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TABLE OF CONTENTS
THE
ULTIMATE SOFTWARE GROUP, INC.
2000 ULTIMATE WAY
WESTON, FLORIDA 33326
April 1,
2011
Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders of The Ultimate Software Group, Inc.
(Ultimate, we, us or
our), which will be held on Tuesday, May 17,
2011, at 10:00 a.m. (EDT), at Ultimates principal
corporate office at 2000 Ultimate Way, Weston, Florida 33326
(the Annual Meeting).
The principal business of the meeting will be (i) to elect
two directors to serve until the 2014 Annual Meeting of
Stockholders or until their successors are duly elected and
qualified; (ii) to ratify the appointment of KPMG LLP as
Ultimates independent registered public accounting firm
for the fiscal year ending December 31, 2011; (iii) to
approve by non-binding advisory vote the compensation paid to
Ultimates named executive officers; (iv) to
recommend, by non-binding advisory vote, the frequency of future
advisory votes on the compensation paid to Ultimates named
executive officers; and (v) to transact such other business
as may properly come before the meeting or any postponement or
adjournment thereof. During the Annual Meeting, we will also
review the results of the past fiscal year and report on
significant aspects of our operations during the first quarter
of fiscal 2011.
In accordance with the Securities and Exchange Commission
(SEC) rule (Notice and Access Rule) that
allows companies to furnish their proxy materials (including the
form of proxy, this proxy statement and our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, filed with the
SEC on March 1, 2011) over the Internet, we sent a
Notice of Internet Availability of Proxy Materials
(Notice) on or about April 1, 2011 to our
stockholders of record as of March 21, 2011. We also
provided access to our proxy materials over the Internet
beginning on that date. As a result of the Notice and Access
Rule, all stockholders receiving the Notice have the ability to
access the proxy materials over the Internet and request to
receive a paper copy of the proxy materials by mail.
Instructions on how to access the proxy materials over the
Internet or to request a paper copy may be found on the Notice.
In addition, the Notice contains instructions on how
stockholders may request to receive proxy materials
electronically by
e-mail.
Whether you plan to attend the Annual Meeting or not, to have
your vote recorded, you should vote over the Internet or by
telephone, or, if you requested paper copies of the proxy
materials by mail, you can also vote by mail by following the
instructions on the proxy card. Voting by any of these methods
will ensure your representation at the Annual Meeting regardless
of whether you attend in person. If you decide to attend the
meeting, you may, of course, revoke your proxy and personally
cast your votes.
We thank you for your continued interest in Ultimate.
Sincerely yours,
Scott Scherr
Chairman, President and Chief Executive Officer
THE
ULTIMATE SOFTWARE GROUP, INC.
2000 ULTIMATE WAY
WESTON, FLORIDA 33326
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2011
TO THE
STOCKHOLDERS OF THE ULTIMATE SOFTWARE GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of The Ultimate Software Group, Inc. (Ultimate,
we, us or our) will be held
on Tuesday, May 17, 2011, at 10:00 a.m. (EDT), at
Ultimates principal corporate office at 2000 Ultimate Way,
Weston, Florida 33326 for the following purposes:
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1.
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To elect two directors to serve until the 2014 Annual Meeting of
Stockholders or until their successors are duly elected and
qualified;
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2.
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To ratify the appointment of KPMG LLP as Ultimates
independent registered public accounting firm for the fiscal
year ending December 31, 2011;
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3.
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To approve by non-binding advisory vote the compensation paid to
Ultimates named executive officers;
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4.
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To recommend, by non-binding advisory vote, the frequency of
future advisory votes on the compensation paid to
Ultimates named executive officers; and
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5.
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To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
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Stockholders of record of the voting stock of Ultimate at the
close of business on March 21, 2011 are entitled to notice
of and to vote at the Annual Meeting or any postponement or
adjournment thereof.
By Order of the Board of Directors:
Vivian Maza
Secretary
Weston, Florida
April 1, 2011
IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDERS MEETING TO BE HELD ON MAY 17, 2011:
This proxy statement, the form of proxy and Ultimates
annual report on
Form 10-K
for the year ended December 31, 2010 (2010 Annual
Report) are being mailed to stockholders who have
requested hard copies on or after April 1, 2011.
Registered stockholders may view and print Ultimates proxy
statement and the 2010 Annual Report at
www.envisionreports.com/ULTI.
Beneficial stockholders may view and print Ultimates proxy
statement and the 2010 Annual Report at www.proxyvote.com.
All stockholders may view and print Ultimates proxy
statement and the 2010 Annual Report, which are located on the
Investors link of Ultimates website at
http://ultimatesoftware.com/investors.asp.
1
THE
ULTIMATE SOFTWARE GROUP, INC.
2000 ULTIMATE WAY
WESTON, FLORIDA 33326
PROXY
STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 17,
2011
This proxy statement (this Proxy Statement) is being
furnished to holders of The Ultimate Software Group, Inc.
(Ultimate, we, us, or
our) common stock, par value $0.01 per share (the
Common Stock). Proxies are being solicited on behalf
of the Board of Directors of Ultimate (the Board) to
be used at the Annual Meeting of Stockholders (the Annual
Meeting) to be held on Tuesday, May 17, 2011, at
10:00 a.m. (EDT), at Ultimates principal corporate
office at 2000 Ultimate Way, Weston, Florida 33326 and at any
postponement or adjournment thereof, for the purposes set forth
in the Notice of Annual Meeting of Stockholders.
Ultimate is using the Securities and Exchange Commission (the
SEC) rule that allows companies to furnish their
proxy materials over the Internet. As a result, we mailed to our
stockholders a Notice of Internet Availability of Proxy
Materials (the Notice) instead of a paper copy of
the proxy materials (including the form of proxy, this Proxy
Statement and our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, filed with the
SEC on March 1, 2011 (the 2010 Annual Report),
collectively, the Proxy Materials) on or about
April 1, 2011. We also provided access to our Proxy
Materials over the Internet beginning on that date. The Notice
contained instructions on how to access this Proxy Statement and
the 2010 Annual Report and how to vote online or by toll-free
number. Subsequent to receiving the Notice, all stockholders
have the ability to access the Proxy Materials over the Internet
and request to receive a paper copy of the Proxy Materials by
mail. Instructions on how to access the Proxy Materials over the
Internet or to request a paper copy may be found on the Notice.
In addition, the Notice contains instructions on how
stockholders may request to receive Proxy Materials
electronically by
e-mail.
Registered stockholders may view and print this Proxy Statement
and the 2010 Annual Report at www.Envisionreports.com/ULTI.
Beneficial stockholders may view and print this Proxy Statement
and the 2010 Annual Report at www.proxyvote.com.
All stockholders may view and print this Proxy Statement and the
2010 Annual Report, which are located on the
Investors link of Ultimates website at
http://ultimatesoftware.com/investors.asp.
Proxies are being solicited from holders of Ultimates
Common Stock. If a proxy is properly executed and returned, the
shares represented by it will be voted and, where specification
is made by the stockholder as provided in such proxy, will be
voted in accordance with such specification. Unless a
stockholder specifies otherwise, all shares represented by valid
proxies will be voted (i) FOR the election of the persons
named in this Proxy Statement as nominees of Ultimate under the
heading Election of Directors; (ii) FOR the
ratification of the appointment of KPMG LLP as Ultimates
independent registered public accounting firm for the fiscal
year ending December 31, 2011; (iii) FOR approval, by
non-binding advisory vote, of the compensation paid to
Ultimates named executive officers; (iv) to express a
preference for the holding of a stockholder advisory vote on the
compensation paid to Ultimates named executive officers
every year; and (v) at the discretion of the proxy holders
on any other matter that may properly come before the Annual
Meeting or any adjournment thereof.
2
SOLICITATION
OF PROXIES
Ultimate is paying all of the costs of soliciting proxies,
including preparation costs, assembly, posting on the Internet,
printing and mailing of the Proxy Materials, the Notice and any
additional information furnished to stockholders. Proxies are
being solicited by Ultimate primarily by mail and the Internet,
but in addition, the solicitation by these means may be followed
by solicitation in person, or by telephone or facsimile, by
directors, officers and other employees of Ultimate without
additional compensation. Brokers, dealers, banks, voting trusts,
custodians and other institutions, and their nominees, who are
holders of shares of Ultimates Common Stock on the Record
Date, referred to below, will be requested to forward the
soliciting material to the beneficial owners of such shares of
Common Stock and to obtain authorization for the execution of
proxies. Ultimate will, upon request, reimburse such
institutions for their reasonable expenses in forwarding the
Proxy Materials to their beneficial owners.
VOTING
RIGHTS AND PROCEDURES
Only stockholders of record of the Common Stock of Ultimate at
the close of business on March 21, 2011 (the Record
Date) will be entitled to vote at the Annual Meeting. As
of that date, a total of 27,004,692 shares of Common Stock
were outstanding, each share being entitled to one vote. There
is no cumulative voting.
A majority of the issued and outstanding shares of Common Stock
entitled to vote at the Annual Meeting, represented in person or
by proxy, constitutes a quorum for the transaction of business
at the Annual Meeting. If a stockholder abstains from voting as
to any matter, then the shares held by such stockholder shall be
deemed present at the Annual Meeting for purposes of determining
a quorum. If a broker returns a non-vote proxy,
indicating a lack of authority to vote on such matter, then the
shares covered by such non-vote shall be deemed present at the
Annual Meeting for purposes of determining a quorum but shall
not be deemed to have been voted in favor of or against such
matter.
Assuming the presence of a quorum, the affirmative vote of a
plurality of the votes cast is required for the election of
directors. If a stockholder returns a proxy withholding
authority to vote the proxy with respect to a nominee for
director, then the shares of the Common Stock covered by such
proxy shall be deemed present at the Annual Meeting for purposes
of determining a quorum and for purposes of calculating the vote
with respect to such nominee, but shall not be deemed to have
been voted for such nominee. In the election of directors,
abstentions will have no effect on the outcome of the vote.
The affirmative vote of the holders of a majority of the shares
represented in person or by proxy and entitled to vote at the
Annual Meeting is required for the ratification of the
appointment of KPMG LLP as Ultimates independent
registered public accounting firm for the fiscal year ending
December 31, 2011 and the advisory approval of executive
compensation. Abstentions will not be counted either for or
against the proposal for the ratification of the appointment of
KPMG LLP as Ultimates independent registered public
accounting firm for 2011 and the proposal for advisory approval
of executive compensation.
The advisory vote on the frequency of future advisory
stockholder votes on executive compensation asks the
stockholders to express their preferences for one of three
choices: every year, every other year or every three years.
Abstentions will have the same effect as not expressing a
preference.
A stockholder may revoke a proxy at any time prior to its
exercise by giving to the Secretary of Ultimate a written notice
of revocation of the proxys authority prior to the voting
thereof or by submitting a later dated proxy by telephone, on
the Internet or by mail, or by voting in person at the Annual
Meeting.
3
PROPOSAL IELECTION
OF DIRECTORS
The Board of Ultimate is currently composed of seven members
divided into three classes. The members of each class are
elected to serve three-year terms with the term of office of
each class ending in successive years. Messrs. LeRoy A.
Vander Putten and Robert A. Yanover serve in the class whose
term expires at the Annual Meeting.
The Board has nominated Messrs. LeRoy A. Vander Putten and
Robert A. Yanover for election to the Board at the Annual
Meeting for a term of three years, expiring at the 2014 Annual
Meeting, and each has indicated a willingness to serve.
Messrs. Rick A. Wilber, Marc D. Scherr and James A.
FitzPatrick, Jr. serve in the class whose term expires at
the Annual Meeting of Stockholders in 2012. Messrs. Scott
Scherr and Alois T. Leiter serve in the class whose term expires
at the Annual Meeting of Stockholders in 2013.
The affirmative vote of a plurality of the votes cast at the
Annual Meeting is necessary to elect the nominees as directors.
The persons named as proxies in the enclosed form of proxy will
vote the proxies received by them FOR the election of
Messrs. LeRoy A. Vander Putten and Robert A. Yanover,
unless authority is withheld by the stockholder in the proxy or
unless a broker returns a non-vote proxy. In the event that
either of Messrs. LeRoy A. Vander Putten or Robert A.
