def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No.
)
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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o Preliminary
Proxy Statement |
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o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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Arris Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
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Title of each class of securities to which
transaction applies:
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(2) |
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transaction applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
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Identify the previous filing by registration statement number,
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TABLE OF CONTENTS
ARRIS
GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19,
2010
To the
Stockholders of ARRIS Group, Inc.:
The Annual Meeting of Stockholders of ARRIS Group, Inc. will be
held at the Companys corporate headquarters, located at
3871 Lakefield Drive, Suwanee, Georgia, on Wednesday,
May 19, 2010, at 10:00 a.m. local time, for the
purposes of:
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1.
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electing nine directors;
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2.
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ratifying the retention of Ernst & Young LLP as the
independent registered public accounting firm for ARRIS Group,
Inc. for 2010; and
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3.
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transacting such other business as may properly be brought
before the meeting or any adjournment(s) thereof.
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These matters are more fully described in the proxy statement
accompanying this notice.
As stockholders of ARRIS, your vote is important. Whether or not
you plan to attend the Annual Meeting in person, it is important
that you vote as soon as possible to ensure that your shares are
represented. Because of a change in the stock exchange rules,
unlike previous annual meetings, your broker will NOT be able to
vote your shares with respect to the election of directors if
you have not provided directions to your broker. I strongly
encourage you to submit your voting instruction card and
exercise your right to vote as a stockholder. Therefore, I urge
you to promptly vote and submit your proxy via the Internet, by
telephone or by signing, dating, and returning the enclosed
proxy card in the accompanying reply envelope. If you decide to
attend the annual meeting, you will be able to vote in person,
even if you previously have submitted your proxy.
The Board of Directors fixed the close of business on
March 24, 2010, as the record date for the determination of
stockholders entitled to notice of, and to vote at, the meeting
or any adjournment(s) thereof. A complete list of the
stockholders entitled to vote at the meeting will be open for
examination at the Companys corporate headquarters by any
stockholder for any purpose germane to the meeting during
ordinary business hours for ten days prior to the meeting and at
the meeting.
A copy of our 2009 annual report is enclosed. Additional copies
of these materials may be obtained without charge by writing the
Secretary of ARRIS Group, Inc., 3871 Lakefield Drive, Suwanee,
Georgia 30024.
BY ORDER OF THE BOARD OF
DIRECTORS
Lawrence A. Margolis, Secretary
Suwanee, Georgia
April 9, 2010
NOTICE OF
INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding Internet Availability of Proxy
Materials for the Shareholder Meeting to be Held on May 19,
2010
The proxy materials for the Companys Annual Meeting of
Shareholders, including the 2009
Form 10-K,
the Proxy Statement and other materials are available over the
Internet at www.arrisi.com/proxy.
PROXY
STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
OF ARRIS GROUP, INC.
To Be Held May 19, 2010
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of ARRIS
Group, Inc., a Delaware corporation, in connection with the
Annual Meeting of Stockholders of the Company to be held on
May 19, 2010 at 10:00 a.m. local time at the
Companys corporate headquarters, 3871 Lakefield Drive,
Suwanee, Georgia, and any adjournment(s) thereof. The
Companys corporate headquarters is located at 3871
Lakefield Drive, Suwanee, Georgia 30024 (telephone
678-473-2000).
This proxy statement and form of proxy are first being mailed to
stockholders on or about April 9, 2010.
This solicitation is being made by mail, although directors,
officers and regular employees of the Company may solicit
proxies from stockholders personally or by telephone,
e-mail or
letter. The costs of this solicitation will be borne by the
Company. The Company may request brokerage houses, nominees or
fiduciaries and other custodians to forward proxy materials to
their customers and will reimburse them for their reasonable
expenses in so doing. In addition, the Company has retained
Morrow & Co., LLC, 470 West Ave., Stamford, CT
06902 to assist in the solicitation for a fee of approximately
$7,500 plus expenses.
VOTING
Shares of Common Stock of the Company represented by proxies in
the accompanying form, which are properly executed and returned
to the Company (and which are not effectively revoked), will be
voted at the meeting in accordance with the stockholders
instructions contained therein. In the absence of contrary
instructions, except as discussed below, shares represented by
such proxies will be voted IN FAVOR OF Proposal 1 to
elect as directors the nominees listed below, IN FAVOR OF
Proposal 2 to ratify the retention of Ernst &
Young LLP as the independent registered public accounting firm
for the Company for 2010, and in the discretion of the appointed
proxies upon such other business as may properly be brought
before the meeting.
Each stockholder has the power to revoke his or her proxy at any
time before it is voted by (1) delivering to the Company,
prior to or at the meeting, written notice of revocation or a
later dated proxy, or (2) attending the meeting and voting
his or her shares in person.
The Board of Directors fixed the close of business on
March 24, 2010, as the record date for the determination of
stockholders entitled to notice of, and to vote at, the meeting
or any adjournment(s) thereof. As of that date,
126,039,760 shares of Common Stock were outstanding. Each
holder of Common Stock is entitled to one vote per share.
A quorum, which is a majority of the outstanding shares of
Common Stock as of the record date, must be present in order to
hold the meeting. Your shares will be counted as being present
at the meeting if you appear in person at the meeting or if you
submit a properly executed proxy, whether or not such proxy is
voted.
A broker non-vote occurs when a nominee holding
shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have the discretionary
voting power with respect to that item and has not received
instructions from the beneficial owner. Broker
non-votes are not deemed to be entitled to vote for
purposes of determining whether stockholder approval of that
matter has been obtained. As a result, broker
non-votes are not included in the tabulation of the
voting results on the election of directors or other issues
requiring the approval of a majority of the shares of Common
Stock present or represented by proxy and entitled to vote.
Proxies that contain a broker non-vote are counted towards a
quorum and voted on the matters indicated. If a quorum is
present, the votes required to approve the various matters
presented to stockholders at the meeting shall be as follows:
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Proposal 1 (Election of Directors) In
the absence of a contested election, the nominees receiving the
affirmative vote of a majority of the votes cast for the
election of directors will be elected. In the event of a
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contested election, the nominees receiving the most votes will
be elected. Abstentions and broker non-votes will not be counted
as votes cast and will have no effect on the result of the vote.
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Proposal 2 (Retention of Ernst & Young LLP as
the Independent Registered Public Accounting
Firm) Ratification of the retention of
Ernst & Young LLP as the independent registered public
accounting firm for the Company for 2010 requires the
affirmative vote of holders of a majority of the shares present
or represented by proxy and entitled to vote at the meeting.
Abstentions will have the same effect as a negative vote. Broker
non-votes will have no effect on the outcome of this proposal.
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PROPOSAL 1
ELECTION OF DIRECTORS
In the absence of contrary instructions, the proxies received
will be voted for the election as directors of the nominees
listed below, all of whom presently serve on the Board of
Directors, to hold office until the next annual meeting of
stockholders or until their successors are elected and
qualified. Although the Board of Directors does not contemplate
that any nominee will decline or be unable to serve as director,
in either such event the proxies will be voted for another
person selected by the Board of Directors, unless the Board of
Directors acts to reduce the size of the Board of Directors in
accordance with the provisions of ARRIS by-laws. The
current number of Directors has been set by the Board at nine.
Upon his re-election at this years Annual Meeting,
Mr. Stanzione is expected to serve as Chairman of the Board.
Effective March 8, 2010, the Board of Directors amended and
restated the Companys By-Laws to implement a majority
voting standard in the election of Directors. The amendment
provides, in the absence of a contested election (as defined in
the By-Laws), each nominee shall be elected by the vote of a
majority of the votes cast for such nominee. If a nominee who is
an incumbent director (in the absence of a contested election)
is not elected, the director shall promptly tender his or her
resignation to the Board of Directors, subject to acceptance by
the Board of Directors. The Nominating and Governance Committee
will consider the resignation and make a recommendation to the
Board of Directors. The Board of Directors must determine
whether to accept the resignation and must publicly disclose its
decision and the rationale behind its decision within ninety
days from the date of the certification of the shareholder vote.
If a directors resignation is accepted or a nominee who is
not an incumbent director is not elected, the Board of Directors
may fill the resultant vacancy by appointment or election or may
reduce the size of the Board pursuant to the By-Laws of the
Company.
NOMINEES
TO SERVE FOR A ONE-YEAR TERM EXPIRING IN 2011
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Name:
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Alex B. Best
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Age:
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69
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Director since:
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2003
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ARRIS Board Committee:
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Compensation Committee, Nominating and Corporate Governance
Committee and Technology Committee (Chairman)
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Principal occupation and recent business experience:
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Prior to his retirement in 2000, Mr. Best was the Executive Vice
President of Cox Communications, Inc. From 1986 through 1999,
he served as the Vice President of Engineering of Cox. Since
2000, Mr. Best has continued to consult for Cox on a part-time
basis. From 1966 through 1986, Mr. Best worked for
Scientific-Atlanta and was involved in nearly every aspect of
its cable television product development and business
applications. Mr. Best served as Chairman of the National Cable
Television Associations Engineering Advisory Committee
from 1995 until 2000.
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Other directorships:
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Concurrent Computer Corporation (until December 2007)
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Name:
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Harry L. Bosco
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Age:
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64
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Director since:
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2002
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ARRIS Board Committee:
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Audit Committee and Nominating and Corporate Governance
Committee (Chairman)
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Principal occupation and recent business experience:
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Since 2000, Mr. Bosco has served as the Chief Executive Officer
and President of OpNext, Inc. As of April 1, 2009, Mr. Bosco
became the Chairman of the Board of OpNext, Inc. and no longer
serves as the Chief Executive Officer and President. From 1965
to 2000, Mr. Bosco held numerous senior management positions
within Lucent Technologies, formerly Bell Labs.
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Other directorships:
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OpNext, Inc.
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Name:
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James A. Chiddix
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Age:
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64
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Director since:
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2009
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ARRIS Board Committee:
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Technology Committee and Nominating and Corporate Governance
Committee
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Principal occupation and recent business experience:
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Mr. Chiddix has over 35 years of experience in the cable
industry. Prior to his retirement in 2007, Mr. Chiddix was the
Chairman and Chief Executive Officer of OpenTV Corporation.
From 2007 to 2009, he served as the Vice-Chairman of the Board
of OpenTV. Prior to 2004, his previous roles included President
at MystroTV (a division of Time Warner), Chief Technology
Officer and Senior Vice President, Engineering and Technology at
Time Warner Cable, Senior Vice President, Engineering at Oceanic
Cable, and General Manager at Waianae Cablevision.
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Other directorships:
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Virgin Media, Inc., Dycom Industries, Inc., Symmetricom, Inc.,
Vyyo Inc. (ceased to be public in December 2008), and OpenTV
Corporation (director from 2004 to 2009), Shougang Concord
Technology Holdings Ltd.
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Name:
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John Anderson Craig
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Age:
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67
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Director since:
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1998
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ARRIS Board Committee:
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Audit Committee and Compensation Committee
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Principal occupation and recent business experience:
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Mr. Craig is a business consultant. From 1999 through 2000, Mr.
Craig was Chief Marketing Officer of Nortel Networks, Inc. From
1981 to 1999, he held various senior management positions within
Northern Telecom Inc., now known as Nortel Networks Inc.
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Other directorships:
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CAE, Inc., and Bell Canada International (until liquidated in
2006)
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Name:
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Matthew B. Kearney
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Age:
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70
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Director since:
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2003
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ARRIS Board Committee:
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Audit Committee (Chairman) (Financial Expert)
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Principal occupation and recent business experience:
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Prior to his retirement in 1997, Mr. Kearney was the Chief
Financial Officer of Griffin Gaming & Entertainment, Inc.
(formerly Resorts International, Inc.). Mr. Kearney also served
as President of Griffin Gaming & Entertainment, Inc. from
1993 through 1995. Prior to joining Resorts International,
Inc., Mr. Kearney worked in public accounting for Price
Waterhouse & Co. Mr. Kearney is a CPA (inactive) in New
York and Florida.
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Name:
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William H. Lambert
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Age:
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73
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Director since:
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1997
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ARRIS Board Committee:
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Compensation Committee (Chairman) and Nominating and Corporate
Governance Committee
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Principal occupation and recent business experience:
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Mr. Lambert is retired. From 1988 to 1997, Mr. Lambert served
as the Chairman, President and Chief Executive Officer of TSX
Corporation, which was acquired by ARRIS in 1997. Mr. Lambert
has been a private investor since 1998.
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Name:
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John R. Petty
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Age:
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79
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Director since:
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1993
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ARRIS Board Committee:
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Audit Committee (Financial Expert) and Nominating and Corporate
Governance Committee. Mr. Petty is also the Lead Independent
Director.
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Principal occupation and recent business experience:
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Mr. Petty is the Chairman of TECSEC Incorporated, a data
security company. Mr. Petty also has served as the Chairman of
Federal National Payables, Inc., Federal National Commercial,
Inc., and Federal National Services, Inc., since 1992. Mr.
Petty has been a private investor since 1988.
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Name:
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Robert J. Stanzione
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Age:
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62
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Director since:
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1998
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ARRIS Board Committee:
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Technology Committee
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Principal occupation and recent business experience:
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Mr. Stanzione has been Chief Executive Officer of the Company
since 2000. From 1998 through 1999, Mr. Stanzione was President
and Chief Operating Officer of the Company. Mr. Stanzione has
been Chairman of the Board of Directors since 2003. From 1995
to 1997, he was President and Chief Executive Officer of Arris
Interactive L.L.C. From 1969 to 1995, he held various positions
with AT&T Corporation.
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Other directorships:
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National Cable & Telecommunications Association (NCTA) and
Symmetricom, Inc.
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Name:
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David A. Woodle
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Age:
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55
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Director since:
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2007
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Principal occupation and recent business experience:
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In April 2008, Mr. Woodle became Chairman of the Board and Chief
Executive Officer of NanoHorizons Inc., a nanotechnology company
that specializes in producing nanosilver particles for
anti-microbial applications. Prior to ARRIS acquisition of
C-COR Incorporated on December 14, 2007, Mr. Woodle was
C-CORs Chairman and Chief Executive Officer, positions
that he had held since 2000. Prior to joining C-COR, Mr. Woodle
was Vice President and General Manager of Raytheon E-Systems/HRB
Systems, and led merger transition efforts to successfully
position that company in the wireless data telecommunications
marketplace.
