def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
Mobility Electronics, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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MOBILITY
ELECTRONICS, INC.
17800 North Perimeter Drive,
Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
April 26,
2007
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Mobility Electronics, Inc., a Delaware
corporation, to be held at 10:00 a.m., local time, on
Monday, June 11, 2007 at the Scottsdale Marriott at
McDowell Mountains, 16770 North Perimeter Drive, Scottsdale,
Arizona 85260. The attached Notice of Annual Meeting and Proxy
Statement fully describe the formal business to be transacted at
the meeting, which includes the election of one director to
serve until the annual meeting of stockholders in 2010 and such
other matters that shall properly come before the meeting or any
adjournments thereof. We have also enclosed a copy of our Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2006.
Our directors and officers will be present to help host the
meeting and to respond to any questions that our stockholders
may have. I hope that you will be able to attend.
Our Board of Directors believes that a favorable vote on the
matter to be considered at the meeting is in the best interest
of Mobility and our stockholders and unanimously recommends a
vote FOR such matter. Accordingly, we urge you to
review the attached material carefully and to return the
enclosed proxy card promptly. Whether or not you plan to attend
the meeting, please complete, sign, date and return your proxy
card in the enclosed envelope. If you attend the meeting, you
may vote in person if you wish, even though you have previously
returned your proxy card. If you hold your shares through an
account with a brokerage firm, bank or other nominee, please
follow the instructions you receive from them to vote your
shares.
On behalf of your Board of Directors, thank you for your support.
Sincerely,
Charles R. Mollo
Chairman of the Board, President and
Chief Executive Officer
MOBILITY
ELECTRONICS, INC.
17800 North Perimeter Drive,
Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 11, 2007
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Mobility Electronics, Inc. (the Company) will be
held at 10:00 a.m., local time, on Monday, June 11,
2007 at the Scottsdale Marriott at McDowell Mountains, 16770
North Perimeter Drive, Scottsdale, Arizona 85260, for the
following purposes:
1. to elect one member of the Board of Directors, for a
three-year term, to serve until the annual meeting of
stockholders in 2010; and
2. to transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board has fixed the close of business on April 20, 2007
as the record date for determining stockholders entitled to
notice of, and to vote at, the meeting or any adjournments
thereof.
A list of stockholders entitled to vote at the meeting will be
open to examination by any stockholder, for any purpose germane
to the meeting, at the location of the meeting on June 11,
2007 and during ordinary business hours for a period of at least
ten days prior to the meeting at the Companys offices
located at 17800 North Perimeter Drive, Suite 200,
Scottsdale, Arizona 85255.
Information concerning the matters to be acted upon at the
meeting is more fully described in the accompanying Proxy
Statement.
Your vote is important. Whether or not you expect to attend
the meeting, please complete, date and sign the enclosed proxy
card and mail it promptly to assure that your shares are
represented at the meeting. A return envelope (which is postage
prepaid if mailed in the United States) is provided. Even if you
have given your proxy, you may still vote in person if you
attend the meeting. If you hold shares through an account with a
brokerage firm, bank or other nominee, please follow the
instructions you receive from them to vote your shares.
By Order of the Board of Directors,
Brian M. Roberts
Secretary
Scottsdale, Arizona
April 26, 2007
TABLE OF
CONTENTS
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MOBILITY
ELECTRONICS, INC.
17800 North Perimeter Drive,
Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
PROXY
STATEMENT
FOR
ANNUAL MEETING OF
STOCKHOLDERS
To Be Held June 11,
2007
This proxy statement and the accompanying proxy are first being
mailed on or about April 26, 2007 to the holders of the
common stock of Mobility Electronics, Inc., a Delaware
corporation, by the Board of Directors to solicit proxies for
use at the annual meeting of stockholders to be held at
10:00 a.m., local time, on June 11, 2007 at the
Scottsdale Marriott at McDowell Mountains, 16770 North Perimeter
Drive, Scottsdale, Arizona 85260, or at such other time and
place to which the meeting may be adjourned.
At the meeting, our stockholders will consider and vote upon the
following matters:
1. the election of one member of the Board of Directors,
which will consist of a total of five directors, to serve until
the annual meeting of stockholders in 2010; and
2. such other business as may properly come before the
meeting or any adjournments thereof.
REVOCABILITY
OF PROXIES
A proxy may be revoked before it is exercised by delivering
written notice of such revocation to Computershare Investor
Services, 350 Indiana Street, Suite 800, Golden CO 80401,
Attention: Proxy Department, which revocation must be received
before June 11, 2007. If notice of revocation is not
received by such date, a stockholder may nevertheless revoke a
proxy by attending the meeting and voting in person. If your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, please follow the instructions
you receive from them to vote your shares.
RECORD
DATE AND VOTING SECURITIES
The Board has set the record date for determining the
stockholders entitled to vote at the meeting as of the close of
business on April 20, 2007. Mobilitys common stock,
par value $0.01 per share, constitutes the only class of
securities entitled to notice of, or to vote at, the meeting. As
of the record date, we had 31,804,992 shares of common
stock issued and outstanding. A holder of common stock on the
record date shall be entitled to cast one vote for each share of
common stock registered in his or her name.
QUORUM
AND VOTING
Our bylaws require the presence at the meeting, in person or
represented by proxy, of the holders of a majority of the shares
of our common stock issued and outstanding and entitled to vote
to constitute a quorum to transact business. Abstentions and
broker non-votes (shares held by a broker or nominee
that does not have the authority, either express or
discretionary, to vote on a particular matter) will be treated
as shares that are present for purposes of determining the
presence of a quorum. In the election of directors, abstentions
will have no effect on the outcome of the vote; however, in the
votes on the other matters that properly come before the meeting
abstentions will have the effect of votes against
the proposals. Broker non-votes are not considered to be shares
entitled to vote and will not affect the outcome of any vote at
the meeting.
If a quorum is present, in order to be elected as a director, a
nominee must receive the affirmative vote of the holders of a
plurality of the shares of common stock present, either in
person or by proxy, and entitled to vote on the election of
directors. If a quorum is present, approval of all other matters
that properly come before the meeting
requires the affirmative vote of the holders of a majority of
the shares of common stock present, either in person or by
proxy, and entitled to vote on the matter presented at the
meeting.
Unless contrary instructions are indicated on the enclosed
proxy, all shares represented by valid proxies received pursuant
to this solicitation (and which have not been revoked in
accordance with the procedures set forth above) will be voted
(i) FOR the election of the nominee for director
named under Proposal No. 1, and (ii) in
accordance with the best judgment of the named proxies on any
other matters properly brought before the meeting. In the event
you specify a different choice by means of the enclosed proxy,
your shares will be voted in accordance with those instructions.
If sufficient votes for approval of the matters to be considered
at the annual meeting have not been received prior to the
meeting date, Mobility may postpone or adjourn the annual
meeting in order to solicit additional votes. The form of proxy
being solicited by this proxy statement provides the authority
for the proxy holders, in their discretion, to vote the
stockholders shares with respect to a postponement or
adjournment of the annual meeting. At any postponed or adjourned
meeting, proxies received pursuant to this proxy statement will
be voted in the same manner described in this proxy statement
with respect to the original meeting.
Under the Delaware General Corporation Law, stockholders do not
have any rights of appraisal or similar rights of dissenters
with respect to the proposals set forth in this proxy statement.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The Board has nominated Larry M. Carr for re-election to the
Board as a Class I director at the meeting, to serve until
the 2010 annual meeting of stockholders and until his successor
has been elected and qualified. Unless otherwise directed, the
persons named in the proxy intend to vote all proxies FOR
the election of Mr. Carr to the Board. The nominee has
consented to serve as a director of the Company if elected. If,
at the time of the meeting, the nominee is unable or declines to
serve as a director, the discretionary authority provided in the
enclosed proxy will be exercised to vote for a substitute
candidate designated by the Board. The Board has no reason to
believe that the nominee will be unable or will decline to serve
as a director.
Vote
Required
In order to be elected as a director, a nominee must receive the
affirmative vote of a plurality of the votes of the shares of
common stock present, either in person or by proxy, and entitled
to vote on the election of directors. The Board recommends a
vote FOR the election of Mr. Carr to the Board.
Board of
Directors
Our Board has authorized seven director positions and our Board
currently consists of six members. One of our current directors,
Mr. Stead, serves as a Class I director whose term
will expire at the meeting. Mr. Stead has indicated that he
will retire from the Board at the end of his current term. As a
result, assuming Mr. Carr is elected at the meeting, our
Board will consist of only five members following the meeting.
Although there is currently one vacancy on the Board, and there
will be two vacancies following the meeting, you may not vote
for a greater number of persons than the number of nominees
named in this proxy statement. The Board, along with the
assistance of the Corporate Governance and Nominating Committee,
has considered, and continues to consider, whether to fill the
vacancies on the Board. As of the date of this proxy statement,
the Board has determined not to fill the vacancies. In the event
any one or more appointments are made, however, each newly
appointed director will be elected by the Board to serve on one
of the three classes of our Board until that class is next up
for re-election by our stockholders.
Each director holds office until the directors term
expires, the director resigns, is removed or dies, or until the
directors successor is duly elected and qualified. Our
bylaws provide for a classified Board. In accordance with the
2
terms of our bylaws, our Board is divided into three classes
whose terms expire at different times. The three classes are
currently comprised of the following directors:
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Class I consists of Jerre L. Stead and Larry M. Carr, who,
if elected at the meeting, will serve until the annual meeting
of stockholders to be held in 2010. Mr. Carr is a nominee
under this Proposal No. 1. If Mr. Carr is
elected, there will be one vacancy in Class I after the
annual meeting.
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Class II consists of Jeffrey R. Harris and William O. Hunt,
who will serve until the annual meeting of stockholders to be
held in 2008.
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Class III consists of Charles R. Mollo and Robert W.
Shaner, who will serve until the annual meeting of stockholders
to be held in 2009.
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At each annual meeting of stockholders, the successors to
directors whose terms will then expire will be elected to serve
from the time of election and qualification until the third
annual meeting following election and until their successors
have been duly elected and qualified. Any additional
directorships resulting from an increase in the number of
directors will be distributed among the three classes so that,
as nearly as possible, each class will consist of an equal
number of directors.
Nominees,
Continuing Directors and Executive Officers
Set forth below is information furnished to the Company by the
director nominees, each incumbent director whose terms will
continue following the meeting, and each executive officer who
is not a director. There are no family relationships among any
directors or executive officers of the Company. None of the
corporations or other organizations referenced in the
biographical information below is a parent, subsidiary or other
affiliate of the Company.
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Nominee or Continuing Director
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Name
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Age
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and Term/ Executive Officer
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Charles R. Mollo
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Chairman of the Board, President
and Chief Executive Officer and Director with term expiring in
2009
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Larry M. Carr(1)(2)
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Nominee with term expiring in 2010
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Jeffrey R. Harris(1)(2)
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Director with term expiring in 2008
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William O. Hunt(1)(3)(4)
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Director with term expiring in 2008
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Robert W. Shaner(2)(3)
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Director with term expiring in 2009
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Joan W. Brubacher(5)
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Executive Vice President, Chief
Financial Officer and Treasurer
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Jonathan S. Downer(5)
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Senior Vice President, Worldwide
Sales and Distribution
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Brian M. Roberts(5)
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Vice President, General Counsel
and Secretary
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Darryl S. Baker(5)
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Vice President, Chief Accounting
Officer and Controller
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Member of Audit Committee |
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Member of Corporate Governance and Nominating Committee |
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Lead Independent Director |
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Executive Officer |
Charles R. Mollo is one of our founders and has been
Chief Executive Officer and Chairman of the Board of Directors
since our formation in May 1995, and President since July 1999,
having previously served as President between March 1997 and
June 1998. From September 1992 to May 1995, Mr. Mollo was
the director of the Wireless Telephone Products Division of
Andrew Corporation, a communications equipment services and
systems company. From September 1986 to July 1992,
Mr. Mollo was the Vice President of Corporate Development
of Alliance
3
Telecommunications Corporation, a wireless telecommunications
company. Between 1980 and 1986, Mr. Mollo was a Vice
President of Meadows Resources, Inc., where he managed a venture
capital and investment portfolio of approximately
$150 million. In the past, he has served on the boards of a
number of companies, including Alliance Telecommunications
Corporation. Mr. Mollo holds a bachelors degree in
Electrical Engineering from Manhattan College, a masters
degree in Electrical Engineering from Newark College of
Engineering, and an MBA from the University of New Mexico.
Larry M. Carr has been a director since September 2000
and is Chairman of the Corporate Governance and Nominating
Committee and a member of the Audit Committee. Mr. Carr has
served as Chairman of the Board of Simtrol, Inc., formerly Video
Conferencing Systems, Inc., a software company specializing in
device control and monitoring, since 1998, and has been a
director since 1993. Mr. Carr is also Chairman of the Board
of NurseCore Management Services, LLC, a temporary services
company in the healthcare industry, and a director of OHA
Financial, Inc.
