generally in the Company’s best interests to comply with Section
162(m) and expects that most of the compensation paid to the NEOs will be under
the $1 million limit, eligible for exclusion (such as stock options and
performance units), or based on other qualified performance objectives. However,
notwithstanding this general policy, the Committee also believes that there may
be circumstances in which the Company’s interests are best served by maintaining
flexibility in the way compensation is provided, whether or not compensation is
fully deductible under Section 162(m). Accordingly, it is possible that some
compensation paid to the named executive officers may not be deductible, such as
the restricted stock portion of the long-term executive equity incentive plan to
the extent that the aggregate of non-exempt compensation exceeds the $1 million
level.
Nonqualified Deferred
Compensation
On October 22, 2004, the American Jobs Creation Act
of 2004 was signed into law, changing the tax rules applicable to nonqualified
deferred compensation arrangements by adding a new Section 409A to the Internal
Revenue Code. The Company is operating in compliance with the statutory
provisions regarding nonqualified deferred compensation
arrangements.
Accounting for Stock-Based
Compensation
Since December 31, 2005, the Company has accounted
for stock-based payments, including its Stock Option Program, Long-Term Stock
Grant Program, Restricted Stock Program and Stock Award Program in accordance
with the requirements of FASB ASC 718.
Compensation Committee Membership and
Processes
The Compensation Committee
Compensation for our executives is determined by the
Compensation Committee which consists of Thomas McChesney, Chair, William Steele
and Craig Tall. As discussed under the “Corporate Governance” section, each of
the members satisfies all of the independence requirements of the New York Stock
Exchange. Each member also meets applicable requirements under the regulations
issued by the Securities and Exchange Commission as “non-employee directors” and
the Internal Revenue Service as “outside directors.”
The Committee’s mission, as stated in its Charter, is
“to further shareholder value by helping to create compensation plans that
provide financial incentives to employees for producing results that fairly
reward shareholders.”
The Committee has regularly scheduled in-person
meetings each quarter and has additional in-person or telephonic meetings as
appropriate. During 2009 the Committee met seven times. The agenda for each
meeting is set by the Chair. The Committee has full authority to directly retain
the services of outside counsel and compensation consultants and has done so on
a regular basis. Our Chief Executive Officer and other NEOs have also attended
portions of Committee meetings in order to provide information and help explain
data relating to
- 46 -
matters under consideration
by the Committee but are not present during deliberations or determinations of
their respective compensation or during executive sessions which occur in
connection with each meeting. Outside counsel also regularly attends Committee
meetings.
Prior to each regular meeting the Committee receives
and reviews meeting materials including the agenda, minutes from prior meetings,
a summary of outstanding equity awards and other briefing and background
materials relating to agenda items. Tally sheets for each of our NEOs are made
available to the Committee for each meeting at which the Committee considers
material changes to existing compensation arrangements or exercises discretion
under existing plans. The tally sheets summarize: (i) all material aspects of
the executive compensation program for each NEO for the last two full years as
well as year-to-date information for the current year including base salary,
cash awards under the short-term incentive plan, equity awards (restricted stock
and option grants) under the long-term incentive plan and all other
miscellaneous compensation and benefits; (ii) equity ownership information for
the last two years and the current year including current holdings, option
vestings and exercises, restricted stock vestings, and any other purchases or
sales of our stock; and (iii) amounts payable to NEOs in the event of
termination under various scenarios, including voluntary and involuntary
termination with and without cause or good reason. The regular availability of
tally sheets provides the Committee with up to date and relevant information and
has enabled the Committee members to assess the effect of individual decisions
and new proposals in the context of the existing programs and prior awards and
benefits taken as a whole. No specific changes were made as a result of
maintaining the tally sheets but the availability of the information has proven
to be a valuable and convenient reference source.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has
reviewed and discussed the Compensation Discussion and Analysis required by Item
402(b) of Regulation S-K with management and, based on such review and
discussions, the Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement.
Members of the Compensation
Committee:
Thomas E. McChesney,
Chair
William W. Steele
Craig E. Tall
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Compensation Committee is comprised entirely of
independent directors. During 2009, none of the Company’s executive officers
served as a member of a compensation committee or board of directors of any
other entity which had an executive officer serving as a member of the Company’s
Board of Directors.
- 47 -
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows all compensation paid by
the Company in fiscal 2007, 2008, and 2009 to our Chief Executive Officer, Chief
Financial Officer, and the other three most highly paid executive officers. All
individuals listed in the following table are referred to in this Proxy
Statement as the “Named Executive Officers” or “NEOs.” Annual Compensation
includes amounts deferred at the NEO’s election.
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Value and |
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Deferred |
|
|
|
|
Name and |
|
|
|
|
|
Awards |
|
Awards |
|
Compensation |
|
Compensation |
|
All Other |
|
|
Principal
Position |
|
Year |
|
Salary |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
Compensation |
|
Total |
Steven C. Cooper |
|
2007 |
|
$425,000 |
|
$318,750 |
|
$343,740 |
|
— |
|
— |
|
$4,014 (5) |
|
$1,091,504 |
President
and
|
|
2008 |
|
$545,194 |
|
$412,504 |
|
$412,081 |
|
— |
|
— |
|
— |
|
$1,369,799 |
Chief Executive Officer |
|
2009 |
|
$536,252 |
|
$412,501 |
|
$412,504 |
|
$495,000 |
|
— |
|
|
|
$1,856,257 |
Derrek L. Gafford |
|
2007 |
|
$250,001 |
|
$150,000 |
|
$161,760 |
|
— |
|
— |
|
$3,875 (6) |
|
$565,636 |
Executive Vice
President
|
|
2008 |
|
$298,077 |
|
$179,997 |
|
$120,000 |
|
— |
|
— |
|
— |
|
$598.074 |
and Chief Financial
Officer
|
|
2009 |
|
$295,039 |
|
$180,002 |
|
$120,000 |
|
$165,000 |
|
$15,168 |
|
|
|
$775,208 |
James E. Defebaugh |
|
2007 |
|
$275,001 |
|
$165,000 |
|
$177,936 |
|
— |
|
— |
|
$288,780 (7) |
|
$906,717 |
Exec. V.P.,
Secretary
|
|
2008 |
|
$299,039 |
|
$179,997 |
|
$120,000 |
|
— |
|
— |
|
$23,406 (8) |
|
$622,442 |
and General
Counsel
|
|
2009 |
|
$295,039 |
|
$180,002 |
|
$120,000 |
|
$165,000 |
|
— |
|
$865 (6) |
|
$760,040 |
Wayne Larkin |
|
2007 |
|
$250,001 |
|
$225,000 |
|
$134,800 |
|
— |
|
— |
|
$9,056 (9) |
|
$618,857 |
President of Labor
Ready
|
|
2008 |
|
$298,077 |
|
$299,992 |
|
$120,000 |
|
— |
|
— |
|
$680 (10) |
|
$717,949 |
|
|
2009 |
|
$295,039 |
|
$180,002 |
|
$120,000 |
|
$165,000 |
|
$7,371 |
|
|
|
$767,411 |
Noel S. Wheeler |
|
2007 |
|
$250,000 |
|
$150,000 |
|
$161,760 |
|
$37,500 |
|
$2,597 |
|
$3,875 (6) |
|
$605,732 |
Executive Vice
President,
|
|
2008 |
|
$294,424 |
|
$179,997 |
|
$120,000 |
|
— |
|
— |
|
— |
|
$594,421 |
TrueBlue
Operations
|
|
2009 |
|
$295,039 |
|
$300,002 |
|
$120,000 |
|
$180,000 |
|
$33,420 |
|
|
|
$928,461 |
____________________
|
(1) |
|
This column
represents the aggregate grant date fair value of restricted shares
granted to each of the NEOs in 2007, 2008, and 2009 computed in accordance
with FASB ASC Topic 718. The amounts are calculated using the closing
price of our stock on the grant date. These amounts do not necessarily
correspond to the actual value that will be realized by the NEO. For
additional information, refer to Note 12 to the Notes to Consolidated
Financial Statements found in Item 8 of Part II of our 2007 and 2008 Form
10-K and Note 14 to the Notes to Consolidated Financial Statements found
in Item 8 of Part II of our 2009 Form 10-K (listed under Stock Based
Compensation). Additional information regarding the shares of restricted
stock granted to our NEOs during 2007, 2008, and 2009 is set forth in the
Grants of Plan-Based Awards Table. The amounts reported for 2008 and 2007
for all NEOs have been restated to reflect the aggregate grant date fair
value for the respective years, in accordance with new SEC
rules.
|
|
|
|
(2) |
|
This column
represents the aggregate grant date fair value of stock options granted to
each of the NEOs in 2007, 2008, and 2009 computed in accordance with FASB
ASC Topic 718. The values were calculated using an estimated Black-Scholes
valuation model. These amounts do not necessarily correspond to the actual
value that will be realized by the NEO. For additional information, refer
to Note 12 to the Notes to Consolidated Financial Statements found in Item
8 of Part II of our 2007 and 2008 Form 10-K and Note 14 to the Notes to
Consolidated Financial Statements found in Item 8 of Part II of our 2009
Form 10-K (listed under Stock Based Compensation). Additional information
regarding the stock options granted to our NEOs during 2007, 2008, and
2009 is set forth in the Grants of Plan-Based Awards Table. The amounts
reported for 2008 and 2007 for all NEOs have been restated to reflect the
aggregate grant date fair value for the respective years, in accordance
with new SEC rules.
|
|
|
|
(3) |
|
The amounts set
forth in this column for the respective fiscal year were earned during
such fiscal year and paid in the early part of the corresponding
subsequent fiscal year to each of the NEOs under our Short-Term Incentive
Plan. For additional information on the determination of the amounts
related to Non-Equity Incentive Plan Compensation, see the discussion
above in the Compensation Discussion and Analysis entitled, “Short-Term
Incentive Plan.”
|
- 48 -
|
(4) |
|
These amounts
represent the “above market” earnings on contributions to the Company’s
deferred compensation plan, described in more detail below in the section
regarding Nonqualified Deferred Compensation.
|
|
|
|
(5) |
|
This amount
represents $680 in a gift card, $3,334 in spousal
travel,
|
|
|
|
(6) |
|
These amounts
represent 401(k) matching funds paid to the NEO.
|
|
|
|
(7) |
|
This amount
represents $2,812 paid in 401(k) matching funds, $4,495 for a 2006 tax
shortfall, and $281,473 in relocation expenses paid to or on behalf of the
NEO.
|
|
|
|
(8) |
|
This amount
represents a tax reimbursement related to relocation
expenses.
|
|
|
|
(9) |
|
This amount
represents $680 in a gift card, $4,501 in spousal travel, and $3,875 in
401(k) matching funds.
|
|
|
|
(10) |
|
This amount
represents $680 in a gift card.
|
Grants of Plan-Based Awards
The following table provides information about equity
awards granted and non-equity awards paid to the NEOs in 2009. In the columns
labeled as Estimated Future Payouts Under Non-Equity Incentive Plan Awards, this
table quantifies potential awards under the Short-Term Incentive Plan discussed
in the Compensation Discussion and Analysis. In the columns labeled below as
Estimated Future Payouts Under Equity Incentive Plan Awards, this table
quantifies actual stock option and restricted stock grants made to named
executive officers under the Long-Term Executive Equity Incentive Plan discussed
in the Compensation Discussion and Analysis. For additional information about
the non-equity incentives and option awards and restricted stock awards, see the
description of incentive compensation in the Compensation Discussion and
Analysis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise or |
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future |
|
Base Price |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under Equity |
|
of Option |
|
of Stock |
|
|
|
|
Action |
|
Estimated Future Payouts Under |
|
Incentive Plan |
|
Awards |
|
and Option |
|
|
Grant |
|
Date |
|
Non-Equity Incentive Plan
Awards |
|
Awards |
|
($/Share) |
|
Awards |
Name |
|
Date |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Stock |
|
Restricted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
Stock |
|
|
|
|
Steven C. Cooper |
|
|
|
4/10/09 |
|
$330,000 |
|
$330,000 |
|
$495,000 |
|
|
|
|
|
|
|
|
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
132,212 |
|
|
|
$9.08 |
|
$412,501 |
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
|
|
45,430 |
|
|
|
$412,504 |
Derrek L. Gafford |
|
|
|
4/10/09 |
|
$120,000 |
|
$120,000 |
|
$180,000 |
|
|
|
|
|
|
|
|
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
38,462 |
|
|
|
$9.08 |
|
$120,000 |
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
|
|
19,824 |
|
|
|
$180,002 |
James E. Defebaugh |
|
|
|
4/10/09 |
|
$120,000 |
|
$120,000 |
|
$180,000 |
|
|
|
|
|
|
|
|
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
38,462 |
|
|
|
$9.08 |
|
$120,000 |
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
|
|
19,824 |
|
|
|
$180,002 |
Wayne Larkin |
|
|
|
4/10/09 |
|
$120,000 |
|
$120,000 |
|
$180,000 |
|
|
|
|
|
|
|
|
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
38,462 |
|
|
|
$9.08 |
|
$120,000 |
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
|
|
19,824 |
|
|
|
$180,002 |
Noel S. Wheeler |
|
|
|
4/10/09 |
|
$120,000 |
|
$120,000 |
|
$180,000 |
|
|
|
|
|
|
|
|
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
38,462 |
|
|
|
$9.08 |
|
$120,000 |
|
|
2/6/2009 |
|
|
|
|
|
|
|
|
|
|
|
19,824 |
|
|
|
$180,002 |
|
|
7/24/2009 |
|
|
|
|
|
|
|
|
|
|
|
9,310 |
|
|
|
$120,006 |
____________________
|
(1) |
|
This column
reflects the date that the Compensation Committee approved the Company
performance target and individual target incentive percentages pursuant to
the Short-Term Incentive Plan.
