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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Commission file number 000-28275
PFSWEB, INC.
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Delaware
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75-2837058 |
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(State or other jurisdiction of
incorporation or organization)
500 North Central Expressway, Plano, Texas
(Address of principal executive offices)
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(I.R.S. Employer
Identification Number)
75074
(Zip code) |
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code:
972-881-2900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act. o Yes þ No
Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.
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Yes þ No
Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. þ
Yes
o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K/A or any amendment to this Form
10-K/A. þ
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting Company þ
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).
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Yes þ No
The aggregate market value of the voting stock held by non-affiliates of the registrant
as of June 30, 2007 (based on the closing price as reported by the National Association of
Securities Dealers Automated Quotation System) was $32,274,635.
As of March 26, 2008, there were 46,579,564 shares of the registrants Common Stock,
$.001 par value, outstanding.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (the Amendment) amends the Annual Report on Form 10-K
of PFSweb, Inc. for the fiscal year ended December 31, 2007, originally filed with the Securities
and Exchange Commission (SEC) on March 31, 2008 (the Original Filing). We are filing this
Amendment to amend Part III of the Original Filing to include the information required by and not
included in Part III of the Original Filing.
In connection with the filing of this Amendment and pursuant to the rules of the SEC, we are
including with this Amendment certain new certifications by our principal executive officer and
principal financial officer. Accordingly, Item 15 of Part IV has also been amended to reflect this
filing of these new certifications.
Except as described above, no other changes have been made to the Original Filing. The
Original Filing continues to speak as of the date of the Original Filing, and we have not updated
the disclosures contained therein to reflect any events which occurred at a date subsequent to the
filing of the Original Filing other than as expressly indicated in the Amendment.
TABLE OF CONTENTS
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Directors
The Board of Directors is divided into three classes. Each class serves three years, with the
terms of office of the respective classes expiring in successive years. The term of the current
Class I directors expires at the 2009 Annual Meeting; the term of the current Class II director
expires at the 2010 Annual Meeting; and the term of the current Class III directors expires at the
2008 Annual Meeting. The Board presently consists of five members, two Class I directors, one Class
II director and two Class III directors.
The following information, which has been provided by the individuals named, sets forth for
each member of the Board of Directors, such persons name, age, principal occupation or employment
during at least the past five years, the name of the corporation or other organization, if any, in
which such occupation or employment is carried on and the period during which such person has
served as a director of the Company.
Class I Director
David I. Beatson, age 60, has served as a non-employee Director since November 2000. Mr.
Beatson is Chief Executive Officer of Globalware Solutions (GWS), a global supply chain
management solution provider with facilities in North America, Asia and Europe. GWS provides
comprehensive state-of-the-art physical and digital supply chain solutions that enable clients to
increase return on investment and improve time-to-market. Mr. Beatson is a recognized leader in the
field of transportation, logistics and supply chain management having served as Chairman and CEO of
several leading companies in the industry. From July 2003 to April 2005, Mr. Beatson served as
Regional CEO North America and Member of the Executive Board of Panalpina, Inc., a leading provider
of intercontinental airfreight and sea freight forwarding and transportation, specializing in
global integrated logistics and comprehensive supply chain management solutions. From June 2000 to
July 2001, Mr. Beatson served as president, CEO and Chairman of Supply Links, Inc., an
Internet-based business-to-business global supply chain network that links customers to multiple
transportation modes and service providers through a single platform. From July 1998 to June 2000,
Mr. Beatson served as chairman, president and CEO of Circle International Group, Inc., a global
transportation and logistics company. From 1991 to June 1994, Mr. Beatson served as vice-president
of sales and marketing and then from June 1994 until July 1998 as president and CEO of Emery
Worldwide, a global transportation and logistics company. Prior to 1991, Mr. Beatson held several
management positions in the logistics and transportation industry, including American Airlines and
CF Airfreight. Mr. Beatson also currently serves as an industry representative member of the
Executive Advisory Committee to the National Industrial Transportation League, to which the Air
Freight Association elected him in 1995. He also serves on several industry boards including the
Council of Supply Chain Management Professionals.
James F. Reilly, age 49, has served as a non-employee Director of the Company since its
inception in 1999. Mr. Reilly has been an investment banker since 1983 and is currently a Senior
Advisor to Needham & Company, LLC, a nationally recognized investment banking and asset management
firm focused primarily on serving emerging growth industries and their investors. He has been with
Needham & Company, LLC, since January 2004 serving in various capacities including Head of West
Coast Investment Banking. Previously he was a Managing Director of J.P. Morgan Securities, Inc.,
an investment banking firm, and a Managing Director in the Technology Group of Warburg Dillon Read,
the global investment banking division of UBS AG. From 1983 to 1999, Mr. Reilly was associated with
Warburg Dillon Read or one of its predecessor companies and specialized in corporate finance
advisory work for a broad range of technology companies.
Class II Director
Dr. Neil W. Jacobs, age 73, has served as a non-employee Director of the Company since July
2000. Dr. Jacobs is a technology industry veteran and Emeritus Professor of Management, at the W.
A. Franke College of Business (FCB) at Northern Arizona University (NAU). In May 2007 he was
elected to the FCB Faculty Hall of Fame. Dr. Jacobs academic areas of interest included strategic
management and the role of information technology in support of strategy and operations. From 1996
to 1999, Dr. Jacobs served as associate dean of the College of Business Administration at NAU.
Prior to his academic career, he served as an officer in the United
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States Air Force and held management positions in manufacturing, materials management, and
information technology at IBM and Memorex.
Class III Directors
Timothy M. Murray, age 55, has served as a non-employee Director of the Company since its
inception in 1999. Mr. Murray is a partner of Chicago Growth Partners (a private equity firm) and
is a managing director of several private equity funds related to William Blair Capital Partners (a
private equity firm). From 1979 to 2004, Mr. Murray was employed at William Blair & Company (an
investment banking firm) and was a Principal of that firm from 1984 to 2004. Mr. Murray is a
director of several privately held corporations.
Mark C. Layton, age 48, has served as Chairman of the Board, President and Chief Executive
Officer of PFSweb since its inception in 1999. Mr. Layton previously held the following positions
with Daisytek International Corporation (Daisytek), a leading global distributor of consumable
computer supplies and office products and the former parent corporation of the Company: Chairman of
the Board from September 1999 to October 2000; President, Chief Executive Officer and Chief
Operating Officer from April 1997 to February 2000; Director from 1988 to October 2000; President,
Chief Operating Officer and Chief Financial Officer from 1993 to April 1997; Executive Vice
President from 1990 to 1993; and Vice President Operations from 1988 to 1990. Prior to joining
Daisytek, Mr. Layton served as a management consultant with Arthur Andersen & Co., S.C. for six
years through 1988 specializing in wholesale and retail distribution and technology.
Executive Officers
Steven S. Graham, age 56, has served as Executive Vice President of the Company since
inception in 1999. Mr. Graham is currently Chief Solutions Officer and prior to 2007, served as
Chief Technology Officer of the Company from its inception in 1999. Mr. Graham previously served as
Senior Vice President of Information Technologies and Chief Information Officer of Daisytek, a
position he held from 1996 to 2000. Prior to joining Daisytek, Mr. Graham was employed as Vice
President of Technology by Ingram Micro, a major technology distributor. Mr. Graham has over 34
years of experience in the information-technology and outsourcing fields.
Thomas J. Madden, age 46, has served as Executive Vice President, Chief Financial and
Accounting Officer of the Company since its inception in 1999. Mr. Madden previously served as
Chief Financial Officer of Daisytek from 1997 to 2000, as Vice President Finance, Treasurer and
as Chief Accounting Officer of Daisytek from 1994 to 2000 and as Controller of Daisytek from 1992
to 1994. From 1983 to 1992, Mr. Madden served in various capacities with Arthur Andersen & Co.,
S.C., including financial consulting and audit manager.
Michael C. Willoughby, age 44, has served as President of Priority Fulfillment Services, a
subsidiary of the Company, since February 2006. He also serves as Executive Vice President and
Chief Information Officer of the company, positions he has held since October 2001. From 1999 to
2001, Mr. Willoughby served the Company as Vice President of E-Commerce. Prior to joining the
Company, Mr. Willoughby served as President and Chief Executive Officer of Design Technologies,
Inc., an e-commerce software development firm from 1994 to 1999. Prior to founding Design
Technologies, Inc., Mr. Willoughby served as President and Chief Executive Officer of Integration
Services, Inc., an IT consulting services company.
