UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K/A
Amendment
No. 1
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
(Commission
file number)
Iomega
Corporation
(Exact
name of registrant as specified in its charter)
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Delaware
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86-0385884
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(State
of Incorporation)
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(IRS
employer identification number)
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(Address
of principal executive offices)
(858)
314-7000
(Registrant’s
telephone number)
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class
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Name
of Each Exchange on Which Registered
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Common
Stock, par value $0.03-1/3 per share
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New
York Stock Exchange
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Rights
to Purchase Series A Junior Participating Preferred Stock, $0.01 par value
per share
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New
York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act. Yes ¨ No x
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past
90 days. Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule#12b-2 of the Exchange Act. (Check
one):
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Large accelerated filer ¨
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Accelerated filer x
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Non-accelerated filer ¨
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Smaller reporting company ¨
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act) Yes ¨ No x
The
aggregate market value of Common Stock held by non-affiliates of the registrant
at June 29, 2007 was $253,779,981 based upon the last reported sales price
of the Common Stock as reported by the New York Stock Exchange.
Explanatory
Note
The
Company is filing this Amendment No. 1 on Form 10-K/A to its Annual Report
on Form 10-K for the year ended December 31, 2007 to furnish the
information required in Part III (Items 10, 11, 12, 13 and 14). This report
is limited in scope to the items identified above and should be read in
conjunction with the Form 10-K. Other than the furnishing of the information
identified above, this report does not modify or update the disclosure in the
Form 10-K in any way.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
Directors
The Board
of Directors currently has six members. Each member serves for a term
of one year that expires at the following annual meeting of
stockholders.
Set forth
below is information regarding each of our directors:
Reynolds
C. Bish (Age 55) – Director since 2006
Mr. Bish
was appointed Chief Executive Officer and a Director of Kofax on November 3,
2007. Kofax (London Stock Exchange: KFX) is a global leader of
intelligent capture and exchange solutions. From August 2006 until
November 2007, Mr. Bish was a private business consultant. From
January 2006 until August 2006, he was the President and General Manager of EMC
Captiva, a leading provider of input management solutions that operated as a
standalone business within the EMC Software Group, and a Vice President of the
EMC Software Group. Prior to EMC’s acquisition of Captiva at the end of 2005, he
was President and CEO, as well as a member of the Board of Directors, of
Captiva, a NASDAQ listed company that he co-founded in 1989.
Mr. Bish
is a member of the Board and the Chair of the Audit Committee of I-Many, Inc., a
NASDAQ listed company that provides contract management solutions.
Stephen
N. David (Age 59) – Director since 2002
Mr. David
is our Board Chair, and is also the Lead Director and Presiding Director and in
that role presides over all meetings of non-management and independent
directors. He is an independent consultant focused on providing
strategic planning services to a variety of clients in the consumer products
industry. He retired from Procter & Gamble, a multi-national
manufacturer of family, personal and household care products, in January 2005,
following a career that spanned more than thirty-four years. From
July 2000 until his retirement, he held the position of Chief Information
Officer and Business-to-Business Officer. He briefly acted as Interim
President and Chief Executive Officer of Iomega in February 2006 when a search
was made for a new CEO.
Mr. David
is a member of the Board of multiple private companies and is also on the Audit
Committee of a not-for-profit organization.
Margaret
L. Hardin (Age 35) – Director since 2004
Ms.
Hardin was appointed President of Munchkin, Inc., a designer, developer,
manufacturer and distributor of baby and toddler care products, in July
2007. She has also served as Chief Operating Officer of Munchkin
since January 2005. Ms. Hardin joined Munchkin in April 2000 and
previously served as Chief Financial Officer and Executive Vice
President. Prior to joining Munchkin, Ms. Hardin was employed by
Procter & Gamble in the capacity of Global Oral Care Finance Manager from
1996 to 2000.
Jonathan
S. Huberman (Age 42) – Director since 2004
Mr.
Huberman was appointed Vice Chair and Chief Executive Officer of Iomega in
February 2006. Prior to accepting this position, he was managing
director of aAd Capital Management, LP, which he co-founded in January
2005. aAd Capital is a long/short equity hedge fund that invests
primarily in small and mid-cap U.S. public equities. From 1997 through September
2004, Mr. Huberman was a general partner at Idanta Partners, Ltd., a private
venture capital partnership investing in public and private
enterprises. Mr. Huberman had previously served as a Director of
Iomega from November 1999 to May 2004.
Mr.
Huberman is a member of the Board of Trustees and serves on the Finance
Committee of a private education organization.
Daniel
R. Maurer (Age 51) – Director since March 2006
Mr. Maurer joined Intuit Inc., a
leading provider of business, financial management, and tax solutions for small
businesses, consumers, and accountants, in January 2006. He is
currently the Chief Marketing Officer and is responsible for all of Intuit’s
marketing programs. From October 2002 to December 2005, he was
employed by Campbell Soup Company, a global manufacturer and marketer of
high-quality, branded convenience food products, where he served as Vice
President, Strategy, Campbell USA. From January 2001 to May 2002, he
was Chair and Chief Executive Officer of Emmperative Inc., a private company
that develops marketing software for enterprises. Prior to May 2002,
he spent over 20 years in various capacities at Procter & Gamble, including
strategic business development, management of international operations and
marketing.
John
E. Nolan (Age 80) – Director since 2001
Mr. Nolan is a partner in the
Washington D.C. law firm of Steptoe & Johnson, and a mediator and arbitrator
of major business disputes. He has been with his firm since
1956 and has appeared before the Supreme Court to argue cases ranging from
constitutional issues of absolute presidential immunity to questions of punitive
damages and preemption under the Federal pension statute, ERISA.
Mr. Nolan
is on the CPR Panel of Distinguished Neutrals and serves as a mediator for the
U.S. Court of Appeals for the D.C. Circuit.
The
executive officers of the Company and their respective ages, positions with the
Company and business experience is provided in Part I of the Company’s Form 10-K
for the fiscal year ending December 31, 2007 under the heading “Executive
Officers of the Company”, and such disclosure is incorporated herein by
reference.
Section
16(a) Beneficial Ownership Reporting Compliance
To
Iomega's knowledge, and based on a review of reports and written representations
submitted to Iomega, all reports regarding beneficial ownership of securities of
Iomega required to be filed under Section 16(a) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), for the 2007 fiscal year were timely
filed with the SEC.
Website
Availability of Corporate Governance and Other Documents
Iomega believes that good corporate
governance practices are important to ensure that Iomega is managed for the
long-term benefit of its stockholders, employees and customers. The
following documents are available in the investor relations section of our
website, www.iomega.com: (1) our Code of Conduct adopted by us which is
applicable to directors and employees, including the Chief Executive Officer,
Chief Financial Officer and other executive officers, as well as the Corporate
Controller (2) our Corporate Governance Guidelines and (3) key Board
Committee charters, including charters for the Audit, Nominating, Compensation
and Ethics/Compliance Committees. Stockholders also may
obtain printed copies of these documents by submitting a written request to Ron
S. Zollman, Corporate Secretary of Iomega Corporation, 10955 Vista Sorrento
Parkway, San Diego, California 92130. We intend to post
on our website, www.iomega.com, all
disclosures that are required by law or New York Stock Exchange listing
standards concerning any amendments to, or waivers from, the provisions of the
Code of Conduct.
Director
Candidates
The
process followed by the Nominating and Corporate Governance Committee of the
Company’s Board of Directors to identify and evaluate director candidates
includes requests to Board members and others for recommendations, meetings from
time to time to evaluate biographical information and background material
relating to potential candidates, and interviews of selected candidates by
members of the Committee and the Board.