Jeffrey R. Harris has been a director since September
1995 and is Chairman of the Audit Committee and a member of the
Corporate Governance and Nominating Committee. Mr. Harris
is a Business Facilitation Consultant, having retired in 2002
from Public Service Company of New Mexico, a public utility
company, where he worked since 1972, most recently as Director,
International Business Development. Mr. Harris is also
President of New Vistas Investment Corporation, a real estate
development and management company, President of New Horizons
Enterprises, Inc., a real estate investment and management
company, Vice President of Homes By New Vistas, a custom home
builder, and was a founder and principal of Bright Beginnings
Child Development Centers, a 15-center childcare chain in New
Mexico, until its sale in 1994.
William O. Hunt has been a director since December 1999
and is a member of the Compensation and Human Resources
Committee, and Audit Committee, and also currently serves as
Mobilitys lead independent director. From 1992 to 2001,
Mr. Hunt served as Chairman of the Board of Wireless
WebConnect!, Inc., a public access telecommunications firm, and
from 1992 to 1998 served as its Chief Executive Officer. From
1993 to 1996, Mr. Hunt served as Vice Chairman of the Board
of Hogan Systems, Inc., a leading supplier of application
software for the worldwide financial and banking industry, and
from 1990 to 1993 served as its Chairman. From 1986 to 1992,
Mr. Hunt served as Chairman of the Board, Chief Executive
Officer and President of Alliance Telecommunications
Corporation, a wireless telecommunications company. He is also
currently a director of Andrew Corporation, a global designer,
manufacturer, and supplier of communications equipment, services
and systems.
Robert W. Shaner has been a director since May 2004 and
is Chairman of the Compensation and Human Resources Committee
and a member of the Corporate Governance and Nominating
Committee. From December 2002 to September 2005, Mr. Shaner
served as a director of REMEC, Inc., a wireless equipment and
military product manufacturer, and from February 2004 to
September 2004, served as its Interim Chief Executive Officer.
From January 2001 to February 2003, Mr. Shaner served as
the president of Wireless Operations for Cingular Wireless, LLC,
a joint venture between the wireless divisions of SBC
Communications Inc. and BellSouth Corporation. From November
1999 to January 2001, Mr. Shaner served as President and
Chief Executive Officer of Pacific Bell Wireless and
Southwestern Bell Mobile Systems, providers of wireless
communication services to consumers and businesses.
Mr. Shaner served as the President and Chief Executive
Officer of Pacific Bell Wireless from August 1998 to November
1999. From March 1997 to July 1998, Mr. Shaner served as
president of SBCI Europe and Middle East for SBC International,
Inc. Prior to 1997, Mr. Shaner held various management
positions at Southwestern Bell Telephone/Telecom and Cellular
One. Mr. Shaner also currently serves as the Chairman of
the Board of Trustees of Central Methodist University and as a
director of Interdigital Communications Corporation, a designer,
developer and provider of advanced wireless technologies and
products that drive voice and data communications.
Executive
Officers
Joan W. Brubacher began working for us in 1998 as our
Senior Financial Analyst, was appointed Controller in 1999 and
promoted to Vice President in 2000. She was appointed to the
position of Vice President and Chief Financial Officer in 2001
and Executive Vice President and Chief Financial Officer in
2002. Prior to joining us, Ms. Brubacher served as Chief
Financial Officer for Phase Laser Systems, Inc., an electronics
development/
4
manufacturing firm. Previously, she served as Chief Financial
Officer and subsequently as Chief Operating Officer for Laserex,
Inc., a laser pointer manufacturing company. Ms. Brubacher
began her career with the international public accounting firm
Ernst & Whinney (now Ernst & Young) and holds
a bachelors degree in Business Administration with
concentration in Accounting from Kansas State University.
Jonathan S. Downer joined us in July 2006 as Senior Vice
President, Worldwide Sales and Distribution. Prior to joining
Mobility, Mr. Downer was employed by Motorola, Inc. for
approximately eleven years. During Mr. Downers tenure
at Motorola, he served as the General Manager, Americas for
Motorolas Companion Products division from June 2003 to
July 2006, the General Manager of the BellSouth/Cingular Account
for Motorola PCS from February 1999 to August 2000, and National
Sales Director for Motorola PCS (Canada) from October 1995 to
February 1999. Prior to joining Motorola, Mr. Downer served
as General Manager of the Mobile Communications division of
Robert Bosch Canada from June 1992 to October 1995.
Mr. Downer holds an MBA from Northwestern Universitys
Kellogg Graduate School of Management and a bachelors
degree in Business Administration from Ryerson University.
Brian M. Roberts joined us in 2003 as Corporate Counsel.
Mr. Roberts was appointed Secretary in December 2003,
General Counsel in May 2005, and Vice President in April 2006.
Prior to joining us, Mr. Roberts was an attorney with the
law firm of Snell & Wilmer LLP from September 1998 to
August 2003. Mr. Roberts holds a bachelors degree in
Business Administration and a law degree, both of which were
received from the University of Kansas.
Darryl S. Baker joined us in October 2001 as Controller.
Mr. Baker was appointed Vice President in May 2002 and was
appointed Chief Accounting Officer in April 2006. Prior to
joining Mobility, from 1997 to 2001, Mr. Baker served as
corporate controller for various publicly traded and
entrepreneurial companies, including SkyMall, an integrated
specialty retailer, and Integrated Information Systems, a
provider of secure integrated information solutions. Prior to
1997, Mr. Baker was an audit manager for Ernst &
Young. Mr. Baker currently serves as a member of the AeA
National Committee on Sarbanes-Oxley. Mr. Baker holds a
bachelors degree in Accountancy from the Marriott School
of Management at Brigham Young University and is a Certified
Public Accountant.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF MR. CARR TO THE BOARD OF DIRECTORS.
BOARD
COMMITTEES, INDEPENDENCE AND MEETING ATTENDANCE
Board and
Committee Independence
The Board of Directors has determined each of the following
directors to be an independent director as such term
is defined in Marketplace Rule 4200(a)(15) of the rules of
the The NASDAQ Global Market:
Larry M. Carr
Jeffrey R. Harris
William O. Hunt
Robert W. Shaner
Jerre L. Stead
In this proxy statement, these five directors are sometimes
referred to individually as an Independent Director
and collectively as the Independent Directors.
The Board of Directors has also determined that each member of
the Audit, Compensation and Human Resources, and Corporate
Governance and Nominating committees meets the independence
requirements applicable to those committees prescribed by the
rules of The NASDAQ Global Market, the Securities and Exchange
Commission and the Internal Revenue Service.
5
Meetings
of Independent Directors
The Independent Directors meet in executive session at least
twice annually. These meetings are chaired by the Lead
Independent Director, who is appointed by the Board on an annual
basis. Only Independent Directors are eligible to serve as the
Lead Independent Director. Mr. Hunt currently serves as
Lead Independent Director.
Board and
Committee Meetings
Our Board meets on a regularly scheduled basis to review
significant developments affecting the Company and to act on
matters requiring approval of the Board. It also holds special
meetings when an important matter requires action by the Board
between scheduled meetings. During 2006, the Board held twelve
meetings, the Compensation and Human Resources Committee held
five meetings, the Audit Committee held nine meetings, and the
Corporate Governance and Nominating Committee held three
meetings. During 2006, except for Jerre L. Stead who attended
eight of the twelve Board meetings, four of the five
Compensation and Human Resources Committee meetings, and one of
the three Corporate Governance and Nominating Committee
meetings, each member of the Board participated in at least 75%
of all Board and applicable committee meetings held during the
period for which he was a director.
Board
Committees
During 2006, the Board had three standing committees: the
Compensation and Human Resources Committee, the Audit Committee,
and the Corporate Governance and Nominating Committee. Each of
these committees has a written charter which is available on our
website at http://www.mobilityelectronics.com.
Audit Committee. The Companys Audit
Committee is a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the
Exchange Act. The Audit Committee of the Board consists of
Messrs. Harris (Chair), Carr and Hunt. The Audit Committee
aids management in the establishment and supervision of our
financial controls, evaluates the scope of the annual audit,
reviews audit results, makes recommendations to our Board
regarding the selection of our independent registered public
accounting firm, consults with management and our independent
registered public accounting firm prior to the presentation of
financial statements to stockholders and, as appropriate,
initiates inquiries into aspects of our financial affairs.
The Board has determined that each member of the Audit
Committee Messrs. Harris, Hunt and
Carr is an audit committee financial
expert as such term is defined in Item 407(d) of
Regulation S-K
promulgated by the Securities and Exchange Commission. The Board
of Directors has also determined that each member of the Audit
Committee is independent under the rules stated above.
Compensation and Human Resources
Committee. The Compensation and Human Resources
Committee of the Board, which we refer to as the Compensation
Committee, currently consists of Messrs. Shaner (Chair),
Hunt and Stead. The Board has not yet determined whether to
replace Mr. Steads position on the Compensation
Committee with another Independent Director following the
meeting. The Compensation Committee makes determinations
concerning salaries and incentive compensation for our executive
officers, directors and certain employees and consultants and
administers our 2004 Omnibus Long-Term Incentive Plan, our 2004
Non-Employee Director Long-Term Incentive Plan, our 1996
Long-Term Incentive Plan, our Employee Stock Purchase Plan, and
our incentive compensation program. The Board of Directors has
also determined that each member of the Compensation Committee
is independent under the rules stated above.
The Compensation Committees membership is determined by
the Board of Directors and during 2006 was composed of three
non-management directors. The Compensation Committee has the
authority to delegate any of its responsibilities to
subcommittees as the Compensation Committee may deem appropriate
in its sole discretion. During 2006, the Compensation Committee
did not delegate any of its responsibilities. The Compensation
Committee engaged an outside consulting firm in 2004 and 2005,
Compensation Strategies, Inc., as a consultant to review
Mobilitys compensation practices and to compare the
compensation of Mobilitys executive officers and those of
a comparative group. The Compensation Committee did not engage
any consultant in 2006.
The Compensation Committee meets throughout the year in person
to perform its duties and periodically approves and adopts, or
makes recommendations to the Board for, the Companys
compensation decisions
6
(including the approval of grants of restricted stock units to
our named executive officers). The CEO and the General Counsel
attend regular Committee meetings (each meeting typically
concludes with an executive session during which only the
Committee members are present).
For more information on the processes and procedures for the
consideration and determination of executive compensation,
please refer to the discussion under Executive
Compensation Compensation Discussion and
Analysis Our Compensation Committee.
Corporate Governance and Nominating
Committee. The Corporate Governance and
Nominating Committee of the Board, which we refer to as the
Nominating Committee, consists of Messrs. Carr (Chair),
Harris, Shaner and Stead. The Board has not yet determined
whether to replace Mr. Steads position on the
Nominating Committee with another Independent Director following
the meeting. The Nominating Committees role is to assist
the Board in identifying qualified individuals to become members
of the Board, in determining the composition of the Board and
its committees, in monitoring a process to assess Board
effectiveness and in developing and implementing the
Companys corporate governance policies and practices. The
Board of Directors has also determined that each member of the
Nominating Committee is independent under the rules stated above.
Director
Nominations Policy
The Companys Board of Directors has adopted a Director
Nominations Policy. The purpose of the Nominations Policy is to
describe the process by which candidates are selected for
possible inclusion in the Companys recommended slate of
director nominees (Candidates). The Nominations
Policy is administered by the Nominating Committee of the Board.
Minimum
Criteria for Board Members
Each Candidate must possess at least the following specific
minimum qualifications:
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Each Candidate shall be prepared to represent the best interests
of all of the Companys stockholders.
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Each Candidate shall be an individual who has demonstrated
integrity and ethics in his or her personal and professional
life and shall have established a record of professional
accomplishment in his or her chosen field.
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Each Candidate shall be prepared to participate fully in Board
activities, including active membership on at least one Board
committee and attendance at, and active participation in,
meetings of the Board and the committee or committees of which
he or she is a member, and shall not have other personal or
professional commitments that would, in the Nominating
Committees sole judgment, interfere with or limit his or
her ability to do so.
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Each Candidate shall be willing to make, and shall be
financially capable of making, the required investment in the
Companys stock in the amount and within the timeframe
specified in the Companys Corporate Governance Guidelines.
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Desirable
Qualities and Skills
In addition, the Nominating Committee also considers it
desirable that Candidates possess the following qualities or
skills:
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Each Candidate should contribute positively to the existing
chemistry and collaborative culture among Board members.
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Each Candidate should possess professional and personal
experiences and expertise relevant to the Companys goal of
being the leading provider of innovative products and solutions
for the mobile electronics industry.
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7
Internal
Process for Identifying Candidates
The Nominating Committee has two primary methods for identifying
Candidates (other than those proposed by the Companys
stockholders, as discussed below). First, on a periodic basis,
the Nominating Committee solicits ideas for possible Candidates
from a number of sources members of the Board;
senior level Company executives; individuals personally
known to the members of the Board; and research, including
database and Internet searches.
