UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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APAC CUSTOMER SERVICES, INC.

(Name of Registrant as Specified In Its Charter)

 

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2201 Waukegan Road, Suite 300
Bannockburn, Illinois 60015
(800) 776-2722

Notice of Annual Meeting of Shareholders
To Be Held On June 7, 2011

To the Shareholders of APAC Customer Services, Inc.:

The Annual Meeting of Shareholders of APAC Customer Services, Inc. will be held at the Westin Chicago North Shore, 601 N. Milwaukee Avenue, Wheeling, IL 60090 on Tuesday, June 7, 2011, at 9:30 a.m. Central Daylight Time for the following purposes:

1. To elect six directors.

2. To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm;

3. To consider an advisory vote on the compensation of the Named Executive Officers;

4. To consider an advisory vote on the frequency of the advisory vote on executive compensation and

5. To consider and transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

Information with respect to the above matters is set forth in the Proxy Statement which accompanies this Notice.

Shareholders of record at the close of business on April 14, 2011 are entitled to notice of, and to vote at, the Annual Meeting.

Even if you plan to attend the meeting in person, please read these proxy materials and date, sign and mail the enclosed proxy in the envelope provided, which requires no postage for mailing in the United States. A prompt response is helpful, and your cooperation will be appreciated. Shareholders who are present at the Annual Meeting may withdraw their proxies and vote in person if they so desire.

By Order of the Board of Directors

Robert B. Nachwalter
Senior Vice President, General Counsel and Corporate Secretary

Dated: April 22, 2011

APAC Customer Services, Inc.
2201 Waukegan Road, Suite 300
Bannockburn, Illinois 60015
(800) 776-2722

Proxy Statement

Annual Meeting of Shareholders to be Held June 7, 2011

This Proxy Statement and the accompanying proxy card are being mailed to shareholders of APAC Customer Services, Inc. (the “Company” or “our”) on or about April 29, 2011, in connection with the solicitation of proxies by the Board of Directors for the Annual Meeting of Shareholders to be held on June 7, 2011. The purpose of the Annual Meeting is to consider and act upon the matters specified in the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

Each shareholder is entitled to one vote for each Common Share (as defined in the Company’s Amended and Restated Articles of Incorporation, dated August 8, 1995, as subsequently amended) held as of the record date. A majority of the outstanding Common Shares entitled to vote at this meeting and represented in person or by proxy will constitute a quorum. As of the close of business on April 14, 2011, the record date for determining shareholders entitled to vote at the Annual Meeting, 53,417,300 Common Shares were outstanding.

If the form of Proxy that accompanies this Proxy Statement is executed and returned, it will be voted in accordance with the indicated direction. A Proxy may be revoked at any time prior to the voting thereof by written notice to our Corporate Secretary, by executing and delivering a subsequently dated proxy card or by voting in person at the Annual Meeting. Shareholders whose Common Shares are held in the name of a bank, broker or other holder of record will receive voting instructions from the holder of record.

The affirmative vote of the holders of a majority of the Common Shares entitled to vote and represented in person or by proxy at the Annual Meeting is required for the election of directors and for any other proposal submitted to a vote. Shareholders are not entitled to cumulate their votes. Shares represented by proxies which are marked “withhold” or to deny discretionary authority on any matter will be treated as shares present and entitled to vote, which will have the same effect as a vote against any such matter. Broker “non-votes” and the shares as to which shareholders abstain are included for purposes of determining whether a quorum of shares is present at a meeting, except as to matters for which a non-vote is indicated on the broker’s proxy. If a non-vote is indicated on the broker’s proxy with respect to a particular matter, the shares will not be treated as represented at the meeting for the purposes of determining a quorum for such matter. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Votes will be tabulated by representatives of BNY Mellon Shareowner Services, our transfer agent and inspector of elections for the Annual Meeting. We will bear all expenses incurred in the solicitation of proxies.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on June 7, 2011

A copy of this proxy statement and of our annual report to stockholders is available at: http://ir.apaccustomerservices.com/proxy11.cfm.

The 2011 Annual Meeting will be held on June 7, 2011, at 9:30 a.m., Central Daylight Time, at the Westin Chicago North Shore, 601 N. Milwaukee Avenue, Wheeling, IL 60090.

At the Annual Meeting, you will be asked to consider and vote:

	•		To elect six directors;
	•		To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm;
	•		To consider an advisory vote on the compensation of our Named Executive Officers;
	•		To consider an advisory vote on the frequency of the advisory vote on executive compensation.; and
	•		To consider and transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

For the reasons set forth in more detail elsewhere in this proxy statement, our Board of Directors recommends a vote “FOR” the approval of each of the proposals set forth above.

The materials available at the http://ir.apaccustomerservices.com/proxy11.cfm website include a copy of this proxy statement, a copy of our annual report to stockholders and a copy of the form of proxy.

You may contact the Corporate Secretary, at 1-800-776-2722 if you would like to obtain directions to be able to attend the annual meeting and vote in person.

COMMON SHARES BENEFICIALLY OWNED BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT

The following table sets forth certain information, as of April 1, 2011, regarding the beneficial ownership of Common Shares by (i) each person known by us to own beneficially more than 5% of our outstanding Common Shares, (ii) each director and nominee, (iii) each Named Executive Officer (as defined in “Compensation Discussion and Analysis — Overview of Compensation Process” appearing in the “Executive Compensation” section of this Proxy Statement) and (iv) all directors, director nominees and executive officers as a group. Except as otherwise indicated, we believe that each beneficial owner of Common Shares listed below, based on information provided by such owner, has sole investment and voting power with respect to such Common Shares. Unless otherwise indicated, the address of each of the shareholders named below is c/o APAC Customer Services, Inc., 2201 Waukegan Road, Suite 300, Bannockburn, Illinois 60015.

		Common Shares Benefically Owned
Name		Number				Percent (1)
Theodore G. Schwartz			15,034,429	(2)(3)			28.4	%
Wellington Management Company, LLP			5,316,947	(4)			10.0	%
Ronald L. Chez			3,650,569	(5)			6.9	%
Trust Four Hundred Thirty U/A/D 4/2/94			2,040,000	(6)			3.9	%
Trust Seven Hundred Thirty U/A/D 4/2/94			2,040,000	(6)			3.9	%
Trust 3080			500,000	(6)			*
Trust 3081			379,000	(6)			*
Katherine Andreasen			6,976	(3)			*
Kevin T. Keleghan			301,976	(3)			*
John J. Park			252,841	(3)			*
Samuel K. Skinner			74,402	(3)			*
John L. Workman			102,100	(3)			*
Arthur D. DiBari			220,000	(3)			*
Mark E. McDermott			287,816	(3)			*
Robert B. Nachwalter			60,000	(3)			*
Andrew B. Szafran			570,000	(3)			1.1	%
All directors, nominees and executive officers as a group (10 persons)			16,910,540	(3)			31.9	%

Notes to Common Shares Beneficially Owned Table

PROPOSAL 1
THE ELECTION OF DIRECTORS

At the Annual Meeting, six directors are to be elected to serve until the next Annual Meeting of Shareholders.

It is intended that the executed and returned proxy cards (except proxy cards marked to the contrary) will be voted for the nominees listed below. Proxies cannot be voted for a greater number of persons than the number of nominees listed below. It is expected that the nominees will serve, but if any nominee declines or is unable to serve for any unforeseen cause, the proxies will be voted to fill any vacancy so arising in accordance with the discretionary authority of the persons named in the proxies.

The Board of Directors recommends a vote FOR the election of each of the following nominees:

Nominees for Election

Name		Age				Position
Katherine Andreasen			45			Ms. Andreasen became a director in November 2009. In October 2010 Ms. Andreasen was appointed Chief People Officer of AOL, Inc., an American global internet services and media company. From December 2009 to October 2010, Ms. Andreasen was Chief Human Resources Officer for Orchard Brands, a portfolio company of Golden Gate Capital and a leading multi-channel marketer of apparel and home products. From May 2008 to June 2009, she was the senior executive for Human Resources at Bill Me Later, Inc., one of the fastest growing divisions of eBay/PayPal. Prior to that, from August 2006 to May 2008 she served as the Chief Human Resources Officer for Orbitz Worldwide, managing global human resources, real estate and facilities management organizations. Before joining Orbitz, from May 2002 to August 2006, she was Senior Vice President, Human Resources, Cendant Corporation.
						Ms. Andreasen is a senior human resources professional who brings considerable human resources and talent management experience to APAC. She has substantial experience in the services industry and has been responsible for large non-exempt workforces similar to APAC which allows her to provide insight and guidance on critical employment issues. She has also designed and managed complex compensation plans and programs for private and public companies.
Kevin T. Keleghan			53			Mr. Keleghan became a director of the Company in November 2009. He was appointed President and Chief Executive Office of our Company in September 2010. Prior to joining our Company as President and Chief Executive Officer, Mr. Keleghan was President and Chief Executive Officer of Axiant, LLC a leading provider of financial services and recovery management solutions for issuers and investors in debt products. Axiant, LLC filed for protection under Chapter 11 of the U.S. Bankruptcy Code which was converted to a Chapter 7 liquidation in December 2009. Prior to joining Axiant, he was President and Chief Executive Officer at Outsourcing Solutions, Inc. (“OSI”) one of the largest providers of outsourced services in the accounts receivable management industry from 2002 to 2008. OSI filed for protection under Chapter 11 of the U.S. Bankruptcy Code in December 2002 and emerged from Chapter 11 protection in May 2003. From 1996 to 2002, he served at Sears Holdings Corporation in various roles, including President of Credit Card Services, Vice President of Marketing Credit Card Products and Vice President of Operations for Sears Credit Services.
						Mr. Keleghan is a seasoned professional with considerable industry knowledge in the area of outsourcing specifically in the area of financial services. As a result of his expertise, Mr. Keleghan is able to lead APAC in the development of new services, center operations and client management. He previously had leadership responsibility for large non-exempt workforces which are similar to APAC’s workforce.