Cynthia D. Almond, age 40, has served as Vice President Client Services of the Company since
March 2001 and as Secretary of the Company since 2007. From 1999 to 2001, Ms. Almond served as
Director of Account Management. From 1991 to 1999, Ms. Almond served in various marketing, product
management and sales capacities for Daisytek.
Harvey H. Achatz, age 67, has served as Executive Vice President Administration of the
Company since its inception in 1999. Mr. Achatz also served as Secretary of the Company until 2007.
Mr. Achatz previously served as Vice President Administration and Secretary of Daisytek from 1993
and 1984 to 2000, respectively, as Vice President Finance from 1985 to 1993, as Controller from
1981 to 1985 and as a Director from 1984 to 1990.
Officers
Scott R. Talley, age 43, has served as Vice President International Distribution for the
Company since its
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inception in 1999. Mr. Talley previously served in various capacities for Daisytek since 1991,
most recently as Vice President Distribution. Mr. Talley received a Bachelor of Business
Administration degree from the University of North Texas and a Masters of Business Administration
degree from New York Institute of Technology.
Bruce E. McClung, age 70, has served as Vice President Sales of the Company since October
2001. From 1999 to 2001, Mr. McClung served in various marketing and sales capacities for the
Company. From 1995 to 1998, Mr. McClung served in various capacities for Daisytek. Mr. McClung
has spent more than 25 years in sales, marketing and management roles in systems and solutions
organizations, including Daisytek, IBM, Boeing and Perdata.
David B. Reese, age 45, has served as Vice President Business Solutions of the Company since
November 2004. From 2000 to 2004, Mr. Reese served as Director of Implementation Services for the
Company. Mr. Reese was Director of European Operations from January 1999 to May 2000. From 1995 to
1998, Mr. Reese served in various capacities for Daisytek. Previously Mr. Reese was Vice President
of Operations for a 3PL company and operated several intermodel and distribution facilities.
Gibson T. Dawson, age 42, has served as Vice President Corporate Controller of the Company
since May 2007. From 1998 to 2007, Mr. Dawson served as Corporate Controller for PFSweb. Prior to
joining the Company, Mr. Dawson was controller for a recorded-music distribution company and prior
to that spent more than 8 years with KPMG LLP in the assurance services practice.
Compliance with Certain Reporting Obligations
Section 16(a) of the Exchange Act requires the Companys executive officers, directors and
controlling stockholders to file initial reports of ownership and reports of changes of ownership
of the Companys Common Stock with the Securities and Exchange Commission and the Company. To the
Companys knowledge, all reports required to be so filed were filed in accordance with the
provisions of said Section 16(a).
Code of Ethics
The Board has approved a code of business conduct and ethics in accordance with rules of the
SEC and NASD listing standards applicable to all directors, officers and employees, including the
chief executive officer, senior financial officers and the principal accounting officer. The code
is intended to provide guidance to directors and management to assure compliance with law and
promote ethical behavior. Copies of the Companys code of business conduct and ethics may be found
on the Companys website at www.pfsweb.com (the contents of the website are not incorporated in
this Form 10-K/A by reference).
Certain Corporate Governance Matters
The Board of Directors currently has standing Nominating, Audit, Compensation, and Stock
Option Committees.
The Nominating Committee is responsible for identifying and evaluating individuals qualified
to become Board members and recommending to the Board candidates to stand for election or
re-election as directors. The Committee will consider candidates at the recommendation of existing
Board members, Company management, search firms or other consultants, or stockholders. Stockholders
wishing to recommend director candidates to the Board may do so by writing to the Committee in care
of the Corporate Secretary at the Companys executive office, 500 North Central Expressway, Plano,
TX 75074. At a minimum, director candidates should have demonstrated achievement in their
particular field of endeavor, significant business or other management experience that would be of
value to the Company, integrity and high ethical standards, good communication and leadership
skills, and the ability and willingness to commit adequate time and attention to carry out their
Board duties effectively. The Committee will evaluate candidates through background and reference
checks, interviews and an analysis of each candidates qualifications and attributes in light of
the current composition of the Board and the Companys leadership needs at the time. From time to
time, the Committee may engage the services of an outside consultant to assist the Committee by
conducting searches to identify candidates, evaluating candidates qualifications, handling
background and reference checks, and making initial contacts with potential candidates. The members
of the Nominating Committee are Timothy M. Murray and Dr. Neil W. Jacobs, each of whom has been
determined to be independent as discussed above. The Nominating Committee has adopted a charter
which is available on the Companys website at www.pfsweb.com.
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Audit Committee and Audit Committee Financial Expert
The Audit Committee is established for the purpose of overseeing the Companys accounting and
financial reporting processes and audits of the Companys financial statements. The Audit Committee
is established to assist the Board in fulfilling its oversight responsibilities by reviewing and
reporting to the Board on the integrity of the financial reports and other financial information
provided by the Company to its shareholders. The Audit Committee is directly responsible for the
appointment, compensation, retention and oversight of the work of any independent auditor employed
by the Company (including resolution of disagreements between management and the auditor regarding
financial reporting) for the purpose of preparing or issuing an audit report or related work or
performing other audit, review or attest services for the Company. The Companys auditors report
directly to the Audit Committee.
The Audit Committee is comprised of three directors, Mr. Reilly, Mr. Beatson and Dr. Jacobs,
each of whom has been determined by the Board of Directors to be independent as discussed above,
and is able to read and understand fundamental financial statements, including the Companys
balance sheet, income statement and cash flow statement. The Board of Directors has determined
that, based on his relevant experience as described above, Mr. Reilly is qualified as the audit
committee financial expert within the meaning of applicable SEC regulations and has the requisite
financial sophistication required by the NASD listing standards. The Committee has adopted a
written amended and restated audit committee charter setting out the audit-related functions of the
Audit Committee, and the Committee reviews and reassesses the adequacy of the charter on an annual
basis. A copy of the charter is available on the Companys
website at www.pfsweb.com.
Item 11. Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Program
The Compensation Committee of the Board is responsible for establishing and implementing our
compensation philosophy. The Compensation Committee believes that the total compensation paid to
our executive officers should be and is fair, reasonable and competitive. Throughout this Form
10-K/A, the individuals who served as our Chief Executive Officer and Chief Financial Officer
during 2007, as well as the other executive officers included in the Summary Compensation Table on
page 14, are referred to as the Named Executive Officers.
Compensation Philosophy and Objectives
The Compensation Committee believes that executive officer compensation be structured to
provide competitive base salaries and benefits to attract and retain superior employees and to
provide short- and long-term incentive compensation to incentivize executive officers to attain,
and to reward executive officers for attaining, established financial goals that are consistent
with increasing stockholder value. The Compensation Committee uses a combination of cash bonuses
and retention based equity awards as key components in the short- and long-term incentive
compensation arrangements for executive officers, including the Named Executive Officers.
The Compensation Committees goal is to maintain compensation programs that are competitive
within our industry and geographic market. Each year, the Compensation Committee reviews the
executive compensation program with respect to the external competitiveness of the program, the
linkage between executive compensation and the creation of stockholder value, and determines what
changes, if any, are appropriate.
In determining the form and amount of compensation payable to Named Executive Officers, the
Compensation Committee is guided by the following objectives and principles:
Compensation levels should be sufficiently competitive to attract and retain key executives.
We aim to ensure that our executive compensation program attracts, motivates and retains high
performance talent and rewards them for our achieving and maintaining a competitive position in our
industry and geographic market. Total
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compensation (i.e. maximum achievable compensation) should increase with position and
responsibility.
Compensation should relate directly to performance and incentive compensation should be a
portion of total compensation. We aim to foster a pay-for-performance culture, with the bonus
portion of total compensation being at risk. Accordingly, absent unusual circumstances, any bonus
payable as part of total compensation should be tied to and vary with our financial, operational
and strategic performance, as well as individual performance. Bonuses should not be granted if
these goals and results are not achieved.
Long-term incentive compensation should align executives interests with our stockholders.