In
considering whether to recommend any particular candidate for inclusion in the
Board’s slate of recommended director nominees, the Nominating and Corporate
Governance Committee will apply the criteria set forth in Iomega’s Criteria for
Nomination as a Director. These criteria include: a
reputation for integrity, honesty and adherence to high ethical standards; the
demonstrated background, skills, expertise and judgment to make significant
long-term contributions to the Board, Iomega and its stockholders; a commitment
to understand Iomega and its industry; and sufficient time available to prepare
for and regularly attend and actively participate in meetings of the Board and
its committees. In addition, non-employee nominees should be
independent and neither have nor appear to have a conflict of interest that
would impair the nominee’s ability to (i) represent the interests of all
Iomega’s stockholders and (ii) fulfill the responsibilities of a
director. The Committee does not assign specific weights to
particular criteria, and no particular criterion is a prerequisite for each
prospective nominee. Iomega believes that the backgrounds and
qualifications of its directors, considered as a group, should provide a
composite mix of experience, knowledge, and abilities that will allow the Board
to fulfill its responsibilities.
Stockholders
may recommend individuals to the Nominating and Corporate Governance Committee
for consideration as potential director candidates by submitting their names,
together with appropriate biographical information and background materials and
a statement as to whether the stockholder or group of stockholders making the
recommendation has beneficially owned more than 5% of Iomega’s common stock for
at least one year as of the date such recommendation is made, to Nominating and
Corporate Governance Committee, c/o Corporate Secretary, Iomega Corporation,
10955 Vista Sorrento Parkway, San Diego, CA 92130. Assuming that
appropriate biographical and background material have been provided on a timely
basis, the Committee will evaluate stockholder-recommended candidates by
following substantially the same process, and applying substantially the same
criteria, as it follows for candidates submitted by others. If the Board
determines to nominate a stockholder-recommended candidate and recommends his or
her election, then his or her name will be included on Iomega’s proxy card for
the next annual meeting.
Stockholders
also have the right under Iomega’s Bylaws to directly nominate director
candidates, without any action or recommendation on the part of the Committee or
the Board, by following the procedures set forth in the Bylaws. Any
candidates nominated by stockholders in accordance with the procedures set forth
in the Bylaws will not be included on Iomega’s proxy card for the next annual
meeting unless the Board or Iomega is otherwise required by law to do
so.
Communicating
with the Independent Directors
The Board
will give attention to written communications that are submitted by stockholders
and other interested parties and will respond if and as
appropriate. The Lead Director (who is the Chair of the Board when
the Chair is independent), with the assistance of Iomega’s General Counsel, is
primarily responsible for monitoring communications from stockholders and other
interested parties and for providing copies or summaries to the other Directors
as deemed appropriate.
As
provided in the Corporate Governance Guidelines, communications are forwarded to
all Directors if they relate to important substantive matters and include
suggestions or comments that the Lead Director considers to be important for the
Directors to know. In general, communications relating to corporate
governance and long-term corporate strategy are more likely to be forwarded than
communications relating to ordinary business affairs, personal grievances or
matters as to which Iomega tends to receive repetitive or duplicative
communications.
Stockholders
and interested parties who wish to send communications on any topic to the
non-management Directors or to the Board should address such communications to
Board of Directors, Iomega Corporation, c/o General Counsel, 10955 Vista
Sorrento Parkway, San Diego, CA 92130, or via email to boardofdirectors@iomega.com.
Audit
Committee
The Company has a separately designated
standing Audit Committee. The Board of Directors has determined that
all of the members of the Audit Committee are independent as defined under New
York Stock Exchange rules and as contemplated by Rule 10A-3 under the Exchange
Act.
The Board
of Directors has determined that Mr. Bish, Acting Chair of the Audit Committee,
is an “audit committee financial expert” as defined in the regulations adopted
by the SEC.
ITEM
11. EXECUTIVE COMPENSATION
Compensation
Discussion and Analysis
This discussion describes the
principles underlying our compensation policies for our Chief Executive Officer,
Chief Financial Officer and our other executive officer (the President/Chief
Operating Officer) (collectively, these three are the “Named Executive
Officers”). We focus on the most important factors and analysis
relevant to the compensation awarded to our Named Executive Officers for 2007.
The discussion provides qualitative information regarding the manner and context
in which compensation is determined and adds perspective to the data presented
in the tables and narrative that follows.
The
Compensation Committee of our Board of Directors (the “Committee”) oversees
Iomega’s executive compensation program. The Committee sets Iomega’s
policies and, based on those policies, the Committee reviews or makes
adjustments to compensation to reflect changing business objectives or market
conditions.
Objectives
and Philosophy of our Executive Compensation Program:
Iomega’s
executive compensation program is intended to:
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attract,
retain, reward and motivate the best possible executive
talent;
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tie
short and long term cash and equity incentives to achievement of
measurable corporate performance objectives;
and
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align
executives’ incentives with stockholder value
creation.
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The
Committee evaluates executive performance with the goal of setting compensation
levels competitive with companies in the Computer/Peripherals industry, with
adjustments for individual experience levels and performance. In
making compensation decisions, we do not generally retain compensation
consultants and did not do so in 2007. We do regularly review salary
surveys such as the Radford Executive Survey, which was reviewed in
2007. The Committee believes that the Radford Executive Survey
provides an appropriate representation of the full range of competitive
companies. The survey is widely recognized as one of the most authoritative and
comprehensive sources for data on competitive total direct executive
compensation packages. The data reported is gathered from more than 700
participating organizations nationwide. These companies are predominately in
technology-based industries and approximately half operate outside of
California. The Committee generally targets overall compensation for
executives at approximately the 50th
percentile of compensation paid to similar positions at comparable companies.
Within the Radford survey data, we looked at the following companies with $200
million to $500 million in revenues within the Computer/Peripherals industry
segment (we view those as comparable companies):
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Acer
America
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InFocus
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Adaptec
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Oki
Data
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Cray
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Radisys
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Datalogic
Scanning
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TDK
Electronics
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Dot
Hill Systems
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Verifone
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Emulex
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Xyratex
International
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Headway
Technologies
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With
new hires, the Committee also looks at past compensation history, forfeitures in
leaving an immediately prior position, or any uniquely valuable skills the
executive may bring to Iomega to enhance stockholder value. The
Committee’s focus in connection with cash bonus awards is the Company’s success
or failure at meeting the annual operating plan goals set each year by the Board
in consultation with management; in particular, bonus payouts are tied to annual
operating income goals.
We also
provide a portion of our executive compensation in the form of stock options
that vest over time, which we believe can help to retain our executives and
align their interests with those of our stockholders by allowing them to
participate in the longer term success of our company.
Components
of our Executive Compensation Program
The primary elements of our executive
compensation program are:
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annual
cash bonuses based on company
performance;
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medical
and life insurance, additional paid-time-off and other employee benefits;
and
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severance
and change-of-control agreements.
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We do not
have a formal or informal policy for allocating compensation between long-term
and short-term compensation, between cash and non-cash compensation or among the
different forms of non-cash compensation. Instead, the Committee
reviews market data, historical practices, salary history, and practices of
comparable companies provided by the Director of Human Resources or the
President/Chief Operating Officer and determines, subjectively, what it believes
to be the appropriate level and mix of the various compensation
components.
Management
Involvement
For
compensation decisions, grants of equity compensation relating to executive
officers other than to our chief executive officer, amounts of salary adjustment
or any other financial remuneration, the Committee typically considers
recommendations from the chief executive officer and the president.
Base
Salary
In 2007, base salaries for our
executives were established on the scope of their responsibilities, related
experience, and market data. We believe the executive base salaries
should be targeted near the median of the range of salaries for executives in
similar positions at comparable companies. Base salaries are reviewed
annually by the Committee and may be adjusted to realign salaries with market
levels after taking into account individual responsibilities, performance and
experience. In 2007, executive officers did not receive a salary
increase. The executive officers were in their positions for only a
portion of the prior fiscal year and, accordingly, for 2006, the “Summary
Compensation Table” reflects this prorated salary amount.
Annual
Cash Incentive Bonus and Discretionary Bonus
Each
executive’s annual bonus target (set as a percentage of base salary) is
determined by the Committee (or, in the case of the Chief Executive Officer and
the President, the independent members of the Board), and the target is
generally set forth in each executive’s employment letter agreement, but may be
revised based upon promotion or other changes in responsibility. The
Committee does not believe that executives should generally receive an annual
cash incentive bonus unless the Company is earning an operating profit, and the
Committee believes that operating income is the most direct measure of the
leadership team’s delivery of results to the stockholders.