|
- 49 -
|
(2) |
|
These columns
show what the potential payout for each NEO was under the Short-Term
Incentive plan in 2009, if the threshold, target, or maximum goals were
satisfied for all performance measures. The potential payouts were
performance-driven and therefore completely at risk. The threshold and
target amounts are equal because the target amount represented the minimum
Company profitability which could result in a bonus being paid. For actual
payouts under the Short-Term Incentive plan in 2009, please see the
Summary Compensation Table, above. The business measurements, performance
goals, and salary multipliers for determining the payout are described in
the Compensation Discussion and Analysis, above.
|
|
|
|
(3) |
|
This column
shows the number of stock options and restricted stock awards granted in
2009 to the NEOs under the Long-Term Incentive plan. The 2009 stock
options vest in full three years after the date of grant. The 2009
restricted stock awards vest in equal installments over three
years.
|
|
|
|
(4) |
|
This column
shows the exercise price for the stock options granted, which was the
closing price of Company stock on the grant date
indicated.
|
|
|
|
(5) |
|
This column
shows the grant date fair value of equity awards in accordance with FASB
ASC Topic 718. For restricted stock, fair value is calculated using the
closing price of Company stock on the date of grant. The closing price of
Company stock on February 6, 2009 was $9.08. For options, the fair value
is calculated using the Black-Scholes value on the grant date which was
estimated to be $3.12 per option granted for all 2009 option grants. For
additional information, refer to Note 14 to the Notes to Consolidated
Financial Statements found in Item 8 of Part II of our 2009 Form 10-K
(listed under Stock Based
Compensation).
|
- 50 -
Outstanding Equity Awards at Fiscal
Year-End
The following table provides information on the
holdings of stock option and restricted stock awards to the NEOs as of December
25, 2009. This table includes unexercised and unvested option awards and
unvested shares of restricted stock. Each equity grant is shown separately for
each named executive. The option exercise price shown below reflects the closing
market price of the Company’s stock on the date of the grant. The market value
of the restricted stock awards is based on the closing market price on December
25, 2009, which was $14.97. For additional information about the option awards
and restricted stock awards, see the description of equity incentive
compensation in the Compensation Discussion and Analysis. The vesting schedule
for each grant is shown following this table, based on the option or restricted
stock award grant date. Grants that are not listed in the vesting schedule are
100% vested.
|
|
Option Awards |
|
Restricted Stock
Awards |
|
|
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
Shares or Units |
|
Market Value of |
|
|
|
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
|
|
of Stock That |
|
Shares or Units of |
|
|
Grant |
|
Options |
|
Options |
|
Exercise |
|
Expiration |
|
Grant |
|
Have Not |
|
Stock That Have Not |
Name |
|
Date |
|
Exercisable |
|
Unexercisable |
|
Price |
|
Date |
|
Date |
|
Vested |
|
Vested |
Steven C. Cooper |
|
1/3/05 |
|
25,970 |
|
|
|
$16.98 |
|
1/3/2012 |
|
5/17/06 |
|
2,500 |
|
$37,425 |
|
|
1/3/06 |
|
38,251 |
|
|
|
$21.24 |
|
1/3/2013 |
|
2/2/07 |
|
5,597 |
|
$83,787 |
|
|
2/2/07 |
|
|
|
5,268 |
|
$18.98 |
|
2/2/2014 |
|
2/1/08 |
|
18,518 |
|
$277,214 |
|
|
2/2/07 |
|
|
|
45,732 |
|
$18.98 |
|
2/2/2014 |
|
2/6/09 |
|
45,430 |
|
$680,087 |
|
|
2/1/08 |
|
|
|
78,583 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/1/08 |
|
|
|
6,734 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
121,198 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
11,014 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
Derrek L. Gafford |
|
1/3/05 |
|
15,000 |
|
|
|
$16.98 |
|
1/3/2012 |
|
2/2/07 |
|
2,634 |
|
$39,431 |
|
|
1/3/06 |
|
29,644 |
|
|
|
$21.24 |
|
1/3/2013 |
|
2/1/08 |
|
8,080 |
|
$120,958 |
|
|
2/2/07 |
|
|
|
18,732 |
|
$18.98 |
|
2/2/2014 |
|
2/6/09 |
|
19,824 |
|
$296,765 |
|
|
2/2/07 |
|
|
|
5,268 |
|
$18.98 |
|
2/2/2014 |
|
|
|
|
|
|
|
|
2/1/08 |
|
|
|
18,086 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/1/08 |
|
|
|
6,734 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
27,448 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
11,014 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
James E. Defebaugh |
|
1/3/06 |
|
27,174 |
|
|
|
$21.24 |
|
1/3/2013 |
|
2/2/07 |
|
2,897 |
|
$43,368 |
|
|
2/2/07 |
|
|
|
5,268 |
|
$18.98 |
|
2/2/2014 |
|
2/1/08 |
|
8,080 |
|
$120,958 |
|
|
2/2/07 |
|
|
|
21,132 |
|
$18.98 |
|
2/2/2014 |
|
2/6/09 |
|
19,824 |
|
$296,765 |
|
|
2/1/08 |
|
|
|
18,086 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/1/08 |
|
|
|
6,734 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
27,448 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
11,014 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
Wayne Larkin |
|
1/3/06 |
|
24,704 |
|
|
|
$21.24 |
|
1/3/2013 |
|
2/2/07 |
|
2,195 |
|
$32,859 |
|
|
2/2/07 |
|
|
|
14,732 |
|
$18.98 |
|
2/2/2014 |
|
9/5/07 |
|
2,462 |
|
$36,856 |
|
|
2/2/07 |
|
|
|
5,268 |
|
$18.98 |
|
2/2/2014 |
|
2/1/08 |
|
8,080 |
|
$120,958 |
|
|
2/1/08 |
|
|
|
18,086 |
|
$14.85 |
|
2/1/2015 |
|
5/14/08 |
|
6,516 |
|
$97,545 |
|
|
2/1/08 |
|
|
|
6,734 |
|
$14.85 |
|
2/1/2015 |
|
2/6/09 |
|
19,824 |
|
$296,765 |
|
|
2/6/09 |
|
|
|
27,448 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
11,014 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
Noel S. Wheeler |
|
1/3/06 |
|
29,644 |
|
|
|
$21.24 |
|
1/3/2013 |
|
2/2/07 |
|
2,634 |
|
$39,431 |
|
|
2/2/07 |
|
|
|
5,268 |
|
$18.98 |
|
2/2/2014 |
|
2/1/08 |
|
8,080 |
|
$120,958 |
|
|
2/2/07 |
|
|
|
18,732 |
|
$18.98 |
|
2/2/2014 |
|
2/6/09 |
|
19,824 |
|
$296,765 |
|
|
2/1/08 |
|
|
|
18,086 |
|
$14.85 |
|
2/1/2015 |
|
7/24/09 |
|
9,310 |
|
$139,371 |
|
|
2/1/08 |
|
|
|
6,734 |
|
$14.85 |
|
2/1/2015 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
27,448 |
|
$9.08 |
|
2/6/2016 |
|
|
|
|
|
|
|
|
2/6/09 |
|
|
|
11,014 |
|
$9.08 |
|
26/2016 |
|
|
|
|
|
|
- 51 -
Vesting Schedule for Outstanding Awards at
Fiscal Year-End Table
Vesting schedules are provided below for
grants that were not 100% vested as of December 25, 2009.
Grant Date |
|
Option Awards Vesting
Schedule |
|
Grant Date |
|
Stock Awards Vesting
Schedule |
2/2/07 |
|
100% vests on 3rd anniversary of award |
|
5/17/06 |
|
25% vests each year for 4
years |
2/1/08 |
|
100% vests on 3rd anniversary of award |
|
2/2/07 |
|
33% vests each year for 3 years |
2/6/09 |
|
100% vests on 3rd anniversary of award |
|
9/5/07 |
|
25% vests each year for 4
years |
|
|
|
|
2/1/08 |
|
33% vests each year for 3 years |
|
|
|
|
5/14/08 |
|
25% vests each year for 4
years |
|
|
|
|
2/6/09 |
|
33% vests each year for 3 years |
|
|
|
|
7/24/09 |
|
33% vests each year for 3
years |
Option Exercises and Stock Vested
The following table provides information for
the NEOs on: (1) stock option exercises during 2009, including the number of
shares acquired upon exercise and the value realized; and (2) the number of
shares acquired upon the vesting of restricted stock awards and the value
realized each before payment of any applicable withholding tax and broker
commissions. The value realized represents long-term gain over many years; which
is not part of 2009 compensation.
|
|
Option Awards |
|
Stock Awards |
|
|
Number of Shares |
|
Value Realized on |
|
|
|
Value Realized |
|
|
Acquired on |
|
Exercise |
|
Number of Shares |
|
on Vesting |
Name |
|
Exercise |
|
(1) |
|
Acquired on
Vesting |
|
(2) |
Steven C. Cooper |
|
— |
|
— |
|
20,395 |
|
$180,612 |
Derrek L. Gafford |
|
— |
|
— |
|
10,528 |
|
$101,558 |
James E. Defebaugh |
|
— |
|
— |
|
10,596 |
|
$101,803 |
Wayne Larkin |
|
— |
|
— |
|
9,427 |
|
$127,995 |
Noel S. Wheeler |
|
— |
|
— |
|
9,028 |
|
$80,453 |
____________________
|
(1) |
|
The
dollar amount realized upon exercise was calculated by determining the
difference between the market price of the underlying securities at
exercise and the exercise price of the options. |
|
|
|
(2) |
|
The
dollar amount realized upon vesting was calculated by multiplying the
number of shares of stock by the market value of the underlying shares on
the vesting date. |
Pension Benefits
The Company does not maintain a defined
benefit pension plan or supplemental pension plan.
- 52 -
Nonqualified Deferred
Compensation
The Company maintains a nonqualified unsecured
Deferred Compensation Plan that allows certain highly compensated employees,
including the NEOs, to defer portions of their base salary and annual incentive
bonus and thereby defer taxes.
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
|
|
|
Contributions in |
|
Contributions |
|
Earnings |
|
Withdrawals/ |
|
Aggregate Balance |
Name |
|
Last FY(1) |
|
in Last FY |
|
in Last FY(2) |
|
Distributions |
|
at Last
FYE |
Steven C. Cooper |
|
— |
|
— |
|
— |
|
— |
|
— |
Derrek L. Gafford |
|
— |
|
— |
|
$18,444 |
|
— |
|
$84,021 |
James E. Defebaugh |
|
— |
|
— |
|
— |
|
— |
|
— |
Wayne Larkin |
|
$18,428 |
|
— |
|
$8,100 |
|
— |
|
$41,111 |
Noel S. Wheeler |
|
$11,274 |
|
— |
|
$40,431 |
|
|
|
$191,934 |
____________________
|
(1) |
|
The
amounts contributed to this plan by the Company’s NEOs are set forth in
this table are included in the amounts shown as “Salary” in the Summary
Compensation Table, above. |
|
|
|
(2) |
|
The
amounts reported in the “Aggregate Earnings in Last FY” column represent
all earnings on nonqualified deferred compensation in fiscal year 2009.
Pursuant to SEC rules, all earnings on nonqualified deferred compensation
in fiscal year 2009 in excess of 4.17% (the December 2009 Applicable
Federal Long Term Rate with compounding) have been deemed “above-market
earnings”. Based on the performance of the funds elected in advance by the
participants (as described below), Messrs. Gafford, Larkin, and Wheeler
had earnings on nonqualified deferred compensation in excess of 4.17% in
fiscal year 2009. All “above-market earnings” on nonqualified deferred
compensation were reported in this year’s “Summary Compensation Table.”
See the “Change in Pension Value and Nonqualified Deferred Compensation
Earnings” column of the “Summary Compensation
Table.” |
The participants in the Nonqualified Deferred
Compensation Plan may annually elect to defer up to 50% of salary and up to 75%
of their annual incentive bonus. Participants are always 100% vested in the
elective deferral contributions to the plan. The amounts deferred into this plan
and all earnings remain subject to the claims of the Company’s general creditors
until distributed to the participant. Participants may receive their funds
during employment in the case of an unforeseen emergency, the disability of the
participant, or a change in control. The participant may only receive their
funds after employment in the case of their separation from the Company or the
participant’s death or disability. The Company’s matching contributions are
discretionary. Whether a matching contribution will be made for a plan year and
the amount of any such match will be determined each year by the Company. Any
matching contributions a participant receives in the plan for a plan year are
subject to a vesting schedule over five years. The plan account balances are
credited with earnings based on the performance of one or more of the following
mutual funds pre-selected by the participant:
- Diversified International R3 Fund
(2009 rate of return: 27.38 %)
- International Emerging Mkts R3
Fund (2009 rate of return: 67.78%)
- LargeCap Growth R3 Fund (2009 rate
of return: 31.32%)
- LargeCap Value III R3 Fund (2009
rate of return: 19.25%)
- MidCap Growth III R3 Fund (2009
rate of return: 48.66%)
- MidCap Value I R3 Fund (2009 rate
of return: 49.21%)
- SmallCap Growth II R3 Fund (2009
rate of return: 30.71%)
- SmallCap Value I R3 Fund (2009
rate of return: 15.52%)
- 53 -
The deemed rates of return for these earnings
options may be positive or negative and thus may result in gains or losses to a
participant’s plan balance. No assets are required to actually be invested in
such funds. The deemed investment options may be changed by the participant
periodically throughout the year. For certain key employees, the distribution
election must be made at least six months before the actual payment of the
participant’s account balance.