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Each of the nominees brings with him a wealth of relevant
business experience which has and continues to qualify him for
service on the Board:
Alex Best. Mr. Best is Chairman of the
Technology Committee. Mr. Best brings to the Board
industry-specific engineering and technology experience derived
from an extensive engineering and executive career, both on the
behalf of major equipment suppliers (Scientific Atlanta, now
part of Cisco Incorporated) and a major system operator (Cox
Communications, Inc.).
Harry L. Bosco. Mr. Bosco is Chairman of
the Nominating and Corporate Governance Committee.
Mr. Bosco brings to the Board broad recent experience as an
executive, including being the CEO of a public company, in the
telecommunication technology equipment supply business focused
on telecom operators.
James A. Chiddix. Mr. Chiddix, our newest
director, has spent a career of 35 years in the cable
industry, including senior roles at both major service providers
and equipment suppliers. Mr. Chiddix brings rich industry
specific technology and product experience, including video
experience, to the Board from both an operator and supplier
point of view derived from having served as Chief Technology
Officer of Time Warner Cable, currently the second largest
Multiple System Operator in the United States, and as Chief
Executive Officer of Open TV, a middle ware supplier to the
cable industry.
John Anderson Craig. Mr. Craigs
career was spent largely at Nortel Networks, Inc. and its
affiliates and predecessors. Mr. Craig held various senior
management positions culminating as Chief Marketing Officer.
Mr. Craig brings a wealth of worldwide communication
technology sales and marketing expertise to the Board relating
to both the telecommunication operator and cable operator
customer segments.
Matthew B. Kearney. Mr. Kearney is the
Chairman of the Audit Committee and one of two financial experts
on the Board. He brings a wealth of financial expertise from
public companies experience. Mr. Kearney is a CPA
(inactive) and has served as the CFO of a major public company,
Griffin Gaming and Entertainment, Inc. (formerly Resorts
International).
William H. Lambert. Mr. Lambert is the
Chairman of the Compensation Committee. He brings a wealth of
manufacturing and business operational experience as an
equipment supplier to the cable industry to the Board. He was
Chairman and CEO of TSX Corporation, a publicly traded company
prior to its acquisition by ARRIS in 1997. Mr. Lambert
completed a compensation committee leadership development
program for directors at the Harvard Business School in 2006 and
brings significant experience and public company compensation
expertise to the Board.
John R. Petty. Mr. Petty is our Lead
Director and one of our two financial experts on the Board.
Mr. Petty brings substantial financial expertise and
financial industry experience to the Board. His career included
substantial
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executive experience in investment banking, commercial banking,
and finance. Mr. Petty has served as Chairman and CEO of
the 10th largest US commercial bank, and United States Under
Secretary of the Treasury, and currently he serves as Chairman
of Federal National Payables, Inc., Federal National Commercial,
Inc. and Federal National Services, Inc.
David W. Woodle. Mr. Woodle brings
significant experience in cable industry technology equipment
sales and operations to the company including experience as
Chairman and CEO of C-COR prior to its acquisition by ARRIS in
2007. Mr. Woodles experience includes the planning
and execution of strategic merger and acquisition transition
efforts at both C-COR and Raytheon
E-systems/HRB
systems. Mr. Woodle will qualify as an independent director
at the end of this year and is the only non
independent director other than Mr. Stanzione.
Robert J. Stanzione. Mr. Stanzione is the
Chairman and CEO of the Company and is the sole management
director serving on the Board.
The Board of Directors believes that these nominees would
provide a good cross-section of skills and experience to the
Board of Directors and that the stockholders of the Company
would be well-served by these nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THESE NOMINEES.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
LLP
AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed the
firm of Ernst & Young LLP to serve as the independent
registered public accounting firm of ARRIS Group, Inc. for the
fiscal year ending December 31, 2010, subject to
stockholder approval. This firm has audited the accounts of the
Company since 1993. If stockholders do not ratify this
appointment, the Committee will consider other independent
registered public accounting firms. One or more members of
Ernst & Young LLP are expected to be present at the
Annual Meeting, will be able to make a statement if they so
desire, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
RATIFICTION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM.
6
SECURITY
OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table sets forth, as of March 24, 2010,
certain information with respect to the Common Stock of the
Company that may be deemed beneficially owned by each director
or nominee for director of the Company, the officers named in
the Summary Compensation Table and by all directors, officers
and nominees as a group.
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Shares
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Shares that
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Total Shares
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Beneficially
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May Be Acquired
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Percentage of Class
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Beneficial Owner(1)
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Owned(2)
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Within 60 Days
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if > 1%(3)
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Alex B. Best
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38,100
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2,100
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*
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Harry L. Bosco
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38,400
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2,100
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*
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James A. Chiddix
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2,000
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2,100
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*
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John Anderson Craig
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68,100
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12,100
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*
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Matthew B. Kearney
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38,100
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2,100
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*
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William H. Lambert
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56,350
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12,100
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*
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John R. Petty
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56,150
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17,100
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*
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David A. Woodle
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24,951
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603,960
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*
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Robert J. Stanzione
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234,884
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1,226,709
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1.1
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%
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Lawrence A. Margolis
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134,924
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410,351
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*
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David B. Potts
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53,890
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298,416
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*
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James D. Lakin
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109,055
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238,527
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*
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Ronald M. Coppock
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48,990
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99,099
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*
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All directors, nominees and executive officers as a group
including the above named persons (17 persons)
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3.4
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%
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* |
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Percentage of shares beneficially owned does not exceed one
percent of the class. |
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(1) |
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Unless otherwise indicated, each person has sole investment
power and sole voting power with respect to the securities
beneficially owned by such person. |
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(2) |
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Includes an aggregate of 231,850 stock units awarded to
directors (other than Mr. Stanzione) that convert on a
one-for-one
basis into shares of Common Stock at a time predetermined at the
time of issuance. |
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(3) |
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The shares underlying all equity awards that may be exercised
within 60 days are deemed to be beneficially owned by the
person or persons for whom the calculation is being made and are
deemed to have been exercised for the purpose of calculating
this percentage, including the shares underlying options where
the exercise price is above the current market price. |
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 24,
2010, with respect to each person who is known by the management
of the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock. Unless otherwise indicated,
the beneficial owner has sole voting and investment power and
the information below is based upon SEC filings by the person.
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Amount and Nature of
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Percent
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Beneficial Owner
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Beneficial Ownership
|
|
of Class
|
|
BlackRock, Inc.(1)
|
|
|
11,452,645
|
|
|
|
9.14
|
%
|
EARNEST Partners, LLC(2)
|
|
|
7,180,794
|
|
|
|
5.70
|
%
|
Shamrock Activist Value Fund, L.L.C.(3)
|
|
|
7,155,514
|
|
|
|
5.69
|
%
|
|
|
|
(1) |
|
The address for BlackRock, Inc. is 40 East 52nd Street, New
York, NY 10022. |
|
(2) |
|
EARNEST Partners LLC has sole voting power with respect to
2,368,241 shares, shared voting power with respect to
1,644,634 shares, and sole dispositive power with respect
to 7,180,794 shares. The address for EARNEST Partners LLC
is 1180 Peachtree Street NE, Suite 2300, Atlanta, GA 30309. |
|
(3) |
|
The address for Shamrock Activist Value Fund, L.L.C. is
4444 W. Lakeside Drive, Burbank, California 91505. |
7
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys directors and executive officers and persons who
own more than ten percent of a registered class of the
Companys equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of the
Companys Common Stock and other equity securities. To the
Companys knowledge, based solely on review of the copies
of such reports furnished to the Company or filed with the SEC
and written representations that no other reports were required,
for the fiscal year ended December 31, 2009 all
Section 16(a) filing requirements applicable to its
directors, executive officers and
greater-than-ten-percent
beneficial owners were properly filed.
EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth information concerning Common
Stock that may be issued upon exercise of options, warrants and
rights under all equity compensation plans as of
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
|
|
|
|
|
|
for Future Issuance
|
|
|
|
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
Number of Securities to be
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Issued Upon Exercise of
|
|
|
Outstanding
|
|
|
(Excluding
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
Warrants and Rights(1)
|
|
|
and Rights(2)
|
|
|
1st Column)(3)
|
|
|
Equity compensation plans approved by security holders
|
|
|
13,309,393
|
|
|
$
|
10.03
|
|
|
|
11,210,294
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13,309,393
|
|
|
$
|
10.03
|
|
|
|
11,210,294
|
|
|
|
|
(1) |
|
Includes unexercised vested stock options, unvested stock
options, unvested restricted stock, unvested stock units, and
unvested performance shares. |
|
(2) |
|
The weighted-average exercise price is calculated on the
outstanding options and does not include restricted stock or
rights with no exercise price. |
|
(3) |
|
Includes securities available for future issuance under
ARRIS stock incentive plans (9,292,566) and 2001 Employee
Stock Purchase Plan (1,917,728). |
BOARD AND
COMMITTEE MATTERS
DIRECTOR
INDEPENDENCE
For purposes of determining the independence of its directors,
the Board of Directors has adopted the definition of
independence used in the listing standards of the NASDAQ. It
also considers the definition of independence used in the
Internal Revenue Code and Securities Exchange Act of 1934 for
purposes of determining whether members of the Audit Committee
and Compensation Committee are independent. In making
determinations, the Board of Directors considers that in the
ordinary course of business, transactions may occur between the
Company and companies at which some of the directors are or have
been outside directors. The Board of Directors determines
whether the transaction and whether it has any implications to
the directors independence. A copy of the director
independence standards is available on the Companys
website at www.arrisi.com under the caption Investor
Relations: Corporate Governance. Based upon these standards,
the Board of Directors has determined that all of the directors,
other than Robert J. Stanzione and David A. Woodle, who
constitute a majority of the Board of Directors, are
independent. Mr. Stanzione, as the Companys Chief
Executive Officer and President, and Mr. Woodle, as a
former officer of C-COR, are not considered independent.
Mr. Woodle will be considered independent, under the
applicable rules noted above at the end of 2010.
8
CONSIDERATION
OF RISKS
On a periodic basis the Companys management reviews the
primary risks that the Company faces and assesses the adequacy
of the means through which the Company manages those risks. Some
risks, such as the focus of the Companys business on the
cable industry and its significant sales to the dominant cable
MSOs are intrinsic to its business and are largely unavoidable
without a significant change in strategic focus. Others, such as
the risk of property damage or business interruption from
weather or other causes are managed through maintaining
insurance of types and at levels that the Company believes are
reasonable given the nature of its assets and business and
through the maintenance of backup storage and processing
capability offsite. Still others, such as credit risk, currency
risk and country risk, are actively managed through policies and
oversight designed to minimize the Companys ultimate
exposure to loss. On an annual basis, the Companys
management, as part of its strategic planning process and annual
budget process, reviews with the Board of Directors (and with
the Audit Committee with respect to certain financial risks) the
risks that it considers the most significant as well as the
approaches used to manage or mitigate those risks. In addition,
the Board of Directors informally considers risk-related matters
on a more frequent basis and also in connection with its
consideration of specific transaction and issues. Similarly, on
at least an annual basis the Companys management, as part
of the annual budget process, reviews with the Board of
Directors technological developments affecting the industry and
the research and development program that respond to those
developments and risks.
COMPENSATION
OF DIRECTORS
Cash Fees. The non-employee directors receive
director fees. During 2009, the Company paid its non-employee
directors:
|
|
|
|
|
an annual cash retainer of $40,000 (paid in equal quarterly
installments);
|
|
|
|
$1,000 for each committee meeting that they attended in person
or;
|
|
|
|
$1,000 for each teleconference committee meeting in which they
participated; and
|
|
|
|
$500 for each in-person committee meeting that they attended by
telephone
|
The Lead Independent Director, John Petty, receives an
additional annual cash retainer of $10,000. Each member of the
Audit Committee receives an additional annual cash retainer of
$5,000, and the respective Chairmen of our Board committees will
continue to receive the following additional annual cash
retainers:
|
|
|
|
|
Audit Committee: $10,000
|
|
|
|
Compensation Committee: $7,500
|
|
|
|
Nominating and Corporate Governance Committee: $5,000
|
|
|
|
Technology Committee: $5,000
|
Stock Awards and Minimum Holding
Requirement. Each non-employee director also
receives annual compensation paid in the form of stock units.
Stock units vest in fourths in sequential calendar quarters. The
number of units is determined by dividing the dollar amount of
the award by the closing price of the Common Stock on the
trading day preceding the day of grant rounded to the nearest
one hundred units. One-half of the number of stock units
converts, on a
one-for-one
basis, into shares of the Companys Common Stock when such
director is no longer a member of the Board. The remaining units
convert, on a
one-for-one
basis, into shares of the Companys Common Stock at a date
selected by the individual director. The number of stock units
that are granted to directors that they do not convert until no
longer a director i.e., a hold until
retirement period functions as a minimum
holding requirement. The number of units held by each director
that do not convert until he is no longer a director is set
forth in the table below under the caption Director Compensation
Table.
For 2009, the stock unit portion of director compensation was
$75,000. Of the 2009 total award, $50,000 was paid in stock
units as of July 1, 2009. The additional $25,000 was paid
as of January 2, 2009. For 2010, the stock unit portion of
director compensation has been increased to $100,000, $50,000 of
which was paid as of January 2, 2010 and the remaining
$50,000 of which will be paid as of July 1, 2010.
9
Reimbursements. Directors are reimbursed for
reasonable expenses (including costs of travel, food and
lodging) incurred in attending Board, committee and shareholder
meetings. Directors also are reimbursed for reasonable expenses
associated with other business activities related to their Board
of Directors service, including participation in director
education programs and memberships in director organizations.
Liability Insurance. The Company maintains
customary directors and officers liability insurance
and is obligated under its Bylaws to indemnify its officers and
directors under certain circumstances.