Awards of equity-based compensation encourage executives to focus on our long-term growth and
prospects, and incentivize executives to manage the company from the perspective of stockholders
with a meaningful stake in us, as well as to focus on long-term career orientation.
Our executive compensation program is designed to reward the achievement of goals regarding
growth, productivity and profitability, including such goals as:
To assist the Company in achieving and surpassing its internal targets and budgets,
including quarterly financial and operating targets.
To recruit, motivate and exhibit leadership that aligns employees interests with that of
our stockholders.
To develop business models and systems that seek out strategic opportunities, which benefit
us and our stockholders.
To implement a culture of compliance and commitment to operate our business with the highest
standards of professional conduct and compliance.
Compensation Committee Practices and Procedures
The Compensation Committee determines and reviews the value and forms of compensation for the
Named Executive Officers and other officers based on the Compensation Committee members general
knowledge and experience and commercially available compensation surveys prepared by third party
firms.
The Compensation Committee is delegated all authority of the Board as may be required or
advisable to fulfill the purposes of the Compensation Committee. The Compensation Committee meets
as often as it deems necessary or appropriate.
Role of Executive Officers in Compensation Decisions
The Compensation Committee makes all compensation decisions for all executive officers (which
includes the Named Executive Officers). The Compensation Committee actively considers, and has the
ultimate authority of approving, recommendations made by the Chief Executive Officer regarding all
equity awards to our employees. Our Chief Executive Officer determines the non-equity compensation
of management level employees who are not executive officers or officers.
The Chief Executive Officer annually reviews the performance of each executive officer (other
than the Chief Executive Officer whose performance is reviewed by the Compensation Committee).
Based on these annual reviews, the Chief Executive Officer makes recommendations to the
Compensation Committee with respect to annual base salary adjustments and short- and long-term
incentive compensation awards for such executive officers. The Compensation Committee then reviews
these recommendations and exercises its discretion in whether to accept such recommendations or to
modify such recommendations as it deems appropriate. The Compensation Committee annually reviews
the performance of the Chief Executive Officer and determines the total compensation, including
base salary, cash bonus and long-term equity compensation, for the Chief Executive Officer. The
Chief Executive Officer does not participate in such determination.
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Setting Executive Compensation
Based on the foregoing compensation philosophy, the Compensation Committee has structured our
annual, short- and long-term compensation to motivate executives to achieve the financial
performance objectives we set and to incentivize the executives to achieve and exceed, and to
reward the executives for achieving and exceeding, such objectives. To date, the Compensation
Committee has not retained the services of human resource consulting firms or similar third party
advisors, but it has reviewed commercially available published surveys of executive compensation
for comparable companies based on factors such as annual revenue and geographic region.
The Compensation Committee does not believe that it is appropriate to establish compensation
levels based exclusively or primarily on benchmarking to our publicly-traded peers. The
Compensation Committee looks to the above described external market data as one of several
reference points in reviewing and establishing individual pay components and total compensation and
ensuring that our executive compensation is competitive in the marketplace.
The Compensation Committee annually determines total compensation levels, as well as the
individual pay components of the executive officers and officers (including the Named Executive
Officers). In making such determinations for 2007, the Compensation Committee reviewed and
considered: (1) recommendations of the Chief Executive Officer, based on individual
responsibilities and performance, (2) historical compensation, including base compensation and
bonuses, paid by the Company since the Company instituted pay cuts in 2003 through the period
ending December 31, 2006, (3) commercially available published surveys of executive compensation
for comparable companies based on factors such as annual revenue and geographic region, (4) our
overall financial performance in achieving or substantially achieving the Companys budget in light
of our future objectives and challenges, and (5) overall effectiveness of the executive
compensation program, including the fact that no stock options or other equity compensation had
been awarded to the Companys executive officers or officers (including the Named Executive
Officers) during 2006. These factors were considered as a whole and no one factor was more heavily
weighted than the other factors. This review resulted in the Committees determination to (i)
approve an increase in base salaries for 2007 for all executive officers and officers (including
the Named Executive Officers, other than the Chief Executive Officer) of approximately 5.8% over
2006 base salaries and increase the 2007 base salary for the Chief Executive Officer by
approximately 5.8% and (ii) approve the issuance of a total of 154,500 stock options to all
executive officers and officers (including the Named Executive Officers, other than the Chief
Executive Officer) and the issuance of 21,000 stock options to the Chief Executive Officer. The
Committees determination to authorize the issuance of stock options was made shortly after the
filing by the Company of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.
A percentage of total compensation is allocated to incentives as a result of the
compensation philosophy discussed above. There is no pre-established policy or target for the
allocation between either cash and non-cash or short- and long-term incentive compensation, but the
Committee generally considers base salary as the primary component of compensation.
For 2008, the Compensation Committee adopted a 2008 management bonus plan pursuant to
our 2005 Employee Stock and Incentive Plan. Under the terms of the bonus plan, cash bonuses, if
any, will be awarded to the Chief Executive Officer and other executive officers, officers and
senior management based on, and subject to, the achievement of a specified performance goal. The
performance goal shall be for the Company to exceed, on a quarterly basis, the corresponding
projected quarterly earnings before interest, taxes, depreciation and amortization (EBITDA)
contained in the Companys annual budget (or, in case of a budgeted operating loss, to reduce the
operating loss below the budgeted operating loss).
Subject to an aggregate annual maximum of $1,100,000, the maximum aggregate amount to be
awarded for any quarter shall be equal to the sum of the following: (i) the amount of Excess EBITDA
up to $275,000, plus (ii) if the Excess EBITDA exceeds $275,000, the amount of such excess, up to
the Cumulative Recapture Pool, plus (iii) if the amount of Excess EBITDA exceeds the amounts
determined under the preceding clauses (i) and (ii), an amount equal to ten percent (10%) of such
excess. Excess EBITDA means, for any quarter, the amount by which the EBITDA for such quarter
exceeded the budgeted EBITDA for such quarter; Cumulative Recapture Pool means, as of any date,
(i) $275,000 for each completed Eligible Quarter prior to such date, minus (ii) the aggregate
amount of awards issued under the 2008 Bonus Plan as of such date; and Eligible Quarter means a
quarter in which the Companys EBITDA was not less than 80% of the budgeted EBITDA.
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Following the end of each quarter, the Committee will grant cash bonuses in an aggregate
amount to be determined by it, but not to exceed the above limitations, to the Chief Executive
Officer and other executive officers, officers and senior management based on the Committees
determination of the relative contribution of each such person. The adoption of the 2008 Bonus Plan
does not restrict the ability of the Compensation Committee to award discretionary bonuses for any
quarter in which the performance goal was not achieved.
2007 Executive Officer Compensation Components
For the year ended December 31, 2007, the principal components of compensation for Named
Executive Officers were:
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base salary; |
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performance-based incentive compensation, including both short-term
cash incentive compensation and long term equity incentive
compensation; |
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retirement and other benefits; and |
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perquisites and other personal benefits. |
Base Salary
We provide our Named Executive Officers and other employees with a base salary to
compensate them for services rendered during the year. Base salary ranges for Named Executive
Officers are determined for each executive officer based on the factors described above, his or her
position and level of responsibility and his or her actual performance during the preceding year.
Base salaries for each year are typically evaluated annually in the first quarter of such year.
Merit-based increases to base salaries for executive officers are based on the Compensation
Committees assessment of the various factors described above, including the individuals
performance during the preceding year.
Performance-Based Incentive Compensation
Our 2005 Employee Stock and Incentive Plan provides the Compensation Committee with the
flexibility to design cash- and stock-based incentive compensation programs to promote performance
and the achievement of our goals and objectives by executive officers and other key employees by
allowing them to participate in our long-term growth and profitability. The Compensation Committee
believes that providing performance-based incentive compensation is necessary to attract and retain
superior executive talent and to align the financial interests of executive officers with those of
our stockholders. A portion of each executive officers potential aggregate compensation is in the
form of incentive compensation. There are two types of performance-based incentive compensation
used by the Compensation Committee. The first type is short-term incentive compensation in the form
of a potential cash bonus. The second type is long-term incentive compensation in the form of
grants of stock options, restricted stock or restricted stock units.
