DATATRAK International, Inc. DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
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DATATRAK International, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
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May 4, 2007
Dear Shareholder:
You are cordially invited to attend the 2007 Annual Meeting of
Shareholders of DATATRAK International, Inc., to be held at
9:00 a.m., local time, on Thursday, June 14, 2007 at
our offices located at 6150 Parkland Boulevard, Paragon II,
Suite 100, Mayfield Heights, Ohio.
At this years Annual Meeting, shareholders will be asked
to elect four Directors for a two-year term ending at the Annual
Meeting in 2009. Information relating to the election of the
four Directors is presented in the accompanying proxy statement,
which shareholders are encouraged to read carefully.
Whether or not you plan to attend the Annual Meeting in person,
it is important that your shares are represented. Therefore,
please complete, sign, date and promptly return the enclosed
proxy card in the accompanying envelope. If you do attend the
Annual Meeting, you may, of course, withdraw your proxy should
you wish to vote in person, even if you have previously returned
your proxy card.
On behalf of the Board of Directors and management of DATATRAK
International, Inc., we would like to thank you for your
continued support and confidence.
Sincerely yours,
Dr. Jeffrey A. Green
President and Chief Executive Officer
TABLE OF CONTENTS
DATATRAK
INTERNATIONAL, INC.
6150
Parkland Boulevard
Mayfield Heights, Ohio 44124
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 14, 2007
The 2007 Annual Meeting of Shareholders of DATATRAK
International, Inc., will be held at 9:00 a.m., local time,
on Thursday, June 14, 2007 at our offices located at 6150
Parkland Boulevard, Paragon II, Suite 100, Mayfield
Heights, Ohio, for the following purposes:
1. To nominate and elect four individuals as Directors for
a two-year term ending at the Annual Meeting in 2009; and
2. To transact such other business as may properly come
before the Annual Meeting and any adjournments thereof.
Only shareholders of record at the close of business on
April 25, 2007 will be entitled to receive notice of and to
vote at the Annual Meeting and any adjournments thereof.
By Order of the Board of Directors,
Thomas F. McKee
Secretary
Mayfield Heights, Ohio
May 4, 2007
YOUR VOTE
IS IMPORTANT
WE URGE YOU TO COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. YOUR PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE 2007
ANNUAL MEETING.
DATATRAK INTERNATIONAL,
INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Mailed on or about May 4, 2007
Why am I
receiving these materials?
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of DATATRAK
for use at the 2007 Annual Meeting of Shareholders on Thursday,
June 14, 2007 at 9:00 a.m., local time, and any
adjournments or postponements thereof. The time, place and
purposes of the Annual Meeting are stated in the Notice of
Annual Meeting of Shareholders accompanying this proxy statement.
Who is
paying for this proxy solicitation?
The expense of soliciting proxies, including the cost of
preparing, assembling and mailing the notice, proxy statement
and proxy, will be borne by us. We may pay persons holding
Common Shares for others their expenses for sending proxy
materials to their principals. In addition to solicitation of
proxies by mail, our Directors, officers and employees, without
additional compensation, may solicit proxies by telephone,
electronically via
e-mail and
personal interview. We also may retain a third party to aid in
the solicitation of proxies.
What
voting rights do I have as a shareholder?
On each matter to be voted on, you have one vote for each
outstanding Common Share you own as of April 25, 2007, the
record date for the meeting. Only shareholders of record at the
close of business on April 25, 2007 are entitled to receive
notice of and to vote at the Annual Meeting. On this record
date, there were 13,562,437 Common Shares outstanding and
entitled to vote. Shareholders do not have the right to vote
cumulatively in the election of Directors.
How do I
vote?
If you are a shareholder of record, you can vote (i) in
person at the Annual Meeting or (ii) by signing and mailing
in your proxy card in the enclosed envelope.
If you are a shareholder of record, the proxy holders will vote
your Common Shares based on your directions. If you sign and
return your proxy card, but do not properly direct how your
Common Shares should be voted, the proxy holders will vote
FOR the election of the four nominees listed
in this proxy statement and will use their discretion on any
other proposals and other matters that may be brought before the
Annual Meeting.
If you hold Common Shares through a broker or nominee, you may
vote in person at the Annual Meeting only if you have
obtained a signed proxy from your broker or nominee giving you
the right to vote your shares. Your broker or nominee may
provide separate voting instructions, if any, with the proxy
statement. Your broker or nominee may provide proxy submission
through the Internet or by telephone.
Can I
revoke or change my vote after I submit a proxy?
Yes. You can revoke your proxy or change your vote at any time
before the proxy is exercised at the Annual Meeting. This can be
done by (i) submitting another properly completed proxy
card with a later date; (ii) sending a written notice to
our Secretary prior to the commencement of the Annual Meeting;
or (iii) attending the Annual Meeting and vote in person.
You should be aware that simply attending the Annual Meeting
will not automatically
revoke your previously submitted proxy, rather you must notify a
DATATRAK representative at the Annual Meeting of your desire to
revoke your proxy and vote in person.
What vote
is required to approve the election of the four Directors for a
two-year term ending at the Annual Meeting in 2009?
The nominees receiving the greatest number of votes will be
elected. A proxy card marked Withhold Authority with
respect to the election of one or more Directors will not be
voted with respect to the Director or Directors indicated.
Abstentions and broker non-votes will have no effect on the
election of Directors.
What
constitutes a quorum?
A quorum of shareholders will be present at the Annual Meeting
if at least a majority of the aggregate voting power of Common
Shares outstanding on the record date are represented, in person
or by proxy, at the Annual Meeting. With 13,562,437 votes
outstanding as of the close of business on the record date,
shareholders representing at least 6,781,219 votes will be
required to establish a quorum. Abstentions and broker non-votes
will be counted towards the quorum requirement.
2
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table and accompanying footnotes show information
regarding the beneficial ownership of our Common Shares as of
April 25, 2007, unless otherwise indicated, with respect to:
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each person who is known by us to beneficially own more than 5%
of our outstanding Common Shares,
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each member of our Board of Directors and each of our Named
Executive Officers (as hereinafter defined); and
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all Directors and Named Executive Officers as a group.
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Common Shares
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Beneficially Owned (2)
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Name and Address of Beneficial Owner (1)
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Number
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Percent
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Laurence P. Birch(3)
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*
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Timothy G. Biro(4)
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115,792
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*
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Terry C. Black
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77,209
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*
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Dr. Jeffrey A. Green(5)
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590,985
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4.3
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%
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Seth B. Harris(6)
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417,819
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3.1
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%
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Dr. Jerome H. Kaiser
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117,345
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*
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Dr. Mark J. Ratain
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127,794
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*
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Marc J. Shlaes
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90,563
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*
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Dr. Robert M. Stote
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166,441
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1.2
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%
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Dr. Wolfgang Summa
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9,750
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*
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Jim Bob Ward
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673,908
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5.0
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%
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Potomac Capital Management LLC(7)
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1,010,123
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7.4
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%
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825 Third Avenue,
33rd Floor
New York, New York 10022
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Diker Management LLC(8)
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1,324,835
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9.7
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%
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745 Fifth Avenue,
Suite 1409
New York, New York 10151
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All Directors and executive
officers as a group (11 persons)
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2,387,606
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16.6
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%
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Less than one percent. |
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The address of the Directors and executive officers listed above
is c/o DATATRAK International, Inc., 6150 Parkland
Boulevard, Suite 100, Mayfield Heights, Ohio 44124. |
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The number of Common Shares deemed beneficially owned is
comprised of 13,562,437 Common Shares outstanding as of
April 25, 2007 and with respect to each of the
following individuals and groups, the following number of Common
Shares which may be purchased pursuant to option exercises
within 60 days after April 25, 2007: Mr. Biro
(103,125 Common Shares); Mr. Black (68,345 Common Shares);
Dr. Green (181,750 Common Shares); Mr. Harris (121,875
Common Shares); Dr. Kaiser (100,875 Common Shares);
Dr. Ratain (106,375 Common Shares); Mr. Shlaes
(90,563 Common Shares); Dr. Stote (43,375 Common Shares);
Dr. Summa (9,750 Common Shares); for all Directors and
executive officers as a group (826,033 Common Shares) and
with respect to each of the following groups, the following
number of Common Shares which may be exercised pursuant to
warrant exercises within 60 days after April 25, 2007:
Potomac Capital Management LLC (63,750 Common Shares) and Diker
Management LLC (67,501 Common Shares). |
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Mr. Birch was appointed to our Board of Directors on
April 16, 2007 and does not own any of our Common Shares as
of April 25, 2007. |
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Includes 300 Common Shares held by Mr. Biros wife.
Mr. Biro disclaims beneficial ownership of these
300 Common Shares. |
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(5) |
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Includes 110,953 Common Shares held by Dr. Greens
wife, 1,450 Common Shares held by Dr. Greens son,
1,500 Common Shares held by Dr. Greens daughter, and
1,500 Common Shares held by Dr. Greens other
daughter. Dr. Green disclaims beneficial ownership of these
115,403 Common Shares. |
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Includes 44,634 Common Shares held in trust for Mr. Harris. |
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Based solely on information provided pursuant to
Schedule 13G filed jointly with the Securities and Exchange
Commission on March 20, 2007 by Potomac Capital Management
LLC, Potomac Capital Management Inc. and Mr. Paul J. Solit.
The aforementioned parties indicated that as of March 19,
2007, Potomac Capital Management LLC, Potomac Capital Management
Inc. and Mr. Solit were deemed to beneficially own
1,010,123 Common Shares consisting of 946,373 Common Shares and
warrants to purchase 63,750 Common Shares of DATATRAK. |
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Based solely on information contained in a Selling Shareholder
Questionnaire associated with our March 2007 private placement
of DATATRAKs Common Shares jointly provided to the Company
by (i) Diker GP, LLC, a Delaware limited liability company
(Diker GP), as the general partner to the Delaware
limited partnership the Diker Value Tech Fund, LP
(VT), Diker Value Tech QP Fund, LP
(VTQP), Diker Micro-Value Fund, LP (MV),
the Diker Micro-Value QP Fund, LP (MVQP), Diker
Micro & Small Cap Fund LP (MS) and
Diker M&S Cap Master Ltd (MSCM) with respect to
the Common Shares directly owned by VT, VTQP, MV, MVQP, MS and
MSCM (collectively, the Diker Funds);
(ii) Diker Management, LLC, a Delaware limited liability
company (Diker Management), as the investment
manager of the Diker Funds, with respect to the Common Shares
held by the Diker Funds; and (iii) Mark N. Diker, a citizen
of the United States, and the managing member of each of Diker
GP and Diker Management, with respect to the Common Shares
subject to the control of Diker GP and Diker Management. As the
sole general partner of the Diker Funds, Diker GP, has the power
to vote and dispose of the shares of the Common Shares owned by
the Diker Funds and, accordingly, may be deemed the beneficial
owner of such shares. As of March 19, 2007, the
aforementioned parties was deemed to beneficially own 1,324,835
Common Shares consisting of 1,257,334 Common Shares and warrants
to purchase 67,501 Common Shares of DATATRAK. |
4
ELECTION
OF DIRECTORS
The authorized number of Directors is presently fixed at seven,
with members of the Board of Directors divided into two classes,
Class I and Class II, and with the term of office of
one class expiring each year. At the Annual Meeting,
shareholders will elect four individuals as Directors to serve
in Class I until the Annual Meeting to be held in fiscal
year 2009 and until the successors of those Directors are duly
elected and qualified. At its March 27, 2007 meeting, upon
the recommendation of the Nominating and Corporate Governance
Committee, the Board of Directors nominated Mr. Biro,
Dr. Kaiser and Dr. Stote to stand for election as
Directors at the Annual Meeting. Mr. Biro, Dr. Kaiser
and Dr. Stote are presently Directors of our Company. At
its April 13, 2007 meeting, upon the recommendation of the
Nominating and Corporate Governance Committee, the Board of
Directors increased the size of the Board from six to seven
seats, and effective as of the close of business on
April 16, 2007, appointed Mr. Laurence P. Birch to
fill the vacancy in the Class I Directors created thereby.