Potential Payments to Named Executive Officers
upon Termination of Employment or Change in Control
The Company has entered into employment
agreements and change in control agreements with each of the NEOs pursuant to
which each NEO may be entitled to payments upon termination of employment under
the circumstances described below. The payments are subject to the fulfillment
of certain conditions, including compliance with a non-competition agreement,
which is also described below. The information below is a summary of certain
material provisions of these agreements and does not attempt to describe all
aspects of the agreements. The rights of the parties are governed by the actual
agreements and are in no way modified by the abbreviated summary set forth in
this proxy statement.
Following the description of the agreements,
there is a table showing the potential payments the NEOs could have received
under these agreements, assuming their employment with the Company was
terminated by the Company without cause or for good reason by the NEO on
December 25, 2009.
Employment Agreement for Steven C.
Cooper
Mr. Cooper’s employment agreement provides
that if the Company terminates his employment without cause, or if Mr. Cooper
terminates his employment with good reason, then he will be entitled to the
following:
- separation payments at a rate
equal to his base salary at the time of termination for a period of 18
months;
- payment of Mr. Cooper’s then
applicable short term incentive bonus, subject to performance
conditions set by the Board and
prorated for the portion of the bonus period Mr. Cooper is actually employed
by the Company; and
- immediate accelerated vesting in
all previously awarded but unvested stock options, restricted stock
and other equity awards, provided that
any options or other equity awards that are not exercised within the time periods for exercise set
forth in the applicable plan, sub-plan or grant agreement, shall expire in accordance with the terms of such
plan, sub-plan or grant agreement.
The foregoing separation benefits are
conditioned upon the execution by Mr. Cooper of a release of claims against the
Company and, continued compliance by Mr. Cooper with all covenants with the
Company. Pursuant to his employment agreement, Mr. Cooper’s covenants with the
Company include, without limitation, covenants requiring a duty of loyalty,
non-disclosure of confidential information, assignment of inventions and
non-competition and non-solicitation. Mr. Cooper has also signed a
non-competition agreement with the Company, which is described
below.
Mr. Cooper’s employment agreement also
provides that if he is deemed to receive an “excess parachute payment” as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”) by reason of his vesting of the unvested equity awards (taking into
account any other compensation paid or deemed paid to him), the amount of such
payments or deemed payments shall be reduced, or, alternatively the provisions
of the employment agreement shall not act to vest unvested equity incentive
awards to Mr. Cooper, so that no such payments or deemed payments shall
constitute excess parachute payments. The determination of whether a payment or
deemed payment constitutes an excess parachute payment shall be in the sole
discretion of the Board.
- 54 -
Employment Agreements for James E. Defebaugh,
Derrek L. Gafford, Wayne Larkin, and Noel S. Wheeler
Messrs. Defebaugh, Gafford, Larkin, and
Wheeler are parties to employment agreements which provide that if the Company
terminates the executive’s employment without cause, or if he terminates his
employment with good reason, and such termination is for other than death or
disability, then he will be entitled to the following:
- separation payments for twelve
months from the termination date at a rate equal to his base salary at
the time of termination; and
- accelerated vesting in any
previously awarded stock options, restricted stock and other equity
awards as if he had worked for
the Company for twelve months after his termination date, provided that
any options or other equity
awards that are not exercised within the time periods for exercise set forth
in the applicable plan,
sub-plan or grant agreement, shall expire in accordance with the terms of
such plan, sub-plan or grant
agreement.
As a condition precedent to being entitled to
receive the benefits set forth above, the executive must (1) sign and deliver
and thereafter not revoke a release; (2) be and remain in full compliance with
all provisions of the sections of the employment agreement relating to
non-disclosure of confidential information and assignment of inventions; and (3)
be and remain in full compliance with the non-competition agreement and any
other covenants with the Company entered into by the executive. The employment
agreement contains, among other things, covenants relating to assignment of
inventions, non-disclosure of confidential information, non-disparagement and
duty of loyalty. Messrs. Defebaugh, Gafford, Larkin, and Wheeler are also
parties to a non-competition agreement in the form described below.
In addition to the provisions described above,
the employment agreement for each NEO also provides that, if at the time of
termination of employment the executive is considered a “specified employee”
subject to the required six-month delay in benefit payments under Section
409A(a)(2)(B)(i) of the Code, then any separation payments that would otherwise
have been paid within the first six months after termination of employment shall
instead be paid in a single lump sum on (or within 15 days after) the six-month
anniversary of such termination of employment and any remaining severance
payments shall be made monthly after such six-month anniversary.
Change in Control
Agreements
On December 31, 2006, the Company entered into
change in control agreements with various executive officers, including each of
the NEOs. Each change in control agreement by its terms expired on December 31,
2009, provided that beginning with January 1, 2010, the change in control
agreements will automatically be extended for an additional year unless either
party gives notice of termination not later than September 30 of the immediately
preceding year. No such notices of termination were provided so the change in
control agreements are in effect through December 31, 2010. If a change in
control occurs during the term, the term will expire on the earlier of the third
anniversary of the change in control or the date of the executive’s death (such
period is referred to as the “Severance Period”). If the executive ceases to be
employed prior to a change in control, the agreement will expire on the date of
termination of employment. The change in control agreements are effective on the
date executed, but do not become operative unless a change in control
occurs.
Change in control means that during the
term of the agreements any of the following events occur:
- any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) is or becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 33 1/3 % of the
combined voting power of the then-outstanding voting stock of the Company;
- 55 -
- a majority of the Board ceases to
be comprised of incumbent directors; or
- the consummation of a
reorganization, merger, consolidation, plan of liquidation or
dissolution, recapitalization
or sale, or other disposition of all or substantially all of the assets of the
Company or the acquisition of
the stock or assets of another corporation, or other transaction (each, a
“Business Transaction”), and as
a result of which less 50% of the outstanding voting interests or securities
of the surviving or resulting
entity immediately after the Business Transaction are owned in the
aggregate by the former
shareholders of the Company, as the same shall have existed immediately prior
to such Business Transaction,
in substantially the same proportions as their ownership before such
Business Transaction.
The Company will be required to pay the
amounts described below if following the occurrence of a change in control (or
within 90 days prior to the date of a change in control if at the request of a
third party who has taken steps reasonably calculated to effect a change in
control) (1) the Company terminates the executive’s employment during the
Severance Period other than for cause, or as a result of the executive’s death
or permanent disability, or (2) the executive terminates the executive’s
employment for good reason during the Severance Period. Each of (1) and (2) is
referred to in the change in control agreement as a “Triggering Termination.” As
a condition precedent to receiving any payments and benefits under the change in
control agreement, the executive must execute and not later revoke a waiver and
release agreement and be in compliance with the restrictive covenants and terms
of the change in control agreement. The material covenants of the executive in
the change in control agreement include a duty of loyalty, non-disclosure,
non-use and protection of confidential information, non-disparagement,
non-competition and non-solicitation of employees and clients. The
non-competition and non-solicitation provisions apply during the term of the
change in control agreement and for a period of two years following the
termination of employment.
In the event of a Triggering Termination,
subject to the terms of the agreement, the Company is required to pay to the
executive an amount equal to two times (except in the case of Mr. Cooper, in
which case it shall be three times) the sum of (a) the executive’s annual base
salary rate in effect for the year in which the termination date occurs, plus
(b) the executive’s incentive or target bonus (in an amount equal to the target
bonus immediately prior to the change in control or, if such target shall not
have been established or shall be reduced after a change in control, the highest
aggregate incentive pay earned in any of the three fiscal years immediately
preceding the year in which the change in control occurred). Such amounts shall
be payable as follows: 50% shall be payable within five business days after the
termination date and 50% shall be payable in equal monthly installments over the
24 months following the termination date, provided that the agreement provides
that the timing of payments may be adjusted if necessary to comply with Section
409A of the Code. The Company will also either provide employee benefits to the
executive comparable to the benefits that the executive was receiving or
entitled to receive immediately prior to the termination date or will pay a lump
sum payment in lieu of the continuation of such benefits, as described in the
change in control agreement.
In addition to the amounts described above, if
there is a Triggering Termination, the Company will pay in cash to the executive
a lump sum amount equal to the sum of (i) any unpaid incentive compensation that
has been earned, accrued, allocated or awarded to the executive for any
performance period ending prior to a Triggering Termination, plus (ii) the value
of any annual bonus or long-term incentive pay earned, accrued, allocated or
awarded with respect to the executive’s service during the performance period or
periods that include the date on which the change in control occurred.
Furthermore, if there is a Triggering Termination, all stock options, restricted
stock and any other equity award shall become fully vested as of the date of
termination.
- 56 -
Notwithstanding any provision of the change in
control agreement or any other agreement between the executive and the Company
to the contrary, if any amount or benefit to be paid or provided under the
change in control agreement or any other agreement would be a payment that
creates an obligation for the executive to pay excise taxes under Section 280G
of the Code (an “excess parachute payment”), then the payments and benefits to
be paid or provided under the change in control agreement and any other
agreement will be reduced to the minimum extent necessary (but in no event to
less than zero) so that no portion of any such payment or benefit, as so
reduced, constitutes an excess parachute payment; provided that the foregoing
reduction will not be made if such reduction would result in the executive
receiving an after-tax amount less than 90% of the after-tax amount of the
severance payments he would have received under the change in control agreement
or under any other agreement. In the event that any payment or benefit intended
to be provided is required to be reduced pursuant to this provision, the
executive will be entitled to designate the payments and/or benefits to be so
reduced.
In addition to the foregoing limitation, the
change in control agreements provide that to the extent that the executive
receives payments by reason of his termination of employment pursuant to any
other employment or severance agreement or employee plan (collectively, “Other
Employment Agreements”), the amounts otherwise receivable under the change in
control agreement will be reduced by the amounts actually paid pursuant to the
Other Employment Agreements, but not below zero, to avoid duplication of
payments so that the total amount payable or value of benefits receivable under
the change in control agreement, and under the Other Employment Agreements, is
not less than the amounts payable or value receivable had such benefits been
paid in full under the change in control agreement.
Non-Competition Agreements
Each of the NEOs has also entered into a
non-competition agreement with the Company. Each non-competition agreement
provides, among other things, that during the executive’s employment with the
Company and for a period of two years following the termination of such
employment for any reason, the executive shall not, directly or
indirectly:
- employ or solicit for employment
any Company employee who has been employed by the Company during the six months prior to the
termination of the executive’s employment or urge any such person to discontinue employment with the Company;
seek to employ any individual who has applied for and/or accepted placement in a job by the
Company with a client, and about whom the executive obtained information or with whom the
executive interacted on behalf of the Company;
- solicit any client of the Company
for the purpose of providing temporary and/or permanent staffing services on behalf of a competing
business;
- engage in any conduct intended to
induce or urge any client to discontinue its business relationship
with the Company; or
- do any business with any Company
client in connection with the provision of temporary and/or permanent staffing services.
The non-competition agreement also provides
that during the executive’s employment with the Company and for a period of 12
months (18 months in the case of Mr. Cooper) following the termination of such
employment, the executive shall not, directly or indirectly, in any location in
which the Company conducts or plans to conduct business, work for or participate
in a business similar to or that competes with the business of the Company.
Within 15 days after the termination of the executive’s employment, the Company,
in its sole discretion, may elect to extend the non-competition period from 12
months (18 months in the case of Mr. Cooper) to 24 months, provided that if the
Company makes such election and either the Company terminated the executive’s
employment without cause or the executive terminated employment with good
reason, then, if the executive has complied with
- 57 -
certain conditions
precedent, the period during which the executive is entitled to receive
separation payments pursuant to the executive’s employment agreement will
automatically and without further action be extended from 12 months (18 months
in the case of Mr. Cooper) to 24 months. The non-competition agreement also
contains, among other things, provisions covering duty of loyalty and
non-disclosure, non-use and other protection of confidential
information.
Stock Option and Restricted Stock
Agreements
The award agreements that govern the stock
option and restricted stock grants to the NEOs also provide that the stock
options and restricted stock, as applicable, will become fully vested if after a
change of control the NEO is terminated without cause or terminates his
employment for good reason. For purposes of the stock option and restricted
stock agreements, change of control means the first day that any one or more of
the following conditions shall have been satisfied:
- the sale, liquidation or other
disposition of all or substantially all of the Company’s assets in one or
a series of related
transactions;
- an acquisition (other than
directly from the Company) of any outstanding voting securities by any
person, after which such person has
beneficial ownership of 25% or more of the then outstanding voting securities of the Company, other than
a Board approved transaction;
- during any 24-consecutive month
period, the individuals who, at the beginning of such period, constitute the Board cease for any reason
other than death to constitute at least a majority of the members of the Board, subject to certain
exceptions; or
- a merger, consolidation or
reorganization of the Company, as a result of which the shareholders of
the Company immediately prior to such
merger, consolidation or reorganization own directly or indirectly immediately following such
merger, consolidation or reorganization less than 50% of the combined voting power of the outstanding
voting securities of the entity resulting from such merger, consolidation or reorganization.