Name		Age				Position
John J. Park			49			John J. Park became a director in August 2004. Mr. Park is Chief Financial Officer for Meritas, LLC, which operates a worldwide network of college preparatory schools. Prior to joining Meritas in August 2010, Mr. Park was the Chief Financial Officer at Hewitt Associates, a global human resources outsourcing and consulting firm, from November 2005 to January 2010. Prior to joining Hewitt, Mr. Park served as Chief Financial Officer of Orbitz, Inc., an online travel company, from October 2000 until February 2005, and as acting President from November 2004 until February 2005. Prior to joining Orbitz, Mr. Park held various executive positions with Sears, Roebuck and Co., including Vice President, Finance for its services and credit card businesses.
						Mr. Park has served in the role of chief financial officer for public companies which results in him bringing substantial finance experience to APAC — specifically the Audit Committee. Based in part on his considerable finance experience, Mr. Park qualifies as an “audit committee financial expert” which is important to the Company. As a senior finance professional he can provide guidance and oversight on finance issues facing public companies. Additionally, Mr. Park served as a senior officer of one of the world’s leading HR consulting and outsourcing companies. As a result, he has knowledge with outsourcing as well the field of human resources which allows him to advise on issues APAC similarly confronts.
Theodore G. Schwartz			57			Theodore G. Schwartz is Chairman of the Board of Directors. Mr. Schwartz is the founder of the Company and has served as Chairman since its formation in May 1973. He served as the Company’s Chief Executive Officer until January 2000, and again from May 2001 until March 2004.
						Mr. Schwartz is an award-winning pioneer in the call center and outsourcing industry. Over his many years in the industry, Mr. Schwartz created a number of innovative approaches and systems for call centers. As the current Chairman of the Board and the former President and Chief Executive Officer, he led APAC to becoming a leader in global outsourced services and solutions. His insight and institutional knowledge is of considerable value to APAC.

Name		Age				Position
Samuel K. Skinner			72			Samuel K. Skinner previously served on the Board of Directors from July 2003 to June 2005. He rejoined the Board in June 2008. Mr. Skinner is of counsel to the law firm Greenberg Traurig, LLP where he concentrates on corporate, governmental and regulatory matters. From 2000 to 2003, Mr. Skinner was president and Chief Executive Officer of USF Corporation, and chairman from January 1, 2000 through May 2003. Mr. Skinner previously served as president of Commonwealth Edison Company and its holding company, Unicom Corporation (Exelon Corporation). He also was formerly White House chief of staff to President George H.W. Bush and, prior to that, served as U.S. Secretary of Transportation from February 1989 to December 1991. Mr. Skinner previously was United States Attorney for the Northern District of Illinois from 1975 to 1977, having served in that office for eight years. Mr. Skinner also serves on the board of directors of Express Scripts, Inc., Navigant Consulting, Inc., Echo Global Logistics, Inc., Chicago Board of Options Exchange and MedAssets, Inc. He previously served on the boards of Diamond Management and Technology Consultants and Dade Behring.
						Mr. Skinner has had a distinguished career with both the government and in the private sector. As a lawyer with more than 40 years of experience, he counsels APAC in a variety of areas including advising on litigation, regulatory and governmental matters and corporate governance. Additionally, Mr. Skinner’s impressive leadership positions both with the government and private corporations bring valuable management experience and knowledge to the Board. He brings insights into corporate governance and legal matters that face the board, developed through his long professional experience with such matters as an attorney and member of numerous other boards.
John L. Workman			59			John L. Workman has served as a Director since June 2008. Mr. Workman is currently President and Chief Financial Officer of Omnicare, Inc. a position that he was appointed to in February 2011. Prior to being appointed President, he served as Executive Vice President and Chief Financial Officer of Omnicare from November 2009 to February 2011. From September 2004 to October 2009, Mr. Workman was Executive Vice President and Chief Financial Officer of HealthSouth Corporation. From 1998 to 2004, Mr. Workman served in various management and executive capacities with U.S. Can Corporation, including serving as its Chief Financial Officer from 1998 to 2002, as its Chief Operating Officer from 2002 to 2003, and its Chief Executive Officer from 2003 to 2004. Prior to joining U.S. Can Corporation, Mr. Workman was employed by Montgomery Ward & Company, Inc. for 14 years, where he held several management and executive positions, including General Auditor, Chief Financial Officer, and Chief Restructuring Officer. Mr. Workman previously served on the boards of Halozyme Therapeutics, Inc., U.S. Can Corporation and ValueVision International, Inc. Mr. Workman began his career in public accounting, and was a partner with the public accounting firm KPMG.
						Mr. Workman has served in the role of chief financial officer for public companies which results in him bringing substantial finance experience to APAC — specifically the Audit Committee. Based in part on his considerable finance experience, Mr. Workman qualifies as an “audit committee financial expert” which is important to the Company. Additionally, Mr. Workman has held senior positions overseeing the area of information technology and, therefore, can share his experience and advise APAC on issues in this area. Finally, as a partner in public accounting, Mr. Workman can advise APAC on accounting/audit issues that face public companies.

Meetings of the Company’s Board of Directors and Corporate Governance

Our Board of Directors met 18 times during fiscal year 2010 and periodically took action by unanimous written consent. All incumbent directors attended at least 75% of the aggregate of such meetings and meetings of Board committees on which they served in fiscal year 2010 during the periods that such directors served.

We have a commitment to good corporate governance practices. These practices provide a framework within which our Board of Directors and management can pursue our strategic objectives and ensure the Company’s long-term vitality for the benefit of stockholders. The foundation of our practices is an independent and qualified Board of Directors. All directors are elected annually by a majority of votes cast by stockholders. Our Board of Directors has determined that, other than Messrs. Marrow (who served during part of 2010 but resigned as of September 12, 2010), Keleghan and Schwartz, all current Board members all nominees for election as directors, and all individuals who served as Board members during fiscal year 2010, are or were independent as defined by the NASDAQ listing standards. All Board committees are composed entirely of independent directors. Our independent directors hold executive sessions periodically throughout the year.

The Board carefully evaluates each incoming director candidate based on selection criteria and overall priorities for Board composition that are periodically re-examined by the corporate governance committee with input from the rest of the directors. As our directors’ commitments change, the Board revisits their situations to ensure that they can continue to serve the best interests of the Company and its stockholders. We also demand high standards of ethics from our directors and management as described in the Code of Business Conduct and Ethics.

Director Independence

The Board of Directors has determined that the following four of our six current directors are “independent” as defined by applicable law and NASDAQ listing standards: Ms. Andreasen, and Messrs. Park, Skinner and Workman. Each of our Audit, Compensation and Nominating and Corporate Governance committees is composed only of independent directors, as identified below under the heading “Board Committees.”

Based on such standards, Mr. Schwartz is not independent because of his significant ownership interest in the Company which exceeds 10%. Mr. Keleghan is not independent because he is an executive officer of the Company.

Board Leadership Structure

The Bylaws provide that the Chairman of the Board of Directors shall be appointed by the Board of Directors. The Board is free to choose its Chairman in any way that the Board deems to be in the best interest of the Company and its shareholders. The Chairman of the Board has general authority over the Company’s business and affairs, subject to the Board of Directors, and is responsible for ensuring that the Board’s directives are carried out. The Chairman may also serve as the Chief Executive Officer of the Company. The Board determines whether the role of the Chairman and the Chief Executive Officer should be separated or combined based on its judgment as to the structure that best serves the interests of the Company. The Board does not have a firm policy as to whether the position of the Chairman and the position of the Chief Executive Officer should be separate and intends to preserve the freedom to decide what is in the best interest of the Company at any point in time.