Director Compensation Table. The following
tables set forth information about the compensation paid to the
non-employee members of the Board of Directors for the last
fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Held
|
|
|
Fees Earned or
|
|
|
|
|
|
Until Board
|
Name(1)
|
|
Paid in Cash ($)
|
|
Stock Awards ($)
|
|
Total Compensation ($)
|
|
Retirement
|
|
Alex B. Best
|
|
|
51,000
|
|
|
|
74,721(2
|
)
|
|
|
125,721
|
|
|
|
20,150
|
|
Harry L. Bosco
|
|
|
61,000
|
|
|
|
74,721(2
|
)
|
|
|
135,721
|
|
|
|
31,800
|
|
James A. Chiddix
|
|
|
20,000
|
|
|
|
25,020(3
|
)
|
|
|
45,020
|
|
|
|
2,000
|
|
John Anderson Craig
|
|
|
60,000
|
|
|
|
74,721(2
|
)
|
|
|
134,721
|
|
|
|
55,550
|
|
Matthew B. Kearney
|
|
|
58,750
|
|
|
|
74,721(2
|
)
|
|
|
133,471
|
|
|
|
30,350
|
|
William H. Lambert
|
|
|
52,500
|
|
|
|
74,721(2
|
)
|
|
|
127,221
|
|
|
|
55,650
|
|
John R. Petty
|
|
|
65,750
|
|
|
|
74,721(2
|
)
|
|
|
140,471
|
|
|
|
24,050
|
|
David A. Woodle
|
|
|
40,000
|
|
|
|
74,721(2
|
)
|
|
|
114,721
|
|
|
|
12,300
|
|
|
|
|
(1) |
|
Mr. Stanzione, as an employee of the Company, receives no
additional compensation for his service and participation as a
member of the Board. |
|
(2) |
|
Historically, the non-employee members of the Board of Directors
received stock units granted on July 1 each year that vested
quarterly through June 30 of the following year. In 2009, an
increase in director compensation in restricted unit fees
resulted in an additional grant on January 2 each year that
vested quarterly through December 31 of the same year.
Therefore, the 2009 fiscal year stock awards compensation is
comprised of half of the July 1, 2008 grant, all of the
January 2, 2009 grant and half of the July 1, 2009
grant. The number of stock units granted on July 1, 2008
was 5,800 per member, which was determined by dividing $50,000
by the July 1, 2008 closing price of $8.64 per share and
rounding to the nearest 100 units. The number of stock
units granted on January 2, 2009 was 3,100 per member,
which was determined by dividing $25,000 by the January 2,
2009 closing price of $7.95 per share and rounding to the
nearest 100 units. The number of stock units granted on
July 1, 2009 was 4,000 per member, which was determined by
dividing $50,000 by the July 1, 2009 closing price of
$12.51 per share and rounding to the nearest 100 units. As
of December 31, 2009, the number of vested stock awards for
the grant on July 1, 2009, consisted solely of restricted
stock units, held by each non-employee director is as follows:
Alex B. Best, 2,000; Harry L. Bosco, 2,000; James A. Chiddix,
2,000; John A. Craig, 2,000; Matthew B. Kearney, 2,000; William
H. Lambert, 2,000; and John R. Petty, 2,000; David Woodle, 2,000. |
|
(3) |
|
James A. Chiddix joined the board as of July 1, 2009.
Therefore the 2009 calendar year stock awards compensation is
comprised of one-half of the award from the July 1, 2009
grant. As of December 31, 2009, 2,000 of the units granted
on July 1, 2009 to James A Chiddix had vested. |
10
COMMITTEES
OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors has standing Audit, Compensation,
Nominating and Corporate Governance, and Technology committees.
The table below shows current membership for each of the Board
committees.
|
|
|
|
|
|
|
|
|
Compensation
|
|
Nominating and Corporate
|
|
Technology
|
Audit Committee
|
|
Committee
|
|
Governance Committee
|
|
Committee
|
|
Harry L. Bosco
|
|
Alex B. Best
|
|
Alex B. Best
|
|
Alex B. Best*
|
John Anderson Craig
|
|
John Anderson Craig
|
|
Harry L. Bosco*
|
|
James A. Chiddix
|
Matthew B. Kearney*
|
|
William H. Lambert*
|
|
James A. Chiddix
|
|
Robert J. Stanzione
|
John R. Petty
|
|
|
|
William H. Lambert
|
|
|
|
|
|
|
John R. Petty
|
|
|
The Board of Directors held five meetings in 2009. During 2009,
each of the directors attended 75% or more of the total of all
meetings held by the Board and the committees on which the
director served.
The Company has not adopted a formal policy on Board
members attendance at annual meetings of stockholders;
however, all directors are encouraged to attend the meetings.
All of the Companys directors attended the 2009 annual
meeting of stockholders on May 21, 2009.
Audit
Committee
The Audit Committee in 2009 consisted of Messrs. Kearney
(Chairman), Bosco, Craig, and Petty. Information regarding the
functions performed by the Audit Committee is set forth in the
Report of the Audit Committee, included in this
proxy statement. The Audit Committee is governed by a written
charter that is available on the Companys website at
www.arrisi.com. The Board of Directors believes that each
of its Audit Committee members is independent and financially
literate as defined by the SEC and the current listing standards
of the NASDAQ. The Board has identified Matthew B. Kearney and
John R. Petty as audit committee financial experts,
as defined by the SEC. The Audit Committee held eleven meetings
in 2009.
Compensation
Committee
The Compensation Committee in 2009 consisted of
Messrs. Lambert (Chairman), Best and Craig. No member of
the Compensation Committee is currently or has served as an
executive officer or employee of the Company and none of the
members of the Compensation Committee had any
interlocks within the meaning of Item 407(e)(4)
of the SEC
Regulation S-K
during fiscal 2009. The Compensation Committee is governed by a
written charter that is available on the Companys website
at www.arrisi.com. The Compensation Committee determines
the compensation for our executive officers and non-employee
directors, establishes our compensation policies and practices,
and reviews annual financial performance under our employee
incentive plans. The Compensation Committee generally exercises
all powers of the Board of Directors in connection with
compensation matters, including incentive compensation, benefit
plans and stock grants, except as relates to the Chairman and
CEO, in which case the entire Board of Directors approves or
ratifies all said compensation matters. The Compensation
Committee held four meetings in 2009.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee in 2009
consisted of Messrs. Bosco (Chairman), Best, Chiddix,
Lambert, and Petty. The Nominating and Corporate Governance
Committees operations are governed by a written charter
that is available on the Companys website at
www.arrisi.com. The Nominating and Corporate Governance
Committee identifies individuals qualified to become directors
and recommends candidates to the Board of Directors. The
Nominating and Corporate Governance Committee held one meeting
in 2009.
The Nominating and Corporate Governance Committee supervises the
conduct of director self-evaluation procedures including the
performance of an anonymous survey of directors as to the
Boards processes and effectiveness and governance
practices in general. The Nominating and Governance Committee
together with the
11
Board actively review succession issues and plans for both
management and the Board of Directors. It is anticipated that at
least one new member of the Board with specific industry
expertise or experience may be appointed during the next year or
two.
With respect to the Committees evaluation of director
nominee candidates, the Committee considers each candidate on
his or her own merits. In evaluating candidates, there are a
number of criteria that the Committee generally views as
relevant and is likely to consider. Some of these factors
include the candidates:
|
|
|
|
|
career experience, particularly experience that is germane to
the Companys business, such as telecommunications products
and services, legal, human resources, finance, marketing, and
regulatory experience;
|
|
|
|
whether the candidate is an audit committee financial
expert (as defined by the SEC);
|
|
|
|
experience in serving on other boards of directors or in the
senior management of companies that have faced issues generally
of the level of sophistication that the Company faces;
|
|
|
|
contribution to diversity of the Board of Directors;
|
|
|
|
integrity and reputation;
|
|
|
|
ability to work collegially with others;
|
|
|
|
whether the candidate is independent;
|
|
|
|
other obligations and time commitments and the ability to attend
meetings in person; and
|
|
|
|
current membership on the Board the Board values
continuity (but not entrenchment).
|
The Committee does not assign a particular weight to the
individual factors. Similarly, the Committee does not expect to
see all (or even more than a few) of these factors in any
individual candidate. Rather, the Committee looks for a mix of
factors that, when considered along with the experience and
credentials of the other candidates and existing Board members,
will provide stockholders with a diverse and experienced Board
of Directors.
With respect to the identification of nominee candidates, the
Board recommends candidates whom they are aware of personally or
by reputation. The Company historically has not utilized a
recruiting firm to assist in the process but may do so in the
future.
The Committee welcomes recommendations from stockholders. The
Committee evaluates a candidate for director who was recommended
by a stockholder in the same manner that the Committee evaluates
a candidate recommended by other means. In order to make a
recommendation, the Committee asks that a stockholder send the
Committee:
|
|
|
|
|
a resume for the candidate detailing the candidates work
experience and credentials;
|
|
|
|
written confirmation from the candidate that he or she
(1) would like to be considered as a candidate and would
serve if nominated and elected, (2) consents to the
disclosure of his or her name, (3) has read the
Companys Policy on Business Ethics and Conduct and that
during the prior three years has not engaged in any conduct
that, had he or she been a director, would have violated the
Policy or required a waiver, (4) is, or is not,
independent as that term is defined in the
Committees charter, and (5) has no plans to change or
influence the control of the Company;
|
|
|
|
the name of the recommending stockholder as it appears in the
Companys books, the number of shares of Common Stock that
are owned by the stockholder and written confirmation that the
stockholder consents to the disclosure of his or her name. (If
the recommending person is not a stockholder of record, he or
she should provide proof of share ownership);
|
|
|
|
personal and professional references, including contact
information; and
|
|
|
|
any other information relating to the candidate required to be
disclosed in a proxy statement for election of directors under
Regulation 14A of the Securities Exchange Act of 1934 (the
Exchange Act).
|
12
This information should be sent to the Nominating and Corporate
Governance Committee,
c/o Corporate
Secretary, ARRIS Group, Inc., 3871 Lakefield Drive, Suwanee, GA
30024, who will forward it to the chairperson of the Committee.
The Committee does not necessarily respond to recommendations.
The nomination must be accompanied by the name and address of
the nominating stockholder and must state the number of shares
held. For potential nominees to be considered at the 2011 annual
stockholders meeting, the Corporate Secretary must receive
this information by December 15, 2010.
In addition to the procedures described above for recommending
prospective nominees for consideration by the Committee,
stockholders may directly nominate directors for consideration
at any annual meeting of stockholders.
Technology
Committee
The Technology Committee consists of Messrs Best (Chairman),
Chiddix and Stanzione. The Technology Committee monitors the
development of the Companys technology and operates as an
intermediary between the Company and its customers and the
Technology Advisory Board of the Company. The Technology
Committee held two meetings in 2009.
Lead
Independent Director
The Companys Governance Guidelines provide that at any
time the Board of Directors does not have an Independent
Chairman, the Board of Directors must have a Lead Independent
Director. The Lead Independent Director presides over Executive
Sessions of the Board of Directors and other meetings where the
Chairman is not present. The Lead Independent Director also
approves the agenda for Board meetings and approves the
information sent to the Board. He also is the liaison between
the Chairman and the independent directors and may call meetings
of the independent directors. Lastly, he is available for
consultation and direct communications, if so requested by a
major shareholder and has various other communications and
administrative responsibilities. Mr. Petty currently is the
Lead Independent Director. The Company believes that having the
Chief Executive Officer serve as Chairman, and having a separate
Lead Director, is important because it best reflects the
Boards intent that the Chief Executive Officer function as
the Companys overall leader, while the Lead Director
provides independent leadership to the directors and serves as
an intermediary between the independent directors and the
Chairman. The resulting structure sends a message to our
employees, customers and stockholders that we believe in having
strong, unifying leadership at the highest levels of management,
but that we also value the perspective of our independent
directors and their many contributions to our Company.
COMMUNICATION
WITH THE BOARD
Stockholders may communicate with the Board of Directors,
including the Lead Independent Director, by sending a letter to
the ARRIS Group, Inc. Board of Directors,
c/o Corporate
Secretary, ARRIS Group, Inc., 3871 Lakefield Drive, Suwanee, GA
30024. The Corporate Secretary will submit the correspondence to
the Lead Independent Director or to any specific director to
whom the correspondence is directed.
13
REPORT OF
THE AUDIT COMMITTEE
Pursuant to its written charter, the Audit Committee oversees
the Companys financial reporting process on behalf of the
Board of Directors. Our responsibility is to monitor and review
these processes. It is not our duty or our responsibility to
conduct auditing or accounting reviews or procedures. We are not
employees of the Company and we do not represent ourselves to
be, or to serve as, accountants or auditors by profession.
Therefore, we have relied, without independent verification, on
managements representation that the consolidated financial
statements have been prepared with integrity and objectivity and
in conformity with U.S. generally accepted accounting
principles and on the representations of the independent
registered public accounting firm included in their report on
the Companys consolidated financial statements. Our
oversight does not provide us with an independent basis to
determine that management has maintained appropriate accounting
and financial reporting principles or policies, or appropriate
internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations.
Furthermore, our considerations and discussions with management
and the independent registered public accounting firm do not
assure that the Companys consolidated financial statements
are presented in accordance with U.S. generally accepted
accounting principles, that the audit of the Companys
consolidated financial statements has been carried out in
accordance with the standards of the Public Company Accounting
Oversight Board (United States) or that the Companys
independent registered public accounting firm is in fact
independent.
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. In fulfilling our oversight responsibilities,
we reviewed the audited financial statements in the Annual
Report with management, including a discussion of the quality,
not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the disclosures in
the financial statements.
We reviewed with the independent registered public accounting
firm, who is responsible for expressing an opinion on the
conformity of those audited financial statements with
U.S. generally accepted accounting principles, its
judgments as to the quality, not just the acceptability of the
Companys accounting principles required by Statement on
Auditing Standards No. 61, as amended by Statement of
Auditing Standards No. 90, and such other matters as are
required to be discussed with the Committee under the standards
of the Public Company Accounting Oversight Board (United
States). In addition, we discussed with the independent
registered public accounting firm their independence from
management and the Company, including the matters in the written
disclosures required by the Public Company Accounting Oversight
Board Rule 3526, and considered the compatibility of
nonaudit services provided by the independent registered public
accounting firm to the Company with their independence.