- 58 -
Potential Payout Upon an Involuntary
Termination Without Cause or for Good Reason
The table below quantifies the potential payouts
to each of the NEOs. The table shows two alternative scenarios – termination
before a change in control and termination after a change in
control.
|
|
Potential Payouts upon
Involuntary |
|
Potential Payouts upon
Involuntary |
|
|
Termination by Company without Cause
or |
|
Termination by Company
without |
|
|
by Executive for Good Reason after a
Change |
|
Cause or by Executive for
Good |
|
|
in Control(1)(2) |
|
Reason before a Change in Control(3) |
|
|
|
|
|
|
|
|
Continuation |
|
|
|
|
|
|
|
|
|
|
Restricted |
|
Stock |
|
of Health & |
|
|
|
Restricted |
|
|
|
|
Cash |
|
Stock |
|
Option |
|
Welfare |
|
Cash |
|
Stock |
|
Stock Option |
Name |
|
Payment |
|
Vesting(4) |
|
Vesting(5) |
|
Benefits |
|
Payment |
|
Vesting(4)(6) |
|
Vesting(5)(6) |
Steven C. Cooper(7) |
|
$2,640,000 |
|
$1,078,514 |
|
$788,967 |
|
$59,050 |
|
$1,155,000 |
|
$1,078,514 |
|
$788,967 |
Derrek L. Gafford(7) |
|
$840,000 |
|
$457,154 |
|
$229,520 |
|
$39,366 |
|
$300,000 |
|
$198,832 |
|
$77,003 |
James E. Defebaugh(7) |
|
$840,000 |
|
$461,091 |
|
$229,520 |
|
$13,575 |
|
$300,000 |
|
$202,769 |
|
$77,003 |
Wayne Larkin(7) |
|
$840,000 |
|
$584,983 |
|
$229,520 |
|
$39,366 |
|
$300,000 |
|
$243,203 |
|
$77,003 |
Noel Wheeler(7) |
|
$840,000 |
|
$596,525 |
|
$229,520 |
|
$39,366 |
|
$300,000 |
|
$245,288 |
|
$77,003 |
____________________
|
(1) |
|
Assumes that (a) the change in control agreement was effective as
of December 25, 2009, (b) a change in control occurred on or before such
date and (c) the NEO was terminated by the company without cause on such
date or the NEO terminated his employment for good reason on such
date. |
|
|
|
(2) |
|
As
explained above, the definition of a change of control for purposes of the
stock option and restricted stock agreements differs slightly from the
definition of change in control in the change in control agreements. In
the event a NEO was terminated on December 25, 2009, by the company
without cause or the NEO terminated his employment for good reason on such
date following a change of control under the stock option and restricted
stock agreements that did not constitute a change in control for purposes
of the change in control agreement, the NEO would have been entitled to
the restricted stock vesting and stock option vesting but not the cash
payment or continuation of health and welfare benefits shown in the
table. |
|
|
|
(3) |
|
Assumes that (a) the employment agreement was effective as of
December 25, 2009, (b) no change in control occurred on or before such
date and (c) the NEO was terminated by the company without cause on such
date or the NEO terminated his employment for good reason on such
date. |
|
|
|
(4) |
|
The
amounts shown for each NEO are calculated by multiplying the number of
unvested restricted stock awards for such NEO with respect to which the
vesting would accelerate as a result of termination under the
circumstances noted by the closing price of a share of common stock on
December 24, 2009, which was $14.97. Unvested restricted stock awards are
set forth in the Outstanding Equity Awards at Fiscal Year-End
table. |
|
|
|
(5) |
|
The
amounts shown for each NEO are calculated by multiplying the number of
in-the-money options with respect to which the vesting would accelerate as
a result of termination under the circumstances noted by the difference
between the exercise price and the closing price of a share of common
stock on December 24, 2009, which was $14.97. The number of shares subject
to unvested stock options and exercise prices thereof are shown above in
the Outstanding Equity Awards at Fiscal Year-End table. |
|
|
|
(6) |
|
Mr.
Cooper’s employment agreement provides for the accelerated vesting of all
equity awards upon termination of employment under the conditions noted in
footnote (3) above. Under the employment agreements for the NEOs (other
than Mr. Cooper), however, vesting is only accelerated for those equity
awards which would have vested in the 12 month period following a
termination of employment under the conditions noted in footnote (3)
above. |
|
|
|
(7) |
|
As
discussed above, the amounts actually payable to the NEOs pursuant to the
change in control agreement (and the amounts actually payable to Mr.
Cooper pursuant to his employment agreement) are subject to reduction if
any amount or benefit to be paid under such agreement or any other
agreement would be a payment that creates an obligation for the NEO to pay
excise taxes under Section 280G of the Code. For purposes of Section 280G,
the value of the acceleration of stock options and restricted stock is
based on a time-based formula and is different than the method described
in footnotes (4) and (5) above. |
- 59 -
Equity Compensation Plan
Information
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
remaining available |
|
|
|
|
|
|
for future issuance under |
|
|
Number of securities to |
|
Weighted-average |
|
equity compensation plans |
|
|
be issued upon exercise |
|
exercise price of |
|
(excluding securities |
Plan
category |
|
of outstanding
options |
|
outstanding
options |
|
reflected in column
(a)) |
Equity compensation plans |
|
|
|
|
|
|
approved by security holders
(1) |
|
917,000 |
|
$15.31 |
|
2,027,000 |
|
Employee stock purchase plans |
|
|
|
|
|
|
approved by security holders
(2) |
|
-- |
|
-- |
|
156,000 |
|
|
917,000 |
|
$15.31 |
|
2,183,000 |
|
____________________
|
(1) |
|
Equity
compensation plans approved by security holders include the
following: |
|
|
|
|
|
1996 TrueBlue, Inc.
Employee Stock Option and Incentive Plan. This plan applies to
directors, officers, and employees of the Company and permits the granting
of non-qualified and incentive stock options, restricted shares, stock
appreciation rights and other stock based awards. Outstanding stock
options as of the fiscal year end are listed in the table above. No
further awards were made pursuant to this plan upon shareholder approval
of the 2005 Long-Term Equity Incentive Plan. |
|
|
|
|
|
TrueBlue, Inc. 2005
Long-Term Equity Incentive Plan. This plan applies to directors,
officers, employees and consultants of the Company and permits the
granting of nonqualified and incentive stock options, restricted stock,
restricted stock units and stock appreciation rights. The total number of
shares authorized under this plan is 5,500,000 shares. As of December 25,
2009 there were 2,027,000 shares available for future issuance under this
plan. There were 869,324 restricted shares outstanding as of December 25,
2009. Outstanding stock options as of the fiscal year end are listed in
the table above. All future stock compensation awards will be awarded from
this plan. |
|
|
|
(2) |
|
Employee stock purchase plans approved by security holders include
the following: |
|
|
|
|
|
1996 TrueBlue Employee
Stock Purchase Plan. This plan provides an opportunity for regular
employees who have met certain service qualifications to purchase shares
of our common stock through payroll deductions of up to 10% of eligible
after-tax compensation. These deductions are used to purchase shares of
our common stock at 85% of the fair market value of our common stock as of
either the first day or last day of each month, whichever is less. As of
December 25, 2009, there were 156,000 shares available for future issuance
under this plan. |
- 60 -
PROPOSALS OF SHAREHOLDERS
The Company anticipates that the 2011 Annual
Meeting will be held no later than June 2011. A shareholder proposal to be
presented at the Company’s 2011 Annual Meeting of Shareholders and included in
the Company’s proxy statement relating to such meeting must be received by the
Company at its executive offices at P.O. Box 2910, Tacoma, WA 98401, not later
than the close of business on the 120th day prior to the
first anniversary of the date of this proxy statement for the 2010 Annual
Meeting. Please send the proposal to the attention of the Company’s Secretary. A
proposal for action to be presented by any shareholder at an annual meeting will
be out of order and will not be acted upon unless: (i) specifically described in
the Company’s proxy statement relating to such meeting; (ii) such proposal has
been submitted in writing to the Secretary at the above address not later than
the close of business on the 120th day prior to the
first anniversary of this proxy statement (proposals for the 2011 annual meeting
must be submitted before December 1, 2010); and (iii) such proposal is, under
law, an appropriate subject for shareholder action. All shareholder proposals
related to the nomination of a director must comply with the provisions set
forth above in the section Nominations by Shareholders. Shareholder proposals
not related to the nomination of a director, in addition to the information
about the proposing shareholder requested above, must set forth:
(a) a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest of such shareholder, in such
business, and
(b) a description of all agreements,
arrangements and understandings, direct and indirect, between such shareholder,
and any other person or persons (including their names) in connection with the
proposal of such business by such shareholder.
OTHER BUSINESS
We do not intend to bring any other business
before the meeting, and, so far as we know, no matters are to be brought before
the meeting except as specified in the notice of the meeting. However, as to any
other business which may properly come before the meeting, it is intended that
proxies, in the form enclosed, will be voted in respect thereof, in accordance
with the judgment of the persons voting such proxies.
FORM 10-K REPORT AVAILABLE
A copy of the Company’s annual report on Form
10-K, as filed with the Securities and Exchange Commission, will be furnished
without charge to shareholders upon request to Chief Financial Officer,
TrueBlue, Inc., P.O. Box 2910, Tacoma, WA 98401; telephone: (253)
383-9101.
TRUEBLUE, INC. |
By Order of the Board of
Directors |
|
|
James E. Defebaugh |
Secretary |
|
|
/s/ James E.
Defebaugh |
|
|
Tacoma, Washington |
March 31,
2010 |
- 61 -
EXHIBIT A
TRUEBLUE, INC.
2010 EMPLOYEE STOCK PURCHASE PLAN
Adopted by the
Shareholders May 12, 2010
1. Purpose of the Plan. The TrueBlue,
Inc. 2010 Employee Stock Purchase Plan (the “Plan”) is intended to provide a
method whereby eligible employees of TrueBlue, Inc. (the “Company”) and its
Subsidiaries will have an opportunity to purchase shares of the common stock of
the Company. The Company believes that employee participation in the ownership
of the Company is of benefit to both the employees and the Company. The Company
intends to have the Plan qualify as an “employee stock purchase plan” under
Section 423 of the Internal Revenue Code. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
that is consistent with the requirements of that Section of the
Code.
2. Definitions.
|
(a) |
|
“Account” means the funds that
are accumulated with respect to each individual Participant as a result of
payroll deductions for the purpose of purchasing Shares under the Plan.
The funds that are allocated to a Participant’s Account shall at all times
remain the property of that Participant, but such funds may be commingled
with the general funds of the Company. |
|
(b) |
|
“Base Pay” means an employee’s
regular straight time salary or earnings plus any overtime, bonus,
incentive compensation, or commission. |
|
(c) |
|
“Board” means the Board of
Directors of the Company. |
|
(d) |
|
“Business Day” means a day that
the New York Stock Exchange, or other designated exchange, is open for
trading. |
|
(e) |
|
“Code” means the Internal Revenue
Code of 1986, as amended. |
|
(f) |
|
“Commencement Date” means January
1, April 1, July 1, or October 1, as the case may be, on which a
particular Offering Period begins. |
|
(g) |
|
“Committee” means any committee
or officer(s) of the Company to which or to whom the Board has delegated
any or all of its authority and obligations under this Plan pursuant to
Section 21.1. To the extent the Board reserves authority to itself with
respect to certain powers under this Plan, or if no Committee has been
established, references to Committee shall be construed to mean the
Board. |
|
(h) |
|
“Ending Date” means March 31,
June 30, September 30, or December 31, as the case may be, on which the
particular Offering Period concludes. |
|
(i) |
|
“ESPP Broker” means a qualified
stock brokerage or other financial services firm that has been designated
by the Company to establish Accounts for Shares purchased under the Plan
by Participants. |
|
(j) |
|
“Fair Market Value” of a Share as
of a particular date means (1) if the Shares are listed on a national
securities exchange, the closing or last price of a Share on the composite
tape or other comparable reporting system for the applicable date, or if
the applicable date is not a Business Day, the Business Day immediately
preceding the applicable date, or (2) if the Shares are not then listed on
a national securities exchange, or the value of such shares is not
otherwise determinable, such value as determined by the Committee in good
faith in its sole discretion (but in any event not less than fair market
value within the meaning of Section 409A of the Code). |
|
(k) |
|
“Holding Period” means the
holding period that is set forth in Section 423(a) of the Code, which, as
of the date that the Board adopted this Plan, is the later of (1) the
two-year period after the Commencement Date and (2) the one-year period
after transfer to a Participant of any Shares under the Plan.
|
|
(l) |
|
“Offering Period” means any one
of the consecutive three-month periods for the purchase and sale of Shares
under the Plan. Each one of the Offering Periods may be referred to as an
“Offering.” |
- 62 -
|
(m) |
|
“Participant” means an employee
who, pursuant to Section 3, is eligible to participate in the Plan and has
complied with the requirements of Section 7. |
|
(n) |
|
“Shares” means shares of the
Company’s common stock, no par value per share, which will be sold to
Participants under the Plan.
|
|
(o) |
|
“Subsidiaries” means any present
or future domestic or foreign corporation that: (1) would be a “subsidiary
corporation” of the Company as that term is defined in Section 424 of the
Code, and (2) whose employees have been designated by the Committee to be
eligible, subject to Section 3, to be Participants under the Plan. The
Subsidiaries currently designated by the Committee as eligible to
participate are set forth on Attachment A hereto.
|
|
(p) |
|
“Withdrawal
Notice” means a notice in a form designated by the Company that a
Participant who wishes to withdraw from the Plan must submit to the
Company in the manner set forth in Section
22.
|
3.