We currently separate the positions of Chief Executive Officer and Chairman of the Board of Directors. Separating the positions of Chief Executive Officer and Chairman of the Board of Directors allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board of Directors to lead the Board of Directors in its fundamental role of providing advice to and oversight of management.

Mr. Schwartz, our current Chairman, is also our founder and our largest shareholder. Although Mr. Schwartz is not considered an independent director, the Board of Directors believes that having Mr. Schwartz serve as a separate Chairman of the Board of Directors is the appropriate leadership structure for the Company, given his wealth of industry experience, his considerable business contacts in the area of outsourcing, and extensive knowledge of the Company and his history of innovative and strategic thinking. Furthermore, based in part on past history, the Board of Directors believes that it is best for our Chief Executive Officer to functionally operate the business and the Chairman to manage the Board of Directors and critically review management’s performance. The Board of Directors believes that performance is optimized with the separation of these roles. With the separation, the Board of Directors can speak more candidly and critically on the performance of the management and operations of Company. We believe that such separation helps provide proper checks and balances.

Board’s Role in Risk Oversight

Risk is an integral part of Board and committee deliberations throughout the year. The Company’s Board of Directors administers its risk oversight function directly and through both its Audit Committee and Compensation Committee. The Audit Committee has oversight responsibility with respect to the Company’s financial risk assessment and financial risk management. The Audit Committee meets regularly with management to review the Company’s risk exposures, the potential financial impact those risks may have on the Company, the steps management takes to address those risks, and how management monitors emerging risks. With respect to the Company’s compensation plans and programs, the Compensation Committee structures such plans and programs to balance risk and reward, while mitigating the incentive for excessive risk taking by our officers and employees. The full Board of Directors has oversight responsibility of enterprise risk management and periodically requests management to review the Company’s major enterprise risk exposures, the potential financial or other impact on the Company, and the process for managing such risks.

Board Committees

Our Board of Directors has established three standing committees and has adopted written charters for each committee: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee each comprised of independent directors. Our Board of Directors appoints the members of each committee. While our Board’s committees are constituted as described below and vote on matters as described below, other members of our Board, including directors not determined by our Board to qualify as independent, are frequent participants (although not voting participants) in committee meetings and proceedings.

Each committee’s charter and our Corporate Governance Guidelines are available on our website at www.apaccustomerservices.com. A copy of each charter is also available in print to shareholders upon request, addressed to our Corporate Secretary c/o APAC Customer Services, Inc., 2201 Waukegan Road, Suite 300, Bannockburn, Illinois 60015.

Audit Committee

Our Audit Committee consists of Messrs. Workman (Chairperson), Park and Skinner. Mr. Keleghan also served as a member of the Audit Committee during fiscal 2010. Mr. Keleghan resigned from the Audit Committee prior to his appointment as our President and Chief Executive Officer. Our Audit Committee has direct responsibility for appointing our independent registered public accounting firm, reviewing the proposed scope of the annual audit, overseeing the adequacy and effectiveness of accounting and financial controls, and reviewing the annual and quarterly financial statements with management and the independent registered public accounting firm. Our Audit Committee met five times in fiscal year 2010 and periodically took action by unanimous written consent. All members of our Audit Committee are independent directors (or were at the applicable time) as defined for audit committee members by the listing standards of NASDAQ. Our Board of Directors has determined that each member of our Audit Committee is financially literate in accordance with the listing standards of NASDAQ and that Messrs. Park and Workman are each an “audit committee financial expert,” as defined by the SEC. For details regarding Mr. Park’s and Mr. Workman’s qualifications as an “audit committee financial expert,” see “Nominees for Election” appearing in “Proposal 1. The Election of Directors” section of this Proxy Statement.

Compensation Committee

Our Compensation Committee consists of Ms. Andreasen (Chairperson) and Messrs. Park and Workman. Cindy Andreotti also served as a member, and Chairperson, of the Compensation Committee during fiscal 2010. John C. Kraft and Kevin T. Keleghan also served as members of the Compensation Committee during fiscal 2010. Ms. Andreotti and Mr. Kraft were not re-nominated to serve as directors at the 2010 Annual Meeting of Shareholders and, therefore, ceased serving as directors on June 15, 2010. Mr. Keleghan resigned from the Compensation Committee prior to his appointment as the Company’s President and Chief Executive Officer. Our Compensation Committee is directly responsible for approving senior management compensation and overseeing our equity compensation plans. For a more detailed description of the responsibilities and authority of the Compensation Committee, see “Compensation Discussion and Analysis — Overview of Compensation Process” appearing in the “Executive Compensation” section of this Proxy Statement. Our Compensation Committee met nine times in fiscal year 2010 and periodically took action by unanimous written consent. All members of the Compensation Committee are independent (or were at the applicable time) directors as defined by the listing standards of NASDAQ.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee consists of Mr. Skinner (Chairperson), Ms. Andreasen, and Mr. Park. Ms. Andreotti, Mr. Kraft and Mr. Keleghan also served as members of the Nominating and Corporate Governance Committee in fiscal 2010. Ms. Andreotti and Mr. Kraft were not re-nominated to serve as directors at the 2010 Annual Meeting of Shareholders and, therefore, ceased serving as directors on June 15, 2010. Mr. Keleghan resigned from the Nominating and Corporate Governance Committee prior to his appointment as the Company’s President and Chief Executive Officer. The Nominating and Corporate Governance Committee is directly responsible for identifying and recommending to our Board of Directors individuals qualified to serve as directors, recommending directors to serve on committees of our Board of Directors, advising our Board of Directors with respect to matters of Board composition and procedures, developing and recommending to our Board of Directors corporate governance principles applicable to us, overseeing corporate governance matters generally, and reviewing on an annual basis director compensation. The Nominating and Corporate Governance Committee met five times during fiscal year 2010 and periodically took action by unanimous written consent. All members of our Nominating and Corporate Governance Committee are independent directors (or were at the applicable time) as defined by the listing standards of NASDAQ.

The Nominating and Corporate Governance Committee assists the Board in identifying qualified persons to serve as directors of the Company. The Committee evaluates all proposed director nominees, evaluates incumbent directors before recommending re-nomination, and recommends all approved candidates to the Board for appointment or nomination.

Our Nominating and Corporate Governance Committee believes that the minimum qualifications for serving as a director are the ability to apply good and independent judgment in a business situation and the ability to represent the interests of all shareholders. Our directors play a critical role in guiding the Company’s strategic direction and oversee the management of the Company. A director also must be free from any conflicts of interest that would interfere with his or her loyalty to us or our shareholders. Candidates considered by our Nominating and Corporate Governance Committee for election or re-election to our Board of Directors should possess the following qualifications: the highest level of personal and professional ethics, integrity and values; an inquiring and independent mind; practical wisdom and mature judgment; broad training and experience at the policy-making level in business, finance and accounting, government, education or technology; expertise that is useful to us and complementary to the background and experience of other Board members, so that an optimal balance of Board members can be achieved and maintained; willingness to devote sufficient time and attention to carrying out the duties and responsibilities of Board membership; commitment to serve on the Board for several years to develop knowledge about our business; willingness to represent the best interests of all shareholders and objectively appraise management performance; and involvement only in activities or interests that do not conflict with the director’s responsibilities to us and our shareholders.

Our Nominating and Corporate Governance Committee considers diversity in its nomination of directors to the Board, and in its assessment of the effectiveness of the Board and its committees. In considering diversity, the Nominating and Corporate Governance Committee looks at a range of different personal factors in light of the business, customers, suppliers and employees of the Company. The range of factors includes diversity of personal and business backgrounds and prior board service, financial expertise, international experience, industry experience, leadership skills, including prior management experience, and a variety of subjective factors. In addition to diversity of experience and backgrounds, racial, ethnic and gender diversity are also considered in the director selection process, but there is no specific policy regarding Board diversity. The Nominating and Corporate Governance Committee regularly reports to the full Board on its assessment of the composition and functioning of the Board.

Once a person has been identified by our Nominating and Corporate Governance Committee as a potential candidate, the committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If our Nominating and Corporate Governance Committee determines that the candidate warrants further consideration, our Chairperson or another member of the committee or of our Board of Directors, including directors who have not been designated as independent, contacts the person. Generally, if the person expresses a willingness to be considered and to serve on our Board, our Nominating and Corporate Governance Committee requests information from the candidate, reviews the person’s accomplishments and qualifications, in light of any other candidates that the committee might be considering, and conducts one or more interviews with the candidate. Other members of our Board, including Messrs. Schwartz and Keleghan, will also interview the candidate. In certain instances, committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater firsthand knowledge of the candidate’s accomplishments. The committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder, although, as stated above, our Board may take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held.

