UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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the Registrant
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Check the appropriate box:
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Preliminary Proxy statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Aggregate number of securities to which transactions applies:
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Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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Form, Schedule or Registration Statement No.:
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Date Filed:
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BLACKBOARD
INC.
650 Massachusetts Ave., NW, 6th
Floor
Washington, D.C. 20001
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On June 3,
2011
The Annual Meeting of Stockholders of Blackboard Inc. will be
held at the companys corporate headquarters, 650
Massachusetts Avenue, NW, First Floor, Washington, District of
Columbia 20001, on Friday, June 3, 2011 at 11:00 a.m.,
Eastern Time, to consider and act upon the following matters:
1. To elect the two nominees for director named herein to
Class I of our Board of Directors, each to serve for a term
expiring at our 2014 annual meeting or until his successor is
duly elected and qualified or until his earlier resignation or
removal;
2. To approve an advisory resolution on the compensation of
our named executive officers;
3. To vote on an advisory resolution regarding the
frequency of future advisory votes on executive compensation;
4. To ratify the selection of Ernst & Young LLP
as our independent registered public accounting firm for the
year ending December 31, 2011; and
5. To transact such other business as may properly come
before the meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on
April 14, 2011, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting
and any adjournment or postponement thereof.
To ensure that your vote is recorded promptly, please vote by
proxy as soon as possible, whether or not you plan to attend the
annual meeting.
Most stockholders have three options for submitting their
vote by proxy: (1) via the Internet, (2) by phone or
(3) by mail. For further details, see the discussion on
page 1 of the enclosed proxy statement. If you have
Internet access, we encourage you to record your vote on the
Internet.
By Order of the Board of Directors
Matthew H. Small
Chief Business Officer, Chief Legal Officer and
Secretary
Washington, D.C.
April 21, 2011
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to Be Held on June 3,
2011 at 11:00 a.m. Eastern Time at 650 Massachusetts
Avenue, NW, First Floor, Washington, District of Columbia
20001.
The proxy
statement and annual report to stockholders are available at
http://investor.blackboard.com/phoenix.zhtml?c=177018&p=proxy.
BLACKBOARD
INC.
650 Massachusetts Ave., NW, 6th
Floor
Washington, D.C. 20001
PROXY
STATEMENT
This proxy statement is furnished to stockholders of Blackboard
Inc. (Blackboard, we, us,
and our) in connection with the solicitation of
proxies by our Board of Directors (the Board or
Board of Directors) for use at our annual meeting of
stockholders to be held at 650 Massachusetts Avenue, NW, First
Floor, Washington, District of Columbia 20001, at
11:00 a.m., Eastern time on Friday, June 3, 2011, and
at any adjournments or postponements of the meeting (the
Annual Meeting). Directions to the Annual Meeting
may be found at
http://www.blackboard.com/resources/company/DCDirections.pdf.
The 2011 annual report to stockholders, containing our audited
consolidated financial statements for the year ended
December 31, 2010, is being mailed together with this proxy
statement to all stockholders entitled to vote at the Annual
Meeting.
Only stockholders of record at the close of business on
April 14, 2011 (the Record Date) will be
entitled to receive notice of and to vote at the Annual Meeting.
This proxy statement and the accompanying notice and form of
proxy will be first mailed to stockholders on or about
April 27, 2011. As of the Record Date,
34,857,261 shares of our common stock, $0.01 par value
per share, were issued and outstanding and entitled to vote. The
holders of common stock are entitled to one vote per share on
any proposal presented at the Annual Meeting.
Voting by Stockholder of Record.
If your
shares are registered directly in your name with our transfer
agent, American Stock Transfer & Trust Company,
you are considered, with respect to those shares, the
stockholder of record. As the stockholder of record, you may
vote in one of the following three ways whether or not you plan
to attend the Annual Meeting: (1) by completing, signing
and dating the accompanying proxy card and returning it in the
postage-prepaid envelope enclosed for that purpose, (2) by
completing your proxy using the toll-free telephone number
listed on the proxy card, or (3) by completing your proxy
on the Internet at the address listed on the proxy card. If you
attend the meeting, you may vote in person even if you have
previously returned your proxy card or voted by phone or on the
Internet. Any proxy given pursuant to this solicitation may be
revoked by the person giving it at any time before it is voted.
Proxies may be revoked by (1) filing with our corporate
secretary, before the taking of the vote at the Annual Meeting,
a written notice of revocation bearing a later date than the
proxy, (2) duly completing a later-dated proxy relating to
the same shares and delivering it to our corporate secretary
before the taking of the vote at the Annual Meeting or granting
a subsequent proxy by phone or on the Internet, or
(3) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of
itself constitute a revocation of a proxy). Any written notice
of revocation or subsequent proxy should be sent so as to be
delivered to Blackboard Inc., 650 Massachusetts Avenue NW,
6th Floor, Washington, DC 20001, Attention: Matthew H.
Small, Corporate Secretary, at or before the taking of the vote
at the Annual Meeting.
Voting by Beneficial Owner.
If your shares are
held in a stock brokerage account or by a bank or other nominee,
you are considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you by
your broker, bank, or nominee which is considered, with respect
to those shares, the stockholder of record. As the beneficial
owner, you have the right to direct your broker on how to vote
and are also invited to attend the meeting. However, because you
are not the stockholder of record, you may not vote these shares
in person at the meeting unless you obtain a signed proxy from
the record holder giving you the right to vote the shares. Your
broker, bank, or nominee has enclosed or provided a voting
instruction card for you to use in directing the broker or
nominee how to vote your shares. If you do not provide the
stockholder of record with voting instructions, your shares may
constitute broker non-votes. The effect of broker non-votes is
more specifically described below. If you wish to change your
vote after submitting your proxy, you should follow the
instructions provided by your broker or bank.
The representation in person or by proxy of at least a majority
of the outstanding shares of common stock entitled to vote at
the Annual Meeting is necessary to constitute a quorum for the
transaction of business. Votes withheld from any nominee,
abstentions and broker non-votes are counted as
present or represented for purposes of determining the presence
or absence of a quorum for the Annual Meeting. A
non-vote occurs when a nominee holding shares for a
beneficial owner has not received instructions from the
beneficial owner as to how to vote on
matters deemed non-routine. Generally, if shares are held by a
broker or nominee, the beneficial owner of the shares is
entitled to give voting instructions to the broker or nominee
holding the shares. If the beneficial owner does not provide
voting instructions, the broker or nominee can still vote the
shares with respect to matters that are considered to be
routine, but not with respect to non-routine matters. Under the
rules and interpretations of the New York Stock Exchange
(NYSE), non-routine matters are matters
that may substantially affect the rights or privileges of
stockholders, such as mergers, stockholder proposals, elections
of directors (even if not contested) and, for the first time,
under a new amendment to the NYSE rules, executive compensation,
including the advisory stockholder votes on executive
compensation and on the frequency of stockholder votes on
executive compensation. Even though our common stock is listed
on the NASDAQ Global Select Market, the NYSE rules apply to
brokers who are NYSE members voting on matters being submitted
to stockholders at our Annual Meeting.
On Proposal No. 1, the election of Class I
directors, the two nominees receiving the highest number of
affirmative votes of the shares present or represented and
entitled to vote at the Annual Meeting will be elected as
directors. Only votes For or Withheld
will affect the outcome. On Proposals No. 2 and 4, an
affirmative vote of a majority of the shares present, in person
or represented by proxy, and voting on each such matter is
required for approval. On Proposal No. 3, the advisory
vote on the frequency of future advisory votes on executive
compensation, the frequency receiving the highest number of
votes from the holders of shares present in person or
represented by proxy and entitled to vote will be considered the
frequency preferred by the stockholders An automated system
administered by our transfer agent tabulates the votes. The vote
on each matter submitted to stockholders is tabulated
separately. Abstentions are included in the number of shares
present or represented and voting on each matter and therefore
have the same effect as votes against, except in the case of
Proposal No. 3, for which abstentions will have no
effect. Broker non-votes are not considered voted
for the particular matter and have the effect of reducing the
number of affirmative votes required to achieve a majority for
such matter by reducing the total number of shares from which
the majority is calculated. They will have no effect on any of
the proposals. The persons named as attorneys-in-fact in the
proxies, John E. Kinzer and Matthew H. Small, were selected by
the Board of Directors and are executive officers of Blackboard.
All properly executed proxies returned in time to be counted at
the Annual Meeting will be voted by such persons at the Annual
Meeting. Where a choice has been specified on the proxy with
respect to the foregoing matters, the shares represented by the
proxy will be voted in accordance with the specifications. If no
such specifications are indicated, such proxies will be voted
FOR
the election of both nominees for director,
FOR
the advisory resolution on executive compensation, for
THREE YEARS
as the preferred frequency of future advisory
votes on executive compensation, and
FOR
the ratification
of Ernst & Young LLP as our registered public
accounting firm for the year ending December 31, 2011.
Aside from the matters described in this proxy statement, the
Board of Directors knows of no other matters to be presented at
the Annual Meeting. If any other matter should be presented at
the Annual Meeting upon which a vote properly may be taken,
shares represented by all proxies received by the Board of
Directors will be voted with respect thereto in accordance with
the judgment of the persons named as attorneys-in-fact in the
proxies.
Preliminary voting results will be announced at the Annual
Meeting. Final voting results will be published in a current
report on
Form 8-K
that we expect to file with the SEC within four business days
after the Annual Meeting. If final voting results are not
available to us in time to file a
Form 8-K
within four business days after the meeting, we intend to file a
Form 8-K
to publish preliminary results and, within four business days
after the final results are known to us, file an additional
Form 8-K
to publish the final results.
2
Table of
Contents
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Page
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1
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4
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3
SECURITIES
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 2011 except
where indicated, information regarding beneficial ownership of
our common stock (i) by each person known to us who
beneficially owned more than 5% of the shares of our common
stock outstanding at such date; (ii) by each current
director; (iii) by each executive officer identified in the
Summary Compensation Table; and (iv) by all current
directors and current executive officers as a group.