Employees Eligible to
Participate.
3.1 Domestic
Employees. Any regular employee of the Company or any of its Subsidiaries
is eligible to participate in the Plan except any employee who: (a) is not in
the employ of the Company or any of its Subsidiaries on a Commencement Date, (b)
has not been so employed for at least six consecutive months prior to the
Commencement Date, (c) has not been paid for an average of at least twenty hours
per week during such employment, and (d) is typically employed for less than
five (5) months in any calendar year. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company or a Subsidiary and
meeting the requirements of Treasury Regulation Section
1.421-7(h)(2).
3.2 Foreign
Employees. In order to facilitate participation in the Plan, the
Committee may provide for such special terms applicable to Participants who are
citizens or residents of a foreign jurisdiction, or who are employed by a
Designated Subsidiary outside of the United States, as the Committee may
consider necessary or appropriate to accommodate differences in local law, tax
policy or custom. Such special terms may not be more favorable than the terms of
rights granted under the Plan to Eligible Employees who are residents of the
United States. Moreover, the Committee may approve such supplements to, or
amendments, restatements or alternative versions of, this Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of this Plan as in effect for any other purpose. No such special
terms, supplements, amendments or restatements shall include any provisions that
are inconsistent with the terms of this Plan as then in effect unless this Plan
could have been amended to eliminate such inconsistency without further approval
by the shareholders of the Company.
4. Offering
Periods. The Plan shall consist of Offering Periods commencing on July 1,
2010, and on each subsequent October 1, January 1, April 1, and July
1.
5. Price. The purchase price per share
shall be the lesser of (1) 85% of the Fair Market Value of the Shares on the Commencement Date of an Offering
Period; or (2) 85% of the Fair Market Value of the Shares on the Ending Date of
an Offering Period.
6. Number of
Shares Offered Under the Plan. The maximum number of Shares that will be
offered under the Plan is 1,000,000. If, on any date, the total number of Shares
for which purchase rights are to be granted pursuant to Section 9 exceeds the
number of Shares then available under this Section 6 after deduction of all
Shares (a) that have been purchased under the Plan and (b) for which rights to
purchase are then outstanding, the Company shall make a pro-rata allocation of
the Shares that remain available in as nearly a uniform manner as shall be
practicable and as it shall determine, in its sole judgment, to be equitable. In
such event, the number of
- 63 -
Shares each Participant may
purchase shall be reduced and the Company shall give to each Participant a
written notice of such reduction.
7. Participation. An
eligible employee may become a Participant by completing the enrollment process
as designated by the Company prior to the Commencement Date of the Offering to
which it relates. Participation in one Offering under the Plan shall neither
limit, nor require, participation in any other Offering, but a Participant shall
remain enrolled in the Plan until the Participant withdraws from the Plan
pursuant to Section 13 hereof, or his or her employment is terminated with the
Company or one of its Subsidiaries.
8. Payroll
Deductions.
8.1 At the time the enrollment process is completed
and for so long as a Participant participates in the Plan, each Participant
shall authorize the Company to make payroll deductions of a whole percentage
(not partial or fractional) of Base Pay; provided, however, that no payroll
deduction shall be less than two percent or exceed 10 percent of Base Pay. The
amount of the minimum percentage deduction may be adjusted by the Committee from
time to time; provided, however, that a Participant’s existing rights under any
Offering that has already commenced may not be adversely affected
thereby.
8.2 Each Participant’s payroll deductions shall be
credited to that Participant’s Account. A Participant may not make a separate
cash payment into such Account nor may payment for Shares be made from other
than the Participant’s Account.
8.3 A Participant’s payroll deductions shall begin on
or following the Commencement Date, and shall continue until the termination of
the Plan unless the Participant elects to withdraw pursuant to Section 13 or
changes his or her contribution percentage prior to the Commencement Date for a
subsequent Offering.
8.4 A Participant may discontinue participation in
the Plan as provided in Section 13, but no other change may be made during an
Offering and, specifically, a Participant may not alter the amount or rate of
payroll deductions during an Offering.
9. Granting of Right to
Purchase. On the Commencement Date, the Plan shall be deemed to have
granted automatically to each Participant a right to purchase as many Shares
(including fractional Shares) as may be purchased with such Participant’s
Account on the corresponding Ending Date.
10. Purchase of Shares.
On each Ending Date, each Participant’s accumulated payroll deductions and any
funds remaining from any prior Offering Period will be applied to the purchase
of whole or fractional Shares, up to the maximum number of Shares permitted
pursuant to the terms of the Plan and the applicable Offering Document, at the
Purchase Price. Any fractional Shares or cash in lieu of fractional Shares
remaining after the purchase of full Shares upon exercise of the purchase right
will be credited to such Participant’s account and carried forward and applied
toward the purchase of full Shares for the next following Offering Period,
subject to the terms of the Plan.
11. Participant’s Rights as a
Shareholder. No Participant shall have any rights of a shareholder with
respect to any Shares until the Shares have been purchased in accordance with
Section 10 and issued by the Company.
12. Evidence of Ownership of
Shares.
12.1 Promptly following the Ending Date of each
Offering, the Shares that are purchased by each Participant shall be deposited
into an account that is established in the Participant’s name with the ESPP
Broker.
12.2 A Participant may direct, by written notice to
the ESPP Broker prior to the Ending Date of the pertinent Offering, that the
ESPP Broker account be established in the names of the Participant and one such
other person as may be designated by the Participant as joint tenants with right
of survivorship, tenants in common, or community property, to the extent and in
the manner permitted by applicable law.
- 64 -
12.3 A Participant shall be free to undertake a
disposition, as that term is defined in Section 424(c) of the Code (which
generally includes any sale, exchange, gift, or transfer of legal title), of
Shares in the Participant’s ESPP Broker account at any time, whether by sale,
exchange, gift, or other transfer of title. Subject to Section 12.4 below, in
the absence of such a disposition of the Shares, however, the Shares must remain
in the Participant’s account at the ESPP Broker until the Holding Period has
been satisfied. With respect to Shares for which the Holding Period has been
satisfied, a Participant may move such Shares to an account at another brokerage
firm of the Participant’s choosing or request that a certificate that represents
the Shares be issued and delivered to the Participant.
12.4 A Participant who is not subject to United
States taxation may, at any time and without regard to the Holding Period, move
his or her Shares to an account at another brokerage firm of the Participant’s
choosing or request that a certificate that represents the Shares be issued and
delivered to the Participant.
13. Withdrawal and
Suspension.
13.1 A Participant may withdraw from an Offering by
delivering a withdrawal notice to the Company at any time before the first day
of the last month of the Offering Period or other date designated by the
Company. Upon withdrawal, the amount in the Participant’s account will be
refunded as soon as practicable. A Participant’s withdrawal will become
effective on the Commencement Date of the next Offering Period following
withdrawal. After such withdrawal, the Company shall refund the Participant’s
entire Account as soon as practicable.
13.2 A Participant who has previously withdrawn from
the Plan may re-enter by complying with the requirements of Section 7. Upon
compliance with such requirements, an employee’s re-entry into the Plan will
become effective on the Commencement Date of the next Offering following the
date the Participant complies with Section 7 with respect to the
re-entry.
13.3 A Participant may suspend participation in an
Offering at any time before the first day of the last month of the Offering
Period by reducing his or her payroll deduction percentage election to 0% for
the remainder of the Offering Period. In such a case, the amount accumulated in
the Participant’s account prior to the suspension is not refunded, but is used
to purchase shares as described above. A Participant who has withdrawn from or
suspended participation in an Offering may not again participate in the Purchase
Plan until the Participant complies with the terms of Section 7,
above.
14. Carryover of Account.
At the conclusion of each Offering, the Company shall automatically re-enroll
each Participant in the next Offering, and the balance of each Participant’s
Account shall be used to purchase Shares in the subsequent Offering, unless the
Participant has advised the Company otherwise in writing, or as set forth in
Section 20 or 23, in which case the Company shall refund to the Participant the
funds that remain in the Participant’s Account as soon as practicable
thereafter.
15. Interest. No interest
shall be paid or allowed on a Participant’s Account.
16. Rights Not
Transferable. No Participant shall be permitted to sell, assign,
transfer, pledge, or otherwise dispose of or encumber such Participant’s Account
or any rights to purchase or to receive Shares under the Plan other than by will
or the laws of descent and distribution, and such rights and interests shall not
be liable for, or subject to, a Participant’s debts, contracts, or liabilities.
If a Participant purports to make a transfer, or a third party makes a claim in
respect of a Participant’s rights or interests, whether by garnishment, levy,
attachment, or otherwise, such purported transfer or claim shall be treated as a
withdrawal election under Section 13.
17. Termination of
Employment. As soon as practicable upon termination of a Participant’s
employment with the Company for any reason whatsoever, including but not limited
to death or retirement, the Participant’s Account shall be refunded to the
Participant or the Participant’s estate, as applicable.
- 65 -
18. Amendment or Discontinuance
of the Plan.
18.1 The Committee shall have the right to amend or
modify the Plan at any time without notice, except to the extent the Board has
reserved such authority to itself with respect to any aspect of the Plan, and
the Board shall have the right to amend, modify or terminate the Plan at any
time without notice, provided that (i) subject to Sections 19 and 23.1(b), no
Participant’s existing rights under any Offering that is in progress may be
adversely affected thereby, and (ii) subject to Section 19, in the event that
the Board or the Committee desires to retain the favorable tax treatment under
Sections 421 and 423 of the Code, no such amendment of the Plan shall increase
the number of Shares that were reserved for issuance hereunder unless the
Company’s shareholders approve such an increase.
18.2 Without shareholder consent and without regard
to whether any Participant rights may be considered to have been adversely
affected, to the extent permitted by Section 423 of the Code, the Committee
shall be entitled to change the Offering Periods, establish subplans with
differing offering periods, change or alter the participating Subsidiaries,
limit the frequency and/or number of changes in the amount withheld during an
Offering Period, establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a Participant in order to adjust for delays or mistakes in
the Company’s processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Shares for each
Participant properly correspond with amounts withheld from the Participant’s
Base Pay, and establish such other limitations or procedures as the Committee
determines in its sole discretion to be advisable.
19. Changes in
Capitalization. In the event of reorganization, recapitalization, stock
split, stock dividend, combination of Shares, merger, consolidation, offerings
of rights, or any other change in the capital structure of the Company, the
Committee shall make whatever adjustments are appropriate in the number, kind,
and the price of the Shares that are available for purchase under the Plan, and
in the number of Shares that a Participant is entitled to purchase.
20. Share Ownership.
Notwithstanding anything herein to the contrary:
20.1 No Participant shall be permitted to subscribe
for any Shares under the Plan if such Participant, immediately after such
subscription, owns Shares that account for (including all Shares that may be
purchased under outstanding subscriptions under the Plan) five percent or more
of the total combined voting power or value of all classes of Shares of the
Company or its Subsidiaries. For the foregoing purposes the rules of Section
424(d) of the Code shall apply in determining share ownership;
20.2
No Participant shall be allowed to subscribe for any Shares under the Plan that
permit such Participant’s rights to purchase Shares under all “employee stock
purchase plans” of the Company and its Subsidiaries to accrue at a rate that
exceeds $25,000 of the Fair Market Value of such Shares for each calendar year
in which such right to subscribe is outstanding at any time. For purposes of
this Section 20, the Fair Market Value of Shares shall be determined in each
case as of the Commencement Date of the Offering in which such Shares are
purchased. The Company shall refund as soon as practicable any contributions by
a Participant that exceed the limit set forth in the preceding
sentence;
20.3
No Participant shall be allowed to subscribe for any Shares under the Plan that
permit such Participant’s rights to purchase Shares under all “employee stock
purchase plans” of the Company and its Subsidiaries to accrue at a rate that
exceeds 2,500 shares in any one Offering Period.
- 66 -
21. Administration.
21.1 The Plan shall be administered by the Board. The
Board may delegate any or all of its authority and obligations under this Plan
to such committee or committees (including without limitation, a committee of
the Board) or officer(s) of the Company as it may designate. Notwithstanding any
such delegation of authority, the Board may itself take any action under the
Plan in its discretion at any time, and any reference in this Plan document to
the rights and obligations of the Committee shall be construed to apply equally
to the Board. Any references to the Board mean only the Board.
21.2 The Committee shall be vested with full
authority and discretion to construe the terms of the Plan and make factual
determinations under the Plan, and to make, administer, and interpret such rules
and regulations as it deems necessary to administer the Plan, and any
determination, decision, or action of the Committee in connection with the
construction, interpretation, administration, or application of the Plan shall
be final, conclusive, and binding upon all Participants and any and all persons
claiming under or through any Participant. The Committee may retain outside
entities and professionals to assist in the administration of the Plan
including, without limitation, an ESPP Broker.
22. Notices. All notices
or other communications by a Participant to the Company under or in connection
with the Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, that is designated
by the Company from time to time for the receipt thereof, and, in the absence of
such a designation, the Company’s Human Resources Department, Attention: ESPP
Administration shall be authorized to receive such notices.
23. Termination of the
Plan.