Our Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders. In considering candidates submitted by shareholders, our Nominating and Corporate Governance Committee will take into consideration the needs of our Board of Directors and the qualifications of the candidate. Our Nominating and Corporate Governance Committee may also take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held. To have a candidate considered by our Nominating and Corporate Governance Committee, a shareholder must submit the recommendation in writing and must include the following information: the name of the shareholder and evidence of the person’s ownership of Common Shares, including the number of shares owned and the length of time of ownership; the name of the candidate; the candidate’s resume or a listing of his or her qualifications to be a director; and the candidate’s consent to be named as director if selected by our Nominating and Corporate Governance Committee and nominated by our Board.

The shareholder recommendation and information described above must be sent to our Corporate Secretary c/o APAC Customer Services, Inc., 2201 Waukegan Road, Suite 300, Bannockburn, Illinois 60015 and must be received by our Corporate Secretary not later than the close of business on the 90^th day, nor earlier than the close of business on the 120^th day prior to the anniversary date of our most recent annual meeting of shareholders.

Transition Oversight/Business Operations Committee

The Company previously had a Transition Oversight Committee which consisted of Messrs. Schwartz, Marrow and Ms. Andreotti. This committee was formed to provide the Board an opportunity to provide input to management with respect to various operational matters. This Committee was formally dissolved on February 17, 2010.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2010, members of our Compensation Committee included Ms. Andreasen (Chairperson), Ms Andreotti (former Chairperson) and Messrs. Keleghan, Kraft, Park and Workman. None of the current members of the Compensation Committee serve as, or formerly served as, officers of the Company. Mr. Keleghan resigned from the Compensation Committee prior to his appointment as the Company’s President and Chief Executive Officer.

During fiscal year 2010, none of our executive officers served on the board of directors or compensation committee of any other corporation where any member of our Compensation Committee or our Board of Directors was engaged as an executive officer. None of the current members of our Compensation Committee have ever been employed by us.

Shareholder Communications with our Board of Directors

Our Board of Directors has established a process to receive communications from shareholders. Shareholders may contact any member (or all members) of our Board by mail. To communicate with our Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to our Board of Directors or any such individual director, or group or committee of directors, by either name or title. All such correspondence should be sent “c/o Corporate Secretary” to APAC Customer Services, Inc., 2201 Waukegan Road, Suite 300, Bannockburn, Illinois 60015.

All communications received as set forth in the preceding paragraph will be opened by the office of the Corporate Secretary for the sole purpose of determining the nature of the communications. Communications that constitute advertising, promotions of a product or service, or patently offensive material will not be forwarded to the directors. Other communications will be forwarded promptly to the addressee or addressees.

Policy Regarding Director Attendance at Annual Meetings

We consider attendance and participation at the annual meeting of shareholders to be important to effectively fulfill the responsibilities of our directors. Accordingly, it is our policy to encourage each of our directors to attend the annual meeting. All of the directors then serving on the Board were in attendance at the 2010 Annual Meeting.

Director Compensation

Our Nominating and Corporate Governance Committee reviews and approves the compensation paid to each member of our Board on an annual basis. Each director who is not employed by us is compensated for his or her services as a director with: (i) an annual cash retainer of $22,000; (ii) a cash payment of $1,500 for each board meeting attended in person and a cash payment of $750 for each board meeting attended by telephone; and (iii) quarterly grants of options to purchase Common Shares. The total number of options to be granted annually to each director is calculated as of the date of our annual meeting of shareholders and is calculated by dividing $90,000 by the average fair market value of a common share over the preceding twelve (12) month period. Options are granted to directors in four equal installments as of the first trading day of each calendar quarter. Options have an exercise price equal to the fair market value of a Common Share on the date of grant. Additionally, Mr. Schwartz receives an annual cash fee of $15,000 for his services as Chairman of the Board.

For Board committee service: (i) the Audit Committee Chairperson receives an annual fee of $10,000; (ii) each of the other committee chairperson receives an annual cash fee of $5,000; and (iii) each committee member, including the committee chairperson, receives a cash payment of $1,500 for each committee meeting attended in person and a cash payment of $750 for each committee meeting attended by telephone.

Directors who are requested to perform services beyond regular attendance at board and committee meetings are compensated and receive cash payments ranging from $250 to $1,500 per day depending on the circumstances. Directors are also reimbursed for certain expenses in connection with attendance at Board and committee meetings as well as approved education programs and other required travel.

2010 Director Compensation

The following table sets forth the information with respect to all compensation paid or earned for services rendered to us by each member of our Board of Directors (other than Mr. Marrow (our former President and Chief Executive Officer), during fiscal year 2010. During that portion of fiscal year 2010, when Mr. Keleghan and Mr. Marrow were employees of the Company they did not receive any additional compensation for their services as directors.

						Option				All Other
		Fees Earned				Awards				Compensation				Total
Name		($)(1)				($)(2)				($)				($)
Katherine Andreasen			62,220				96,839				—				159,059
Cindy K. Andreotti (4)			30,000				72,944				—				102,944
Kevin T. Keleghan (3)			41,220				85,092				—				126,312
John C. Kraft (4)			29,250				72,944				—				102,194
John J. Park			69,561				96,839				—				166,400
Theodore G. Schwartz			54,250				96,839				—				151,089
Samuel K. Skinner			54,245				96,839				—				151,084
John L. Workman			55,250				96,839				—				152,089

Notes to 2010 Director Compensation Table

EXECUTIVE OFFICERS

Set forth below is certain information concerning the current executive officers of the Company, which officers serve at the discretion of the Board of Directors.

Name		Age				Position and Business Experience
Kevin T. Keleghan			53			Mr. Keleghan became a director of the Company in November 2009. He was appointed President and Chief Executive Office of the Company in September 2010. Prior to joining the Company as President and Chief Executive Officer, Mr. Keleghan was President and Chief Executive Officer of Axiant, LLC a leading provider of financial services and recovery management solutions for issuers and investors in debt products. Axiant, LLC filed for protection under Chapter 11 of the U.S. Bankruptcy Code which was converted to a Chapter 7 liquidation in December 2009. Prior to joining Axiant, he was President and Chief Executive Officer at Outsourcing Solutions, Inc. (“OSI”) one of the largest providers of outsourced services in the accounts receivable management industry from 2002 to 2008. OSI filed for protection under Chapter 11 of the U.S. Bankruptcy Code in December 2002 and emerged from Chapter 11 protection in May 2003. From 1996 to 2002, he served at Sears Holdings Corporation in various roles, including President of Credit Card Services, Vice President of Marketing Credit Card Products and Vice President of Operations for Sears Credit Services.
Andrew B. Szafran			44			Andrew B. Szafran has served as Senior Vice President and Chief Financial Officer of APAC since May 2008. Mr. Szafran was previously Vice President and Chief Financial Officer of Communications Supply Corp. (“CSC”), a nationwide distributor of low voltage infrastructure products and industrial wire and cable with $700 million in annual revenues. Serving in that capacity since 2002, he was responsible for managing the finance and human resources functions as well as for legal affairs. Mr. Szafran was a key member of the management team that diversified CSC’s business and significantly increased its revenue and profitability. In addition to his operations finance and accounting experience, Mr. Szafran has extensive experience in the areas of financial planning and analysis, corporate finance, mergers and acquisitions, risk management and taxation. Prior to joining CSC, Mr. Szafran held various financial positions of increasing responsibility with Alliant Exchange, Inc. and its affiliate, Alliant Foodservice, Inc., for seven years. He served most recently as Senior Vice President, Finance.
Christopher H. Crowley			40			Mr. Crowley joined APAC as Senior Vice President, Sales in March 2009. Mr. Crowley was most recently at Cybernet Software Systems where he served as Senior Vice President of Sales focusing on IT Solutions for technology companies. Prior to that, he worked in the business process outsourcing industry in the role of Senior Vice President of Sales for Teletech Holdings, Inc., and earlier, Senior Vice President of Sales with Sutherland Global Services. Mr. Crowley also has several years of operations and service delivery experience having worked as Director of Operations for North American Service Delivery when he first started with Sutherland in 1997. He began his career as a Business Development Manager responsible for field sales at MCI Communications.
Arthur Di Bari			54			Mr. DiBari joined us as Senior Vice President, Operations in March 2008. On August 5, 2010, he was promoted to the position of Senior Vice President and Chief Operating Officer. From 2005 to 2008 Mr. DiBari was Regional Vice President, Emerging Markets for the Americas for ACS, a leading provider of business process outsourcing and information technology solutions. Mr. Di Bari joined ACS in 2004. Prior to that, Mr. Di Bari spent over six years with Aegis Communications Group, a Texas-based customer care organization, where he held numerous operational roles of increasing responsibility, including Senior Vice President of Operations.