The
Iomega Corporate Bonus Plan for 2007 (the “2007 Bonus Plan”) was designed to pay
out on an annual basis upon achievement of targeted operating income goals set
forth by the Board of Directors. If Iomega reached one specific
threshold level of positive operating income, each executive received 75% of his
respective target bonus. From that threshold level to a higher target
level of operating income, the bonus payout increased proportionately up to a
maximum of 100% of the executive’s target bonus. There were no
provisions for paying any executive an amount exceeding 100% of his bonus
target. For 2007, each executive officer received a bonus equal to
100% of his target bonus. For 2007, the 100% target bonus threshold
was $9.067 million of non-GAAP operating income. This target figure
excluded: the cost of the bonus itself, any restructuring charges,
non-cash goodwill impairment charges and expenses related to the previously
planned purchase by Iomega of ExcelStor.
For 2008,
the Iomega Corporate Bonus Plan (the “2008 Bonus Plan”) is similarly designed,
except that the non-GAAP operating income goals are set more than 50% above the
non-GAAP operating income goals in the 2007 Bonus Plan. If Iomega
reaches one specific threshold level of positive operating income, each
executive will receive 75% of his or her respective target
bonus. From that first threshold level to a higher target level of
operating income, the bonus payout will increase proportionately to 100% of each
person’s respective bonus target; and then, from that level of operating income
to a third target level of operating income, the bonus payout will increase
proportionately at a somewhat more rapid rate, to 150% of each person’s
respective bonus target. Thus, 150% is the maximum percent of target
bonus that each executive may receive. Any bonus payment is based on
the executive’s then-current annual base salary.
The
Company has sometimes awarded (and could in the future award) discretionary
bonuses for special contributions, for example, where executives have created a
unique strategic opportunity for the Company, or where particular executives
have been asked to accept unusual burdens for a period of time, like filling a
second position during a vacancy. Such discretionary bonuses are not
scheduled to occur at any particular intervals. No discretionary
bonus payments were made for fiscal year 2007.
Stock
Options
We believe that equity grants provide
our executive officers with a strong link to our long-term performance, create
an ownership culture, and help to align the interests of our executives and our
stockholders. In addition, the vesting feature of our equity grants, generally
over four years, should aid executive officer retention.
We generally make an initial equity
award of stock options to new executives and annual equity grants as part of our
overall compensation program. All grants of options to executives are
approved by the Compensation Committee or, in the case of Messrs. Huberman and
Kampfer, by the independent members of the Board.
Our equity awards have typically taken
the form of stock options. The Compensation Committee reviews all
components of the executive’s compensation when determining annual equity awards
to ensure that their total compensation conforms to our overall compensation
philosophy and objectives. Stock awards to our executives have
typically been granted annually in the second quarter (except in the case of a
change of position or responsibility). The numbers of stock options
awarded to executives have been based on historical practices, market data and
subjective factors. The Committee believes that its option granting
practices have been conservative. The Company’s total option overhang (options
authorized plus options outstanding divided by total shares outstanding) is
approximately 15% as of the end of fiscal 2007. Option grants have
generally been scheduled to vest in equal fractions at the end of each of four
years (subject to change of control protections).
Because
of the then pending, confidential negotiations with ExcelStor, no stock options
were granted to executive officers in 2007. Following the
announcement of the ExcelStor transaction in December and the public disclosure
of earnings for the fiscal quarter ending in December 2007 (i.e., after the
February 5, 2008 earnings announcement), the Company proceeded with the delayed
stock option grants to its executive officers. In February 2008, the
Compensation Committee recommended, and all of the independent Directors
approved, stock option grants as follows: 425,000 options to the
Chief Executive Officer, 275,000 options to the President and Chief Operating
Officer, and 100,000 options to the Chief Financial Officer. In
determining these grants, the Board considered the following
factors: the 2007 Radford Executive Survey on equity compensation for
the 50th
percentile of our peer group, the fact that no options had been granted to Named
Executive Officers in 2007 or for almost two years, the Company had achieved
significantly improved financial results, the Company’s return to profitability
since third quarter 2006, and certain subjective
factors. The exercise price of the February 8, 2008 stock options
equaled the closing price of $2.81 on the date of the grant. They
vest at the rate of 25% per annum commencing on the first anniversary of the
grant date and expire ten years after the grant date.
Under the existing option plan, we set
the exercise price of all stock options to equal the Closing Price of our common
stock on the NYSE on the date of grant. We do not grant below fair
market value options or re-price options. New hire or promotion-based
options can only be granted at set periods during each month, and annual grants
are generally planned for a set period each year. Except as noted
above (where the 2007 grants were delayed because of material non-public
information), we do not time stock option grants to executives in coordination
with the release of material non-public information.
Benefits
and Other Compensation
We maintain broad-based benefits that
are provided to all employees, including health and dental insurance, life and
disability insurance, flexible spending accounts, long term care insurance, and
a 401(k) plan. Executives are eligible to participate in all of our
employee benefit plans, in each case on the same basis as other
employees. The maximum 401(k) “company match” an executive received
in 2007 was $8,700.
The
Company provides executive officers with perquisites and other personal benefits
that are reasonable and consistent with its overall compensation program to
enable Iomega to attract and retain employees for key positions. For
2007, we provided the following personal benefits and perquisites to our Named
Executive Officers, all of which benefits were fully paid for by the
Company: executive supplemental term life insurance, executive
long-term disability insurance, annual physicals, tax return preparation,
financial planning, and an additional two weeks of paid time off.
The
Committee periodically reviews the levels of perquisites and personal benefits
being provided.
Change
in Control Benefits
We have entered into Executive
Retention Agreements with our executive officers that provide certain benefits
in the event of a termination of an executive officer’s employment following a
change in control of Iomega or in the event their employment is terminated
without cause. We have provided detailed information about these
benefits, along with estimates of their value under various circumstances in the
section entitled “Potential Payments Upon Termination or Change in Control”
under “Executive Compensation.”
The
Compensation Committee has determined to provide for change of control benefits
for company leadership because we recognize that, as is the case with many
publicly-held corporations in the technology sector, the possibility of a change
in control exists, and such possibility, and the uncertainty and questions which
it may raise among our executive officers, could result in the departure or
distraction of executive officers to the detriment of the Company and our
stockholders. We believe a “double trigger” maximizes stockholder
value because it prevents an unintended windfall to executives in the event of a
friendly change of control, while still providing them appropriate incentives to
cooperate in negotiating any change of control in which they believe they may
lose their jobs. The Committee further believes that if an executive
officer remains at the Company following a change in control, but finds the work
environment subjectively unacceptable after a reasonable transition period, the
executive officers should have the opportunity (during a limited window one year
from the change in control) to elect to resign with benefits applicable as if
employment was severed.
In
connection with the then proposed acquisition of ExcelStor, the terms of the
Executive Retention Agreements for the executive officers were
amended. The amendments terminated as a result of the termination of
the ExcelStor Purchase Agreement in April 2008. See section entitled
“Compensation Elements of the Terminated ExcelStor Transaction” for
details.
Severance
We have
entered into Executive Retention Agreements with our executive officers that
provide severance benefits to an executive if the Company terminates his or her
employment without “cause.” These agreements with Messrs. Huberman, Kampfer, and
Romm are further described in the section entitled “Employment and Severance
Agreements.”
Impact
of Accounting and Tax Treatments of Compensation
The
accounting and tax treatment of compensation generally has not been a factor in
determining compensation amounts for executive officers. However, the
Committee does strive to balance the cost to the Company with the benefit to the
executive.
We have
adopted FAS 123R, and the accounting treatment is not expected to have a
material effect on the future selection and use of differing forms of equity
compensation.