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Number of Shares
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Percentage of
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Beneficially
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Shares of
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Name and Address of Beneficial Owner(1)
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Owned
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Common Stock
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Janus Capital Management, LLC(2)
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4,323,383
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12.40
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%
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151 Detroit Street
Denver, CO 80206
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T. Rowe Price Associates, Inc.(3)
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3,524,450
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10.11
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100 E. Pratt Street
Baltimore, MD 21202
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Artisan Partners(4)
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2,937,500
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8.43
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875 East Wisconsin Avenue
Suite 800 Milwaukee, WI 53202
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BlackRock Inc.(5)
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2,867,348
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8.23
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40 East
52
nd
Street
New York, NY 10022
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TimesSquare Capital Management, LLC(6)
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2,314,430
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6.64
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1177 Avenue of the Americas, 39th Floor
New York, NY 10036
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Michael L. Chasen(7)
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671,917
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1.90
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Michael J. Beach(8)
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2,293
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*
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John E. Kinzer(9)
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108,013
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*
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Matthew H. Small(10)
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172,295
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*
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Raymond P. Henderson III(11)
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132,815
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*
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Judy K. Verses(12)
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59,894
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*
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Jonathan R. Walsh(13)
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73,078
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*
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Joseph L. Cowan(14)
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30,000
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*
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Frank Gatti(15)
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18,000
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*
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Thomas Kalinske(16)
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30,000
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*
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Beth Kaplan(17)
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30,000
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*
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E. Rogers Novak, Jr.(18)
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78,434
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*
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Matthew L. Pittinsky(19)
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97,719
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*
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All directors and executive officers as a group
(11 persons)(20)
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1,442,271
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4.03
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*
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Less than one percent.
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(1)
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This table is based upon information supplied by officers,
directors and principal stockholders and Schedules 13G filed
with the SEC. The percentages shown are based on
34,854,554 shares of common stock outstanding as of
March 31, 2011. Beneficial ownership is determined in
accordance with the rules of the United States Securities and
Exchange Commission (the SEC), and includes voting
and investment power with respect to shares. Unless otherwise
indicated below, to our knowledge, all persons named in the
table have sole voting and investment power with respect to
their shares of common stock, except to the extent authority is
shared by spouses under applicable law. Unless otherwise listed,
the address of each stockholder is:
c/o Blackboard
Inc., 650 Massachusetts Avenue NW, 6th Floor, Washington, DC
20001.
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(2)
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Consists of securities beneficially owned by one or more
investment companies or other managed accounts which are advised
or
sub-advised
by Janus Capital Management, LLC (Janus Capital).
Janus Capital has a direct 94.5% ownership stake in INTECH
Investment Management (INTECH) and a direct 77.8%
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ownership stake in Perkins Investment Management LLC
(Perkins). Due to the above ownership structure,
holdings for Janus Capital, Perkins and INTECH are aggregated.
Janus Capital, Perkins and INTECH are registered investment
advisers, each furnishing investment advice to various
investment companies registered under Section 8 of the
Investment Company Act of 1940 and to individual and
institutional clients (Managed Portfolios). As a
result of its role as investment adviser or
sub-adviser
to the Managed Portfolios, Janus Capital may be deemed to be the
beneficial owner of 4,323,383 shares of Blackboard common
stock held by such Managed Portfolios. However, Janus Capital
does not have the right to receive any dividends from, or the
proceeds from the sale of, the securities held in the Managed
Portfolios and disclaims any ownership associated with such
rights. This information is derived solely from a
Schedule 13G/A filed by Janus Capital with the SEC on
February 14, 2011.
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(3)
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This information is derived solely from a Schedule 13G/A
filed by T. Rowe Price Associates, Inc. with the SEC on
February 14, 2011.
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(4)
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Consists of securities held by Artisan Partners Holdings LP,
Artisan Investment Corporation, Artisan Partners Limited
Partnership, Artisan Investments GP LLC, ZFIC Inc, Andrew A
Ziegler and Carlene M. Ziegler. Artisan Partners is an
investment adviser registered under section 203 of the
Investment Advisers Act of 1940; Artisan Holdings is the sole
limited partner of Artisan Partners; Artisan Investments is the
general partner of Artisan Partners; Artisan Corp is the general
partner of Artisan Holdings; ZFIC is the sole stockholder of
Artisan Corp.; Mr. Ziegler and Ms. Ziegler are the
principal stockholders of ZFIC. This information is derived
solely from a Schedule 13G/A filed by Artisan Partners
Holdings LP with the SEC on February 10, 2011.
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(5)
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Consists of shares held by the following investment management
subsidiaries of BlackRock, Inc.: BlackRock Japan Co. Limited,
BlackRock Institutional Trust Company, N.A., BlackRock Fund
Advisors, BlackRock Asset Management Australia Limited,
BlackRock Advisors LLC, BlackRock Capital Management, Inc.,
BlackRock Financial Management, Inc., BlackRock Investment
Management LLC, BlackRock (Luxembourg) S.A., BlackRock
International Ltd, and State Street Research &
Management Co. This information is derived solely from a
Schedule 13G/A filed by BlackRock, Inc. with the SEC on
February 3, 2011.
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(6)
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This information is derived solely from a Schedule 13G
filed by TimesSquare Capital Management, LLC with the SEC on
February 9, 2011.
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(7)
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Includes 511,760 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(8)
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Includes 2,293 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(9)
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Includes 75,466 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(10)
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Includes 43,440 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(11)
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Includes 22,916 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(12)
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Includes 56,114 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(13)
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Includes 59,995 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(14)
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Includes 30,000 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(15)
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Includes 12,000 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(16)
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Includes 30,000 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(17)
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Includes 30,000 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(18)
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Includes 32,700 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(19)
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Includes 97,719 shares of common stock issuable upon
exercise of options on or before May 30, 2011.
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(20)
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Includes 945,996 shares of common stock issuable upon
exercise of options on or before May 30, 2011. Does not
include shares beneficially owned by Mr. Beach or
Ms. Verses, who were not executive officers as of
March 31, 2011.
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5
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
Our Board of Directors currently consists of seven members. In
February 2011, Dr. William Raduchel resigned from our Board
of Directors, and the board reduced the size of the board from
eight to seven directors in accordance with our bylaws. Our
fourth amended and restated certificate of incorporation divides
the Board of Directors into three classes. One class is elected
each year for a term of three years, and there are two directors
in the class to be elected this year. Upon the recommendation of
the Nominating and Corporate Governance Committee, the Board of
Directors has nominated E. Rogers Novak Jr. and Joseph L. Cowan
for re-election to the Board of Directors as Class I
directors, each to hold office until the annual meeting of
stockholders to be held in the year 2014 and until his successor
has been duly elected and qualified or until his earlier
resignation or removal.
Mr. Novak and Mr. Cowan are Class I directors
whose terms expire at this Annual Meeting and are each a nominee
for re-election as directors. The Board of Directors is also
composed of (i) two Class II directors, whose terms
expire upon the election and qualification of directors at the
annual meeting of stockholders to be held in 2012 and
(ii) three Class III directors, whose terms expire
upon the election and qualification of directors at the annual
meeting of stockholders to be held in the year 2013.
Each nominee has agreed to serve if elected. The Board of
Directors knows of no reason why either of the nominees would be
unable or unwilling to serve, but if either nominee should for
any reason be unable or unwilling to serve, the proxies will be
voted for the election of such other person for the office of
director as the Board of Directors may recommend in the place of
such nominee.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the nominees named above.
Required
Vote
Directors are elected by a plurality of votes cast. The two
nominees receiving the highest number of affirmative votes will
be elected. Votes withheld and broker non-votes are not counted
toward a nominees total.
The Board of Directors recommends a vote FOR the election
of
each of the nominated directors.
6
The following table lists the nominees to be elected at the
Annual Meeting and the continuing directors. Also listed are the
positions currently held by each nominee and continuing
director, the committees of the Board on which each nominee or
continuing director serves as of the date of this proxy
statement, the year each nominees or continuing
directors current term will expire and the class of
director of each nominee and continuing director.
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Year Current
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Class of
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Name and Position
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Board Committees
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Term Will Expire
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Director
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Nominees:
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E. Rogers Novak Jr.
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Nominating and Corporate Governance
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2011
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I
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Director (Lead independent director)
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(Chair); Audit; Compensation
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Joseph L. Cowan
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Compensation (Chair)
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2011
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I
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Director
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Continuing Directors:
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Michael L. Chasen
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2012
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II
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Chief executive officer,
president and director
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Thomas Kalinske
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Audit
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2012
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II
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Director
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Matthew L. Pittinsky
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2013
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III
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Chairman of the Board
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Frank R. Gatti
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Audit (Chair); Nominating and Corporate
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2013
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III
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Director
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Governance
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Beth Kaplan
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Compensation; Nominating and
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2013
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III
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Director
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Corporate Governance
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We seek to assemble a Board of Directors that, as a whole,
possesses the appropriate balance of professional and industry
knowledge, financial expertise and high-level management
experience necessary to oversee and direct our business. Our
Nominating and Corporate Governance Committee identifies and
selects potential nominees by using the principles and criteria
described in the corporate governance guidelines adopted by our
Board, including factors such as business experience,
independence requirements, the nominees reputation for
integrity, honesty and adherence to high ethical standards, the
existence of real or perceived conflicts of interest, diversity
and the nominees ability to devote the time necessary to
fulfill his or her responsibilities as a director. To that end,
each director nominee has been identified and evaluated in the
broader context of the Boards overall composition, with
the goal of including members who complement and strengthen the
skills of other members and who also exhibit integrity,
collegiality, sound business judgment and other qualities that
are critical to the effective functioning of the board. The
brief biographies below include each nominee or continuing
directors age as of March 31, 2011, the year he or
she was first elected to the Board, and certain information, as
of the date of this proxy statement, regarding the specific and
particular experience, qualifications, attributes or skills of
each nominee or continuing director.
Nominees
for Class I Directors
Joseph L. Cowan
, 62, has served as a director since April
2007. Since June 2010, Mr. Cowan has served as President
and CEO of Online Resources Corporation, a publicly held
provider of online financial services and technology, as well as
a member of its board of directors. From June 2009 to May 2010,
Mr. Cowan served as a consultant with Vector Capital, a
venture capital investment firm. Mr. Cowan served as chief
executive officer and a member of the board of directors of
Interwoven Inc., a publicly held provider of content management
software, from April 2007 until its acquisition by Autonomy,
Inc. in March 2009. He served as chief executive officer and a
director of Manugistics Group, Inc., a publicly held provider of
supply chain management software, from 2004 to 2006. From 2002
to 2003, Mr. Cowan served as president and chief executive
officer of EXE Technologies, Inc., a provider of supply chain
execution and warehouse management systems. From 2001 to 2002,
he served as president and chief executive officer of Invensys
Automation & Information Systems. From 2000 to 2001,
Mr. Cowan served as president and chief executive officer
of Wonderware, a business unit of Invensys plc, and from 1998 to
2000 he
7
served as senior vice president, sales and marketing, of
Wonderware. The Board believes that Mr. Cowans
business experience in the technology industry and his executive
management experience and skills are a valuable contribution to
the Boards function. Mr. Cowan received a BS degree
from Auburn University and an MS degree from Arizona State
University.