Name		Age				Position and Business Experience
Joseph R. Doolan			47			Mr. Doolan has served as the Company’s Vice President and Controller since February 2006. Prior to joining APAC, from 2004 to 2006 Mr. Doolan was Vice President and Controller for CNH Capital, a broad-based financial services company and a subsidiary of CNH Global N.V., where he managed the North American and International finance teams. Prior to joining CNH Capital from 2002 to 2003, Mr. Doolan was Controller at GE Healthcare Financial Services. From 1995 to 2002, Mr. Doolan worked for Heller Financial Inc. where he held various positions of increasing responsibility in finance and accounting.
Michael V. Hoehne			47			Mr. Hoehne has served as Vice President, Human Resources since August 2006. Prior to joining APAC, from 2005 to 2006, Mr. Hoehne served as Vice President of Human Resources for Wickes Furniture Co. From 1995 to 2005, Mr. Hoehne held several Human Resources leadership roles with Sears, Roebuck and Co.
Mark E. McDermott			50			Mr. McDermott serves as Vice President and Chief Information Officer, a position he has had since April 2004. Previously, Mr. McDermott served as our Vice President, Solutions. He has been employed by us in various positions since March 1996. From April 2004 until June 2007, Mr. McDermott was our Senior Vice President and Chief Information Officer. From June 2007 until March 2008, Mr. McDermott was our Senior Vice President, Operations and Chief Information Officer.
Robert B. Nachwalter			40			Mr. Nachwalter has served as our Senior Vice President and General Counsel since November 2008. Prior to joining APAC, Mr. Nachwalter was Senior Vice President and General Counsel for Whitehall Jewelers Holdings, Inc. (“Whitehall”), a publicly-traded national retailer of fine jewelry with approximately 375 stores in 39 states. Whitehall filed for protection under Chapter 11 of the U.S. Bankruptcy Code in June 2008. Before Whitehall, Mr. Nachwalter was senior legal counsel with Ryder System, Inc., a Fortune 500 transportation and logistics company.

EXECUTIVE COMPENSATION

Employment Arrangements with Kevin T. Keleghan, President and Chief Executive Officer

Effective September 13, 2010, Mr. Keleghan was appointed our President and Chief Executive Officer. He continues to serve as a member of the Board of Directors.

Compensation

We entered into an Executive Employment Agreement with Mr. Keleghan, dated September 13, 2010 (the “Employment Agreement”). The Employment Agreement provides that Mr. Keleghan will be paid an initial annual base salary of $500,000 and will be eligible to participate in and earn an annual bonus pursuant to the Company’s Management Incentive Plan (“MIP”) with a target bonus equal to one hundred percent (100%) of his base salary and a maximum annual bonus equal to two hundred percent (200%) of his base salary. In addition, in connection with his appointment as President and Chief Executive Officer, he was granted options to purchase 750,000 common shares of the Company which vest over a five year period pro rata. The options to acquire 750,000 shares have an exercise price of $5.23 per share. At the same time, we also granted him 250,000 restricted common shares which will vest over a five year period on a pro rata basis. The vesting for the restricted shares may be accelerated on the second and third anniversary of the grant based on the Company’s meeting the specific performance goals set forth in his Restricted Share Agreement.

Under Mr. Keleghan’s Executive Employment Agreement, he is entitled to compensation in the event of a termination of employment. The Employment Agreement provides for Mr. Keleghan to receive severance payments equal to eighteen (18) months of base salary in the event he is terminated without cause to be paid over a twenty-four (24) month period. Mr. Keleghan will also receive a pro rata annual bonus for the year of termination based on actual performance under the MIP. Additionally, following a termination without cause, for a period of eighteen (18) months after the date of his termination Mr. Keleghan shall be required to pay only the premium amount charged to active employees for such healthcare coverage and the Company shall pay the balance of such COBRA premiums.

In connection his employment, Mr. Keleghan also executed an Agreement Protecting Company Interests. Subject to the terms of this Agreement which contains certain exceptions, Mr. Keleghan has agreed that, during his employment with the Company and for a period of two (2) years after his termination of employment, he will not be employed by or own, operate, manage or control any competitive call-center outsourced business services business, solicit or induce or attempt to induce the Company’s clients over which he had direct contact, direct supervisory responsibility or access to confidential information, to stop doing business with the Company, or do business with another company providing materially similar services, or induce or attempt to induce any employee to terminate employment with the Company.

In March 2011, the Compensation Committee approved an annual management incentive program pursuant to our MIP (the “2011 MIP”) for Mr. Keleghan and all other executive officers of the Company. Under the terms of our 2011 MIP, Mr. Keleghan is eligible to receive a cash bonus for fiscal year 2011 based on our achieving certain financial performance goals established by the Compensation Committee. For a more detailed discussion see the Compensation Discussion and Analysis — 2011 MIP. Mr. Keleghan’s 2011 MIP will be based 40% on our achieving the threshold or maximum revenue amounts established by our Compensation Committee and 60% on our achieving the threshold or maximum adjusted PTP amounts established by our Compensation Committee. PTP is defined as “pre-tax profit” or “income before income taxes.” For additional discussion on 2011 MIP, see Compensation Discussion and Analysis — Annual Cash Incentive.

Potential Payments Upon Termination or Change of Control

The nature and amount of payments and benefits Mr. Keleghan is entitled to in the event of a termination of employment as a result of retirement, death or disability, involuntary termination (not for cause), voluntary termination, termination for cause, and termination in connection with a change of control, as well as in the event of a change of control without termination of employment are described in greater detail under “Potential Payments Upon Termination or Change of Control” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

Employment Arrangements with Messrs. Szafran, DiBari, McDermott and Nachwalter

Compensation

We entered into an employment agreement with Mr. Szafran on May 12, 2008 which provides that he will be paid an annual base salary of $300,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. Szafran is eligible for a target bonus equal to 50% of his base salary and a maximum bonus equal to 100% of his base salary. In addition to the above, when Mr. Szafran joined us, we granted him an option to purchase 450,000 Common Shares. The option vests in five equal annual installments beginning on May 14, 2009 and has an exercise price of $1.10 per share.

Mr. Szafran participates in the 2011 MIP described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. Szafran see discussion under “Payments Made Upon Termination or Change in Control.”

We entered into an Employment Agreement with Mr. DiBari on March 11, 2008 which provides that he will be paid an annual base salary of $285,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. DiBari is eligible for a target bonus equal to 50% of his base salary and a maximum bonus equal to 150% of his base salary. In addition to the above, when Mr. DiBari joined us, we agreed to pay him a sign-on bonus of $45,000 and we granted him an option to purchase 300,000 Common Shares. The option vests in five equal annual installments beginning on March 24, 2009 and has an exercise price of $.79 per share.

On October 1, 2010 we executed an amendment (the “DiBari Amendment”) to his March 11, 2008 employment agreement. The DiBari Amendment modified and supplemented the employment agreement to reflect the following: (1) the promotion of Mr. DiBari to the position of Senior Vice President and Chief Operating Officer; (2) the increase of Mr. DiBari’s annual base salary to $325,000; (3) the increase of Mr. DiBari’s eligible severance payments for a termination without cause or with good reason; and (4) the payment to Mr. DiBari of a one-time lump sum spot bonus in the amount of $25,000 in connection with his service as Interim Chief Executive Officer. All other terms of the employment agreement remain in full force and effect.

Mr. DiBari participates in the 2011 MIP described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. DiBari see discussion under “Payments Made Upon Termination or Change in Control.”

We entered into an Employment Agreement with Mr. McDermott on April 12, 2004 which provides that he will be paid an annual base salary of $225,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. McDermott is eligible for a target bonus equal to 40% of his base salary and a maximum bonus equal to 80% of his base salary. In addition to the above, when Mr. McDermott entered into this Employment Agreement, we granted him an option to purchase 25,000 Common Shares. The option vested in four equal annual installments beginning on April 15, 2005 and has an exercise price of $2.955 per share.

Mr. McDermott participates in the 2011 MIP described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. McDermott see discussion under “Payments Made Upon Termination or Change in Control.”

We entered into an Employment Agreement with Mr. Nachwalter on November 17, 2008 which provides that he will be paid an annual base salary of $250,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. Nachwalter is eligible for a target bonus equal to 50% of his base salary and a maximum bonus equal to 100% of his base salary. In addition to the above, when Mr. Nachwalter joined us, we granted him an option to purchase 150,000 Common Shares. The option vests in five equal annual installments beginning on November 21, 2009 and has an exercise price of $1.18 per share.

Mr. Nachwalter participates in the 2011 MIP described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. Nachwalter see discussion under “Payments Made Upon Termination or Change in Control.”