We discussed with the Companys internal auditors and
independent registered public accounting firm the overall scope
and plans for their respective audits. We met with the internal
auditors and the independent registered public accounting firm,
with and, as deemed advisable, without management present, to
discuss the results of their examinations, their evaluations of
the Companys internal controls and the overall quality of
the Companys financial reporting. We reviewed proposed
interim financial statements with management and the independent
registered public accounting firm. We oversaw the Companys
compliance with Section 404 of the Sarbanes-Oxley Act of
2002.
In 2009, we had eleven meetings. In reliance on the reviews and
discussions referred to above, we recommended to the Board of
Directors (and the Board of Directors has accepted that
recommendation) that the audited financial statements be
included in the Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, for filing
with the Securities and Exchange Commission. In addition, we
have appointed Ernst & Young LLP as the Companys
independent registered public accounting firm for calendar year
2010, subject to stockholder ratification.
The Company maintains a corporate governance hotline system in
which employees may directly contact the members of the Audit
Committee concerning potential failures to meet corporate
standards of conduct, including questionable accounting or
auditing matters. These calls are completely confidential and
anonymous.
Matthew B. Kearney, Chairman
Harry L. Bosco
John A. Craig
John R. Petty
14
Notwithstanding anything to the contrary which is or may be
set forth in any of the Companys filings under the
Securities Act of 1933 or the Exchange Act that might
incorporate Company filings, including this proxy statement, in
whole or in part, the preceding Report of the Audit Committee
shall not be incorporated by reference into any such filings.
EXECUTIVE
COMPENSATION
Summary
Each of the named executive officers has an employment agreement
with the Company. Each agreement establishes the base salary for
the officer, which is subject to annual review. The target bonus
is established at 60% of base salary for each of the named
executive officers, except Mr. Stanzione, whose target
bonus is 100% of base salary. Each year the Compensation
Committee establishes the performance criteria for the bonuses.
The agreements also contemplate the grant of equity awards
annually in the discretion of the Compensation Committee. The
agreements renew annually automatically until the employee
reaches age 65. In the event an executive is terminated
without cause or in connection with a change of control of the
Company, the executive is entitled to receive one years
salary and bonus (two years in the case of Mr. Margolis and
Mr. Potts and three years in the case of
Mr. Stanzione); all unvested options and stock awards vest
immediately and the executive is entitled to continued benefits,
for example, life, medical and disability insurance, during the
severance period (one, two or three years as noted above).
The Compensation Committee reviews base salaries, bonus plans
and equity awards annually. It regularly, but not necessarily
annually, retains consultants, who are not engaged by management
for any other matters, to review executive compensation levels
compared to selected peer companies, companies in the technology
industries generally and companies of similar size. The Company
has sought to establish salaries at approximately the median
levels (with exceptions to recognize outstanding performance)
and to have equity and annual bonus target opportunities at or
above median levels. The survey conducted for the Companys
deliberations for 2008 compensation decisions indicated that,
taken as a whole, the Companys base salaries, target
annual incentive, and targeted long term equity compensation are
at or moderately above median levels. Compensation has been
actively managed. For example, in 2002, salary levels for
executives were frozen for a year and during 2003 executive
salaries were reduced by 5%. The reduction was reinstated in
2004. Raises were not reinstated above the 2002 level until 2005
(with the exception of Mr. Stanzione whose salary was not
changed until 2006). In 2009, salary levels for executives and
non-executives were frozen. Normal merit increases will be
reinstated in 2010, but not retroactively.
Risk
Considerations
The Compensation Committees approach to compensation
beyond base salary focuses heavily on company-wide and long-term
performance. For instance, for 2009, 80% of the incentives
underlying annual cash bonuses were tied to Company performance,
in particular consolidated adjusted direct operating income.
Since this metric has a company-wide focus, the Compensation
Committee does not believe that it generally incentivizes high
risk behavior by members of our management team in the same way,
or to the extent, that annual bonuses based upon narrowly
focused individual performance might. Similarly, the
Companys equity awards consist of restricted stock with
four year time-based vesting and performance-based restricted
stock that vests based upon a three year total shareholder
return measurement. The performance of both compensation
elements generally reflects the overall market performance of
the Companys stock over a substantial period of time. The
Compensation Committee does not believe that this structure of
equity awards incentivizes high risk behavior. Moreover, the
level of compensation and awards, although highly competitive,
are not believed to be large enough to induce high risk behavior
or to distort the application of normal mature business
judgment. Our compensation schemes are designed to be in place
over several years and the Committee believes they are designed
to reward sustained long term profitable growth of the Company.
As a result, the Compensation Committee does not believe that
the Companys compensation programs for senior management
are likely to lead to managements taking on more risks
than are appropriate from a sound business judgment prospective.
15
Compensation
Discussion and Analysis (CD&A)
Overview
This CD&A describes the major elements of our compensation
program for the executive officers named in the Summary
Compensation Table later in this proxy statement (the
named executive officers or NEO). This
CD&A also discusses the objectives, philosophy and
decisions underlying the compensation of the named executive
officers. The CD&A should be read together with the
executive compensation tables and related footnotes found later
in this proxy statement.
Authority over compensation of the Companys senior
executives is within the province of the Compensation Committee.
The Compensation Committee is composed entirely of independent
directors, as determined under the applicable NASDAQ listing
standards and Section 162(m) of the Internal Revenue Code.
The Compensation Committee reviews and approves executive
compensation programs and specific compensation arrangements for
the executive officers. The Compensation Committee reports to
the Board, and all compensation decisions with respect to the
Chief Executive Officer are reviewed and approved by the whole
Board, without participation by the Chief Executive Officer.
The principal elements of our executive compensation program for
2007, 2008 and 2009 were:
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Base salary;
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Annual, performance-based cash incentives (Bonus);
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Long-term equity incentives;
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Benefits and perquisites; and
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A change in control severance pay plan and other severance pay
arrangements and practices.
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Programs
and Objectives and Reward Philosophy
Our Compensation Committee is guided by the following key
objectives and reward philosophies in the design and
implementation of our executive compensation program:
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Competitive Pay. Competitive compensation
programs are required to attract and retain a high-performing
executive team, particularly for a technology focused company.
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Pay for performance. Our compensation program
must motivate our executive officers to drive ARRIS
business and financial results and is designed to reward both
near-term performance as well as sustainable performance over a
longer period through equity compensation. The at
risk portion of total compensation (i.e., the incentive
programs under which the amount of compensation realized by the
executive is not guaranteed, and increases with higher levels of
performance) should be a significant component of an
executives compensation.
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Alignment with shareholders. Our
executives interests must be aligned with the interests of
our shareholders. Our compensation program should motivate and
reward our executives to drive performance which leads to the
enhancement of long-term shareholder value.
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Key
Considerations
In applying these program objectives and reward philosophies,
the Compensation Committee takes into account the key
considerations discussed below:
Competitive Market Assessment. We regularly,
but not necessarily annually, conduct a competitive market
assessment for each of the primary elements of our executive
compensation program. In setting executive compensation levels,
the Compensation Committee reviews market data from the
following sources:
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Peer Group Information. The Compensation
Committee considers information from the proxy statements of
peer group public companies. The peer group is
composed primarily of communications infrastructure
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companies. The peer group was selected by the Compensation
Committee based on input from third party consultants and
management. The following companies were included in our peer
group for 2008 and 2009:
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3Com Corporation
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JDS Uniphase Corporation
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ADC Telecommunications
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Loral Space & Communications Ltd.
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Avocent Corporation
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Mastec, Inc.
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Black Box Corporation
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Netgear, Inc.
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Ciena Corporation
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Plantronics, Inc.
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CommScope, Inc.
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Polycom, Inc.
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Dycom Industries, Inc.
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Powerwave Technologies
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Hughes Communications, Inc.
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Tellabs, Inc.
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Survey Data. Survey data from various sources
also are utilized, including the following:
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ERI Executive Compensation Assessor 2008 (Economic Research
Institute)
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2007/2008 Top Management Compensation Industry
Report (Watson Wyatt)
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2007 Mercer Benchmark Database Executive (Mercer Human Resources
Consulting)
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Information from Longnecker &
Associates. Our Compensation Committee also
considers competitive market information and the recommendations
provided by Longnecker & Associates, an independent
advisor retained by the Compensation Committee, and not retained
by management for other matters.
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Our Financial and Strategic Objectives. Each
year our management team develops an annual operating plan or
budget for review and approval by our Board of Directors. The
Compensation Committee utilizes the financial plan in the
development of compensation plans and performance goals for our
named executive officers for the next year.
Considerations for Mr. Stanzione. In
setting the compensation arrangements for Mr. Stanzione,
the primary factors considered by the Compensation Committee
include:
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An assessment of his skill set, experience and recent
performance, as well as his performance over a sustained period
of time, (based on evaluations from the entire Board);
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The financial and strategic results achieved by ARRIS for the
last year relative to the pre-established objectives in our
annual operating plan;
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Other strategic and operational factors critical to the
long-term success of our business;
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The competitive market survey information described
above; and
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Guidance from the Compensation Committees independent
compensation consultant.
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Considerations for Other Named Executive
Officers. The Compensation Committee considers
the same factors in setting the compensation arrangements for
each of the other named executive officers as well as:
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Mr. Stanziones assessment and recommendation of the
named executive officers individual performance and
contributions to our performance for the most recent year as
well as the performance and contributions made over a sustained
period of time (through both positive and negative business
cycles); and
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An evaluation of the skill set and experience of each named
executive officer, including an assessment of how effective or
unique the skill set is, how difficult it would be to replace
and the relative importance of that particular skill set to the
accomplishment of our business objectives and each named
executives ability to assume additional responsibility.
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Accounting, Tax and Financial
Considerations. The Compensation Committee
carefully considers the accounting, tax and financial
consequences of the executive compensation and benefit programs
implemented by us. These were important considerations in
connection with the design of the following compensation
programs:
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Our Stock Incentive Plan (SIP) and Annual Incentive
Plan (AIP) were designed to generally allow for
tax-deductibility of performance based stock awards, stock
options, and annual cash incentive awards, respectively, under
Section 162(m) of the Internal Revenue Code. The AIP and
the issuance of grants and awards under the SIP are topics
discussed in greater detail later in this CD&A.
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We have taken steps to ensure that our supplemental retirement
plans and executive employment agreements, including change in
control, comply with the recently implemented regulations on
non-qualified deferred compensation under Section 409A of
the Internal Revenue Code.
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In recent years, the Compensation Committee has determined not
to use stock options as the sole form of long-term equity
incentives and instead has used a mix of stock options and
restricted stock with time-based vesting. During 2008 and 2009,
all awards were made in the form of restricted stock with
one-half of the awards granted to executives in the form of
performance based restricted shares. This change was made, in
part, due to the implementation of new accounting regulations
concerning the expensing of equity-based incentive awards and to
reduce the dilution associated with long-term equity
compensation. Given the increasing trend in favor of using
restricted shares instead of stock options, it is anticipated
that future long-term equity awards will be in the form of
restricted shares (including performance shares for senior
executives) and not stock options. The timing and amount of
expense recorded for each of these various forms of equity
awards will vary depending on the requirement of stock-based
compensation accounting. The use of these various forms of
long-term equity compensation awards for each of our named
executive officers is discussed in greater detail later in this
CD&A.
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The Company has adopted a clawback policy that
enables the Company to recoup compensation paid to certain
executives if that compensation was based on (i) financial
results or operating metrics satisfied as a result of fraudulent
or illegal conduct of the Executive, or (ii) intentional
misconduct that materially contributes to improper or incorrect
financial data. The policy is effective with respect to
compensation for the year 2009 and following and, in certain
situations, prior compensation as well. The policy is discussed
more fully later in this proxy statement.
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Additional
Information and Considerations
The Role of the Compensation Committee and Its Use of
Advisors. A summary of the role of the
Compensation Committee is found in the section entitled
Corporate Governance and Board Matters in this proxy
statement. For more information on the role and responsibilities
of the Compensation Committee, we encourage you to review the
Compensation Committee charter, which is posted on our website
at www.arrisi.com.
The Compensation Committee charter permits the Compensation
Committee to engage independent outside advisors to assist the
Compensation Committee in the fulfillment of its
responsibilities. The Compensation Committee engages an
independent executive compensation consultant for information,
advice and counsel. Typically, the consultant assists the
Compensation Committee by providing an independent review of:
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Our executive compensation policies, practices and designs;
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The mix of compensation established for our named executive
officers as compared to external benchmarks;
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Market trends and competitive practices in executive
compensation; and
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The specific compensation package for Mr. Stanzione and
other named executive officers.
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For 2008 and 2009, the Compensation Committee engaged Longnecker
and Associates as its independent consultant. In 2010 the focus
of Longnecker and Associates was on long term equity practices
since base salary was frozen in 2009. This selection was made
directly by the Compensation Committee. Longnecker and
Associates provides no other compensation or benefit consulting
services to ARRIS.
18
The Role of Executive Management in the Process of
Determining Executive
Compensation. Mr. Stanzione makes
recommendations to the Compensation Committee regarding
executive compensation decisions for the other named executive
officers. Mr. Margolis, our Executive Vice President of
Strategic Planning, Administration and Chief Counsel, is
responsible for administering our executive compensation
program. Mr. Potts, our Chief Financial Officer, provides
information and analysis on various aspects of our executive
compensation plans, including financial analysis relevant to the
process of establishing performance targets for our annual cash
incentive plan and the cost of long term equity incentive plans.
Although members of our management team participate in the
process of determining executive compensation, the Compensation
Committee also meets regularly in executive session without any
members of the management team present. The Compensation
Committee makes the final determination of the executive
compensation package provided to each of our named executive
officers subject, in the case of Mr. Stanzione, Chairman
and CEO, to full board approval.