For 2007, the Companys Compensation Committee adopted a management bonus plan (the 2007
Bonus Plan) pursuant to the Companys 2005 Employee Stock and Incentive Plan. Under the terms of
the 2007 Bonus Plan, cash bonuses, were awarded to the Chief Executive Officer and other executive
officers and officers based on, and subject to, the achievement of the following performance goal.
The performance goal was for the Company to exceed, on a quarterly basis, the corresponding
projected quarterly net income contained in the Companys annual budget (or, in case of a budgeted
net loss, to reduce the net loss below the budgeted net loss) (the Over Budget Amount). The Over
Budget Amount was determined by the Compensation Committee on a quarter-by-quarter basis.
Under the 2007 Bonus Plan, the total bonus amount for each quarter was the sum of (i) an
amount to be determined by the Compensation Committee for such quarter, but not to exceed the
lesser of (x) $250,000 or (y) the Over Budget Amount and (ii) if and to the extent the Over Budget
Amount exceeded $250,000, ten percent (10%) of such excess.
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Following the end of each quarter, the Compensation Committee could grant cash bonuses
in an aggregate amount to be determined by it, but not to exceed the above described total bonus
amount for such immediately preceding quarter, to the Chief Executive Officer and other executive
officers and officers based on the Compensation Committees determination of the relative
contribution of each such person. The adoption of the 2007 Bonus Plan did not restrict the ability
of the Compensation Committee to award discretionary bonuses for any quarter in which the
performance goal was not achieved.
During the fourth quarter of 2007, based on achieving the performance goal under the 2007
Bonus Plan for the third quarter, the Committee awarded aggregate cash bonuses of $105,000 to the
Companys executive officers and officers (including the Named Executive Officers, other than the
Chief Executive Officer) and a cash bonus of $20,000 to the Companys Chief Executive Officer. In
addition, based on the Committees consideration of (1) the improvement in the Companys financial
and operating performance during the 2007 fourth quarter and for the full fiscal year 2007, (2) the
determination by the Committee in the third quarter not to award the full Bonus Pool Amount under
the 2007 Bonus Plan, and (3) the Committees compensation objectives of, among other things,
seeking to focus management on business performance that creates stockholder value, encouraging
innovative approaches to the business of the Company and providing rewards for results, the
Committee also awarded discretionary aggregate cash bonuses for 2007 of $106,000 and a cash bonus
of $19,000 to the Companys Chief Executive Officer, which were paid during 2008.
Long-term incentive compensation for each executive officer consists of awards of stock
options based on the executive officers level and scope of responsibility. The Compensation
Committee is responsible for the granting of all equity-based compensation, including the award
dates for each grant, which is determined in its discretion. Stock options typically vest over a
three-year period in quarterly installments. An important purpose of the granting of stock options
is to retain executive talent and incentivize the executive team to increase stockholder value.
During 2007 the Committee approved the issuance of a total of 154,500 stock options to all
executive officers and officers (including the Named Executive Officers, other than the Chief
Executive Officer) and the issuance of 21,000 stock options to the Chief Executive Officer. The
grant of options to the Companys executive officers and officers, including the Named Executive
Officers, was approximately 25% of the total options granted by the Company during 2007. The
Committees determination to authorize the issuance of stock options was made shortly after the
filing by the Company of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.
Severance Agreements and Change-In-Control Provisions
The
Company and certain of the Named Executive Officers have entered into agreements more
fully described below pursuant to which the Named Executive Officers are entitled to certain
severance and other benefits upon termination and/or a change in control. The Compensation
Committee believes that such arrangements are appropriate and provide the Named Executive Officers
a reasonable package based on the value the officers have created that is ultimately realized by
our stockholders. In addition, the change in control protection allows management to focus their
attention and energy on our business without any distractions regarding the effects of a change in
control. Further, such protections are intended to maximize stockholder value by encouraging
management to objectively review any proposed transaction to determine whether such proposal is in
the best interest of the stockholders.
Retirement and Other Benefits
Executive officers are eligible to participate in our 401(k) plan and other benefit
programs as described below. The Compensation Committee reviews the overall cost to us of these
various programs generally on an annual basis or when changes are proposed. The Compensation
Committee believes that the benefits provided by these programs have been important factors in
attracting and retaining the overall executive officer group, including the Named Executive
Officers.
Our 401(k) plan provides for employer matching funds of 20 percent of the employee
contribution. We do not provide any other retirement benefits or tax-qualified deferred
compensation plans or programs for our executive officers.
Executive officers also receive benefit of life insurance policies, which provide
coverage in varying amounts up to $3.0 million.
8
Executive officers are also entitled to participate in the various other group health,
term life, employee stock purchase, and similar benefit plans available to all of our employees and
on the same terms as such employees.
Perquisites and Other Personal Benefits
We provide Named Executive Officers with perquisites and other personal benefits that we
and the Compensation Committee believe are reasonable and consistent with our overall compensation
program to better enable us to attract and retain superior employees for key positions.
Tax and Accounting Implications
Deductibility of Executive Compensation
As part of its role, the Compensation Committee reviews and considers the deductibility
of executive compensation under Section 162(m) of the Code, which provides that we may not deduct
compensation of more than $1 million that is paid to certain individuals, subject to certain
exceptions. We believe that compensation paid under our Plan is generally fully deductible for
federal income tax purposes. However, the Compensation Committee may approve compensation that will
not meet these requirements in order to ensure competitive levels of total compensation for its
executive officers.
Accounting for Stock-Based Compensation
Effective January 1, 2006, we began accounting for stock-based payments, including our
2001 Plan, in accordance with the requirements of FASB Statement 123R.
Nonqualified Deferred Compensation
The American Jobs Creation Act of 2004 and Section 409A of the Internal Revenue Code
changed the tax rules applicable to nonqualified deferred compensation arrangements. While certain
of the final regulations have not yet become effective, we believe we are operating our executive
compensation arrangements including severance benefits and equity awards in good faith compliance
with the statutory provisions that were effective January 1, 2005. We will timely make any
necessary modifications to our executive compensation arrangements to comply with Internal Revenue
Code section 409A.