Future
Compensation
On April
8, 2008, we entered into an Agreement and Plan of Merger (the “Merger
Agreement”) by and among Iomega, EMC Corporation (“EMC”) and Emerge Merger
Corporation, a wholly owned subsidiary of EMC (“Merger
Sub”). Pursuant to the Merger Agreement, Merger Sub will make an
offer to pay Three Dollars and Eighty-five Cents ($3.85) in cash for each
outstanding share of Iomega common stock, subject to certain conditions (the
“Offer”). Provided that the tender offer results in EMC acquiring at
least a majority of the outstanding shares of our common stock, the consummation
of the Offer will be followed by the merger of Merger Sub with and into Iomega
(the “Merger”), with Iomega surviving as a wholly owned subsidiary of
EMC.
It is
expected that upon the consummation of the Merger,, executive compensation will
be adjusted by EMC pursuant to its policies and practices as well as employment
agreements to be entered into between certain of our Named Executive Officers
and EMC. This would include salary and bonus, stock options, stock
awards, severance packages, and health and welfare benefits. Details
of any such adjustments will be disclosed in the Company’s Schedule 14D-9 to be
filed in connection with the EMC tender offer.
Summary
Compensation Table
The
following table contains compensation information for each Named Executive
Officer. The columns for “Stock Awards,” and “Change in Pension
Value and Nonqualified Deferred Compensation Earnings” have been omitted because
no compensation has been earned, paid or awarded under these
categories.
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Name
and
Principal Position
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Year
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Salary ($)
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|
|
Bonus ($)
|
|
|
Option
Awards($)
(1)
|
|
|
Nonequity
Incentive Plan Compensa-tion
($)(2)
|
|
|
All
Other Compensa-tion
($)(3)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan
S. Huberman
Chief
Executive Officer and Vice Chair
|
|
|
2007
2006
|
|
|
|
500,000
405,769
|
|
|
|
500,000
|
|
|
|
132,964
|
|
|
|
500,000
--
|
|
|
|
8,700
11,068
|
|
|
|
1,141,664
980,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
D. Kampfer
President
and Chief Operating Officer
|
|
|
2007
2006
|
|
|
|
355,000
344,635
|
|
|
|
216,250
|
|
|
|
|
|
|
|
266,250
--
|
|
|
|
8,700
8,700
|
|
|
|
715,396
581,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preston
S.
Romm
Vice
President, Finance and Chief Financial Officer
|
|
|
2007
2006
|
|
|
|
270,000
197,308
|
|
|
|
95,000
|
|
|
|
|
|
|
|
148,500
--
|
|
|
|
8,700
6,819
|
|
|
|
497,546
299,127
|
|
|
(1)
|
The
amounts under “Option Awards” reflect the compensation cost recognized in
each year for options that vested in that year, whether or not they were
granted in a prior year, and are in accordance with FAS
123R. The assumptions used in the calculations of these amounts
are set forth in the Notes to the Company’s audited financial statements
for fiscal year 2007 which are included in the Company’s Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 14,
2008.
|
|
(2)
|
The
amount earned by each Named Executive Officer under the 2007 Corporate
Bonus Plan was paid in the first quarter of
2008.
|
|
(3)
|
The
amounts shown under “All Other Compensation” include Iomega’s matching
contribution in 2007 under the Iomega Retirement and Investment Savings
Plan (“401(k) Plan”) as follows: Jonathan Huberman - $8,700;
Thomas Kampfer - $8,700; Preston Romm -
$8,700.
|
Perquisites
and personal benefits for each Named Executive Officer are below the threshold
of $10,000 per person, and therefore, have been omitted from the table as
permitted by the SEC rules.
Grants
of Plan-Based Awards for 2007
The following table provides
information about non-equity incentive plan awards granted to the Named
Executive Officers in 2007. Certain columns otherwise required to be
provided in this table have been omitted because there is no information to be
disclosed under these headings.
|
|
|
|
Estimated
Potential Payouts under
Non-Equity Incentive
Plan Awards(1)
|
|
|
Name
|
Grant
Date(2)
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Jonathan
Huberman…….
|
2/28/07
|
|
|
375,000
|
|
|
|
500,000 |
|
|
|
500,000 |
|
|
Thomas
Kampfer………..
|
2/28/07
|
|
|
199,688 |
|
|
|
266,250 |
|
|
|
266,250 |
|
|
Preston
Romm…………..
|
2/28/07
|
|
|
111,375 |
|
|
|
148,500 |
|
|
|
148,500 |
|
|
(1)
|
This
information relates to award opportunities granted under the 2007
Corporate Bonus Plan as further described on in the section entitled
“Annual Cash Incentive Bonus and Discretionary
Bonus.”
|
|
(2)
|
This
is the date the 2007 Corporate Bonus Plan was approved by the Board of
Directors.
|
Outstanding
Equity Awards at 2007 Fiscal Year End
The following table provides
information about outstanding equity awards held by the Named Executive Officers
at the end of fiscal year 2007. The columns for “Stock Awards,” and
“Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options” have been omitted because there is no information
to be disclosed under these headings. Except as footnoted, all
options vest at 25% per year on each anniversary of the date of
grant. Outstanding options listed below expire ten years from the
date of grant.
|
Name
|
Option Grant Date
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
|
Option
Exercise Price
($)
|
|
Option Expiration Date
|
|
Jonathan
Huberman..
|
11/03/04
05/11/05
02/24/06
|
|
|
6,000
5,000
150,000
|
|
|
|
4,000
5,000
250,000
|
|
|
$ |
4.415
2.40
2.75
|
|
|
|
Thomas
Kampfer……
|
07/24/01
05/26/04
05/11/05
03/03/06
|
|
|
32,000
60,000
22,000
31,250
|
|
|
|
--
20,000
22,000
93,750
|
|
|
|
3.075
4.685
2.40
2.75
|
|
|
|
Preston
Romm………
|
03/07/06
|
|
|
43,750 |
|
|
|
131,250 |
|
|
|
3.10 |
|
|
|
(1)
|
Vests
at 20% per year beginning on the first anniversary of the grant date; this
option was granted to Mr. Huberman when he served as a non-employee
director.
|
|
(2)
|
Vests
12.5% on date of grant, 25% per year on the first, second and third
anniversaries of the grant date, and 12.5% on the fourth anniversary of
the grant date.
|
Outstanding
options are subject to acceleration or cash-out of the value of the outstanding
options if such options are not assumed or substituted upon an acquisition
event. In addition, in the event of an acquisition event, under each
1997 Nonqualified Stock Option Agreement (the “1997 Agreement”), one-half of the
shares subject to the 1997 Agreement which are not by their terms then
exercisable, become immediately exercisable, with the remaining shares becoming
exercisable in accordance with the original vesting schedule, except that all
shares will vest two years after the acquisition event or earlier if the
optionholder's employment is terminated without cause or if the optionholder
terminates employment for “good reason.” “Good Reason” is defined in
the 1997 Agreement as a significant reduction in the optionholder’s
compensation, position or responsibilities. An “acquisition event” generally
means (a) any merger or consolidation which results in the voting securities of
Iomega outstanding immediately prior to such event representing less than 50% of
the combined voting power of the voting securities of Iomega or the surviving or
acquiring entity outstanding immediately after such merger or consolidation; (b)
any sale of all or substantially all of the assets of Iomega; or (c) the
acquisition of beneficial ownership of securities of Iomega representing 50% or
more of the combined voting power of Iomega's then outstanding securities by any
person.
Option
Exercises and Stock Vested During 2007
The table required under this heading
has been omitted because there is no information to be disclosed.
Employment
and Executive Retention Agreements
Employment Agreement with Mr.
Huberman. In February 2006, Jonathan S. Huberman was appointed Vice Chair
and Chief Executive Officer. Iomega entered into an employment
agreement with Mr. Huberman providing for a base salary of
$500,000. His annual incentive award was targeted at 100% of his
annual base salary, and his bonus was guaranteed for fiscal
2006. He was also granted an option to purchase 400,000 shares
of Iomega common stock. The agreement provides that Iomega will pay Mr. Huberman
severance pay equal to twelve months of his base salary if his employment is
terminated other than for cause plus his target bonus for the year in which the
employment termination occurs (prorated for the portion of the year he actually
worked), and health benefits continued for 12 months or until Huberman finds new
employment. If Huberman becomes employed during the 12 months
following his termination, Iomega’s post-termination obligations shall be
reduced by 50% of the amount he obtains from that employment, provided that
Iomega’s obligations shall not be less than six months of his base salary and
50% of his target incentive award and other insurance for a period of twelve
months. Mr. Huberman’s current annual salary is
$500,000.