Separation Arrangement Pursuant to Letter Amendment with Mr. Marrow, Former President and Chief Executive Officer.

In connection with Mr. Marrow’s resignation, the Company and Mr. Marrow entered into a letter agreement (including a waiver and release agreement) which serves as an amendment to Mr. Marrow’s Employment Agreement dated February 25, 2008 (the “Marrow Amendment”).

Under the terms of the Marrow Amendment, Mr. Marrow will receive severance in the form of continued payments of his current base salary through December 31, 2012 payable in equal installments in accordance with the Company’s current payroll practices. He will also receive continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), monthly for a period of eighteen (18) months following his termination of employment for which he will pay only the premium amount charged to active employees for such healthcare coverage. Mr. Marrow also received a lump sum cash payment of $86,000 for conversion of current Company-sponsored life insurance. Mr. Marrow additionally received a payment on October 22, 2010 in the amount $231,000 in payment of his annual target bonus for the 2010 fiscal year under the MIP.

Pursuant to the Marrow Amendment, the unvested portion (options on 540,000 shares) of the stock options previously granted to Mr. Marrow under his February 25, 2008 Stock Option Agreement accelerated and immediately became vested on his termination date (in addition to the options for 360,000 shares, of the total such options of 900,000 shares, that previously had vested). The Company purchased all 900,000 of the vested stock options related to the stock options granted under the February 25, 2008 Stock Option Agreement for a net price of $3.54 per share, after taking into account the exercise price under such grant but prior to applicable tax withholding. The gross amount of the payment for his stock options was $3,186,000, which payment was made on October 22, 2010.

2010 Summary Compensation Table

The following table sets forth information with respect to all compensation paid or earned for services rendered to us by the Named Executive Officers during fiscal years 2010, 2009 and 2008.

														Non-Equity
														Incentive
														Plan				Option				Stock				All Other
Name and						Salary				Bonus				Awards				Awards				Awards				Compensation				Total
Principal Position		Year				($)				($)(1)				($)(2)				($)(3)				($)(3)				($)(4)(6)				($)
Kevin T. Keleghan (5)			2010				144,231				—				43,672				1,392,592				2,183,475				41,720				3,805,690
President, Chief Executive
Officer and Director
Andrew B. Szafran (7)			2010				307,096				—				44,131				87,339								13,233				451,799
SVP and Chief Financial Officer			2009				311,538				—				228,641				—								17,683				557,862
			2008				176,538				—				150,000				241,605								4,047				572,190
Arthur D. DiBari (7)			2010				310,385				25,000				90,199				291,130								6,251				722,965
SVP and Chief Operating Officer			2009				295,962				—				211,648				483,705								6,061				997,376
			2008				208,269				177,508				177,800				110,310								4,352				678,239
Mark E. McDermott			2010				250,718				—				28,760				—								65,538				345,016
VP and Chief Information Officer			2009				257,538				—				148,800				—								16,160				422,498
			2008				276,000				—				111,333				—								(1,541	)			385,792
Robert B. Nachwalter (7)			2010				254,928				5,000				36,597				29,113								8,667				334,305
SVP, General Counsel and			2009				259,615				—				187,500				—								2,026				449,141
Corporate Secretary			2008				19,231				—				30,303				95,670								29				145,233
Michael P. Marrow (6)			2010				305,108				—				231,000				—								3,398,919				3,935,027
Former President, Chief			2009				363,462				—				266,747				477,975								18,882				1,127,066
Executive Officer and Director			2008				282,692				100,000				300,000				506,790								3,416				1,192,898
Robert J. Keller (8)			2010				—				—				—				—								142,769				142,769
Former President, Chief			2009				—				—				—				—								481,846				481,846
Executive Officer and Director			2008				199,514				—				99,462				—								306,250				605,227

Notes to 2010 Summary Compensation Table

2010 Grants of Plan-Based Awards

The following table sets forth the number of restricted Common Shares and stock options, if any, granted to the Named Executive Officers during fiscal year 2010 and details concerning each Named Executive Officer’s annual non-equity incentive plan award opportunity under the 2010 MIP. For further information see “Compensation Discussion and Analysis — Long-Term Equity Incentives — 2010 Equity Grants to Named Executive Officers” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

																						All Other Stock
										Estimated Payouts Under Non-Equity												Awards: Number of				All Other Option				Exercise or Base				Grant Date Fair
		Compensation								Incentive Plan Awards (1)												Shares of Stock				Awards: Number of				Price of				Value of Stock and
Name and		Committee				Grant				Threshold				Target				Maximum				or Units				Securities				Option Awards				Option Awards
Principal Position		Action				Date				($)				($)				($)				(#)				Underlying Options				($/Sh)				($)(2)
Kevin T. Keleghan (3)											76,923				153,846				307,692
President, Chief Executive			6/22/2009				1/4/2010																				10,465				5.96				37,616
Officer and Director			6/22/2009				4/5/2010																				10,465				5.75				35,328
			6/22/2009				7/6/2010																				3,975				5.49				12,148
			9/8/2010				9/14/2010																250,000												1,307,500
			9/8/2010				9/14/2010																				750,000				5.23				2,183,475
Andrew B. Szafran (4)											77,250				154,500				309,000
SVP and Chief Financial Officer			9/8/2010				9/14/2010																—				30,000				5.23				87,339
Arthur D. DiBari (4)											81,250				162,500				487,500
SVP and Chief Operating Officer			9/8/2010				9/14/2010																—				50,000				5.23				145,565
			9/8/2010				9/14/2010																—				50,000				5.23				145,565
Mark E. McDermott											50,344				100,688				201,376
VP and Chief Information Officer																							—				—				—				—
Robert B. Nachwalter (4)											64,063				128,125				256,250
SVP, General Counsel and			9/8/2010				9/14/2010																—				10,000				5.23				29,113
Corporate Secretary
Michael P. Marrow											—				—				—
Former President, Chief																							—				—				—				—
Executive Officer and Director
Robert J. Keller											—				—				—				—				—				—				—
Former President, Chief Executive Officer and Director

Notes to 2010 Grants of Plan-Based Awards Table

Outstanding Equity Awards on January 2, 2011

The following table sets forth information regarding the outstanding equity awards held by the Named Executive Officers as of January 2, 2011. The vesting dates for any equity awards not vested on January 2, 2011 are set forth in the applicable footnotes. Some of the equity awards set forth in this table have vested since the January 2, 2011 effective date of this table as noted in the footnotes.

		Option Awards																				Stock Awards
																														Equity				Equity
										Equity																				Incentive				Incentive
										Incentive																				Plan				Plan Awards:
										Plan																				Awards:				Market or
										Awards;																				Number of				Payout Value
		Number of				Number of				Number of												Number of				Market Value				Unearned				of Unearned
		Securities				Securities				Securities												Shares or				of Shares or				Shares, Units				Shares, Units
		Underlying				Underlying				Underlying												Units of				Units of Stock				or Other				or Other
		Unexercised				Unexercised				Unexercised				Option								Stock That				That Have				Rights That				Rights That
		Options				Options				Unearned				Exercise				Option				Have Not				Not				Have				Have
Name and		(#)				(#)				Options				Price				Expiration				Vested				Vested				Not Vested				Not Vested
Principal Position		Exercisable				Unexercisable				(#)				($)				Date				(#)				($)				(#)				($)
Kevin T. Keleghan			—				10,465	(1)							5.96				1/4/2020
President, Chief Executive Officer and Director			—				10,465								5.75				4/5/2020
			—				3,975								5.49				7/6/2020
			—				750,000								5.23				9/14/2020
																							250,000				1,307,500				—				—
Andrew B. Szafran			180,000				270,000	(2)							1.10				5/14/2018				—				—				—				—
SVP and Chief Financial Officer			—				30,000								5.23				9/14/2020
Arthur D. DiBari			120,000				180,000	(3)							0.79				3/24/2018				—				—				—				—
SVP and Chief Operating Officer			10,000				40,000								5.53				5/8/2019
			20,000				80,000								5.43				8/18/2019
			—				50,000								5.23				9/14/2020
			—				50,000								5.23				9/14/2020
Mark E. McDermott			6,500				—	(4)							2.90				1/24/2012				—				—				—				—
VP and Chief Information Officer			271,540				—								1.62				2/8/2015
Robert B. Nachwalter			60,000				90,000	(5)							1.18				11/21/2018				—				—				—				—
SVP, General Counsel and Corporate Secretary			—				10,000								5.23				9/14/2020
Michael P. Marrow			—				—	(6)							—								—				—				—				—
Former President, Chief Executive Officer and Director
Robert J. Keller			—				—	(7)							—				—				—				—				—				—
Former President, Chief Executive Officer and Director