Equity awards generally are granted annually sometime between
January and May depending on board meeting schedule, shareholder
approval of new equity plans and other factors. The Compensation
Committee has determined that grant dates should occur as early
as practicable after final budgets for the new year have been
approved by the Board of Directors and after year-end results
have been announced to the public. Equity grant and annual
compensation adjustments and incentive plan performance criteria
generally will be decided simultaneously, although they may be
implemented at various times. (For example, raises generally are
effective April 1, while bonuses generally are paid
earlier.) We plan for equity grants generally to be analyzed,
determined and granted in the mid-February to mid-April time
frame. The exercise price for options is the closing price of
the Common Stock on the date of grant.
Annual
Cash Incentives
Annual cash bonuses are tied to Company performance. Annual
bonus targets for senior executives have been established as a
percentage of base pay level including the annual raise, if any,
in the relevant years and are set forth in the employment
agreements of each executive officer. Mr. Stanziones
bonus target is 100% of base salary, which was established when
his employment agreement was amended in 1999 in connection with
his becoming the Chief Executive Officer. The remaining senior
executives annual bonus targets are 60% of base salary.
The maximum bonus payout for each of the named executive
officers is 200% of the annual bonus target.
The Compensation Committee seeks to establish variable pay in
the form of annual cash bonus opportunity in the 50th to 75th
percentile levels of the peer group and survey analysis
described above. The Compensation Committee believes that
variable pay target should be within the aforesaid range to
encourage and reward exceptional performance, while assuring in
years where Company performance may be weaker that total cash
compensation is less. The Compensation Committee believes that
the bonus targets for the senior executives are within the
aforesaid range of the peer group and survey analysis described
above.
In 2007, 2008 and 2009, annual incentives were measured not only
by targeted financial performance (for 80% of the target bonus),
but by individual assigned objectives that may be objectively or
subjectively measured. Twenty percent of the target bonus for
Mr. Stanzione and the other senior executives were based on
assigned objectives. Specific financial performance criteria
have varied; however, in 2007, 2008 and 2009, the only financial
performance criterion was the achievement of budgeted adjusted
operating income for the Company. The Compensation Committee
chose a single profit metric in order to focus the senior
executives as a team on earnings growth. The annual budget was
developed by management in collaboration with and approved by
the Board of Directors. In reviewing the budget, the Board of
Directors considers, in addition to the detailed budget as
presented, expected capital expenditure trends in the
telecommunications industry generally and the cable segment of
the telecommunications industry more specifically and the
Companys market share and market share growth. For 2010,
the Committee changed the annual incentive measurement. Forty
percent will be based on budgeted adjusted operating income and
forty percent will be based on budgeted sales. Twenty percent
will continue to be based on assigned objectives.
For 2009, the target for consolidated adjusted operating income
(excluding goodwill amortization, goodwill impairment,
restructuring, certain acquisition and other items) that would
yield 100% payment of the financial performance part the
targeted bonus for senior executives was $130 million. If
actual adjusted operating income
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achieved was below 75% of the budgeted adjusted operating income
for 2009, the bonus payout would have been zero. For performance
in the range between that 75% threshold and 100% of budgeted
adjusted operating income, the bonus payout would have been
between a 50% payout and 100% payout. For performance in the
range between budget and 125% of budget, the bonus payout would
have been between a 100% payout and 200% payout. For performance
between these specific levels, bonus payouts were to be
determined by straight line interpolation. Actual performance
for 2009 was approximately 146% of the target performance and,
accordingly, the financial performance portion of the bonus
payouts was approximately 200% of the annual bonus target payout
related to targeted financial performance. Certain executives in
businesses performing well above or below company overall
results were adjusted in recognition of their respective
performance.
The 20% assigned subjective portion of the bonus target was
based on management objectives established by the Compensation
Committee. Bonus awards for individual accomplishments of
objectives can range from 0% to 200% of target. For 2009, the
management objectives for the senior executives included:
1. Maintain Company position and profitability
through current economic cycle
2. Continue to diversify the business on a product
and customer basis
3. Expand gross margins
4. Communicate the ARRIS story to investors,
shareholders and employees
5. Rationalize overlapping products resulting from
acquisitions
6. Develop cross-product line product strategy
7. Use IT to reduce operating expense
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Measure, focus and motivate improvement on return on assets,
return on equity, return on investment and cash generation.
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Invest R&D dollars for short- and long-term return, and in
particular focus on product migration for the long-term and for
video opportunities.
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Maintain and develop relationships with senior customer
executives, expand customer base and grow strategic accounts
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Develop and implement strategies for litigation defense and cost
control for pending and possible claims
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Develop teamwork collaboration and staff on an inter- and
intra-group basis
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Based on the success of senior management, particularly with
respect to market penetration, timely product development,
margin improvement, and cash generation, the specific management
objective portion of the bonus paid out at 100% of target as
reflected in the Summary Compensation Table under the heading
Non-Equity Incentive Plan Compensation.
In the past six years bonuses have ranged from 0% to the maximum
as achieved in 2005, 2006 and 2009 based on the performance
criteria then in effect. Consistent with our
pay-for-performance
reward philosophy, no annual incentives were paid to our named
executive officers in fiscal year 2003 because we did not
achieve our pre-established financial goals in that year. In
2006 and 2007, we exceeded the budgeted amounts for our
pre-established financial goals, which resulted in annual
incentive payouts greater than 100% of the targeted amounts. In
2008, 91% of the financial performance target was achieved and
the resulting payout was approximately 76% of target. In 2009 we
achieved 146% of our target performance, and the financial
portion of the bonus plan paid at 200% while in the aggregate
the MBO portion was paid at 100%.
The volatile and challenging industry and market conditions in
which we operate contributes to significant variations in annual
performance against goals and incentive payout amounts against
the target level of payout.
The value of the target payout amounts for our annual incentive
plan we believe is within the aggregate the 50th to 75th
percentile range of the short-term incentive target payout
percentage made by companies included in the market survey data
that we used as benchmarks. The dollar amount of annual cash
incentive bonus paid in 2009 to
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each of our named executive officers is reported in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table appearing later in this proxy
statement.
The Compensation Committee has the authority to adjust bonuses,
including additions to the bonuses earned (or pay bonuses when
no bonus has been earned) under the bonus plan. For example, in
2007 the amount of bonus for executive officers was adjusted up
or down based on individual unit performance and business unit
performance as reflected in the Summary Compensation Table under
the heading Bonus ($). The Company does not have a
formal policy for payments above the amounts established under
the bonus plans. The Compensation Committee also may adjust the
performance criteria if circumstances dictate (e.g.,
acquisitions, financings or other items that may not have been
incorporated in the budget and therefore might require
adjustment).
Long-Term
Equity Incentives
We make long-term equity incentive awards to our executive
officers each year. The primary objectives of our equity
incentive program are to:
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Align the interests of our executive officers with the interests
of our shareholders through stock awards which have multi-year
vesting requirements and which provide a significant incentive
for executives to focus on increasing long-term shareholder
value;
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Provide a total compensation package that is competitive based
upon our assessment of the market data described earlier in this
CD&A; and
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Provide financial incentive to retain our executives over a
multi-year period.
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The long term incentive compensation for senior executives in
the past three years has consisted of grants of stock options
(in 2008 time-vested restricted shares were granted in lieu of
options) and performance-based restricted stock with time-based
vesting. Previously, long term incentive compensation consisted
predominantly of stock options. During the past three years, the
Company has included restricted stock to reduce the share
dilution associated with option grants since restricted stock
awards are for fewer shares than comparably valued stock option
awards. Moreover, recent changes in accounting standards require
that stock options as well as restricted stock be expensed.
Prior to these changes, the Company, like most companies,
utilized primarily stock options to take advantage of the then
available favorable accounting treatment for stock options.
Since 2008, the Company has used restricted shares instead of
stock options also to maintain retention incentive even in
challenging periods when our stock price may be depressed. When
granted, stock options had a term of seven or ten years and
vested annually over three or four years.
For 2007, 2008 and 2009, the Compensation Committee established
an aggregate value for equity grants for Company wide
distribution focusing on cost to be reflected in the
Companys financial statements, the annual grant level as a
percent of shares outstanding and, using the Black-Scholes
methodology, the value of the aggregate grants as a percentage
of the Companys total market capitalization. A value
expressed in dollars was allocated to the senior executives
based on the survey data concerning long term incentive values
for senior executives in comparable positions and the level of
expense and dilution the Compensation Committee deemed
appropriate. One-half of that value was awarded in shares of
restricted stock and, using the Black-Scholes methodology,
one-half in options (in 2007) at the then fair market value
of the shares. (For 2008 and 2009, stock options were replaced
with restricted shares.) For Mr. Stanzione, the target
value for long term incentives has been approximately 200% of
base salary, and for the other senior executives, the value has
ranged from approximately 150% to 200% of base salary. The
Compensation Committee seeks to establish long-term incentive
targets for senior executives, like bonuses, between 50th and
75th percentile levels of the peer group and survey analysis
described above to emphasize long term stock appreciation. The
most recent survey data reviewed in connection with the
Compensation Committees 2010 deliberations indicates that
awards of long term incentives in 2007, 2008 and 2009 were
within the 50th and 75th percentile levels for the senior
executive officers in the aggregate.
One half of the restricted stock awarded to the senior
executives in 2007, 2008 and 2009 were in the form of
performance shares. Under the performance criteria for 2007 and
2008, senior executives earned 100% of the target or assigned
value at the time of grant if the Company achieved budgeted
consolidated sales for the applicable year. For 2007, for
performance below 94% of budgeted sales, the restricted stock
awards paid out zero shares, and for
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performance at 94% of budget, the shares paid out 50% of the
assigned values. For performance at budgeted sales, the shares
paid out at 100% of the assigned value. For sales at or above
116% of budgeted sales, the shares paid out a number of shares
equal to 150% of the assigned value. For 2008, senior executives
would earn, under the performance share criteria, 100% of target
shares at 100% of budgeted sales. For performance below
approximately 82% of budgeted sales, stock awards paid out zero
shares with 50% of target being paid at the approximate 82% of
the targeted sales. For sales at or above 105% of targeted
sales, the shares paid 150% of targeted shares. Straight line
interpolation was applied for performance between the designated
levels. The Compensation Committee believes that performance
based awards better align the executives and shareholders
interests in that awards are reduced or eliminated if Board of
Directors approved budgets are not met while achievement beyond
targeted achievement is more highly rewarded. The 2008
restricted stock awards paid out was approximately 55% as actual
sales were approximately 84% of budgeted sales. The 2007
restricted stock award payout was 115% as actual sales were
approximately 105% of budgeted sales. The specific numbers of
stock options and restricted stock that were granted to each of
our named executive officers in 2009 are set forth on the table
entitled Grants of Plan-Based Awards in the
executive compensation tables found later in this proxy
statement.
For 2009, the performance criteria for performance shares were
changed. The new criteria is based on the Companys total
shareholder return as compared to the shareholder return of the
NASDAQ composite over a three year period (the TSR
measurement) beginning with the calendar year of 2009. The
TSR measurement will allow for payment from 0% and 200% based on
underperforming, meeting or exceeding the NASDAQ composite three
year return. Both 2009 and 2010 are transition years where a
portion of the performance share awards will be paid at 100%
since the Company has exceeded the three year NASDAQ composite
shareholder return in each of the last three fiscal years. For
2009, two-thirds of the awards will pay out at 100% vesting over
two years with the first vesting occurring on March 30,
2010, and the remaining one-third will be based on the
three-year TSR and will vest on January 31, 2012. The 2010
grant was similarly structured but only one-third of the grant
will be paid at 100% and vest on the first anniversary of the
grant date, and two-thirds will be based on the TSR measurement
and will vest on January 31, 2013. The 2011 grant is
expected to be 100% based on the TSR measurement and will vest
on January 31, 2014.
Executive
Stock Ownership Guidelines
The Company has share ownership guidelines that require each
senior executive to own shares having a value equal to a
multiple of the senior executives annual base salary at
the time the executive became subject to the ownership
requirement. For Mr. Stanzione, the multiple was three
times base salary; for Messrs. Margolis, Potts and Lakin it
was twice base salary; and for Mr. Coppock it was one times
base salary. Once the ownership level is achieved, the changes
in share value are no longer monitored. Each of the senior
executives has achieved the requisite level of share ownership.
Summary
Compensation Table
The summary compensation table below presents the total
compensation earned by our Named Executive Officers during
2007, 2008 and 2009. This amount is not the actual compensation
received by our NEOs. In addition to cash and other forms of
compensation actually received, total compensation includes the
amount of the annual change in actuarial present value of
accumulated pension benefit which will not be paid, or begin to
be paid, until retirement, and the calculated dollar amounts set
forth in the Stock Awards and Option
Awards columns. The compensation expense included in the
Stock Awards and Option Awards columns
likely will vary from the actual amounts ultimately realized by
any NEO based on a number of factors, including the number of
shares that ultimately vest, the timing of any exercise or sale
of shares, and the price of our stock. The actual value realized
by our NEOs from stock awards and options during 2009 is
presented in the Option Exercises and Stock Vested
table below. Details about the equity awards granted to our NEOs
during 2009 can be found in the Grants of Plan-Based
Awards table below.