Yanover becomes unavailable for election at the Annual Meeting,
the persons named as proxies in this Proxy Statement may vote
for a substitute nominee in their discretion as recommended by
the Board.
The following table sets forth certain information concerning
the nominees, based on data furnished by them. Information
regarding incumbent directors whose terms are not expiring is
included in the section labeled Directors and Executive
Officers below.
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Name of Nominee
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Age
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Principal Occupation
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Director Since
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LeRoy A. Vander Putten
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76
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Director, Chairman of the Compensation Committee and Member of
the Audit Committee of the Board
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October 1997
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Robert A. Yanover
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74
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Director, Chairman of the Audit Committee and Member of the
Compensation Committee of the Board
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January 1997
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LeRoy A. Vander Putten has served as a director of Ultimate
since October 1997, is Chairman of the Compensation Committee
and is a member of the Audit Committee. Mr. Vander Putten
is a retired insurance company executive. He served as the
Executive Chairman of The Insurance Center, Inc., a holding
company for 14 insurance agencies, from October 2001 to
January 27, 2006. Previously, he served as the Chairman of
CORE Insurance Holdings, Inc., a member of the GE Global
Insurance Group, engaged in the underwriting of casualty
reinsurance, from August 2000 to August 2001. From April 1998 to
August 2000, he served as Chairman of Trade Resources
International Holdings, Ltd., a corporation engaged in trade
finance for exporters from developing countries. From January
1988 until May 1997, Mr. Vander Putten was Chairman and
Chief Executive Officer of Executive Risk Inc., a specialty
insurance holding company. From August 1982 to January 1988,
Mr. Vander Putten served as Vice President and deputy
Treasurer of The Aetna Life and Casualty Company, an insurance
company. Mr. Vander Puttens extensive executive and
board level experience, including his roles as chairman and
chief executive officer of a public company, Executive Risk
Inc., and as a senior financial officer of The Aetna Life and
Casualty Company, brings to the Board considerable expertise in
financial, operational and corporate strategy development as
well as organizational acumen. Mr. Vander Puttens
experience also enables him to serve in the important role as
audit committee financial expert of the Audit
Committee as defined in the rules of the SEC.
4
Robert A. Yanover has served as a director of Ultimate since
January 1997 and is Chairman of the Audit Committee and a member
of the Compensation Committee. Mr. Yanover founded Computer
Leasing Corporation of Michigan, a private leasing company, in
1975 and served as its President from its founding until 2007,
at which time Mr. Yanover retired. Mr. Yanover also
founded Lason, Inc., a corporation specializing in the imaging
business, and served as Chairman of the Board from its inception
in 1987 until 1998 and as a director through February 2001.
Mr. Yanover brings to the Board his experience and strong
business and leadership skills, having served as president and
chairman of public and private companies for over 30 years.
In addition, having served as a director of Ultimate for the
past 14 years, Mr. Yanover brings to the Board deep
institutional knowledge, including a well developed
understanding of Ultimates business operations and the
fundamentals essential to its business model.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
LEROY A. VANDER PUTTEN AND ROBERT A. YANOVER AS DIRECTORS OF
ULTIMATE TO HOLD OFFICE UNTIL THE 2014 ANNUAL MEETING AND UNTIL
THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND QUALIFIED.
PROPOSAL IIRATIFICATION
OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The audit committee of the Board (the Audit
Committee) has appointed KPMG LLP as the independent
registered public accounting firm for Ultimate for the fiscal
year ending December 31, 2011. KPMG LLP has served as the
independent registered public accounting firm for Ultimate since
2002. A representative of KPMG LLP will be present at the Annual
Meeting and will be given an opportunity to make a statement.
The representative will also be available to respond to
appropriate questions from stockholders.
Stockholder ratification of the appointment of KPMG LLP as
Ultimates independent registered public accounting firm is
not required by Ultimates By-Laws or otherwise. However,
the Board is submitting the selection of KPMG LLP to the
stockholders for ratification as a matter of corporate practice.
The affirmative vote of the holders of a majority of the shares
represented in person or by proxy and entitled to vote is
required for the ratification of the appointment of KPMG LLP as
Ultimates independent registered public accounting firm
for the fiscal year ending December 31, 2011. Abstentions
will not be counted either for or against the proposal for the
ratification of the appointment of KPMG LLP as Ultimates
independent registered public accounting firm for 2011. If the
stockholders fail to ratify the selection, the Audit Committee
will reconsider whether or not to retain KPMG LLP. Even if the
selection is ratified, the Audit Committee, in its discretion,
may direct the appointment of a different independent registered
public accounting firm at any time during the year if the Audit
Committee determines that such a change would be in the best
interests of Ultimate and its stockholders.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS ULTIMATES INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2011.
PROPOSAL IIIADVISORY
VOTE ON NAMED
EXECUTIVE OFFICER COMPENSATION
Pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the Dodd-Frank Act) and the
SEC rules promulgated thereunder, we are providing our
stockholders with the opportunity to vote to approve, on a
non-binding, advisory basis, the compensation of our named
executive officers as disclosed in this Proxy Statement. This
proposal, commonly known as a
say-on-pay
proposal, gives our stockholders the opportunity to express
their views on our named executive officers compensation.
The vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named
executive officers
5
and the philosophy, policies and practices described in this
Proxy Statement. A proposal will be presented at the Annual
Meeting in the form of the following resolution:
RESOLVED, that the stockholders of Ultimate hereby approve
the compensation paid to Ultimates named executive
officers, as disclosed in the proxy statement for
Ultimates 2011 Annual Meeting of Stockholders pursuant to
Item 402 of SEC
Regulation S-K,
including the Compensation Discussion and Analysis, compensation
tables and narrative discussion.
The Board believes that our compensation program is consistent
with the goals and objectives set forth under Compensation
Discussion and Analysis in this Proxy Statement,
attracting and retaining key executives who are committed to
Ultimates core values of excellence, integrity and
teamwork, while motivating the named executive officers to
achieve Ultimates strategic goals and aligning their
interests with those of our stockholders. The Board urges you to
review carefully the information under Compensation
Discussion and Analysis in this Proxy Statement and to
vote, on an advisory basis, to approve the compensation of
Ultimates named executive officers, as disclosed in this
Proxy Statement pursuant to Item 402 of SEC
Regulation S-K.
While the vote on named executive officer compensation is
advisory and non-binding, the Board and Compensation Committee
value the opinions of our stockholders and will consider the
outcome of the vote when making future executive compensation
decisions.
THE BOARD RECOMMENDS AN ADVISORY VOTE FOR THE APPROVAL OF
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED
IN THIS PROXY STATEMENT.
PROPOSAL IVADVISORY
VOTE ON THE FREQUENCY OF
AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to the Dodd-Frank Act and the SEC rules promulgated
thereunder, we are also providing our stockholders with the
opportunity to vote, on a non-binding, advisory basis, for their
preference as to how frequently we should seek future advisory
votes on the compensation of our named executive officers like
the one provided for in Proposal III above. By voting with
respect to this Proposal IV, stockholders may indicate
whether they would prefer that we conduct future advisory votes
on executive compensation once every one, two, or three years.
Stockholders also may, if they wish, abstain from casting a vote
on this proposal.
The Board has determined that an annual advisory vote on
executive compensation will allow our stockholders to provide
timely, direct input on Ultimates executive compensation
philosophy, policies and practices as disclosed in the proxy
statement each year. The Board believes that an annual vote is
consistent with our efforts to engage in an ongoing dialogue
with our stockholders on executive compensation and corporate
governance matters. Therefore, the Board recommends that you
vote to hold the advisory vote on named executive officer
compensation every year. While this vote is advisory and
non-binding, the Board will take the results of the vote into
account in its decision when considering the frequency of future
advisory votes on executive compensation.
The enclosed proxy card gives you four choices for voting on
this proposal. You can vote, on an advisory basis, to hold a
stockholder advisory vote on named executive officer
compensation every year, every two years or every three years.
You may also abstain from voting on this proposal. You are not
voting to approve or disapprove the Boards recommendation
on this proposal.
THE BOARD RECOMMENDS THAT AN ADVISORY VOTE ON NAMED EXECUTIVE
OFFICER COMPENSATION BE HELD EVERY YEAR.
6
CORPORATE
GOVERNANCE, BOARD MEETINGS AND COMMITTEES OF THE BOARD
During fiscal 2010, the Board held six meetings. During fiscal
2010, each director holding office during the year attended all
of the meetings of the Board and all of the meetings of the
committees of the Board on which he served. The Board has an
Executive Committee, an Audit Committee and a Compensation
Committee, which are described below.
Interested parties may communicate with the Board, anonymously
if they wish, by sending a written note or memo to the
Secretary, The Ultimate Software Group, Inc., 2000 Ultimate Way,
Weston, Florida 33326. Communications that are intended
specifically for non-management or independent directors should
be sent to the above address to the attention of the Chairman of
the Audit Committee. All such communications will be delivered
unopened by the Secretary to the Chairman of the Board or the
Chairman of the Audit Committee, as applicable.
Following consultation with counsel and based upon the facts
described below, the Board has determined that the following
individuals are independent directors within the meaning of the
Marketplace Rules of the NASDAQ Stock Market LLC
(NASDAQ): James A. FitzPatrick, Jr., Alois T.
Leiter, LeRoy A. Vander Putten, Rick A. Wilber and Robert A.
Yanover. In the course of the Boards determination
regarding the independence of each non-employee director, it
considered any transactions, relationships and arrangements as
required by the NASDAQ rules governing independence standards
for directors. In particular, with respect to each of the three
most recently completed fiscal years, the Board evaluated for
(i) Mr. FitzPatrick, the annual amount of fees
Ultimate paid for legal services to Dewey & LeBoeuf
LLP, the law firm in which Mr. FitzPatrick is a partner,
and (ii) Mr. Leiter, the annual amount of charitable
contributions Ultimate made, in connection with his acting as a
spokesman for Ultimate, to Leiters Landing, the non-profit
charitable organization benefiting children that was formed by
Mr. Leiter. These relationships and transactions are
described in further detail below under Certain
Relationships and Related Transactions and
Compensation Committee Interlocks and Insider
Participation. The Board determined that the annual
payment or contribution, as the case may be, to either of these
organizations constituted an amount less than the greater of
$200,000 or five percent of such organizations annual
consolidated gross revenues during each of such
organizations three most recently completed fiscal years,
as such threshold is set forth in NASDAQ
Rule 5605(a)(2)(D). The Board determined that these
relationships would not interfere with the ability of either
Mr. FitzPatrick or Mr. Leiter in exercising
independent judgment in carrying out the responsibilities of a
director.
The independent directors met regularly in executive session and
outside the presence of Ultimates management throughout
the 2010 fiscal year, and will do so throughout fiscal 2011 in
compliance with the NASDAQ rules.
Nominating Committee. The Board does not have
a standing nominating committee or committee performing similar
functions. The Board has determined that it is appropriate not
to have a nominating committee because of the relatively small
size of the Board and because the entire Board, the majority of
whom are independent directors, functions in the capacity of a
nominating committee. The Board has adopted processes with
respect to the nomination of directors that require that a
majority of the independent directors shall recommend to the
Board the nominees to stand for election at the Annual Meeting.
When considering potential director candidates, the Board
considers the candidates independence (as mandated by the
NASDAQ rules), character, judgment, age, skills, financial
literacy, and experience in the context of the needs of Ultimate
and the Board. The Board does not have a formal diversity
policy; however, the Boards goal is to nominate candidates
that represent diverse viewpoints. When identifying nominees to
serve as directors, the Board will consider candidates with a
diversity of experiences and backgrounds who will enhance the
quality of the Boards deliberations and decisions.
7
In 2010, Ultimate did not pay any fees to a third party to
assist in identifying or evaluating potential nominees.
The Board will consider director candidates recommended by
Ultimates stockholders in a similar manner as those
recommended by members of management or other directors. The
name and qualifications of, and other information specified in
Ultimates By-Laws with respect to, any recommended
candidate for director should be sent to the attention of the
Secretary of Ultimate in accordance with the procedures set
forth under the caption Stockholder Proposals for the 2012
Annual Meeting of Stockholders.