E. Rogers Novak, Jr.
, 62, has served as a
director since September 1998. Since 1996, Mr. Novak has
been a managing member of the general partnership of Novak
Biddle Venture Partners, L.P., a venture capital investment
firm. Prior to co-founding Novak Biddle, Mr. Novak served
as general partner of Grotech Partners, a private investment
company. He also led investment banking and served on the
executive committee at Baker, Watts & Co. Currently,
Mr. Novak serves on the boards of a number of private
companies, including Parchment Inc., an educational credentials
company. From April 2007 to April 2011, he served as a board
member and a member of the Executive Committee of the National
Venture Capital Association. He also serves on the advisory
board of the U.S. Department of Homeland Securitys
PREDICT (Protected Repository for the Defense of Infrastructure
Against Cyber Threats), and is a member of the Department of
Defenses DeVenCI program. The Board believes that
Mr. Novaks range of business and board experience,
his knowledge of Blackboards corporate history and
operations, and his expertise in financial matters and venture
capital investing bring valuable expertise and insight to the
Board. Mr. Novak received a BA degree from Kenyon College.
Continuing
Class II Directors
Michael L. Chasen
, 39, has served as chief executive
officer since 2001, as president since 2004 and as a director
since our founding in 1997. Prior to serving as CEO,
Mr. Chasen served as president from 1997 to 2001. Before
co-founding Blackboard, from 1996 to 1997, Mr. Chasen was a
consultant with KPMG Consulting (now BearingPoint, Inc.) serving
the college and university marketplace. As our CEO and
co-founder, Mr. Chasen has demonstrated vision and
leadership, and has a deep understanding of our operations and
business strategy. The Board believes that his dedication to
Blackboard as well as his experience and knowledge in the
education technology industry make him uniquely qualified to
serve on our Board. Mr. Chasen received a BS degree in
computer science from American University and an MBA degree from
Georgetown University School of Business.
Thomas Kalinske
, 66, has served as a director since April
2007. Since July 2009, Mr. Kalinske has been Executive
Chairman and a member of the Board of Directors of Moonshoot US,
a company developing online video games that helps teach English
to children. Since February 2010, he has served as a member of
the board of directors of Cambium Learning Group, Inc., a public
company that provides research-based education solutions for
K-12 students and programs for struggling learners. He also
serves on the boards of a number of private companies, including
Kidzui, a company offering a web browser, applications and a
search engine to allow children to safely surf the web, and
Genyous Biomed International, a pharmaceutical development
company. From March 2008 until May 2009, Mr. Kalinske
served as the chief executive officer and a member of the board
of directors of CFares, Inc., an online travel search engine.
Mr. Kalinske also currently serves as vice chairman of the
board of Leapfrog Enterprises Inc., a publicly held maker of
educational toys and games, and has served as a director of
Leapfrog since 1997. From 1997 to 2006, Mr. Kalinske served
as CEO of Leapfrog and as its Chairman from 1997 to 2004. From
1996 to 2004, Mr. Kalinske served as the president of
Knowledge Universe LLC (now renamed Krest LLC), an education
company. From 1990 to 1996, he served as president and chief
executive officer of Sega of America, a computer game company.
From 1987 to 1990, he was president and chief executive officer
of the Universal Matchbox Group, a toy maker. From 1985 to 1987,
he served as president and co-chief executive officer of Mattel,
Inc. Mr. Kalinske served in other senior management
positions at Mattel from 1972 to 1985. The Board believes that
Mr. Kalinskes business experience in the educational
technology industry in particular as well as with
childrens toys and entertainment companies, along with his
general executive management experience and insight, bring a
valuable perspective to the Board. Mr. Kalinske received a
BS degree from the University of Wisconsin and an MBA degree
from the University of Arizona.
Continuing
Class III Directors
Frank R. Gatti
, 64, has served as a director since April
2004. Since 1997, Mr. Gatti has been the chief financial
officer of ETS, a global assessment, licensure and certification
company with over one billion dollars in annual revenue.
Mr. Gatti has announced that he plans to retire from ETS as
of May 1, 2011. Before joining ETS, Mr. Gatti
8
served as vice president of financial management at The New York
Times Company beginning in 1996, and prior to that served as
corporate vice president/corporate controller beginning in 1988.
He also served as a certified public accountant at
Deloitte & Touche, an international public accounting
firm. He is a member of the Board of Directors of the Princeton
Chamber of Commerce, a member of the Advisory Board for the
Masters of Science in Publishing Program at Pace
University, and a member of the Financial Advisory Board at
Rutgers Business School, and a member of the Finance Committee
of the Board of Trustees of The Conference Board. Mr. Gatti
also chairs The Conference Boards CFO Council, and is a
member of
CFO Magazine
s Advisory Board. The Board
believes that Mr. Gattis years of experience in
financial management and accounting, as well as his advisory
roles at various educational institutions and business
organizations, give him a wide range of financial and executive
management experience and skills, which add valuable expertise
and insight to the Board. Mr. Gatti, a Certified Public
Accountant, received a BBA degree from Baruch College and an MBA
degree from the Rutgers Business School.
Beth Kaplan
, 53, has served as a director since April
2007. Since January 2008, Ms. Kaplan has served as
president and chief merchandising and marketing officer of GNC
Holdings, Inc., a public company, and its operating subsidiary,
General Nutrition Centers, Inc., a specialty retailer of health
and wellness products, and has served as a member of its board
of directors since February 2008. From March 2005 to December
2007, Ms. Kaplan served as the managing member of Axcel
Partners, LLC, a venture capital firm. From 2002 to 2005,
Ms. Kaplan was executive vice president of Bath &
Body Works and previously served as senior executive vice
president for marketing and merchandising with Rite Aid and as
vice president for the U.S. cosmetics and fragrance
business at Procter & Gamble. Ms. Kaplan
currently serves on the Board of Directors of the Baltimore
Symphony Orchestra and the Wharton Board of Overseers.
Ms. Kaplan previously served as a director of Blackboard
from June 2000 to August 2001. The Board believes that her
skills and expertise in marketing as well as her professional
experiences in a variety of executive leadership roles provide a
unique and valuable perspective to the Board. Ms. Kaplan
received BS and MBA degrees from the University of
Pennsylvanias Wharton School.
Matthew L. Pittinsky
, Ph.D., 38, has served as
chairman of the Board of Directors since our founding in 1997.
Since January 2011, Dr. Pittinsky has served as chief
executive officer of Parchment Inc., an education credentials
company. Prior to joining Parchment Inc., from January 2009 to
December 2010, Dr. Pittinsky taught and conducted research
as Assistant Professor of Sociology at Arizona State University,
and continues his affiliation with the University as Research
Assistant Professor. On March 1, 2008, Dr. Pittinsky
resigned as an executive officer of Blackboard and now serves as
a non-employee chairman of the Board. From June 1997 to November
1998, Dr. Pittinsky also served as our chief executive
officer. Before co-founding Blackboard, from July 1995 to June
1997 Dr. Pittinsky was a consultant with KPMG Consulting
(now BearingPoint, Inc.) serving colleges and universities.
Dr. Pittinsky is the editor of The Wired Tower, a book
analyzing the Internets impact on higher education, as
well as a variety of scholarly research articles in the fields
of sociology and education. The Board believes that, as our
chairman and co-founder, Dr. Pittinsky has a unique insight
into and deep understanding of the education technology
industry, and has continued to demonstrate vision and
leadership. His experience and knowledge of our business as well
as his perspective as a professor and educator, add valuable
insight to the Board. Dr. Pittinsky received a B.A. degree
from American University, an Ed.M degree from Harvard University
Graduate School of Education, and M.Phil and Ph.D. degrees from
Columbia University Teachers College.
CORPORATE
GOVERNANCE
Our Board of Directors believes that good corporate governance
is important to ensure that Blackboard is managed for the
long-term benefit of stockholders. This section describes key
corporate governance guidelines and practices that our Board has
adopted. Complete copies of our corporate governance guidelines,
committee charters and code of conduct are available on the
corporate governance section of our website,
http://investor.blackboard.com.
Alternatively, you can request a copy of any of these documents
by writing to Investor Relations, Blackboard Inc., 650
Massachusetts Avenue NW, 6th Floor, Washington, DC 20001.
9
Corporate
Governance Guidelines
Our Board has adopted corporate governance guidelines to assist
in the exercise of its duties and responsibilities and to serve
the best interests of Blackboard and our stockholders. These
guidelines, which provide a framework for the conduct of the
Boards business, provide that:
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the Boards principal responsibility is to oversee the
management of Blackboard;
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a majority of the members of the Board shall be independent
directors;
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the independent directors meet regularly in executive session;
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directors have full and free access to management and, as
necessary and appropriate, independent advisors;
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new directors participate in an orientation program and all
directors are expected to participate in continuing director
education on an ongoing basis; and
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at least annually, the Board and its committees will conduct a
self-evaluation to determine whether they are functioning
effectively.
|
THE BOARD
OF DIRECTORS AND ITS COMMITTEES
Board of
Directors
The Board of Directors met eleven times during the year ended
December 31, 2010. During 2010, each of the directors
attended at least 75% of the total number of meetings of the
Board of Directors and all committees of the Board of Directors
on which he or she served at the time. The Board of Directors
has separately designated standing Audit, Compensation and
Nominating and Corporate Governance Committees. Each committee
has a charter that has been approved by the Board of Directors.
As a policy, we encourage our directors to attend our annual
stockholder meetings. Our 2010 annual meeting was attended by
Mr. Chasen and Dr. Raduchel, who was serving as a
director at that time.
Board
Leadership Structure
We separate the roles of CEO and Chairman of the Board in
recognition of the differences between the two roles. The CEO is
responsible for setting the strategic direction for our company
and the day to day management and performance of our business,
while the Chairman of the Board provides advice and guidance to
the CEO. Our CEO, Mr. Chasen, and our Chairman,
Dr. Pittinsky, co-founded Blackboard in 1997 and both have
remained involved in different respects. Dr. Pittinsky has
served as Chairman of the Board since the founding of
Blackboard, continuing to demonstrate leadership as both an
education technology entrepreneur and an academic, bringing his
experience as a professor and educator to the Board.
Mr. Chasen has been a member of the Board of Directors
since our founding, and has served as CEO since 2001, providing
strategic and tactical direction to the business as well as
working with the Chairman and the rest of the Board to develop
and implement the Companys vision and overall business
strategy. In addition, the Board has designated Mr. Novak
as its lead independent director, relying on his experience,
oversight and expertise from outside the Company. In this role,
he is responsible for coordinating the activities of the
independent directors, and serves as a liaison between the
senior management of the Company and the independent directors.
Board
Role in Risk Oversight
Our Board has an active role, as a whole and at the committee
level, in overseeing management of risk. The Board regularly
reviews information regarding our financial position, governance
and operations, as well as the risks associated with each. The
Compensation Committee is responsible for overseeing the
management of risks relating to our executive compensation plans
and arrangements. The Audit Committee oversees management of
financial and reporting risks. The Nominating Committee oversees
the management of risks associated with the independence of the
Board of Directors and potential conflicts of interest. While
each committee is responsible for evaluating certain risks and
overseeing the management of such risks, the entire Board of
Directors is regularly
10
informed through committee reports about such risks.