Employment Agreement with Mr.
Kampfer. In February 2006, Mr. Kampfer was appointed President
and Chief Operating Officer; he also continued to serve as Interim Financial
Officer until March 2006. As a result of his February 2006 change in
responsibility and promotion, Iomega amended the employment agreement with Mr.
Kampfer and agreed to increase his base salary to $355,000. His
annual incentive award was targeted at 75% of his annual base salary, and his
bonus was guaranteed for fiscal 2006. He was also granted an option
to purchase 125,000 shares of Iomega common stock. The agreement
provides that Iomega will pay Mr. Kampfer severance pay equal to twelve months
of base salary if his employment is terminated other than for cause, plus his
target bonus for the year in which the employment termination occurs (prorated
for the portion of the year he actually worked), and a payment equal to the cost
to continue his health benefits for a period of twelve
months. Mr. Kampfer’s current annual salary is
$355,000.
Employment Agreement with Mr. Romm.
In March 2006, Preston Romm was appointed Vice President, Finance and
Chief Financial Officer. Iomega entered into an employment agreement
with Mr. Romm providing for a base salary of $270,000. His annual
incentive award was targeted at 55% of his annual base salary, and his bonus was
guaranteed for fiscal 2006. In addition, he received a hiring bonus
of $20,000. He was also granted an option to purchase 175,000 shares
of Iomega common stock. The agreement provides that Iomega will pay
Mr. Romm severance pay equal to nine months of his base salary if his employment
is terminated other than for cause. Mr. Romm’s current annual salary
is $270,000.
Executive Retention
Agreements. Iomega has Executive Retention Agreements with its Named
Executive Officers. These agreements are in conjunction with the
general severance arrangements described above and are intended to govern in the
specific occurrence of a change in control. The agreements are
generally entered into at the time employment commences and will continue during
each executive's employment until the earlier of (1) 24 months after the change
in control date if the executive is then employed, or (2) the fulfillment of
Iomega's obligations to the executive if the executive's employment with Iomega
is terminated within 24 months following a change in control. The
agreements are not employment contracts and do not specify any terms or
conditions of employment. Rather, the agreements provide for certain
severance benefits to the executive if, during the 24 months following a change
in control of Iomega, the executive's employment is terminated by Iomega other
than for cause, or the executive terminates his employment for good
reason.
The terms
“change in control,” “cause,” and “good reason” are each defined in the
agreements. Change in control means, in summary: the acquisition by a
person or a group of 40% or more of the outstanding stock of Iomega; a change,
without Board of Directors approval, of a majority of the Board of Directors;
the acquisition of Iomega by means of a reorganization, merger, consolidation or
asset sale; or the approval of a liquidation or dissolution of
Iomega. Cause means, in summary: the executive's willful and
continued failure to substantially perform his reasonable assigned duties, which
failure continues after a 30-day cure period; or the executive's willful
engagement in illegal conduct or gross misconduct injurious to
Iomega. Good reason means, in summary: a diminution in the
executive's position, authority or responsibilities; a reduction in his salary
or benefits; a relocation of the executive; a breach of an employment contract
with the executive; or a resignation by the executive, for any reason, during
the 30-day period immediately following the one-year anniversary of the change
in control.
If the executive's employment is
terminated by Iomega without cause or by the executive for good reason within 24
months following a change in control, the executive is entitled to receive (1)
accrued compensation through the date of termination; (2) monthly payments for
12 months (24 months for the Chief Executive Officer and 18 months
for the President) equal to one-twelfth of the executive's highest base salary
and highest bonus target during the three-year period prior to the change in
control; (3) a continuation of all employee benefits during the 12-month period
(24 months for the Chief Executive Officer and 18 months for the President)
following employment termination; and (4) any other post-termination benefits
which the executive is eligible to receive under any plan or program of
Iomega. If an executive officer remains at the Company following a
change in control, but finds the work environment subjectively unacceptable
after a one year transition period, the executive officer has the opportunity
(during a limited window) to elect to resign with benefits applicable as if
employment was severed. The salary and benefit continuation
provisions terminate if the executive becomes engaged in an activity that is
competitive with Iomega. The agreements provide that the amount of
severance benefits payable to the executive shall be reduced by an amount
necessary to avoid triggering the excise tax provisions of Sections 280G and
4999 of the Internal Revenue Code of 1986, only if such reduction results in
greater net after-tax benefits to the executive.
Iomega is
also generally required to pay, as incurred, all expenses that the executive
reasonably incurs as a result of any dispute relating to the
agreement.
Compensation Elements of the
Terminated ExcelStor Transaction. Under the terms of the
Executive Retention Agreements for Iomega’s Named Executive Officers, the
ExcelStor acquisition would have been considered a change in control and would
have triggered certain benefits thereunder. To provide incentives for
these executives to remain with the Company for at least three years following
the closing of the acquisition, in December 2007, the Named Executive Officers
each executed a Retention Bonus and Amendment of Executive Retention Agreement,
applicable only in connection with Iomega’s planned acquisition of ExcelStor or
in the event of a second Change of Control involving an ExcelStor affiliate
within three years of the ExcelStor acquisition. These provisions
became void on April 8, 2008 when Iomega terminated plans to acquire
ExcelStor. The terms that would have applied in the event Iomega
proceeded with that transaction were as follows:
Effective
on the closing of the acquisition of ExcelStor, Mr. Huberman would have received
$1 million payable in monthly installments over a period of twelve months
following the completion of the transactions contemplated by the ExcelStor
Purchase Agreement. He would also have received a lump sum payment of
$1 million on the third anniversary of the closing of the completion of the
transactions contemplated by the ExcelStor Purchase Agreement.
Effective
on the closing of the ExcelStor acquisition, Mr. Kampfer would have received
$466,000 in monthly installments over a period of six months following
completion of the transactions contemplated by the ExcelStor Purchase
Agreement. He would also have received lump sum payments of $186,000,
$140,000 and $139,875 payable on the first, second and third anniversaries of
the completion of the transactions contemplated by the ExcelStor Purchase
Agreement.
Effective
on the closing of the ExcelStor acquisition, Mr. Romm would have received
$209,250 in monthly installments over a period of twelve months following
completion of the transactions contemplated by the ExcelStor Purchase Agreement.
He would also have received $209,250 on the third anniversary of the completion
of the transactions contemplated by the ExcelStor Purchase
Agreement.
It has
been determined that under the language of the stock option plans and related
agreements, the proposed ExcelStor acquisition transaction would not have been
considered a change in control, and there would not have been any acceleration
of unvested options.
In
addition to providing for these payments, the Executive Retention Agreements for
the three Named Executive Officers were amended to provide various new
terms. Specifically, the amendments provided that, in the event of an
additional Change in Control after the proposed ExcelStor Acquisition but within
three years of the closing of the ExcelStor transaction and involving certain
ExcelStor related companies, the total payments that would be due to an
executive in such instance would be reduced by the amount of payments made to or
on behalf of the executive as a retention bonus. If such additional
Change in Control occurred more than three years after the closing of the
proposed acquisition transaction, there would be no reduction to the payments to
which an executive was entitled regardless of the amounts previously paid as
retention bonus amounts. In addition, the provision allowing the
termination of employment by the Named Executive Officer for any reason or no
reason during the 30-day period beginning on the first anniversary of the Change
in Control was to be deleted on the closing of the proposed acquisition
transaction, but for that transaction only.
As noted
above, effective April 8, 2008, in connection with the termination of the
ExcelStor Purchase Agreement, each of the above described Retention Bonus and
Amended Executive Retention Agreements automatically terminated in their
entirety in accordance with their terms.