22
Summary
Compensation Table
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity-based
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan Compensation
|
|
|
|
Deferred
|
|
All
|
|
|
|
|
|
|
Base
|
|
|
|
Stock
|
|
Option
|
|
Non-Equity
|
|
Compensation
|
|
Other
|
|
Total
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Incentive Plan
|
|
Earnings
|
|
Compensation
|
|
Compensation
|
Principal Position
|
|
Year
|
|
($)
|
|
($)(1)(3)
|
|
($)(2)
|
|
($)(2)
|
|
Compensation($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Stanzione
|
|
|
2009
|
|
|
|
730,000
|
|
|
|
|
|
|
|
1,845,600
|
|
|
|
|
|
|
|
1,314,000
|
|
|
|
774,810
|
|
|
|
71,354
|
|
|
|
4,735,764
|
|
Chief Executive,
|
|
|
2008
|
|
|
|
722,500
|
|
|
|
|
|
|
|
1,064,149
|
|
|
|
|
|
|
|
630,000
|
|
|
|
3,197,992
|
|
|
|
48,142
|
|
|
|
5,662,783
|
|
Chairman of the Board
|
|
|
2007
|
|
|
|
687,500
|
|
|
|
|
|
|
|
806,435
|
|
|
|
726,313
|
|
|
|
763,000
|
|
|
|
2,404,431
|
|
|
|
22,305
|
|
|
|
5,409,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence A. Margolis
|
|
|
2009
|
|
|
|
386,000
|
|
|
|
|
|
|
|
711,325
|
|
|
|
|
|
|
|
417,000
|
|
|
|
406,199
|
|
|
|
48,070
|
|
|
|
1,968,594
|
|
Executive Vice
|
|
|
2008
|
|
|
|
382,250
|
|
|
|
|
|
|
|
364,453
|
|
|
|
|
|
|
|
200,000
|
|
|
|
318,383
|
|
|
|
40,200
|
|
|
|
1,305,286
|
|
Strategic Planning,
|
|
|
2007
|
|
|
|
368,125
|
|
|
|
2,366
|
|
|
|
276,492
|
|
|
|
249,021
|
|
|
|
242,634
|
|
|
|
53,843
|
|
|
|
31,916
|
|
|
|
1,224,397
|
|
Administration, Legal, HR, and Strategy, Chief Counsel, &
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Potts
|
|
|
2009
|
|
|
|
385,000
|
|
|
|
|
|
|
|
711,325
|
|
|
|
|
|
|
|
416,000
|
|
|
|
121,525
|
|
|
|
29,460
|
|
|
|
1,663,310
|
|
Executive Vice
|
|
|
2008
|
|
|
|
370,000
|
|
|
|
|
|
|
|
364,453
|
|
|
|
|
|
|
|
200,000
|
|
|
|
69,401
|
|
|
|
17,558
|
|
|
|
1,021,412
|
|
President, Chief
|
|
|
2007
|
|
|
|
320,000
|
|
|
|
22,450
|
|
|
|
276,492
|
|
|
|
249,021
|
|
|
|
212,550
|
|
|
|
32,037
|
|
|
|
17,562
|
|
|
|
1,130,112
|
|
Financial Officer, and Chief Information Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Lakin
|
|
|
2009
|
|
|
|
335,010
|
|
|
|
|
|
|
|
634,425
|
|
|
|
|
|
|
|
362,000
|
|
|
|
85,659
|
|
|
|
33,371
|
|
|
|
1,450,465
|
|
President, Advanced
|
|
|
2008
|
|
|
|
332,508
|
|
|
|
|
|
|
|
306,117
|
|
|
|
|
|
|
|
175,000
|
|
|
|
143,730
|
|
|
|
34,137
|
|
|
|
991,492
|
|
Technology & Services
|
|
|
2007
|
|
|
|
320,000
|
|
|
|
22,450
|
|
|
|
276,492
|
|
|
|
249,021
|
|
|
|
212,500
|
|
|
|
132,166
|
|
|
|
21,621
|
|
|
|
1,234,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Coppock
|
|
|
2009
|
|
|
|
325,000
|
|
|
|
|
|
|
|
653,650
|
|
|
|
|
|
|
|
351,000
|
|
|
|
112,121
|
|
|
|
35,252
|
|
|
|
1,477,023
|
|
President,
|
|
|
2008
|
|
|
|
315,500
|
|
|
|
|
|
|
|
364,453
|
|
|
|
|
|
|
|
170,000
|
|
|
|
66,597
|
|
|
|
29,952
|
|
|
|
946,502
|
|
Worldwide Sales
|
|
|
2007
|
|
|
|
282,000
|
|
|
|
22,302
|
|
|
|
276,492
|
|
|
|
249,021
|
|
|
|
187,698
|
|
|
|
31,338
|
|
|
|
19,388
|
|
|
|
1,068,239
|
|
|
|
|
(1) |
|
The amount shown in this column would relate to any
discretionary portion of the Annual Incentive Bonus for each NEO
that was outside of the amount listed under the Non-Equity
Incentive Plan Compensation column. |
|
(2) |
|
The amounts represent the aggregate grant date fair value of the
award, computed based on the number of awards granted and the
fair value of the award on the date of grant. For 2007 and 2008,
restricted stock award payout was 115% and 55% respectively. For
2009, the table reflects an estimated payout of 100%; if the
maximum achievement of 200% is attained, additional awards of
$307,600 will be granted to Mr. Stanzione, $118,557 to
Messrs. Margolis and Potts, $105,738 to Mr. Lakin and
$108,944 to Mr. Coppock. The values for awards from prior
years were restated to reflect fair value on the grant date.
Assumptions used in the fair value calculation of these awards
are included in Note 18 of Notes to Consolidated Financial
Statements in our 2009
Form 10-K
and incorporated by reference into this Proxy Statement. |
|
(3) |
|
For 2009, the amount reflects annual bonus earned for 2009
performance (paid in 2010). Amount reflects 146% of our target
performance and the financial portion of the bonus plan paid at
200% while in the aggregate the MBO portion was paid at 100%.
For 2008, the amount reflects annual bonus earned for 2008
performance (paid in 2009). As described above, the amount
reflects a 76% payout of the financial performance piece of the
bonus plan (80% of the plan), and the individual performance
objective portion of the bonus plan (20%) paying at between
129% 133% of target based on performance of assigned
objectives. For 2007, the amount reflects annual bonus earned
with respect to 2007 performance (paid in 2008), which was 109%
of target bonus. Due to the strong performance of the Company,
the Compensation Committee determined that Messrs. Lakin
and Potts bonus payout would be 121% of target, for
Mr. Coppock would be 122% of target, and Mr. Margolis
would be 110% of target. |
|
(4) |
|
Change in pension value reflects the aggregate annual change in
the actuarial present value of accumulated pension benefits
under the qualified and non-qualified defined benefit pension
plans. The change in pension value does not include changes
under any of the Companys defined contribution plans
because there is no above-market or preferential earnings
provided under such plans. |
|
(5) |
|
Included in all other compensation for 2009 are a matching
contribution by ARRIS Group Inc. into the 401(k) savings plan,
the non-qualified 401(k) wrap plan, the incremental cost for
supplemental life insurance coverage, |
23
|
|
|
|
|
expenses related to financial planning (except for
Mr. Potts), and club membership fees (except for
Mr. Stanzione). Effective March 31, 2010 the Company
will no longer provide or reimburse executives for financial
planning or club membership benefits. |
Grants of
Plan-Based Awards 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Number of
|
|
Exercise or
|
|
Grant
|
|
|
|
|
Under Non-Equity
|
|
%Under Equity
|
|
Shares of
|
|
Base
|
|
Date
|
|
|
|
|
Incentive Plan Awards(2)
|
|
Incentive Plan Awards(3)
|
|
Stock or
|
|
Price of
|
|
Fair
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Award
|
|
Value of
|
Name
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)(4)
|
|
($/sh)
|
|
Award(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Stanzione
|
|
|
|
|
|
$
|
365,000
|
|
|
$
|
730,000
|
|
|
$
|
1,460,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
120,000
|
|
|
|
160,000
|
|
|
|
120,000
|
|
|
$
|
7.69
|
|
|
$
|
1,845,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence A. Margolis
|
|
|
|
|
|
|
115,800
|
|
|
|
231,600
|
|
|
|
463,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,542
|
|
|
|
46,250
|
|
|
|
61,667
|
|
|
|
46,250
|
|
|
$
|
7.69
|
|
|
|
711,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Potts
|
|
|
|
|
|
|
115,500
|
|
|
|
231,000
|
|
|
|
462,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,542
|
|
|
|
46,250
|
|
|
|
61,667
|
|
|
|
46,250
|
|
|
$
|
7.69
|
|
|
|
711,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Lakin
|
|
|
|
|
|
|
100,500
|
|
|
|
201,000
|
|
|
|
402,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,375
|
|
|
|
41,250
|
|
|
|
55,000
|
|
|
|
41,250
|
|
|
$
|
7.69
|
|
|
|
634,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Coppock
|
|
|
|
|
|
|
97,500
|
|
|
|
195,000
|
|
|
|
390,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,417
|
|
|
|
42,500
|
|
|
|
56,667
|
|
|
|
42,500
|
|
|
$
|
7.69
|
|
|
|
653,650
|
|
|
|
|
(1) |
|
Grant date is the date the awards, in the form of restricted
stock and performance shares, were made. |
|
(2) |
|
The non-equity incentive awards reflect the Companys
annual bonus plan. The plan calls for the payment of from 0% to
200% based upon the achievement of specified adjusted
consolidated adjusted operating income levels for the Company in
2009. The plan would pay out $0 if actual results did not reach
75% of the budgeted adjusted operating income level of 2009. The
individually assigned objectives portion of the plan, as
indicated above under the caption annual incentives, paid out at
100% of their portion of the targeted bonus. Overall bonus for
the named executive officers paid out at 180% of target bonuses.
Bonus target payout levels are a percent of the ending 2009 base
salary level; for Mr. Stanzione the percent is 100% of base
salary and it is 60% of base salary for the other named
executive officers. The amounts reflected herein are duplicative
of the amounts reflected in the Summary Compensation Table and
the Outstanding Equity at Year End Table. For additional
discussion of 2009 bonus payment, see Compensation
Disclosure and Analysis Annual Cash Incentives. |
|
(3) |
|
The amounts shown under the Equity Incentive Plan Awards are the
number of shares of restricted stock that were granted to each
of the named executives in 2009 that were performance shares.
Two-thirds of the awards will pay out at 100% vesting over two
years with the first vesting occurring on March 30, 2010.
The remaining one-third will be based on the three-year Total
Shareholder Return, and the final payout of these shares can
range from 0% to 200% of the target award. These shares will
vest on January 31, 2012. The amounts reflected here are
duplicative of the amounts reflected in the Outstanding Equity
Awards at Fiscal Year End table. |
|
(4) |
|
The amounts shown under All Other Equity Awards reflect the
number of restricted shares granted to the named executives on
the grant date. These shares vest annually over four years with
the first vesting occurring on March 30, 2010. The table
reflects the full amounts of the awards even though the awards
vest over four years and are subject to forfeiture prior to
vesting except in certain cases. The amounts reflective herein
are duplicative of the amounts reflected in the Outstanding
Equity Awards at Year End Table. |
|
(5) |
|
Represents the value at $7.69 of the March 27, 2009 equity
awards to the named executives including the restricted shares
described above in footnote four and the performance shares
described above in footnote three. All of these shares vest over
three or four years as described above. |
24
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Incentive
|
|
Plan Awards:
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value
|
|
Plan Awards:
|
|
Market Value of
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
of Shares or
|
|
Number of
|
|
Unearned
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of Stock
|
|
Unearned Shares
|
|
Shares or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock Held
|
|
That Have
|
|
or Units of
|
|
Units of Stock
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Exercise
|
|
Expiration
|
|
That Have
|
|
Not Vested
|
|
Stock
|
|
Not Vested
|
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
|
Not Vested (#)
|
|
($)(4)
|
|
Not Vested (#)
|
|
($)(4)
|
|
|
|
Robert J. Stanzione
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(1)(5)
|
|
|
2,286,000
|
|
|
|
80,000
|
(6)
|
|
|
914,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,259
|
(7)
|
|
|
1,614,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,979
|
(8)
|
|
|
342,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,684
|
(9)
|
|
|
167,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,827
|
|
|
|
57,828
|
(2)
|
|
|
13.45
|
|
|
|
03/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,261
|
|
|
|
21,754
|
(3)
|
|
|
13.28
|
|
|
|
04/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,182
|
|
|
|
|
|
|
|
6.44
|
|
|
|
04/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
4.90
|
|
|
|
05/25/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,000
|
|
|
|
|
|
|
|
8.12
|
|
|
|
01/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
10.20
|
|
|
|
08/06/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
8.00
|
|
|
|
12/19/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence A. Margolis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,084
|
(1)(5)
|
|
|
881,071
|
|
|
|
30,833
|
(6)
|
|
|
352,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,379
|
(7)
|
|
|
552,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,279
|
(8)
|
|
|
117,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,224
|
(9)
|
|
|
59,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,826
|
|
|
|
19,827
|
(2)
|
|
|
13.45
|
|
|
|
03/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,217
|
|
|
|
7,740
|
(3)
|
|
|
13.28
|
|
|
|
04/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,325
|
|
|
|
|
|
|
|
6.44
|
|
|
|
04/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,000
|
|
|
|
|
|
|
|
4.90
|
|
|
|
05/25/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,000
|
|
|
|
|
|
|
|
4.85
|
|
|
|
07/01/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
8.12
|
|
|
|
01/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
10.20
|
|
|
|
08/06/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
10.20
|
|
|
|
08/06/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
8.00
|
|
|
|
12/19/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Potts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,084
|
(1)(5)
|
|
|
881,071
|
|
|
|
30,833
|
(6)
|
|
|
352,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,379
|
(7)
|
|
|
552,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,279
|
(8)
|
|
|
117,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,224
|
(9)
|
|
|
59,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,826
|
|
|
|
19,827
|
(2)
|
|
|
13.45
|
|
|
|
03/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,217
|
|
|
|
7,740
|
(3)
|
|
|
13.28
|
|
|
|
04/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,325
|
|
|
|
|
(4)
|
|
|
6.44
|
|
|
|
04/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,065
|
|
|
|
|
|
|
|
4.90
|
|
|
|
05/25/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
8.12
|
|
|
|
01/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
10.20
|
|
|
|
08/06/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Lakin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,750
|
(1)(5)
|
|
|
785,813
|
|
|
|
27,500
|
(6)
|
|
|
314,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,635
|
(7)
|
|
|
464,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,279
|
(8)
|
|
|
117,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,224
|
(9)
|
|
|
59,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,826
|
|
|
|
19,827
|
(2)
|
|
|
13.45
|
|
|
|
03/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,217
|
|
|
|
7,740
|
(3)
|
|
|
13.28
|
|
|
|
04/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
10.20
|
|
|
|
08/06/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald M. Coppock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,834
|
(1)(5)
|
|
|
809,633
|
|
|
|
28,333
|
(6)
|
|
|
323,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,379
|
(7)
|
|
|
552,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,279
|
(8)
|
|
|
117,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,224
|
(9)
|
|
|
59,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,826
|
|
|
|
19,827
|
(2)
|
|
|
13.45
|
|
|
|
03/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,478
|
|
|
|
7,740
|
(3)
|
|
|
13.28
|
|
|
|
04/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
38.938
|
|
|
|
01/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
38.938
|
|
|
|
01/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These shares are duplicative of the shares reflected in the Plan
Based Awards Table. |
|
(2) |
|
The options were granted on March 9, 2007 and vest annually
over four years with the first vesting occurring on
March 9, 2008. |
|
(3) |
|
The options were granted on April 25, 2006 and vest
annually over four years with the first vesting occurring on
April 30, 2007. |
25
|
|
|
(4) |
|
Reflect the value as calculated based on the closing price of
the Companys Common Stock on December 31, 2009 of
$11.43 per share. |
|
(5) |
|
Shares of restricted stock were granted on March 27, 2009
and vest annually over four years with the first vesting
occurring on March 30, 2010. |
|
(6) |
|
Shares of restricted stock that are subject to performance
measures were granted on March 27, 2009. The final payout
of these shares can range from 0% to 200% of the target award,
and will be based on the three-year Total Shareholder Return.