23.1
This Plan shall terminate at the earliest of the following:
(a) The date of the filing of a Statement of Intent
to Dissolve by the Company or the effective date of a merger or consolidation
wherein the Company is not to be the surviving corporation, which merger or
consolidation is not between or among corporations related to the Company. Prior
to the occurrence of either of such events, on such date as the Company may
determine, the Company may permit a Participant to carry out the right to
purchase, and to purchase at the purchase price set forth in Section 5, the
number of Shares (including fractional Shares) that may be purchased with that
Participant’s Account. In such an event, the Company shall refund to the
Participant the funds that remain in the Participant’s Account after such
purchase;
(b)
The date the Board acts to terminate the Plan in accordance with Section 18
above; or
(c)
The date when all of the Shares that were reserved for issuance hereunder have
been purchased. 23.2 Upon termination of the Plan, the Company shall refund to
each Participant the balance of each Participant’s Account.
24. Limitations on Sale of
Shares Purchased Under the Plan. The Plan is intended to provide Shares
for investment and not for resale. The Company does not, however, intend to
restrict or influence the conduct of any employee’s affairs. An employee,
therefore, may sell Shares that are purchased under the Plan at any time,
subject to compliance with any applicable federal or state securities laws. THE
EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE SHARES.
25. Governmental
Regulation. The Company’s obligation to sell and deliver Shares under
this Plan is subject to any governmental approval that is required in connection
with the authorization, issuance, or sale of such Shares.
- 67 -
26. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the benefit of
any employee or class of employees to purchase any Shares under the Plan, or
create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company’s right to terminate, or otherwise modify,
an employee’s employment at any time.
27. Governing Law. The
laws of the state of Washington shall govern all matters that relate to this
Plan except to the extent it is superseded by the laws of the United States.
- 68 -
Attachment
A
TRUEBLUE, INC.
2010
EMPLOYEE STOCK PURCHASE PLAN
Eligible
Subsidiaries
Effective May 12, 2010
In addition to the employees
of TrueBlue, Inc. the employees of the following TrueBlue, Inc. subsidiaries are
eligible to participate in the Plan:
Employer |
|
Adoption
Date |
CLP Resources, Inc. |
|
January 1, 2007 |
Labor
Ready Central, Inc. |
|
January 1, 1998 |
Labor Ready Mid-Atlantic, Inc. |
|
January 1, 1998 |
Labor
Ready Midwest, Inc. |
|
January 1, 1998 |
Labor Ready Northeast, Inc. |
|
January 1, 1998 |
Labor
Ready Northwest, Inc. |
|
January 1, 1998 |
Labor Ready Puerto Rico, Inc. |
|
January 1, 1998 |
Labor
Ready Southeast, Inc. |
|
January 1, 1998 |
Labor Ready Southwest, Inc. |
|
January 1, 1998 |
Project
Trade Solutions, LLC |
|
January 1, 2007 |
Spartan Staffing, LLC |
|
January 1, 2008 |
Venue
Ready, LLC |
|
January 1, 2008 |
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EXHIBIT B
TRUEBLUE, INC.
2005
LONG-TERM EQUITY INCENTIVE PLAN
(Effective May 18, 2005 and Amended and Restated
effective May 12, 2010)
1.
Purposes of the
Plan. The purposes of this
Plan are to further the growth, development and financial success of the Company
by attracting and retaining the most talented Employees, Consultants and
Directors available, and by aligning the long-term interests of Employees,
Consultants and Directors with those of the shareholders by providing an
opportunity to acquire an ownership interest in the Company and by providing
both performance rewards and long-term incentives for future contributions to
the success of the Company.
The Plan permits the
grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock,
Restricted Stock Units, or Stock Appreciation Rights, at the discretion of the
Committee and as reflected in the terms of the Award Agreement. Each Award will
be subject to conditions specified in the Plan and Award Agreement, such as
continued employment or satisfaction of performance criteria.
This Plan will serve as
a framework for the Committee to establish sub-plans or procedures governing the
grants to Employees, Directors, Consultants and Employees working for the
Company outside of the United States. The awards granted under the Former Plans
shall continue to be administered under the Former Plans until such time as
those options are exercised, expire or become unexercisable for any
reason.
This Plan is intended
to comply with the requirements of Section 409A of the Code and the regulations
thereunder, with such compliance coming in large part by Awards not constituting
deferred compensation that is subject to 409A (and thus such Awards being
excepted from the requirements of 409A), and the Plan will be interpreted and
administered accordingly.
2. Definitions. As used herein, the following definitions shall
apply:
(a) “Award” shall mean any award or
benefits granted under the Plan, including Options, Restricted Stock, Restricted
Stock Units, and SARs.
(b) “Award
Agreement” shall mean a written or electronic agreement between the
Company and the Participant setting forth the terms of the Award.
(c) “Beneficial Ownership” shall have the
meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
(d)
“Board”
shall mean the Board of Directors of the Company.
(e)
“Code” shall mean the Internal
Revenue Code of 1986, as amended.
(f) “Committee” shall mean the Compensation
Committee appointed by the Board, which at all times shall consist of two (2) or
more members of the Board, each of whom must qualify as an Independent
Director.
(g)
“Common Stock” shall mean the
common stock of the Company, no par value per share.
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(h) “Company” shall mean TrueBlue, Inc., a
Washington corporation and any successor thereto.
(i) “Consultant” shall mean any person,
except an Employee, engaged by the Company or any Subsidiary of the Company, to
render personal services to such entity, including as an advisor, pursuant to
the terms of a written agreement.
(j) “Continuous Status as a Participant”
shall mean (i) for Employees, the absence of any interruption or termination of
service as an Employee, (ii) for Directors, the absence of any interruption or
termination of service as a Director, and (iii) for Consultants, the absence of
any interruption, expiration, or termination of such person’s consulting or
advisory relationship with the Company or the occurrence of any termination
event as set forth in such person’s Award Agreement. Continuous Status as a
Participant shall not be considered interrupted (A) for an Employee in the case
of sick leave, maternity leave, infant care leave, medical emergency leave,
military leave, or any other leave of absence properly taken in accordance with
the policies of the Company or any applicable Subsidiary as may be in effect
from time to time while such individual remains an Employee or has a right to
reemployment as an Employee, and (B) for a Consultant, in the case of any
temporary interruption in such person’s availability to provide services to the
Company which has been authorized in writing by a vice president of the Company
prior to its commencement.
(k)
“Director” shall mean a member
of the Board.
(l) “Disability” shall mean (i) in the case
of a Participant whose employment with the Company or a Subsidiary is subject to
the terms of an employment or consulting agreement that includes a definition of
“Disability” as used in this Plan shall have the meaning set forth in such
employment or consulting agreement during the period that such employment or
consulting agreement remains in effect; and (ii) in all other cases, the term
“Disability” as used in this Plan shall mean a ”permanent and total disability”
as the term is defined for purposes of Section 22(e)(3) of the Code.
(m) “Effective Date” shall mean May 18,
2005, the date on which the Company’s shareholders approved this Plan in
accordance with applicable NYSE rules.
(n) “Employee” shall mean any person,
including an officer, who is a common law employee of, receives remuneration for
personal services to, is reflected on the official human resources database as
an employee of, and is on the payroll of the Company or any Subsidiary of the
Company. A person is on the payroll if he or she is paid from or at the
direction of the payroll department of the Company, or any Subsidiary of the
Company. Persons providing services to the Company, or to any Subsidiary of the
Company, pursuant to an agreement with a staff leasing organization, temporary
workers engaged through or employed by temporary or leasing agencies, and
workers who hold themselves out to the Company, or a Subsidiary to which they
are providing services as being independent contractors, or as being employed by
or engaged through another company while providing the services, and persons
covered by a collective bargaining agreement (unless the collective bargaining
agreement applicable to the person specifically provides for participation in
this Plan) are not Employees for purposes of this Plan and do not and cannot
participate in this Plan, whether or not such persons are, or may be
reclassified by the courts, the Internal Revenue Service, the U. S. Department
of Labor, or other person or entity, as common law employees of the Company, or
any Subsidiary, either solely or jointly with another person or entity.
(o)
“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
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(p) “Executive Officers” shall mean the
officers of the Company as such term is defined in Rule 16a-1 under the Exchange
Act.
(q) “Fair
Market Value” shall mean the closing price per share of the Common Stock
on the NYSE as to the date specified (or the previous trading day if the date
specified is a day on which no trading occurred), or if the NYSE shall cease to
be the principal exchange or quotation system upon which the shares of Common
Stock are listed or quoted, then such exchange or quotation system as the
Company elects to list or quote its shares of Common Stock and that the
Committee designates as the Company’s principal exchange or quotation
system.
(r) “FAS
123” shall mean Statement of Financial Accounting Standard 123,
“Accounting for Stock-based Compensation,” as promulgated by the Financial
Accounting Standards Board.
(s)
“FLSA” shall mean the Fair Labor
Standards Act of 1938, as amended.
(t) “Former
Plans” shall mean collectively the 1996 Labor Ready Employee Stock Option
and Incentive Plan and the Labor Ready, Inc. 2000 Stock Option Plan.
(u) “Incentive Stock Option” shall mean any
Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code.
(v) “Independent Director” shall mean a
Director who: (1) meets the independence requirements of the NYSE, or if the
NYSE shall cease to be the principal exchange or quotation system upon which the
shares of Common Stock are listed or quoted, then such exchange or quotation
system as the Company elects to list or quote its shares of Common Stock and
that the Committee designates as the Company’s principal exchange or quotation
system; (2) qualifies as an “outside director” under Section 162(m) of the Code
and the Treasury Regulations promulgated thereunder; (3) qualifies as a
“non-employee director” under Rule 16b-3 promulgated under the Exchange Act; and
(4) satisfies independence criteria under any other applicable laws or
regulations relating to the issuance of Shares to Employees.
(w)
“Maximum Annual Participant
Award” shall have the meaning set forth in Section 6(b).
(x)
“NYSE” shall mean the New York
Stock Exchange.
(y)
“Non-Employee Director” shall
mean a Director who is not an Employee.
(z) “Nonqualified Stock Option” shall mean
an Option that does not qualify or is not intended to qualify as an Incentive
Stock Option.
(aa)
“Option” shall mean a stock
option granted pursuant to Section 7 of the Plan.
(bb) “Option
Price” shall mean the per share purchase price of a Share purchased
pursuant to an Option.
(cc) “Parent” shall mean a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.
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(dd)
“Participant” shall mean an
Employee, Director or Consultant.
(ee)
“Performance Criteria” shall
have the meaning set forth in Section 8(c).
(ff) “Plan” shall mean this TrueBlue, Inc.
2005 Long-Term Equity Incentive Plan, including any amendments
thereto.
(gg) “Reprice” shall mean the adjustment or
amendment of the exercise price of Options or SARs previously awarded whether
through amendment, cancellation, replacement of grants or any other means or any
action that would be considered a repricing with the meaning of U.S. Generally
Accepted Accounting Principles or a NYSE rule.
(hh)
“Restricted Stock” shall mean a
grant of Shares pursuant to Section 8 of the Plan.
(ii) “Restricted Stock Units” shall mean a
grant of the right to receive Shares in the future or their cash equivalent (or
both) pursuant to Section 8 of the Plan.
(jj)
“SAR” shall mean a stock
appreciation right awarded pursuant to Section 9 of the Plan.
(kk)
“SEC” shall mean the Securities
and Exchange Commission.
(ll) “Share” shall mean one share of Common
Stock, as adjusted in accordance with Section 4 of the Plan.
(mm)
“Stand-Alone SARs” shall have
the meaning set forth in Section 9(c) of the Plan.
(nn)
“Subcommittee” shall have the
meaning set forth in Section 5(d).
(oo) “Subsidiary” shall mean (1) in the case
of an Incentive Stock Option a “subsidiary corporation,” whether now or
hereafter existing, as defined in Section 424(f) of the Code, and (2) in the
case of a Nonqualified Stock Option, Restricted Stock, a Restricted Stock Unit
or a SAR, in addition to a subsidiary corporation as defined in (1), (A) a
limited liability company, partnership or other entity in which the Company
controls fifty percent (50%) or more of the voting power or equity interests, or
(B) an entity with respect to which the Company possesses the power, directly or
indirectly, to direct or cause the direction of the management and policies of
that entity, whether through the Company’s ownership of voting securities, by
contract or otherwise, provided that the Company is an “eligible issuer of
service recipient stock” as defined in the Treasury regulations under Code
Section 409A with respect to Employees, Directors or Consultants of any such
entity described in this subpart (2).
(pp)
“Tandem SARs” shall have the
meaning set forth in Section 9(a) of the Plan.
(qq) “Ten
Percent Shareholder” shall mean a person or entity who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock comprising more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary.
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3. Shares Subject to the
Plan.