Ultimate does not have a policy with respect to attendance by
the directors at the Annual Meeting of Stockholders. Two of the
seven members of the Board attended the 2010 Annual Meeting of
Stockholders.
Executive Committee. The Executive Committee
of the Board is composed of Messrs. Scott Scherr
(Chairman), Marc D. Scherr and Robert A. Yanover. The Executive
Committee has the authority to exercise (except as provided by
law or as may have been specifically reserved by or for the
Board) all the powers and authority of the Board in the
management of the business and affairs of Ultimate between
regular meetings of the Board and while the Board is not in
session. The Executive Committee held no meetings during fiscal
2010.
Audit Committee. Messrs. Robert A.
Yanover (Chairman), Rick A. Wilber and LeRoy A. Vander Putten
are members of the Audit Committee of the Board. The Audit
Committee oversees Ultimates financial reporting process
on behalf of the Board and reviews the independence of
Ultimates auditors. The Audit Committee held four meetings
during fiscal 2010.
The Board has determined that the Audit Committees current
member composition satisfies the NASDAQ rules that govern audit
committee composition, including the requirement that audit
committee members all be independent directors as
that term is defined by NASDAQ Rule 5605(a)(2). The Board
has determined that Mr. LeRoy A. Vander Putten is an
audit committee financial expert as defined in the
rules of the SEC.
Compensation Committee. Messrs. LeRoy A.
Vander Putten (Chairman), Robert A. Yanover, Rick A. Wilber and
Alois T. Leiter are members of the Compensation Committee of the
Board. The Compensation Committee is responsible for determining
the compensation and benefits for the executive officers of
Ultimate and administers Ultimates stock-based plans and
oversees such other benefit plans as Ultimate may from time to
time maintain. The Compensation Committee held four meetings
during fiscal 2010. The Compensation Committee does not have a
charter.
Board
Leadership
The Chairman, Scott Scherr, also serves as Ultimates
President and Chief Executive Officer. A combined Chairman and
Chief Executive Officer role provides an efficient and effective
leadership model because it fosters clear accountability,
effective decision-making and alignment on corporate strategy.
The Chief Executive Officers direct involvement in
Ultimates operations and his familiarity with
Ultimates business and industry make him best positioned
to lead productive Board meetings and strategic planning
sessions. While Ultimates independent directors bring
experience, oversight and expertise from outside the company and
industry, the Chief Executive Officer brings company-specific
experience and expertise to the Board. The Board has not
designated a lead independent director from among its members.
The Board retains the authority to modify the foregoing
structures.
Board
Role in Risk Oversight
Management is responsible for the
day-to-day
management of risks that Ultimate encounters, while the Board,
as a whole and through its committees, has responsibility for
the oversight of risk management. Management regularly presents
to the Board reports from members of
8
senior management on areas that may pose material risk to
Ultimate, including operational, strategic, financial,
compliance, legal, product, competitive and reputational risks.
While oversight of risk management efforts is the responsibility
of the entire Board, the Audit Committee assists the Board in
fulfilling its oversight responsibilities with respect to risk
management in the areas of accounting, auditing, financial
reporting and maintaining effective internal controls for
financial reporting. The Compensation Committee assists the
Board in fulfilling its oversight responsibilities with respect
to the management of any risks arising from Ultimates
compensation policies and arrangements. The Boards role in
risk oversight had no effect on the Boards leadership
structure.
DIRECTOR
COMPENSATION
Each non-employee director of Ultimate receives compensation for
serving on the Board, payable exclusively in the form of
restricted stock awards granted under Ultimates Amended
and Restated 2005 Equity and Incentive Plan (the
Plan).
During 2010, non-employee directors and the Chairmen of the
Audit and Compensation committees of the Board, respectively,
were granted restricted stock awards for each regular Board and
Committee meeting attended. During the first three quarters of
2010, under the arrangement, (i) each non-employee director
was granted a restricted stock award of 1,000 shares of
Common Stock for each regular meeting of the Board attended and
(ii) each of the Chairmen of the Audit Committee and
Compensation Committee of the Board was granted a restricted
stock award of 625 shares of Common Stock for attendance at
each regular meeting of the Committee that he chaired. During
the fourth quarter of 2010, under the arrangement, (i) each
non-employee director was granted a restricted stock award of
750 shares of Common Stock for each regular meeting of the
Board attended and (ii) each of the Chairmen of the Audit
Committee and the Compensation Committee of the Board was
granted a restricted stock award of 468 shares of Common
Stock for attendance at each regular meeting of the Committee
that he chaired. In addition, each non-employee director was
granted, for each fiscal quarter during which he served, a
restricted stock award of that number of shares of Common Stock
equal to the quotient of $12,500 divided by the closing price of
the Common Stock on NASDAQ on the date of grant, which is the
effective date of the grant determined by the Board for each
such quarter, rounded down to the closest full number of shares.
The date of grant shall not be a date prior to the date of the
Boards determination of the same. Such restricted stock
awards shall vest on the fourth anniversary of the date of
grant, subject to accelerated vesting in the event of a
directors death, disability, cessation of service at the
end of his term or the occurrence of a change of control of
Ultimate.
All directors are reimbursed (in cash) for expenses incurred in
connection with their attendance at Board and Committee
meetings. In addition, in connection with their having joined
the Board, each non-employee Director has received a single
option grant to purchase 25,000 shares of Ultimates
Common Stock. All such options were fully vested upon the date
of grant and have an exercise price equal to 100% of the fair
market value of Ultimates Common Stock on the date of
grant.
2010
DIRECTOR COMPENSATION
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|
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Change in
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|
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Pension
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($)
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|
|
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($)
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Value and
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|
|
Fees
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|
Non-Equity
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Nonqualified
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($)
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Earned
|
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($)
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|
($)
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Incentive
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Deferred
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All
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|
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or Paid
|
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Stock
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Option
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Plan
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Compensation
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Other
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($)
|
Name (1)
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in Cash
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Awards (2)
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Awards
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Compensation
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Earnings
|
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Compensation
|
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Total
|
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Robert A. Yanover
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$
|
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$
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256,257
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$
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|
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$
|
|
|
|
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$
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$
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256,257
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LeRoy A. Vander Putten
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|
|
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256,257
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|
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|
|
|
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|
|
|
|
|
|
|
|
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256,257
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|
James A. FitzPatrick, Jr.
|
|
|
|
|
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176,925
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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176,925
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Rick A. Wilber
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176,925
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|
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176,925
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Alois T. Leiter
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|
|
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|
|
176,925
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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176,925
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|
(1) Messrs. Scott Scherr and Marc D. Scherr are not
included in this table as they are employees of Ultimate and
receive no compensation for their services as directors. The
compensation for Messrs. Scott Scherr and Marc D. Scherr as
employees is shown in the Summary Compensation Table.
(2) The amounts reported in the Director Compensation table
above represent the aggregate grant date fair value of
restricted stock awards granted to each director as compensation
costs for Board services in accordance with Accounting Standards
Codification (ASC) 718,
Compensation Stock Compensation,
(ASC 718) for fiscal 2010. Under ASC 718, the
fair value of each restricted stock award is measured based on
the closing market price of Ultimates Common Stock at the
date of grant and is recognized on a straight-line basis over
the vesting period. Holders of restricted stock awards have all
rights of a stockholder including the right to vote the shares
and receive all dividends and other distributions paid or made
with respect thereto. Each award becomes vested on the fourth
anniversary of the respective date of grant, subject to the
grantees continued Board service with Ultimate on each
such vesting date and subject further to accelerated vesting in
the event of a change in control of Ultimate, death or
disability, or at cessation of his Board Service at the end of
his term.
The number of outstanding stock option awards and outstanding
restricted stock awards for each non-employee director as of
December 31, 2010 was as follows:
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Outstanding
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Outstanding Restricted
|
Name
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Option Awards
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Stock Awards
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Robert A. Yanover
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68,702
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19,342
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LeRoy A. Vander Putten
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66,034
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19,342
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James A. FitzPatrick, Jr.
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|
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73,032
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14,499
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Rick A. Wilber
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61,520
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|
|
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14,499
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Alois T. Leiter
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|
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48,437
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14,499
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|
10
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of Ultimates Common Stock as of
February 28, 2011 (unless otherwise noted) by (i) each
person who is known by Ultimate to own beneficially more than 5%
of the Common Stock; and (ii) each of Ultimates
directors, director nominees and executive officers and all
directors and executive officers of Ultimate as a group.
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AMOUNT AND
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NATURE OF
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PERCENT
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BENEFICIAL
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OF
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NAME AND ADDRESS OF BENEFICIAL
OWNER
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OWNERSHIP (1)
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CLASS (2)
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William Blair & Company, L.L.C. (3)
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2,431,191
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9.0%
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222 W. Adams
Chicago, IL 60606
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Wasatch Advisors, Inc. (4)
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2,034,230
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7.6%
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150 Social Hall Avenue
Salt Lake City, UT 84111
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BlackRock Inc. (5)
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1,388,313
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5.2%
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40 East
52nd
Street
New York, NY 10022
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Scott Scherr (6)
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525,487
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2.0%
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Marc D. Scherr (7)
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589,829
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2.2%
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Mitchell K. Dauerman (8)
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132,251
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*
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James A. FitzPatrick, Jr. (9)
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88,999
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*
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LeRoy A. Vander Putten (10)
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119,734
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*
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Rick A. Wilber (11)
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358,656
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1.3%
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Robert A. Yanover (12)
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162,052
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*
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Alois T. Leiter (13)
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202,981
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*
|
|
All directors and executive officers as a group (8 persons)
(14)
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2,179,989
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8.1%
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*
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|
Indicates beneficial ownership of
less than 1.0% of the outstanding Common Stock.
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|
(1) |
|
Beneficial ownership is determined in accordance with the rules
of the SEC and includes voting or investment power with respect
to securities. Shares of Common Stock issuable upon the exercise
of stock options exercisable within 60 days from
February 28, 2011 are deemed outstanding and to be
beneficially owned by the person holding such option for
purposes of computing such persons percentage ownership,
but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. Ultimate has made
restricted stock awards to named executive officers and
non-employee directors under the Plan (Restricted Stock
Awards). The shares of Common Stock issued under the
Restricted Stock Awards are subject to certain vesting
requirements and restrictions on transfers. The holders of such
shares have all the rights of a stockholder with respect to such
shares, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect
thereto, unless the Compensation Committee or the Board
determines otherwise at the time the Restricted Stock Award is
granted. Each Restricted Stock Award becomes vested on the
fourth anniversary of the respective date of grant, subject to
the grantees continued employment with Ultimate or any
subsidiary, or service on the Board by a non-employee director
on each such vesting date and further subject to accelerated
vesting in the event of a Change in Control of Ultimate or the
grantees death, disability or termination of the
grantees employment with Ultimate without cause or
termination of a non-employee directors service on the
Board at the end of his |
11
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|
term. All shares of Common Stock issued under the Restricted
Stock Awards are considered to be beneficially owned for
purposes of computing the holders respective percentages
of ownership in this table. Except for shares held jointly with
a persons spouse or subject to applicable community
property laws, or as indicated in the footnotes to this table,
each stockholder identified in the table possesses the sole
voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by such stockholder. Ultimate
has also made awards of stock units under the Plan (Stock
Unit Awards). A Stock Unit Award is a grant of a number of
hypothetical share units with respect to shares of Common Stock
that are subject to vesting and transfer restrictions and
conditions under a stock unit award agreement. The value of each
unit is equal to the fair market value of one share of Common
Stock on any applicable date of determination. The payment with
respect to each unit under a Stock Unit Award may be made, at
the discretion of the Compensation Committee, in cash or shares
of Common Stock or in a combination of both. Stock Unit Awards
are not included in this table since the grantee does not have
any rights as a stockholder with respect to the shares subject
to a Stock Unit Award until such time as shares of Common Stock
are delivered to the grantee pursuant to the terms of the
related stock unit award agreement. |
(2) |
|
Applicable percentage of ownership is based on
26,942,788 shares of Common Stock outstanding. |
(3) |
|
Represents shares held as of December 31, 2010 as reported
on Schedule 13G/A filed by William Blair &
Company, L.L.C. (William Blair). As reported on
Schedule 13G/A, William Blair is a broker dealer registered
under Section 15 of the Securities Exchange Act of 1934, as
amended (the Exchange Act). William Blair has sole
voting power and sole dispositive power of 2,431,191 shares
of Common Stock of Ultimate. |
(4) |
|
Represents shares held as of December 31, 2010 as reported
on Schedule 13G filed by Wasatch Advisors, Inc.