Accordingly, the Board has not chosen to establish a separately
designated risk committee. The full Board also participates in
risk oversight in the course of their other responsibilities
such as operational discussions with management, review and
approval of the annual operating plan, and review and approval
of merger and acquisition transactions. In 2010, at the
Boards direction, the company engaged an independent
consulting firm to conduct an enterprise-wide risk assessment
analyzing the key risks identified in surveys and interviews
with the Board and senior management, and proposing mitigation
strategies and monitoring plans to manage these risks.
Board
Determination of Independence
NASDAQ Stock Market listing rules require that a majority of the
members of a listed companys board of directors must
qualify as independent. Under applicable NASDAQ
listing rules, a director will only qualify as an
independent director if that person does not have
any disqualifying relationships with the company as identified
in the NASDAQ listing rules, or, in the opinion of our Board,
that person does not have a relationship which would interfere
with the exercise of independent judgment in carrying out the
responsibilities of a director.
Our Board, after review of all relevant identified transactions
between each director, or any of his or her family members, and
Blackboard, our senior management and our independent auditors,
and after consulting with counsel, has determined that none of
Mr. Cowan, Mr. Gatti, Mr. Kalinske,
Mr. Novak, or Ms. Kaplan has a disqualifying
relationship with the company as identified in the NASDAQ
listing rules or otherwise has a relationship that would
interfere with the exercise of independent judgment in carrying
out the responsibilities of a director and that each of these
directors is an independent director as defined
under applicable NASDAQ listing rules. Dr. Pittinsky was
previously an executive officer of our company but resigned that
position in March 2008. As of April 2011, our Board has made an
affirmative determination that Dr. Pittinsky is now an
independent director under NASDAQ listing rules and
that he no longer has a relationship with Blackboard that would
interfere with the exercise of his independent judgment in
carrying out his responsibilities as a director. Mr. Chasen
is not an independent director by virtue of his employment with
Blackboard.
Audit
Committee
The Audit Committee oversees our accounting and financial
reporting processes and the audits of our consolidated financial
statements. The Audit Committee assists the Board of Directors
in fulfilling its responsibilities by:
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reviewing the financial reports provided by us to the SEC, our
stockholders or the general public;
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reviewing our internal financial and accounting controls;
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evaluating and selecting our independent registered public
accounting firm;
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reviewing with management and the independent auditors our
annual audited consolidated financial statements and quarterly
reviewed consolidated financial statements;
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discussing the adequacy of our internal controls and procedures
with management and our independent registered public accounting
firm;
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supervising our relationship with our independent registered
public accounting firm;
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reviewing the scope of both audit and non-audit services and
related fees; and
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determining the independence of our independent registered
public accounting firm.
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The Audit Committee met seven times during 2010.
Messrs. Gatti, Kalinske, and Novak currently serve on the
Audit Committee and Mr. Gatti serves as chairperson. The
Board has determined that all members of the Audit Committee are
independent as that term is defined in applicable
NASDAQ listing rules and satisfy the other independence
standards for audit committee members set forth in the NASDAQ
listing rules. The Board has determined that all members of the
Audit Committee are independent for purposes of applicable rules
under the Securities Exchange Act of 1934, as amended. The Board
has further determined that Mr. Gatti is an audit
committee
11
financial expert as defined by rules under the Exchange
Act. The Audit Committee operates under a written charter
adopted by the Board of Directors, which is available on our
website at
http://investor.blackboard.com.
Compensation
Committee
The Compensation Committee is responsible for determining and
making recommendations with respect to all forms of compensation
to be granted to our executive officers and producing an annual
report of the Compensation Committee on executive compensation
for inclusion in our proxy statement for our annual meeting of
stockholders in accordance with applicable rules and
regulations. The Compensation Committee also:
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approves the salary, bonus and equity arrangements of our chief
executive officer and other executive officers;
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recommends, subject to approval by the entire Board of
Directors, any equity-based plans and any material amendments
thereto, including increases in the number of shares of common
stock available for grant as stock options or otherwise
thereunder; and
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recommends, subject to approval by the entire Board of
Directors, any director compensation plans.
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The Compensation Committee met four times during 2010.
Ms. Kaplan, Mr. Cowan and Dr. Raduchel, a former
director, served on the Compensation Committee and
Dr. Raduchel served as chairperson until June 30,
2010. Since July 1, 2010, the Compensation Committee has
consisted of Ms. Kaplan and Messrs. Cowan and Novak,
and Mr. Cowan currently serves as chairperson. The Board
has determined that all members of the Compensation Committee
are independent directors under applicable NASDAQ listing rules.
The Compensation Committee operates under a written charter
adopted by the Board of Directors, which is available on our
website at
http://investor.blackboard.com.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible
for assisting the Board of Directors in fulfilling its
responsibilities by:
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reviewing and making recommendations to the Board of Directors
regarding the composition and structure of the Board of
Directors and the committees of the Board of Directors;
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establishing criteria for membership on the Board of Directors
and evaluating corporate policies relating to the recruitment of
members of the Board of Directors;
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assessing the performance of the Board of Directors; and
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establishing, implementing and monitoring policies and processes
regarding principles of corporate governance in order to promote
the Board of Directors compliance with its fiduciary
duties to Blackboard and our stockholders.
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Consideration of new Board nominee candidates typically involves
a series of internal discussions, review of information
concerning candidates and interviews with selected candidates.
The Nominating and Corporate Governance Committee may also
retain external advisors, to identify or evaluate potential
nominees to be considered for election to the Board of
Directors. The Nominating and Corporate Governance Committee
may, in its discretion, consider nominees recommended by
stockholders. Candidates proposed by stockholders are evaluated
using the same criteria as for other candidates. A stockholder
seeking to recommend a prospective nominee for consideration by
the Nominating and Corporate Governance Committee should submit
the candidates name, biographical data, qualifications and
business experience for at least the previous five years, a
document indicating the candidates willingness to act if
elected and evidence of the nominating stockholders
ownership of our common stock at least 120 days prior to
the anniversary of the mailing date of our proxy statement for
the previous annual meeting to the Nominating and Corporate
Governance Committee,
c/o Matthew
H. Small, Corporate Secretary, Blackboard Inc., 650
Massachusetts Avenue NW, 6th Floor, Washington, DC 20001.
Stockholders also have the right under our bylaws to directly
nominate director candidates, without any action
12
or recommendation on the part of the Nominating and Corporate
Governance Committee or the Board, by following the procedures
set forth herein under Stockholder Proposals.
In accordance with the corporate governance guidelines adopted
by the Board, the Nominating and Corporate Governance Committee
identifies and selects potential nominees by using the
principles and criteria described in the corporate governance
guidelines, including the consideration of the following
factors: compliance with the independence requirements under the
NASDAQ listing rules and applicable law, the candidates
reputation for integrity, honesty and adherence to high ethical
standards, the candidates business acumen and experience,
the existence of real or perceived conflicts of interest,
diversity and the candidates ability to devote the time
necessary to discharge his or her responsibilities as a
director. While the Board has not established term limits,
director membership is reviewed annually by the Nominating and
Corporate Governance Committee and the Board has established a
general policy that any director who reaches the age of 70 is
expected to retire from the Board effective at the end of his or
her term. Potential nominees should generally be able to serve
for at least five years before reaching the age of 70.
The Nominating and Corporate Governance Committee met three
times during 2010. Ms. Kaplan and Messrs. Novak and
Gatti currently serve on the Nominating and Corporate Governance
Committee and Mr. Novak serves as chairperson.
Dr. Raduchel also served on the Nominating and Corporate
Governance Committee from July 1, 2010 until his
resignation from the Board of Directors and all committees on
February 14, 2011. The Board has determined that all
members of the Nominating and Corporate Governance Committee are
independent directors under applicable NASDAQ listing rules.
The Nominating and Corporate Governance Committee operates under
a written charter adopted by the Board of Directors, which is
available on our website at
http://investor.blackboard.com.
Communications
from Stockholders to the Board
Our Board will give appropriate attention to written
communications that are submitted by stockholders, and will
respond if and as appropriate. The lead independent director,
with the assistance of our chief legal officer, is primarily
responsible for monitoring communications from stockholders and
for providing copies or summaries to the other directors as he
or she considers appropriate.
Any stockholder wishing to communicate with any of our directors
may write to the director,
c/o Matthew
H. Small, Corporate Secretary, Blackboard Inc., 650
Massachusetts Avenue NW, 6th Floor, Washington, DC 20001.
The corporate secretary will forward these communications
directly to the director(s) specified or, if none is specified,
to the chairman of the Board.
2010
DIRECTOR COMPENSATION
The following table provides information about the compensation
of our non-employee directors for 2010.
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Fees Earned or
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Option Awards
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Total
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Name
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Paid in Cash ($)
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($)(1)
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|
($)
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Joseph L. Cowan
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$
|
62,500
|
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$
|
97,203
|
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$
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159,703
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Frank R. Gatti
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$
|
75,000
|
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|
$
|
97,203
|
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|
$
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172,203
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Thomas Kalinske
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$
|
55,000
|
|
|
$
|
97,203
|
|
|
$
|
152,203
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|
Beth Kaplan
|
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$
|
60,000
|
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|
$
|
97,203
|
|
|
$
|
157,203
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|
E. Rogers Novak, Jr.
|
|
$
|
77,500
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$
|
97,203
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$
|
174,703
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Matthew Pittinsky
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$
|
102,000
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$
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97,203
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$
|
199,203
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William Raduchel
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$
|
62,500
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$
|
97,203
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$
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159,703
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(1)
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Represents the full grant date fair value of stock options
granted in 2010 to the named director, calculated in accordance
with ASC Topic 718, excluding estimates of forfeitures. The
assumptions made in valuing option awards reported in this
column are discussed in Note 2 to the consolidated
financial statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, under the heading
Significant
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13
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Accounting Policies and subheadings Stock
Options and Restricted Stock and Restricted Stock
Units. The amounts reported in the table above for these
awards may not represent the amounts that the director will
actually realize from the awards. Whether, and to what extent, a
director realizes value will depend on the future stock price
and the directors continued service.