(a) Reservation of
Shares. The shares of Common Stock reserved under this Plan will include
reserved shares of Common Stock that are not subject to a grant or as to which
the option award granted has been forfeited under the Former Plans, and an
additional Four Million Six Hundred Fifty Thousand (4,650,000) Shares of Common
Stock. Subject to the provisions of Section 4, the maximum aggregate number of
Shares which may be awarded and delivered under the Plan shall not exceed Five
Million Five Hundred Thousand (5,500,000) Shares (adjusted, proportionately, in
the event of any stock split or stock dividend with respect to the Shares), and
the maximum number which may be granted as Incentive Stock Options under the
Plan shall not exceed Four Million (4,000,000) Shares. Provided that, as of May
12, 2010, an additional Two Million (2,000,000) Shares are reserved under the
Plan and the maximum aggregate number of Shares which may be awarded and
delivered under the Plan shall not exceed Seven Million Five Hundred Thousand
(7,500,000) Shares (adjusted, proportionately, in the event of any stock split
or stock dividend with respect to the Shares). The number of Shares, underlying
an Award not issued as a result of any of the following actions, shall again be
available for issuance under the Plan: (i) a payout of a Non-Tandem SAR, or a
performance-based Restricted Stock Unit in the form of cash; or (ii) a
cancellation, termination, expiration, forfeiture, or lapse for any reason (with
the exception of the termination of a Tandem SAR upon exercise of the related
Options, or the termination of a related Option upon exercise of the
corresponding Tandem SAR) of any Award. Notwithstanding the foregoing sentence,
any Shares of Common Stock that are (A) tendered in payment of an Option
exercise price; (B) withheld by the Company to satisfy any tax withholding
obligation; or (C) repurchased by the Company with Option exercise proceeds
shall be considered issued pursuant to the Plan and shall not be added to the
maximum number of Shares that may be issued under the Plan. The Company, during
the term of this Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the Plan. Shares
available for issuance under the Plan shall be increased by any shares of Common
Stock subject to outstanding awards under the Former Plans as of the Effective
Date that later cease to be subject to such awards for any reason other than
such awards having been exercised, subject to adjustment from time to time as
provided in Section 5, which shares of Common Stock shall, as of the date such
shares cease to be subject to such awards, cease to be available for grant and
issuance under the Former Plans, but shall be available for issuance under the
Plan. The Shares may be authorized but unissued, or reacquired shares of Common
Stock.
(b) Substitutions and
Assumptions. The Board or the Committee shall have the right to
substitute or assume Awards in connection with mergers, reorganizations,
separations, or other transactions to which Section 424(a) of the Code applies,
provided such substitutions and assumptions are permitted by Section 424 of the
Code and the regulations promulgated thereunder and will not cause such Awards
to be treated as deferred compensation that is subject to Code Section 409A. The
number of Shares reserved pursuant to Section 3(a) may be increased by a
corresponding number of Awards assumed and, in the case of substitution, by the
net increase in the number of Shares subject to Awards before and after the
substitution.
(c) Securities Law
Compliance. Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated under either such Act, and
the requirements of any stock exchange or quotation system upon which the Shares
may then be listed or quoted, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
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4.
Adjustments to Shares
Subject to the Plan. If
any change is made to the Shares by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Shares as a class without the Company’s receipt of
consideration, appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the number and/ or
class of securities and/or the price per Share covered by outstanding Awards
under the Plan, and (iii) the Maximum Annual Participant Award, provided such
adjustments do not cause an Award to be treated as deferred compensation that is
subject to Code Section 409A. The Committee may also make adjustments described
in the previous sentence in the event of any distribution of assets to
shareholders other than a normal cash dividend. In determining adjustments to be
made under this Section 4, the Committee may take into account such factors as
it deems appropriate, including the restrictions of applicable law and the
potential tax consequences of an adjustment, and in light of such factors may
make adjustments that are not uniform or proportionate among outstanding Awards.
Adjustments, if any, and any determinations or interpretations, including any
determination of whether a distribution is other than a normal cash dividend,
made by the Committee shall be final, binding and conclusive. The Committee in
its discretion may provide holders of Restricted Stock or Restricted Stock Units
a dividend equivalent right with respect to the Shares the Participant shall be
entitled to receive or purchase. For purposes of this Section 4, conversion of
any convertible securities of the Company shall not be deemed to have been
“effected without receipt of consideration.”
Except as expressly provided herein, no issuance by
the Company of shares of any class, or securities convertible into shares of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Award.
5. Plan
Administration.
(a) Authority. The Plan
shall be administered by the Committee. The Committee shall have full and
exclusive power to administer the Plan on behalf of the Board, subject to such
terms and conditions as the Committee may prescribe. Notwithstanding anything
herein to the contrary, the Committee’s power to administer the Plan, and
actions the Committee takes under the Plan, shall be consistent with the
provisions set forth in the Committee’s charter, as such charter may be amended
from time to time.
(b) Powers of the
Committee. Subject to the other provisions of this Plan, the Committee
shall have the authority, in its discretion:
|
(i) |
|
to grant Incentive Stock
Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock
Units, and SARs to Participants and to determine the terms and conditions
of such Awards, including the determination of the Fair Market Value of
the Shares and the exercise price (subject to Section 7(b)), and to modify
or amend each Award, with the consent of the Participant when
required; |
|
(ii) |
|
to determine the
Participants to whom Awards, if any, will be granted hereunder, the timing
of such Awards, and the number of Shares to be represented by each
Award; |
|
(iii) |
|
to construe and
interpret the Plan, the Awards granted hereunder, and any Award Agreement;
|
|
(iv) |
|
to prescribe, amend, and
rescind rules and regulations relating to the Plan, including the form of
Award Agreement, and manner of acceptance of an Award, such as correcting
a defect or supplying any omission, or reconciling any inconsistency so
that the Plan or any Award Agreement complies with applicable law,
regulations and listing requirements and to avoid unanticipated
consequences deemed by the Committee to be inconsistent with the purposes
of the Plan or any Award Agreement; |
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|
(v) |
|
to establish performance
criteria for Awards made pursuant to the Plan in accordance with a
methodology established by the Committee, and to determine whether
performance goals have been attained; |
|
(vi) |
|
to accelerate or defer
(with the consent of the Participant) the exercise or vesting date of any
Award that is an Option or SAR, provided any deferred date is not later
than the original expiration date of such Option or SAR; |
|
(vii) |
|
to accelerate the
vesting date of any Award that is Restricted Stock or Restricted Stock
Units; |
|
(viii) |
|
to authorize any person
to execute on behalf of the Company any instrument required to effectuate
the grant of an Award previously granted by the Committee; |
|
(ix) |
|
to establish subplans,
procedures or guidelines for the grant of Awards to Employees, Directors
and Consultants; |
|
(x) |
|
to authorize the
cancellation, forfeiture or suspension of an Award; and |
|
(xi) |
|
to make all other
determinations deemed necessary or advisable for the administration of the
Plan; |
Provided that, no
consent of a Participant is necessary under clauses (i) or (vi) if a
modification, amendment, acceleration, or deferral, in the reasonable judgment
of the Committee confers a benefit on the Participant or is made pursuant to an
adjustment in accordance with Section 4.
(c) Effect of Committee’s
Decision. All decisions, determinations, and interpretations of the
Committee shall be final, conclusive and binding on all Participants, the
Company, any shareholder and all other persons.
(d) Delegation and
Administration. Consistent with the Committee’s charter, as such charter
may be amended from time to time, the Committee may delegate to one or more
subcommittees consisting of members of the Committee or other Directors who are
Independent Directors (any such committee a “Subcommittee”) the administration
of the Plan, and such administrator(s) may have the authority to directly, or
under their supervision, execute and distribute agreements or other documents
evidencing or relating to Awards granted by the Committee under this Plan, to
maintain records relating to the grant, vesting, exercise, forfeiture or
expiration of Awards, to process or oversee the issuance of Shares upon the
exercise, vesting and/or settlement of an Award, to interpret the terms of
Awards and to take such other actions as the Committee may specify. Any action
by any such Subcommittee within the scope of such delegation shall be deemed for
all purposes to have been taken by the Committee.
6. General
Eligibility.
(a) Awards. Awards may be
granted to Participants who are Employees, Directors or Consultants, provided
however that Incentive Stock Options may only be granted to Employees.
(b) Maximum Annual Participant
Award. The aggregate number of Shares with respect to which an Award or
Awards may be granted to any one Participant in any one taxable year of the
Company (the “Maximum Annual Participant Award”) shall not exceed 1 million
shares of Common Stock (adjusted, proportionately, in the event of any stock
split or stock dividend with respect to the Shares). If an Option is in tandem
with a SAR, such that the exercise of the Option or SAR with respect to a Share
cancels the tandem SAR or Option right, respectively, with respect to each
Share, the tandem Option and SAR rights with respect to each Share shall be
counted as covering but one Share for purposes of the Maximum Annual Participant
Award.
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(c) No Employment/Service
Rights. Nothing in the Plan shall confer upon any Participant the right
to an Award or to continue in service as an Employee or Consultant for any
period of specific duration, or interfere with or otherwise restrict in any way
the rights of the Company (or any Subsidiary employing or retaining such
person), or of any Participant, which rights are hereby expressly reserved by
each, to terminate such person’s services at any time for any reason, with or
without cause (as such term is defined in a Company subplan or an Award
Agreement, as applicable).
7. Grant, Terms and Conditions
of Options.
(a) Designation. Each
Option shall be designated in an Award Agreement as either an Incentive Stock
Option or a Nonqualified Stock Option. However, notwithstanding the foregoing,
if an Option is not designated as an Incentive Stock Option, such Option will be
deemed to be a Nonqualified Stock Option. To the extent that the aggregate Fair
Market Value (determined at the time of grant) of the Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any Employee during any calendar year exceeds $100,000, such
excess Options shall be treated as Nonqualified Stock Options. For this purpose,
Options shall be taken into account in the order in which they were granted.
(b) Option Price. The per
Share exercise price under an Incentive Stock Option (i) granted to a Ten
Percent Shareholder, shall be no less than 110% of the Fair Market Value per
Share on the date of grant, or (ii) granted to any other Participant, shall be
no less than 100% of the Fair Market Value per Share on the date of grant. The
per Share exercise price under a Nonqualified Stock Option or SAR shall be no
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant. In no event shall the Board or the Committee be permitted to
Reprice an Option after the date of grant. Notwithstanding the foregoing, an
Option may be granted with an exercise price lower than that set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) Term of Options. The
term of each Incentive Stock Option shall be no more than ten (10) years from
the date of grant. However, in the case of an Incentive Stock Option granted to
a Ten Percent Shareholder, the term of the Option shall be no more than five (5)
years from the date of grant. The term of all Nonqualified Options shall be
seven (7) years unless otherwise provided by the Committee in its discretion.
(d) Vesting. To the
extent Options vest and become exercisable in increments, unless otherwise
provided in the applicable Award Agreement or any severance agreement (i) such
Options shall cease to vest upon the earlier of a Participant’s Disability or
termination of such Participant’s Continuous Status as a Participant (other than
upon a Participant’s death), and (ii) such Options shall immediately vest in
full upon a Participant’s death.
(e) Substitution of SARs for
Options. Notwithstanding the foregoing, if the Company is required to or
elects to expense the cost of Options pursuant to FAS 123 (or a successor or
other standard), the Committee shall have the sole discretion to substitute
without receiving Participants’ permission, SARs paid only in stock for
outstanding Options; provided, the terms of the substituted stock SARs are the
same as the terms of the Options, the number of shares underlying the number of
stock SARs equals the number of shares underlying the Options and the difference
between the Fair Market Value of the underlying Shares and the grant price of
the SARs is equivalent to the difference between the Fair Market Value of the
underlying Shares and the exercise price of the Options.
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(f) Exercise. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Committee at the time of grant, and as shall be permissible
under the terms of the Plan. No fractional Shares may be issued or delivered
pursuant to the Plan or any Award.
8. Grant, Terms and Conditions
of Stock Awards.
(a) Designation.
Restricted Stock or Restricted Stock Units may be granted under the Plan.
Restricted Stock or Restricted Stock Units may include a dividend equivalent
right, as permitted by Section 4. After the Committee determines that it will
offer Restricted Stock or Restricted Stock Units, it will advise the Participant
in writing or electronically, by means of an Award Agreement, of the terms,
conditions and restrictions, including vesting, if any, related to the offer,
including the number of Shares that the Participant shall be entitled to receive
or purchase, the price to be paid, if any, and, if applicable, the time within
which the Participant must accept the offer. The offer shall be accepted by
execution of an Award Agreement or as otherwise directed by the Committee.
Restricted Stock Units may be paid as permitted by Section 10(b). The term of
each award of Restricted Stock or Restricted Stock Units shall be at the
discretion of the Committee.
(b) Restrictions. Subject
to Section 8(c), the Committee may impose such conditions or restrictions on the
Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it
may determine advisable, including the achievement of specific performance
goals, time based restrictions on vesting, or others. If the Committee
established performance goals, the Committee shall determine whether a
Participant has satisfied the performance goals.
(c) Performance Criteria.
Restricted Stock and Restricted Stock Units granted pursuant to the Plan that
are intended to qualify as “performance based compensation” under Section 162(m)
of the Code shall be subject to the attainment of performance goals relating to
the Performance Criteria selected by the Committee and specified at the time
such Restricted Stock and Restricted Stock Units are granted. For purposes of
this Plan, “Performance Criteria” means one or more of the following (as
selected by the Committee): (i) cash flow; (ii) earnings per share; (iii)
earnings before interest, taxes, and amortization; (iv) return on equity; (v)
total shareholder return; (vi) share price performance; (vii) return on capital;
(viii) return on assets or net assets; (ix) revenue; (x) revenue growth; (xi)
earnings growth; (xii) operating income; (xiii) operating profit; (xiv) profit
margin; (xv) return on operating revenue; (xvi) return on invested capital;
(xvii) market price; (xviii) brand recognition; (xix) customer satisfaction;
(xx) operating efficiency; or (xxi) productivity. Any of these Performance
Criteria may be used to measure the performance of the Company as a whole or any
business unit or division of the Company.