The Board of Directors also nominated Mr. Birch to stand
for election as a Director at the Annual Meeting.
Unless otherwise directed, the persons named in the accompanying
proxy will vote for the election of the four nominees shown
below as Directors. In the event of the death of or inability to
act of any of the nominees, the proxies will be voted for the
election of the other persons that the Board of Directors may
recommend. The Board of Directors has no reason, however, to
anticipate that this will occur. In no event will the
accompanying proxy be voted for more than four nominees or for
persons other than those persons named below or any substitute
nominees for any of them.
Included below is information concerning the nominees for
election at the Annual Meeting, as well as those Directors who
will continue to serve in office after the Annual Meeting.
Nominees
for Election at the 2007 Annual Meeting
Laurence P. Birch, 47, has been a Director since
April 16, 2007. Since March 2007, Mr. Birch has been
the President and Chief Executive Officer and a director of
Neopharm, Inc., a biopharmaceutical company dedicated to the
research, development and commercialization of new and
innovative cancer drugs for therapeutic applications. From 2006
to March 2007, Mr. Birch served as Chief Financial Officer
of Ohio Medical Corporation, a supplier of medical air and
pumping systems. Before that, from 2005 to 2006, Mr. Birch
served as Chief Financial Officer and Interim Chief Executive
Officer of AKSYS, Ltd., a hemodialysis developer and
manufacturer. From 2003 to 2005, Mr. Birch served as
co-founder and managing director of Stratego Partners, a cost
management consulting firm. During 2002 to 2003, he served as
Executive Vice President and Chief Financial Officer of Seurat,
Inc., a marketing outsourcing and services company. From 2000 to
2002 he served as Sr. Vice President Business
Development and Chief Financial Officer of Technology Solutions,
Inc., a systems integration and consulting company.
Mr. Birch was Chief Financial Officer of Brigade, Inc., an
internet support company, from 1999 to 2000. Mr. Birch
began his career with Baxter Healthcare, a manufacturer and
supplier of pharmaceuticals and medical devices, where over the
course of 13 years he held a variety of positions.
Mr. Birch holds a Bachelor of Science-Finance from the
University of Illinois and a MBA from Northwestern
University Kellogg Graduate Business of Management.
Mr. Birch is also a Certified Public Accountant.
Timothy G. Biro, MBA, 53, has been a Director since 1992.
Mr. Biro has been the Managing Partner of Ohio Innovation
Fund I, L.P., a venture capital firm which invests in
early-stage business, since 1997. Mr. Biro is also a
Partner with Reservoir Venture Partners, an early stage venture
capital firm, since 2004. Mr. Biro has been involved in
venture capital financing since 1991. Prior to 1991,
Mr. Biro was Superintendent of Pharmaceutical Manufacturing
at Merck & Co., Inc. Mr. Biro has a B.S. Degree in
Microbiology from Pennsylvania State University and in Pharmacy
from Temple University and an MBA from The Wharton School of
Business at the University of Pennsylvania.
Jerome H. Kaiser, Ph.D., 50, has been a Director
since December 1999. Dr. Kaiser has served as Senior Vice
President and Chief Information Officer for Tower Group, Inc.,
an insurance company since 2006. Prior to his appointment to
that position, Dr. Kaiser was Director of Systems for
Rothschild Inc., a private investment bank from 1999 to 2006.
From 1992 to 1999, Dr. Kaiser held various positions within
the pharmaceutical industry. During 1998 and 1999, he was the
Director of Product Management for Pfizer, Inc. From 1994 to
1998, Dr. Kaiser was employed by Hoffman-LaRoche, Inc.,
first as Senior Projects Specialist and then as Director of
Information
5
Management for Global Development. Dr. Kaiser worked in
Project Management for Boots Pharmaceuticals from 1992 to 1994.
From 1986 to 1992, he served in the positions of Assistant and
Associate Professor of Physics at the University of Texas at
Arlington. Dr. Kaiser earned a Bachelor of Sciences and a
Ph.D. in Physics from the University of East Anglia, Norwich,
England.
Robert M. Stote, M.D., 67, has been a Director since
1993. Dr. Stote has served as a Senior Vice President and
Chief Medical Officer at Bentley Pharmaceuticals, Inc., a
pharmaceutical company, since 1992. Dr. Stote also served
as a director of Bentley Pharmaceuticals, Inc. from 1992 until
2004. He also serves on the Scientific Advisory Board of
NuPathe, Inc. Prior to 1992, Dr. Stote was employed for
20 years by SmithKline Beecham Corporation, serving as
Senior Vice President and Medical Director, Worldwide Medical
Affairs, from 1989 to 1992 and Vice President
Clinical Pharmacology Worldwide from 1987 to 1989.
The Board of Directors unanimously recommends that the
shareholders vote FOR the four nominees whose
two-year term will expire in 2009.
Directors
Continuing in Office
Jeffrey A. Green, Pharm.D., FCP., 51, is the
founder of DATATRAK and has served as our President, Chief
Executive Officer and a Director since March 1992. From 1984 to
1992, Dr. Green served as an Assistant Professor of
Medicine and Radiology at Case Western Reserve University,
Cleveland, Ohio. During his tenure at Case Western Reserve
University, Dr. Green established and directed the
Cardiovascular Clinical Pharmacology Research Program at
University Hospitals of Cleveland. In addition, Dr. Green
was an established investigator in clinical cardiology and PET
scanning, and was responsible for directing over 90 individual
investigations during his tenure. Dr. Green has authored
over 90 publications and has been an invited speaker at more
than 170 national meetings. He was the recipient of the McKeen
Cattell Distinguished Achievement Award from the American
College of Clinical Pharmacology in 1988. Dr. Green is a
graduate of Purdue University (B.S.) and the University of Texas
(Pharm.D.).
Seth B. Harris, 67, has been a Director since 1992 and
has been designated as our Lead Independent Director.
Mr. Harris is the Chairman of Brand Development Ventures
Inc., a consulting company that offers a wide range of services
in new product development and marketing, since 2002. During
2000 and 2001, Mr. Harris was the Chairman of Toy Craze,
Inc., a Cleveland-based toy company. Mr. Harris was the
Chairman of Frieder Inc., a distributor of consumer products,
from 1993 to 2000. Mr. Harris has been an active business
consultant since his retirement as Chairman of the Board and
President of Harris Wholesale, Inc., a wholesale pharmaceutical
distribution company.
Mark J. Ratain, M.D., 52, has been a Director since
April 1998. Dr. Ratain is a hematologist/oncologist and a
clinical pharmacologist. He is the Leon O. Jacobson Professor of
Medicine and Chairman of the Committee on Clinical Pharmacology
and Pharmacogenomics and Associate Director for Clinical Science
for the Cancer Research Center at the University of Chicago.
Dr. Ratain has been associated with the Department of
Medicine at the University of Chicago since 1983. He has
authored and co-authored more than 300 articles and book
chapters principally relating to the treatment of cancer. Prior
to becoming a Director, Dr. Ratain served as Chairman of
our Scientific Advisory Board for four years. He received his
A.B. Degree in Biochemical Sciences from Harvard University and
his M.D. from the Yale University School of Medicine.
6
CORPORATE
GOVERNANCE MATTERS
Director
Independence
The Board of Directors has determined that all Directors except
Dr. Green, our President and Chief Executive Officer, are
independent under the listing standards of the
Nasdaq Stock Market. The independent Directors meet at least
twice a year in executive sessions. The sessions of independent
Directors are presided over by the Lead Independent Director who
is identified in the table below. Any independent Director can
request that an additional session be scheduled.
Board of
Directors and Committees
During the last fiscal year, the Board of Directors held four
regular meetings and five special meetings. Each Director
attended at least 75% of the aggregate of (1) the total
number of meetings of the Board of Directors held during the
period he served as a Director and (2) the total number of
meetings held by committees of the Board on which he served. Our
policy is that each member of the Board of Directors is expected
to attend the Annual Meeting of Shareholders.
The Board of Directors has an Audit Committee, a Compensation
Committee, a Nominating and Corporate Governance Committee and
an Executive Committee. Set forth below is the current
membership of each Board committee:
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Nominating and
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Audit
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Corporate Governance
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Committee
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Compensation Committee
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Committee
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Executive Committee
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Mr. Biro (Chairman)
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Mr. Harris** (Chairman)
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Dr. Kaiser (Chairman)
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Dr. Green* (Chairman)
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Dr. Kaiser
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Mr. Biro
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Dr. Ratain
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Mr. Biro
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Dr. Ratain
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Dr. Stote
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Dr. Stote
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Dr. Kaiser
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* |
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Not independent under the listing standards of the
Nasdaq Stock Market. |
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** |
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Lead Independent Director. |
Audit Committee. Our Audit Committee
met six times during the last fiscal year. The Audit Committee
is governed by the Audit Committee Charter adopted by the Board
of Directors. A copy of the Audit Committee Charter is available
on DATATRAKs website. You can also obtain a printed copy
of this document, free of charge, by writing to Investor
Relations, c/o DATATRAK International, Inc., 6150 Parkland
Blvd., Mayfield Heights, Ohio 44124.
The Audit Committee is responsible for the annual appointment of
our auditors, with whom the Audit Committee reviews the scope of
audit and non-audit assignments and related fees, the accounting
principles we use in financial reporting, internal financial
auditing procedures and the adequacy of internal control
procedures. Specific functions and responsibilities of the Audit
Committee are set forth in the Audit Committee Charter.
Our Board has determined that each of the members of the Audit
Committee satisfies the current independence standards of the
Nasdaq Stock Market listing standards and Section 10A(m)(3)
of the Securities Exchange Act of 1934, as amended. The Board
also has determined that the Audit Committee Chairman
Mr. Biro is an audit committee financial expert
as that term is defined in Item 407(d(5)(ii) of
Regulation S-K.
As an audit committee financial expert,
Mr. Biro satisfies the Nasdaq financial literacy and
sophistication requirements.
Compensation Committee. Our
Compensation Committee met three times during the last fiscal
year. The Compensation Committee is governed by the Compensation
Committee Charter adopted by the Board of Directors. A copy of
the Compensation Committee Charter is available on
DATATRAKs website. You can also obtain a printed copy of
this document, free of charge, by writing to Investor Relations,
c/o DATATRAK International, Inc., 6150 Parkland Blvd.,
Mayfield Heights, Ohio 44124.
The Compensation Committee has the authority to administer our
stock option plans and 2005 Omnibus Equity Plan, including the
selection of grantees and the timing of grants, to review and
monitor key employee compensation and benefits policies and to
review and make recommendations to the Board regarding our
senior
7
management yearly compensation levels. Specific functions and
responsibilities of the Compensation Committee are set forth in
the Compensation Committee Charter.
Our Board has determined that each of the members of the
Compensation Committee satisfies the current independence
standards of the Nasdaq Stock Market listing standards.
Nominating and Corporate Governance
Committee. Our Nominating and Corporate
Governance Committee met four times during the last fiscal year.
The Nominating and Corporate Governance Committee is governed by
the Nominating and Corporate Governance Committee Charter
adopted by the Board of Directors. A copy of the Nominating and
Corporate Governance Committee Charter is available on
DATATRAKs website. You can also obtain a printed copy of
this document, free of charge, by writing to Investor Relations,
c/o DATATRAK International, Inc., 6150 Parkland Blvd.,
Mayfield Heights, Ohio 44124.