Compensation Elements of the
Proposed EMC Transaction. In connection with the planned
acquisition of Iomega by EMC, as authorized by, and with the consent of, EMC,
the Company’s Board of Directors approved the payment of certain bonuses to
Messrs. Huberman and Kampfer in consideration for their agreement to terminate
their respective Executive Retention Agreements, effective upon the successful
completion of the EMC transactions. In particular, upon the
completion of the Merger, the Company will pay to Mr. Huberman a bonus in an
amount equal to $750,000 and will pay to Mr. Kampfer a bonus in an amount equal
to $650,000. In consideration for entering into Non-Competition
Agreements with EMC, these executives will each receive an additional payment of
$250,000 on completion of the Merger. Additionally, concurrently with
the execution of the Merger Agreement, EMC entered into separate letter
agreements with Messrs. Huberman and Kampfer (the “Letter Agreements”). The
Letter Agreements, which are effective and contingent upon the consummation of
the Merger, contain terms relating to the employment of Messrs. Huberman and
Kampfer following the effective time of the Merger. Further
information relating to the compensation of Messrs. Huberman and Kampfer in
connection with the Merger will be disclosed in the Company’s Schedule 14D-9 to
be filed in connection with the tender offer.
Potential
Payments Upon Termination Or Change In Control
The information below reflects the
potential payments and benefits each Named Executive Officer of the Company
could receive in the event of a termination of the executive’s
employment. The data assumes that such termination was effective on
December 31, 2007.
The
accelerated vesting of stock options is valued on the difference between our
closing share price ($3.47) on December 31, 2007, and the exercise price for
each option that receives accelerated vesting. Therefore, options
already vested at December 31, 2007 are not included in the potential payment
table.
The
amounts set forth in the table do not include payments and benefits which are
extended by law or on a non-discriminatory basis to salaried employees generally
on termination of employment. This would include such items as
accrued vacation pay and 401(k) account balances.
The Executive Retention Agreements for
all three Named Executive Officers were amended in 2007 to provide various new
terms that would apply only in connection with the potential ExcelStor
acquisition. In April 2008, the Board of Directors of the
Company officially notified ExcelStor that it was terminating the Purchase
Agreement.
The table
below sets out potential payments that would be made in the event of a Change in
Control by an entity that is not EMC or ExcelStor and
pursuant to certain other termination events.
|
Name
|
|
Salary
|
|
|
Bonus
|
|
|
Health
and Other Insurance Benefits
|
|
|
Additional
Vested Options (#)
|
|
|
Value
of Additional Vested Options
|
|
|
Other
Compensa-tion
|
|
|
Jonathan
Huberman
Termination following
Change
in Control (2)
|
|
$
|
500,000
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
|
|
|
|
--
--
129,500
129,500
|
|
|
$
|
140,738
|
|
|
$
|
-- -- -- 25,000 |
|
|
Thomas
Kampfer
Voluntary
Termination
Termination
following Change
in Control (2)
|
|
|
355,000
532,500
|
|
|
|
266,250
399,375
|
|
|
|
|
|
|
|
--
--
67,875
67,875
|
|
|
|
|
|
|
|
-- -- -- 25,000 |
|
|
Preston
Romm
Termination following
Change
in Control (2)
|
|
|
202,250
270,000
|
|
|
|
148,500
|
|
|
|
|
|
|
|
--
--
65,625
65,625
|
|
|
|
|
|
|
|
-- -- -- 25,000 |
|
|
(1)
|
On
a change in control event as defined in certain of the option plans and
agreements, one-half of any unvested options will be immediately
vested.
|
|
(2)
|
On
a termination of employment within two years following a change in
control, all additional unvested options will be fully accelerated, and
the executive will be entitled to outplacement services up to a maximum
cost of $25,000. For additional information, see section
entitled “Executive Retention Agreements” under “Employment and Severance
Agreements.”
|
Severance
payments made following involuntary termination will be paid on a bi-weekly
basis. Health insurance payments generally will be paid in a lump
sum.
Compensation
Committee Interlocks and Insider Participation
The
following directors were members of the Compensation Committee during 2007:
Stephen David, Committee Chair, Daniel Maurer, John Nolan and, until his
resignation in September 2007, Bruce Darling. During 2007, none of
the members of the Compensation Committee was an officer or employee of Iomega
during the time that he served on the Compensation Committee.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed the Compensation Discussion and Analysis and
discussed it with management. Based on its review and discussions with
management, the Committee recommended to the Board of Directors that the
Compensation Discussion and
Analysis
be included in the Company’s Annual Report on Form 10-K for 2007. This report is
provided by the following committee members, all of whom are
independent.
Stephen
N. David, Chair
Daniel
R. Maurer
John
E. Nolan
DIRECTOR
COMPENSATION
Iomega’s
non-employee Directors receive fees for their services on the Board of Directors
and its committees and are reimbursed for out-of-pocket expenses in connection
with Iomega’s business activities. Directors also receive stock
options under existing option plans. The compensation earned by
non-employee Directors for services during 2007 is set forth below. The headings
for “Non-Equity Incentive Plan Compensation,” “Stock Awards,” “All Other
Compensation,“ and “Changes in Pension Value and Nonqualified Deferred
Compensation Earnings” have been omitted as no compensation has been earned,
paid or awarded in these categories. None of the individuals listed
received any perquisites from the Company in 2007.
|
Name
|
|
Fees
Earned or Paid
in Cash
($)
|
|
|
Option Awards ($)(1)(2)
|
|
|
Total
($)
|
|
|
Robert
Berkowitz
(*)
|
|
|
72,347 |
|
|
|
56,169 |
|
|
|
128,516 |
|
|
Reynolds
Bish
|
|
|
45,603 |
|
|
|
28,282 |
|
|
|
73,885 |
|
|
Bruce
Darling
(*)
|
|
|
43,526 |
|
|
|
14,739 |
|
|
|
58,265 |
|
|
Stephen
David
|
|
|
100,000 |
|
|
|
16,998 |
|
|
|
116,998 |
|
|
Margaret
Hardin
|
|
|
62,500 |
|
|
|
14,739 |
|
|
|
77,239 |
|
|
Daniel
Maurer
|
|
|
56,500 |
|
|
|
13,064 |
|
|
|
69,564 |
|
|
John
Nolan
|
|
|
66,000 |
|
|
|
10,106 |
|
|
|
76,106 |
|
* Messrs.
Berkowitz and Darling resigned from the Board of Directors in 2007.
|
|
(1)
|
This
column reflects the compensation cost recognized for accounting purposes
in 2007 for options that vested in 2007, and are in accordance with FAS
123R. The assumptions used in the calculations of these amounts
are set forth in the Notes to the Company’s audited financial statements
for fiscal year 2007 which are included in the Company’s Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 14,
2008.
|
|
|
(2)
|
The
following table provides information on stock options granted to the
non-employee Directors in fiscal year 2007 and their aggregate holdings at
year end:
|
|
Name
|
|
All
Other Option Awards: Number of Securities Underlying Options
(#)(a)
|
|
|
Exercise
or Base Price of Option Award ($/Sh)
|
|
|
Grant
Date Fair Value of Option Awards Granted in Fiscal Year ($)
|
|
|
Aggregate
Total Options Outstanding at End of Fiscal Year
(#)
|
|
|
Robert
Berkowitz..
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
51,005 |
(b) |
|
Reynolds
Bish
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
70,000 |
|
|
Bruce
Darling……
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
-- |
(c) |
|
Stephen
David
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
75,000 |
|
|
Margaret
Hardin
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
45,000 |
|
|
Daniel
Maurer
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
40,000 |
|
|
John
Nolan
|
|
|
20,000 |
|
|
|
4.15 |
|
|
|
83,000 |
|
|
|
45,000 |
|
|
|
(a)
|
All
options in this column were granted on May 23, 2007, and vest at 25% per
year over four years on each anniversary of the grant
date. Options granted to Directors vest over either four or
five years depending on the plan in effect at the time of
grant. Grants made prior to 2007 were issued with an
exercise price equal to the average of the High and Low stock prices on
the date of grant. Commencing with grants made in 2007, the
exercise price equals the closing price of the common stock on the date of
grant. Pursuant to resolutions of the Board of Directors, under
the new 2007 Stock Incentive Plan, on initial election to the Board, each
Director receives an option for 20,000 shares. Thereafter, each
non-employee Director is eligible to receive an annual option grant for
20,000 shares on the date of the annual meeting of stockholders. These
grants vest at the rate of 25% per year on each anniversary of the grant
date, and the life of each option is ten years from date of
grant.
|
|
|
(b)
|
Mr.