(Wasatch). As reported on Schedule 13G, Wasatch
is an investment adviser registered under Section 203 of
the Investment Advisers Act of 1940. Wasatch has sole voting
power and sole dispositive power of 2,034,230 shares of
Common Stock of Ultimate. |
(5) |
|
Represents shares held as of December 31, 2010 as reported
on Schedule 13G filed by BlackRock Inc. As reported on
Schedule 13G, BlackRock Inc. has sole voting power and sole
dispositive power of 1,388,313 shares of Common Stock. As
reported on Schedule 13G, BlackRock Inc is a parent holding
company or control person in accordance with
Rule 13d-1(b)(1)(ii)(G)
under the Exchange Act. |
(6) |
|
Represents 525,487 shares of Common Stock subject to
Restricted Stock Awards held by Mr. Scott Scherr. Excludes
9,173 shares of Common Stock subject to Stock Unit Awards. |
(7) |
|
Represents 10,000 shares of Common Stock held by
Mr. Marc D. Scherr, 29,066 shares of Common Stock held
by certain trusts established for the benefit of Mr. Marc
D. Scherrs children, exercisable options to purchase
233,417 shares of Common Stock and 317,346 shares of
Common Stock subject to Restricted Stock Awards. Excludes
7,430 shares of Common Stock subject to Stock Unit Awards.
Mr. Marc D. Scherr disclaims beneficial ownership of the
shares owned by the trusts established for the benefit of his
children. |
(8) |
|
Represents 18,750 shares of Common Stock held by
Mr. Mitchell K. Dauerman, 250 shares of Common Stock
held by certain trusts established for the benefit of
Mr. Mitchell K. Dauermans child, exercisable options
to purchase 56,751 shares of Common Stock held by
Mr. Dauerman and 56,500 shares of Common Stock subject
to Restricted Stock Awards. Mr. Mitchell K. Dauerman
disclaims beneficial ownership of the shares owned by the trusts
established for the benefit of his child. |
12
|
|
|
(9) |
|
Represents 2,000 shares of Common Stock held by
Mr. FitzPatrick, exercisable options to purchase
71,241 shares of Common Stock and 15,483 shares of
Common Stock subject to Restricted Stock Awards. |
(10) |
|
Represents 35,937 shares of Common Stock held by
Mr. Vander Putten, exercisable options to purchase
62,500 shares of Common Stock and 20,794 shares of
Common Stock subject to Restricted Stock Awards. |
(11) |
|
Represents 283,930 shares of Common Stock held by
Mr. Wilber, exercisable options to purchase
58,830 shares of Common Stock and 15,483 shares of
Common Stock subject to Restricted Stock Awards. These shares
shown include 269,639 shares of Common Stock pledged by
Mr. Wilber. |
(12) |
|
Represents 17,150 shares of Common Stock held by
Mr. Yanover, 6,700 shares of Common Stock held by
Mr. Yanovers spouse, 54,144 shares of Common
Stock held by a Grantor Retained Annuity Trust
(GRAT) of which Mr. Yanover is the trustee,
exercisable options held by Mr. Yanover to purchase
63,264 shares of Common Stock and 20,794 shares of
Common Stock subject to Restricted Stock Awards.
Mr. Yanover disclaims beneficial ownership of the shares
held by his spouse and shares held by GRAT. |
(13) |
|
Represents 138,683 shares of Common Stock held by
Mr. Leiter, exercisable options to purchase
47,500 shares of Common Stock, 1,315 shares of Common
Stock held by certain trusts for the benefit of
Mr. Leiters children and 15,483 shares of Common
Stock subject to Restricted Stock Awards. Mr. Leiter
disclaims beneficial ownership of the shares owned by the trusts
established for the benefit of his children. |
(14) |
|
Represents an aggregate of 597,925 (both directly and indirectly
owned) shares of Common Stock, 987,370 shares of Common
Stock subject to Restricted Stock Awards and exercisable options
to purchase an aggregate of 594,694 shares of Common Stock.
Excludes 16,603 shares of Common Stock subject to Stock
Unit Awards. |
DIRECTORS
AND EXECUTIVE OFFICERS
The directors and named executive officers (Messrs. Scott
Scherr, Marc D. Scherr and Mitchell K. Dauerman), and their ages
as of February 28, 2011, are as follows:
|
|
|
|
|
|
|
NAME
|
|
AGE
|
|
POSITION(S)
|
|
Scott Scherr
|
|
|
58
|
|
|
Chairman of the Board, President and Chief Executive Officer
|
Marc D. Scherr
|
|
|
53
|
|
|
Vice Chairman of the Board and Chief Operating Officer
|
Mitchell K. Dauerman
|
|
|
54
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
James A. FitzPatrick, Jr.
|
|
|
61
|
|
|
Director
|
Alois T. Leiter
|
|
|
45
|
|
|
Director
|
LeRoy A. Vander Putten
|
|
|
76
|
|
|
Director
|
Rick A. Wilber
|
|
|
64
|
|
|
Director
|
Robert A. Yanover
|
|
|
74
|
|
|
Director
|
Scott Scherr has served as President and a director of Ultimate
since its inception in April 1996 and has been Chairman of the
Board and Chief Executive Officer of Ultimate since September
1996. Mr. Scherr is also a member of the Executive
Committee of the Board. In 1990, Mr. Scherr founded The
Ultimate Software Group, Ltd. (the Partnership), the
business and operations of which were assumed by Ultimate in
1998. Mr. Scherr served as President of the
Partnerships general partner from the inception of the
Partnership until its dissolution in March 1998. From 1979 until
1990, he held various positions at Automatic Data Processing,
Inc. (ADP), a payroll services company, where his
titles included Vice President of Operations and Sales
Executive. Prior to joining ADP, Mr. Scherr operated
Management Statistics, Inc., a data processing service bureau
founded by his father, Reuben Scherr, in 1959. He is the brother
of Marc Scherr, the Vice Chairman
13
of the Board and Chief Operating Officer of Ultimate, and the
father-in-law
of Adam Rogers, Senior Vice President and Chief Technology
Officer.
As Ultimates founder and Chief Executive Officer,
Mr. Scherr brings to the Board a unique and deeply rooted
understanding of our company, its business, its employees and
its customers. During his long tenure as Chairman of our Board
and our Chief Executive Officer, Mr. Scherrs
leadership skills have been essential to Ultimates
attraction and retention of high quality personnel, product
development, attraction and retention of customers, and
establishment of a culture of teamwork that has allowed Ultimate
to grow from a start up operation in 1990 to a leading provider
of human capital management solutions.
Marc D. Scherr has been a director of Ultimate since its
inception in April 1996 and has served as Vice Chairman since
July 1998 and as Chief Operating Officer since October 2003.
Mr. Scherr is also a member of the Executive Committee of
the Board. Mr. Scherr became an executive officer of
Ultimate effective March 1, 2000. Mr. Scherr served as
a director of Gerschel & Co., Inc., a private
investment firm from January 1992 until March 2000. In December
1995, Mr. Scherr co-founded Residential Company of America,
Ltd. (RCA), a real estate firm, and served as
President of its general partner until March 2000.
Mr. Scherr also served as Vice President of RCAs
general partner from its inception in August 1993 until December
1995. From 1990 to 1992, Mr. Scherr was a real estate
pension fund advisor at Aldrich, Eastman & Waltch.
Previously, he was a partner in the Boston law firm of
Fine & Ambrogne. Mr. Scherr is the brother of
Scott Scherr, Chairman of the Board, President and Chief
Executive Officer of Ultimate. Mr. Scherrs long
tenure in our executive and Board leadership supports
institutional continuity and industry knowledge accumulated
through all phases of economic cycles and through
Ultimates expansion over that period. With his experience
as a practicing lawyer and businessman, as well as his
longstanding position as a senior executive of Ultimate,
Mr. Scherr brings to Ultimates Board invaluable
insight in developing corporate strategy, strategic
relationships, ethical practices, quality staff and product
differentiation.
Mitchell K. Dauerman has served as Executive Vice President of
Ultimate since April 1998 and as Chief Financial Officer and
Treasurer of Ultimate since September 1996. From 1979 to 1996,
Mr. Dauerman held various positions with KPMG LLP, serving
as a Partner in the firm from 1988 to 1996. Mr. Dauerman is
a Certified Public Accountant. Mr. Dauermans
longstanding experience with accounting principles, financial
reporting rules and regulations, income and sales tax rules and
regulations, financial planning and general oversight of the
financial reporting process, both as a former partner of KPMG
LLP and as our Chief Financial Officer since 1996, as well as
his role interfacing with the analyst and investor communities,
are invaluable to the Board.
James A. FitzPatrick, Jr. has served as a director of
Ultimate since July 2000. Mr. FitzPatrick is a partner in
the law firm Dewey & LeBoeuf LLP (formed in October
2007 by merger of Dewey Ballantine LLP and LeBoeuf, Lamb,
Greene & MacRae LLP), which provides legal services to
Ultimate. Before joining Dewey Ballantine LLP as a partner in
February 1989, Mr. FitzPatrick was a partner in the law
firm LeBoeuf, Lamb, Leiby & MacRae.
Mr. FitzPatrick brings to the Board his longstanding
experience as a practicing attorney, including experience with
corporate governance, contractual matters, private and public
capital raising, purchase and sale of assets and mergers and
acquisitions. Mr. FitzPatricks knowledge of corporate
and securities laws and corporate governance facilitates the
Boards oversight responsibilities concerning such areas.
Rick A. Wilber has served as a director of Ultimate since
October 2002 and is a member of the Audit Committee and a member
of the Compensation Committee of the Board. Mr. Wilber
formerly served on Ultimates Board from October 1997
through May 2000. Since 1995, Mr. Wilber has been the
President of Lynns Hallmark Cards, which owns and operates
a number of Hallmark Card stores. Mr. Wilber has served as
a director of Vanguard Energy Corporation, an oil and gas
company, since June 2010. Mr. Wilber has served as a
director of Synergy Resource Corporation, an oil and gas
exploration company, since October 2008. Mr. Wilber was a
co-founder of Champs Sports Shops and served as its President
from 1974 to 1984. He served on the Board of Royce
14
Laboratories, a pharmaceutical concern, from 1990 until April
1997, when Royce was sold to Watson Pharmaceuticals, Inc., a
pharmaceutical concern. Mr. Wilber brings to the Board his
considerable business and entrepreneurial acumen and business
management experience, his understanding of business
opportunities and strategies and his experience with the
motivation of employees.
Alois T. Leiter has served as director of Ultimate since October
2006 and is a member of the Compensation Committee of the Board.
Mr. Leiter was a three-time Major League Baseball World
Champion and two-time All-Star pitcher formerly with the New
York Yankees, New York Mets, Toronto Blue Jays, and Florida
Marlins, and has been an official spokesperson for Ultimate
since 2002. Mr. Leiter has served as a television
commentator for the Yankees Entertainment and Sports Network
since 2006 and as an analyst with MLB Network since January
2009. He has served on the Executive Committee of New York
Citys official tourism marketing organization,
NYC & Company, since 2000 and is a member of the Board
of Directors of Americas Camp, a legacy organization of
the Twin Towers Fund, on which he also served as a board member.
Mr. Leiter brings to our Board and to our company a strong
understanding of leadership, dedication, performance under
pressure and the importance of communication and teamwork to the
operations of Ultimate. Mr. Leiters success as a
professional athlete and television broadcaster reflects a
commitment to excellence that he regularly imparts to our
management and employees as a member of our Board and as an
official spokesman for Ultimate (see Compensation
Committee Interlocks and Insider Participation below).
Mr. Leiter also brings to the Board 15 years of proven
leadership skills and management experience as president and
founder of Leiters Landing, a charitable organization, and
the knowledge and experience acquired through his service on a
number of New York state and community boards.