9
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or accrued by the Company to the
Companys Chief Executive Officer and to each of the four most highly compensated executive
officers of the Company for services rendered to the Company during the year ended December 31,
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
Incentive Plan |
|
All Other |
|
|
Name and Principle Position |
|
Period |
|
Salary (1) |
|
Bonus (2) |
|
Awards (3) |
|
Compensation (4) |
|
Compensation |
|
Total |
Mark C. Layton |
|
|
2007 |
|
|
$ |
545,546 |
|
|
$ |
19,000 |
|
|
$ |
25,613 |
|
|
$ |
20,000 |
|
|
$ |
38,564 |
(5) |
|
$ |
648,723 |
|
Chairman, |
|
|
2006 |
|
|
$ |
514,739 |
|
|
|
15,000 |
|
|
|
37,623 |
|
|
|
|
|
|
$ |
79,086 |
|
|
$ |
646,448 |
|
President, Chief
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven S. Graham |
|
|
2007 |
|
|
|
265,354 |
|
|
|
19,000 |
|
|
|
23,608 |
|
|
|
18,000 |
|
|
|
9,845 |
(6) |
|
|
335,807 |
|
Executive Vice |
|
|
2006 |
|
|
|
253,462 |
|
|
|
15,000 |
|
|
|
37,623 |
|
|
|
|
|
|
|
19,430 |
|
|
|
325,515 |
|
President Chief
Technology
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael C. Willoughby |
|
|
2007 |
|
|
|
342,892 |
|
|
|
19,000 |
|
|
|
28,435 |
|
|
|
20,000 |
|
|
|
12,640 |
(7) |
|
|
422,967 |
|
Executive Vice |
|
|
2006 |
|
|
|
290,423 |
|
|
|
20,000 |
|
|
|
37,623 |
|
|
|
|
|
|
|
8,020 |
|
|
|
356,066 |
|
President Chief
Information
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Madden |
|
|
2007 |
|
|
|
303,277 |
|
|
|
19,000 |
|
|
|
25,463 |
|
|
|
20,000 |
|
|
|
16,459 |
(8) |
|
|
384,199 |
|
Executive Vice |
|
|
2006 |
|
|
|
273,846 |
|
|
|
20,000 |
|
|
|
37,623 |
|
|
|
|
|
|
|
20,899 |
|
|
|
352,368 |
|
President Chief
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cindy Almond |
|
|
2007 |
|
|
|
199,765 |
|
|
|
14,000 |
|
|
|
25,463 |
|
|
|
12,000 |
|
|
|
16,947 |
(9) |
|
|
268,175 |
|
Vice President -
Client Services
and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Salary represents 2007 base salary earnings |
|
(2) |
|
Bonus awards are cash awards which are not non-equity incentive plan awards as defined
under the rules of the Securities and Exchange Commission. |
|
(3) |
|
Options granted have a ten year term
and generally vest quarterly over three years of continuous service after the date of grant. The
values of the options in this column are the expense amounts for grants made in 2007 and
prior years which continue to be expensed and recognized for financial statement reporting
purposes in fiscal year 2007 in accordance with FAS 123(R) and were estimated using a
Black-Scholes pricing model, which incorporates a range of assumptions for inputs between
the grant date of the option and the date of expiration. The assumptions used and the
resulting weighted average value of stock options granted during 2007 are summarized in
Note 5 to the Companys consolidated financial statements included in its Annual Report on
Form 10-K for the year ended December 31, 2007. There can be no assurance that the FAS
123(R) amounts will be realized. |
|
(4) |
|
Represents cash awards paid under the 2007 Bonus Plan described above. |
|
(5) |
|
Represents Other Compensation of $10,644 and Perquisites of $27,920. Other Compensation
represents life insurance premiums paid by the Company for the benefit of the Named
Executive Officer. Perquisites represent the sum of personal use of automobile expenses,
incremental cost of personal travel expenses paid by the Company, which is based on an
hourly charge that includes fuel, maintenance and related fees, and income tax preparation. |
|
(6) |
|
Represents Other Compensation of $5,536 and Perquisites of $4,309. Other Compensation
represents life insurance premiums paid by the Company for the benefit of the Named
Executive Officer. Perquisites represent the sum of personal use of automobile expenses
and income tax preparation. |
|
(7) |
|
Represents Other Compensation of $2,484 and Perquisites of $10,156. Other Compensation
represents the life insurance premiums paid by the Company for the benefit of the Named
Executive Officer. Perquisites represent the sum of personal use of automobile expenses. |
|
(8) |
|
Represents Other Compensation of $2,539 and Perquisites of $13,920. Other Compensation
represents the life insurance premiums paid by the Company for the benefit of the Named
Executive Officer. Perquisites represent the sum of personal use of automobile expenses
and club dues and memberships. |
|
(9) |
|
Represents Other Compensation of $4,941 and Perquisites of $12,006. Other Compensation
represents the life insurance premiums paid by the Company for the benefit of the Named
Executive Officer. Perquisites represent the sum of personal use of automobile expenses. |
10
2007 GRANTS OF PLAN BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option |
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non- |
|
Awards:
Number of |
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards (2) |
|
Securities |
|
Exercise or Base |
|
Grant Date |
|
|
Grant |
|
Threshold ($) |
|
Target ($) |
|
Maximum |
|
Underlying |
|
Price of Option |
|
Fair Value of |
Name |
|
Date (1) |
|
(3) |
|
(4) |
|
($)(5) |
|
Options
(#)(6) |
|
Awards ($/Sh) |
|
Option Awards (7) |
Mark Layton |
|
|
05/16/07 |
|
|
|
|
|
|
|
|
|
|
$ |
1,000,000 |
|
|
|
21,000 |
|
|
$ |
0.94 |
|
|
$ |
14,915 |
|
Chairman, President,
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Madden |
|
|
05/16/07 |
|
|
|
|
|
|
|
|
|
|
$ |
1,000,000 |
|
|
|
20,000 |
|
|
$ |
0.94 |
|
|
$ |
14,204 |
|
Executive Vice President
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven S. Graham |
|
|
05/16/07 |
|
|
|
|
|
|
|
|
|
|
$ |
1,000,000 |
|
|
|
7,500 |
|
|
$ |
0.94 |
|
|
$ |
5,327 |
|
Executive Vice President
Chief Technology Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael C. Willoughby |
|
|
05/16/07 |
|
|
|
|
|
|
|
|
|
|
$ |
1,000,000 |
|
|
|
40,000 |
|
|
$ |
0.94 |
|
|
$ |
28,409 |
|
Executive Vice President
Chief Information Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cindy Almond |
|
|
05/16/07 |
|
|
|
|
|
|
|
|
|
|
$ |
1,000,000 |
|
|
|
20,000 |
|
|
$ |
0.94 |
|
|
$ |
14,204 |
|
Vice President Client
Services and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Date of grant of stock option under the Companys 2005 Employee Stock and Incentive
Plan. |
|
(2) |
|
The information reported under this column is reported in respect of the 2007 Bonus
Plan described above. The amounts actually paid to the Named Executive Officers under the
2007 Bonus Plan are reported in the Summary Compensation Table under the heading
Non-Equity Incentive Compensation. |
|
(3) |
|
Threshold refers to the minimum amount payable for a certain level of performance
under the 2007 Bonus Plan. Under the 2007 Bonus Plan, there was no minimum amount payable
for achieving the stated performance goal. |
|
(4) |
|
Target refers to the amount payable if the specified performance targets are reached.
Under the 2007 Bonus Plan, no specific amount was payable if the performance goal is
achieved. The specific amount payable to each executive officer and officer, including the