Notes to Outstanding Equity Awards on January 2, 2011 Table

		Number of
		Common Shares
		Underlying				Vesting Date & Number of Common Shares
Grant Date		Options				Vesting on Such Date
January 4, 2010			10,465			January 4, 2011			3,488	(Vested)
						January 4, 2012			3,488
						January 4, 2013			3,489
April 5, 2010			10,465			April 5, 2011		3,488		(Vested)
						April 5, 2012			3,488
						April 5, 2013			3,489
July 6, 2010			3,975			July 6, 2011			1,325
						July 6, 2012			1,325
						July 6, 2013			1,325
September 14, 2010			750,000			September 14, 2011			150,000
						September 14, 2012			150,000
						September 14, 2013			150,000
						September 14, 2014			150,000
						September 14, 2015			150,000

		Number of
		Common Shares
		Underlying				Vesting Date & Number of Common Shares
Grant Date		Options				Vesting on Such Date
May 14, 2008			450,000			May 14, 2009		90,000		(Vested)
						May 14, 2010		90,000		(Vested)
						May 14, 2011			90,000
						May 14, 2012			90,000
						May 14, 2013			90,000
September 14, 2010			30,000			September 14, 2011			6,000
						September 14, 2012			6,000
						September 14, 2013			6,000
						September 14, 2014			6,000
						September 14, 2015			6,000

		Number of
		Common Shares
		Underlying				Vesting Date & Number of Common Shares
Grant Date		Options				Vesting on Such Date
March 24, 2008			300,000			March 24, 2009		60,000		(Vested)
						March 24, 2010		60,000		(Vested)
						March 24, 2011		60,000		(Vested)
						March 24, 2012			60,000
						March 24, 2013			60,000
May 8, 2009			50,000			May 8, 2010		10,000		(Vested)
						May 8, 2011			10,000
						May 8, 2012			10,000
						May 8, 2013			10,000
						May 8, 2014			10,000
August 18, 2009			100,000			August 18, 2010		20,000		(Vested)
						August 18, 2011			20,000
						August 18, 2012			20,000
						August 18, 2013			20,000
						August 18, 2014			20,000
September 14, 2010			50,000			September 14, 2011			10,000
						September 14, 2012			10,000
						September 14, 2013			10,000
						September 14, 2014			10,000
						September 14, 2015			10,000
September 14, 2010			50,000			September 14, 2011			10,000
						September 14, 2012			10,000
						September 14, 2013			10,000
						September 14, 2014			10,000
						September 14, 2015			10,000

		Number of
		Common Shares
		Underlying				Vesting Date & Number of Common Shares
Grant Date		Options				Vesting on Such Date
November 21, 2008			150,000			November 21, 2009		30,000		(Vested)
						November 21, 2010		30,000		(Vested)
						November 21, 2011			30,000
						November 21, 2012			30,000
						November 21, 2013			30,000
September 14, 2010			10,000			September 14, 2011			2,000
						September 14, 2012			2,000
						September 14, 2013			2,000
						September 14, 2014			2,000
						September 14, 2015			2,000

2010 Options Exercised and Stock Vested

The following table sets forth information regarding the stock options exercised and restricted Common Shares vested for each of the Named Executive Officers during fiscal year 2010:

		Option Awards								Stock Awards
		Number of shares				Value				Number of shares				Value
		acquired upon				realized on				acquired on				realized on
Name and		exercise				exercise				vesting				vesting
Principal Position		(#)				($)				(#)				($)
Kevin T. Keleghan			—				—				—				—
President, Chief Executive Officer and Director
Andrew B. Szafran			—				—				—				—
SVP and Chief Financial Officer
Arthur D. DiBari			—				—				—				—
SVP and Chief Operating Officer
Mark E. McDermott			—				—				—				—
VP and Chief Information Officer
Robert B. Nachwalter			—				—				—				—
SVP, General Counsel and Corporate Secretary
Michael P. Marrow			30,000				14,190				—				—
Former President, Chief Executive Officer and Director
Robert J. Keller			—				—				—				—
Former President, Chief Executive Officer and Director

Additional Compensation Tables

All other tables have been omitted because they are not applicable to us in fiscal year 2010.

Compensation Discussion and Analysis

Overview of Compensation Process

The Compensation Committee of our Board of Directors is responsible for establishing, implementing and monitoring adherence with our compensation philosophy. The committee establishes total compensation for our President and Chief Executive Officer and, with input from our Chief Executive Officer, establishes compensation for our other Named Executive Officers. Our Compensation Committee does not delegate any of its authority in this regard. Mr. Keleghan was our principal executive officer beginning on September 13, 2010. Mr. Marrow resigned as our President and Chief Executive Officer on September 12, 2010. Our principal executive officer, our principal financial officer, our three most highly compensated executive officers (other than our principal executive officer and principal financial officer) who were serving as executive officers at the end of fiscal year 2010, Mr. Marrow, our former President and Chief Executive Officer and Mr. Keller, another former President and Chief Executive Officer, are our Named Executive Officers for 2010. As a result of severance payments made in 2010 to Mr. Keller, our former President and Chief Executive Officer, is still listed in Summary Compensation for our Named Executive Officers for 2010.

Our Compensation Committee is currently composed of three independent directors. From time to time, we retain independent compensation consultants to provide objective and expert advice on various compensation plan design issues.

From time to time, we also use additional compensation data which we obtain from established executive compensation survey sources.

In addition to Messrs. Marrow and Keleghan, Mr. Szafran, our Senior Vice President and Chief Financial Officer and Mr. Michael V. Hoehne, our Vice President, Human Resources participated in the preparation, development and review of various executive compensation presentations made to our Compensation Committee and our Board of Directors during fiscal year 2010.

Compensation Consultant

In October 2009, the Compensation Committee retained the Delves Group (“Delves”), a compensation consultant, to provide an overall assessment of our management and sales compensation programs for our executive officers (including the Named Executive Officers) as well as certain other identified employees.

Delves was engaged to conduct a competitive analysis of our total compensation programs for identified executives and managers — examining base salary, annual incentives, long-term incentives, benefits and perquisites. The analysis included a comparison of pay levels and structure to benchmark data. Delves also reviewed our current employment terms for executives, including, but not limited to severance, change-in-control provisions and other special provisions. Delves and the Compensation Committee discussed the assessment of the effectiveness of our management and sales compensation programs, our equity granting practices, and certain potential identified gaps, between our current compensation programs and our present compensation philosophy as well as the competitive market practices.

During fiscal 2010, Delves provided some compensation analysis and information related to the President and Chief Executive Officer transition. The nature and scope was to assist in benchmarking elements of compensation specific to a 280G “Gross Up.”

Delves and its affiliates did not provide any other services to us in 2010.

In March 2011, the Compensation Committee retained Towers Watson, as compensation consultant, to provide services related to compensation for fiscal 2011. As Towers Watson was only recently engaged, the parties have yet to establish the specific deliverables and a timeline for their completion.

Compensation Objectives

We design our executive compensation policies with the objective of attracting, motivating and retaining the highest quality executives. Our goal is to compete in the market for high caliber individuals who possess the talent and capabilities we believe necessary to our success. We believe the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals and which aligns executives’ interests with those of our shareholders by rewarding performance which ultimately improves shareholder value.

Compensation Philosophy

We desire to attract and retain superior executive talent by offering a total compensation package that is competitive with the compensation practices of those companies with which we compete for executive talent. Such companies include both publicly-traded and private (i) companies in our industry, (ii) companies having annual revenue comparable to ours (i.e., under $500 million), and (iii) Chicago-area based Fortune 500 companies. We believe that total compensation packages for our executive officers should reward individual performance, put a significant portion of the executive’s compensation at risk of achieving pre-established objectives, and align the interests of our executive officers with those of our shareholders. To that end, our compensation packages contain both cash and stock-based compensation as well as short-term and long-term incentives.

The market for suitable executive leadership is very competitive and we contend with many larger companies for top executive-level talent. As a result, our practice is to target total compensation levels for our executive officers at above-median levels. Accordingly, our Compensation Committee determined that the total compensation packages for our executive officers should be between the 50th percentile and the 75th percentile of the packages of executive officers at companies with which we compete for executive talent. Variations to this objective may occur as dictated by the performance and/or experience level of an individual as well as other market factors.

In evaluating each element of our executive compensation program, the Compensation Committee considers, among other things, relevant data on other executive compensation programs and practices and Company financial performance. The Compensation Committee uses benchmark comparisons to published surveys, as applicable, to ensure that it is acting on an informed basis and to establish points of reference to determine whether and to what extent it is establishing competitive levels of compensation for our executives.

For benchmarking purposes, the Compensation Committee uses several recognized resources: (1) Watson Wyatt Data Services; (2) Economic Research Institute; and (3) Equilar Executive Compensation. When utilizing these materials, the Compensation Committee generally uses collected information from the designated business sector — professional services. There is an extremely large participant list of companies which are included in the data collected for these surveys and, therefore, it is not practical to list them all.