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Director
Compensation Policy
Under our outside director compensation policy, each
non-employee director is paid an annual retainer of $50,000. The
chairperson of each of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee are
paid an additional annual retainer of $20,000. Non-chair members
of the Audit Committee, Compensation Committee and Nominating
and Corporate Governance Committee are paid an annual retainer
of $5,000 for each committee on which they serve. A
non-executive chairman of the Board is paid an additional annual
retainer of $20,000, $4,000 per meeting day for in-person
meetings of the Board and $2,000 per telephonic meeting of the
Board. The cash retainers are paid quarterly in arrears, and new
board members receive a pro-rated amount for the quarter in
which they are first elected or appointed. Upon election or
nomination to our Board of Directors, new non-employee directors
will receive an option grant to purchase 12,000 shares of
our common stock with a three- year vesting period. On June 15
of each year, each non-employee director who has served for at
least six months will receive an option grant to purchase
6,000 shares of our common stock which vests in full on May
1 of the following year. The exercise price of the option grants
will be equal to the fair market value of our common stock on
the date of the grant.
14
AUDIT
COMMITTEE REPORT
The Audit Committee oversees Blackboards financial
reporting process on behalf of the Board of Directors. As
described more fully in its charter, the purpose of the Audit
Committee is to assist the Board in its general oversight of
Blackboards financial reporting, internal controls and
audit functions. A copy of the charter is available on our
website at
http://investor.blackboard.com.
Management is responsible for the preparation, presentation and
integrity of Blackboards consolidated financial
statements; accounting and financial reporting principles;
internal controls; and procedures designed to reasonably assure
compliance with accounting standards, applicable laws and
regulations. Ernst & Young LLP (E&Y),
Blackboards independent registered public accounting firm,
is responsible for performing independent audits of the
consolidated financial statements and internal controls over
financial reporting in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB). The Audit Committee has reviewed
Blackboards audited consolidated financial statements for
the year ended December 31, 2010 and has discussed these
consolidated financial statements with Blackboards
management and E&Y.
The Audit Committee has discussed with E&Y the matters
required to be discussed by Statement on Auditing Standards 61,
The Auditors Communication with Those Charged with
Governance
, as adopted by the PCAOB, which include, among
other items, matters related to the conduct of the audit of
Blackboards consolidated financial statements. The Audit
Committee discussed with Blackboards management and
independent registered public accounting firm the overall scope
and plans for their respective audits. The Audit Committee
reviewed with E&Y its judgments as to the quality, not
merely the acceptability, of Blackboards accounting
principles, the reasonableness of significant estimates and
judgments and the clarity of disclosure in Blackboards
consolidated financial statements and such other matters as are
required to be discussed with the Audit Committee in accordance
with the standards of the PCAOB. The Audit Committee met with
E&Y, with and without management present, to discuss the
results of their examinations, their evaluations of
Blackboards internal controls, and the overall quality of
Blackboards financial reporting.
In addition, the Audit Committee has discussed with E&Y its
independence from management and Blackboard and considered the
compatibility of non-audit services with E&Ys
independence. The Audit Committee has also received the written
disclosures and the letter from E&Y required by the
standards of the PCAOB regarding the independent registered
public accounting firms communications with the Audit
Committee concerning independence. In accordance with Audit
Committee policy and the requirements of applicable law, all
services to be provided by E&Y are pre-approved by the
Audit Committee including audit services, audit-related
services, tax services and other services.
Based on these reviews and discussions, the Audit Committee
recommended to the Board, and the Board approved, that the
audited consolidated financial statements be included in
Blackboards Annual Report on
Form 10-K
for the year ended December 31, 2010 as filed with the
Securities and Exchange Commission.
Respectfully submitted by the Audit Committee.
AUDIT COMMITTEE
Frank R. Gatti, Chair
Thomas Kalinske
E. Rogers Novak, Jr.
15
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Summary
Blackboards executive compensation program is designed to
attract, retain, and motivate talented executives, align the
interests of shareholders and executives, and ensure that
executives maintain a focus on long-term goals. A significant
portion of executive compensation is tied to the companys
financial results and the attainment of certain financial,
operational and strategic objectives. During 2010, the company
experienced significant growth, due primarily to several
acquisitions that were completed over the course of the year.
Blackboard also expanded or entered into significant strategic
relationships with key customers and technology partners,
expanding the scope and depth of its product and services
offerings and creating a new long-term strategic outlook for the
company.
Blackboards executive compensation program is set by the
Compensation Committee of our Board of Directors, which is
composed entirely of independent directors. The Compensation
Committee, with the help of an independent compensation
consultant, undertakes a thorough review of executive
compensation at least once each year. In setting executive
compensation, the Compensation Committee considers the pay
practices of peer companies and short- and long-term company
performance, including the companys performance relative
to our peer companies during a difficult global economic
downturn. The Compensation Committee believes that the executive
compensation program reflects a
pay-for-performance
philosophy that rewards innovation without encouraging
unnecessary or excessive risks, and motivates executives to
strive for strong financial performance and long-term increases
in shareholder value. The Compensation Committee believes that
providing compensation based on longer-term objectives provides
appropriate incentives to ensure that Blackboards
strategic and operational plans are designed to encourage
long-term success in addition to meeting annual performance
goals.
Executive
Compensation Objectives
The objectives of Blackboards executive compensation
program are to:
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support Blackboards short- and long-term financial and
strategic objectives by attracting, retaining and motivating the
talented executives needed to attain such objectives;
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align interests of executive officers and shareholders by tying
a significant portion of realized compensation to changes in
shareholder value;
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motivate and reward executives for achieving and exceeding the
financial goals of the company by having performance-based pay
comprise a significant portion of total compensation;
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provide differentiated pay based on relative contributions to
company performance; and
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maximize the financial efficiency of the overall program to the
company from a tax, accounting and cash flow perspective.
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Role of
the Compensation Committee and Management in Executive
Compensation
The Compensation Committee of our Board of Directors determines
the total compensation of our chief executive officer (CEO) and
other executive officers, as chosen by the Compensation
Committee, and is responsible for:
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the review, establishment and approval of our executive
compensation and benefits strategy, programs, policies and
practices;
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determining the compensation structure for our chief executive
officer, named executive officers and selected other
executives; and
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the administration of our equity-based incentive compensation
plans.
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Members of the Compensation Committee are appointed by our Board
of Directors. During 2010, the composition of the Compensation
Committee changed, with Dr. Raduchel leaving the
Compensation Committee, Mr. Novak joining the Committee,
and Mr. Cowan becoming its new chair. The Compensation
Committee consists
16
entirely of independent directors within the meaning of SEC and
NASDAQ stock exchange listing rules and who are
non-employee directors for purposes of the Internal
Revenue Code and outside directors for purposes of
Rule 16b-3
under the Securities Exchange Act of 1934, as amended. None of
the members of the Compensation Committee have ever been
employees of the company. The Compensation Committee chair
regularly reports on Committee actions and recommendations at
Board meetings. The Compensation Committee has a written charter
that it follows in carrying out its responsibilities which is
available on our website at
http://investor.blackboard.com.
The Compensation Committee meets annually to review the
performance of the companys executives and to assess the
executive compensation strategy for the coming year. As part of
its annual review, which typically occurs at the end of each
fiscal year, the Compensation Committee may decide to adjust one
or more elements of an executive officers total
compensation, and determines the amount of any adjustments to
base salary, annual incentive opportunities and long-term
incentives, the criteria for achieving annual and long-term
incentives and the payout of incentive awards for prior periods
based on the attainment of previously established objectives.
The Compensation Committee may consider changes to our executive
compensation structure at other times during the year and has
the discretion to adjust compensation outside of annual reviews,
including performance measure targets, as it deems appropriate.
On occasion, the Compensation Committee may grant equity
incentives to executives at other times during the year.
As part of its executive compensation review each year, the
Compensation Committee may review and consider materials such as
our financial reports and projections, operational data, tax and
accounting information, stock ownership information, data
relating to historical changes in our stock price, competitive
market pay data, analyses of historical executive compensation
levels and company-wide compensation levels, and the
recommendations of the CEO and other members of the Board of
Directors, as well as the Compensation Committees
independent compensation consultant.
Role of
Independent Compensation Consultant
The Compensation Committee has the authority to retain outside
advisors to assist it in evaluating actual and proposed
compensation for our executive officers. In connection with
making its recommendations for executive compensation for 2010
and 2011, the Compensation Committee engaged Aon Hewitt, a
division of Aon Corporation, as its independent compensation
consultant to advise on executive compensation matters generally.
As described below under Compensation Analysis
Competitive Benchmarking, the Compensation Committee
requests the independent compensation consultant to review and
provide recommendations on the composition of a peer group of
comparable companies in the enterprise software industry, and to
provide benchmark pay data for executive officers, as well as
provide advice on other compensation matters.
Role of
Management
For executive officers other than the CEO, the Compensation
Committee solicits and considers the performance evaluations and
compensation recommendations of the CEO, including with respect
to salary adjustments and the setting of annual bonus targets
and long-term compensation awards. In the case of the CEO, the
Compensation Committee evaluates his performance and determines
whether to make any adjustments to his compensation.
The CEO meets periodically with the Compensation Committee to
review compensation policies and specific levels of compensation
paid to executive officers and other key personnel. During
Compensation Committee meetings, management may present topical
issues for discussion and education as well as specific
recommendations for the Compensation Committees review.
Our CEO and our chief legal officer attend a portion of
regularly scheduled Compensation Committee meetings, excluding
executive sessions, and provide input from management including
legal, finance and human resources considerations. Decisions in
the annual compensation review are made by the Compensation
Committee in executive session in consultation with the
independent consultant without management present.
17
Delegation
of Authority
The Compensation Committee has delegated to the CEO the
authority to periodically grant stock options and restricted
stock to employees who are not executive officers or direct
reports of the CEO. These long-term incentive grants are
generally for new hires, promotions, or annual grants and are
subject to a cap on the number of stock options and shares of
restricted stock which may be granted to any one individual.
Other grants issued pursuant to this delegation of authority are
periodically reported to the Compensation Committee. The grant
dates for such awards are determined by policy and are not
discretionary.
Executive
Compensation Program Summary
To help us achieve our executive compensation objectives, we
strive to offer our executive officers compensation and benefits
that are attractive and competitive in the marketplace for
talent. The key components of compensation provided to our
executive officers are:
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annual base salaries;
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annual cash incentive opportunity based on performance measured
against specific measures;
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long-term incentives;
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employee benefits and perquisites; and
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severance and change of control benefits.
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Total compensation for executive officers is reviewed annually
and may be considered at other times in the discretion of the
Compensation Committee.
Components
of Compensation by Percentage
While the Compensation Committee believes that it is important
to pay competitive base salaries, it believes that the majority
of executive compensation should take the form of variable pay.
The two primary forms of variable pay are: (i) the annual
incentive bonus which is dependent on company financial
performance
and/or
individual performance; and (ii) equity incentive grants
for which value is dependent on the companys stock price
performance. The tables below summarize the percentage of each
compensation type that comprised each named executive
officers target 2010 compensation and estimated target
2011 compensation.