Named Executive Officers, was determined quarterly by the Compensation Committee. |
|
(5) |
|
Maximum refers to the maximum payout possible under the 2007 Bonus Plan. Under the
2007 Bonus Plan, the maximum amount payable to all executive officers and officers as a
group, including the Named Executive Officers was $1,000,000 ($250,000 per quarter), plus
ten percent of the amount by which the Companys actual net income (or loss) exceeded the
Companys budgeted net income (or loss), determined quarterly. The specific amount payable
to each executive officer and officer, including the Named Executive Officers, was
determined quarterly by the Compensation Committee. |
|
(6) |
|
Represents number of stock options issued under the Companys 2005 Employee Stock and
Incentive Plan. Options granted under the Plan have a ten year term and vest quarterly over
three years of continuous service after the date of grant. |
|
(7) |
|
Represents the grant date fair value of $0.71 per stock
option award estimated using the Black-Scholes option valuation
model. This valuation is in accordance with the accounting valuation
recognized under FAS 123(R). |
11
OUTSTANDING EQUITY AWARDS AT 2007 FISCAL YEAR END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
Number of |
|
|
|
|
|
|
|
|
|
|
Underlying |
|
Securities |
|
|
|
|
|
|
|
|
|
|
Unexercised |
|
Underlying |
|
Option |
|
Option |
|
|
|
|
|
|
Options |
|
Unexercised Options |
|
Exercise |
|
Expiration |
Name |
|
Grant Date |
|
(# Exercisable) |
|
(# Unexercisable) |
|
Price ($) |
|
Date |
Mark C. Layton |
|
|
8/15/2000 |
|
|
|
50,000 |
|
|
|
|
|
|
$ |
1.92 |
|
|
|
8/14/2010 |
|
|
|
|
12/5/2001 |
|
|
|
594,056 |
|
|
|
|
|
|
$ |
0.91 |
|
|
|
12/4/2011 |
|
|
|
|
4/11/2003 |
|
|
|
82,000 |
|
|
|
|
|
|
$ |
0.39 |
|
|
|
4/10/2013 |
|
|
|
|
3/29/2004 |
|
|
|
43,000 |
|
|
|
|
|
|
$ |
1.61 |
|
|
|
3/28/2014 |
|
|
|
|
4/5/2005 |
|
|
|
30,000 |
|
|
|
6,000 |
|
|
$ |
2.57 |
|
|
|
4/4/2015 |
|
|
|
|
5/16/2007 |
|
|
|
3,500 |
|
|
|
17,500 |
|
|
$ |
0.94 |
|
|
|
5/15/2017 |
|
Steven S. Graham |
|
|
8/15/2000 |
|
|
|
35,000 |
|
|
|
|
|
|
$ |
1.92 |
|
|
|
8/14/2010 |
|
|
|
|
12/5/2001 |
|
|
|
587,449 |
|
|
|
|
|
|
$ |
0.91 |
|
|
|
12/4/2011 |
|
|
|
|
1/25/2002 |
|
|
|
15,000 |
|
|
|
|
|
|
$ |
0.84 |
|
|
|
1/24/2012 |
|
|
|
|
4/11/2003 |
|
|
|
82,000 |
|
|
|
|
|
|
$ |
0.39 |
|
|
|
4/10/2013 |
|
|
|
|
3/29/2004 |
|
|
|
43,000 |
|
|
|
|
|
|
$ |
1.61 |
|
|
|
3/28/2014 |
|
|
|
|
4/5/2005 |
|
|
|
30,000 |
|
|
|
6,000 |
|
|
$ |
2.57 |
|
|
|
4/4/2015 |
|
|
|
|
5/16/2007 |
|
|
|
1,250 |
|
|
|
6,250 |
|
|
$ |
0.94 |
|
|
|
5/15/2017 |
|
Michael C. Willoughby |
|
|
8/15/2000 |
|
|
|
35,000 |
|
|
|
|
|
|
$ |
1.92 |
|
|
|
8/14/2010 |
|
|
|
|
1/25/2002 |
|
|
|
40,000 |
|
|
|
|
|
|
$ |
0.84 |
|
|
|
1/24/2012 |
|
|
|
|
4/11/2003 |
|
|
|
82,000 |
|
|
|
|
|
|
$ |
0.39 |
|
|
|
4/10/2013 |
|
|
|
|
3/29/2004 |
|
|
|
43,000 |
|
|
|
|
|
|
$ |
1.61 |
|
|
|
3/28/2014 |
|
|
|
|
4/5/2005 |
|
|
|
30,000 |
|
|
|
6,000 |
|
|
$ |
2.57 |
|
|
|
4/4/2015 |
|
|
|
|
5/16/2007 |
|
|
|
6,667 |
|
|
|
33,333 |
|
|
$ |
0.94 |
|
|
|
5/15/2017 |
|
Thomas J. Madden |
|
|
8/15/2000 |
|
|
|
35,000 |
|
|
|
|
|
|
$ |
1.92 |
|
|
|
8/14/2010 |
|
|
|
|
12/5/2001 |
|
|
|
344,673 |
|
|
|
|
|
|
$ |
0.91 |
|
|
|
12/4/2011 |
|
|
|
|
1/25/2002 |
|
|
|
15,000 |
|
|
|
|
|
|
$ |
0.84 |
|
|
|
1/24/2012 |
|
|
|
|
4/11/2003 |
|
|
|
82,000 |
|
|
|
|
|
|
$ |
0.39 |
|
|
|
4/10/2013 |
|
|
|
|
3/29/2004 |
|
|
|
43,000 |
|
|
|
|
|
|
$ |
1.61 |
|
|
|
3/28/2014 |
|
|
|
|
4/5/2005 |
|
|
|
30,000 |
|
|
|
6,000 |
|
|
$ |
2.57 |
|
|
|
4/4/2015 |
|
|
|
|
5/16/2007 |
|
|
|
3,333 |
|
|
|
16,667 |
|
|
$ |
0.94 |
|
|
|
5/15/2017 |
|
Cindy Almond |
|
|
8/15/2000 |
|
|
|
30,000 |
|
|
|
|
|
|
$ |
1.92 |
|
|
|
8/14/2010 |
|
|
|
|
12/5/2001 |
|
|
|
33,618 |
|
|
|
|
|
|
$ |
0.91 |
|
|
|
12/4/2011 |
|
|
|
|
1/25/2002 |
|
|
|
63,000 |
|
|
|
|
|
|
$ |
0.84 |
|
|
|
1/24/2012 |
|
|
|
|
4/11/2003 |
|
|
|
60,000 |
|
|
|
|
|
|
$ |
0.39 |
|
|
|
4/10/2013 |
|
|
|
|
3/29/2004 |
|
|
|
43,000 |
|
|
|
|
|
|
$ |
1.61 |
|
|
|
3/28/2014 |
|
|
|
|
4/5/2005 |
|
|
|
30,000 |
|
|
|
6,000 |
|
|
$ |
2.57 |
|
|
|
4/4/2015 |
|
|
|
|
5/16/2007 |
|
|
|
3,333 |
|
|
|
16,667 |
|
|
$ |
0.94 |
|
|
|
5/15/2017 |
|
|
|
|
(1) |
|
The Options Awards listed above are generally subject to a quarterly vesting schedule over a
three-year period commencing on the date of grant. |
EMPLOYMENT, CHANGE OF CONTROL AND TERMINATION ARRANGEMENTS FOR EXECUTIVES
The Company and certain of the named executive officers have entered into Change in Control
and Severance Agreements. Under these agreements, and in consideration of certain commitments of
the officer to continue employment, upon the occurrence of a change in control, all unvested
options held by the officer immediately vest and become exercisable. During the two year period
following a change in control (whenever occurring), if the employment of the officer is terminated
(other than for cause, death, disability or retirement), or if there is a material adverse change
in the officers responsibilities, compensation or benefits to which the officer does not consent,
then, in each case, the officer is entitled to receive from the Company (1) all salary and bonus
amounts accrued through the date of termination, (2) a severance payment equal to twice the
officers salary and bonus amount (which is defined as the greater of (i) the highest annual
incentive bonus earned by the executive during the last three completed fiscal years or (ii) the
executives then target bonus, if any) and (3) continuation for two years
12
of all employee benefits (unless otherwise provided by a subsequent employer). If applicable, the
officer is also entitled to receive an additional payment to compensate the officer for any
additional excise tax liability arising by reason of the receipt of such severance or bonus
payment. The agreement terminates upon the voluntary resignation or termination of employment by
the officer.
The Company and certain of the executive officers named above have also entered into Executive
Severance Agreements. Under these agreements, and in consideration for, among other things, the
agreement by the executive to be bound by a restrictive covenant, in the event of the termination
of the employment of the executive other than for cause (including a material adverse change in the
officers responsibilities or the failure to re-nominate to the Board of Directors any executive
also serving on the Board), the executive is entitled to a severance payment, based on the
executives years of service, up to a maximum of twice the executives salary and the bonus, if
any, that the executive would have received for such fiscal year (based upon the executives
targeted bonus amount and the Companys actual results for such fiscal year), payable in monthly
installments over a period not to exceed two years (based on the executives years of service) In
addition, in the event of termination without cause, the executive is entitled to a continuation of
benefits and to the accelerated vesting of all options then held by the executive. The severance
payment and benefits are reduced by any compensation or benefits received by the executive from any
subsequent employer.