Second, the Nominating Committee may from time to time use its
authority under its charter to retain at the Companys
expense one or more search firms to identify Candidates (and to
approve such firms fees and other retention terms). If the
Nominating Committee retains one or more search firms, they may
be asked to identify possible Candidates who meet the minimum
and desired qualifications expressed in the Nominations Policy,
to interview and screen such candidates (including conducting
appropriate background and reference checks), to act as a
liaison among the Board, the Nominating Committee and each
Candidate during the screening and evaluation process and
thereafter to be available for consultation as needed by the
Nominating Committee.
The Nominations Policy divides the process for Candidates
proposed by stockholders into the general nomination right of
all stockholders and proposals by Qualified
Stockholders (as defined below).
General
Nomination Right of All Stockholders
Any stockholder of the Company may nominate one or more persons
for election as a director of the Company at an annual meeting
of stockholders if the stockholder complies with the provisions
of
Rule 14a-8
of the Securities Exchange Act of 1934. In order for the
director nomination to be timely, a stockholders notice to
the Company must be delivered to the Companys principal
executive offices not less than 120 days prior to the
anniversary of the date of the Companys proxy statement
released to stockholders in connection with the previous
years annual meeting. In the event that the Company sets
an annual meeting date that is not within 30 days before or
after the date of the immediately preceding annual stockholders
meeting, notice by the stockholder must be received no later
than the close of business on the 10th day following the
day on which notice of the date of the annual meeting was mailed
or public disclosure of the date of the annual meeting was made,
whichever occurs first. The procedures described in the next
paragraph are meant to establish an additional means by which
certain stockholders can have access to the Companys
process for identifying and evaluating Candidates, and is not
meant to replace or limit stockholders general nomination
rights in any way.
Proposals
by Qualified Stockholders
In addition to those Candidates identified through its own
internal processes, in accordance with the Nominations Policy,
the Nominating Committee will evaluate a Candidate proposed by
any single stockholder or group of stockholders that has
beneficially owned more than 5% of the Common Stock for at least
one year (and will hold the required number of shares through
the annual stockholders meeting) and that satisfies the notice,
information and consent provisions in the Nominations Policy (a
Qualified Stockholder). All Candidates (whether
identified internally or by a Qualified Stockholder) who, after
evaluation, are then recommended by the Nominating Committee and
approved by the Board, will be included in the Companys
recommended slate of director nominees in its proxy statement.
In order to be considered by the Nominating Committee for an
upcoming annual meeting of stockholders, a notice from a
Qualified Stockholder regarding a potential Candidate must be
received by the Nominating Committee not less than 120 calendar
days before the anniversary of the date of the Companys
proxy statement released to stockholders in connection with the
previous years annual meeting. If the Company changes its
annual meeting date by more than 30 days from year to year,
the notice must be received by the Nominating Committee no later
than the close of business on the 10th day following the
day on which notice of the date of the upcoming annual meeting
is publicly disclosed.
Any Candidate proposed by a Qualified Stockholder must be
independent of the Qualified Stockholder in all respects as
determined by the Nominating Committee or by applicable law. Any
Candidate submitted by a Qualified
8
Stockholder must also meet the definition of an
independent director under the rules of the Nasdaq
National Market.
Evaluation
of Candidates
The Nominating Committee will consider all Candidates identified
through the processes described above, and will evaluate each of
them, including incumbents, based on the same criteria.
If, based on the Nominating Committees initial evaluation,
a Candidate continues to be of interest to the Nominating
Committee, a member of the Nominating Committee, the Chairman of
the Board or the chief executive officer will interview the
Candidate and communicate his or her evaluation to the
Nominating Committee members. Later reviews will be conducted by
other members of the Nominating Committee and senior management.
Ultimately, background and reference checks will be conducted
and the Nominating Committee will meet to finalize its list of
recommended Candidates for the Boards consideration.
Future
Revisions to the Nominations Policy
The Nominations Policy is intended to provide a flexible set of
guidelines for the effective functioning of the Companys
director nominations process. The Nominating Committee intends
to review the Nominations Policy at least annually and
anticipates that modifications will be necessary from time to
time as the Companys needs and circumstances evolve, and
as applicable legal or listing standards change. The Nominating
Committee may amend the Nominations Policy at any time, in which
case the most current version will be available on the
Companys web site at
http://www.mobilityelectronics.com.
AUDIT
COMMITTEE REPORT
The Audit Committee has reviewed and discussed our audited
consolidated financial statements with management. The Audit
Committee has also discussed the matters required to be
discussed by SAS 61, as amended, (Codification of Statements on
Auditing Standards, AU § 380) and Securities and
Exchange Commission rules and regulations with KPMG LLP, our
independent registered public accounting firm. The Audit
Committee has received the written disclosures and the letter
from KPMG LLP required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and
has reviewed, evaluated and discussed with KPMG LLP its
independence from the Company. The Audit Committee has also
discussed with management and KPMG LLP such other matters and
received such assurances from them as it deemed appropriate.
Based upon the review and discussion of the above, the Audit
Committee recommended to the Board that the audited consolidated
financial statements be included in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2006 filed with the
Securities and Exchange Commission.
Respectfully submitted:
Jeffrey R. Harris
William O. Hunt
Larry M. Carr
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Representatives of KPMG LLP, who were the Companys
independent registered public accounting firm for the year 2006,
are expected to be present at the Annual Meeting. They will have
the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions. The Audit
Committee Charter states that the Audit Committee shall engage
in a formal process every three years of soliciting proposals
from various accounting firms regarding their potential
engagement as the Companys outside auditor. The Audit
Committee is currently conducting this process and has therefore
determined that it is not appropriate to ask the Companys
9
stockholders to ratify the retention of an independent
registered public accounting firm at this years annual
meeting.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES
Our independent registered public accounting firm during the
year ended December 31, 2006 was KPMG LLP. KPMG LLP has
audited our financial statements since 1995. A representative of
KPMG LLP is expected to be present at the meeting for the
purpose of responding to appropriate questions and will be given
the opportunity to make a statement if he or she desires to do
so.
The following table sets forth the aggregate fees billed to the
Company for fiscal 2006 and fiscal 2005 by KPMG LLP:
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2006
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2005
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Audit Fees
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$
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667,470
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$
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633,150
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Audit-Related Fees
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18,350
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6,950
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Tax Fees
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13,836
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All Other Fees
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Total
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$
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685,820
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$
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653,936
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Audit Fees consist of fees relating to the audit of our
year-end consolidated financial statements, the audit of our
internal control over financial reporting, and reviews of our
quarterly financial statements. Audit fees for 2006 also consist
of fees relating to the review of the Think Outside acquisition,
the stock option grant date review, and the review of asset
impairments. Audit fees for 2005 also consist of fees relating
to the filing of our amended annual report on
Form 10-K
for the year ended December 31, 2004 and amended quarterly
reports on
Form 10-Q
for the quarters ended March 31, 2005 and June 30,
2005.
Audit-Related Fees for 2006 consist primarily of fees
relating to the review of the Mission transaction, and, for
2005, consist primarily of fees relating to the review of
registration statements filed with the Securities and Exchange
Commission.
Tax Fees consist of fees relating to tax compliance and
advisory services.
The Audit Committee regularly determines whether specific
projects or expenditures could potentially affect
KPMG LLPs independence. The Audit Committee has
considered whether the provision of non-audit services is
compatible with maintaining the independence of KPMG LLP
and has concluded that it is compatible.
PRE-APPROVAL
OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES
The Audit Committee is directly responsible for the appointment,
compensation, retention, replacement, and oversight of the work
of the independent registered public accounting firm. The Audit
Committee must approve, in advance, the provision by the
independent registered public accounting firm of all audit
services and permissible non-audit services. These services may
include audit services, audit-related services, tax services and
other services. The Audit Committee also actively engages in a
dialogue with the independent registered public accounting firm
with respect to any relationships or services that may impact
their objectivity and independence. In 2006, all fees paid to
the independent registered public accounting firm for non-audit
services were approved in advance by the Audit Committee.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of Messrs. Hunt, Shaner and Stead, who are all of the
current members of our Compensation Committee, has at any time
been one of our officers or employees nor had any relationship
that required disclosure under Item 404 of
Regulation S-K.
None of our executive officers serves as a member of the board
or compensation committee of any entity which has one or more
executive officers serving as a member of our Board or
Compensation.
10
CORPORATE
GOVERNANCE
Current copies of the following materials related to
Mobilitys corporate governance policies and practices are
available publicly on the Companys web site at
http://www.mobilityelectronics.com.
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Audit Committee Charter
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Compensation and Human Resources Committee Charter
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Corporate Governance and Nominating Committee Charter
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Corporate Governance Guidelines
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Director Nominations Policy
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Code of Business Conduct and Ethics
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Policy for Reporting Questionable Accounting or Auditing Matters
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Copies may also be obtained, free of charge, by writing to:
Secretary, Mobility Electronics, Inc.,
17800 N. Perimeter Dr., Suite 200, Scottsdale,
Arizona 85255.
Stockholders may communicate directly with any or all of our
Board members or any Board committee by writing to such
individuals or committees in care of our Secretary. The
Secretary will forward any such communications to the addressee
on a regular basis. The Lead Independent Director will receive
all communications directed to the Board, and the Chairman of
each committee will receive all communications directed to that
specific committee. Please address any written communications as
follows:
Mobility Electronics, Inc.
[Addressee*]
c/o Secretary
17800 N. Perimeter Dr., Suite 200
Scottsdale, Arizona 85255
*Board of Directors
*Audit Committee
*Compensation and Human Resources Committee
*Corporate Governance and Nominating Committee
*Name of individual director
The Corporate Governance Guidelines require each Board member to
attend the Companys annual meeting of stockholders except
for absences due to causes beyond the reasonable control of the
director. There were six directors at the time of the 2006
annual meeting of stockholders and all members were present.
Our Code of Business Conduct and Ethics applies to all of our
directors, officers and employees. A copy of the Code of
Business Conduct and Ethics is posted on our Internet website at
www.mobilityelectronics.com. If we make any amendment to,
or grant any waivers of, a provision of the Code of Business
Conduct and Ethics that applies to our principal executive
officer, principal financial officer principal accounting
officer or controller, or persons performing similar functions,
where such amendment or waiver is required to be disclosed under
applicable SEC rules, we intend to disclose such amendment or
waiver and the reasons therefore on our Internet website at
www.mobilityelectronics.com.
11
DIRECTOR
COMPENSATION
Director
Compensation Table
The following table sets forth information regarding the
compensation of our non-employee directors for 2006.
Mr. Mollo, who is our Chairman, President and Chief
Executive Officer, does not receive any additional compensation
for his service as a director.
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Fees Earned
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or Paid
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Stock
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Option
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Name
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in Cash ($)(1)
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Awards ($)(1)(2)
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Awards ($)(3)(4)
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Total ($)
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Larry M. Carr
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-0-
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112,514
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-0-
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112,514
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Jeffrey R. Harris
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12,500
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99,964
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-0-
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112,464
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William O. Hunt
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33,500
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91,875
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-0-
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125,375
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Robert W. Shaner
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-0-
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136,431
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-0-
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136,431
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Jerre L. Stead
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16,000
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90,014
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-0-
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106,014
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(1) |
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During 2006, directors had the right to elect to receive
quarterly fees earned in cash or stock under the Companys
2004 Mobility Electronics, Inc. Non-Employee Director Plan which
we refer to as the 2004 Director Plan. Amounts earned, but
paid in stock, are reflected under the Stock Awards
column. The number of shares issued is determined by dividing
the designated portion of the retainer fee by the average
closing price of the last thirty days of each applicable
quarter. The shares to be issued are rounded up to the next
whole share. |
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The directors received the following stock awards in 2006 in
lieu of cash for quarterly fees: |
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Name
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Number of Shares
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$ Amount
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Larry M. Carr
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4,663 shares
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26,500
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Jeffrey Harris
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1,772 shares
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13,500
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Robert W. Shaner
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4,168 shares
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23,000
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Jerre L. Stead
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653 shares
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4,000
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The dollar amount shown equals the amount recognized for
financial statement reporting purposes for 2006 which was equal
to the grant date fair value calculated in accordance with
SFAS 123(R). A discussion of the assumptions used in
calculating the compensation cost is set forth in Note 16
to the Notes to our consolidated financial statements included
in our Annual Report on
Form 10-K. |
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(2) |
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The number of restricted stock units or RSUs held by the
non-employee directors under the 2004 Director Plan at
December 31, 2006 was as follows: Mr. Carr (28,300),
Mr. Harris (28,300), Mr. Hunt (29,700),
Mr. Shaner (49,800), and Mr. Stead (28,300). The
amount shown in this column reflects the compensation expense
recognized by Mobility in 2006 in accordance with
SFAS 123(R), disregarding for this purpose the estimate of
forfeitures related to service-based vesting conditions, for the
outstanding RSUs granted to the Directors during 2006 and prior
years. For RSUs granted in 2006, this amount equals the grant
date fair value computed in accordance with SFAS 123(R).