Berkowitz resigned from the Board of Directors in November 2007 due to
health reasons and retained his options pursuant to the provisions of the
various Plans under which the grants were
made.
|
|
|
(c)
|
Mr.
Darling resigned from the Board of Directors in September 2007 and had no
options outstanding at the end of the fiscal
year.
|
Compensation to non-employee Directors
is determined using historical Company practices and reviewing data for
comparable companies. Management, through the Director of Human
Resources and the President/Chief Operating Officer, provides competitive
benchmarking data and analysis to the Compensation Committee. No
outside consultants are engaged in this process. Director
compensation currently consists of cash and stock options. Changes to
non-employee Director compensation are reviewed by the Compensation Committee
and presented to the full Board of Directors for
approval.
During 2007, non-employee Directors
were compensated in accordance with the following fee schedule with the
exception of Mr. Bish. At the time he joined the Board of Directors
in 2006, Mr. Bish waived his Board and Committee retainers for a period of one
year and received in lieu thereof 30,000 stock options under the 1997 Stock
Incentive Plan. Mr. Bish was compensated under the existing fee
schedule beginning after the May 2007 annual meeting.
|
Annual
Retainer:
|
|
|
|
|
|
|
$ |
100,000 |
|
Other Non-Employee
Directors
|
|
$ |
30,000 |
|
|
Committee
Fees:
|
|
|
|
|
Chair of the Audit
Committee
|
|
$ |
40,000 |
|
Chair of the Compensation
Committee
|
|
$ |
20,000 |
|
Chair of the Ethics and Compliance
Committee
|
|
$ |
10,000 |
|
Members of the Audit
Committee
|
|
$ |
15,000 |
|
Members of the Compensation
Committee
|
|
$ |
10,000 |
|
Other Members of a Standing
Committee (other than the
Nominating and Governance
Committee)
|
|
$ |
5,000 |
|
|
Meeting
Fees:
|
|
|
|
|
|
|
|
$ |
2,000 |
|
Committee Meeting (not paid if meeting fees
exceed $3,500 for same two-day period)
|
|
$ |
1,500 |
|
Per Board or Committee Meeting by
Teleconference
|
|
$ |
500 |
|
There are
no committee or meeting fees with respect to the Nominating and Governance
Committee.
The Board
has an ad hoc Special Committee which replaced the Strategy Committee in
February 2007. The current members of the Special Committee are Messrs. David,
Chair, and Bish. No meeting fees are paid for service on this
Committee.
|
|
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
Equity
Compensation Plan Information
The following table provides
information, as of December 31, 2007, concerning securities authorized for
issuance under all equity compensation plans of Iomega:
|
Plan
Category
|
|
(a)
Number
of securities to be issued upon exercise of outstanding
options
|
|
|
(b)
Weighted
average exercise price of outstanding
options
|
|
|
(c)
Number
of securities remaining available for future issuance (excluding securities in Column
(a))
|
|
|
Equity
compensation plans approved by security holders
|
|
|
3,062,644 |
|
|
$ |
3.89 |
|
|
|
5,676,525 |
|
|
Equity
compensation plans not approved by security holders
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
3,062,644 |
(1) |
|
$ |
3.89 |
(2) |
|
|
5,676,525 |
(3) |
|
(1)
|
Represents
shares of common stock issuable on exercise of options under the following
equity compensation plans: 1995 Director Stock Option Plan;
1997 Stock Incentive Plan; 2005 Director Stock Option Plan; and 2007 Stock
Incentive Plan.
|
|
(2)
|
This
column reflects the weighted average exercise price of outstanding
options.
|
|
(3)
|
Represents
324,025 shares under the 1998 Employee Stock Purchase Plan and the 1998
International Employee Stock Purchase Plan and 5,352,500 available under
the 2007 Stock Incentive Plan. The 1998 Employee Stock Purchase
Plan and the 1998 International Employee Stock Purchase Plan were
suspended in fiscal 2004. These Plans may be reactivated if conditions
warrant.
|
Ownership
by Management, Directors and Principal Stockholders
The following table contains
information regarding beneficial ownership of Iomega's common stock on April 22,
2008, by each director or nominee, each executive officer named in the Summary
Compensation Table, all directors and executive officers as a group, and the
holders of more than five percent of Iomega's outstanding common stock known to
Iomega. Beneficial ownership is determined in accordance with the
rules of the SEC. Shares of common stock subject to options that are
presently exercisable or exercisable within 60 days of April 22, 2008, are
deemed outstanding for the purpose of computing the percentage ownership of the
person holding the options, but are not treated as outstanding for the purpose
of computing the percentage ownership of any other
person. Information for holders of more than five percent of Iomega's
common stock is based on their latest Schedule 13G filed with the
SEC. Except as otherwise indicated in the table below, the addresses
of the named beneficial owners are in care of Iomega Corporation, 10955 Vista
Sorrento Parkway, San Diego, California 92130.
|
Beneficial
Owner
|
|
Amount
and nature of beneficial ownership excluding
options
|
|
|
Shares
acquirable within 60
days
|
|
|
Percent
ownership
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryant
R. Riley (1)
11100
Santa Monica Blvd., #800
|
|
|
5,570,948 |
|
|
|
-- |
|
|
|
10.2 |
% |
|
Renaissance
Technologies, LLC
James
H. Simons (2)
800
Third Avenue
|
|
|
4,860,300 |
|
|
|
-- |
|
|
|
8.8 |
% |
|
Dimensional
Fund Advisors Inc. (3)
1299
Ocean Avenue
|
|
|
4,364,361 |
|
|
|
-- |
|
|
|
8.0 |
% |
|
Lloyd
I. Miller, III (4)
4550
Gordon Drive
|
|
|
4,323,046 |
|
|
|
-- |
|
|
|
7.9 |
% |
|
Weiss
Multi-Strategy Advisers LLC (5)
One
State Street, 20th Flr.
|
|
|
2,970,736 |
|
|
|
-- |
|
|
|
5.4 |
% |
|
Reynolds
C.
Bish
|
|
|
20,000 |
|
|
|
30,000 |
|
|
|
* |
|
|
Stephen
N. David
(6)
|
|
|
15,000 |
|
|
|
55,000 |
|
|
|
* |
|
|
Margaret
L.
Hardin
|
|
|
-- |
|
|
|
23,000 |
|
|
|
* |
|
|
Daniel
R.
Maurer
|
|
|
-- |
|
|
|
15,000 |
|
|
|
* |
|
|
John
E. Nolan
(7)
|
|
|
50,000 |
|
|
|
25,000 |
|
|
|
* |
|
|
Jonathan
S.
Huberman
|
|
|
30,000 |
|
|
|
263,500 |
|
|
|
* |
|
|
Thomas
D.
Kampfer
|
|
|
6,000 |
|
|
|
207,500 |
|
|
|
* |
|
|
Preston
S.