The Nominating and Corporate Governance Committee is responsible
for (1) identifying, selecting and recommending qualified
individuals as nominees for the Board of Directors at each
Annual Meeting or when otherwise required to fill a vacancy or
increase the size of the Board of Directors and
(2) assisting the Board of Directors in developing and
implementing the Companys corporate governance policies
and guidelines.
The Nominating and Corporate Governance Committee will seek
prospective Director nominees for an open Director position by
soliciting suggestions from Committee members, other Board
members, senior management or others. The Committee also may
retain a third-party executive search firm to identify
prospective Director nominees from time to time. Additionally,
as discussed below, the Committee will accept shareholder
recommendations regarding potential candidates for the Board.
The Nominating and Corporate Governance Committee will evaluate
Director nominees, including nominees that are submitted to the
Company by a shareholder. In selecting new Directors of the
Company, consideration is given to each individual
Directors personal qualities and abilities, the collective
Board members skills and aptitudes for conducting
oversight of the Company and its management, and duties imposed
by law, regulation and the Companys contractual
obligations. Important factors include the following minimum
qualifications:
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A desire to represent the best interests of the shareholders;
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An express commitment to the mission and success of the Company
as well as an ability to work compatibly with the Board and
senior management;
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A history of outstanding achievements and the highest ethical
standards, values and integrity;
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Experience and knowledge that is relevant to the Company and
which has been obtained as a director or in a senior executive
position or in an academic, scientific or government position;
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The ability and willingness to commit and devote the necessary
time and energy to the diligent performance of his or her
duties, including preparing for, attending and participating in
Board meetings and one or more standing committees of the
Board; and
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Basic knowledge of corporate governance matters and the role of
boards of public companies.
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In addition, Directors must have the ability and willingness to
commit and devote the necessary time and energy to the diligent
performance of his or her duties, including preparing for,
attending and participating in Board meetings and one or more
standing committees of the Board. In determining whether to
recommend a Director for re-election, the Nominating and
Corporate Governance Committee also considers the
Directors past attendance at meetings, past performance
and contribution to the activities of the Board of Directors.
The Nominating and Corporate Governance Committee will use the
above enumerated factors to consider potential candidates
regardless of the source of the recommendation. Shareholder
recommendations for Director nominations may be submitted to the
Company at the address specified under the caption
Shareholder Communication with the Board below.
Shareholder recommendations for Director nominations will be
forwarded to the Nominating and Corporate Governance Committee
for consideration, provided that such recommendations are
accompanied by sufficient information to permit the Nominating
and Corporate
8
Governance Committee to evaluate the qualifications and
experience of the nominees. Recommendations should include, at a
minimum, the following:
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The name and contact information for the candidate;
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A brief biographical description of the candidate, including his
or her employment for at least the last five years, educational
history, and a statement that describes the candidates
qualifications to serve as a Director;
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A statement describing any relationship between the candidate
and the nominating shareholder, and between the candidate and
any employee, Director, customer, supplier, vendor or competitor
of DATATRAK; and
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The candidates signed consent to be a candidate and to
serve as a Director if nominated and elected, including being
named in our proxy statement.
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Once the Nominating and Corporate Governance Committee has
identified a prospective candidate, the Committee makes a
determination whether to conduct a full evaluation of the
candidate. This initial determination is based primarily on the
Boards need to fill a vacancy or desire to expand the size
of the Board as well as the likelihood that the candidate can
meet the Committees evaluation criteria set out in the
Committees charter as well as compliance with all other
legal and regulatory requirements. The Nominating and Corporate
Governance Committee will rely on public information about a
candidate, personal knowledge of any Committee or Board member
or member of management regarding the candidate, as well as any
information submitted to the Committee by the person
recommending a candidate for consideration. The Nominating and
Corporate Governance Committee, after consultation with other
Board members, will decide whether additional consideration of
the candidate is warranted.
If additional consideration is warranted, the Nominating and
Corporate Governance Committee may request the candidate to
complete a questionnaire that seeks additional information about
the candidates independence, qualifications, experience
and other information that may assist the Committee in
evaluating the candidate. The Committee may interview the
candidate in person or by telephone and also may ask the
candidate to meet with senior management. The Committee then
evaluates the candidate against the standards and qualifications
set out in the Committees charter. Additionally, the
Committee shall consider other relevant factors as it deems
appropriate (including independence issues and family or related
party relationships).
Before nominating an existing Director for re-election at an
Annual Meeting, the Nominating and Corporate Governance
Committee will consider the Directors past performance and
contribution to the Board and its committees. After completing
the evaluation of new candidates or existing Directors whose
term is expiring, if the Committee believes the candidate would
be a valuable addition to the Board or the existing Director is
a valued member of the Board, then the Committee will make a
recommendation to the full Board that such candidate or existing
Director should be nominated by the Board. The Board will be
responsible for making the final determination regarding
prospective nominees after considering the recommendation of the
Committee.
Executive Committee. The Executive
Committee has the authority to exercise all powers of the Board
of Directors in the management of our business and affairs of at
any time when the entire Board of Directors cannot meet. The
Executive Committee met four times during our 2006 fiscal year.
Code of
Business Conduct and Ethics and Financial Code of
Ethics
The Board of Directors has adopted both our Code of Business
Conduct and Ethics and our Financial Code of Ethics, copies of
which are available on DATATRAKs website. You can also
obtain a printed copies of these document, free of charge, by
writing to Investor Relations, c/o DATATRAK International,
Inc., 6150 Parkland Blvd., Mayfield Heights, Ohio 44124.
Shareholder
Communication with the Board
Shareholders may communicate their concerns directly to the
entire Board or specifically to non-management Directors of the
Board by submitting in writing to us at the following address:
Investor Relations, DATATRAK International, Inc., 6150 Parkland
Boulevard, Suite 100, Mayfield Heights, Ohio 44124. The
status of all outstanding concerns addressed to the entire Board
or only non-management Directors will be reported to the Lead
Independent Director, on a quarterly basis. Mr. Harris has
been designated as the Lead Independent Director.
9
COMPENSATION
COMMITTEE REPORT
Report of
the Compensation Committee on Executive Compensation
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with the Companys management. Based on that review and
discussion, the Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
and in the Companys definitive proxy statement prepared in
connection with its 2007 Annual Meeting of Shareholders.
THE COMPENSATION COMMITTEE
Seth B. Harris (Chairman)
Timothy G. Biro
Dr. Robert M. Stote
The above Report of the Compensation Committee does not
constitute soliciting material and should not be deemed filed
with the Commission or subject to Regulation 14A or 14C
(other than as provided in Item 407 of
Regulation S-K)
or to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically requests that
the information in this Report be treated as soliciting material
or specifically incorporates it by reference into a document
filed under the Securities Act of 1933, as amended (the
Securities Act), or the Exchange Act. If this Report
is incorporated by reference into the Companys Annual
Report on
Form 10-K,
such disclosure will be furnished in such Annual Report on
Form 10-K
and will not be deemed incorporated by reference into any filing
under the Securities Act or the Exchange Act as a result of
furnishing the disclosure in this manner.
10
COMPENSATION
DISCUSSION AND ANALYSIS
The following discussion and analysis of compensation
arrangements of our Named Executive Officers should be read
together with the compensation tables and related disclosures
set forth elsewhere in this proxy statement. This discussion
contains forward looking statements that are based on our
current plans and expectations regarding future compensation
programs. Actual compensation programs that we adopt may differ
materially from currently planned programs as summarized in this
discussion.
Overview
Our overall compensation philosophy is to provide executive
compensation packages that enable us to attract, retain and
fairly reward our executive officers and align the long-term
interests of our executive officers with our shareholders
interests. This program includes a competitive salary, an
opportunity for a performance bonus as well as the opportunity
to become an owner of our Common Shares through equity
compensation awards.
Role of
Compensation Committee
The members of our Compensation Committee during our 2006 fiscal
year were Messrs. Harris and Biro and Dr. Stote, all
of whom meet the definitions of (i) independent
within the meaning of the Nasdaq Stock Market listing standards;
(ii) a non-employee director within the meaning
of
Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (as
amended); and (iii) an outside director within
the meaning of Section 162(m) of the Internal Revenue Code
of 1986 (as amended).
Our executive compensation programs are approved and monitored
by the Compensation Committee of our Board of Directors. The
Compensation Committee has the role of determining the
Companys compensation philosophy and determining
compensation for the Companys executive officers. The
Compensation Committee also administers the Companys
equity-based compensation plans, including the selection of
grantees and the timing of equity awards, reviews and monitors
key employee compensation and benefits policies, programs and
plans. For more information regarding the functions of our
Compensation Committee, please refer to Corporate
Governance Matters Board of Directors and
Committees Compensation Committee.
The Compensation Committee evaluates, with the input of the
Chief Executive Officer, each executive officer annually based
on the achievement of both Company goals and individual
performance objectives. In addition to performance-related
factors, the Compensation Committee consults with various
published independent compensation surveys of similarly situated
companies, taking into account compensation information from our
geographical locations to determine market pay practices to
compensate its executive officers accordingly.
Executive
Compensation Program
Consistent with our overall compensation philosophy, our
executive compensation program consists of the following
elements: annual base salary; annual incentive bonus; long-term
equity-based incentive awards; and employee benefits. We believe
that appropriately balancing the total compensation package and
ensuring the viability of each component of the package is
necessary in order to provide market-competitive compensation
and to attract and retain talent. In deciding on the type and
amount of compensation, we focus on both current pay and the
opportunity for future compensation. Total compensation for our
executive officers may vary significantly from
year-to-year
based on Company and individual performance.
The following is a more detailed explanation of the primary
components of our executive compensation program.
Base
Salary
Salaries of our Named Executive Officers, including our Chief
Executive Officer, are subject to minimum levels set by the
terms of each Named Executive Officers employment
arrangement. The primary factor in setting salary levels
pursuant to these arrangements was the desire to provide
compensation in amounts sufficient to induce these individuals
to either join or continue to work with our Company. These
minimum salary levels for executive officers reflected the
Compensation Committees judgments on appropriate salaries
in light of the duties and
11
responsibilities inherent in such executives positions.
The particular qualifications of an individual holding the
position and his level of experience, as well as information
concerning compensation paid by other companies of a similar
size in a similar industry in similar geographic markets, and
the rate of inflation were considered in determining these
initial salary levels.
Base salaries for our Named Executive Officers are reviewed at
least annually. The Compensation Committees assessment of
the individuals performance and contribution to our
Companys performance are the primary criteria influencing
decisions regarding salary adjustments. Salary decisions are
first determined by the Compensation Committee presenting a
weighted average of salary percentage increases for the coming
year. Information is obtained from national as well as local
indices and is presented to senior management. In addition to
market data, the Compensation Committee reviews the achievement
of Company goals in determining the overall percentage increase
in compensation for the Named Executive Officers. Once an
overall percentage salary increase has been determined, a pool
of the total amount to be awarded to the Named Executive
Officers is determined. The Compensation Committee is
responsible for setting the base salary of the Chief Executive
Officer and President. The current base salary for the Chief
Executive Officer and President is $220,000 for 2007 which
remains unchanged from 2006. Evaluation of the Chief Executive
Officers salary is based upon a comparison of similar
positions at certain similarly situated companies in similar
geographic markets, the rate of inflation and based on the
experience of the members of the Compensation Committee, taking
into account his individual responsibilities, performance and
experience relative to those of chief executive officers at
companies similarly situated to the Company.