(d) Vesting. Unless the
Committee determines otherwise, the Award Agreement shall provide for the
forfeiture of the non-vested Shares underlying Restricted Stock or the
termination of Restricted Stock Units upon cessation of a Participant’s
Continuous Status as a Participant, and the Shares underlying Restricted Stock
and Restricted Stock Units shall vest in full immediately upon death. To the
extent that the Participant purchased the Shares granted under any such
Restricted Stock award and any such Shares remain non-vested at the time of
cessation of a Participant’s Continuous Status as a Participant, the cessation
of Participant’s Continuous Status as a Participant shall cause an immediate
sale of such non-vested Shares to the Company at the original price per Share
paid by the Participant. Non-vested Shares underlying Restricted Stock and
Restricted Stock Units shall vest in full immediately upon death.
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9. Grant, Terms and Conditions
of SARs.
(a) Grants. The Committee
shall have the full power and authority, exercisable in its sole discretion, to
grant SARs to selected Participants. The Committee is authorized to grant both
tandem stock appreciation rights consisting of SARs with underlying Options
(“Tandem SARs”) and stand-alone stock appreciation rights consisting of SARs not
tied to underlying Options (“Stand-Alone SARs”). The term of a SAR shall be at
the discretion of the Committee. In no event shall the Board or the Committee be
permitted to Reprice a SAR after the date of grant without shareholder approval.
(b)
Tandem
SARs.
(i) Participants may be granted a Tandem SAR,
exercisable upon such terms and conditions as the Committee shall establish, to
elect between the exercise of the underlying Option for Shares or the surrender
of the Option in exchange for a distribution from the Company in an amount equal
to the excess of (A) the Fair Market Value (on the Option surrender date) of the
number of Shares in which the Participant is at the time vested under the
surrendered Option (or surrendered portion thereof) over (B) the aggregate
exercise price payable for such vested Shares.
(ii) No such Option surrender shall be effective
unless it is approved by the Committee, either at the time of the actual Option
surrender or at any earlier time. If the surrender is so approved, then the
distributions to which the Participant shall become entitled under this Section
9(b) may be made in Shares valued at Fair Market Value (on the Option surrender
date), in cash, or partly in Shares and partly in cash, as the Committee shall
deem appropriate.
(iii) If the surrender of an Option is not approved
by the Committee, then the Participant shall retain whatever rights he or she
had under the surrendered Option (or surrendered portion thereof) on the Option
surrender date and may exercise such rights at any time prior to the later of
(A) five (5) business days after the receipt of the rejection notice or (B) the
last day on which the Option is otherwise exercisable in accordance with the
terms of the instrument evidencing such Option, but in no event may such rights
be exercised more than ten (10) years after the date of the Option
grant.
(c)
Stand-Alone
SARs.
(i) A Participant may be granted a Stand-Alone SAR
not tied to any underlying Option under Section 7 of the Plan. The Stand-Alone
SAR shall cover a specified number of Shares and shall be exercisable upon such
terms and conditions as the Committee shall establish. Upon exercise of the
Stand-Alone SAR, the holder shall be entitled to receive a distribution from the
Company in an amount equal to the excess of (A) the aggregate Fair Market Value
(on the exercise date) of the Shares underlying the exercised right over (B) the
aggregate base price in effect for those Shares.
(ii) The number of Shares underlying each Stand-Alone
SAR and the base price in effect for those Shares shall be determined by the
Committee at the time the Stand-Alone SAR is granted. In no event, however, may
the base price per Share be less than the Fair Market Value per underlying Share
on the grant date.
(iii) The distribution with respect to an exercised
Stand-Alone SAR may be made in Shares valued at Fair Market Value on the
exercise date, in cash, or partly in Shares and partly in cash, as the Committee
shall deem appropriate.
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(d) Vesting. To the
extent SARs vest and become exercisable in increments, unless otherwise provided
in the applicable Award Agreement or any severance agreement (i) such SARs shall
cease to vest upon the earlier of a Participant’s Disability or termination of
such Participant’s Continuous Status as a Participant (other than upon a
Participant’s death), and (ii) such SARs shall immediately vest in full upon a
Participant’s death.
10. Procedure for Exercise;
Payments under Awards; Rights as a Shareholder.
(a) Procedure. An Award
shall be exercised when written, electronic or verbal notice of exercise has
been given to the Company, or the brokerage firm or firms approved by the
Company to facilitate exercises and sales under this Plan, in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised has been
received by the Company or the brokerage firm or firms, as applicable. The
notification to the brokerage firm shall be made in accordance with procedures
of such brokerage firm approved by the Company. Full payment may, as authorized
by the Committee, consist of any consideration and method of payment allowable
under the terms of this Plan. The Company shall issue (or cause to be issued)
such share certificate promptly after the exercise of the Award or, in the case
of Restricted Stock Units, after the Participant has vested in such Restricted
Stock Units and otherwise become entitled to Shares in connection with such
Restricted Stock Units. In the event that the exercise of an Award is treated in
part as the exercise of an Incentive Stock Option and in part as the exercise of
a Nonqualified Stock Option pursuant to Section 7(a), the Company shall issue a
share certificate evidencing the Shares treated as acquired upon the exercise of
an Incentive Stock Option and a separate share certificate evidencing the Shares
treated as acquired upon the exercise of a Nonqualified Stock Option, and shall
identify each such certificate accordingly in its share transfer records. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the share certificate is issued, except as provided in
Section 4 of the Plan. In no event shall cash be paid or Shares issued to a
Participant with respect to an Award of the Participant later than March 15 of
the calendar year immediately following the calendar year in which the
Participant became vested in and otherwise entitled to such cash or
Shares.
(b) Method of Payment.
The consideration to be paid for any Shares to be issued upon exercise or other
required settlement of an Award, including a method of payment, shall be
determined by the Committee at the time of settlement, and which forms may
include: (i) check; (ii) wire transfer; (iii) tender of shares of Common Stock
owned by the Participant in accordance with rules established by the Committee
from time to time; and (iv) a request that the Company or a designated brokerage
firm conduct a cashless exercise of the Option. Shares used to pay the Option
Price shall be valued at their Fair Market Value on the exercise date. Payment
of the aggregate Option Price by means of tendering previously-owned shares of
Common Stock shall not be permitted when the same may, in the reasonable opinion
of the Company, cause the Company to record a loss or expense as a result
thereof.
(c) Withholding
Obligations. To the extent required by applicable federal, state, local
or foreign law, the Committee may and/or a Participant shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise with respect to any Incentive Stock Option, Nonqualified
Stock Option, SAR, Restricted Stock or Restricted Stock Units, or any sale of
Shares. The Company shall not be required to issue Shares or to recognize the
disposition of such Shares until such obligations are satisfied. These
obligations may be satisfied by having the Company withhold a portion of the
Shares that otherwise would be issued to a Participant under such Award
(provided, however, that no Shares are withheld with a value exceeding the
minimum amount of tax required to be withheld by law) or by tendering Shares
previously acquired by the Participant in accordance with rules established by
the Committee from time to time.
- 80 -
(d) Shareholder Rights.
Except as otherwise provided in this Plan, until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the share certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Shares subject to the Award, notwithstanding the
exercise of the Award.
(e) Non-Transferability of
Awards. An Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in exchange for consideration, and may not be
transferred other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Participant, only by the Participant;
unless the Committee permits further transferability, on a general or specific
basis, in which case the Committee may impose conditions and limitations on any
permitted transferability.
11. Expiration of
Awards.
(a) Expiration, Termination or
Forfeiture of Awards. Unless otherwise provided in the applicable Award
Agreement or any severance agreement, vested Awards granted under this Plan
shall expire, terminate, or otherwise be forfeited as follows:
(i) ninety (90) days after the date of termination of
a Participant’s Continuous Status as a Participant other than in circumstances
covered by (ii), (iii), (iv) or (v) below;
(ii) immediately upon termination of a Participant’s
Continuous Status as a Participant for cause (as defined in a Company subplan or
Award Agreement, as applicable);
(iii) twelve (12) months after the date on which a
Participant ceased performing services as a result of his or her Disability;
and
(iv) twelve (12) months after the date of the death
of a Participant who was a Participant whose Continuous Status as a Participant
terminated as a result of his or her death.
(b) Extension of Term.
Notwithstanding subsection (a) above, the Committee shall have the authority to
extend the expiration date of any outstanding Options or SARs other than an
Incentive Stock Option in circumstances in which it deems such action to be
appropriate (provided that no such extension shall extend the term of an Option
or SAR beyond the date on which the Award would have expired or been forfeited
if there had been no termination of the Employee’s Continuous Status as a
Participant).
12. Term, Amendment and
Termination of the Plan.
(a) Term of Plan. The
Plan shall become effective as of the Effective Date. It shall continue in
effect until the tenth anniversary of the Effective Date or until terminated
under this Section 12 of the Plan or extended by an amendment approved by the
shareholders of the Company pursuant to Section 12(a).
(b) Amendment and
Termination. The Board or the Committee may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable (including,
but not limited to amendments which the Board deems appropriate to enhance the
Company’s ability to claim deductions related to stock option exercises);
provided that to the extent required by the Code or the rules of the NYSE or the
SEC, shareholder approval shall be required for any amendment of the Plan.
Subject to the foregoing, it is specifically
- 81 -
intended that the Board or
Committee may amend the Plan without shareholder approval to comply with legal,
regulatory and listing requirements and to avoid unanticipated consequences
deemed by the Committee to be inconsistent with the purpose of the Plan or any
Award Agreement.
(c) Participants in Foreign
Countries. The Committee shall have the authority to adopt such
modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Subsidiaries may operate to assure the viability of the benefits from Awards
granted to Participants performing services in such countries and to meet the
objectives of the Plan.
(d) Effect of Amendment or
Termination. Any such amendment or termination of the Plan shall not
affect Awards already granted and such Awards shall remain in full force and
effect as if this Plan had not been amended or terminated, unless mutually
agreed otherwise between the Participant and the Committee, which agreement must
be in writing and signed by the Participant and the Company.
13.
Shareholder
Approval. The Plan, and
any material amendment to the Plan, is subject to approval by the shareholders
of the Company in accordance with applicable NYSE rules.
- 82 -
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TRUEBLUE, INC. C/O
COMPUTERSHARE 350 INDIANA STREET SUITE 750 GOLDEN, CO
80401
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VOTE BY
INTERNET - www.proxyvote.com |
Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time
Tuesday, May 11, 2010. Have your proxy card in hand when you access the
web site and follow the instructions to obtain your records and to create
an electronic voting instruction form. |
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ELECTRONIC DELIVERY OF FUTURE
PROXY MATERIALS |
If you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow
the instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials
electronically in future years. |
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VOTE BY
PHONE - 1-800-690-6903 |
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time Tuesday, May 11, 2010. Have
your proxy card in hand when you call and then follow the
instructions. |
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VOTE BY
MAIL |
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M22082-P90432
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KEEP THIS PORTION FOR
YOUR RECORDS |
THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION
ONLY |
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TRUEBLUE, INC. |
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A |
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Election of Directors |
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The Board of Directors recommends a vote
FOR the listed nominees. |
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Nominees: |
For |
Against |
Abstain |
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1a. |
Steven C. Cooper |
o |
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1b. |
Thomas E. McChesney |
o |
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1c. |
Gates McKibbin |
o |
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1d. |
Joseph P. Sambataro, Jr. |
o |
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1e. |
Bonnie W. Soodik |
o |
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1f. |
William W. Steele |
o |
o |
o |
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1g. |
Robert J. Sullivan |
o |
o |
o |
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1h. |
Craig E. Tall |
o |
o |
o |
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For address
changes and/or comments, please check this box and write them on the back
where indicated. |
o |
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B |
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Issues |
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The Board of Directors
recommends a vote FOR the following proposals.
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For |
Against |
Abstain |
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Ratification of
the appointment of Deloitte & Touche LLP as the Company's independent
registered public accounting firm for the fiscal year ending December 31,
2010.
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Approval of the
Company's 2010 Employee Stock Purchase Plan.
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Approval of
amendments to the Company's 2005 Long-Term Equity Incentive
Plan.
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As may be
recommended by the Board of Directors, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting.
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C |
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Authorized
Signatures - Sign Below- This section must be completed for your
instructions to be executed.
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NOTE: When
shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by an authorized person.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
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Important Notice Regarding the
Availability of Proxy Materials for the Annual
Meeting: The
Notice and Proxy Statement and Form 10-K are available at
www.proxyvote.com.
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FOR ANNUAL MEETING OF THE
SHAREHOLDERS
This Proxy is Solicited on Behalf of the Board
of Directors
The undersigned hereby appoints Joseph P. Sambataro, Jr. and James E.
Defebaugh (collectively, the "Proxies"), and each of them, with full power of
substitution, as proxies to vote the shares which the undersigned is entitled to
vote at the Annual Meeting of the Company to be held at 10:00 a.m. (Pacific
Daylight Time) on Wednesday, May 12, 2010, at 1015 A Street, Tacoma, Washington,
and at any adjournment thereof.
If
no direction is made, this proxy will be voted FOR PROPOSAL 1 (the election of
directors nominated by the Board of Directors), FOR PROPOSAL 2 (ratification of
selection of independent registered public accounting firm), FOR PROPOSAL 3
(adoption of the 2010 Employee Stock Purchase Plan), FOR PROPOSAL 4 (approval of
amendments to the 2005 Long-Term Equity Incentive Plan) and, with respect to any
other business that may come before the meeting, as recommended by the Board of
Directors.
Address
Changes/Comments: |
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(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse
side.)
IMPORTANT - PLEASE SIGN AND RETURN
PROMPTLY.