Romm
|
|
|
17,850 |
|
|
|
87,500 |
|
|
|
* |
|
|
All
Directors and Executive Officers as a group
|
|
|
138,850 |
|
|
|
706,500 |
|
|
|
1.5 |
% |
* Less
than 1%
|
(1)
|
Based
on information set forth in Amendment No. 3 to Schedule 13G filed with the
SEC on February 14, 2008, Bryant R. Riley reported that as a member of a
group, he has sole voting and sole dispositive power over 3,315,770 shares
and shared voting and shared dispositive power over 3,007,781
shares. He disclaims beneficial ownership of 10,000 shares
owned in custodial accounts by his children and for whose accounts he
serves as custodian. Riley Investment Management LLC has shared
voting and shared dispositive power over 2,969,182 shares owned by
investment advisory clients, 2,226,579 of which are held in managed
accounts indirectly affiliated with Mr. Riley, and he disclaims beneficial
ownership of the non-affiliated
shares.
|
|
(2)
|
Based
on information set forth in Schedule 13G filed with the SEC on February
13, 2008, the beneficial owners reported that they each
have sole voting power over 4,623,100 shares and sole
dispositive power over 4,860,300
shares.
|
|
(3)
|
Based
on information set forth in Amendment No. 4 to Schedule 13G filed with the
SEC on February 6, 2008, the beneficial owner reported that it has sole
voting and sole dispositive power over all shares
indicated.
|
|
(4)
|
Based
on information set forth in Amendment No. 2 to Schedule 13G filed with the
SEC on February 11, 2008, the beneficial owner reported that he has sole
voting and sole dispositive power over 2,470,056 shares as the manager of
a limited liability company that is the general partner of a certain
limited partnership and as trustee to certain grantor retained annuity
trusts and certain generation skipping trusts. He also has
shared voting and shared dispositive power with respect to 1,852,990
shares of the amount reported as an investment advisor to the trustee of a
certain family trust and as trustee of a certain generation skipping
trust.
|
|
(5)
|
Based
on information set forth in Schedule 13G filed with the SEC on January 11,
2008, Weiss Multi-Strategy Advisers LLC reported that as a member of a
group, it had shared voting power over 1,782,793 shares and shared
dispositive power over 2,970,736
shares.
|
|
(6)
|
Mr.
David holds his shares in a brokerage account which may be subject to the
standard margin provisions included in the account
application.
|
|
(7)
|
Mr.
Nolan holds his shares in a brokerage account which may be subject to the
standard margin provisions included in the account
application.
|
|
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
|
Certain
Relationships
The Company realizes that transactions
between the Company and any of its directors, director nominees, executives,
holders of five percent or more of the Company’s outstanding common stock or
their immediate family members can present potential or actual conflicts of
interest and create the appearance that Company decisions are based on
considerations other than the best interests of the Company and its
stockholders. The Company has a Code of Conduct which establishes
guidelines to aid directors and executives in avoiding such
transactions. However, the Company recognizes that there are
situations where such transactions may be consistent with the best interests of
the Company. Therefore, the Company also has a written Related
Persons Transactions Policy which requires the Audit Committee to review and, if
appropriate, approve or ratify such transactions. Pursuant to the
policy, the Committee will review any transaction in which the Company is or
will be a participant and the amount involved exceeds $120,000, and in which any
of the Company’s directors, director nominees, executives, holders of five
percent or more of the Company’s outstanding common stock, or their immediate
family members had, has or will have a direct or indirect material
interest. After a review, the Committee will only approve or ratify
those transactions that are consistent with the best interests of the Company
and its stockholders, as the Committee determines in good faith. As
set out in the Code of Conduct, certain transactions smaller than $120,000 are
prohibited as well.
There were no
related person transactions in 2007.
Board
Determination of Independence
Under the
New York Stock Exchange (“NYSE”) rules, a Director of Iomega will only qualify
as “independent” if the Board of Directors affirmatively determines that he or
she has no material relationship with Iomega (either directly or as a partner,
shareholder or officer of an organization that has a relationship with
Iomega). The Board of Directors has established guidelines to assist
it in determining whether a Director has a material relationship with
Iomega. Under these guidelines, a Director will be considered to have
a material relationship with Iomega if he or she is not independent under
Section 303A.02(b) of the NYSE Listed Company Manual or he or she:
|
·
|
is
an executive officer of another company which is indebted to Iomega, or to
which Iomega is indebted, and the total amount of either company's
indebtedness to the other is more than 1% of the total consolidated assets
of the company for which he or she serves as an executive officer;
or
|
|
·
|
serves
as an officer, director or trustee of a charitable organization and
Iomega's discretionary charitable contributions to the organization are
more than the greater of $1 million or 2% of that organization's total
annual charitable receipts.
|
Ownership
of a significant amount of Iomega's stock, by itself, does not constitute a
material relationship. For relationships not covered by the guidelines set
forth above, the determination of whether a material relationship exists is made
by the other members of the Board of Directors who are independent. The
Board of Directors has affirmatively determined that the following non-employee
members of the Board have no material relationships with the Company and its
subsidiaries and that they are “independent” under the director independence
standards established by the NYSE: Messrs. Bish, David, Maurer and
Nolan and Ms. Hardin. Similarly, the Board had previously determined
that each of Mr. Berkowitz and Mr. Darling were independent.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees
For Professional Services
The
following table summarizes the fees of BDO Seidman, LLP for the audit of
Iomega's annual financial statements and fees billed for other services rendered
during fiscal years 2006 and 2007:
|
Fee
Category
|
|
2006
|
|
|
2007
|
|
|
Audit
Fees
(1)
|
|
$ |
805,575 |
|
|
$ |
878,754 |
|
|
Audit-Related
Fees
(2)
|
|
|
26,518 |
|
|
|
31,327 |
|
|
Tax
Fees
(3)
|
|
|
-- |
|
|
|
-- |
|
|
All
Other Fees
(4)
|
|
|
-- |
|
|
|
93,733 |
|
|
|
|
$ |
832,093 |
|
|
$ |
1,003,814 |
|
|
(1)
|
Audit
fees consist of fees for the audit of our annual financial statements
included in the Form 10-K, the review of the interim financial statements
included in our quarterly reports on Form 10-Q, audit of the Company’s
internal control over financial reporting and other professional services
provided in connection with statutory and regulatory filings or
engagements for Iomega and its
subsidiaries.
|
|
(2)
|
Audit-related
fees consist of fees for assurance and related services that are
reasonably related to the performance of the audit and the review of our
financial statements and which are not reported under “Audit
Fees.” These services include employee benefit plan audits and
environmental compliance audits conducted in Europe in
2005.
|
|
(3)
|
No
fees for tax services were incurred in 2006 or
2007.
|
|
(4)
|
The
amounts for All Other Fees consist primarily of due diligence
investigation and review and analysis of financial data in connection with
the proposed acquisition of
ExcelStor.
|
Pre-Approval
Policy and Procedures
The Audit
Committee has adopted policies and procedures relating to the approval of all
audit and non-audit services that are to be performed by Iomega's independent
registered public accounting firm. This policy generally provides
that Iomega will not engage its independent registered public accounting firm to
render audit or non-audit services unless the service is specifically approved
in advance by the Audit Committee or the engagement is entered into pursuant to
one of the pre-approval procedures described below.
From time
to time, the Audit Committee may pre-approve specified types of services that
are expected to be provided to Iomega by its independent registered public
accounting firm during the next 12 months. Any such pre-approval is
detailed as to the particular service or type of service to be provided and is
also subject to an estimated budget.
The Audit
Committee has delegated to the Chair of the Audit Committee the authority to
approve any audit services to be provided to Iomega by its independent
registered public accounting firm up to a maximum amount of $50,000 per
quarter. Any approval of services by the Chair pursuant to this
delegated authority is reported at the next meeting of the Audit
Committee.
The Audit
Committee meets annually with its independent registered public accounting firm
and reviews both audit and non-audit services performed as well as fees charged
for such services. The Audit Committee also reviews the annual audit plan and
the results of the annual audit. Non-audit services are reviewed by
the Audit Committee, which considers, among other things, the anticipated
effect, if any, the performance of such services would have on the accounting
firm's independence.
All audit
and audited related services performed by BDO in fiscal year 2007 were
pre-approved by the Audit Committee in accordance with SEC
regulations.
Signatures
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 thereunto
duly authorized.
/s/ Jonathan S.
Huberman
Vice Chairman and Chief
ExecutiveOfficer
/s/ Preston
Romm
|
|
Vice
President of Finance and
|
Exhibit
Index
The
following exhibits are filed as part of this Annual Report on Form
10-K/A.
Exhibit
Number Description
31.11 Section
302 certification letter from Jonathan S. Huberman, ViceChairman and Chief
Executive Officer.
31.12 Section
302 certification letter from Preston Romm, VicePresident of Finance and Chief
Financial Officer.
27