Information regarding Messrs. LeRoy A. Vander Putten and
Robert A. Yanover is included under the heading
PROPOSAL I ELECTION OF DIRECTORS.
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Compensation Policy
As a provider of Web-based payroll and talent management
solutions, our long-term success depends on our ability to
(i) develop, enhance and market our products and services
to keep pace with our competitors; (ii) adapt to
technological advancements and changing industry standards; and
(iii) expand the functionality of our products and services
to address the increasingly sophisticated requirements of our
customers. To achieve these goals, it is critical that we be
able to attract, motivate and retain highly talented individuals
at all levels of the organization who are committed to
Ultimates core values of excellence, integrity and
teamwork.
It is our belief that compensation should be based on the level
of job responsibility, individual performance and
Ultimates performance. As employees progress to higher
levels in the organization, an increasing proportion of their
pay should be linked to Ultimates performance, since they
are more able to affect Ultimates results. Additionally,
compensation should reflect the value of the job in the
marketplace. In order to attract and retain a highly skilled
work force, we must remain competitive with the pay of other
employers who compete with us for talent. Although the programs
and individual pay levels will always reflect differences in job
responsibilities, geographies and marketplace considerations,
the overall structure of compensation and benefit programs
should be broadly similar across Ultimate.
Our Compensation Committee is responsible for developing and
approving Ultimates compensation program for the executive
officers and other officers of Ultimate. In addition, our
Compensation Committee administers Ultimates equity-based
plan and oversees such other benefit plans as Ultimate may from
time to time maintain.
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Our Compensation Committee is composed of four non-employee
directors, Messrs. LeRoy A. Vander Putten (Chairman), Rick
A. Wilber, Robert A. Yanover and Alois T. Leiter.
The executive compensation program was designed to reward
executive officers for achieving Ultimates strategic goals
and to align the interests of the executive officers with those
of Ultimates stockholders. In particular, Ultimates
Amended and Restated 2005 Equity and Incentive Plan (the
Plan) is intended to (i) provide a vehicle for
compensating Ultimates key personnel by giving them the
opportunity to acquire a proprietary interest in Ultimates
Common Stock by receiving equity-based incentive compensation;
(ii) provide management with equity ownership in Ultimate
commensurate with Ultimates performance, as reflected in
increased stockholder value; (iii) attract, motivate and
retain key employees and non-employee directors by maintaining
competitive compensation levels; and (iv) provide an
incentive to management for continuous employment with or
service to Ultimate.
This philosophy is reflected in an executive compensation
package that is generally comprised of three elements
(collectively, Total Compensation): (i) base
salary, which is determined on the basis of the
individuals position and responsibilities with Ultimate;
(ii) incentive performance awards payable in cash and tied
to Ultimates achievement of specified financial targets;
and (iii) long-term stock-based incentive compensation,
which is related to Ultimates achievement of specified
financial and other performance targets and which includes the
issuance of restricted stock awards
and/or stock
unit awards that create a link between executive compensation
and the interests of Ultimates stockholders. The
Compensation Committee has also granted stock options to
executive officers and employees in prior years.
The
Compensation Committees Processes
The Compensation Committee utilizes different processes to
assist it in ensuring that Ultimates executive
compensation program is achieving its objectives. Among those
are:
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Industry Comparison. The Compensation Committee
establishes Total Compensation levels for executives that it
believes are competitive with industry compensation practices of
other software and technology companies of comparable size. In
order to enhance its objectivity and independence, the
Compensation Committee has, in the past, obtained advice
and/or
recommendations of an outside compensation consulting firm,
Watson Wyatt and Company (Watson Wyatt). In
addition, the Compensation Committee reviews available
information, including information published in secondary
sources, regarding prevailing salaries and compensation programs
offered to chief executive officers by businesses that are
comparable to Ultimate in terms of size and industry group.
Included in this group in 2010 were the following companies:
Concur Technologies Inc., SI Corporation, NIC Inc., Art
Technology Group, Inc., Vocus, Inc., J2 Global Communications,
Ariba,Inc., Websense, Inc., SuccessFactors Inc., Salesforce.com,
Inc., Lawson Software, Inc. and Paychex, Inc. (collectively, the
Survey Group). Generally, the Chief Executive
Officer provides recommendations for other executive officer
compensation changes to the Compensation Committee for its
review. Ultimates objective is generally to set the Total
Compensation of the executive officers of Ultimate in the broad
middle range of comparable sized companies. In 2010, the
Chairman of the Compensation Committee compiled a survey of 2009
Total Compensation of the chief executive officers and next
highest paid officers of Ultimate and the companies comprising
the Survey Group, based upon 2010 proxy statement disclosures.
The 2009 respective total compensation of each of
Messrs. Scott Scherr, Marc D. Scherr and Mitchell K.
Dauerman ranked in the broad bottom third, when compared to the
2009 total compensation paid to their respective counterparts in
the Survey Group. The
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Compensation Committee believes Total Compensation for each of
the executive officers is competitive with other software and
technology companies of comparable size.
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Assessment of Ultimates Performance. The
Compensation Committee uses Ultimates performance measures
in establishing total compensation ranges. The Compensation
Committee may consider various measures of Ultimates
performance, including sales, earnings per share and growth in
recurring revenue. The Compensation Committee makes a subjective
determination after considering such measures collectively. In
addition, as described in more detail below, the Compensation
Committee may grant performance awards under a formula provided
for under the Plan. Such awards shall represent the right to
receive a payment in cash or equity if corporate performance
goals established by the Compensation Committee for a certain
performance period are satisfied.
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Assessment of Individual Performance. Individual
performance has a strong impact on the compensation of all
employees, including the executive officers. The members of the
Compensation Committee meet with the Chief Executive Officer,
and then meet in executive session, when compensation is being
considered in order to evaluate the Chief Executive
Officers performance for the year. This evaluation is
considered by the Compensation Committee in setting the Chief
Executive Officers compensation. For the other executive
officers, the Compensation Committee reviews the compensation
recommendation from the Chief Executive Officer and may also
exercise its judgment based on the Compensation Committees
assessment of the performance of such executive officers.
Elements of the individual performance of Scott Scherr taken
into account by the Compensation Committee include his
leadership of Ultimate as a whole, his particular leadership in
and the results of the sales and marketing function, his
communications with the Board, employees, customers,
stockholders and the investment community and his responsibility
for the culture of Ultimate. Elements of the individual
performance of Marc Scherr taken into account by the
Compensation Committee include his leadership in and results of
the product strategy, development, shared services, enterprise
and workplace groups and his communications with the Board.
Elements of the individual performance of Mr. Dauerman
taken into account by the Compensation Committee include his
leadership of the finance department and its operations and his
communications with the Board, the Audit Committee,
Ultimates independent auditors and the investment
community.
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Components
of Executive Compensation for 2010
Ultimates compensation program balances both the mix of
cash and equity compensation and the mix of currently-paid and
longer-term compensation in a way that furthers the compensation
objectives discussed above. Following is a discussion of the
Compensation Committees considerations in establishing
each of the components for the executive officers.
Base
Salary
Base salary is the fixed element of employees annual cash
compensation. Our executive compensation program is designed to
align executive performance with the financial and strategic
objectives of Ultimate, to reward executive management for the
successful performance of these objectives and to encourage the
executives to be focused on building long-term success.
Therefore, a portion of these employees total compensation
is performance-based.
The Compensation Committee annually reviews and determines the
base salary of the Chief Executive Officer and the base salaries
of the other executive officers based on the recommendations of
the Chief Executive Officer. Base salaries are generally
adjusted to reflect
17
promotions, increases in responsibilities and competitive
considerations. In order to attract and retain qualified
executives, Ultimate provides base salaries it considers to be
competitive.
While determining the base salary for Ultimates President
and Chief Executive Officer, Mr. Scott Scherr, for 2010,
the Compensation Committee reviewed the current and long term
incentive compensation of the chief executive officers of
certain software and technology companies, referred to above,
that have market capitalizations comparable to that of Ultimate.
This information provided the basis of a competitive review of
Mr. Scherrs compensation; however, the Compensation
Committee did not attempt to benchmark
Mr. Scherrs base salary against the base salary of
these or other chief executive officers. Instead, the
Compensation Committee exercised its own judgment based upon
Mr. Scherrs personal performance, in particular his
successful leadership of Ultimate with a business strategy
focused on maximizing recurring revenue streams by selling
Ultimates UltiPro software offerings primarily on a
recurring revenue basis and maintaining strong customer
retention. During the Compensation Committees evaluation
of Mr. Scherrs performance as of October 2009,
Mr. Scherr stated that he and Mr. Marc D. Scherr had
determined that they would not request or accept an increase in
their base salaries for 2010, particularly in view of the state
of the economy. Therefore, the Compensation Committee did not
increase Mr. Scherrs base salary in 2010 and it
remained at $700,000 for 2010.
The Compensation Committee reviewed with Mr. Scott Scherr
the performance of Mr. Marc D. Scherr as Ultimates
Vice Chairman and Chief Operating Officer in overseeing
Ultimates strategic and operational activities. As
discussed above, in October 2009, Mr. Marc D. Scherr
advised the Compensation Committee that he would not accept an
increase in his base salary for 2010. Therefore, the
Compensation Committee did not increase Mr. Marc D.
Scherrs base salary in 2010 and it remained at $625,000
for 2010. The Compensation Committee also reviewed with
Mr. Scott Scherr the performance of Mr. Dauerman as
Ultimates Chief Financial Officer, including his oversight
of financial and accounting functions and Ultimates
relationships with the investment community. Based upon
Mr. Scott Scherrs recommendation that the base
salaries of all three executive officers should remain unchanged
for 2010, and its review with him, the Compensation Committee
determined that Mr. Mitchell K. Dauermans base salary
would remain at $475,000 for 2010.
Incentive
Compensation
From time to time, on a discretionary basis, the Compensation
Committee approves (i) incentive performance awards payable
in cash and tied to the achievement of corporate performance
goals (Cash Bonuses); and (ii) long-term
stock-based incentive compensation. In order to provide
incentives to new employees and in recognition of superior
performance, promotions and increased responsibilities of
executive officers and employees, Ultimate provides long-term
stock-based incentive compensation payable through the issuance
of (i) options to purchase shares of Ultimates Common
Stock (Stock Options); (ii) Restricted Stock
Awards;
and/or
(iii) Stock Unit Awards (collectively, Stock-Based
Compensation). All employees of Ultimate are eligible for
discretionary Cash Bonuses and Stock-Based Compensation, based
on the achievement of corporate and individual performance goals
and as approved by the Compensation Committee.
Incentive
Performance Awards
The Compensation Committee may grant performance awards under
the Plan, which shall represent the right to receive a payment
in cash or equity if the performance goals established by the
Compensation Committee for a performance period are satisfied.
At the time a performance award is granted, the Compensation
Committee shall determine, in its sole discretion, the
applicable performance period and performance goals to be
achieved during the performance period, as well as such other
conditions as the Compensation Committee deems appropriate. The
Compensation Committee may also determine a target payment
amount or a range of payment amounts for each
18
award. The performance goals applicable to a performance award
grant may be subject to adjustments as the Compensation
Committee shall deem appropriate to reflect significant
unforeseen events, such as changes in law, accounting practices
or unusual or nonrecurring items or occurrences. At the end of
the performance period, the Compensation Committee shall
determine the extent to which performance goals have been
attained, or a degree of achievement between minimum and maximum
levels, in order to establish the level of payment to be made,
if any.
In February 2010, the Compensation Committee approved grants of
contingent cash Performance Awards (as defined in the Plan) to
certain members of senior management, including our named
executive officers, Mr. Scott Scherr, Mr. Marc D.
Scherr and Mr. Mitchell K. Dauerman. Pursuant to this
grant, the aggregate amount of the Performance Awards, subject
to the maximum referred to below, was equal to the excess, if
any, of (A) Ultimates pretax operating income, as
reflected in its audited financial statements for the year ended
December 31, 2010, adjusted to add back the charges for
such Performance Awards, as well as the charges for non-cash
stock-based compensation expense and non-cash amortization of
acquired intangible assets, over (B) $22,550,000. The
maximum aggregate amount of the Performance Awards granted was
$1,500,000. The respective percentages of the aggregate
Performance Awards to Mr. Scott Scherr, Mr. Marc D.