2010
Target Compensation
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Base
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Annual Incentive
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Stock Option
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Restricted Stock
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Salary
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Bonus(1)
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Grants(2)
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Grants(3)
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Michael L. Chasen
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16
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%
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16
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%
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36
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%
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32
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%
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Matthew H. Small
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21
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%
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14
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%
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34
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%
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31
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%
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Judy K. Verses(4)
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19
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%
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15
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%
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35
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%
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31
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%
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Jonathan R. Walsh
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34
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%
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14
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%
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30
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%
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22
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%
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2011
Target Compensation
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Base
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Annual Incentive
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Stock Option
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Restricted Stock
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Salary
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Bonus(1)
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Grants(2)
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Grants(3)
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Michael L. Chasen
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19
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%
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19
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%
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26
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%
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36
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%
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John E. Kinzer
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24
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%
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16
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%
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25
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%
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35
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%
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Matthew H. Small
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24
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%
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16
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%
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25
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%
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35
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%
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Raymond P. Henderson III
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24
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%
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16
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%
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25
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%
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35
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%
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Jonathan R. Walsh
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42
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%
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17
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%
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17
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%
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24
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%
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(1)
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Assumes that the named executive officer achieves 100% of his or
her target bonus for the year.
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(2)
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Based on the fair value of each grant estimated on the date of
grant using the Black-Scholes option-pricing model, not the
value ultimately realized by the named executive officer. Grants
are subject to a four-year vesting period.
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(3)
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Based on the fair value of each grant using the companys
closing stock price on the date of grant, not the value
ultimately realized by the named executive officer. Grants are
subject to a four-year vesting period.
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(4)
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Ms. Verses resigned from her position as an executive
officer effective December 31, 2010.
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Factors
Considered
In determining the amount and form of compensation elements, the
Compensation Committee assesses both company performance factors
and individual factors as they apply to each executive officer.
The Compensation Committee believes that it is important to
consider both company performance relative to the performance of
comparable companies and each officers individual
circumstances and contributions.
Company performance factors considered by the Compensation
Committee have historically included widely available financial
metrics that provide comparability across companies, such as:
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revenue growth;
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market capitalization and total stockholder return; and
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non-GAAP earnings, excluding specified non-cash items.
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Individual compensation factors considered by the Compensation
Committee take into account each officers individual
circumstances, and have typically included items such as:
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the officers performance;
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the officers compensation relative to the performance of
the company and relative to the total equity outstanding;
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the total compensation levels of comparable executive officers
at peer group companies and in published survey sources;
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scope and strategic impact of the executive officers
responsibilities;
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the experience of the individual;
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the officers past compensation levels and those of the
executive officers as a group;
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internal pay equity of the compensation paid to one officer as
compared to another;
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the amount of base salary in the context of the
individuals total compensation and other benefits; and
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for each executive officer other than the CEO, the evaluation
and recommendation of the CEO.
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The Compensation Committee does not assign relative weights or
rankings to these factors, but instead makes a subjective
determination based upon the consideration of all of these
factors.
2010
and 2011 Considerations
In making compensation decisions for 2010, the Compensation
Committee took into consideration that there had been no
increase in compensation levels for executive officers and
employees generally across the company between 2008 and 2009 due
to the global economic slowdown, disruptions in financial
markets, the need for the company to manage its expense levels
in light of the slowdown, and the potential effect on the
companys financial performance. The Compensation Committee
also considered current market conditions going into 2010; the
companys performance relative to its budget and relative
to the companies in the selected peer group; that the company
had generally exceeded its operating plan for 2009; and that
over the past several years, the companys financial
performance had generally been in the top half or top quartile
of the relevant financial metrics evaluated. Finally, the
Committee observed with respect to total stockholder return in
2009 that due to stock market volatility, the companys
ranking varied anywhere between the top quartile and the bottom
quartile depending on the
19
measurement date. Overall, the companys consistent
financial performance over multiple years and during a difficult
economic period was a significant factor in the Committees
determination that it was appropriate to generally target 2010
total direct compensation to be in the top quartile of the peer
group, with adjustments according to each executives
individual circumstances. The Compensation Committee considered
these factors in its review of executive compensation for 2011
in addition to the factors discussed below.
In its 2011 compensation review, the Compensation Committee
considered the companys positive financial performance
across various metrics and its significant growth during 2010
due to several acquisitions completed during the year. The
companys 2010 results include an increase in revenue as
well as greater scope and depth of product offerings due to
acquisitions, and also reflect the expansion of relationships
with key customers and strategic partners. The Compensation
Committee also acknowledged that broader economic and market
conditions had shown signs of improvement and considered the
companys strong performance relative to the companies in
its peer group and across the industry generally.
Compensation
Analysis
Competitive
Benchmarking
The peer group companies referenced by the Compensation
Committee primarily consist of software companies with revenues
and market capitalizations comparable to Blackboards. The
Compensation Committee, in consultation with its independent
consultant, annually determines the peer group in order to
maintain comparability with Blackboard. The review is designed
to keep the peer group generally stable but also to reflect
changes in (1) peer group companies revenue, market
capitalization
and/or
status as independent publicly-traded companies and
(2) Blackboards growth in revenue and market
capitalization. The independent consultant to the Compensation
Committee conducts this benchmarking analysis and provides the
assessment to the Compensation Committee. The Compensation
Committee often shares the analysis with management, and
management also provides market data to the Compensation
Committee that it believes to be relevant to the review.
In the fall of 2009, with the assistance of Aon Hewitt, the
Compensation Committee reviewed and confirmed the composition of
Blackboards peer group, which consisted of the following
20 companies for the purpose of benchmarking executive
compensation for 2010:
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Advent Software Inc.
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Akamai Technologies Inc.
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Allscripts Healthcare Solutions Inc.
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Ansys Inc.
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Blackbaud Inc.
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Concur Technologies Inc.
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DealerTrack Holdings Inc.
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Digital River Inc.
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Epicor Software Corporation
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EPIQ Systems Inc.
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Equinix Inc.
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Informatica Corporation
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Manhattan Associates Inc.
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MicroStrategy Inc.
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Skillsoft PLC
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Tibco Software Inc.
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Ultimate Software Group Inc.
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United Online Inc.
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WebMD Health Corporation
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Websense Inc.
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This group represented publicly-traded enterprise software
companies with annual revenues generally in the range of
$175 million to $790 million (median annual revenues
of approximately $375 million), and market capitalizations
generally in the range of $340 million to $3.6 billion
(median market capitalization of approximately
$970 million).
In the fall of 2010, following a review by the Compensation
Committee and in consultation with Aon Hewitt, a determination
was made to maintain the composition of the peer group for 2011
with the exception of Skillsoft PLC, which was removed because
the company was taken private in 2010. The remaining
19 companies constituted the peer group for the 2011
compensation review, with reported annual revenues generally in
the range of $200 million to $1 billion (median
revenues of approximately $400 million), and with market
capitalizations generally in the range of $420 million to
$8 billion (median market capitalization of approximately
$1 billion).
20
To supplement the peer group benchmarks, and for executive
positions where the peer group data was insufficient to
establish a benchmark, the Compensation Committee also obtained
data from two proprietary sources for both the 2010 and 2011
analyses: a database maintained by Culpepper and Associates,
Inc., a compensation advisory firm focused on high-tech
companies, and a survey by Radford (a division of Aon
Corporation), a human capital consulting firm. The Culpepper
database consists of compensation data from over
750 companies. Blackboard management uses the Culpepper
database to set compensation benchmarks for its
U.S. employee population as a whole. In managements
analysis, benchmarks for the executive officers were established
using the same methodology as is used for general employee
salary benchmarking and consisted of data from companies in the
Culpepper database with revenues comparable to Blackboard. The
Radford Executive Survey provides additional market pay data for
technology companies. The Compensation Committee considers the
broader information provided by these sources as a secondary
reference point.
While the supplemental published survey data is an important
additional source of information for the benchmarking analysis,
the Compensation Committee relies primarily on the publicly
traded peer group data. The Compensation Committee is generally
able to obtain financial performance information for our
publicly traded peer group companies, which enables the
Compensation Committee to consider the compensation levels of
the peer group executive officers relative to the actual
financial performance of their respective companies. As the
Compensation Committee desires to align the compensation of
Blackboards executives with the companys financial
performance, the Compensation Committee believes that publicly
traded peer group data provides the most useful and relevant
information on market levels for it to consider.
The Compensation Committee believes that there are inherent
challenges in any effort to evaluate executive compensation in
comparison to other companies. Benchmarking alone does not
provide a definitive methodology for setting compensation
levels. Compensation can include a mixture of annual, one-time,
periodic, promotional and new-hire awards, and may vary with an
executives tenure in the position, and thus compensation
levels may not be directly comparable between or among
companies. Equity awards are valued at different dates and may
reflect very different conditions in the public equity markets.
In setting the executive compensation for a coming fiscal year,
the Compensation Committee relies on benchmarking data from the
prior fiscal year and as a result must make a determination as
to the impact of these timing differences, in consultation with
its independent compensation consultant. The prior year
benchmarking data is used in conjunction with assessments of
performance and potential to appropriately compensate, motivate
and reward executives and to support the Compensation
Committees short- and long-term strategic objectives.
Company
performance factors
The Compensation Committee has historically considered the
changes in revenue, market capitalization and non-GAAP earnings
for its comparisons as they are widely available metrics which
provide the greatest level of comparability across companies,
and can provide a consistent basis for comparison during periods
of disruption in the financial markets and the global economy.
In both the 2010 and 2011 reviews, the Compensation Committee
assessed the companys stock performance in the prior year
compared to the stock performance of the other companies in its
peer group and determined that Blackboard generally performed
favorably compared to the peer group although due to market
volatility, Blackboards stock performance varied depending
on the measurement date.
The Compensation Committee believes that if Blackboard can
outperform the peer group median in financial performance, the
executive officers should receive compensation above the
estimated median level of total compensation paid by the peer
group companies to executive officers performing comparable
functions. In addition, the Compensation Committee believes that
the competition for senior executive talent in our industry and
from other companies is significant, and that the cost to
replace executive officers is substantial, thus reinforcing the
importance of retaining our executive officers. Finally, as the
perceived ultimate value of equity incentives can fluctuate
significantly with changes in market conditions, the
Compensation Committee believes that it is appropriate to ensure
that the cash component of total compensation remains
competitive.