The Compensation Committee compares numerous elements of executive compensation, including base salaries, annual incentive compensation, long-term cash and equity-based incentives, to assist in determining whether proposed compensation programs are competitive. Management and the Compensation Committee view this comparative data as one factor in making compensation decisions, but do not rely solely on this information. The Compensation Committee uses its experience and judgment to make final compensation decisions.

There is discretion in the application of the survey information for determining the specific compensation which can lead to deviations from the survey data in those circumstances where the Compensation Committee deems it is appropriate.

Risk Assessment

In designing compensation plans and programs for our employees including the Named Executive Officers, the Compensation Committee structures such plans and programs to balance risk and reward, while mitigating the incentive for excessive risk taking. The following characteristics of our executive compensation plans and programs limit the possibility for excessive risk taking:

•

The base salary is a fixed amount, and therefore does not encourage risk taking.

•

The annual incentive compensation opportunity is capped at a maximum amount.

•

All current outstanding long-term incentive opportunities are comprised of time-based options that vest over multiple years which align the option holders’ interests to the long-term stockholder interests.

•

Members of the Compensation Committee approve the final incentive compensation awards after reviewing the executive and corporate performance awards, and may utilize negative discretion based on a variety of performance objectives, thereby diversifying the risk.

Elements of Compensation

To achieve our objectives, our executive compensation program includes the following components:

•

Base Salary: An annual base salary, subject to discretionary annual merit increases based on the executive’s overall performance during the previous year;

•

Annual Cash Incentive: A potential annual cash bonus under our management incentive plan based on our attaining certain specified financial performance measures;

•

Long-Term Equity Incentives: Long-term incentives consisting of stock options and performance-based restricted share grants under our incentive stock plan; and

•

Other Employee Benefits: Other employee benefits including the right to participate in company-sponsored benefit and welfare plans such as health, dental and prescription drug insurance, the premiums of which are partly paid for by us, company-sponsored flexible spending accounts for certain qualified medical, dental and childcare expenses, matching contributions to our 401(k) plan and supplemental 401(k) restoration plan for highly compensated employees, and company-subsidized supplemental life insurance.

The Summary Compensation Table sets forth the amounts for these components that we paid each of the Named Executive Officers in fiscal year 2010. See “2010 Summary Compensation Table” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement. For fiscal year 2010, we did not make any material changes to the weighting or amount of any components of the compensation paid to our Named Executive Officers.

In addition, to provide for executive stability, we offer our currently employed Named Executive Officers payments and benefits (i) in the event an executive officer is involuntarily terminated other than for cause or resigns for good reason and (ii) in the event we experience a change of control. See “Potential Payments Upon Termination or Change of Control” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

We compensate our currently employed Named Executive Officers (and other executive officers) primarily by using a combination of short-term compensation (salary and annual cash incentive compensation) and long-term compensation (stock options and restricted common shares). We have historically determined the mix of short-term and long-term compensation and the mix of base and incentive compensation by using market compensation information provided by an outside consultant or by reference to established executive compensation surveys. We believe it is important that a portion of our executive officers’ incentive compensation is dependent upon our stock price, and a portion of their overall compensation opportunity consists of equity compensation. However, since the price of our Common Shares is subject to some factors outside our control and the control of the Company’s executive officers, we also believe it is important that a portion of an executive officer’s incentive compensation be tied to the performance of goals relating to the operations of our company. Accordingly, we tie our executive officers’ annual cash incentive compensation to the achievement of financial performance goals that we believe help to drive our business and create value for our shareholders. On a total dollar value basis, other benefits compensation is smaller when compared to cash and equity compensation portions of our total executive compensation package.

Conversely, there are certain types of compensation that we have elected to omit from our executive compensation packages, as we believe they are of limited value in attracting, retaining and motivating the type of executive officers we seek. Examples of the types of executive compensation that we deemed to be unnecessary include: (i) a defined benefit (pension) plan; (ii) a stipend or expenses for a company car; and (iii) country club memberships. We believe that we are not negatively affected by our failure to offer these types of benefits and perquisites to our executive officers.

Base Salary

Annual base salary is a major component of overall cash compensation each year. Generally, we determine base salaries for each Named Executive Officer by evaluating his or her experience, performance, and any changes in the executive’s duties during the year. We also consider the competitive market for executive talent, and compare salaries we pay our executive officers to those paid to executive officers in comparable positions at companies with which we compete for such talent. See “Compensation Philosophy.”

Salary levels are typically considered annually as part of our performance review process as well as upon a promotion or other change in job responsibility. Merit increases in annual base salary (if any) are discretionary, and are awarded depending upon the executive officer’s overall performance during the prior year.

The following table sets forth the annualized 2010 and 2011 base salaries for each of the currently employed Named Executive Officers.

Named Executive Officer		2010 Base Salary				2011 Base Salary
Kevin T. Keleghan		$	500,000			$	500,000
Arthur D. DiBari		$	325,000			$	325,000
Mark E. McDermott		$	251,720			$	251,720
Robert B. Nachwalter		$	256,250			$	266,500
Andrew B. Szafran		$	309,000			$	325,000

Annual Cash Incentive

No annual cash bonus is guaranteed, but our Named Executive Officers are eligible for annual bonuses under our MIP, which was approved by our shareholders on June 3, 2005 and amended and restated on August 2, 2007. The MIP gives the Compensation Committee the latitude to design cash and stock-based short-term and long-term incentive compensation programs to promote exceptional performance and achievement of corporate goals by key employees. Under the MIP, cash incentive opportunities are designed annually around a strategic mix of corporate and individual performance objectives which take into consideration our overall philosophy with respect to risk management. All performance targets for the Named Executive Officers are directly linked to the achievement of our annual financial plan. Annual bonuses earned by the Named Executive Officers have historically been paid in cash.

Performance targets are set following considerable exchange between the Board of Directors and management. The specific bonus targets, as a component of the annual plan, are considered “aggressive” — set at levels necessary to challenge and motivate executive management but levels which we believe are achievable through efficient and persistent execution. The Compensation Committee sets demanding achievement levels as related to our financial performance which align management’s interests with those of our shareholders. The specific targets for 2011 are set at levels which will reward considerable top-line growth while maintaining consistent levels of operational efficiencies.

2010 MIP

For fiscal year 2010, all executive officers, including the Named Executive Officers were eligible to receive annual cash bonus payments on either an annual or a quarterly basis based on us achieving certain financial performance goals established by the Compensation Committee. Mr. DiBari is the only NEO who is eligible to receive payments on a quarterly basis. No annual cash bonus was guaranteed, but each executive officer was eligible for a MIP payment ranging from 0% to 200% of his base salary. For all executive officers, other than our Senior Vice President, Sales who does not participate in the MIP, but instead participates in the Business Development Sales Commission, the 2010 MIP was based 40% on us achieving the threshold or maximum revenue amounts established by the Compensation Committee and 60% on our achieving the threshold or maximum PTP amounts established by the Compensation Committee.

The fiscal year 2010 annual bonus opportunity for Mr. Keleghan at threshold, target and maximum levels was 50%, 100% and 200% of his base salary (pro-rated for the partial year he was employed by us). The 2010 annual bonus opportunity for the other Named Executive Officers at threshold, target and maximum levels was 25%, 50% and 150% of base salary for Mr. DiBari, 25%, 50% and 100% of base salary for Mr. Szafran, 25%, 50% and 100% of base salary for Mr. Nachwalter and 20%, 40% and 80% of base salary for Mr. McDermott.

The threshold and maximum financial performance goals established by the Compensation Committee for the 2010 MIP were based on our 2010 financial plan approved by our Board of Directors. Revenue is defined as net revenue, as reported in our quarterly and annual audited financial statements. PTP is defined as “pre-tax profit” or “income before income taxes”. All incremental PTP bonus dollars which exceed the MIP 100% bonus payout threshold are subject to a required split of 60% of the additional PTP dollars going to the Company’s retained earnings and 40% of the additional PTP dollars being paid in bonuses to the employees.

For 2010, the performance objectives (and the related weightings), thresholds, targets, maximums and results for calculating the Named Executive Officers’ pre-adjusted awards were as follows:

2010 Management Incentive Plan
Financial Measures

						Revenue				PTP				Total
Weighting						40%				60%
Performance Targets
Slope						105%				123%
Maximum			200%				$352,329,624				$51,244,691
Target			100%				$335,552,023				$41,527,302
Threshold			50%				$318,774,422				$39,450,937
Actual 2010 Results							$325,958,415				$34,013,339
% to Target						97%				82%
% Payout						28.6%				0%				28.6%