Scherr and Mr. Mitchell K. Dauerman were 12%, 12% and 10%,
respectively. The remainder of the aggregate Performance Awards
were awarded to other members of senior management. Based upon
the audited financial statements of Ultimate for the year ended
2010 and the formula described in (A) and (B) above,
none of Mr. Scott Scherr, Mr. Marc D. Scherr,
Mr. Mitchell K. Dauerman or any other officer or employee
received a cash Performance Award in 2011 for Ultimates
2010 performance.
Long-Term
Stock-Based Incentive Compensation
Ultimate grants long-term equity incentives in the form of
Stock-Based Compensation that converts into shares of Common
Stock. The Compensation Committee has sole discretion in
awarding stock awards and does not delegate such authority to
our management nor does our management have the ability to
select or influence stock award grant dates. Ultimate grants
Restricted Stock Unit Awards to its employees under the Plan.
Such Restricted Stock Unit Awards vest in three equal annual
installments of
331/3%
of the number of Restricted Stock Unit Awards on each of the
first three anniversaries of the date of grant thereof, subject
to the participants continued employment with Ultimate or
any of its subsidiaries on each such vesting date, and shall be
payable in Common Stock or cash, provided, however, that if any
such anniversary is not a date on which Ultimates Common
Stock is traded on NASDAQ, then the vesting date shall be the
last trading day preceding such day on which Ultimates
Common Stock is traded on NASDAQ; and provided further, however,
that if the Chief Financial Officer (CFO) of
Ultimate should determine that any such anniversary falls within
a period during which the participant is prohibited from trading
Ultimates Common Stock under Ultimates stock trading
policy, the CFO shall so advise the participant in writing and
the vesting date shall be the date as of which the CFO has
determined that such period has ended.
During 2010, the Compensation Committee provided long-term
stock-based incentive compensation to Mr. Scott Scherr,
based on his performance, as discussed above, his level of
equity ownership in Ultimate and the determination by the
Compensation Committee to increase the equity related component
of executive compensation. During 2010, Mr. Scherr received
one grant of a Restricted Stock Award for 37,500 restricted
shares of Common Stock.
During 2010, the Compensation Committee provided long-term
stock-based incentive compensation to Mr. Marc D. Scherr
based on his performance, as discussed above, his level of
equity ownership in Ultimate and the determination by the
Compensation Committee to increase the equity related component
of executive compensation. During 2010, Mr. Scherr received
one grant of a Restricted Stock Award for 18,750 restricted
shares of Common Stock.
19
During 2010, the Compensation Committee provided long-term
stock-based incentive compensation to Mr. Mitchell K.
Dauerman based on his performance as discussed above, his level
of equity ownership in Ultimate and the determination by the
Compensation Committee to increase the equity related component
of executive compensation. During 2010, Mr. Dauerman
received one grant of a Restricted Stock Award for 11,500
restricted shares of Common Stock.
Holders of Restricted Stock Awards have all rights of a
stockholder including the right to vote the shares and receive
all dividends and other distributions paid or made with respect
thereto. Each Restricted Stock Award becomes vested on the
fourth anniversary of the respective date of grant, subject to
the grantees continued employment with Ultimate or any
subsidiary on each such vesting date.
Holders of Stock Unit Awards do not have any rights as a
stockholder with respect to the shares subject to a Stock Unit
Award until such time as shares of Common Stock are delivered to
the participant pursuant to the terms of the award agreement.
Severance
Benefits
Except as described below, Ultimate is not obligated to pay
severance or other enhanced benefits to executive officers upon
termination of their employment.
The Board has adopted two Amended and Restated Change in Control
Bonus Plans (first adopted in March 2004). One Change in Control
Bonus Plan provides for the payment of cash amounts to
Ultimates three named executive officers upon a
change in control of Ultimate. The other Change in
Control Bonus Plan provides for the payment of cash amounts in
the event of a change in control to employees other
than the named executive officers of Ultimate as designated by
the Compensation Committee. (The two Amended and Restated Change
in Control Bonus Plans are hereinafter referred to collectively
as the CIC Plan.) A change in control
would occur (i) if Ultimate were to complete a
consolidation or merger pursuant to which the stockholders of
Ultimate immediately prior to the merger or consolidation did
not have beneficial ownership of 50% or more of the combined
voting power of Ultimates securities outstanding
immediately after the merger or consolidation, (ii) if
Ultimate were to sell, lease or transfer all or substantially
all of its assets or business or (iii) if beneficial
ownership of more than 50% of Ultimates Common Stock were
acquired by a person or entity other than Ultimate, a subsidiary
or an employee benefit plan of Ultimate.
The amount of the payments to be made to the executive officers
under the CIC Plan is based upon the gross consideration
received by Ultimate or its stockholders in the change in
control transaction (the CIC Consideration). The
aggregate amount of payments (including the gross up
payments described below) that may be made to all participants
under the CIC Plan may not exceed 6% of the CIC Consideration.
To the extent this limit would otherwise be exceeded, the
Compensation Committee would reduce payments under the Amended
and Restated Change in Control Bonus Plan for Ultimates
three named executive officers on a pro rata basis. In the event
such payments were reduced to zero and aggregate payments under
the CIC Plan would still exceed 6% of the CIC Consideration, the
Committee would reduce one or more other payments in its
discretion in the manner that it determines to be equitable. No
payments will be made under the CIC Plan to any participant
whose employment with Ultimate is terminated prior to the
consummation of the change in control transaction.
In adopting the CIC Plan, the Board determined not to require
that only participants whose employment was terminated in
connection with a change in control would be eligible to receive
the CIC Consideration. The view of the Board upon adoption of
the CIC Plan was that the ownership of equity in Ultimate by
executives and employees was relatively small and that the CIC
Consideration would provide a fair and reasonable means by which
they could participate with stockholders in connection with a
change in control. In addition, it was the view of the Board
that
20
these payment arrangements would encourage executives and
employees to remain with Ultimate during a period of uncertainty
in connection with a proposed change of control.
Under the CIC Plan, Messrs. Scott Scherr, Marc D. Scherr
and Mitchell K. Dauerman would be entitled to payments equal to
1.75%, 1.3125% and 0.4375%, respectively, of the CIC
Consideration. To the extent that change in control payments to
these individuals, whether under the CIC Plan or otherwise,
would exceed the limitations of Section 280G of the
Internal Revenue Code of 1954, as amended (the
Code), they would be entitled to receive an
additional gross up payment to indemnify them for
the effect of the resulting excise tax imposed on the
individuals, subject to the 6% aggregate limitation referred to
above. Assuming that there was a change in control on
December 31, 2010, at the closing price of Ultimates
Common Stock on NASDAQ on the last trading day of the year,
Messrs. Scott Scherr, Marc D. Scherr and Mitchell K.
Dauerman would have been entitled to receive approximately
$28.5 million, $21.3 million and $6.9 million,
respectively, inclusive of amounts in respect of such
gross up under the CIC Plan.
The Board may amend or terminate the CIC Plan at any time,
provided that any resulting reduction in a participants
right to payments is compensated for by an arrangement of
comparable or greater value.
Accelerated
Vesting
In addition to the severance provisions described above,
Ultimates Stock-Based Compensation for our executive
officers is subject to accelerated vesting under certain
circumstances described below.
Stock Options. Ultimates stock options issued
to the executive officers pursuant to the Plan ordinarily vest
25% on the date of grant and 25% on each of the first three
anniversaries of the date of grant, subject to each executive
officers continued employment with Ultimate. However,
pursuant to the terms of the Nonqualified Stock Option Award
Agreements entered into between Ultimate and the executive
officers under the Plan, in the event of death, disability or a
change in control of Ultimate (each, an Accelerated
Vesting Occurrence), each executive officers
unvested stock options under the Plan would immediately vest and
become fully exercisable. Stock options held by
Messrs. Scott Scherr, Marc D. Scherr and Mitchell K.
Dauerman were fully vested as of December 31, 2010.
Restricted Stock Awards. Ultimates shares of
restricted stock issued pursuant to the Plan ordinarily vest on
the fourth anniversary of the date of grant, subject to each
executive officers continued employment with Ultimate.
However, pursuant to the terms of the Restricted Stock Award
Agreements entered into between Ultimate and the executive
officers under the Plan, in the event of an Accelerated Vesting
Occurrence, each executive officers shares of unvested
restricted stock would immediately vest. Assuming that there was
an Accelerated Vesting Occurrence on December 31, 2010, the
unvested shares of restricted stock held by Messrs. Scott
Scherr, Marc D. Scherr and Mitchell K. Dauerman would have
automatically vested and they would have been entitled to
receive amounts equal to the value of $25,554,433, $17,620,886
and $2,747,595, respectively, as a result of such acceleration.
These amounts are derived from the per share Year End Fair
Market Value (as defined below) of the Common Stock multiplied
by the number of shares being accelerated. In addition, pursuant
to the terms of the Restricted Stock Award Agreements entered
into between Ultimate and the executive officers under the Plan,
in the event an executive officers employment is
terminated by Ultimate without cause (a Termination
Without Cause Occurrence), 1/48th (one forty-eighth)
of the shares of restricted stock for each complete month of
continued employment by the executive officer with Ultimate
following the applicable dates of grant would immediately vest.
Assuming that there was a Termination Without Cause Occurrence
on December 31, 2010, a portion of the unvested shares of
restricted stock held by Messrs. Scott Scherr, Marc D.
Scherr and Mitchell K. Dauerman would have automatically vested
on a pro rated basis as described above and they would have been
entitled to receive amounts equal to the value of $15,398,071,
$11,174,943 and $1,208,658, respectively, as a result of such
acceleration. These
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amounts are derived from the per share fair market value of the
Common Stock, at the closing price of the Common Stock on NASDAQ
on the last trading day of 2010 (the Year End Fair Market
Value) multiplied by the pro rated number of shares being
accelerated.
Stock Units. Ultimates stock units
attributable to Ultimates matching contribution of a
portion of cash bonuses voluntarily deferred by an executive
officer under the Plan ordinarily vest on the fourth anniversary
of the date of grant, subject to each executive officers
continued employment with Ultimate. However, pursuant to the
terms of the Stock Unit Award Agreements entered into between
Ultimate and the executive officers under the Plan, in the event
of an Accelerated Vesting Occurrence, each executive
officers unvested stock units would immediately vest and
become fully exercisable. Assuming that there was an Accelerated
Vesting Occurrence on December 31, 2010, the unvested stock
units held by Messrs. Scott Scherr and Marc D. Scherr would
have automatically vested and they would have been entitled to
receive amounts equal to the value of $148,709 and $120,454,
respectively, as a result of such acceleration. These amounts
are derived from the per share Year End Fair Market Value of the
Common Stock multiplied by the number of shares subject to the
stock units being accelerated.
In addition, pursuant to the terms of the Stock Unit Award
Agreements entered into between Ultimate and the executive
officers under the Plan, in the event of a Termination Without
Cause Occurrence, 1/48th (one forty-eighth) of the stock
units for each complete month of continued employment by the
executive officer with Ultimate following the applicable dates
of grant would immediately vest and become fully exercisable.
Assuming that there was a Termination Without Cause Occurrence
on December 31, 2010, a portion of the unvested stock units
held by Messrs. Scott Scherr and Marc D. Scherr would have
automatically vested on a pro rated basis as described above and
they would have been entitled to receive amounts equal to the
value of $142,513 and $115,435, respectively, as a result of
such acceleration. These amounts are derived from the per share
Year End Fair Market Value of the Common Stock multiplied by the
pro rated number of shares subject to the stock units being
accelerated.
Tax
Deductibility of Executive Compensation
In general, Section 162(m) of the Code disallows a
deduction for any compensation paid in excess of $1 million
during a calendar year to any of Ultimates named executive
officers as determined pursuant to the executive compensation
disclosure rules under the Securities Exchange Act of 1934
(other than the principal financial officer). An exemption from
this limitation applies to performance-based
compensation. The Compensation Committee has endeavored,
to the extent it deems consistent with the best interests of
Ultimate and its stockholders, to obtain deductibility of
compensation paid to executive officers. However, the
Compensation Committee also recognizes the need to retain
flexibility to make compensation decisions that may not meet
Section 162(m), standards when necessary to enable Ultimate
to meet its overall objectives, even if Ultimate may not deduct
all of the compensation. Accordingly, the Compensation Committee
will award non-deductible compensation in appropriate
circumstances. For 2010, a significant portion of the
compensation paid to Ultimates named executive officers
(other than the principal financial officer) was not deductible
pursuant to the limitations of Section 162(m).