These shares will vest on January 31, 2012. Included in the
table above is 200% of the target award. |
|
(7) |
|
Shares of restricted stock were granted on March 28, 2008
and vest annually over four years with the first vesting
occurring on March 28, 2009. |
|
(8) |
|
Shares of restricted stock were granted on March 9, 2007
and vest annually over four years with the first vesting
occurring on March 9, 2008. |
|
(9) |
|
Shares of restricted stock were granted on April 25, 2006
and vest annually over four years with the first vesting
occurring on April 30, 2007. |
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized
|
|
Number of Shares
|
|
Value Realized
|
Name
|
|
Acquired on Exercise (#)
|
|
on Exercise ($)(1)
|
|
Acquired on Vesting (#)
|
|
On Vesting ($)(2)
|
|
Robert J. Stanzione
|
|
|
|
|
|
|
|
|
|
|
76,760
|
|
|
|
612,157
|
|
Lawrence A. Margolis
|
|
|
|
|
|
|
|
|
|
|
26,489
|
|
|
|
211,765
|
|
David B. Potts
|
|
|
21,275
|
|
|
|
188,284
|
|
|
|
26,489
|
|
|
|
211,765
|
|
James D. Lakin
|
|
|
61,328
|
|
|
|
367,968
|
|
|
|
23,908
|
|
|
|
191,917
|
|
Ronald M. Coppock
|
|
|
16,732
|
|
|
|
98,050
|
|
|
|
26,489
|
|
|
|
211,765
|
|
|
|
|
(1) |
|
Amount shown for each named executive officer is the aggregate
number of options granted in previous years that were exercised
and sold during 2009 and the taxable compensation realized
(aggregate sales price less aggregate exercise price) on such
shares exercised and sold. The amounts are not reflected in the
Summary Compensation Table. |
|
(2) |
|
Amounts shown for each named executive officer represent the
aggregate number of shares of restricted stock granted in the
previous years that vested during the calendar year. Vested
shares may have been held or sold by the executive in his
discretion. The Company withholds taxes by retaining an
appropriate number of shares (equal to the value of the amount
required to be withheld) that vest. The amounts shown above
include the number of shares withheld. These amounts are not
reflected in the Summary Compensation Table. |
Executive
Benefits and Perquisites
Primary Benefits. Our named executive officers
are eligible to participate in the same employee benefit plans
in which all other eligible U.S. salaried employees
participate. These plans include medical, dental, and a
non-qualified retirement savings plan, life insurance,
disability and a qualified retirement savings plan. We also
maintain a nonqualified retirement plan in which our named
executive officers are eligible to participate.
26
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
Present Value Of
|
|
Payments During
|
|
|
|
|
Credited Service
|
|
Accumulated Benefit
|
|
Last Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
|
Robert J. Stanzione
|
|
Qualified Pension Plan
|
|
|
5
|
|
|
|
73,830
|
|
|
|
|
|
|
|
Non Qualified Plan
|
|
|
42
|
|
|
|
10,194,881
|
|
|
|
|
|
Lawrence A. Margolis
|
|
Qualified Pension Plan
|
|
|
18
|
|
|
|
333,937
|
|
|
|
|
|
|
|
Non Qualified Plan
|
|
|
27
|
|
|
|
1,427,834
|
|
|
|
|
|
David B. Potts
|
|
Qualified Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non Qualified Plan
|
|
|
14
|
|
|
|
306,996
|
|
|
|
|
|
James D. Lakin
|
|
Qualified Pension Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non Qualified Plan
|
|
|
13
|
|
|
|
541,414
|
|
|
|
|
|
Ronald M. Coppock
|
|
Qualified Pension Plan
|
|
|
5
|
|
|
|
38,782
|
|
|
|
|
|
|
|
Non Qualified Plan
|
|
|
13
|
|
|
|
265,894
|
|
|
|
|
|
The Company maintains qualified and non-qualified Defined
Benefit pension plans. The qualified plan for the named
executive officers has been frozen since December 31, 1999,
and no further accrual of benefit under that plan has occurred
since that date. Neither Mr. Potts nor Mr. Lakin
participated in the qualified plan. The non-qualified plan is a
mirror image of the qualified plan, but covers only earnings
levels and payment levels that are or would be excluded under
the qualified plan under applicable Internal Revenue Service
regulations. Benefits under the plans are calculated based on
the named executive officers base salary and annual bonus
amounts. The benefit formula is the number of years of
continuous service (up to a maximum of 30 years) times the
sum of (a) 0.65% of the individuals final
annual compensation up to the named executive
officers social security covered compensation level, plus
(b) 1.3% of the final average salary in excess
of the named executive officers social security covered
compensation level. The social security covered compensation
level is the
35-year
average of the taxable wage bases (for Social Security purposes)
in effect prior to the participants Social Security normal
retirement date. Final average salary is the average of the five
highest consecutive years of compensation in the ten years
preceding retirement. In calculating benefits under the
non-qualified plan, it is assumed that the qualified plan
remains in effect; that is, the amount of compensation that
would have been covered under the qualified plan had it remained
in effect is excluded from the non-qualified plan. The benefit
is paid monthly on a single life annuity basis or, subject to
discount, on a 50% joint and survivor annuity basis. Normal
retirement under the plans is age 65, and benefits are
discounted for early retirement, which is available at
age 55. Messrs. Stanzione, Margolis and Lakin are 62,
62 and 66 years of age, respectively, and thus could elect
to retire immediately. The discount is calculated to be the
actuarial equivalent of an age 65 retirement using an 8%
discount factor. There is no lump sum payment option available,
except for Mr. Stanzione (see below).
The Company has established a Rabbi Trust to hold funds set
aside to meet the obligations under the non-qualified defined
benefit plans. The Company intends to fully fund the Rabbi Trust
such that the amount of the actuarial accrued liability under
the non-qualified defined benefit plan as set forth in the
Companys financial statements has been set aside in a
Rabbi Trust by the time the actuarial liability has been
established. Amounts contributed to the Rabbi Trust remain the
funds of the Company but can be used only to discharge
obligations under the non-qualified plan, provided however, the
funds in the trust remain subject to the claims of creditors.
The Company maintains on Mr. Stanziones behalf a
supplemental employee retirement plan (SERP), which is included
in the information provided in the Pension Benefits table set
forth above. Under the SERP, normal retirement age is 62, and a
lump sum payment on termination is the form of payment. In
addition, under the SERP, final average compensation is
Mr. Stanziones actual annual salary at the time of
his retirement plus the average of the three highest bonuses
received in the five years preceding retirement. Years of
continuous service are Mr. Stanziones actual service
multiplied by three and are not limited to 30 years. The
benefit calculation is otherwise the same as described above,
although Mr. Stanziones benefit may not exceed 50% of
his final average compensation. In the event of
Mr. Stanziones termination of employment by the
Company without cause, termination by him as a result of a
material uncured breach of his employment agreement by the
Company, or termination by him following a change of control and
the diminution of his position, then Mr. Stanziones
pension benefit cannot be lower than $33,333 per month. The
Company has established a separate Rabbi Trust to
hold
27
funds equal to the Companys obligations under the
non-qualified defined benefit plan and SERP to
Mr. Stanzione. Pursuant to Mr. Stanziones
employment agreement, the Company fully funded those obligations
by the date of Mr. Stanziones 62nd birthday.
Mr. Stanziones defined benefit value at age 62
is frozen. Thereafter such funds will be credited only with the
benefit or losses of independently managed investment vehicles
elected by Mr. Stanzione from a menu of vehicles made
available by the Company.
The Company maintains a 401(k) defined contribution plan to
which employees may contribute a portion of their salary and
bonus compensation. The Company matches 100% of the first 3% of
employee contributions of pay and matches 50% of the next 2% of
employee contributions of pay subject to the Internal Revenue
Service maximum contribution (which was $16,500 during 2009).
The named executives participate in this plan and received the
Company match, which could not exceed $9,800 for 2009.
In addition, effective as of July 1, 2008, the Company
established a non-qualified defined contribution retirement plan
(the 401(k) Wrap) that mirrors the 401(k) plan. The
plan allows certain senior executives, including the named
executive officers, to contribute amounts in excess of the
amounts allowed under applicable tax laws under the 401(k) plan.
The tax law for 2009 disallows contribution on income above
$245,000 or contributions more than $16,500. The Company will
match employee contributions under the 401(k) Wrap in a manner
analogous to the 401(k). Provided the employee contributes the
maximum amount allowed under the 401(k), the Company will
contribute to the 401(k) and 401(k) Wrap in the aggregate 100%
on the first 3% of pay and 50% of the next 2% of pay, less the
amount of employer matches made to the 401(k). The amounts of
employee and employer contributions to the 401(k) Wrap are held
in a Rabbi Trust. Funds held under the 401(k) and the 401(k)
Wrap are invested in authorized and independently managed mutual
funds and other vehicles that the employee elects from a menu of
vehicles offered under the plans. The employee account receives
the benefit or loss of the increases or decreases based only on
such funds performance. The Company does not enhance or
guarantee performance.
The Company previously maintained a non-qualified deferred
compensation plan that enabled certain executives, including the
named executives, to defer amounts above the IRS maximum. This
plan, and employee contributions and Company matches under it,
were frozen in September 2004. No employee contributions or
Company matching contributions have been made since that time
under such plan. The accounts under this plan remain in
existence, but the Company has never enhanced the earnings of
the accounts, which earnings are determined by the actual
earnings of investment vehicles selected by the employee.
28
The table below reflects the change in value of the named
executives account under the Companys Non-Qualified
Deferred Compensation arrangements (both current and frozen)
during calendar year 2009. The amounts shown reflect dividends
and interest and appreciation (or depreciation) in investments
whether or not realized. The change in value reflects the
performance of any of several mutual funds which may be selected
by the executive.
Nonqualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
|
|
|
|
Aggregate
|
|
|
Contributions in
|
|
Contributions in
|
|
Aggregate
|
|
Aggregate
|
|
Balance at Last
|
|
|
Last FY
|
|
Last FY
|
|
Earnings in Last
|
|
Withdrawals/
|
|
Fiscal Year End
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
FY ($)
|
|
Distributions ($)
|
|
($)
|
|
Robert J. Stanzione
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frozen Plan
|
|
|
|
|
|
|
|
|
|
|
138,918
|
|
|
|
|
|
|
|
528,649
|
|
Active Plan
|
|
|
63,288
|
|
|
|
24,550
|
|
|
|
43,162
|
|
|
|
|
|
|
|
146,642
|
|
Lawrence A. Margolis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frozen Plan
|
|
|
|
|
|
|
|
|
|
|
83,451
|
|
|
|
|
|
|
|
301,418
|
|
Active Plan
|
|
|
14,365
|
|
|
|
12,784
|
|
|
|
11,695
|
|
|
|
|
|
|
|
47,575
|
|
David B. Potts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frozen Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Plan
|
|
|
7,700
|
|
|
|
|
|
|
|
1,112
|
|
|
|
|
|
|
|
8,812
|
|
James D. Lakin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frozen Plan
|
|
|
|
|
|
|
|
|
|
|
86,451
|
|
|
|
|
|
|
|
374,146
|
|
Active Plan
|
|
|
6,700
|
|
|
|
11,269
|
|
|
|
7,870
|
|
|
|
|
|
|
|
33,374
|
|
Ronald M. Coppock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frozen Plan
|
|
|
|
|
|
|
|
|
|
|
13,627
|
|
|
|
|
|
|
|
64,178
|
|
Active Plan
|
|
|
23,448
|
|
|
|
10,495
|
|
|
|
9,329
|
|
|
|
|
|
|
|
51,013
|
|
|
|
|
(1) |
|
Excludes deferral of bonuses paid in 2010 with respect to the
2009 calendar year. |
|
(2) |
|
Represents the company match made in 2009 for 2008 employee
contributions. |
Other Perquisites. Historically, we reimburse
certain club membership fees and airline club dues and pay for
financial counseling services for our named executive officers.
Effective March 31, 2010 the Company no longer will
reimburse for club dues or financial counseling services.
Clawback
Policy.
In February 2009, the Board of Directors adopted the Executive
Compensation Adjustment and Recovery Policy. This policy is a
so-called clawback policy that enables the Company
to recoup compensation paid to any president, vice president,
secretary, treasurer or principal financial officer, comptroller
or principal accounting officer, or any other officer routinely
performing corresponding functions with respect to the Company
when such compensation was based on financial results or
operating metrics that were satisfied as the result of a
fraudulent or illegal conduct of any of the officers. The Board
of Directors is entitled to recover compensation when it
concludes that it is attributable to such officers conduct
and would not have been awarded had such financial results or
operating metrics not been satisfied. In addition, if an officer
engaged in intentional misconduct that contributed in any
material respect to the improper accounting or incorrect
financial data, the Board of Directors may seek to recoup any
profits realized from the officers sale of securities of
the Company during or subsequent to the impacted accounting
period. A copy of the Policy is available at www.arrisi.com
under the caption Investor Relations.