The following sets forth the estimated amounts payable under the foregoing agreements assuming
that all relevant triggering events thereunder were effective as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause or |
|
|
Voluntary or |
|
Name and |
|
|
|
Qualifying |
|
|
For |
|
Principle Position |
|
Potential Executive Benefits and Payments |
|
Termination |
|
|
Cause Termination |
|
|
Mark C. Layton |
|
Base Salary (1) |
|
$ |
1,102,630 |
|
|
$ |
|
|
Chairman,President, |
|
Bonus Payable (2) |
|
|
78,000 |
|
|
|
|
|
Chief Executive Officer |
|
Medical & Life Insurance Benefits (3) |
|
|
61,008 |
|
|
|
|
|
|
|
Automobile Benefits (4) |
|
|
54,557 |
|
|
|
|
|
|
|
Club Dues (5) |
|
|
73,861 |
|
|
|
|
|
|
|
Base Salary accrued but not paid (6) |
|
|
24,167 |
|
|
|
24,167 |
|
|
|
Bonus accrued but not paid (7) |
|
|
19,000 |
|
|
|
19,000 |
|
|
|
Income Tax Preparation (8) |
|
|
11,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Severance |
|
$ |
1,424,323 |
|
|
$ |
43,167 |
|
|
|
|
|
|
|
|
|
|
Steven S. Graham |
|
Base Salary (1) |
|
$ |
532,630 |
|
|
$ |
|
|
Executive Vice President- |
|
Bonus Payable (2) |
|
|
74,000 |
|
|
|
|
|
Chief
Technology Officer |
|
Medical & Life Insurance Benefits (3) |
|
|
50,793 |
|
|
|
|
|
|
|
Automobile Benefits (4) |
|
|
25,265 |
|
|
|
|
|
|
|
Base Salary accrued but not paid (6) |
|
|
11,674 |
|
|
|
11,674 |
|
|
|
Bonus accrued but not paid (7) |
|
|
19,000 |
|
|
|
19,000 |
|
|
|
Income Tax Preparation (8) |
|
|
2,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Severance |
|
$ |
715,762 |
|
|
$ |
30,674 |
|
|
|
|
|
|
|
|
|
|
Michael C. Willoughby |
|
Base Salary (1) |
|
$ |
658,630 |
|
|
$ |
|
|
Executive Vice President - |
|
Bonus Payable (2) |
|
|
78,000 |
|
|
|
|
|
Chief
Information Officer |
|
Medical & Life Insurance Benefits (3) |
|
|
44,688 |
|
|
|
|
|
|
|
Automobile Benefits (4) |
|
|
30,408 |
|
|
|
|
|
|
|
Base Salary accrued but not paid (6) |
|
|
14,436 |
|
|
|
14,436 |
|
|
|
Bonus accrued but not paid (7) |
|
|
19,000 |
|
|
|
19,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Severance |
|
$ |
845,162 |
|
|
$ |
33,436 |
|
|
|
|
|
|
|
|
|
|
Thomas J. Madden |
|
Base Salary (1) |
|
$ |
614,630 |
|
|
$ |
|
|
Executive Vice President - |
|
Bonus Payable (2) |
|
|
78,000 |
|
|
|
|
|
Chief Financial Officer |
|
Medical & Life Insurance Benefits (3) |
|
|
44,798 |
|
|
|
|
|
|
|
Automobile Benefits (4) |
|
|
26,984 |
|
|
|
|
|
|
|
Club Dues (5) |
|
|
15,328 |
|
|
|
|
|
|
|
Base Salary accrued but not paid (6) |
|
|
13,471 |
|
|
|
13,471 |
|
|
|
Bonus accrued but not paid (7) |
|
|
19,000 |
|
|
|
19,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Severance |
|
$ |
812,211 |
|
|
$ |
32,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Base salary is a maximum of two times the base salary being earned as of December 31,
2007 |
|
(2) |
|
Bonus payable is a maximum of two times the amount of bonus earned as of December 31,
2007 |
13
|
|
|
(3) |
|
Represents a maximum of two years worth of COBRA health, dental and life insurance
premiums as incurred by each executive |
|
(4) |
|
Includes a maximum of two years of automobile related expenses as incurred by each
executive |
|
(5) |
|
Represents a maximum of two years worth of club dues and memberships as incurred by
each executive |
|
(6) |
|
Represents the amount of salary payable as of
December 31, 2007 |
|
(7) |
|
Represents the amount of bonus payable as of December 31,
2007 |
|
(8) |
|
Represents the amount of income tax preparation fees paid as of December 31, 2007. |
2007 DIRECTOR COMPENSATION
The following table sets forth the compensation earned by non-employee Directors for their
service on the Board of Directors and its committees, as applicable, during the year ended
December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
Option |
|
|
|
|
Paid in Cash |
|
Awards (1) |
|
Total |
David I. Beatson |
|
$ |
29,000 |
|
|
$ |
11,795 |
(2) |
|
$ |
40,795 |
|
|
James F. Reilly |
|
|
29,000 |
|
|
|
11,795 |
(3) |
|
$ |
40,795 |
|
|
Dr. Neil W. Jacobs |
|
|
25,000 |
|
|
|
14,541 |
(4) |
|
$ |
39,541 |
|
|
Timothy M. Murray |
|
|
20,000 |
|
|
|
11,795 |
(5) |
|
$ |
31,795 |
|
|
|
|
(1) |
|
The values of the options in this column are the expense amounts for grants made in
2007 and prior years which continue to be expensed and recognized for financial statement
reporting purposes in fiscal year 2007 in accordance with FAS 123(R) and were estimated
using a Black-Scholes pricing model, which incorporates a range of assumptions for inputs
between the grant date of the option and the date of expiration. The assumptions used and
the resulting weighted average value of stock options granted during 2007 are summarized in
Note 5 to the Companys consolidated financial statements included in its Annual Report on
Form 10-K for the year ended December 31, 2007. There can be no assurance that the FAS
123(R) amounts will be realized. |
|
(2) |
|
Mr. Beatson had 95,000 options outstanding as of December 31, 2007. |
|
(3) |
|
Mr. Reilly had 85,000 options outstanding as of December 31, 2007. |
|
(4) |
|
Dr. Jacobs had 95,000 options outstanding as of December 31, 2007. |
|
(5) |
|
Mr. Murray had 156,167 options outstanding as of December 31, 2007. |
In June 1999 the Company adopted a Non-Employee Director Stock Option and Retainer Plan
(the Non-Employee Director Plan). As of the date of the adoption of the Non-Employee Director
Plan, each then non-employee director received an option to purchase 35,000 shares of common stock.
As amended in June 2007, the Non-Employee Director Plan also provides for the issuance to each
non-employee director of options to purchase 20,000 shares of common stock as of the date of each
annual meeting of stockholders. During calendar year 2007, each non-employee director received an
option to purchase 20,000 shares of common stock with an exercise price of $0.95 per share. In
addition, currently, non-employee directors receive an annual retainer fee of $10,000, payable
quarterly, a director meeting fee of $2,500 for each board meeting attended and a committee meeting
fee of $1,500 for each quarterly Audit Committee meeting attended and also receive fees for
participation in certain periodic conference calls. The Non-Employee Director Plan permits the
payment of such non-employee director retainer fees in shares of Common Stock in lieu of cash.
All options to be issued to non-employee directors under the Non-Employee Director Plan are
non-qualified options for federal income tax purposes and have an exercise price equal to the fair
market value of a share of common stock as of the date of the annual meeting upon which such option
is granted. All options have a ten-year term and are subject to a one-year vesting schedule.
Generally, unless the Non-Employee Director Plan administrator otherwise provides, options are
non-transferable other than by will or the laws of descent and distribution. At the time of any
merger, consolidation, reorganization, recapitalization, stock dividend, stock split, or other
change in the corporate structure or capitalization affecting the Companys common stock, the
Non-Employee Director Plan administrator will make appropriate adjustments to the exercise price,
number and kind of shares to be issued under the Non-Employee Director Plan and any outstanding
options. Unless terminated earlier, the Non-Employee Director Plan will terminate ten years from
its adoption, and no stock options will be granted after the Non-Employee Director Plan terminates.
The Board of Directors has the authority to amend, modify, suspend or terminate the Non-Employee
Director Plan at any time.
14
Directors who are also employees of the Company or any of its subsidiaries receive no
remuneration for serving as directors or Committee members.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Messrs. Murray and Reilly, neither of
whom are employees of the Company and both of whom are considered independent directors under the
applicable NASDAQ rules. There were no interlocks or insider participation between any member of
the Board or Compensation Committee and any member of the board of the directors or Compensation
Committee of another company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the disclosures set
forth in this Form 10-K/A under the heading Compensation Discussion and Analysis. Based on the
reviews and discussions referred to above, we recommended to the Board of Directors that the
disclosures set forth in this Form 10-K/A under the heading Compensation Discussion and Analysis
be included in this Form 10-K/A and incorporated by reference into the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2007.
By the Compensation Committee: Timothy M. Murray and James F. Reilly
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
The following table sets forth as of April 16, 2008, certain information regarding the
beneficial ownership of the Companys Common Stock by (i) each person who is known to the Company
to beneficially own more than 5% of the Common Stock, (ii) each of the Directors and named
executive officers of the Company individually and (iii) the Directors and executive officers of
the Company as a group. The information contained in this table reflects beneficial ownership as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the Exchange Act) and,
as such, also includes shares acquirable within 60 days. Unless otherwise indicated, the
stockholders identified in this table have sole voting and investment power with respect to the
shares owned of record by them.
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Name and Address of Beneficial Owner |
|
of Shares |
|
Percent (1) |
Austin W. Marxe and David M. Greenhouse (2)
527 Madison Avenue, Suite 2600
New York, NY 10022 |
|
|
6,984,278 |
|
|
|
15.0 |
% |
Mark C. Layton (3) |
|
|
1,410,349 |
|
|
|
3.0 |
% |
Steven S. Graham (3) |
|
|
862,975 |
|
|
|
1.8 |
% |
Thomas J. Madden (3) |
|
|
668,953 |
|
|
|
1.4 |
% |
Timothy M. Murray (3) |
|
|
242,256 |
|
|
|
* |
|
Michael C. Willoughby (3) |
|
|
251,278 |
|
|
|
* |
|
Cindy Almond (3) |
|
|
273,535 |
|
|
|
* |
|
James F. Reilly (3) |
|
|
171,405 |
|
|
|
* |
|
Dr. Neil W. Jacobs (3) |
|
|
115,312 |
|
|
|
* |
|
David I. Beatson (3) |
|
|
95,000 |
|
|
|
* |
|
All directors and executive officers
As a group (9 persons) (4) |
|
|
4,091,063 |
|
|
|
8.23 |
% |
|
|
|
* |
|
Represents less than 1% |
|
(1) |
|
This table is based on 46,579,564 shares of Common Stock outstanding on April 16, 2008. |
|
(2) |
|
Based on a February 13, 2008 Schedule 13G joint filing by Austin W. Marxe (Marxe) and
David M. Greenhouse (Greenhouse). Marxe and Greenhouse share sole voting and investment
power over 1,090,869 common shares owned by Special |
15
|
|
|
|
Situations Cayman Fund, L.P., 438,015
common shares owned by Special Situations Fund III, L.P., 3,904,755 common shares owned by
Special Situations Fund III QP, L.P., 1,550,639 common shares owned by Special Situations
Private Equity Fund, L.P. |
|
|
(3) |
|
Includes the following outstanding options to purchase the specified number of shares
of Common Stock, which are fully vested and exercisable: Mark C. Layton 812,056; Steven
S. Graham 800,949; Thomas J. Madden 562,340; Timothy M. Murray 156,167; Michael C.
Willoughby 249,333; Cindy Almond 272,285; James F. Reilly 85,000; Dr. Neil W.
Jacobs 95,000 and David I. Beatson 95,000. |
|
|
(4) |
|
Includes outstanding options to purchase 3,128,130 shares of Common Stock, which are
fully vested and exercisable. |
The following table summarizes information with respect to equity compensation plans under
which equity securities of the registrant are authorized for issuance as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
Weighted-average |
|
|
Number of |
|
|
|
to be issued upon |
|
|
exercise price of |
|
|
securities |
|
|
|
exercise of |
|
|
outstanding |
|
|
remaining |
|
|
|
outstanding options |
|
|
options and |
|
|
available for |
|
Plan category (1) |
|
and warrants |
|
|
warrants |
|
|
future issuance |
|
Equity compensation
plans approved by
security holders |
|
|
5,680,698 |
|
|
$ |
1.25 |
|
|
|
2,484,947 |
|
Equity compensation
plans not approved
by security holders |
|
|
429,219 |
|
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
6,109,917 |
|
|
|
|
|
|
|
2,484,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
See Note 5 to the Consolidated Financial Statements included in the Annual Report on
Form 10K for the year ended December 31, 2007 for more detailed information regarding the
registrants equity compensation plans. |
Item 13. Certain Relationship and Related Transactions and Director Independence
Director Independence
The Board of Directors has determined that, other than Mr. Layton, each director is
independent within the meaning of applicable Securities and Exchange Commission (SEC) rules and
NASD listing standards. The independent directors are able to and generally meet in executive
session without the Companys management at each regularly scheduled Board meeting. In addition,
our audit committee, compensation committee and nominating committee are comprised solely of
independent directors.
Item 14. Principal Accounting Fees and Services
KPMG LLP served as the Companys independent auditors for the fiscal year ending December 31,
2007. The following table sets forth (i) the aggregate fees billed by KPMG LLP relating to the audit
of the 2007 and 2006 consolidated financial statements and (ii) the fees for other professional
services billed by KPMG LLP in connection with services rendered during the previous two fiscal
years:
|
|
|
|
|
|
|
|
|
Fee Type |
|
2007 |
|
|
2006 |
|
Audit fees (a) |
|
$ |
422,000 |
|
|
$ |
634,000 |
|
Audit-related fees (b) |
|
|
53,000 |
|
|
|
80,000 |
|
Tax fees (c) |
|
|
196,000 |
|
|
|
118,000 |
|
(a) |
|
Includes fees for professional services rendered in connection with the audit
of the annual financial statements, reviews of the quarterly financial statements and
fees paid for the audit of the Companys subsidiary, Supplies Distributors, to satisfy
requirements of its senior debt agreements and services rendered in connection with our
S-3 filing dated July 14, 2006. |
|
(b) |
|
Consists of aggregate fees billed for assurance services provided in connection
with reports on certain internal controls under Statement of Auditing Standards No. 70. |
|
(c) |
|
Includes fees paid for tax compliance, tax advice and related tax services. |
The Audit Committee has considered whether the provision of the services described in notes
(b) and (c) above is compatible with maintaining KPMG LLPs independence.
16
Pre-Approval Policies and Procedures
The Audit Committee pre-approves all audit and permissible non-audit services provided by the
Companys independent auditors. These services may include audit services, audit related services,
tax and other services. Pre-approval is generally provided for up to one year, and any
pre-approval is detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent auditors and management are required to periodically
report to the Audit Committee regarding the extent of services provided by the independent auditors
in accordance with this pre-approval and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case by case basis. During 2006 and 2007,
all audit, non-audit and tax services provided by KPMG LLP were pre-approved by the Audit Committee
in accordance with this policy.
PART IV
Item 15. Exhibits and Financial Statement Schedules
|
|
|
Exhibit |
|
|
Number |
|
Description of Exhibits |
|
31.1 *
|
|
Certifications of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350 |
|
|
|
31.2 *
|
|
Certifications of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350 |
|
|
|
32.1 *
|
|
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
*
Filed herewith
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
|
|
|
|
|
|
|
|
By: |
/s/ THOMAS J. MADDEN
|
|
|
|
Thomas J. Madden, |
|
|
|
Executive Vice President and
Chief Financial and Accounting Officer |
|
|
Date: April 29, 2008
18
exv31w1
EXHIBIT 31.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
I, Mark Layton, certify that:
1. I have reviewed this report on Form 10-K/A of PFSweb, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the periods covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the registrant and have:
a) |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
b) |
|
Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and |
c) |
|
Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting. |
5. The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent function):
a) |
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All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize, and report financial information; and |
b) |
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Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting. |
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Date:
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April 29, 2008 |
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By:
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/s/ Mark C. Layton |
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Chief Executive Officer |
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exv31w2
EXHIBIT 31.2
CERTIFICATIONS OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
I, Tom Madden, certify that:
1. I have reviewed this report on Form 10-K/A of PFSweb, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the periods covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the registrant and have:
a) |
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Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
b) |
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Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and |
c) |
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Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting. |
5. The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent function):
a) |
|
All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize, and report financial information; and |
b) |
|
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting. |
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Date:
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April 29, 2008 |
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By:
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/s/ Thomas J. Madden |
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Chief Financial Officer |
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exv32w1
EXHIBIT 32.1
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section
1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of PFSweb, Inc.
(the Company), does hereby certify that:
The Annual Report on Form 10-K/A for the year ended December 31, 2007 (the Form 10-K/A) of
the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the
Securities Exchange Act of 1934 and the information contained in the Form 10-K/A fairly presents,
in all material respects, the financial condition and results of operations of the Company as of,
and for, the periods presented in the Form 10-K/A.
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April 29, 2008
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/s/ Mark C. Layton |
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Mark C. Layton
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Chief Executive Officer |
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April 29, 2008
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/s/ Thomas J. Madden |
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Thomas J. Madden
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Chief Financial Officer |
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The foregoing certification is being furnished as an exhibit to the Form 10-K/A pursuant to Item
601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being
filed as part of the Form 10-K/A for purposes of Section 18 of the Securities Exchange Act of 1934,
as whether made before or after the date hereof, regardless of any general incorporation language
in such filing.
A signed original of this written statement required by Section 906 has been provided to PFSweb,
Inc. and will be retained by PFSweb, Inc. and furnished to the Securities and Exchange Commission
or its staff upon request.