Employee
Benefits
Ultimate offers core employee benefits coverage in order to
provide our workforce with a reasonable level of financial
support in the event of illness or injury, and to enhance
productivity and job satisfaction through programs that focus on
work/life balance.
The benefits available are the same for all U.S. employees
and executive officers and include medical and dental coverage,
disability insurance, and life insurance. In addition, our
401(k) Plan provides a reasonable level of retirement income
reflecting employees careers with Ultimate. All
U.S. employees, including executive officers, participate
in these plans.
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The cost of post-employment benefits is partially borne by the
employee, including each executive officer.
Perquisites
Ultimate does not provide significant perquisites or personal
benefits to executive officers.
Summary
Compensation Table
The following table sets forth information, for the fiscal years
ended December 31, 2010, 2009 and 2008, regarding the
aggregate compensation we paid to our named executive officers:
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Name and
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All Other
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Principal
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($)
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Awards
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Awards
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
($)
|
|
Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
(1)
|
|
|
(2)
|
|
|
Compensation
|
|
|
(3)
|
|
|
Total
|
|
|
Scott Scherr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board,
|
|
|
2010
|
|
|
|
$700,000
|
|
|
|
$
|
|
|
|
$1,576,125
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$4,950
|
|
|
|
$2,281,075
|
|
President and Chief
|
|
|
2009
|
|
|
|
700,000
|
|
|
|
|
|
|
|
1,381,500
|
|
|
|
|
|
|
|
33,339
|
|
|
|
4,950
|
|
|
|
2,119,789
|
|
Executive Officer
|
|
|
2008
|
|
|
|
630,000
|
|
|
|
|
|
|
|
3,091,097
|
|
|
|
|
|
|
|
|
|
|
|
4,650
|
|
|
|
3,725,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc D. Scherr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice Chairman
|
|
|
2010
|
|
|
|
$625,000
|
|
|
|
$
|
|
|
|
$788,063
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$4,950
|
|
|
|
$1,418,013
|
|
and Chief
|
|
|
2009
|
|
|
|
625,000
|
|
|
|
|
|
|
|
690,750
|
|
|
|
|
|
|
|
25,004
|
|
|
|
4,950
|
|
|
|
1,345,704
|
|
Operating Officer
|
|
|
2008
|
|
|
|
575,000
|
|
|
|
|
|
|
|
2,237,411
|
|
|
|
|
|
|
|
|
|
|
|
4,650
|
|
|
|
2,817,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell K. Dauerman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice
|
|
|
2010
|
|
|
|
$475,000
|
|
|
|
$
|
|
|
|
$483,345
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$4,950
|
|
|
|
$963,295
|
|
President, Chief
|
|
|
2009
|
|
|
|
475,000
|
|
|
|
|
|
|
|
414,450
|
|
|
|
|
|
|
|
16,669
|
|
|
|
4,950
|
|
|
|
911,069
|
|
Financial Officer
|
|
|
2008
|
|
|
|
450,000
|
|
|
|
|
|
|
|
220,800
|
|
|
|
|
|
|
|
|
|
|
|
4,650
|
|
|
|
675,450
|
|
and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes shares of Common Stock
subject to Restricted Stock Awards granted to the executive in
2010, 2009 and 2008 under Restricted Stock Award agreements. The
total number of restricted shares of Common Stock issued to
Messrs. Scott Scherr, Marc D. Scherr and Mitchell K.
Dauerman in 2010 was 37,500, 18,750 and 11,500, respectively. In
accordance with ASC 718, the grant date fair value of such
shares was $1,576,125, $788,063 and $483,345, respectively. The
aggregate number of restricted shares of Common Stock issued to
Messrs. Scott Scherr, Marc D. Scherr and Mitchell K.
Dauerman in 2009 was 50,000, 25,000 and 15,000, respectively. In
accordance with ASC 718, the grant date fair value of such
shares was $1,381,500, $690,750 and $414,450, respectively. The
aggregate number of restricted shares of Common Stock issued to
Messrs. Scott Scherr, Marc D. Scherr and Mitchell K.
Dauerman in 2008 was 209,993, 151,998 and 15,000, respectively.
In accordance with ASC 718, the grant date fair value of
such shares was $3,091,097, $2,237,411 and $220,800,
respectively. The restricted shares granted in 2010, 2009 and
2008 vest upon the fourth anniversary of the respective date of
grant, subject to the executives continued employment by
Ultimate, or a subsidiary, on the vesting date and subject
further to accelerated vesting in the event of a Change in
Control of Ultimate, the executives death or disability or
the termination of the executives employment by Ultimate
without cause. The total amount in the Stock Awards
column above represents the grant date fair value of Restricted
Stock Awards for each executive officer (excluding forfeiture
assumptions) in accordance with ASC 718. A discussion of
the assumptions used in calculating these values may be found in
Note 15 of Ultimates Annual Report on
Form 10-K
filed with the SEC on March 1, 2011.
|
|
(2)
|
|
There were no option awards
granted in 2010, 2009 or 2008.
|
|
(3)
|
|
Consists of contributions by
Ultimate to Ultimates 401(k) Plan on behalf of the
executive officers indicated.
|
23
Grants of
Plan-Based Awards in 2010
The following table provides information concerning the Stock
Based Compensation awards and cash bonus awards made to the
named executive officers in fiscal 2010 under the Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
of
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Plan Awards (1)
|
|
|
Shares
|
|
|
Grant Date
|
|
|
|
Grant
|
|
|
Committee
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
of Stock
|
|
|
Fair Value
|
|
Name
|
|
Date
|
|
|
Action Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
or Units (#)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Scherr
|
|
|
2/8/2010
|
|
|
|
2/8/2010
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
11/6/2010
|
|
|
|
10/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
$1,576,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc D. Scherr
|
|
|
2/8/2010
|
|
|
|
2/8/2010
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
11/6/2010
|
|
|
|
10/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
$788,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell K. Dauerman
|
|
|
2/8/2010
|
|
|
|
2/8/2010
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
11/6/2010
|
|
|
|
10/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
$483,345
|
|
|
|
|
|
(1)
|
These columns show the threshold and maximum payouts under the
Plan for cash Performance Awards. The Awards do not provide for
any target amount. For a description of these Performance
Awards, see Compensation Discussion and
Analysis Incentive Compensation
Incentive Performance Awards.
|
Ultimate has no employment agreements with its executive
officers.
The material factors necessary to understand each of the awards
listed in the Grants of Plan-Based Awards in the 2010 table are
discussed in detail above under the heading Compensation
Discussion and Analysis under the subheading
Incentive Compensation.
24
Outstanding
Equity Awards at 2010 Fiscal Year-End
The following table sets forth, for Ultimates Chief
Executive Officer and all other executive officers of Ultimate,
certain information concerning unexercised Stock Options; stock
that has not vested; stock units that have not vested; and
equity incentive plan awards as of the end of Ultimates
last completed fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Market Value of
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
Units That
|
|
|
Shares or Units
|
|
|
Vest Date of
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Expiration
|
|
|
|
|
|
Have Not
|
|
|
That Have Not
|
|
|
Stock and Unit
|
|
|
|
|
Name
|
|
Exercisable (#)
|
|
|
Unexercisable (#)
|
|
|
Price ($)
|
|
|
Date
|
|
|
|
|
|
Vested (#)
|
|
|
Vested ($)(3)
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
Scott Scherr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,058
|
|
|
|
148,711
|
|
|
|
2/7/2011
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
2,917,800
|
|
|
|
5/15/2011
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167,994
|
|
|
|
8,169,548
|
|
|
|
10/23/2011
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,993
|
|
|
|
10,211,960
|
|
|
|
10/27/2012
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
2,431,500
|
|
|
|
11/6/2013
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
1,823,625
|
|
|
|
11/6/2014
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc D. Scherr
|
|
|
48,417
|
|
|
|
|
|
|
|
3.49
|
|
|
|
1/2/2013
|
|
|
|
(1
|
)
|
|
|
45,000
|
|
|
|
2,188,350
|
|
|
|
2/6/2011
|
|
|
|
(2
|
)
|
|
|
|
50,000
|
|
|
|
|
|
|
|
9.40
|
|
|
|
10/31/2013
|
|
|
|
(1
|
)
|
|
|
2,477
|
|
|
|
120,457
|
|
|
|
2/7/2011
|
|
|
|
(2
|
)
|
|
|
|
75,000
|
|
|
|
|
|
|
|
13.05
|
|
|
|
10/20/2014
|
|
|
|
(1
|
)
|
|
|
121,598
|
|
|
|
5,913,311
|
|
|
|
10/23/2011
|
|
|
|
(2
|
)
|
|
|
|
60,000
|
|
|
|
|
|
|
|
15.90
|
|
|
|
5/17/2015
|
|
|
|
(1
|
)
|
|
|
151,998
|
|
|
|
7,391,663
|
|
|
|
10/27/2012
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
1,215,750
|
|
|
|
11/6/2013
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
911,813
|
|
|
|
11/6/2014
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell K. Dauerman
|
|
|
11,751
|
|
|
|
|
|
|
|
3.49
|
|
|
|
1/2/2013
|
|
|
|
(1
|
)
|
|
|
15,000
|
|
|
|
729,450
|
|
|
|
10/23/2011
|
|
|
|
(2
|
)
|
|
|
|
20,000
|
|
|
|
|
|
|
|
9.40
|
|
|
|
10/31/2013
|
|
|
|
(1
|
)
|
|
|
15,000
|
|
|
|
729,450
|
|
|
|
10/27/2012
|
|
|
|
(2
|
)
|
|
|
|
25,000
|
|
|
|
|
|
|
|
13.05
|
|
|
|
10/20/2014
|
|
|
|
(1
|
)
|
|
|
15,000
|
|
|
|
729,450
|
|
|
|
11/6/2013
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
559,245
|
|
|
|
11/6/2014
|
|
|
|
(2
|
)
|
|
|
|
(1)
|
|
All such options expire ten years
from the date of grant.
|
(2)
|
|
All such restricted stock grants
and the matching portion of the restricted stock units fully
vest on the fourth anniversary of the date of grant subject to
accelerated vesting in the event of a Change in Control of
Ultimate, the executives death or disability or
termination of the executives employment by Ultimate
without cause.
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(3)
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The market value of the unvested
equity incentive plan awards was calculated based on the closing
market price of Ultimates stock at the end of the last
completed fiscal year. The closing price of Ultimates
stock on NASDAQ on December 31, 2010 was $48.63.
|
25
Option
Exercises and Stock Vested in 2010
The following table sets forth, for Ultimates Chief
Executive Officer and all other named executive officers of
Ultimate, certain information concerning each exercise of Stock
Options, and each vesting of stock, including restricted stock,
stock units and similar instruments, during the last completed
fiscal year:
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Option Awards
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Stock Awards
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(#)
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|
|
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(#)
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Number of
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($)
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|
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Number of
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($)
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|
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|
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|
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Shares
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|
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Value
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Shares
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|
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Value
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|
|
|
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Acquired on
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Realized
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Acquired on
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Realized on
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|
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Name
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Exercise
|
|
|
on Exercise (1)
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Vesting
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|
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Vesting (2)
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|
|
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Scott Scherr
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|
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180,000
|
|
|
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$3,324,299
|
|
|
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125,756
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|
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$
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4,214,303
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Marc D. Scherr
|
|
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100,000
|
|
|
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2,998,146
|
|
|
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92,762
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|
|
|
3,085,606
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Mitchell K. Dauerman
|
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30,000
|
|
|
|
924,130
|
|
|
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15,000
|
|
|
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614,250
|
|
|
|
|
|
(1) Amounts reflect the difference between the exercise
price of the Stock Option and the market price of the underlying
shares at the time of the exercise.