The Company has implemented the Policy. Beginning in 2008,
equity awards contemplated that the Board of Directors might
adopt a clawback policy and the compensation committee made
those awards subject to any policy that the Board of Directors
ultimately adopted. Current and future long-term incentive
awards and annual incentive awards will similarly be subject to
the Policy.
29
Employment
Contracts and Termination of Employment and
Change-in-Control
Arrangements
Executive employment agreements were amended in November 2008 to
comply with the timely payment and other provisions of
Section 409A of the Internal Revenue Code and to harmonize
certain benefits.
The employment agreements generally are one year agreements and
automatically renew until normal retirement at age 65,
define initial salary and target bonus percent, general
employment benefits and business expense reimbursements. The
agreements contain one year non-competition, non-solicitation
and non-disclosures of trade secret provisions. The amendments
provided not only 409A compliance provisions but also that
executives terminating their employment who are 62 years
old or older with ten or more years of experience, their
outstanding equity awards will continue to vest and remain
outstanding for their original term (notwithstanding such
termination) provided they continue to comply with the
non-competition trade secret protection provisions of the
agreement. The amendments also reflect for the Rabbi Trust and
funding elements described above with respect to the
Companys non-qualified deferred benefit plan and the SERP
of Mr. Stanzione. The term of Mr. Margolis
contract is until he reaches age 65 subject to termination
on 24 months notice. Mr. Stanzione agreement is
terminable on 12 months notice. Also,
Mr. Stanziones SERP benefit is frozen at his
age 62 benefit amount, which amount will thereafter be
credited with the investment returns or losses of the
independently managed funds and investment vehicles elected by
Mr. Stanzione from a menu of investment vehicles made
available by the Company. Upon his retirement from the Company,
Mr. Stanzione is entitled to receive a lump sum benefit.
The table below sets forth the approximate value of salary,
bonus and accelerated equity payable to each NEO assuming a
change in control or termination event had occurred on
December 31, 2009.
Termination
Benefit Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerate
|
|
|
|
|
Duration(1)
|
|
Salary
|
|
Bonus(10)
|
|
Benefits
|
|
Equity
|
|
Total
|
|
Robert J. Stanzione
Change in Control or Without Good Cause
|
|
|
3 years
|
|
|
$
|
2,190,000
|
|
|
$
|
3,263,000
|
(6)
|
|
$
|
69,206
|
|
|
$
|
3,386,080
|
|
|
$
|
8,908,286
|
|
Lawrence A. Margolis
Change in Control or Without Good Cause
|
|
|
2 years
|
|
|
|
772,000
|
|
|
|
834,000
|
(7)
|
|
|
34,376
|
|
|
|
1,243,237
|
|
|
|
2,883,613
|
|
David B. Potts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death (2)
|
|
|
3 months
|
|
|
|
96,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,250
|
|
Disability(3)
|
|
|
6 months
|
|
|
|
192,500
|
|
|
|
|
|
|
|
9,584
|
|
|
|
|
|
|
|
202,084
|
|
Without Good Cause(4)
|
|
|
2 years
|
|
|
|
770,000
|
|
|
|
462,000
|
(8)
|
|
|
38,334
|
|
|
|
1,243,237
|
|
|
|
2,513,571
|
|
Change in Control(5)
|
|
|
2 years
|
|
|
|
770,000
|
|
|
|
435,000
|
(9)
|
|
|
38,334
|
|
|
|
1,243,237
|
|
|
|
2,486,571
|
|
James D. Lakin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death(2)
|
|
|
3 months
|
|
|
|
83,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,750
|
|
Disability(3)
|
|
|
6 months
|
|
|
|
167,500
|
|
|
|
|
|
|
|
12,071
|
|
|
|
|
|
|
|
179,571
|
|
Without Good Cause(4)
|
|
|
1 year
|
|
|
|
335,000
|
|
|
|
201,000
|
(8)
|
|
|
24,142
|
|
|
|
1,102,172
|
|
|
|
1,662,314
|
|
Change in Control(5)
|
|
|
1 year
|
|
|
|
335,000
|
|
|
|
205,000
|
(9)
|
|
|
24,142
|
|
|
|
1,102,172
|
|
|
|
1,666,314
|
|
Ronald M. Coppock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death(2)
|
|
|
3 months
|
|
|
|
81,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,250
|
|
Disability(3)
|
|
|
6 months
|
|
|
|
162,500
|
|
|
|
|
|
|
|
9,912
|
|
|
|
|
|
|
|
174,412
|
|
Without Good Cause(4)
|
|
|
1 year
|
|
|
|
325,000
|
|
|
|
195,000
|
(8)
|
|
|
19,825
|
|
|
|
1,183,612
|
|
|
|
1,723,437
|
|
Change in Control(5)
|
|
|
1 year
|
|
|
|
325,000
|
|
|
|
190,000
|
(9)
|
|
|
19,825
|
|
|
|
1,183,612
|
|
|
|
1,718,437
|
|
|
|
|
(1) |
|
Represents the termination period during which payments are made |
|
(2) |
|
Three months of salary continuation paid to NEOs estate. |
|
(3) |
|
Six months of salary and benefits continuation paid. |
|
(4) |
|
Continuation of salary, bonus and benefits for the duration
period, plus accelerated equity vesting. |
|
(5) |
|
Most recent salary and average of prior 2 year bonuses
times the severance duration period. |
|
(6) |
|
Average of highest three bonuses earned in previous five years. |
|
(7) |
|
Most recent annual bonus paid or payable. |
30
|
|
|
(8) |
|
Target bonus equal to 60% of annual base salary. |
|
(9) |
|
Average of two prior paid annual bonuses. |
|
(10) |
|
Does not include bonus earned in 2009 but not paid until 2010:
Stanzione ($1,340,000), Margolis ($417,000), Lakin ($362,000),
Potts ($416,000) and Coppock ($351,000). |
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis section of this
proxy statement with management and, based on such review and
discussion, the Compensation Committee recommends to the Board
of Directors that it be included in this proxy statement.
William H. Lambert, Chairman
Alex B. Best
John Anderson Craig
Notwithstanding anything to the contrary which is or may be
set forth in any of the Companys filings under the
Securities Act of 1933 or the Exchange Act that might
incorporate Company filings, including this proxy statement, in
whole or in part, the preceding Compensation Committee Report
shall not be incorporated by reference into any such filings.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company has adopted a related person transaction policy that
governs the review, approval or ratification of covered related
person transactions. Our Audit Committee manages this policy.
The policy generally provides that we may enter into a related
person transaction only if the Audit Committee approves or
ratifies such transaction in accordance with the guidelines set
forth in the policy and if the transaction is on terms and
conditions that are reasonable under the circumstances and in
the best interests of the shareholders.
Under the policy a related party transaction is one
in which the Company is a participant and that, individually or
taken together with related transactions, exceeds, or is
reasonably likely to exceed, $100,000 in amount in any year and
in which any of the following individuals (a covered
person) has a direct or indirect material interest:
|
|
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any director or executive officer;
|
|
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any nominee for election as a director;
|
|
|
|
any security holder who is known by the Company to own of record
or beneficially more than 5% of any class of the Companys
voting securities; or
|
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|
|
any immediate family member of any of the foregoing persons,
including any child; stepchild; parent; stepparent; spouse;
sibling; mother-, father-, son-, daughter-, brother-, or
sister-in-law;
and any person (other than a tenant or employee) sharing the
same household.
|
For purposes of the policy, a material interest in a transaction
shall not be deemed to exist when a covered persons
interest in the transaction results from (a) the covered
persons (together with his immediate familys) direct
or indirect ownership of less than a 10% economic interest in
the other party to the transaction,
and/or the
covered persons service as a director of the other party
to the transaction, or (b) the covered persons pro
rata participation in a benefit received by him solely as a
security holder.
A transaction is deemed to involve the Company if it involves a
vendor or partner of the Company or any of its subsidiaries and
relates to the business relationship between the Company and any
of its subsidiaries and that vendor or partner.
There have been no related party transactions since the
beginning of the 2009 fiscal year nor are there any such
transactions proposed.
31
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP as
the independent registered public accounting firm of the Company
for the fiscal year ended December 31, 2010, subject to
shareholder ratification. Ernst & Young LLP also acted
in such capacity during the fiscal year ended December 31,
2009 and 2008. Representatives of Ernst & Young LLP,
who are expected to be present at the meeting, will be given an
opportunity to make a statement if they so desire and to respond
to appropriate questions asked by stockholders. The fees billed
by Ernst & Young LLP for the last two Company fiscal
years were as follows, all of which were approved by the Audit
Committee:
Audit
Fees
Fees for audit services totaled $1,742,444 and $2,107,153 in
2009 and 2008, respectively, and include fees associated with
the annual audits, the Sarbanes-Oxley Section 404
attestation, the reviews of the Companys quarterly reports
on
Form 10-Q,
other SEC filings, and audit consultations.
Audit-Related
Fees
Fees for audit-related services totaled $60,000 and $77,979 in
2009 and 2008, respectively. Audit-related services include due
diligence in connection with acquisitions, consultation on
accounting and internal control matters, and audits in
connection with employee benefit plans.
Tax
Fees
Fees for tax services, including tax compliance, tax advice and
tax planning, totaled $209,774 and $302,517 in 2009 and 2008,
respectively.
All Other
Fees
Fees for all other services not included above were $0 for both
2009 and 2008.
Audit
Committee Pre-Approval Policy
The Audit Committee has adopted a policy that requires advance
approval of all audit, audit-related, tax services, and other
permissible non-audit services performed by the independent
registered public accounting firm. Prior to engagement, the
Audit Committee pre-approves independent registered public
accounting firm services and fee amounts or ranges within each
category. Either the independent registered public accounting
firm or the Companys Chief Financial Officer (or his
designee) must submit to the Audit Committee requests for
services to be provided by the independent registered public
accounting firm. The Audit Committee may delegate pre-approval
authority to one of its members. The member to whom such
authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its
next meeting.
The Audit Committee requires the Companys Internal Audit
Director to report to the Audit Committee on a periodic basis
the results of the Internal Audit Directors monitoring of
the independent registered public accounting firms
performance of all services to the Company and whether the
performance of those services was in compliance with the Audit
Committees pre-approval policy. Both the Internal Audit
Director and management are required to report immediately to
the Audit Committee any breaches by the independent registered
public accounting firm of the policy.
STOCKHOLDER
PROPOSALS
Proposals of stockholders intended to be presented at the 2011
Annual Meeting of Stockholders must be received by the Company
at its principal offices by December 15, 2010, in order to
be considered for inclusion in the Companys proxy
statement and proxy relating to the 2011 Annual Meeting of
Stockholders.
32
CONCLUSION
The Board of Directors knows of no other matters to be presented
for stockholder action at the meeting. However, if other matters
do properly come before the meeting, it is intended that the
persons named in the proxies will vote upon them in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Lawrence A. Margolis, Secretary
April 9, 2010
33
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or
telephone voting. Both are available 24 hours a day, 7 days a week. Internet and telephone
voting is available through 11:59 PM Eastern Time the day prior to the shareholder meeting date.
INTERNET http://www.proxyvoting.com/arrs ARRIS GROUP, INC. Use the Internet to vote
your proxy. Have your proxy card in hand when you access the web site. OR TELEPHONE
1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when
you call. If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope. Your Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card. 72515/72832
FOLD AND DETACH HERE THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
Please mark your votes as indicated in this example X WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR ITEM 2. FOR WITHHOLD *EXCEPTIONS ALL FOR ALL FOR AGAINST
ABSTAIN 1. ELECTION OF DIRECTORS 2. Vote to ratify Ernst & Young LLP as our Nominees
Independent public accountant firm for 2010 : 01 Alex B. Best 06 William H. Lambert 02
Harry L. Bosco 07 John R. Petty 3. In their discretion, such other matters as may properly be
brought before 03 James A. Chiddix 08 Robert J. Stanzione the meeting or any adjournment(s)
thereof. 04 John Anderson Craig 09 David A. Woodle 05 Matthew B. Kearney (INSTRUCTIONS: To withhold
authority to vote for any individual nominee, mark the Exceptions box above and write that
nominees name in the space provided below.) *Exceptions Mark Here for Address
Change or Comments SEE REVERSE Signature Signature Date NOTE: Please sign as name
appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. |
You can now access your Arris Group, Inc. account online. Access your Arris Group,
Inc. account online via Investor ServiceDirect® (ISD). BNY Mellon Shareowner Services,
the transfer agent for Arris Group, Inc., now makes it easy and convenient to get current
information on your shareholder account. View account status
View payment history for dividends View certificate history
Make address changes View book-entry information Obtain a
duplicate 1099 tax form Visit us on the web at http://www.bnymellon.com/shareowner/isd For
Technical Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday Eastern Time Investor
ServiceDirect ® Available 24 hours per day, 7 days per week TOLL FREE NUMBER:
1-800-370-1163 Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and more. Simply log on to
Investor ServiceDirect® at www.bnymellon.com/shareowner/isd where step-by-step
instructions will prompt you through enrollment. Important notice regarding the Internet
availability of proxy materials for the Annual Meeting of shareholders. The Proxy Statement and the
2009 Annual Report to Stockholders are available at: http://www.arrisi.com/proxy FOLD AND
DETACH HERE PROXY ARRIS GROUP, INC. Annual Meeting of Stockholders May 19, 2010 THIS PROXY
IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned hereby appoints Robert
Stanzione, Lawrence Margolis, and David Potts, and each of them, with power to act without the
other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them
to represent and vote, as provided on the other side, all the shares of Arris Group, Inc. Common
Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other
business as may properly come before the Annual Meeting of Stockholders of the company to be held
May 19, 2010 or at any adjournment or postponement thereof, with all powers which the undersigned
would possess if present at the Meeting. Address Change/Comments (Mark the corresponding
box on the reverse side) BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ
07606-9250 (Continued and to be marked, dated and signed, on the other side) 72515/72832 |