The directors received the following RSUs during 2006: |
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Name
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Number of RSUs
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$ Amount
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Larry M. Carr
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2,900
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12,095
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Jeffrey Harris
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2,900
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12,095
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William O. Hunt
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3,600
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15,015
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Robert W. Shaner
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24,900
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41,291
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Jerre L. Stead
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2,900
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12,095
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There were no forfeitures by the Directors in 2006. A discussion
of the assumptions used in calculating the compensation cost is
set forth in Note 16 to the Notes to our consolidated financial
statements included in our Annual Report on
Form 10-K. |
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RSUs granted to the non-employee directors in 2004 vest 100% on
May 26, 2007 and may vest earlier, on a pro rata basis,
upon the individuals death, disability or retirement. RSUs
granted to the non-employee directors in |
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2005 and 2006 for their re-election to the Board vest 100% on
the third anniversary of the grant date, and may vest earlier,
on a pro rata basis, upon the individuals death,
disability or retirement. RSUs granted to the non-employee
directors in 2005 and 2006 for their service as a member or
Chairman of a Board committee vest 100% upon the one year
anniversary of the grant date, and may vest earlier, on a pro
rata basis, upon the individuals death, disability or
retirement. |
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(3) |
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We did not incur any compensation costs in 2006 for financial
statement purposes in accordance with SFAS 123(R) for stock
options granted in previous years to non-employee directors
under the Companys 1996 Incentive Stock Option Plan (the
1996 Plan) and the 2004 Director Plan because all of
these options were fully vested prior to January 1, 2006. No
stock options were granted to the non-employee directors in
2006, and the director compensation program no longer includes
the granting of stock options. A discussion of the assumptions
used in calculating the compensation cost is set forth in
Note 16 of the Notes to Consolidated Financial Statements
of our 2006 Annual Report to Stockholders. |
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(4) |
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The number of stock options held by the non-employee directors
under the 1996 Plan and the 2004 Director Plan at
December 31, 2006 was as follows: Mr. Carr (21,625),
Mr. Harris (16,000), Mr. Hunt (0), Mr. Shaner
(0), and Mr. Stead (31,625). There were no options granted
to directors in 2006. |
Director
Compensation Program
The Compensation and Human Resources Committee is responsible
for reviewing and approving the compensation of our non-employee
directors. All of our non-employee directors are paid under the
same compensation program. Officers of Mobility Electronics who
also serve as directors do not receive any additional
compensation for services as a director.
We use a combination of cash and equity-based compensation to
attract and retain our non-employee directors. Compensation for
our non-employee directors consists of an annual cash retainer,
meeting fees, and annual grants of restricted stock units. Stock
options are not currently a part of our non-employee director
compensation program, and we do not provide retirement benefits
to our non-employee directors. We grant equity awards under the
2004 Director Plan. Under this plan, we may grant stock
options, stock appreciation rights, restricted stock awards and
other stock awards as a means to attract and retain qualified
individuals to serve on our Board and to align their interests
with those of our stockholders. An aggregate of
400,000 shares of our common stock may be issued under the
2004 Director Plan. Our non-employee directors are eligible
to participate in the Director Plan. The 2004 Director Plan
is administered and interpreted by the Compensation Committee of
the Board. The Compensation Committee has the authority to
determine the members of our Board to whom grants will be made,
the time when grants will be made, and the type, size, and terms
of each grant. The Compensation Committee also has the authority
to deal with any other matters arising under the
2004 Director Plan. However, the Compensation Committee
does not have authority to reprice stock options or stock
appreciation rights awarded under the Director Plan without
stockholder approval.
Effective as of April 1, 2007, the cash and equity
compensation payable to our non-employee directors is as follows:
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an annual cash retainer of $30,000 per year;
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a meeting fee of $3,500 for each annual meeting of stockholders;
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a cash meeting fee of $2,500 for each board meeting attended in
person;
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a cash meeting fee of $600 for each committee meeting and
telephonic board meeting;
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a grant of 30,000 restricted stock units under the
2004 Director Plan upon election, or re-election, to the
board of directors that vests in full on the third anniversary
of the grant date, subject to earlier vesting, on a pro rata
basis, upon a directors death, disability, or retirement;
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an annual grant of 2,000 restricted stock units under the
2004 Director Plan upon appointment to any board committee
that vests in full on the first anniversary of the grant date,
subject to earlier vesting, on a pro rata basis, upon a
directors death, disability, or retirement;
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13
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an annual grant of 1,500 restricted stock units under the
2004 Director Plan to the Chairman of the Audit Committee
that vests in full on the first anniversary of the grant date,
subject to earlier vesting, on a pro rata basis, upon the
directors death, disability, or retirement;
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an annual grant of 1,000 restricted stock units under the
2004 Director Plan to the Chairman of the Compensation and
Human Resources Committee that vests in full on the first
anniversary of the grant date, subject to earlier vesting, on a
pro rata basis, upon the directors death, disability, or
retirement; and
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an annual grant of 1,000 restricted stock units under the
2004 Director Plan to the Chairman of the Corporate
Governance and Nominating Committee that vests in full on the
first anniversary of the grant date, subject to earlier vesting,
on a pro rata basis, upon the directors death, disability,
or retirement.
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Directors may also be reimbursed for expenses in connection with
attendance at Board and committee meetings.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
We compensate our management through a combination of base
salary, annual incentive bonuses and long-term equity based
awards which are designed to be competitive with those of a peer
group which we have selected for comparative purposes and to
align executive performance with the long-term interests of our
stockholders.
This section discusses the principles underlying our executive
compensation policies and decisions and the most important
factors relevant to an analysis of these policies and decisions.
It provides qualitative information regarding the manner and
context in which compensation is awarded to and earned by our
executive officers and places in perspective the data presented
in the tables and narrative that follow.
Our
Compensation Committee
Our Compensation Committee approves, implements and monitors all
compensation and awards to executive officers including the
chief executive officer, chief financial officer and the other
executive officers named in the Summary Compensation Table
below, all of whom we refer to as the named executive officers
or NEOs.
The Compensation Committees membership is determined by
the Board of Directors and is currently composed of three
non-management directors. The Compensation Committee has the
authority to delegate any of its responsibilities to
subcommittees as the Committee may deem appropriate in its sole
discretion. During 2006, the Compensation Committee did not
delegate any of its responsibilities. The Compensation Committee
engaged an outside consulting firm in 2004 and 2005,
Compensation Strategies, Inc. as a consultant to review
Mobilitys compensation practices and to compare the
compensation of Mobilitys executive officers and those of
a comparative group. The Compensation Committee did not engage
any consultant in 2006.
The Compensation Committee meets throughout the year in person
to perform its duties and periodically approves and adopts, or
makes recommendations to the Board for, the Companys
compensation decisions (including the approval of grants of
restricted stock units to our named executive officers). The CEO
and the General Counsel attend regular Committee meetings (each
meeting concludes with an executive session during which only
the Committee members are present).
The Compensation Committee meets outside the presence of all of
our executive officers, including the named executive officers,
to consider appropriate compensation for our chief executive
officer. For all other named executive officers, the
Compensation Committee meets outside the presence of all
executive officers except our chief executive officer and our
general counsel who recuses himself when the Compensation
Committee discusses his compensation. Mr. Mollo, our CEO,
annually reviews each other named executive officers
performance with the Compensation Committee and makes
recommendations to the Compensation Committee with respect to
the appropriate base salary, payments to be made under our
annual cash incentive program, and the grants of long-term
equity incentive awards for all executive officers, excluding
himself. Based in part on these recommendations from our CEO and
other considerations discussed below, the Compensation Committee
approves the annual
14
compensation package of our executive officers other than our
CEO. The Compensation Committee also annually analyzes our
CEOs performance and determines his base salary, annual
cash incentive plan payout and long-term equity awards based on
its assessment of his performance. The annual performance
reviews of our named executive officers are considered by the
Compensation Committee when making decisions on setting base
salary, targets for, and payments under our annual cash
incentive plan and grants of long-term equity incentive awards.
When making decisions on setting base salary, targets for and
payments under our annual cash incentive program and initial
grants of long-term equity incentive awards for new executive
officers, the Compensation Committee considers the importance of
the position to us, the past salary history of the executive
officer and the contributions to be made by the executive
officer to us.
The Compensation Committee reviewed all components of
compensation for our executive officers, including salary,
target bonus, the dollar value to the executive and cost to
Mobility of all perquisites and all severance and change of
control arrangements. Based on this review, the Compensation
Committee determined that the compensation paid to our named
executive officers reflected our compensation philosophy.
Compensation
Philosophy
Our executive compensation plans have been designed to attract,
retain and reward high caliber executives who are expected to
formulate and execute our business plans in a manner that will
provide our stockholders with a higher than average return on
our common stock while ensuring that our compensation levels are
fair and appropriate to both our executives and stockholders. We
believe that the compensation of our named executive officers
should focus their behavior on the achievement of both
individual and corporate annual targets as well as long-term
business objectives and strategies. Specifically, the goals and
objectives of our compensation program are:
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to encourage growth and create increased stockholder value
through the efficient use of corporate assets;
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to recognize the contribution made by exceptional management; and
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to provide the framework, as a component of the total
compensation program, to attract, retain and motivate highly
qualified management personnel.
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To achieve these goals, we integrate base compensation with
bonuses based upon a variety of factors that include our
operating performance, as well as each participants
individual initiative and performance. The three main elements
of our compensation plans and policies, base salary, annual
incentive bonuses and long-term incentives in the form of equity
grants, have been designed to significantly link total
compensation with our operating performance. We do not use a
mechanical formula for determining the mix of types of
compensation paid to each of our named executive officers;
rather, we look at each individuals performance and our
corporate performance and the CEOs (except with respect to
his own compensation) and the Committees judgment and
experience to determine an appropriate mix of compensation for
each individual.
Encouraging
Growth and Increasing Stockholder Value.
Because we are a relatively small company with limited capital
resources, we believe it is incumbent upon our NEOs to utilize
our available assets in an efficient manner. We have developed
performance criteria measuring revenue growth, profit and loss
performance and other qualitative factors based on achievement
of specific tactical goals that support our strategic
initiatives in order to motivate our NEOs to efficiently use our
corporate assets. We believe that these measures reflect the
efficient use of corporate assets because, if achieved, they
will result in improved performance and increased profitability.
We provide equity incentives, in the form of restricted stock
units, so that our named executive officers will be incentivized
to increase stockholder value over the long term. We utilize
RSUs rather than other forms of equity compensation because we
believe that RSUs effectively meet our equity incentive
objectives and the accounting treatment of RSUs is more
attractive than that of other forms of equity compensation in
light of SFAS 123(R). We provide for both performance-based
and time vesting because we believe that our NEOs should benefit
from meeting or exceeding the goals we establish for performance
vesting while also providing for time vesting in order to
encourage our NEOs to remain with Mobility.
15
Recognizing
Contributions.
We use a combination of company goals and individual performance
measures to motivate exceptional performance. We award annual
cash bonuses based upon a variety of factors that include our
operating performance, which we believe is best measured by
EBITDA, as well as each participants individual initiative
and performance as measured by individual goals unique to the
NEOs position and responsibilities.
Attracting,
Retaining and Motivating Personnel.
In early 2004, and again in 2005, the Compensation Committee
retained Compensation Strategies, an independent consultant, to
review our compensation plans in total and the overall
compensation philosophy for our executive officers, particularly
in light of the new accounting rules that had been adopted
relating to the expensing of stock options. Compensation
Strategies recommended a compensation philosophy set at the
50th percentile of the market, to be determined by a review
of peer company data, with the ability to go above or below the
50th percentile depending on the experience and
capabilities of the individual and the critical nature of that
individuals role. The peer group consisted of 19 publicly
traded companies based on the following parameters:
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Companies from the computer communication and peripheral
equipment industry;
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Companies with revenues ranging from $54 million to
$212 million; and
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Companies with market capitalizations ranging from
$27 million to $563 million.
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The peer group companies included:
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Computer Network Technology
Corporation
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Netopia, Inc.
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Concurrent Computer Corporation
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Network Equipment Technologies,
Inc.
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Cray Inc.
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Omnicell, Inc.
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Dataram Corporation
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Overland Storage, Inc.
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Digi International Inc.
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Paradyne Networks, Inc.
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Fargo Electronics, Inc.
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RadiSys Corporation
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Franklin Electronic Publishers,
Incorporated
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SBS Technologies, Inc.
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Key Tronic Corporation
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SCM Microsystems, Inc.
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MTI Technology Corporation
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Visual Networks, Inc.
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Neoware Systems, Inc.
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We have chosen the 50th percentile because we believe it
allows us to attract and retain executives while also helping us
provide a flexible structure which links compensation to
performance. For each individual officer, we also consider our
needs for that officers skill set, experience, the
contribution that the officer has made or we believe will make,
whether the executive officers skill set is easily
transferable to other potential employers and the competitive
landscape for the executive officers skill set and position
16
Elements
of the Compensation Program
Our executive compensation program is designed to reflect the
philosophy and objectives we have described above. The elements
of executive pay are presented in the table below and discussed
in more detail in the following paragraphs:
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Component
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Type of Payment
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Goal and Objective
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Base Salary
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Fixed annual cash payments with
each executive eligible for annual increase.