(2) Amounts reflect the fair market value on the date of
vesting. Messrs. Scott Scherr and Marc D. Scherr had
Restricted Stock Awards vest on February 8, 2010 and
October 23, 2010. Messrs. Scott Scherr and Marc D.
Scherr had Restricted Stock Unit Awards vest on February 9,
2010. Mr. Mitchell K. Dauerman had Restricted Stock Awards
vest on October 23, 2010. The closing price of
Ultimates stock on NASDAQ on February 8, 2010,
February 9, 2010 and October 23, 2010 was $28.54,
$28.84 and $40.95, respectively.
Relationship
between Compensation Policies and Risk Management
Ultimates management has reviewed Ultimates
compensation policies and practices for all employees and does
not believe that there are any risks arising from such
compensation policies and practices that are reasonably likely
to have a material adverse effect on Ultimate.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
Ultimates management the disclosure set forth under the
heading Compensation Discussion and Analysis
appearing on pages 15 to 23 of this Proxy Statement. Based
on such review and discussions, the Compensation Committee has
recommended to the Board that such Compensation Discussion
and Analysis be included in this Proxy Statement.
LeRoy A. Vander Putten, Chairman
Rick A. Wilber
Robert A. Yanover
Alois T. Leiter
Members of the Compensation Committee
26
AUDIT
COMMITTEE REPORT
The Audit Committee is composed of three non-employee directors,
Messrs. Robert A. Yanover (Chairman), LeRoy A. Vander
Putten and Rick A. Wilber, and operates under a written charter
adopted by the Board, a copy of which is available on
Ultimates website at www.ultimatesoftware.com. The Audit
Committee oversees Ultimates financial reporting process
on behalf of the Board, reviews the independence of
Ultimates auditors and fulfills the other responsibilities
provided for in its charter. The Audit Committee has sole
authority to appoint the independent auditors and terminate
their engagement.
Management is responsible for Ultimates consolidated
financial statements, systems of internal control and the
financial reporting process. Ultimates independent
registered public accounting firm, KPMG LLP, is responsible for
performing an independent audit of Ultimates consolidated
financial statements and expressing an opinion on the conformity
of those consolidated financial statements with generally
accepted accounting principles. In addition, KPMG was
responsible for expressing an opinion on Ultimates
internal control over financial reporting based on their audit
as of December 31, 2010. The Audit Committees
responsibility is to monitor and oversee these processes.
The Audit Committee has implemented procedures to ensure that
during the course of each fiscal year it devotes the attention
it deems necessary or appropriate to fulfill its oversight
responsibilities under the Audit Committees charter. To
carry out its responsibilities, the Audit Committee held four
meetings during fiscal 2010.
The Audit Committee hereby reports as follows:
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1.
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The Audit Committee reviewed and discussed the audited
consolidated financial statements with management and has met
with the independent registered public accounting firm, KPMG
LLP, with and without management present, to discuss the results
of their fiscal 2010 examination, their evaluation of
Ultimates internal controls, and the overall quality of
Ultimates financial reporting.
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2.
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The Audit Committee discussed with KPMG LLP the matters required
to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended.
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3.
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The Audit Committee reviewed the written disclosures and the
letter received from KPMG LLP required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with
the Audit Committee concerning independence and discussed with
KPMG LLP that firms independence from Ultimate and its
management, including whether the independent auditors
provision of non-audit services to Ultimate are compatible with
maintaining their independence.
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In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board that
Ultimates audited consolidated financial statements as of
and for the year ended December 31, 2010 be included in
Ultimates Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 for filing with
the SEC, which occurred on March 1, 2011.
Robert A. Yanover, Chairman
LeRoy A. Vander Putten
Rick A. Wilber
Members of the Audit Committee
27
KPMG LLP
FEES
The following table presents fees for professional services
rendered by Ultimates independent registered public
accounting firm, KPMG LLP, for the audit of Ultimates
annual consolidated financial statements and internal control
over financial reporting for the years ended December 31,
2010 and 2009, together with fees billed for other services
rendered by KPMG LLP during those periods.
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2010
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|
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2009
|
|
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Audit Fees (1)
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$
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457,500
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|
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$
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441,500
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Audit-Related Fees (2)
|
|
|
172,248
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|
|
|
144,000
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Tax Fees (3)
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All Other Fees (4)
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|
|
|
|
|
|
|
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|
|
|
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Total Fees
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|
$
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629,748
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|
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$
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585,500
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|
|
|
|
|
|
|
|
|
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|
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(1) |
|
Consists of the aggregate fees and expenses incurred for the
audits of Ultimates consolidated financial statements for
fiscal years 2010 and 2009 and the reviews of Ultimates
2010 and 2009 quarterly reports on
Forms 10-Q.
The audit fees for the years ended December 31, 2010 and
2009 also include fees for services rendered in connection with
Section 404 of the
Sarbanes-Oxley
Act internal controls audit work and, to a lesser extent,
services performed in connection with review of Ultimates
Form S-8
in 2009 and the issuance of a consent resulting from such
reviews. During 2009, Ultimate filed a registration statement
with the SEC on
Form S-8
covering shares of Common Stock issuable under the Plan. |
(2) |
|
Consists of fees incurred for services provided by KPMG LLP in
relation to the issuances of Statement of Auditing Standards
(SAS) 70 service auditors reports during 2010 and 2009. |
(3) |
|
There were no fees incurred for tax compliance services during
2010 or 2009. |
(4) |
|
Consists of the aggregate fees for products and services
provided by KPMG LLP that were not reported above under
Audit Fees, Audit-Related Fees, or
Tax Fees. Ultimate did not purchase any other
products or services from KPMG LLP during 2010 or 2009. |
28
Audit
Committee Pre-approval of Audit and Permissible Non-Audit
Services of Independent Auditors
Consistent with the SEC requirements regarding auditor
independence, the Audit Committee has adopted a policy to
pre-approve services to be performed by Ultimates
principal independent auditor prior to commencement of the
specified service. Under the policy, the Audit Committee must
pre-approve the provision of services by Ultimates
principal auditor prior to commencement of the specified
service. The requests for pre-approval are submitted to the
Audit Committee by the Chairman of the Board, President and
Chief Executive Officer, the Chief Financial Officer, or a
designee of either with a statement as to whether, in their
view, the request is consistent with the SEC rules on auditor
independence. All of the services performed by KPMG LLP during
2010 and 2009 were pre-approved by the Audit Committee.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. James A. FitzPatrick, Jr., a member of the Board,
is a partner in the law firm Dewey & LeBoeuf LLP,
which provides legal services to Ultimate.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Alois T. Leiter, a member of the Board and the
Compensation Committee, has entered into an agreement with
Ultimate pursuant to which he agreed to (i) attend and
participate in certain internal meetings of Ultimate;
(ii) assist Ultimates salespeople with prospects; and
(iii) act as an official spokesperson for Ultimate in
exchange for which Ultimate agreed to make contributions to
Leiters Landing, a non-profit charitable organization
benefiting children that was formed by Mr. Leiter, in the
amount of one tenth (1/10) of one percent, or 0.1%, of
Ultimates total annual revenue as reported on its
financial statements, such payments not to exceed $200,000 in
any one year. Ultimates payment to Leiters Landing
for 2010 under this agreement aggregated $200,000.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Ultimates
executive officers and directors and persons who beneficially
own more than 10% of Ultimates Common Stock to file
initial reports of ownership and reports of changes in ownership
with the SEC. Such executive officers, directors and greater
than 10% beneficial owners are required by the regulations of
the SEC to furnish Ultimate with copies of all
Section 16(a) reports they file. Based solely on a review
of the copies of such reports furnished to Ultimate and written
representations from the executive officers and directors,
Ultimate believes that all Section 16(a) filing
requirements applicable to its executive officers and directors
and greater than 10% beneficial owners were met during 2010.
STOCKHOLDER
PROPOSALS FOR THE 2012 ANNUAL MEETING OF
STOCKHOLDERS
Under the rules of the SEC, any proposal by a stockholder to be
presented at the 2012 Annual Meeting of Stockholders and to be
included in Ultimates Proxy Statement for such meeting
must be received at Ultimates principal corporate office
at 2000 Ultimate Way, Weston, Florida 33326, no later than the
close of business on December 3, 2011. Proposals should be
sent to the attention of the Secretary of Ultimate. Any such
stockholder proposal must comply with the applicable rules of
the SEC.
Under Ultimates By-Laws, proposals of stockholders not
included in the proxy materials may be presented at the 2012
Annual Meeting of Stockholders only if Ultimates Secretary
has been notified of the nature of the proposal and is provided
certain additional information at least sixty days but not more
than ninety days prior to April 1, 2012, the first
anniversary of the Proxy Statement in connection with the 2011
Annual Meeting of Stockholders (subject to exceptions if the
2012 Annual Meeting is advanced by more than thirty days and the
proposal is a proper one for stockholder action).
29
OTHER
MATTERS
Financial
Statements
A copy of Ultimates Annual Report on
Form 10-K,
for the year ended December 31, 2010, is available on
Ultimates website, www.ultimatesoftware.com.
Other
Ultimate is not aware of any other matters that may come before
the Annual Meeting. If other matters are properly presented at
the Annual Meeting, it is the intention of the persons named as
proxies in the enclosed proxy to vote in accordance with their
best judgment.
By Order of the Board of Directors:
Vivian Maza
Secretary
Weston, Florida
April 1, 2011
30
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods
outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone
must be received by 1:00 a.m., Central Time, on
May 17, 2011
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Vote by Internet |
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Log on to the
Internet and go to
www.envisionreports.com/ULTI |
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Follow the steps outlined on the secured website. |
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Vote by telephone |
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Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a
touch tone telephone. There is NO CHARGE to you for the call. |
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Follow the instructions provided by the recorded message. |
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Using a black ink pen, mark your
votes with an X as shown in this example.
Please do not write outside the designated
areas.
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x |
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Annual Meeting Proxy Card
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6
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
6
A
Proposals The Board of Directors recommends a vote FOR all the nominees,
FOR proposals 2 and 3 and for 1 YEAR on Proposal 4.
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1. |
To elect two directors to serve until the 2014 Annual Meeting. |
+
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For |
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Withhold |
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For |
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Withhold |
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01 - LeRoy A. Vander Putten |
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o
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o
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02 - Robert A. Yanover
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o
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o
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For |
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Against |
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Abstain |
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2.
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To ratify KPMG LLP as the Companys
independent registered public
accounting firm for the fiscal year
ending December 31, 2011.
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o
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o
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o |
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1 Yr |
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2 Yrs |
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3 Yrs |
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Abstain |
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4.
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Say When on Pay - To
recommend, by non-binding
advisory vote, the
frequency of future
advisory votes on the
compensation paid to the
Companys named executive
officers.
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o
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o
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o
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o |
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For |
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Against |
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Abstain |
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3.
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Say on Pay - To approve by
non-binding advisory vote the
compensation paid to the Companys
named executive officers.
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o
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o
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o |
B Non-Voting Items
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Change of Address Please print new address below.
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Meeting Attendance |
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Mark box to the right if
you plan to attend the
Annual Meeting.
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o |
C Authorized Signatures This section must be completed for your vote to be counted. Date
and Sign Below
Please sign exactly as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
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Date
(mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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/ / |
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6
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
6
Proxy The Ultimate Software Group, Inc.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 17, 2011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoints Mitchell K. Dauerman and Vivian
Maza, with full power of substitution, as proxies to represent and vote, as designated herein, all
the shares of common stock, par value $0.01, of The Ultimate Software Group, Inc. (the Company)
which the undersigned would be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held at 2000 Ultimate Way, Weston, Florida, on Tuesday, May 17,
2011, at 10:00 a.m. (EDT), and at any adjournment thereof (the Annual Meeting).
In their discretion, the proxies are authorized to vote upon such other matters as may properly
come before the Annual Meeting.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned
stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3
AND FOR 1 YEAR ON PROPOSAL 4. Attendance of the undersigned at the Annual Meeting will
not be deemed to revoke this proxy unless the undersigned shall revoke this proxy in writing or
shall deliver a subsequently dated proxy to the Secretary of the Company prior to the Annual
Meeting or shall vote in person at the Annual Meeting.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE