UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 25, 2006
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AVOCENT CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 000-30575 91-2032368
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4991 CORPORATE DRIVE HUNTSVILLE, AL 35805
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (256) 430-4000
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n/a
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
2006 Executive Bonus Program.
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On April 25, 2006, Avocent Corporation's Compensation Committee approved
the Avocent Corporation 2005 Executive Bonus Program. A summary of the Avocent
Corporation 2006 Executive Bonus Program is incorporated herein by reference and
filed as Exhibit 99.11 hereto.
2005 Equity Incentive Plan.
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On June 23, 2005, the stockholders of Avocent Corporation (the "Company")
approved the 2005 Equity Incentive Plan (the "2005 Plan"), a copy of which was
included as part of the Proxy Statement for the Company's 2005 Annual Meeting of
Stockholders, and the 2005 Plan (together with the form of agreements under the
2005 Plan) was filed with the Securities and Exchange Commission (the "SEC").
The description of the 2005 Plan contained herein is qualified in its entirety
by reference to the full text of the 2005 Plan (and form of agreements
thereunder), filed as Exhibit 99.11 to the Company's Form 8-K on June 23, 2005.
The Company's Compensation Committee, which is comprised of three independent
non-employee directors, is the Administrator under the 2005 Plan.
On April 25, 2006, the Company's Compensation Committee and the Company's
Board of Directors unanimously approved an amendment to the 2005 Plan to
increase by two million two hundred fifty thousand (2,250,000) the number of
shares that may be awarded under the 2005 Plan. This amendment to the 2005 Plan
is being submitted to the Company's stockholders for approval at the 2006 Annual
Meeting of Stockholders on June 15, 2006, and more details about the proposed
amendment are contained in the Company's Proxy Statement for the 2006 Annual
Meeting of Stockholders, which was filed with the SEC on April 28, 2006.
Under the 2005 Plan, the Administrator has the discretion to make various
equity awards, including awards of stock options, restricted stock, restricted
stock units, performance shares, and performance share units. After a
comprehensive review of the Company's incentive compensation programs with an
independent compensation consultant, the Compensation Committee and Board of
Directors have concluded that future awards under the 2005 Plan will likely
consist of restricted stock, restricted stock units, and performance shares
rather than stock options.
The Administrator also has the authority under the 2005 Plan to approve the
forms of agreements for use under the 2005 Plan and to determine the time-based
or performance-based criteria upon which the granting or vesting of awards is
conditioned. On April 25, 2006, the Administrator approved additional forms of
agreement for grants of restricted stock units and performance shares under the
2005 Plan, copies of which are incorporated herein by reference and filed as
Exhibit 99.12 hereto.
The 2005 Plan authorizes the Administrator to determine the goals
applicable for performance-based awards using one or more measures that are
designed to meet the "performance-based compensations" requirements of Section
162(m) of the Internal Revenue Code. On April 25, 2006, the Administrator
established the performance-based criteria to be used by the Company in the
award of performance shares under the 2005 Plan, and determined that each
participant's performance-based award would be granted or earned based on
certain financial performance of the Company in 2006, and if earned or to the
extent earned, would vest over three years (including 2006). The number of
performance shares earned by each participant would be determined in accordance
with specified levels of growth in the Company's operational (not GAAP) revenue
and specified levels of growth in the Company's operational (not GAAP) earnings
per share in 2006 over the base operational revenue and operational earnings per
share in 2005 and adjusted for any acquisitions on a pro-rata basis and
excluding from the calculation of operational earnings per share any transaction
expenses from failed transactions or transactions that have not closed.
Depending on the levels of growth in the Company's 2006 operational revenue and
2006 operational earnings per share over 2005, participants would earn a
percentage from 0% to 150% of their performance-based awards. Each of the two
performance metrics would be weighted equally in calculating the percentage of
performance shares actually earned by each participant.
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The specific levels of operational revenue and earnings per share growth
and the related percentages of performance shares earned have been communicated
to each eligible executive and represent target levels or other achievements
with respect to specific quantitative or qualitative performance related
factors, or factors or criteria involving confidential commercial or business
information, the disclosure of which would have an adverse effect on the
Company.
Equity Ownership Guidelines.
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On April 25, 2006, the Avocent Corporation Board of Directors approved
stock ownership guidelines for directors and senior corporate officers of the
Company. Under these ownership guidelines, the Company's Board non-executive
members would be expected to own Company stock with a value equal to at least
their annual Board retainer, the Company's Chief Executive Officer would be
expected to own Company stock with a value equal to at least three times his
base salary, the Company's President and Chief Operating Officer would be
expected to own Company stock with a value equal to at least one and one-half
times his base salary, and other senior officers of the Company would be
expected to own Company stock with a value equal to at least the officer's base
salary. These ownership levels would be achieved over a period of time by
requiring the director or officer to retain a significant portion of any
restricted stock award until such time as the required minimum ownership level
is reached.
In the case of both officers and directors, shares owned would be valued
annually on the vest date of any restricted stock award at the then current
values of the shares. Shares owned by the officer or director in excess of the
minimum required stock ownership value can be sold in the discretion of the
officer or director, subject to normal trading guidelines imposed by the Company
from time to time. Performance shares granted to officers from time to time with
specific performance requirements to be earned and, once earned, subject to
additional vesting at specified dates would be excluded from the ownership
guidelines.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description of Exhibit
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99.11 Summary of Avocent Corporation 2006 Executive Bonus Program
99.12 Additional 2005 Equity Incentive Plan Forms of Agreements
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AVOCENT CORPORATION
Date: May 1, 2006
By: /s/ Samuel F. Saracino
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Samuel F. Saracino
Executive Vice President of Legal and Corporate
Affairs, General Counsel, and Secretary
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EXHIBIT INDEX
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Exhibit Description
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99.11 Summary of Avocent Corporation 2006 Executive Bonus Program
99.12 Additional 2005 Equity Incentive Plan Forms of Agreements
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