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Attract and retain executive
talent.
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Annual Incentive Bonus
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Company and Individual
Performance-based annual cash payment.
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Encourage growth/Create increased
stockholder value. Recognize contribution of management.
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Long-term Incentives
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Company and Individual
Performance-based equity awards.
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Align interests of executives with
those of our stockholders. Encourage executive retention.
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We view these components of compensation as related but
distinct. Although our Compensation Committee does review total
compensation, we do not believe that significant compensation
derived from one component of compensation should negate or
reduce compensation from other components. We determine the
appropriate level for each compensation component based in part,
but not exclusively, on competitive benchmarking consistent with
our recruiting and retention goals, our view of internal equity
and consistency, and other considerations we deem relevant, such
as rewarding extraordinary performance. We believe that, as is
common in the technology sector, long-term equity awards are the
primary compensation-related motivator in attracting and
retaining employees and that salary and bonus levels are
secondary considerations to most employees. Except as described
below, our Compensation Committee has not adopted any formal or
informal policies or guidelines for allocating compensation
between long-term and currently paid out compensation, between
cash and non-cash compensation, or among different forms of
non-cash compensation. However, our Compensation
Committees philosophy is to make a greater percentage of
an employees compensation performance-based as he or she
becomes more senior and to keep cash compensation to the minimum
competitive level (which we believe is at the
50th percentile of our peer group) while providing the
opportunity to be well rewarded through equity if Mobility
performs well over time.
Base Salary. During 2006, the Compensation
Committee determined base salaries for our named executive
officers based upon the analysis prepared by Compensation
Strategies in 2005, which included a comparison of competitive
pay practices for the peer companies included in their study.
The Compensation Committee also considered other factors
including the executive officers role, past performance,
experience and capabilities. The Compensation Committee does not
assign relative weights to these factors but instead makes a
subjective determination based on all of the factors. Base
salaries are reviewed on an annual basis as well as at the time
of any promotions or other changes in responsibilities. In
determining whether base salaries should be increased, the
Compensation Committee evaluates individual performance and the
peer group pay levels for similar positions.
During 2006, there was no adjustment in Mr. Mollos
base salary. In January 2006, Ms. Brubachers base
salary was increased by $20,000 to a total base salary of
$258,500 per year and Mr. Jones base salary was
increased by $10,000 to a total base salary of $170,000 per
year. In April 2006, Mr. Roberts base salary was
increased by $15,000 to a total base salary of $150,000 per
year. Mr. Downer began his employment with Mobility in July
2006 and therefore had no adjustment in his base salary during
2006.
The base salaries paid to our NEOs in 2006 are set forth below
in the Summary Compensation Table. For 2006, base salary cash
compensation was $1,057,195 with our CEO receiving approximately
$340,080. We believe that the salaries paid achieved our
objectives and were within our target. On January 1, 2007,
Mr. Roberts base salary was increased by $15,000 to a
total base salary of $165,000 per year. To date, no other
adjustments have been made to the base salary compensation of
any other NEO.
Incentive Compensation. The Compensation
Committee is responsible for administering and interpreting our
incentive compensation program, including determining
eligibility, approving performance goals and plans, and
determining bonus awards. The Compensation Committee adopted a
discretionary bonus plan for 2006 based
17
upon individual goals and company-wide specified consolidated
adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) targets. We have chosen EBITDA because we
believe it accurately reflects our compensation philosophy of
encouraging growth and creating increased stockholder value
through the efficient use of corporate assets. Because it
eliminates non-cash charges such as depreciation and
amortization, we believe that EBITDA provides a true measure not
only of our sales growth but also our ability to control costs.
For more information about the amounts payable under our
incentive compensation programs, please refer to the Grants of
Plan Based Awards Table on page 23.
The determination of whether to make incentive compensation
payments under the incentive compensation program takes into
account input from our NEOs and the Compensation
Committees consideration, among other things, of one or
more of the goals outlined below. The Compensation Committee has
the discretion to take individual performance into account and
to make adjustments, up or down, of the amount to be paid under
the formula described below. For example, while we achieved an
EBITDA target during 2005 that would have resulted in payouts
under the discretionary bonus plan at the 80% level, the
Compensation Committee determined, based on its review of our
operating performance, that bonus awards at this level were not
appropriate. The Compensation Committee did, however, grant
discretionary bonuses at a level ranging between 6% and 10% of
base compensation to reward the executive officers and select
personnel for their performance in connection with sale of a
portfolio of 46 patents and patents pending related to
Mobilitys Split Bridge and serialized PCI intellectual
property for $13 million.
The following is a summary of the individual incentive
compensation programs for our NEOs during 2006:
Charles R. Mollo. For Mr. Mollo, the
individual goal accounted for 50% of his targeted bonus and the
EBITDA target accounted for the other 50%. Mr. Mollos
individual goal was for each of the individuals who directly
reported to him to achieve their respective individual goals.
Mr. Mollo received a bonus of $35,500 as a result of his
individual goal.
Joan W. Brubacher. For Ms. Brubacher, the
individual goal accounted for 50% of her targeted bonus and the
EBITDA target accounted for the other 50%.
Ms. Brubachers individual goals were for each of the
individuals who directly reported to her to achieve their
respective individual goals and to restructure one of
Mobilitys commercial relationships by a specified date.
Ms. Brubacher received a bonus of $38,595 as a result of
the achievement of her individual goals.
Jonathan Downer. For Mr. Downer, the
individual goal accounted for 86% of his targeted bonus and the
EBITDA target accounted for the other 14%.
Mr. Downers individual goals included the completion
of agreements with respect to the sale of certain products to
various customers and the achievement of sales and margin
targets for Mobilitys power business. Mr. Downer
received an additional bonus of $3,000 as a result of the
achievement of his individual goals. In addition,
Mr. Downer received guaranteed bonus payments equal to
$114,000 as part of his employment agreement with Mobility.
Randy Jones. For Mr. Jones, the
individual goal accounted for 48% of his targeted bonus, the
EBITDA target accounted for 32% of his targeted bonus, and a
revenue goal for the connectivity business accounted for the
other 20% of his targeted bonus. Mr. Jones individual
goals included the completion of manufacturing verification
tests for certain products and the completion of agreements with
respect to the sale of certain products and the achievement of
an agreed upon level of inventory turns by the end of 2006.
Mr. Jones received a bonus of $4,615 as a result of the
achievement of his individual goals. Mr. Jones did not
achieve a bonus for the connectivity business revenue goal
because Mobility did not achieve the target for 2006.
Brian M. Roberts. For Mr. Roberts, the
individual goal accounted for 60% of his targeted bonus and the
EBITDA target accounted for the other 40%.
Mr. Roberts goals included the settlement or
successful resolution of certain litigation and insurance claims
by a specified date and the continued compliance by Mobility
with all SEC and corporate governance requirements.
Mr. Roberts received a bonus of $24,580 as a result of the
achievement of his individual goals.
None of the NEOs received a bonus for the EBITDA component of
our bonus plan as Mobility did not achieve the EBITDA target in
2006.
18
Equity Compensation. We believe that stock
ownership by our executive officers, through our equity-based
compensation plans, aligns the interests of the executive
officers with those of our stockholders. By using equity-based
compensation, over a period of time, our executive officers
should become larger holders of common stock. This is intended
to strengthen their identification with our stockholders and
make increasing stockholder value an even more important focus
for our management group. In addition, the Compensation
Committee believes that the use of equity-based compensation
combined with a focus on our operating performance will create a
balance of these two long-term objectives.
Long-term equity grants are made under our 2004 Omnibus
Long-Term Incentive Plan adopted by the Companys
stockholders at its 2004 annual meeting. The Compensation
Committee may make the following types of grants under the
Omnibus Plan, with terms to be established by the Compensation
Committee:
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Stock options;
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Stock appreciation rights;
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Restricted stock awards;
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Performance awards; and
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Other stock-based awards.
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The total aggregate number of shares of our common stock that
may be issued under the Omnibus Plan is 2,350,000 shares.
This share limit will be adjusted by the Compensation Committee
in the event of a stock dividend, spin-off, merger or other
event affecting our capitalization. The Omnibus Plan will
terminate on March 11, 2014.
Prior to 2005, we granted stock options as the main form of
equity-based incentives. We selected options because of the
widespread expectation of employees in our industry that they
would receive stock options and the favorable accounting and tax
treatment to us. However, beginning in 2005 with our adoption of
Financial Accounting Standards No. 123 (R), the
accounting treatment of stock options became less attractive. As
a result, beginning in 2005, we began granting long-term,
equity-based compensation in the form of restricted stock units
pursuant to a Company-wide equity compensation program adopted
by the Committee in 2004. These restricted stock units were
granted under the Companys 2004 Omnibus Long-Term
Incentive Plan adopted by the Companys stockholders at its
2004 annual meeting.
We award restricted stock units on a biennial basis to existing
employees and quarterly to new hires. We chose to grant RSUs on
a biennial basis because we believe it serves to recognize the
contribution of our employees, encourages employee retention,
and allows acceleration objectives to be set in a manner that
creates incentives for improved performance and increased
profitability. We do not time restricted stock unit or other
equity grants in coordination with the release of material
non-public information. All full-time employees, including the
named executive officers, receive restricted stock units that
allow each to receive shares of our common stock upon the
achievement of a specific performance objective tied to net
income. We chose this objective because we believe that if the
net income objective is met, our goal of providing superior
stockholder returns will also be met. Alternatively, if the
performance objective is not met within five years of the date
of grant, the restricted stock units will vest automatically, in
full, at that time. In addition, the restricted stock units may
vest earlier, on a pro-rata basis, upon the death, disability,
termination without cause, or retirement of the plan
participants. This accelerated vesting is discussed under
Termination Payments below.
The size of the awards granted to the Companys named
executive officers in 2006 were based upon a review of awards
granted to executive officers at the peer group described above
and targeted at the 50th percentile level, as well as the
performance of each executive officer compared to our strategic
plan and an analysis of the executive officers role, past
performance, experience and capabilities.
Other
Executive Benefits and Perquisites
Our NEOs are eligible to participate in all of our employee
benefit plans, such as medical, dental, group life, long-term
disability insurance and our 401(k) plan. In addition,
Mr. Mollo and Ms. Brubacher receive a supplemental
executive health insurance policy and Mr. Mollo is
reimbursed for certain travel expenses.
19
Impact of
Regulatory Requirements on Compensation
Deductibility of Executive
Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deductibility by a publicly-held
corporation of compensation in excess of $1 million paid to
the CEO or any other of its four most highly compensated
executive officers, unless that compensation is
performance-based compensation as defined by the
Internal Revenue Code. We believe that our stock option grants
qualify as performance-based compensation and are not subject to
any deductibility limitations under Section 162(m). The
Compensation Committee considers deductibility under
Section 162(m) with respect to other compensation
arrangements with executive officers. However, the Compensation
Committee and the Board believe that it is in the best interest
of Mobility that the Compensation Committee retain its
flexibility and discretion to make compensation awards, whether
or not deductible, in order to foster achievement of performance
goals established by the Compensation Committee as well as other
corporate goals that the Compensation Committee deems important
to our success, such as encouraging employee retention and
rewarding achievement.
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. While the final
regulations have not yet become effective, we believe we are in
compliance with the statutory provisions which were effective
January 1, 2005.
Accounting for Stock-Based
Compensation. Beginning on January 1, 2004,
we began accounting for stock-based payments in accordance with
the requirements of SFAS 123(R).
COMPENSATION
COMMITTEE REPORT
The Compensation Committee of Mobility 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.
This report is submitted by the members of the Compensation
Committee.
Robert W.
Shaner, Chairman
William O. Hunt
Jerre L. Stead
20
SUMMARY
COMPENSATION TABLE
The following table sets forth information regarding the
compensation of our Chairman and CEO, our CFO, our three other
highest paid executive officers for 2006, and one additional
individual for whom disclosure would have been one of our
highest paid executive officers for 2006 but for the fact that
this individual was not serving as an executive officer at the
end of the year.