Increases in base salary with respect to the executive officers,
other than our Chief Executive Officer and President, are
recommended to the Compensation Committee by the Chief Executive
Officer who may allocate the remaining pool available for salary
increases in his discretion. In making this recommendation, the
Chief Executive Officer and President considers each executive
officers individual responsibilities, performance and
experience, and competitive market compensation paid by
similarly situated companies in similar geographic markets, and
the rate of inflation. Although the Compensation Committee
permits the Chief Executive Officer to allocate salary
increases, any increase in base salary is ultimately approved
and in the discretion of the Compensation Committee.
Furthermore, prior to finalizing any such salary adjustments,
the Compensation Committee reviews with the Chief Executive
Officer and President the criteria of measurements and
achievement of individual goals of the executive officers based
upon their respective functions. The current base salaries for
the executive officers other than the Chief Executive Officer
and President are $180,000 for the Vice President, Chief
Financial Officer, Treasurer and Assistant Secretary, $160,000
for the Vice President Product Strategy, 169,032 Euro for the
Vice President of Strategic Business Relationships, and $140,000
for the Vice President of Research and Development.
Mr. Blacks salary of $180,000 for 2007 represents a
$24,000 increase from 2006 due to an increase in his
responsibilities. No other pay increases have been made for 2007
compared to 2006.
Performance
Bonuses
The Company may pay additional compensation in the form of
discretionary performance bonuses to executive officers. Our
Named Executive Officers are also eligible for a performance
bonus that is measured against certain qualitative and
quantitative components. In general, the Named Executive
Officers can earn up to 50% of their base salary upon the
attainment of success in specific corporate and individual goals
which include sales, expense control and shareholder equity.
The Compensation Committee previously allowed bonuses to be
provided either in the form of cash, Common Shares or a
combination of the two. In May of 2006, the Compensation
Committee approved a one time special bonus paid to
Mr. Black for his efforts associated with the acquisition
of ClickFind, Inc. where $5,000 of the bonus was paid in cash
and Mr. Black elected to received restricted shares with a
value equal to $10,000 in lieu of the remainder of the cash
bonus award. It is the current intention of the Compensation
Committee to pay future performance bonuses only in cash. With
the exception of Mr. Blacks bonus, no bonuses were
paid to the Named Executive Officers in 2006.
12
Long
Term Equity-Based Incentive Awards Options
A substantial portion of our compensation program is based on
long-term performance of our Company and the price of our Common
Shares. Historically, the Company has used stock options as the
long-term incentive equity component of our compensation program
for our executive officers. Stock options have been used because
they directly relate the amounts earned by the executive
officers to the amount of appreciation realized by the
Companys shareholders over comparable periods. Stock
options have also provided executive officers with the
opportunity to acquire and build a meaningful ownership interest
in our Company. Our Omnibus Plan is intended to be the primary
share-based award program for covered employees and Directors as
such plan provides us with significant flexibility to grant a
variety of equity incentive awards, including restricted stock,
stock options and stock appreciation rights. The Compensation
Committee currently intends to use restricted stock grants,
rather than stock options, for future equity awards.
Similar to base salary increases, the Named Executive Officers
of the Company will be granted restricted equity awards based on
their level of responsibility, and meeting Company as well as
individual performance goals. With the exception of the award to
Mr. Black related to his special bonus described above, no
long-term equity incentives were awarded to the Named Executive
Officers in 2006.
We believe that long-term equity-based compensation is a
critical element of our overall compensation program because it
helps focus our executives on our long-term financial and
operational performance, creates an incentive for growth and
aligns the interests of our executives with those of our
shareholders. The potential financial value offered through such
equity awards is also an important retention tool for our
Company.
In determining the size of a grant awarded to an individual
executive officer, the Compensation Committee generally
establishes a level of award based upon the position of the
individual and his level of responsibility, and upon
recommendations made by the Chief Executive Officer and
President. The Committees decisions concerning equity
incentive awards are based on its judgment concerning the
appropriate amount of long-term compensation that should be paid
to the executive in question. All equity-based awards are
thoroughly discussed by the Compensation Committee. It is the
current intention of the Compensation Committee to award equity
grants to coincide with our Annual Shareholder meeting. Such
equity grants will be priced at the close of business on the day
of the Annual Meetings. Both the Named Executive Officers and
any grants to other employees are paid at the same time. We
believe that our procedure for the timing of the granting of
equity awards provides the assurance that grant timing is not
being manipulated to result in a price that is favorable to our
employees as we have always granted equity awards in connection
with previously scheduled Board or Compensation Committee
meetings.
Benefits
In general, our practice is to provide commensurate benefits to
employees at all levels of our organization. Consistent with
this practice, the following are the primary benefits provided
to our employees including our Named Executive Officers:
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health and dental plan;
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accidental death insurance;
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401(k) Retirement Plan, provided, however, that the Company is
not obligated to match employee contributions and the
employees participation in the 401(k) Retirement Plan is
on a discretionary basis;
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paid time off and holidays;
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continuing education programs to assist employees requiring
education to maintain their professional licenses or to obtain a
competency in a required Company work skill.
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We believe that these benefits are consistent with those offered
by other companies and specifically with those companies with
which we compete for employees.
We have chosen the above primary components of our executive
compensation program as the elements that will attract, motivate
and retain individuals of superior ability and managerial talent
and align the long-term interests of our executive officers with
our shareholders interests.
13
Termination
Benefits and Severance
Each Named Executive Officer also has entered into an employment
agreement with the Company that provides for certain benefits
upon (i) certain types of termination of the Named
Executive Officers termination from our Company and
(ii) a change of control of our Company. The Compensation
Committee believes these agreements help retain executives and
provide for management continuity in the event of an actual or
threatened Change of Control, as such term is
defined in the employment agreements. They also help ensure
executives interests remain aligned with
shareholders interests during a time when their continued
employment may be in jeopardy. Finally, they provide some level
of income continuity should an executives employment be
terminated (a) by us other than for Cause,
Death, Disability or Sufficient
Reason, as such terms are defined in the employment
agreements, or (b) by the executive for Good
Reason, as such term is defined in the employment
agreements. In the event the Company chooses to terminate a
Named Executive Officer without Cause,
Death, Disability or Sufficient
Reason, we are required to pay the executive the amounts
described in the table below:
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Amount Executive is Entitled to Upon a Termination of
Employment by (1) Us
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Other Than for Cause, Death, Disability or Sufficient Reason,
as Applicable, or
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Executive
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(2) Executive for Good Reason
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Dr. Green
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Base Salary through the date of
such termination and for a period of two years after such
termination.
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Mr. Black and Dr. Summa
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Salary through the date of such
termination and for a period of one year after such termination
plus up to $10,000 in outplacement services from an agent to be
selected by us.
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Mr. Shlaes
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Base Salary through the date of
such termination and for a period of one year after such
termination.
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Mr. Ward
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A lump sum severance payment equal
to the amount that Mr. Ward would have been paid in
Contractual Salary from the Termination Date through
February 13, 2009.
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The Company believes that these benefits are an important part
of an overall compensation package that helps to attract and
retain talented executives. Please refer to Executive
Officer Compensation Narrative Disclosure To Summary
Compensation Table and Grants Employment
Agreements for more information related to the employment
contracts. This summary of certain of the material terms of
these employment agreements is qualified in its entirety to the
entire agreements which we filed with the Securities and
Exchange Commission when we entered into them.
As discussed in more detail in Executive Officer
Compensation 2006 Potential Payments Upon
Termination or Change of Control, upon a Change of
Control, as such term is defined in each of our Equity
Plans (as hereinafter defined), or termination of employment by
Death or Disability, as such terms are
defined in our Omnibus Plan, all Options to purchase Common
Shares granted thereunder to the Named Executive Officers vest
immediately. In addition, pursuant to Mr. Blacks
restricted share and escrow agreement, dated May 11, 2006,
the transfer restrictions imposed on Mr. Blacks
restricted Common Shares will lapse if Mr. Blacks
employment with us is terminated due to his Death or
Disability, as such terms are defined in our Omnibus
Plan.
Anticipated
Changes in Executive Compensation
Our executive compensation programs will continue in their
current form until such time as the Compensation Committee
determines in its discretion that revisions to our current plans
or replacement plans are advisable.
14
EXECUTIVE
OFFICER COMPENSATION
2006
Summary Compensation Table
The following table and related notes and discussion summarize
information concerning compensation earned during the last
completed fiscal year by the following persons: (i) our
Chief Executive Officer who serves as our principal executive
officer (PEO); (ii) our Chief Financial Officer
who serves as our principal financial officer (PFO);
and (iii) the three most highly compensated officers other
than our PEO and PFO in 2006. We refer to these five executive
officers as our Named Executive Officers.
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Stock
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Option
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Awards
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Awards
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Name and Principal Position
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Year
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Salary ($)
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Bonus ($)
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($) (4)
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($) (4) (5) (6)
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Total ($) (7)
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Dr. Jeffrey A. Green
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2006
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216,920
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53,970
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270,890
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President, Chief Executive
Officer and Director (PEO)
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Terry C. Black
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2006
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154,160
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5,000
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(3)
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10,000
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(3)
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22,638
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191,798
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Vice President of Finance,
Chief Financial Officer, Treasurer And Assistant Secretary
(PFO)
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Marc J. Shlaes
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2006
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157,540
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22,332
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179,872
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Vice President of Product
Strategy
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Dr. Wolfgang Summa
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2006
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211,100
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(2)
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26,250
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237,350
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Vice President of Strategic
Business Relationships
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Jim Bob Ward(1)
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2006
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121,000
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121,000
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Vice President of Research and
Development
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(1) |
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Mr. Wards employment with the Company began on
February 13, 2006. |
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(2) |
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Dr. Summas 2006 salary was 168,040 Euro. Based on the
average exchange rate between the United States dollar and the
Euro during 2006, Dr. Summas 2006 salary of 168,040
Euro was the equivalent of U.S. $211,100. |
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(3) |
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During 2006, the Companys Compensation Committee approved
a one-time bonus of $15,000 to Mr. Black for his efforts
associated with the acquisition of ClickFind, Inc. With the
permission of the Compensation Committee, $5,000 of the bonus
was paid in cash and Mr. Black elected to receive
restricted Common Shares with a value equal to the remaining
$10,000 in lieu of a cash bonus award. As such, on May 11,
2006, Mr. Black was granted 1,364 restricted Common Shares
in 2006 with a grant date fair value of $7.33 per share for
which $10,000 of stock compensation expense was recorded for the
year ended December 31, 2006. |
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(4) |
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The dollar values described above are the aggregate dollar
amounts recognized for financial statement reporting purposes
for the fiscal year ended December 31, 2006, in accordance
with SFAS 123(R), Share-Based Payment, and SEC
rules for executive compensation disclosure. |
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(5) |
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The option awards and the dollar values included in the option
awards column for the year ended December 31, 2006 are as
follows: stock option compensation expense recorded for
Dr. Green for the year ended December 31, 2006, was
$53,970 ($7,338 of expense for stock options granted in 2002
with a grant date fair value of $1.74 per share; $13,572 of
expense for stock options granted in 2003 with a grant date fair
value of $3.62 per share and $33,060 of expense for stock
options granted in 2004 with a grant date fair value of
$7.35 per share); stock option compensation expense
recorded for Mr. Black for the year ended December 31,
2006, was $22,638 ($2,550 of expense for stock options granted
in 2002 with a grant date fair value of $1.74 per share;
$8,148 of expense for stock options granted in 2003 with a grant
date fair value of $3.62 per share and $11,940 of expense
for stock options granted in 2004 with a grant date fair value
of $6.37 per share); stock option compensation expense
recorded for Mr. Shlaes for the year ended
December 31, 2006, was $22,332 ($2,244 of expense for stock
options granted in 2002 with a grant date fair value of
$1.74 per share; $8,148 of expense for stock options
granted in 2003 with a grant date fair value of $3.62 per
share and $11,940 of expense for stock options granted in 2004
with a grant date fair value of $6.37 per share); and stock
option compensation expense |
15
|
|
|
|
|
recorded for Dr. Summa for the year ended December 31,
2006, was $26,250 ($6,162 of expense for stock options granted
in 2002 for with a grant date fair value of $1.74 per
share; $8,148 of expense for stock options granted in 2003 with
a grant date fair value of $3.62 per share and $11,940 of
expense for stock options granted in 2004 with a grant date fair
value of $6.37 per share). |
|
(6) |
|
The grant date fair value of the options granted was determined
by using the Black-Scholes option valuation model. The following
assumptions were used to estimate the fair value of the options
granted using the Black-Scholes option valuation model: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
Weighted-average risk free
interest rate
|
|
|
4.1
|
%
|
|
|
4.3
|
%
|
|
|
4.3
|
%
|
Weighted-average volatility of the
expected market price of the Common Shares
|
|
|
1.01
|
|
|
|
1.15
|
|
|
|
1.36
|
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Weighted-average expected life of
option
|
|
|
8 years
|
|
|
|
7 years
|
|
|
|
7 years
|
|
|
|
|
(7) |
|
No other compensation, perquisites or other personal benefits
were received by the Named Executive Officers. |
2006
Grants of Plan-Based Awards Table
The following table and related notes and discussion summarize
grants of equity and non-equity incentive compensation awards to
our Named Executive Officers for our fiscal year ended
December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Shares of Stock
|
|
|
Base Price of
|
|
|
of Stock and
|
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Option Awards
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
Approval Date
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
Dr. Jeffrey A. Green
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry C. Black(1)
|
|
|
5/11/2006
|
|
|
|
5/11/2006
|
|
|
|
1,364
|
|
|
|
7.33
|
|
|
|
10,000
|
|
Marc J. Shlaes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Wolfgang Summa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim Bob Ward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On May 11, 2006, the Companys Compensation Committee
approved a restricted stock grant to Mr. Black in partial
payment of a previously determined bonus award. The award, which
was made pursuant to our 2005 Omnibus Equity Plan, is subject to
certain restrictions including forfeiture in the event of
termination of employment for reasons other than death or
disability. Assuming continuous employment with the Company, the
restrictions will lapse on May 31, 2007. |
Narrative
Disclosure To Summary Compensation Table and Grants
Employment
Agreements
We are party to an employment agreement with each of our Named
Executive Officers. Each employment agreement sets forth the
terms of that officers employment, including among other
things, salary, benefits, termination provisions, and certain
restrictive covenants. Certain material terms of each executive
officers employment agreement are described below. For
additional terms, including post-termination and restrictive
covenants see Other Potential Post-Employment
Payments.
Dr. Jeffrey A. Green. In February 2001,
we entered into an employment agreement with Dr. Green
providing for an initial term of one year. This agreement, which
remains in effect, automatically renews for successive one-year
periods thereafter unless certain prior notice requirements are
satisfied. The base salary initially provided for in this
agreement is $180,000 per year, to be reviewed at least
annually by the Compensation Committee. Currently,
16
the base salary provided for Dr. Green pursuant to this
agreement is $220,000 per year. Bonuses may be paid to
Dr. Green at the discretion of the Compensation Committee.
The agreement also provides Dr. Green with the right to
participate in all benefit plans made available to our
executives
and/or
employees. Dr. Greens employment may be terminated
with or without cause, upon his death or disability or with
sufficient reason. Additionally, under this agreement,
Dr. Green is entitled to terminate his employment for
good reason. Good reason for such
termination will exist if at any time, (1) there is a
material breach of Dr. Greens employment agreement by
the Company, (2) shareholders fail to elect Dr. Green
to the Board of Directors or Dr. Green is otherwise removed
from the Board of Directors, and (3) except in connection
with the termination of Dr. Greens employment in
strict compliance with the terms of the agreement, the Board of
Directors (a) fails to elect Dr. Green to his current
executive position, (b) fails to vest Dr. Green with
the powers and authority customarily associated with his current
position or (c) significantly diminishes his
responsibilities, duties, power or authority. If Dr. Green
terminates his employment for good reason, he will be entitled
to continue to receive his base salary for two years following
the date of such termination. If Dr. Greens
employment is terminated in connection with a sale of our
business, he will be entitled to continue to receive his base
salary for one year following the date of such termination. If
his employment is terminated without cause or without sufficient
reason, he will be entitled to continue to receive his base
salary for a period of two years subsequent to the date of
termination. If Dr. Green terminates his employment without
good reason, or if he is terminated for cause, then
he will be entitled to receive his base salary through the date
of termination. For purposes of Dr. Greens agreement,
cause is defined as a determination by the Board of
Directors that the employee was (1) convicted of a felony
involving moral turpitude or a felony in connection with his
employment, (2) engaged in fraud, embezzlement, material
willful destruction of property or material disruption of our
operations, (3) using or in possession of illegal drugs
and/or
alcohol on our premises or reporting to work under the influence
of same, or (4) engaged in conduct, in or out of the
workplace, which in our reasonable determination has an adverse
effect on our reputation or business. Sufficient
reason shall mean a good faith determination that the
employee failed to adequately perform his duties as an officer
or achieve the business objectives mutually agreed upon by the
parties. Dr. Green also agreed to certain noncompetition
and nondisclosure provisions, which under certain conditions
continue for a period of up to twenty-four months following a
termination of Dr. Greens employment.
Terry C. Black. In February 2001, we entered
into an employment agreement with Mr. Black providing for
an initial term of one year. This agreement, which remains in
effect, automatically renews for successive one-year periods
thereafter unless certain prior notice requirements are
satisfied. The base salary initially provided for in this
agreement is $125,000 per year, to be reviewed at least
annually by the Compensation Committee. Currently, the base
salary provided for Mr. Black pursuant to this agreement is
$180,000 per year. Bonuses may be paid to Mr. Black at
the discretion of the Compensation Committee. The agreement also
provides Mr. Black with the right to participate in all
benefits plans made available to our executives
and/or
employees. Mr. Blacks employment may be terminated
with or without cause or upon his death or disability.
Additionally, Mr. Black is entitled to terminate his
employment for good reason. If Mr. Black
terminates his employment for good reason, he will be entitled
to receive his base salary for a period of one year following
the date of such termination. If Mr. Blacks
employment is terminated in connection with a sale of our
business, he will be entitled to continue to receive his base
salary for one year following the date of such termination. If
his employment is terminated without cause, he will be entitled
to receive his base salary for a period of one year subsequent
to the date of termination. If Mr. Black terminates his
employment without good reason, or if he is terminated for
cause, he will be entitled to receive his base
salary through the date of termination. For purposes of
Mr. Blacks agreement, cause is defined as
a determination by the Board of Directors that the employee was
(1) convicted of a felony involving moral turpitude or a
felony in connection with his employment, (2) engaged in
fraud, embezzlement, material willful destruction of property or
material disruption of our operations, (3) using or in
possession of illegal drugs
and/or
alcohol on our premises or reporting to work under the influence
of same, or (4) engaged in conduct, in or out of the
workplace, which in our reasonable determination has an adverse
effect on our reputation or business. Mr. Black also agreed
to certain noncompetition and nondisclosure provisions, which
continue under certain conditions for a period up to eighteen
months following a termination of Mr. Blacks
employment.
Dr. Wolfgang Summa. In December 2000,
Dr. Summa signed an employment agreement with our German
subsidiary, DATATRAK Deutschland GmbH, providing for an initial
term of four years. This agreement, which remains in effect,
automatically renews for successive one-year periods thereafter
unless certain prior notice requirements are
17
satisfied. The base salary initially provided for in this
agreement is 107,370 Euro (approximately U.S. $110,000 on
the date of the agreement) per year, to be reviewed at least
annually by the Compensation Committee. Currently, the base
salary provided for Dr. Summa pursuant to this agreement is
168,040 Euro per year. Bonuses may be paid to Dr. Summa at
the discretion of the Compensation Committee. The agreement also
provides Dr. Summa with the right to participate in all
benefits plans made available to our executives
and/or
employees. Dr. Summas employment may be terminated
with or without cause or upon his death or disability.
Additionally, Dr. Summa is entitled to terminate his
employment for good reason. If Dr. Summa
terminates his employment for good reason, he will be entitled
to receive his base salary for a period of one year following
the date of such termination. If Dr. Summas
employment is terminated in connection with the sale of our
business, he will be entitled to continue to receive his base
salary for one year following the date of such termination. If
his employment is terminated without cause, he will be entitled
to receive his base salary for a period of one year subsequent
to the date of termination. If Dr. Summa terminates his
employment without good reason, or if he is terminated for
cause, he will be entitled to receive his base
salary through the date of termination. For purposes of
Dr. Summas agreement, cause is defined as
a determination by the Board of Directors that the employee was
(i) convicted of a felony involving moral turpitude or a
felony in connection with his employment, (ii) engaged in
fraud, embezzlement, material willful destruction of property or
material disruption of our operations, (iii) using or in
possession of illegal drugs
and/or
alcohol on our premises or reporting to work under the influence
of same, or (iv) engaged in conduct, in or out of the
workplace, which in our reasonable determination has an adverse
effect on our reputation or business. Dr. Summa also agreed
to certain noncompetition and nondisclosure provisions, which
continue under certain conditions for a period up to eighteen
months following a termination of Dr. Summas
employment. The agreement is governed by German law.
Marc J. Shlaes. In March 2003, we entered into
an employment agreement with Mr. Shlaes providing for an
initial term of one year. This agreement, which remains in
effect, automatically renews for successive one-year periods
thereafter unless certain prior notice requirements are
satisfied. The base salary initially provided for in this
agreement is $145,000 per year, to be reviewed at least
annually by the Compensation Committee. Currently, the base
salary provided for Mr. Shlaes pursuant to this agreement
is $160,000 per year. Bonuses may be paid to
Mr. Shlaes at the discretion of the Compensation Committee.
The agreement also provides Mr. Shlaes with the right to
participate in all benefits plans made available to our
executives
and/or
employees. Mr. Shlaes employment may be terminated
with or without cause or upon his death or disability.
Additionally, Mr. Shlaes is entitled to terminate his
employment for any or no reason. If Mr. Shlaes voluntarily
terminates his employment, all obligations under his employment
will cease to exist. If Mr. Shlaes employment is
terminated in connection with the sale of our business, he will
be entitled to continue to receive his base salary for one year
following the date of such termination. If his employment is
terminated without cause, he will be entitled to receive his
base salary for a period of one year subsequent to the date of
termination. If Mr. Shlaes is terminated for
cause, he will be entitled to receive his base
salary through the date of termination. For purposes of
Mr. Shlaes agreement, cause is defined as
a determination by the Board of Directors that the employee
(i) fails to complete satisfactorily our routine
pre-employment background check, (ii) was convicted of a
felony involving moral turpitude or a felony in connection with
his employment, (iii) was engaged in fraud, embezzlement,
material willful destruction of property or material disruption
of our operations, (iv) was using or in possession of
illegal drugs
and/or
alcohol on our premises or reporting to work under the influence
of same, or (v) was engaged in conduct, in or out of the
workplace, which in our reasonable determination has an adverse
effect on the our reputation or business. Mr. Shlaes also
agreed to certain noncompetition and nondisclosure provisions,
which continue under certain conditions for a period up to
fifteen months following a termination of Mr. Shlaes
employment.