During its 2010 compensation review, the Compensation Committee
considered a number of factors, including its decision in the
prior year to keep 2009 cash compensation generally consistent
with 2008 levels due to the
21
worldwide economic slowdown at the time, the overall market
disruption and the potential effect on the companys
financial performance. The Compensation Committee also
considered the fact that Blackboards financial performance
for 2009 had been in the top half or top quartile of the
relevant metrics in relation to the financial performance of
comparable peer group companies, and that the company generally
exceeded its operating plans for 2009. The Compensation
Committee also took note of the fact that over the past years,
Blackboards financial performance has generally been in
the top half or top quartile of the relevant metrics. Finally,
it noted that with respect to total shareholder returns in 2009,
due to the volatility of the stock markets, Blackboards
rank varied from the first quartile to the fourth quartile
depending on the measurement date. Overall, Blackboards
consistent financial performance both in past years and during a
difficult macroeconomic period in recent years, and the
importance of retaining the companys executive team, were
significant factors in the Compensation Committees
decision to set 2010 executive compensation generally above the
median in relation to comparable companies.
As part of its 2011 compensation review, the Compensation
Committee took into account the companys overall
performance, including the completion of multiple strategic
acquisitions during 2010 that added significantly to the
companys product offerings and total revenue growth. In
addition, the company entered into strategic business
relationships in 2010 with a number of key technology partners,
creating valuable opportunities for long-term growth and
expanded product integration capabilities. The Compensation
Committee also acknowledged the importance of retaining a
successful executive team in a competitive market in order to
maintain focus on executing the companys long-term
strategy, effectively leverage future development and growth
opportunities, and maximize shareholder value. After careful
consideration of these factors, the Compensation Committee
established a general objective of compensating our executive
officers competitively in comparison with our peer group for
2011.
Individual
compensation determinations
The following table presents the 2010 and 2011 annual base
salaries approved for our named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
Percentage
|
|
|
2010 Base
|
|
Increase
|
|
2011 Base
|
|
Increase
|
Executive Officer
|
|
Salary
|
|
Over 2009
|
|
Salary
|
|
Over 2010
|
|
Michael L. Chasen
CEO & President
|
|
$
|
575,000
|
|
|
|
4.5
|
%
|
|
$
|
625,000
|
|
|
|
9
|
%
|
Michael J. Beach(1)
Former CFO & Treasurer
|
|
$
|
390,000
|
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
John E. Kinzer(2)
Chief Financial Officer
|
|
$
|
340,000
|
|
|
|
|
|
|
$
|
375,000
|
|
|
|
10
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%
|
Matthew H. Small
CBO, CLO & Secretary
|
|
$
|
390,000
|
|
|
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4
|
%
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|
$
|
410,000
|
|
|
|
5
|
%
|
Raymond P. Henderson III
CTO, President, Blackboard Learn
|
|
$
|
350,000
|
|
|
|
|
|
|
$
|
410,000
|
|
|
|
17
|
%
|
Judy K. Verses
CCO, President, Sales & Marketing
|
|
$
|
350,000
|
|
|
|
7.7
|
%
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|
|
|
|
|
|
|
|
Jonathan R. Walsh
VP Finance & Accounting
|
|
$
|
225,000
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|
|
|
15
|
%
|
|
$
|
239,500
|
|
|
|
6
|
%
|
|
|
|
(1)
|
|
Mr. Beach resigned as Chief Financial Officer of the
Company effective February 28, 2010.
|
|
(2)
|
|
Mr. Kinzer became the Chief Financial Officer of the
Company effective March 1, 2010, and his annual base salary
was increased to $340,000 at that time.
|
Cash
Compensation
Cash compensation consists of an executive officers base
salary and a target incentive opportunity. The Compensation
Committee seeks to ensure that total target cash compensation is
competitive for each executive officer. Base salary is generally
set with reference to the market practice for comparable
positions at the surveyed peer companies and the factors
described above. The balance of total cash compensation is
delivered through an
22
annual incentive opportunity tied to company
and/or
individual goals. To ensure a strong link between executive pay
and Blackboards performance, the annual target incentive
will generally be a significant proportion of an executive
officers total target cash compensation.
2010 Target Cash Compensation.
In reviewing
the peer group benchmark data for the 2010 compensation review,
the Compensation Committee established a general objective of
compensating our executive officers competitively, with target
total cash compensation generally near or above the median and
below the
75
th
percentile in comparison with our peer group. Based on the
companys financial performance over multiple years,
increased compensation benchmarks among the peer group
companies, and taking into consideration the fact that no
changes were made to compensation levels from 2008 to 2009, in
February 2010 the Compensation Committee approved increases to
the 2010 cash compensation of the companys executive
officers. Accordingly, Mr. Chasen, Mr. Beach and
Mr. Small received increases in their base salary of 4% to
4.5% from their 2009 salary levels. Mr. Walshs base
salary was increased by 15% due to the importance of his
position as the companys principal accounting officer and
based on market data. In February 2009, Ms. Verses was
designated an officer of the company by the Board of Directors.
In July 2009, she was promoted to the role of chief client
officer and president of sales and marketing. In its 2010
compensation review, the Compensation Committee considered the
companys performance as well as Ms. Verses
expanded responsibility during 2009 and the fact that
Ms. Verses cash compensation level was below the
median for comparable positions within the peer group. As a
result, the Compensation Committee increased
Ms. Verses base salary by 7.7% to a level that was
between the median and the
75
th
percentile of comparable positions in the peer group. In
addition to the changes in base salary, the Compensation
Committee increased the target incentive opportunity for
Mr. Beach and Mr. Small from 50% to 65% of their
respective salaries, as described below, in recognition of the
importance of their roles and for Ms. Verses from 50% to
75% of her base salary, reflecting her ability to affect the
companys performance as Blackboards senior sales
executive.
In February 2010, Mr. Henderson was designated an officer
of the company by the Board of Directors. In July 2009,
Mr. Henderson had been promoted to the role of president of
Blackboard Learn. In this role, he assumed responsibility for
product development, support, services and hosting for
Blackboard Learn, including Blackboard and legacy ANGEL Learning
products and services. The Board of Directors determined that
Mr. Hendersons areas of responsibility were critical
to the companys success and that his role merited
designation as one of the companys key executives. During
the 2010 compensation review, the Compensation Committee
increased Mr. Hendersons salary to $350,000 and
increased his target bonus opportunity to 65% of base salary.
CFO Transition.
Mr. Beach resigned from
his position as CFO effective February 28, 2010, and the
Board of Directors appointed Mr. Kinzer to the role of CFO
effective March 1, 2010. In connection with
Mr. Kinzers appointment, the Compensation Committee
set his cash compensation at a level that was higher than his
existing salary and target incentive opportunity but below the
median of the market for chief financial officers among the peer
group. Accordingly, Mr. Kinzers base salary was
increased to $340,000 and his target incentive opportunity was
increased to 65% of base salary.
2011 Target Cash Compensation.
In reviewing
the peer group benchmark data for the 2010 compensation review,
the Compensation Committee determined it was appropriate to set
cash compensation for our executive officers generally above the
median and below the
75
th
percentile in comparison with our peer group for total cash
compensation. Based on the companys growth and financial
performance in 2010, the increased compensation benchmarks
within the peer group, and the expanded responsibility
undertaken by members of the executive team, in February 2011
the Compensation Committee approved increases to the 2011 cash
compensation of the companys executive officers.
Accordingly, Messrs. Chasen, Small and Walsh received
increases in their base salary ranging from 5% to 9% over their
2010 salary levels. Ms. Verses had resigned from her
position as an executive officer effective December 31,
2010 and remained with the company for a transition period until
February 28, 2011, but was not part of the Compensation
Committees 2011 compensation review.
In February 2011, Mr. Henderson was appointed chief
technology officer (CTO) of the company in addition to his
continuing role as the president of our Blackboard Learn
business unit. The Compensation Committee determined that it was
appropriate to bring his compensation level closer in line with
the companys other senior executive officers in
recognition of his increased role, and his base salary was
increased by 17%. Mr. Hendersons
23
new role as CTO includes high-level responsibility for
companywide technology and product development initiatives.
Mr. Kinzer assumed a number of additional responsibilities
following his promotion to CFO in March 2010 and also took on a
leadership role in key financial aspects of multiple strategic
acquisitions completed during 2010. Accordingly, the
Compensation Committee increased Mr. Kinzers base
salary by 10% for 2011 to bring his cash compensation more in
line with the market and closer to other executive
officers pay levels.
Structure of Annual Incentive
Bonus.
Blackboards annual incentive program
is designed to motivate and reward executives for their
contribution to the companys performance. Target incentive
levels are generally expressed as a percentage of an
executives base salary. In 2010 and 2011, the Compensation
Committee established that the target incentive bonus awards
would be based on (1) company performance measures
determined by the Compensation Committee and approved by the
Board, and (2) for executive officers other than the CEO,
certain individual performance goals determined by mutual
agreement of the CEO and the executive officer. The Compensation
Committee believes that it is appropriate for the CEOs
target incentive opportunity to be entirely dependent upon the
achievement of company performance goals in order to reinforce
his role in driving the companys operating plan and
strategy. In 2010, the company performance measures were total
GAAP revenues (25%) and adjusted non-GAAP earnings excluding
amortization of acquired intangibles, stock-based compensation
expense, and certain defined non-cash items, such as non-cash
interest expense, all net of taxes (75%). These company
performance measures were utilized because the Compensation
Committee believes that they are metrics which directly drive
shareholder value and are viewed by our investors as key
measures of our performance. The following table presents the
2010 and 2011 target incentive bonus levels approved for our
named executive officers:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Base Salary
|
|
Performance Measure Weighting
|
|
|
2010 Target
|
|
2011 Target
|
|
Company
|
|
Individual
|
Executive Officer
|
|
Incentive Bonus
|
|
Incentive Bonus
|
|
Performance
|
|
Goals
|
|
Michael L. Chasen
CEO & President
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
0
|
%
|
Michael J. Beach(1)
Former CFO & Treasurer
|
|
|
65
|
%
|
|
|
|
|
|
|
75
|
%
|
|
|
25
|
%
|
John E. Kinzer(2)
Chief Financial Officer
|
|
|
65
|
%
|
|
|
65
|
%
|
|
|
75
|
%
|
|
|
25
|
%
|
Matthew H. Small
CBO, CLO & Secretary
|
|
|
65
|
%
|
|
|
65
|
%
|
|
|
75
|
%
|
|
|
25
|
%
|
Raymond P. Henderson III
CTO, President, Blackboard Learn
|
|
|
65
|
%
|
|
|
65
|
%
|
|
|
25
|
%
|
|
|
75
|
%
|
Judy K. Verses
CCO, President, Sales & Marketing
|
|
|
75
|
%
|
|
|
|
|
|
|
50
|
%
|
|
|
50
|
%
|
Jonathan R. Walsh
VP Finance & Accounting
|
|
|
40
|
%
|
|
|
40
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
|
|
|
(1)
|
|
Mr. Beach resigned as Chief Financial Officer of the
Company effective February 28, 2010.
|
|
(2)
|
|
Mr. Kinzer became the Chief Financial Officer of the
Company effective March 1, 2010.
|
Mr. Chasens target incentive is based 100% on company
performance as noted above. Mr. Beachs,
Mr. Smalls and Mr. Kinzers target
incentives were weighted 75% on company performance to align
their incentives to overall performance and 25% on individual
performance measures to reflect their contributions in their
specific areas of responsibility. Ms. Verses target
incentive was weighted equally between company performance and
individual performance measures because her individual goals as
Blackboards senior sales executive were closely linked
with the companys overall performance.