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Non-Equity
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Stock
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Option
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Incentive Plan
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All Other
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Salary
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Bonus(1)
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Awards(2)
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Awards(3)
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)
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($)
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(4)($)
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($)(5)
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($)
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Charles R. Mollo
Chairman of the Board of Directors, President and Chief
Executive Officer
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2006
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340,080
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-0-
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146,400
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-0-
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35,500
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23,829
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545,809
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Joan W. Brubacher
Executive Vice President and
Chief Financial Officer
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2006
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256,808
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-0-
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163,370
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12,402
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38,595
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18,107
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489,283
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Tim Jeffries
Executive Vice President and Chief Operating
Officer(6)
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2006
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55,038
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-0-
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155,550
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119,481
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-0-
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280,972
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611,041
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Jonathan Downer
Senior Vice President, Worldwide Sales
and Distribution
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2006
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98,538
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114,000
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44,954
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-0-
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3,000
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-0-
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260,493
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Randy Jones
Senior Vice President and General Manager
Connectivity(7)
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2006
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153,846
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-0-
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54,984
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-0-
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4,615
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6,373
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219,818
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Brian M. Roberts
Vice President, General Counsel and Secretary
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2006
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152,885
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-0-
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54,984
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-0-
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24,580
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6,046
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238,495
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(1) |
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The annual cash incentive award that is paid to the executive
officers is reflected under the Non-Equity Incentive Plan
Compensation column. The bonus amount for Mr. Downer
represents a $14,000 signing bonus and two minimum quarterly
payments of $50,000 each for the third and fourth quarters of
2006 which were guaranteed at his hiring date. |
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(2) |
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The amount shown in this column reflects the compensation
expense for outstanding restricted stock and RSU awards held by
the NEOs recognized by Mobility in 2006 in accordance with
SFAS 123(R), disregarding for this purpose the estimate of
forfeitures related to service-based vesting conditions. There
were no forfeitures by the NEOs in 2006. The restricted stock
awards for which this expense is shown in the Summary
Compensation Table (SCT) also includes awards
granted in 2005 for which Mobility recognized expense in 2006. A
discussion of the assumptions used in calculating the
compensation cost is set forth in Note 16 to the Notes to
our consolidated financial statements included in our Annual
Report on
Form 10-K. |
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(3) |
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The amount shown in this column reflects the compensation
expense for outstanding options held by the NEOs recognized by
Mobility in 2006 in accordance with SFAS 123(R),
disregarding for this purpose the estimate of forfeitures
related to service-based vesting conditions. There were no
forfeitures by the NEOs in 2006. The stock option awards for
which this expense is shown in the SCT also includes awards
granted in 2002 and 2003 for which Mobility continued to
recognize expense in 2006. A discussion of the assumptions used
in calculating the compensation cost is set forth in
Note 16 to the Notes to our consolidated financial
statements included in our Annual Report on
Form 10-K.
No additional options were granted in 2006. |
|
(4) |
|
The amount shown in this column represents the annual cash
incentive award earned under Mobilitys discretionary bonus
plan. |
21
|
|
|
(5) |
|
The amounts set forth under All Other Compensation
represent the aggregate dollar amount for each NEO for
perquisites and other personal benefits, 401(k) contributions by
Mobility, executive health insurance, travel expenses, home
internet reimbursement, and severance pay and paid time off
payout. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Pay
|
|
|
|
|
|
|
Executive Health
|
|
|
Travel
|
|
|
Internet
|
|
|
and Paid Time Off
|
|
Name
|
|
401(k)($)
|
|
|
Insurance($)
|
|
|
Reimbursements($)
|
|
|
Reimbursement($)
|
|
|
Payout($)
|
|
|
Charles R. Mollo
|
|
|
6,278
|
|
|
|
12,539
|
|
|
|
4,435
|
|
|
|
577
|
|
|
|
-0-
|
|
Joan W. Burbacher
|
|
|
8,464
|
|
|
|
9,149
|
|
|
|
-0-
|
|
|
|
494
|
|
|
|
-0-
|
|
Tim Jeffries
|
|
|
2,568
|
|
|
|
4,084
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
273,319
|
|
Jonathan Downer
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Randy Jones
|
|
|
6,221
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Brian M. Roberts
|
|
|
6,046
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
(6) |
|
Mr. Jeffries resigned all of his positions with Mobility
effective April 3, 2006. Under the terms of a separation
agreement with Mr. Jeffries, Mobility continued to pay his
base salary for the remainder of 2006 as severance pay. |
|
(7) |
|
Mr. Jones resigned as an officer of Mobility in April 2007. |
GRANTS OF
PLAN-BASED AWARDS TABLE
The following table sets forth information regarding the grants
of annual cash incentive compensation, stock options and
restricted stock to our NEOs during 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
All Other
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
|
|
|
Stock
|
|
|
Awards:
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under
|
|
|
Awards:
|
|
|
Number of
|
|
|
Fair Value
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Equity Incentive
|
|
|
Number of
|
|
|
Securities
|
|
|
of Stock
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
|
Plan Awards
|
|
|
Shares of
|
|
|
Underlying
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Target
|
|
|
Stock or
|
|
|
Options
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
(#)(2)
|
|
|
Units (#)
|
|
|
(#)
|
|
|
($)(3)
|
|
|
Charles R. Mollo
|
|
|
04/13/06
|
|
|
|
95,222
|
|
|
|
238,056
|
|
|
|
476,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan W. Brubacher
|
|
|
04/03/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
281,400
|
|
|
|
|
04/13/06
|
|
|
|
61,449
|
|
|
|
153,623
|
|
|
|
307,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tim Jeffries
|
|
|
03/30/06
|
|
|
|
N/A
|
(4)
|
|
|
N/A
|
(4)
|
|
|
N/A
|
(4)
|
|
|
|
|
|
|
17,500
|
(5)
|
|
|
|
|
|
|
140,700
|
|
|
|
|
03/30/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,861
|
(6)
|
|
|
113,817
|
|
Jonathan Downer(7)
|
|
|
07/17/06
|
|
|
|
22,400
|
|
|
|
200,000
|
|
|
|
228,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
07/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
347,500
|
|
Randy Jones
|
|
|
04/03/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
120,600
|
|
|
|
|
04/13/06
|
|
|
|
14,769
|
|
|
|
76,923
|
|
|
|
113,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian M. Roberts
|
|
|
04/03/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
120,600
|
|
|
|
|
04/13/06
|
|
|
|
14,566
|
|
|
|
45,519
|
|
|
|
81,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These columns show the range of awards under our incentive
compensation program, which is described in the section
Incentive Compensation Program in the Compensation
Discussion and Analysis. |
|
|
|
The threshold column represents the amount payable
if the EBITDA target is attained at the 80% level of
performance. Payments could be less than the
threshold amount reflected in this column upon
partial achievement of individual performance goals as
determined by the Committee in its sole discretion however,
because these amounts were not determinable on the date of
grant, they were not included in this column. Further, because
individual performance goals were not included in the 2005
incentive compensation program, representative amounts from 2005
were also not included in this column. |
22
|
|
|
|
|
The target column represents the amount payable if
the EBITDA target is attained at the 100% level and all of the
individual goals are attained. |
|
|
|
The maximum column represents the maximum payout if
the EBITDA target is attained at the 300% level and all of the
individual performance goals are attained. |
|
|
|
The bonus amount for 2006 was paid in March 2007 as shown in the
Summary Compensation Table in the column entitled
Non-Equity Incentive Plan Compensation and is based
on the goals referenced in footnote 4 of that table. |
|
(2) |
|
This column shows the awards granted under our 2004 Ominbus
Long-Term Incentive Plan as described in the section
Equity Compensation in the Compensation Discussion
and Analysis. RSU grants vest 100% upon the earlier to occur of
(x) the achievement of a specific performance objective set
forth in each NEOs RSU agreement, (y) the fifth anniversary
of the date of grant, or (z) upon the occurrence of a
change of control event. RSU grants vest earlier on a pro rata
basis upon the individuals death, disability, termination
without cause or retirement. The dollar amount recognized by us
for these awards is shown in the Summary Compensation Table in
the column entitled Stock Awards and their valuation
assumptions are referenced in footnote 2 of that table. |
|
(3) |
|
The amount shown in this column represents the total grant date
fair value of the awards computed in accordance with
SFAS 123(R). See Note 16 to the Notes to our
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
for the valuation assumptions used in determining the grant date
fair value of stock and option grants. |
|
(4) |
|
Mr. Jeffries was no longer employed by Mobility at the time
the bonus plan was adopted. |
|
(5) |
|
The amounts reflected in this column represent the number of
restricted stock units accelerated in connection with
Mr. Jeffries resignation pursuant to his separation
agreement with Mobility. |
|
(6) |
|
The amounts reflected in this column represent the number of
options accelerated in connection with Mr. Jeffries
resignation pursuant to his separation agreement with Mobility. |
|
(7) |
|
The amounts disclosed for Mr. Downer do not include the
guaranteed bonuses paid to him in 2006 totaling $114,000. |
Relationship
of Salary and Annual Incentive Compensation to Total
Compensation
The following table sets forth the relationship of salary and
annual incentive compensation to total compensation for each of
our CEO, CFO and the remaining NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Annual
|
|
|
|
% of Salary to
|
|
|
Cash Incentive Payment
|
|
Name
|
|
Total Compensation
|
|
|
to Total Compensation
|
|
|
Charles R. Mollo
|
|
|
62
|
|
|
|
6
|
|
Joan W. Brubacher
|
|
|
52
|
|
|
|
8
|
|
Tim Jeffries
|
|
|
9
|
|
|
|
|
|
Jonathan Downer
|
|
|
38
|
|
|
|
45
|
|
Randy Jones
|
|
|
70
|
|
|
|
2
|
|
Brian M. Roberts
|
|
|
64
|
|
|
|
10
|
|
Employment
Agreements and Termination Payments
We have employment agreements with Mr. Mollo,
Ms. Brubacher and Mr. Downer. Mr. Mollo and
Ms. Brubachers agreements expired on June 1,
2005, but automatically renewed on June 1, 2005 and will
continue to automatically renew on a
year-to-year
basis at the end of each annual term, unless either party to the
agreement gives the other party notice of termination at least
90 days prior to the end of the then current term. None of
the parties have provided notice 90 days prior to
June 1, 2007 and, therefore, the employment agreements will
extend until June 1, 2008. The employment agreements
provide for increases in salary as determined by the Board of
Directors. Mr. Downers employment agreement expires
on December 31, 2008 and will continue to automatically
renew on a
year-to-year
basis at the end of each annual term, unless either party to the
agreement gives the other party notice of termination at least
90 days prior to the end of the then current term.
23
Pursuant to the terms of the restricted stock unit agreements
awarded during 2005 and 2006, all RSUs granted to all employees,
including NEOs, will vest on a pro rata basis, upon the
individuals death, disability, termination without cause
or retirement.
Mr. Mollo. As of December 31, 2006,
Mr. Mollos annual base salary was $340,080.
Mr. Mollo has a targeted annual cash bonus, for each fiscal
year that the agreement is in effect, of 70% of his then current
base salary. If Mr. Mollos employment agreement is
terminated for constructive termination, or for any reason other
than its expiration, the death or disability of Mr. Mollo
or just cause, as defined in the agreement, Mr. Mollo is
entitled to continue to receive his salary for a period of six
months following the date of termination. If
Mr. Mollos employment agreement is terminated for
constructive termination, or for any reason other than its
expiration, the death or disability of Mr. Mollo or just
cause, as defined in the agreement, and such termination occurs
within two years after a change of control in the Company, as
defined in the agreement, Mr. Mollo is entitled to receive
a lump sum payment equal to his then current salary for one year
plus his cash bonus for one year at 100% achievement and
continued health benefits. In the event of a change of control,
as defined in the agreement, all equity compensation held by
Mr. Mollo shall become immediately and fully vested and not
subject to restriction.
Ms. Brubacher. As of December 31,
2006, Ms. Brubachers annual base salary was $258,500.
Ms. Brubacher has a targeted annual calendar year cash
bonus of 60% of her then current salary. If
Ms. Brubachers employment agreement is terminated for
constructive termination, or for any reason other than its
expiration, the death or disability of Ms. Brubacher or
just cause, as defined in the agreement, Ms. Brubacher is
entitled to continue to receive her salary for a period of six
months following the date of termination. If
Ms. Brubachers employment agreement is terminated for
constructive termination, or for any reason other than its
expiration, the death or disability of Ms. Brubacher or
just cause, as defined in the agreement, and such termination
occurs within two years after a change of control in the
Company, as defined in the agreement, Ms. Brubacher is
entitled to receive a lump sum payment equal to her then current
salary for one year plus her cash bonus for one year at 100%
achievement and continued health benefits. In the event of a
change of control, as defined in the agreement, all equity
compensation held by Ms. Brubacher shall become immediately
and fully vested and not subject to restriction.
Mr. Downer. As of December 31, 2006,
Mr. Downers annual base salary was $213,500.
Mr. Downer has a targeted annual cash bonus, for each
fiscal year that the agreement is in effect, of 70% of his then
current base salary. If Mr. Downers employment
agreement is terminated for constructive termination, or for any
reason other than its expiration as a result of
Mr. Downers decision not to continue his employment
with Mobility, the death or disability of Mr. Downer, or
just cause, as defined in the employment agreement,
Mr. Downer is entitled to receive a severance payment equal
to the salary, cash incentives and bonus earned by
Mr. Downer during the twelve month period immediately
preceding the date of such termination. In the event of a change
of control, as defined in the employment agreement, all equity
compensation held by Mr. Downer will become immediately and
fully vested and not subject to restriction.
Mr. Roberts. As of December 31,
2006, Mr. Roberts annual base salary was $150,000.