Jim Bob Ward. In February 2006, we entered
into an employment agreement with Mr. Ward to serve as the
Vice President of eClinical Development (Mr. Wards
official title was subsequently changed to Vice President of
Research and Development). The agreement provides a three-year
term of employment at a minimum base salary of $140,000 per
year. During the three-year term, Mr. Ward remains an
at-will employee. The agreement provides that Mr. Ward will
be eligible to participate in annual bonus awards, if any, as
determined from time to time in the sole discretion of the Board
of Directors or the Compensation Committee. Pursuant to the
terms of the agreement, Mr. Ward will be entitled to
participate in our employee benefit plans as in effect from time
to time on the same basis as similarly situated employees of the
Company. The agreement further provides for a severance payment
equal to the amount that Mr. Ward would have been paid in
contractual salary from the date of termination through the
three year anniversary of the consummation of the merger, in the
event that the Company terminates Mr. Wards
18
employment without cause or Mr. Ward resigns for good
reason, during the employment term. For the purpose of
Mr. Wards agreement, cause is defined as
the employees (i) willful or continuing failure to
perform substantially the employees duties with the
Company which is not cured within thirty days following the
written detailed notice describing the action constituting
failure to perform; (ii) commission of, or plea
of guilty or no contest to a (a) felony or (b) crime
involving moral turpitude; (iii) willful malfeasance or
misconduct which is demonstrably injurious to the Company; or
the (iv) breach of the material terms of the employment
agreement. Mr. Wards agreement also contains certain
noncompetition and nondisclosure provisions, which continue
under certain conditions for a period of 36 months
following a termination of Mr. Wards employment.
2006
Outstanding Equity Awards at Fiscal Year-End Table
The following table and related notes and discussion summarize
certain information with respect to outstanding equity awards
held by the Named Executive Officers as of December 31,
2006, presented in accordance with SEC rules.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Option
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Exercise
|
|
|
Option
|
|
|
Shares That
|
|
|
Shares That
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Vested
|
|
|
Vested ($)
|
|
|
Dr. Jeffrey A. Green(1)
|
|
|
37,500
|
|
|
|
|
|
|
|
7.17
|
|
|
|
1/2/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
|
|
|
|
|
|
2.42
|
|
|
|
12/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
33,750
|
|
|
|
|
|
|
|
1.85
|
|
|
|
6/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
7,500
|
|
|
|
4.05
|
|
|
|
12/23/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
9,000
|
|
|
|
7.35
|
|
|
|
12/28/2014
|
|
|
|
|
|
|
|
|
|
Terry C. Black(2)
|
|
|
46,875
|
|
|
|
|
|
|
|
2.42
|
|
|
|
12/9/2009
|
|
|
|
1,364
|
|
|
|
10,000
|
|
|
|
|
11,720
|
|
|
|
|
|
|
|
1.85
|
|
|
|
6/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
4,500
|
|
|
|
4.05
|
|
|
|
12/23/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
3,750
|
|
|
|
7.35
|
|
|
|
12/28/2014
|
|
|
|
|
|
|
|
|
|
Marc J. Shlaes(3)
|
|
|
18,000
|
|
|
|
|
|
|
|
3.00
|
|
|
|
7/15/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
2.50
|
|
|
|
9/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
20,157
|
|
|
|
|
|
|
|
2.42
|
|
|
|
12/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
5,156
|
|
|
|
|
|
|
|
1.85
|
|
|
|
6/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
4,500
|
|
|
|
4.05
|
|
|
|
12/23/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
3,750
|
|
|
|
7.35
|
|
|
|
12/28/2014
|
|
|
|
|
|
|
|
|
|
Dr. Wolfgang Summa(4)
|
|
|
6,000
|
|
|
|
4,500
|
|
|
|
4.05
|
|
|
|
12/23/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
3,750
|
|
|
|
7.35
|
|
|
|
12/28/2014
|
|
|
|
|
|
|
|
|
|
Jim Bob Ward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Dr. Greens unvested options vest as follows:
(i) 7,500 on December 23, 2007 and (ii) 9,000 on
December 28, 2008. |
|
(2) |
|
Mr. Blacks unvested options vest as follows:
(i) 4,500 on December 23, 2007 and (ii) 3,750 on
December 28, 2008. On May 11, 2006, the Companys
Compensation Committee approved a restricted stock grant to
Mr. Black in partial payment of a previously determined
bonus award which included, among other things Mr. Black
receiving 1,364 restricted Common Shares for a value equal to
$10,000. |
|
(3) |
|
Mr. Shlaes unvested options vest as follows: (i) 4,500
on December 23, 2007 and (ii) 3,750 on
December 28, 2008. |
|
(4) |
|
Dr. Summas unvested options vest as follows:
(i) 4,500 on December 23, 2007 and (ii) 3,750 on
December 28, 2008. |
19
2006
Option Exercises and Stock Vested Table
The following table and related notes and discussion summarize
certain information with respect to the exercise of options to
purchase Common Shares and the vesting of other stock awards by
the Named Executive Officers during the fiscal year ended
December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
Dr. Jeffrey A. Green
|
|
|
5,000
|
|
|
|
13,150
|
|
|
|
|
|
|
|
|
|
Terry C. Black
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc J. Shlaes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Wolfgang Summa
|
|
|
58,313
|
|
|
|
171,184
|
|
|
|
|
|
|
|
|
|
Jim Bob Ward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized on the exercise of the option awards is
determined by calculating the difference between the market
price per Common Share on the date of exercise and the exercise
price of each option award. |
20
Other
Potential Post-Employment Payments
2006
Potential Payments Upon Termination Or Change Of Control
Table
The following table and related notes and discussion summarize
certain information related to the total potential payments upon
termination or change of control for each of the Named Executive
Officers as of December 31, 2006. Please also refer
Compensation Discussion and Analysis
Termination Benefits and Severance, Executive
Officer Compensation Narrative Discussion to Summary
Compensation Grants Employment Agreements, and
Certain Related Party Transactions ClickFind
Merger for additional disclosure related to potential
payments upon termination or change of control.
The amounts shown assume that such termination was effective as
of December 29, 2006, the last business day of 2006, and
thus include amounts earned through such time and are estimates
of the amounts which would be paid out to the executives upon
their termination. The actual amounts to be paid out can only be
determined at the time of an executives separation from
our Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Change
|
|
|
After Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Control
|
|
|
of Control
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
w/o Cause or
|
|
|
w/o Cause or
|
|
|
or
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
|
|
|
|
for Good
|
|
|
for Good
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Sufficient
|
|
Position
|
|
Benefit
|
|
Reason (1)
|
|
|
Reason (1)
|
|
|
for Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Reason (1)
|
|
|
Dr. Jeffrey A. Green
President, Chief Executive Officer and Director (PEO)
|
|
Severance total value
(base salary only)
|
|
$
|
440,000
|
|
|
$
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
220,000
|
|
|
|
Stock option vesting acceleration(3)
|
|
|
|
|
|
$
|
7,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry C. Black
Vice President of Finance, Chief Financial Officer, Treasurer
And Assistant Secretary (PFO)
|
|
Severance total value
(base salary only)
|
|
$
|
156,000
|
|
|
$
|
156,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
total value
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option vesting acceleration(3)
|
|
|
|
|
|
$
|
4,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Common Shares
acceleration of lapse of restrictions(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,847
|
|
|
$
|
6,847
|
|
|
|
|
|
Marc J. Shlaes
Vice President of Product Strategy
|
|
Severance total
value
(base salary only)
|
|
$
|
160,000
|
|
|
$
|
160,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option vesting
acceleration)(3)
|
|
|
|
|
|
$
|
4,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Wolfgang Summa
Vice President of Strategic Business Relationships
|
|
Severance total
value
(base salary only)
|
|
$
|
223,000
|
(2)
|
|
$
|
223,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services
total value
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option vesting acceleration(3)
|
|
|
|
|
|
$
|
4,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim Bob Ward
Vice President of Research and Development
|
|
Severance total value (base
salary only)
|
|
$
|
298,000
|
|
|
$
|
298,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Each Named Executive Officer has an employment agreement with
the Company that provides severance pay in case of certain
termination events as follows: (i) Dr. Green is
entitled to two years of severance in case of termination
without cause or termination for good reason unrelated to a
change in control. In the event of |
21
|
|
|
|
|
termination related to a change in control Dr. Green is
entitled to receive one year of severance pay. In addition,
Dr. Greens employment agreement contains a
sufficient reason provision relating primarily to
performance criteria whereby the Company may terminate
Dr. Greens employment based on a majority vote of the
Board of Directors resulting in one year of severance pay to
Dr. Green; (ii) Messrs. Black, Shlaes and
Dr. Summa are entitled to one year of severance pay in case
of termination without cause, termination for good reason or
termination related to a change in control; and
(iii) Mr. Ward is entitled to severance pay through
February 13, 2009 from the date of termination in case of
termination without cause or termination for good reason. All
severance payments to the Named Executive Officers are to be
paid over the severance period as part of the Companys
ongoing payroll process except for Mr. Ward who is entitled
to a lump-sum payment on the second month anniversary of his
termination date. |
|
|
|
(2) |
|
Dr. Summas salary as of December 31, 2006, was
169,000 Euro. Based on the exchange rate between the United
States dollar and the Euro on December 31, 2006,
Dr. Summas annual salary of 169,000 Euro would be the
equivalent of U.S. $223,000. |
|
(3) |
|
The Named Executive Officers may participate in the:
(i) Amended and Restated 1996 Key Employee and Consultants
Stock Option Plan, as amended (the 1996 Key Employee Stock
Option Plan) and (ii) the 2005 Omnibus Equity Plan
(the Omnibus Plan). With respect to our 1996 Key
Employee Stock Option Plan, all Options to purchase Common
Shares granted thereunder to the Named Executive Officer vest
immediately upon a Change of Control, as such term
is defined in the respective plan. Additionally, with respect to
our Omnibus Plan, all Stock Options to purchase Common Shares
granted thereunder to the Named Executive Officer vest
immediately upon such Named Executive Officers termination
by Death, Disability, or
Retirement, as such terms are defined in our Omnibus
Plan. Under the Omnibus Plan, all awards become vested upon a
Change of Control, as such term is defined in our
Omnibus Plan. The calculation of the value shown in the table
for each Named Executive Officer is as follows: Dr. Green,
7,500 Common Shares, at a market price of $5.02 per Common
Share, for an aggregate market value of $37,650, minus $30,375,
the aggregate exercise price for the Common Shares;
Mr. Black, 4,500 Common Shares, at a market price of
$5.02 per Common Share, for an aggregate market value of
$22,590, minus $18,225, the aggregate exercise price for the
Common Shares; Mr. Shlaes, 4,500 Common Shares, at a market
price of $5.02 per Common Share, for an aggregate market
value of $22,590, minus $18,225, the aggregate exercise price
for the Common Shares; and Dr. Summa, 4,500 Common Shares,
at a market price of $5.02 per Common Share, for an
aggregate market value of $22,590, minus $18,225 the aggregate
exercise price for the Common Shares. |
|
(4) |
|
Pursuant to Mr. Blacks restricted share and escrow
agreement, dated May 11, 2006, the transfer restrictions
imposed on Mr. Blacks restricted Common Shares will
lapse if Mr. Blacks employment with us is terminated
due to his Death or Disability, as such
terms are defined in our Omnibus Plan. The calculation of the
value shown in the table above related to Mr. Blacks
restricted Common Shares was derived by multiplying $5.02, the
closing price of our Common Shares on December 29, 2006,
and Mr. Blacks 1,364 restricted Common Shares. |
Director
Compensation
Under our Director compensation program, each continuing
non-management Director receives annual payments of $16,000 in
cash and $16,000 in Common Shares. Each new non-management
Director will receive $16,000 in cash and up to $32,000 in
Common Shares for their first year of service and thereafter
will be compensated at the regular rate. The chair of our Audit
Committee receives an additional annual payment of $4,000 in
Common Shares and the chairs of our Compensation Committee and
Nominating and Corporate Governance Committees receives an
additional annual payment of $2,000 in Common Shares. All of the
annual payments are paid on a quarterly basis. Further, a
retiring Director who has served on our Board for at least five
years and agrees to be available for limited consulting for a
period of one year after his retirement will be entitled to
receive up to $16,000 in Common Shares. In addition, each
non-management Director is paid a fee, payable quarterly in
Common Shares in arrears, ranging from $500 to $1,000 per
each attended meeting of our Board or a Committee. Directors are
not paid for a Committee meeting when that meeting coincides
with a quarterly Board meeting. Directors also receive
reimbursement for reasonable expenses incurred in attending
meetings of the Board
22
of Directors. For purposes of Director payments in Common
Shares, the Common Shares are valued at the closing price on the
third business day following each quarterly earnings
announcement and the Common Shares are issued on that same day.