Mr. Roberts does not have an employment agreement with
Mobility. Mr. Roberts is, however, a party to a change-in
control agreement under which, for two (2) years after a
change in control, as defined in the agreement, if his
employment is involuntarily terminated, as defined in the
agreement, he will receive a lump sum of six months base
salary and six months of his maximum bonus for the year in
which he is terminated. In addition, in the event of a change of
control, all equity compensation held by Mr. Roberts will
become immediately and fully vested and not subject to
restriction.
Mr. Jones. As of December 31, 2006,
Mr. Jones annual base salary was $170,000. Mr. Jones
does not have either an employment agreement or a change in
control agreement.
24
The table below contains certain information concerning
termination and change in control payments as if the event
occurred on December 31, 2006 for our named executive
officers.
TERMINATION
AND CHANGE IN CONTROL PAYMENTS TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Change
|
|
|
After Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Control
|
|
|
in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o
|
|
|
Termination w/o
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
Just Cause or
|
|
|
Just Cause or
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
Constructive
|
|
|
Constructive
|
|
|
or with
|
|
|
Death /
|
|
|
Change in
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Just Cause
|
|
|
Disability
|
|
|
Control
|
|
Name
|
|
Type of Benefit
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(3)
|
|
|
Charles R. Mollo
|
|
Severance Pay
|
|
|
170,040
|
(1)
|
|
|
578,136
|
(2)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
Option Acceleration
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
RSU Acceleration
|
|
|
128,415
|
|
|
|
335,000
|
|
|
|
-0-
|
|
|
|
128,415
|
|
|
|
335,000
|
|
Joan W. Brubacher
|
|
Severance Pay
|
|
|
128,404
|
(1)
|
|
|
410,431
|
(2)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
Option Acceleration
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
RSU Acceleration
|
|
|
117,156
|
|
|
|
368,500
|
|
|
|
-0-
|
|
|
|
117,156
|
|
|
|
368,500
|
|
Jonathan Downer
|
|
Severance Pay
|
|
|
413,500
|
(3)
|
|
|
413,500
|
(3)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
Option Acceleration
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
RSU Acceleration
|
|
|
19,939
|
|
|
|
167,500
|
|
|
|
-0-
|
|
|
|
19,939
|
|
|
|
167,500
|
|
Randy Jones
|
|
Severance Pay
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
Option Acceleration
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
RSU Acceleration
|
|
|
37,024
|
|
|
|
123,531
|
|
|
|
-0-
|
|
|
|
37,024
|
|
|
|
123,531
|
|
Brian Roberts
|
|
Severance Pay
|
|
|
-0-
|
|
|
|
99,202
|
(4)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
Option Acceleration
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
RSU Acceleration
|
|
|
37,024
|
|
|
|
123,531
|
|
|
|
-0-
|
|
|
|
37,024
|
|
|
|
123,531
|
|
|
|
|
(1) |
|
These amounts reflect a lump sum payment equal to half of the
officers annual base salary during 2006. |
|
(2) |
|
These amounts reflect a lump sum payment equal to the
officers annual base salary during 2006 plus incentive
compensation assuming 100% achievement of EBITDA targets and
individual goals. |
|
(3) |
|
These amounts reflect a lump sum payment equal to the
officers annual base salary during 2006, incentive
compensation assuming 100% achievement of EBITDA targets, and
individual goals, and cash incentives. |
|
(4) |
|
These amounts reflect a lump sum payment equal to half of the
officers annual base salary during 2006, plus 50% of
incentive compensation assuming 100% achievement of EBITDA
targets and individual goals. |
Based upon the Compensation Standards report, we believe that
our severance and change in control provisions are consistent
with the programs and levels of severance and post employment
compensation of other companies in our peer group and believe
that these arrangements are reasonable.
25
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information concerning
unexercised stock options outstanding and unvested RSUs for each
of the NEOs as of the end of 2006.
|
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|
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|
|
|
|
|
|
|
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Option Awards
|
|
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Stock Awards
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Equity Incentive
|
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|
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|
|
|
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|
|
|
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Equity Incentive
|
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Plan Awards:
|
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|
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|
|
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Plan Awards:
|
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|
Market or
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
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Payout Value of
|
|
|
|
Number of
|
|
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Number of
|
|
|
|
|
|
|
|
|
Unearned Shares,
|
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Unearned Shares,
|
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|
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Securities
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Securities
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|
|
|
|
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|
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Units or
|
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Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Other Rights
|
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Other Rights
|
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|
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Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
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That Have
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That Have
|
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Options (#)
|
|
|
Options (#)
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|
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Price
|
|
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Expiration
|
|
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Not Vested
|
|
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Not Vested
|
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Name
|
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Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Charles R. Mollo
|
|
|
150,000
|
|
|
|
-0-
|
|
|
|
9.05
|
|
|
|
12/16/09
|
|
|
|
100,000
|
|
|
|
335,000
|
|
Joan W. Brubacher
|
|
|
2,858
|
|
|
|
-0-
|
|
|
|
1.27
|
|
|
|
03/22/07
|
|
|
|
110,000
|
|
|
|
368,500
|
|
|
|
|
10,714
|
|
|
|
-0-
|
|
|
|
0.84
|
|
|
|
11/19/08
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
42,860
|
|
|
|
-0-
|
|
|
|
0.99
|
|
|
|
02/07/09
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
25,000
|
|
|
|
-0-
|
|
|
|
9.05
|
|
|
|
12/16/09
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Tim Jeffries
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Jonathan Downer
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
50,000
|
|
|
|
167,500
|
|
Randy Jones
|
|
|
22,166
|
|
|
|
-0-
|
|
|
|
8.25
|
|
|
|
07/01/10
|
|
|
|
36,875
|
|
|
|
123,531
|
|
|
|
|
7,834
|
|
|
|
-0-
|
|
|
|
8.25
|
|
|
|
07/10/10
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Brian M. Roberts
|
|
|
15,000
|
|
|
|
-0-
|
|
|
|
7.44
|
|
|
|
09/11/09
|
|
|
|
36,875
|
|
|
|
123,531
|
|
|
|
|
15,000
|
|
|
|
-0-
|
|
|
|
8.48
|
|
|
|
05/26/10
|
|
|
|
N/A
|
|
|
|
N/A
|
|
OPTION
EXERCISES AND STOCK VESTED
The following table reflects the aggregate value realized by the
NEOs for option exercises and for restricted stock that vested
in 2006.
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|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
on Exercise(1)
|
|
|
on Vesting
|
|
|
on Vesting(2)
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Charles R. Mollo
|
|
|
38,526
|
|
|
|
233,039
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Joan W. Brubacher
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Tim Jeffries
|
|
|
86,423
|
|
|
|
468,092
|
|
|
|
17,500
|
|
|
|
140,700
|
|
Jonathan Downer
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Randy Jones
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Brian M. Roberts
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
(1) |
|
The value realized on exercise is the aggregate excess over the
fair market value of the option at the time of the exercise and
the grant price of the option times the number of options
exercised. |
|
(2) |
|
The value realized is the fair market value on the date the
restricted stock vested. |
PRINCIPAL
STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of April 20,
2007 by:
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|
|
each person or entity known by us to beneficially own 5% or more
of the outstanding shares of our common stock;
|
26
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|
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each of our Directors and Executive Officers; and
|
|
|
|
all of our Directors and Executive Officers as a group.
|
Unless otherwise noted, the persons named below have sole voting
and investment power with respect to the shares shown as
beneficially owned by them.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Beneficially
|
|
|
|
|
Name and Address of Beneficial Owner(1)
|
|
Owned(2)
|
|
|
Percentage(3)
|
|
|
Directors and Executive
Officers:
|
|
|
|
|
|
|
|
|
Charles R. Mollo(4)(5)
|
|
|
1,847,917
|
|
|
|
5.8
|
%
|
Larry M. Carr(6)
|
|
|
350,101
|
|
|
|
1.1
|
%
|
Jeffrey R. Harris(5)(7)
|
|
|
1,423,625
|
|
|
|
4.5
|
%
|
William O. Hunt(8)
|
|
|
136,801
|
|
|
|
*
|
|
Robert W. Shaner(9)
|
|
|
39,262
|
|
|
|
*
|
|
Jerre L. Stead(10)
|
|
|
225,691
|
|
|
|
*
|
|
Joan W. Brubacher(11)
|
|
|
283,244
|
|
|
|
*
|
|
Jonathan S. Downer
|
|
|
-0
|
-
|
|
|
*
|
|
Brian M. Roberts(12)
|
|
|
30,877
|
|
|
|
*
|
|
Darryl S. Baker(13)
|
|
|
99,072
|
|
|
|
*
|
|
Executive officers and directors
as a group (10 persons)
|
|
|
3,267,523
|
|
|
|
10.1
|
%
|
5% or more
Stockholders:
|
|
|
|
|
|
|
|
|
Adage Capital Partners, L.P.(14)
|
|
|
7,349,500
|
|
|
|
23.1
|
%
|
Alydar Partners, LLC(15)
|
|
|
2,049,835
|
|
|
|
6.4
|
%
|
|
|
|
* |
|
Represents beneficial ownership of less than 1%. |
|
|
|
(1) |
|
The address of all directors and Named Executive Officers is
c/o Mobility Electronics, Inc.,
17800 N. Perimeter Dr., Suite 200, Scottsdale,
Arizona 85255. |
|
(2) |
|
Beneficially owned shares, as defined by the
Securities and Exchange Commission, are those shares as to which
a person has voting or investment power, or both.
Beneficial ownership does not necessarily mean that
the named person is entitled to receive the dividends on, or the
proceeds from the sale of, the shares. |
|
(3) |
|
Percentage of beneficial ownership is based upon
31,804,992 shares of common stock outstanding as of
April 20, 2007. For each named person, this percentage
includes common stock that such person has the right to acquire
either currently or within 60 days of April 20, 2007,
including upon the exercise of an option or warrant. |
|
(4) |
|
Includes 21,864 shares of common stock that may be
purchased upon the exercise of outstanding options. |
|
|
|
Mr. Mollo is also deemed the beneficial owner of
(a) 6,468 shares of common stock held by his wife,
Janice Breeze-Mollo, over which she has sole voting and
investment power; (b) 14,696 shares of common stock
held by the JLM Revocable Trust, of which Ms. Breeze-Mollo
is the trustee and shares voting and investment power; and
(c) 30,966 shares of common stock held by the Breeze
Family LLC, of which Ms. Breeze-Mollo is the manager and
shares voting and investment power. |
|
|
|
Mr. Mollo shares voting and investment power over
(a) 8,000 shares of common stock held by The CRM
Revocable Trust, of which Mr. Mollo is the trustee; and
(b) 35,000 shares of common stock held by the John R.
Harris and Timothy D. Harris Irrevocable Trust, of which
Mr. Mollo is a trustee. |
|
|
|
Mr. Mollo shares voting and investment power with
Ms. Breeze-Mollo over (a) 85,441 shares of common
stock of which they are the holder of record as joint tenants
with right of survivorship; (b) 128,136 shares of
common stock that may be purchased upon the exercise of options
held by CJMO, LLC, a limited liability company in which
Mr. Mollo and Ms. Breeze-Mollo are members and
Mr. Mollo is the manager; (c) 71,470 shares of
common stock owned by the CRM-008 Trust, of which Mr. Mollo
and Ms. Breeze- |
27
|
|
|
|
|
Mollo are trustees; (d) 165,056 shares of common stock
held by La Luz Enterprises, L.L.C., of which Mr. Mollo
is the sole manager, and the CRM-008 Trust, of which
Mr. Mollo and Ms. Breeze-Mollo are trustees, is the
sole member; and (e) 27,886 shares of common stock
held by La Luz Enterprises-II, L.L.C., of which
Ms. Breeze-Mollo is the sole manager, and the JLM-008
Trust, of which Mr. Mollo and Ms. Breeze-Mollo are
trustees, is the sole member. |
|
(5) |
|
Mr. Mollo and Mr. Harris share voting and investment
power over (a) 63,804 shares of common stock held by
the Harris Family LLC, of which Mr. Harris is the manager
and the John R. Harris and Timothy D. Harris Irrevocable Trust,
of which Mr. Mollo is a co-trustee, is the majority member;
(b) 411,768 shares of common stock held by New
Horizons Enterprises, Inc., of which Mr. Harris owns
approximately 26% and is the president and director, and trusts
controlled by Mr. Mollo and Ms. Breeze-Mollo, the
CRM-008 Trust and the JLM-008 Trust, together own approximately
74%; and (c) 693,495 shares of common stock held by
New Vistas Investment Corporation, of which Mr. Harris owns
approximately 24% and is the president and director,
Ms. Breeze-Mollo is the vice president and director, and
trusts controlled by Mr. Mollo and Ms. Breeze-Mollo,
the CRM-008 Trust and the JLM-008 Trust, own approximately 73%.
Mr. Harris owns approximately 20%. |
|
(6) |
|
Includes 140,149 shares of common stock held by OHA
Financial, Inc., of which Mr. Carr is a director and
majority stockholder; 61,855 shares held with
Ms. Sharon Carr as tenants in common; 13,823 shares of
common stock that may be purchased upon the exercise of
outstanding warrants; 16,000 shares of common stock that
may be purchased upon the exercise of outstanding options; and
28,300 restricted stock units scheduled to vest within
60 days of April 20, 2007. |
|
(7) |
|
Includes 27,647 shares of common stock that may be
purchased upon the exercise of outstanding warrants;
16,000 shares of common stock that may be purchased upon
the exercise of outstanding options; and 5,800 restricted
stock units scheduled to vest, within 60 days of
April 20, 2007. |
|
(8) |
|
Includes 126,001 shares of common stock owned by B&G
Partnership Limited, which Mr. Hunt co-owns with his
spouse; 3,600 shares owned by BCG Partnership Limited, of
which Mr. Hunt is general partner; and
7,200 restricted stock units scheduled to vest within
60 days of April 20, 2007. |
|
(9) |
|
Includes 27,300 restricted stock units scheduled to vest within
60 days of April 20, 2007. |
|
(10) |
|
Includes 21,000 shares of common stock that may be
purchased upon the exercise of outstanding options; and 28,300
restricted stock units scheduled to vest within 60 days of
April 20, 2007. |
|
(11) |
|
Includes 78,574 shares of common stock that may be
purchased upon the exercise of outstanding options. Also
includes 201,812 shares of common stock that are pledged as
collateral for a margin loan, which is at a fair market interest
rate. |
|
(12) |
|
Includes 30,000 shares of common stock that may be
purchased upon the exercise of outstanding options. |
|
(13) |
|
Includes 50,000 shares of common stock that may be
purchased upon the exercise of outstanding options. |
|
(14) |
|
Based solely on a Form 4 filed with the Securities and
Exchange Commission on December 1, 2006. The Form 4
indicates that these shares are held directly by Adage Capital
Partners, L.P., a limited partnership of which Adage Capital
Partners GP, L.L.C. is the general partner. The Form 4
indicates that Adage Capital Partners GP, L.L.C. has discretion
over these shares, but disclaims beneficial ownership except to
the extent of its pecuniary interest therein. The address for
Adage Capital Partners GP, L.L.C. is 200 Clarendon Street,
52nd Floor,
Boston, MA 02116. |
|
(15) |
|
Based solely on a Schedule 13G/A filed with the Securities
and Exchange Commission on February 14, 2007, which
indicates that these shares are beneficially owned by Alydar
Partners, LLC and various related persons and entities. The
Schedule 13G/A reports shared power to vote, or direct the
voting, and shared power to dispose, or direct the disposition,
of a total of 2,049,835 shares. The address for Alydar
Partners, LLC is 222 Berkeley Street,
17th floor,
Boston, MA 02116. |
28
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
Party Transactions
There were no related party transactions in 2006.
On April 16, 2007, we completed the sale of substantially
all of the tangible assets related to our PCI expansion and
docking business pursuant to an agreement we entered into on
February 21, 2007 with Mission Technology Group, Inc. Randy
Jones, our former Senior Vice President and General Manager,
Connectivity, is the president and majority shareholder of
Mission.
As a result of this transaction and the closing on
April 13, 2007 of the sale of a portfolio of patents and
patents pending related to our PCI expansion and docking
technology to A.H. Cresant Group LLC, we received total net
proceeds of $4.855 million, which includes $100,000 in cash
that we will receive upon the removal of legacy liens against
the intellectual property involved in the sale, $825,000 in
cash, two secured promissory notes from Mission totaling
$3.93 million, and a 15% fully diluted equity interest in
Mission.
The first secured promissory note totals $2.5 million,
bears interest at 6% per year, and is payable in twenty
consecutive quarterly installments of $125,000 plus interest
beginning on May 1, 2008. In addition, beginning
May 1, 2008, and continuing until this first secured
promissory note has been paid in full, Mission must make a
prepayment under this note equal to 5% of its net profit for the
prior calendar quarter which will be applied to the last
quarterly installment due under the note at the time of such
payment. The second secured promissory note totals
$1.43 million, which is equal to the fair market value of
the inventory sold to Mission on the closing date, and bears
interest at 6% per year. Beginning in May 2007, Mission
must make monthly payments equal to the fair market value of any
closing inventory sold by Mission during such month, plus
interest, with the unpaid principal and interest payable under
this second secured promissory note due on November 1, 2008.
Given the related party nature of this transaction, we retained
Needham & Company, LLC to assist us in connection with
the disposition of our expansion and docking business. In
determining the sales price for the assets and liabilities that
we sold, we evaluated past performance and expected future
performance, and received an opinion from Needham that the
consideration to be received by us was fair from a financial
point of view. Our Board of Directors approved the transactions
following a separate review and recommended approval of the
Mission transaction by our Audit Committee.
Policy
Related to Related Party Transactions
Pursuant to our Audit Committee Charter, the Audit Committee, or
a comparable body of our board, must review and approve all
related party transactions. Our Audit Committee typically
analyzes the following factors, in addition to any other factors
the members of the Audit Committee deem appropriate, in
determining whether to approve a related party transaction:
|
|
|
|
|
whether the terms are fair to Mobility;
|
|
|
|
whether the transaction is material to Mobility;
|
|
|
|
the role the related party has played in arranging the related
party transaction;
|
|
|
|
the structure of the related party transaction; and
|
|
|
|
the interest of all related persons in the related party
transaction.
|
In addition, our Bylaws state that any contract or transaction
with Mobility in which one or more of our officers or directors
have a financial interest will not be void or voidable if:
|
|
|
|
|
the material facts as to the officer or directors
relationship or interest and as to the contract or transaction
are disclosed or are known to the board or committee, and the
board or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of
disinterested directors; or
|
29
|
|
|
|
|
the material facts as to the officer or directors
relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically
approved in good faith by a vote of the stockholders; or
|
|
|
|
the contract or transaction is fair as to Mobility as of the
time it is authorized, approved or ratified by the board, a
committee of the board, or the stockholders.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of a registered
class of our equity securities, to file initial reports of
ownership and reports of changes in ownership with the
Securities and Exchange Commission. Such persons are required to
furnish us with copies of all Section 16(a) reports they
file. To the Companys knowledge, based solely on a review
of the copies of such reports and written representations that
no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater
than 10% beneficial owners were complied with for 2006, except
that one Form 4 reporting one transaction was not timely
filed by each of Mr. Shaner, Mr. Harris and
Mr. Carr.
OTHER
BUSINESS
The Board knows of no matter other than those described herein
that will be presented for consideration at the meeting.
However, should any other matters properly come before the
meeting or any adjournment thereof, it is the intention of the
persons named in the accompanying proxy to vote on such matters
in accordance with their best judgment in the interests of the
Company.
STOCKHOLDER
PROPOSALS
Stockholder proposals intended for inclusion in the
Companys fiscal 2007 proxy statement and acted upon at the
Companys 2008 Annual Meeting of Stockholders (the
2008 Annual Meeting) must be received by the Company
at its executive offices at 17800 N. Perimeter Dr.,
Suite 200, Scottsdale, Arizona 85255, Attention: Corporate
Secretary, on or prior to December 28, 2007.
Stockholder proposals submitted for consideration at the 2008
Annual Meeting but not submitted for inclusion in the
Companys fiscal 2007 proxy statement, including
stockholder nominations for candidates for election as
directors, generally must be received by the Company at its
executive offices on or prior to December 28, 2007 in order
to be considered timely under SEC rules. However, if the date of
the 2008 Annual Meeting is a date that is not within
30 days before or after June 11, 2008, the anniversary
date of the Annual Meeting, notice by the stockholder of a
proposal must be received no later than the close of business on
the 10th calendar day following the day on which notice of
the date of the upcoming annual meeting is publicly disclosed.
Under applicable rules of the SEC, the Companys management
may vote proxies in their discretion regarding these proposals
if (1) the Company does not receive notice of the proposal
on or prior to December 28, 2007, or (2) the Company
receives written notice of the proposal on or prior to
December 28, 2007, describes the proposal in the
Companys proxy statement relating to the 2008 Annual
Meeting and states how the management proxies intend to vote
with respect to such proposal.
STOCKHOLDERS
SHARING THE SAME ADDRESS
The Company has adopted a procedure called
householding, which has been approved by the SEC.
Under this procedure, the Company will deliver only one copy of
the Companys Annual Report to stockholders for fiscal 2006
(the 2006 Annual Report) and this proxy statement to
multiple stockholders who share the same address (if they appear
to be members of the same family) unless the Company has
received contrary instructions from an affected stockholder.
Stockholders who participate in householding will continue to
receive separate proxy cards. This procedure reduces the
Companys printing and mailing costs and fees.
The 2006 Annual Report and this proxy statement are available at
the Companys web site at
http://www.mobilityelectronics.com.
The Company will deliver promptly upon written or oral request a
separate
30
copy of the 2006 Annual Report and this proxy statement to any
stockholder at a shared address to which a single copy of either
of those documents was delivered. To receipt a separate copy of
the 2006 Annual Report or this proxy statement, stockholders
should contact the Company at:
Investor Relations
Mobility Electronics, Inc.
17800 N. Perimeter Drive, Suite 200
Scottsdale, AZ 85255
(480) 596-0061
x155
ir@mobl.com
If you are a stockholder, share an address and last name with
one or more other stockholders and would like to revoke your
householding consent and receive a separate copy of the
Companys annual report or proxy statement in the future,
please contact Automatic Data Processing, Inc.
(ADP), either by calling toll free at
(800) 542-1061
or by writing to ADP, Householding Department, 51 Mercedes Way,
Edgewood, New York 11717. You will be removed from the
householding programs within 30 days of receipt of the
revocation of your consent.
A number of brokerage firms have instituted householding. If you
hold your shares in street name, please contact your
bank, broker or other holder of record to request information
about householding.
EXPENSES
OF SOLICITATION
All costs incurred in the solicitation of proxies will be borne
by us. We estimate those costs to be approximately $15,000. In
addition to solicitation by mail, our officers and employees may
solicit proxies by telephone, telegraph or personally, without
additional compensation. We may also make arrangements with
brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation materials to the beneficial
owners of shares of common stock held of record by such persons,
and we may reimburse such brokerage houses and other custodians,
nominees and fiduciaries for their
out-of-pocket
expenses incurred in connection therewith.
31
MOBILITY
ELECTRONICS, INC.
FORM 10-K
Accompanying this proxy statement is a copy of our Annual Report
for the fiscal year ended December 31, 2006 on
Form 10-K.
You should rely only on the information contained in or
incorporated by reference in this proxy statement to vote on the
matters proposed herein. We have not authorized anyone to
provide you with information that is different from what is
contained in this proxy statement. You should not assume that
the information contained in the proxy statement is accurate as
of any date other than the date hereof, and the mailing of this
proxy statement to our stockholders shall not create any
implication to the contrary.
By Order of the Board of Directors,
Brian M. Roberts
Secretary
Scottsdale, Arizona April 26, 2007
32
Proxy Card for Common Stockholders
Mobility Electronics, Inc.
This Proxy is solicited on behalf of the Companys Board of Directors.
The undersigned hereby (1) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of Mobility Electronics, Inc. (the Company) to be
held at the Scottsdale Marriott at McDowell Mountains, 16770 North Perimeter
Drive, Scottsdale, Arizona 85260 at 10:00 a.m. local time on June 11, 2007 (the
Meeting), and the Proxy Statement and Annual Report mailed therewith and (2)
appoints Brian M. Roberts and Joan W. Brubacher, or either of them, the
undersigneds proxy with full power of substitution for and in the name, place
and stead of the undersigned to vote all shares of Common Stock of the Company
owned by the undersigned standing in the name of the undersigned, or with
respect to which the undersigned is entitled to vote at the Meeting and any
adjournments thereof, on the following matters as indicated below and such
other business as may properly come before the Meeting.
This Proxy, when properly executed and timely returned, will be voted in
the manner directed herein by the stockholder. If no direction is made, this
Proxy will be voted FOR the nominee as director and in the discretion of the
proxies on any other matters that may properly come before the Meeting and any
adjournments thereof.
The undersigned hereby revokes any proxy heretofore given to vote or act
with respect to the Common Stock of the Company and hereby ratifies and
confirms all that the proxies, their substitutes, or any of them lawfully do by
virtue hereof.
PLEASE mark, sign, date and return the proxy card promptly using the
enclosed envelope. No postage is required if mailed in the United States.
(Continued and to be signed on the other side)
MOBILITY ELECTRONICS, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 2007.
1. |
o |
FOR the election of Larry M. Carr as director |
|
|
|
|
o |
WITHHOLD AUTHORITY to elect Larry M. Carr as director |
|
|
|
2. |
o |
In the discretion of the proxies on any other matters that may properly
come before the Meeting or any adjournments thereof including, without
limitation, a vote to adjourn or postpone the meeting. |
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. |
DATED: , 2007
Signature of Stockholder
Signature if held jointly
Please date this proxy and sign exactly as your name appears hereon. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name
Please mark, date, sign and mail your proxy promptly in the envelope provided.