The following table and related notes and discussion summarize
certain information concerning the annual or long-term
compensation for services in all capacities, for the fiscal year
ended December 31, 2006, to DATATRAKs non-employee
Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock Awards
|
|
|
Total
|
|
Name
|
|
Cash ($) (1)
|
|
|
($) (2) (3) (4)
|
|
|
($) (2) (4) (11)
|
|
|
Laurence P. Birch(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy G. Biro(6)
|
|
|
16,000
|
|
|
|
36,500
|
|
|
|
52,500
|
|
Seth B. Harris(7)
|
|
|
16,000
|
|
|
|
25,500
|
|
|
|
41,500
|
|
Dr. Jerome H. Kaiser(8)
|
|
|
16,000
|
|
|
|
34,000
|
|
|
|
50,000
|
|
Dr. Mark J. Ratain(9)
|
|
|
16,000
|
|
|
|
31,000
|
|
|
|
47,000
|
|
Dr. Robert M. Stote(10)
|
|
|
16,000
|
|
|
|
25,500
|
|
|
|
41,500
|
|
|
|
|
(1) |
|
Fees earned or paid in cash represent the aggregate cash annual
payment to each continuing non-management Director paid on a
quarterly basis. |
|
(2) |
|
Represents the dollar amount recognized for financial statement
reporting purposes with respect to fiscal year 2006 in
accordance with FAS 123R. |
|
(3) |
|
Stock awards represent the aggregate (i) annual stock
awards to each continuing non-management Director and
(ii) annual payments to each Chairman of the Audit,
Compensation, and Nominating and Corporate Governance Committees
in accordance with the table above paid on a quarterly basis.
Stock award expense recorded for Mr. Biro for the year
ended December 31, 2006, was $36,500 ($9,500 of expense for
1,375 shares awarded with a grant date fair value of
$6.91 per share; $10,500 of expense for 1,432 shares
awarded with a grant date fair value of $7.33 per share;
$8,000 of expense for 1,294 shares awarded with a grant
date fair value of $6.18 per share and $8,500 of expense
for 1,902 shares awarded with a grant date fair value of
$4.47 per share); stock award expense recorded for
Mr. Harris for the year ended December 31, 2006, was
$25,500 ($6,500 of expense for 941 shares awarded with a
grant date fair value of $6.91 per share; $6,500 of expense
for 887 shares awarded with a grant date fair value of
$7.33 per share; $6,000 of expense for 971 shares
awarded with a grant date fair value of $6.18 per share and
$6,500 of expense for 1,454 shares awarded with a grant
date fair value of $4.47 per share); stock award expense
recorded for Dr. Kaiser for the year ended
December 31, 2006, was $34,000 ($7,500 of expense for
1,085 shares awarded with a grant date fair value of
$6.91 per share; $9,500 of expense for 1,296 shares
awarded with a grant date fair value of $7.33 per share;
$9,500 of expense for 1,537 shares awarded with a grant
date fair value of $6.18 per share and $7,500 of expense
for 1,678 shares awarded with a grant date fair value of
$4.47 per share); stock award expense recorded for
Dr. Ratain for the year ended December 31, 2006, was
$31,000 ($8,000 of expense for 1,158 shares awarded with a
grant date fair value of $6.91 per share; $8,500 of expense for
1,160 shares awarded with a grant date fair value of
$7.33 per share; $8,500 of expense for 1,375 shares
awarded with a grant date fair value of $6.18 per share and
$6,000 of expense for 1,342 shares awarded with a grant
date fair value of $4.47 per share); and stock award
expense recorded for Dr. Stote for the year ended
December 31, 2006, was $25,500 ($6,000 of expense for
868 shares awarded with a grant date fair value of
$6.91 per share; $7,000 of expense for 955 shares
awarded with a grant date fair value of $7.33 per share;
$6,500 of expense for 1,052 shares awarded with a grant
date fair value of $6.18 per share and $6,000 of expense
for 1,342 shares awarded with a grant date fair value of
$4.47 per share). |
|
(4) |
|
All of our Directors stock awards are fully vested and are
reflected in each Directors entry contained in the
Security Ownership of Certain Beneficial Holders and
Management table. |
|
(5) |
|
Effective as of the close of business on April 16, 2007,
our Board of Directors appointed Mr. Laurence P. Birch as
Class I Director. Mr. Birchs compensation for
his service as a Director will be consistent with that of the
Companys other Directors who are not employees or
consultants of the Company, provided, however, that during
Mr. Birchs first year of service as a Director,
Mr. Birch will receive an aggregate of $24,000 in |
23
|
|
|
|
|
Common Shares (compared to $16,000 received by each continuing
outside Director) paid on a quarterly basis. |
|
(6) |
|
As of December 31, 2006, Mr. Biro had 105,375
exercisable stock options with various per share exercise prices
as follows: (i) 37,500 options at $1.97; (ii) 18,750
options at $2.50; (iii) 15,000 options at $2.79;
(iv) 2,250 options at $2.92; (v) 18,750 options at
$3.46; (vi) 2,250 options at $5.50 and (vii) 10,875
options at $7.56. |
|
(7) |
|
As of December 31, 2006, Mr. Harris had 124,125
exercisable stock options with various per share exercise prices
as follows: (i) 18,750 options at $1.33 (ii) 37,500
options at $1.97; (iii) 18,750 options at $2.50;
(iv) 15,000 options at $2.79; (v) 2,250 options at
$2.92; (vi) 18,750 options at $3.46; (vii) 2,250
options at $5.50 and (vii) 10,875 options at $7.56. |
|
(8) |
|
As of December 31, 2006, Dr. Kaiser had 100,875
exercisable stock options with various per share exercise prices
as follows: (i) 18,750 options at $1.33 (ii) 37,500
options at $1.97; (iii) 15,000 options at $2.42;
(iv) 18,750 options at $3.46; and (v) 10,875 options
at $7.56. |
|
(9) |
|
As of December 31, 2006, Dr. Ratain had 106,375
exercisable stock options with various per share exercise prices
as follows: (i) 18,750 options at $1.33 (ii) 37,500
options at $1.97; (iii) 18,750 options at $2.50;
(iv) 3,250 options at $2.79; (v) 18,750 options at
$3.46; (vi) 9,375 options at $7.56. |
|
(10) |
|
As of December 31, 2006, Dr. Stote had 47,625
exercisable stock options with various per share exercise prices
as follows: (i) 15,000 options at $2.79; (ii) 2,250
options at $2.92; (iii) 18,750 options at $3.46;
(iv) 2,250 options at $5.50; and (v) 9,375 options at
$7.56. |
|
(11) |
|
There were no outstanding unexercisable stock options for any
Board member as of December 31, 2006. |
Compensation
Committee Interlocks and Insider Participation
During our 2006 fiscal year, our Compensation Committee has
consisted of Messrs. Harris and Biro and Dr. Stote,
none of whom is a present or past employee or officer of our
Company or any of our subsidiaries. None of our executive
officers has served on the Board or Compensation Committee (or
other committee serving an equivalent function) of any other
entity, one of whose executive officers served on our Board or
Compensation Committee.
24
AUDIT
COMMITTEE REPORT
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other DATATRAK filing
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent
DATATRAK specifically incorporates this Report by
reference therein.
The Audit Committee oversees DATATRAKs financial reporting
process on behalf of the Board of Directors. The Audit
Committees activities are governed by a written charter
adopted by the Board of Directors.
Management has the primary responsibility for our financial
statements and the reporting process, including the system of
internal controls. The independent registered public accounting
firm audits the annual financial statements prepared by
management and expresses an opinion on the conformity of those
financial statements with accounting principles generally
accepted in the United States. The Audit Committee monitors
these processes.
In this context, the Audit Committee met and held discussions
with management and the independent registered public accounting
firm. Management represented to the Audit Committee that our
financial statements were prepared in accordance with accounting
principles generally accepted in the United States, and the
Audit Committee reviewed and discussed the audited financial
statements with management and the independent registered public
accounting firm, including a discussion of the quality, not just
the acceptability, of the accounting principles, the
reasonableness of specific judgments and the clarity of
disclosures in the financial statements. The Audit Committee
also discussed with the independent registered public accounting
firm such other matters as are required to be discussed with the
Audit Committee by Statement on Auditing Standards No. 61
(Communications with Audit Committees), as amended by
Statement on Auditing Standards No. 90 (Audit Committee
Communications).
In addition, the independent registered public accounting firm
provided to the Audit Committee the written disclosures and
letter required by Independence Standards Board Standard
No. 1 (Independence Discussions With Audit
Committees), related to their independence. The Audit
Committee discussed with the independent registered public
accounting firm the firms independence from the Company
and management and considered the compatibility of non-audit
services with the registered public accounting firms
independence.
The Audit Committee discussed with DATATRAKs financial
management and independent registered public accounting firm the
overall scope and plans for the audit. The Audit Committee also
met with the independent registered public accounting firm, with
and without management present, to discuss the results of the
examinations, their evaluation of the Companys internal
controls and the overall quality of our financial reporting. In
addition, the Audit Committee considered other areas of its
oversight relating to the financial reporting process that it
determined appropriate.
Based on the reviews and discussions referred to above, upon
recommendation of the Audit Committee and approval of the Board
of Directors, the audited financial statements were included in
the DATATRAKs Annual Report on
Form 10-K
for the year ended December 31, 2006 which was filed with
the Securities and Exchange Commission on March 16, 2007.
THE AUDIT COMMITTEE
Timothy G. Biro (Chairman)
Dr. Jerome H. Kaiser
Dr. Mark J. Ratain
25
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has reviewed the audit fees of the
independent registered public accounting firm. During the fiscal
years ended December 31, 2006 and December 31, 2005,
Ernst & Young LLP provided us with various audit and
non-audit services. Set forth below are the aggregate fees for
services billed, on a consolidated basis, by Ernst &
Young LLP for providing the services indicated for the fiscal
years ended December 31, 2006 and December 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
Year End
|
|
|
Year End
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit fees(1)(5)
|
|
$
|
357,300
|
|
|
$
|
324,800
|
|
Audit-Related fees(2)(5)
|
|
|
|
|
|
$
|
9,500
|
|
Tax fees(3)(5)
|
|
|
|
|
|
|
|
|
All Other Fees(4)(5)
|
|
|
|
|
|
$
|
|
|
Total
|
|
$
|
357,300
|
|
|
$
|
334,300
|
|
|
|
|
(1) |
|
Includes fees and expenses related to the fiscal year audit,
quarterly reviews, consents in respect of Securities and
Exchange Commission filings, and audit of internal controls
under Sarbanes-Oxley notwithstanding when the fees and expenses
were billed or when the services were rendered. |
|
(2) |
|
Assurance and related services that are reasonably related to
the performance of the audit or review of the financial
statement and not reported under audit fees. |
|
(3) |
|
Tax compliance, tax advice and tax planning. |
|
(4) |
|
All other services not reported under (1)-(3). |
|
(5) |
|
Includes fees and expenses for services rendered from January
through December of the fiscal year, notwithstanding when the
fees and expenses were billed. |
Prior to each fiscal year, the Audit Committee receives a
written report from Ernst & Young LLP describing the
elements expected to be performed in the course of its audit of
the Companys financial statements for the coming year.
The Audit Committee has adopted a policy that requires advance
approval of all audit and non-audit services provided by our
independent registered public accounting firm prior to the
engagement of the independent registered public accounting firm
with respect to such services. The Chairman of the Audit
Committee has been delegated the authority by the Audit
Committee to evaluate and pre-approve the engagement of the
independent registered public accounting firm when the entire
Audit Committee is unable to do so. The Chairman must report all
such pre-approvals to the entire Audit Committee at the next
committee meeting. All of the services described above for our
2006 fiscal year were pre-approved for 2006 by the Audit
Committee.
Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting. They will have the opportunity to
make a statement if they so desire, and are expected to be
available to respond to appropriate questions.
26
EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth information concerning Common
Shares authorized or available for issuance under our equity
compensation plans as of the December 31, 2006.
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Number of
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Securities
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Number of
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Weighted-
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Remaining Available
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Securities to be
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Average Exercise
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for Future Issuance
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Issued Upon
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Price of
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Under Equity
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Exercise of
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Outstanding
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Compensation Plans
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Outstanding,
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Options,
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(Excluding
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Options, Warrants
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Warrants and
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Securities Reflected
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Plan Category
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and Rights
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Rights
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in Column (a))
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(a) (3)
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(b)
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(c)
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Equity compensation plans approved
by shareholders
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1,390,449
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$
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3.52
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322,849
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Equity compensation plans not
approved by shareholders(1)(2)(3)
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157,079
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$
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8.96
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Total
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1,547,528
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$
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4.07
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322,849
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(1) |
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The terms of our August 2003 private placement of 903,750 Common
Shares required the issuance of warrants to purchase Common
Shares at $3.20 per share as payment for services performed
by certain placement agents related to our private placement.
15,680 of these warrants were outstanding at December 31,
2006. The warrants are fully vested as of the date of grant and
expire August 8, 2008. |
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(2) |
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The terms of our December 2004 private placement of 729,470
Common Shares required the issuance of warrants to purchase a
total of 31,974 Common Shares at $9.60 per share as payment
for services performed by certain placement agents related to
our private placement. In addition, the private placement
required the issuance of warrants to purchase a total of 109,425
Common Shares at $9.60 per share to the investors who
participated in our private placement. The warrants, all of
which were outstanding at December 31, 2006, are fully
vested as of the date of grant and expire December 23, 2007. |
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(3) |
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The above table does not include the warrants to acquire a total
297,949 additional Common Shares issued to certain purchasers
and the warrants to acquire a total of 29,794 Common Shares
issued to the placement agents in connection with the
March 19, 2007 closing of the Private Placement described
in our
Form 8-K
Current Report filed with the Securities and Exchange Commission
on March 19, 2007. |
27
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys Directors and certain of its
executive officers and persons who beneficially own more than
10% of its Common Shares to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. These people are further
required to furnish us with copies of all such forms filed by
them.
Based solely on our review of the copies of the forms that we
received, we believe that all of the Section 16(a) filing
requirements were satisfied by our Directors, executive officers
and beneficial owners of more than 10% of our Common Shares,
except for a Form 4 that Dr. Robert M. Stote attempted
to file on time, but had to file the next day due to an
administrative problem with EDGAR codes.
CERTAIN
RELATED PARTY TRANSACTIONS
ClickFind
Merger
As described in greater detail in the
Form 8-K
filed with the Commission on February 17, 2006 (the
Merger
8-K),
on February 13, 2006, DATATRAK acquired ClickFind.
Mr. Jim Bob Ward, who was the Founder and a significant
shareholder of ClickFind, also served as its President and Chief
Executive Officer.
The negotiated terms of the acquisition were for an aggregate
purchase price of $18,000,000, less approximately $328,000 in
certain transaction expenses and certain indebtedness of
ClickFind. A component of the purchase price was paid with
1,026,522 Common Shares of the Company, priced at $9.25 per
share, as determined by the terms of the acquisition agreement.
The acquisition was recorded as a purchase, and as such, for the
purpose of recording the acquisition, the value of the Common
Shares used in the acquisition were valued at $7.66 per share,
based on the average closing price per share of the
Companys Common Shares for the five business day period
from February 9 through February 15, 2006.
Based on the Common Share valuation of $7.66 per share, the
total recorded acquisition cost, including acquisition related
expenses of $796,000, was $16,619,000. The cash portion of the
purchase price, less cash acquired of $87,000, was approximately
$4,669,000. The remainder of the purchase price consisted of
$4,000,000 in notes payable and the issuance of approximately
$7,863,000 in Common Shares (1,026,522 Common Shares). The notes
payable bear interest at prime plus 1%, and principal payments
are due in installments of $500,000, $500,000 and $3,000,000 on
February 1, 2007, 2008 and 2009, respectively.
In conjunction with the acquisition of ClickFind, DATATRAK
appointed Mr. Ward as Vice President of eClinical
Development and entered into an employment agreement with him
(Mr. Wards official title was subsequently changed to
Vice President of Research and Development). The terms of
Mr. Wards employment agreement are described in
greater detail under the caption Executive Officer
Compensation Narrative Disclosure to Summary
Compensation Table and Grants Employment
Agreements. In connection with the acquisition of
ClickFind, we entered into a Limited Software License Agreement
(the License Agreement) with Mr. Ward, granting
Mr. Ward a limited, royalty-free, non-exclusive license to
use, make and create modifications of, sublicense and distribute
copies of, and sublicense in executable form the current version
of the ClickFind software (as it existed at the time of the
closing of our acquisition of ClickFind) in different
non-competitive commercial applications. A copy of the License
Agreement is attached as Exhibit 10.3 to the Merger
8-K.
Related
Party Transaction Policy
While the Company does not have a written related party
transaction policy, as a matter of corporate governance policy
and practice, any potential related party transactions are
presented and considered by our Audit Committee in accordance
with such Committees charter. See the discussion set forth
above under Corporate Governance Matters Audit
Committee for more information.
28
SHAREHOLDER
PROPOSALS FOR 2008 ANNUAL MEETING
Any shareholder who meets the requirements of the proxy rules
under the Exchange Act may submit proposals to the Board of
Directors to be considered for submission in our proxy materials
for the Annual Meeting of Shareholders to be held in 2008.
Proposals should be submitted in writing by notice delivered or
mailed by first-class United States mail, postage prepaid,
to Investor Relations, c/o DATATRAK International, Inc.,
6150 Parkland Boulevard, Suite 100, Mayfield Heights, Ohio
44124, Attention: Investor Relations, and must be received no
later than January 4, 2008. Any notice shall include:
(a) the name and address of the shareholder and the text of
the proposal to be introduced, (b) the number of Common
Shares held of record, owned beneficially and represented by
proxy by the shareholder as of the date of the notice and
(c) a representation that the shareholder intends to appear
in person or by proxy at the meeting to introduce the proposal
specified in the notice.
Unless we receive notice of a shareholder proposal not included
in our 2008 proxy statement to be brought before the 2008 Annual
Meeting by March 20, 2008, then we may use our discretion
in voting proxies with respect to any shareholder proposal
properly brought before such Annual Meeting. The chairman of the
Annual Meeting may refuse to acknowledge the introduction of any
shareholder proposal not made in compliance with the foregoing
procedures.
OTHER
MATTERS
The Board of Directors is not aware of any matter to come before
the Annual Meeting other than those mentioned in the
accompanying notice. However, if other matters shall properly
come before the Annual Meeting, it is the intention of the
persons named in the accompanying proxy to vote in accordance
with their best judgment on those matters.
A copy of DATATRAKs Annual Report has been provided to
shareholders with this proxy statement. If a shareholder
entitled to vote at the Annual Meeting did not receive a copy of
the Annual Report with this proxy statement, that shareholder
may request a copy of the Annual Report from us. Upon the
receipt of a written request from any shareholder entitled to
vote at the Annual Meeting, we will mail, at no charge to the
shareholder, a copy of our Annual Report, including the
financial statements and schedules required to be filed with the
Commission pursuant to
Rule 13a-1
under the Exchange Act, for our most recent fiscal year.
Requests from beneficial owners of Common Shares must include a
good-faith representation that, as of the record date of the
Annual Meeting, the person making the request was the beneficial
owner of securities entitled to vote at the Annual Meeting.
Written requests for the Annual Report should be directed to:
Investor Relations, DATATRAK International, Inc., 6150 Parkland
Boulevard, Suite 100, Mayfield Heights, Ohio 44124.
You are urged to sign and return your proxy promptly in order to
make certain your shares will be voted at the Annual Meeting.
For your convenience, a return envelope is enclosed requiring no
additional postage if mailed in the United States.
By Order of the Board of Directors,
Thomas F. McKee
Secretary
May 4, 2007
29
c/o National City Bank
Corporate Trust Operations
Locator 5352
P. O. Box 92301
Cleveland, OH 44101-4301
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of
Shareholders, you can be sure your shares are represented at the meeting by
promptly returning your proxy in the enclosed envelope.
(Continued from reverse side)
ê Please fold and detach card at perforation before mailing. ê
The shares represented by this proxy will be voted as indicated in the spaces on the
reverse. To the extent that no directions are given for the election of the four nominees to
serve on the Board of Directors of the Company, the shares represented by this proxy will be
voted FOR the election of the four nominees to serve on the Board of Directors of the Company.
The shares represented by this proxy will be voted in the discretion of the proxy holders on all
other matters properly brought before the Annual Meeting and any adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE.
The proxy holders cannot vote your shares unless you sign and return this card.
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Please date, sign and return promptly in the accompanying envelope. |
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DATE: |
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SIGNATURE(S) |
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SIGNATURE(S) |
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NOTE: 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. |
ê Please fold and detach card at perforation before mailing. ê
PROXY FOR COMMON SHARES
Proxy Solicited on Behalf of the Board of Directors of
the Company for the Annual Meeting of Shareholders on June 14, 2007.
The undersigned hereby (i) appoints Terry C. Black and Raymond J. Merk, and each of them, his
true and lawful agents and proxy holders with full power of substitution in each to appear and vote
all of the Common Shares of DATATRAK International, Inc. that the undersigned will be entitled to
vote at the Annual Meeting of Shareholders of DATATRAK International, Inc. to be held at 6150
Parkland Boulevard, Paragon II, Suite 100, Mayfield Heights, Ohio on June 14, 2007, and at any
adjournments thereof, hereby revoking any and all proxies heretofore given, and (ii) authorizes and
directs said proxy holders to vote all of the Common Shares of the Company represented by this
proxy as follows.
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(1) |
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Election of the following nominees to serve on the Board of Directors of the Company: |
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Mr. Laurence P. Birch
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o FOR
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o WITHHELD |
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Mr. Timothy G. Biro
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o FOR
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o WITHHELD |
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Dr. Jerome E. Kaiser
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o FOR
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o WITHHELD |
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Dr. Robert M. Stote
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o FOR
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o WITHHELD |
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(2) |
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In their discretion to act on any other matters that may properly come before the meeting. |