Mr. Hendersons target incentive is weighted 25% on
company performance and 75% on individual performance to reflect
the importance of his responsibilities in leading Blackboard
Learn and overseeing key product development initiatives. The
Compensation Committee utilizes the individual goals to ensure
that the executive officers are focused on department- or
function-specific objectives in addition to company objectives.
The target incentive for Mr. Walsh, our principal
accounting officer, was based entirely on individual performance
goals because the Compensation Committee
24
believes that Mr. Walshs performance should be
measured on his compliance activities in that role rather than
the financial performance of the company.
For 2011, the Compensation Committee approved an annual
incentive program which is substantially similar in structure to
the 2010 program. As in 2010, each officers target
incentive is comprised of a company performance portion and an
individual performance goal portion, except for Mr. Walsh
whose target incentive is based entirely on the achievement of
individual performance goals and Mr. Chasen whose target is
based entirely on company performance goals. The
2011 company performance measures will be based on total
non-GAAP revenues which includes deferred revenue of acquired
entities that would have been recognized but for GAAPs
purchase accounting treatment requiring the elimination of this
deferred revenue upon acquisition (25%) and a non-GAAP earnings
metric of net income including the deferred revenue adjustment
described above and excluding certain transition, integration
and transaction-related expense items resulting from
acquisitions, non-cash translation gains or losses, amortization
or impairment of acquired intangibles, stock-based compensation,
and non-cash interest expense, all net of taxes (75%). This
non-GAAP earnings measure was chosen because it is a financial
metric which is reported by the company publicly to investors
and is a measure which directly drives long-term shareholder
value.
Attainment of Company Performance Portion of Annual Incentive
Plan.
The portion of each executive
officers target incentive bonus attributable to the
company performance can be awarded at between 0% and 200% of the
target depending on our actual financial performance for the
year as compared against the specified metrics, and attainment
is calculated using a formula established by the Compensation
Committee. The portion of each executives bonus related to
company performance will be paid out at 100% of the target
amount if we achieve the financial targets set forth in the
budget approved by our Board of Directors for the respective
year, which the Compensation Committee believes helps to ensure
that management is aligned with the companys operating
plans. At the end of the fiscal year, the level of attainment of
each of the two financial metrics that make up the company
performance goals are determined and then each appropriately
weighted to calculate a composite attainment percentage. The
composite attainment percentage is then used to calculate the
dollar amount payable to each officer for the company
performance component of his or her annual incentive bonus. The
company performance portion of each officers bonus can be
paid out at above or below 100% of the target amount on a
sliding scale if we achieve a level above or below our financial
targets for the respective year. Adjustments for over- or
under-performance in each measure are calculated according to
the scale set forth in the following table, which was used for
both 2010 and 2011 goals.
|
|
|
Attainment Level of Performance Measure
|
|
Bonus Payout
|
|
80% or below attainment
|
|
zero bonus contribution
|
120% or greater attainment
|
|
200% of target bonus
|
From 80% to 120% attainment
|
|
Straight line interpolation between 0% and 200% of target bonus
|
To earn the maximum payout of 200% of the target bonus, the
company would need to over-perform in both the revenue and
non-GAAP earnings metrics by at least 20% over the budgeted
amounts. The Compensation Committee believes that it was very
difficult to achieve the financial performance corresponding to
a payout of 200% of the company performance bonus for 2010, and
that the financial targets for 2011 have been set at a similar
level of difficulty. The financial targets for 2010 were
$442.5 million for total company GAAP revenues and
$53.2 million for non-GAAP earnings, excluding stock-based
compensation, amortization of acquired intangibles and non-cash
interest expense, all net of taxes, after adjustments following
the Saf-T-Net, Inc. acquisition in March 2010 and the
acquisitions of Elluminate, Inc. and Wimba, Inc. in August 2010.
The revenue metric was achieved at 101% and the non-GAAP
earnings metric was achieved at 104.5%, resulting in a weighted
total company performance attainment level of 103.6%. Therefore,
the company performance component of each executive
officers target bonus for 2010 was paid out in the first
quarter of 2011 at 118% of the target bonus amount for 2010 for
that component. In 2011, the company performance targets are
$540.0 million in total non-GAAP revenue, which includes
deferred revenue of acquired entities that would have been
recognized but for GAAPs purchase accounting treatment
requiring the elimination of this deferred revenue upon
acquisition, and $65.8 million in non-GAAP earnings,
including the deferred revenue adjustment described above and
excluding certain transition, integration and
transaction-related expense items resulting from acquisitions,
non-cash translation gains or losses, amortization or impairment
of acquired intangibles, stock-based compensation, and non-cash
interest expense, all
25
net of taxes, each of which are based on the companys 2011
budget and remain subject to adjustments as may be determined by
the Compensation Committee in its discretion.
Long-Term
Incentives.
The Compensation Committee believes that equity participation by
the executive officers aligns the interests of executive
officers with those of our stockholders by directly linking
compensation and stockholder value, gives executive officers a
significant, long-term interest in Blackboards success and
helps retain key executives in a competitive market for
executive talent. The Compensation Committee also awards equity
because it believes that if our executive officers hold equity
with significant value to them, they will have a greater
incentive to act to maximize long-term stockholder value. The
Compensation Committee reviews the long-term equity incentive
program from time to time and makes adjustments as it deems
appropriate taking into account corporate and market trends and
overall economic conditions, tax and accounting considerations
and company compensation objectives. As with cash incentive
opportunities, in determining the equity opportunity for each
executive, the Compensation Committee believes that the
long-term incentive opportunities should make up a larger
portion of the executives target total compensation as the
officers level of responsibility increases. Long-term
incentive compensation for executive officers in 2010 and 2011
consisted of grants of stock options and restricted stock.
Long-Term Incentive Grant Practices.
Each
stock option represents the right to purchase a specified number
of shares of our common stock at a set exercise price subject to
the terms and conditions of an option agreement and
Blackboards Amended and Restated 2004 Stock Incentive
Plan, or 2004 Plan. The 2004 Plan also permits the grant of
shares of restricted stock. We have a policy of granting stock
options and restricted stock only on established grant dates and
consequently, grants are made effective on the next scheduled
grant date. Currently, we make equity grants on the first
trading day on or after the
15
th
of
each calendar month. Annual equity grants to executive officers
are made on the first trading day on or after February
15
th
of
each year. The exercise price of the stock options we grant is
equal to the closing price of the companys common stock on
the date of grant. As a result, any value that an executive
receives from a stock option is solely the result of increases
in the value of Blackboard stock which benefits all of our
stockholders.
When establishing equity grant levels, the Compensation
Committee generally considers (i) the executives
experience and level of current and potential job
responsibility, (ii) the equity grants awarded by the peer
group companies to executives in similar positions;
(iii) the importance of long-term retention of the
executive; (iv) the CEOs recommendations, except with
respect to his own equity grants; (v) the retention value
in existing long-term equity for that executive; (vi) the
total compensation paid to that executive; and (vii) the
companys burn rate and shareholder dilution.
Long-Term Incentive Mix.
Beginning in 2008,
the Compensation Committee granted a portion of the executive
officers long-term equity incentives in restricted stock.
Previously, the Compensation Committee had granted only stock
options. The shift toward granting restricted stock was made due
to a variety of considerations. In volatile market conditions,
restricted stock was seen as an effective retention tool that
also aligns the interests of the executives with the interests
of the companys shareholders and makes them more sensitive
to stock price declines. The use of restricted stock reduces the
impact of share dilution due to the fact that it requires fewer
shares than otherwise would be required if stock options of
equivalent value were granted. In the past, the Compensation
Committee has also selectively granted long-term equity
incentives in the form of restricted stock units, or RSUs, which
represent the right to receive shares of our common stock, but
do not include certain characteristics of restricted stock such
as voting rights or the right to receive dividends. In
determining the mix of equity incentive awards, the Compensation
Committee generally considers available market data, the mix of
awards granted by our peer group companies, the number of shares
available in our plan reserve, each executives existing
equity holdings, the fair market value of our common stock at
the time of the compensation review, the market environment,
legal and tax considerations, and other factors as it deems
appropriate.
In 2010, the Compensation Committee granted stock options and
restricted stock, with the mix of the total equity incentive
awards consisting of approximately 50% of the value in stock
options, based on the grant date fair value of the option, and
approximately 50% of the value in restricted stock, based on the
closing price of our common stock on the date of grant, in order
to rebalance the executives overall holdings following an
emphasis on
26
restricted stock in the 2009 grants that had been primarily the
result of market conditions and the volatility of the stock
market. In 2011, the Compensation Committee granted a mix of
stock options and restricted stock with approximately 40% of the
value of the grant in stock options and approximately 60% of the
value of the grant in restricted stock. The Compensation
Committee will continue to evaluate the appropriate mix between
stock options and other equity grants based on the market
environment and legal and tax considerations and other factors
as it deems appropriate.
2010
Long-Term Incentive Grants
In February 2010, the Compensation Committee approved grants of
stock options and restricted stock for Mr. Chasen,
Mr. Small, Ms. Verses, Mr. Henderson and
Mr. Walsh as follows. The Compensation Committee also
approved grants of stock options and restricted stock for
Mr. Kinzer in February 2010 in connection with his
appointment as CFO effective March 1, 2010.
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Restricted Stock
|
|
|
Granted in
|
|
Granted in
|
Executive Officer
|
|
February 2010
|
|
February 2010
|
|
Michael L. Chasen
|
|
|
80,000
|
|
|
|
30,000
|
|
John E. Kinzer
|
|
|
35,000
|
|
|
|
12,500
|
|
Matthew H. Small
|
|
|
40,000
|
|
|
|
15,000
|
|
Judy K. Verses
|
|
|
40,000
|
|
|
|
15,000
|
|
Raymond P. Henderson III
|
|
|
40,000
|
|
|
|
15,000
|
|
Jonathan R. Walsh
|
|
|
12,500
|
|
|
|
3,800
|
|
In determining the 2010 equity grant levels, the Compensation
Committee considered the level of grants made by the 2010 peer
group companies in 2009, as well as Blackboards
performance, the need for executive retention, and the value of
the executive officers existing equity holdings and
compensation arrangements. The Compensation Committee recognizes
that the value of long-term equity incentives is often the most
volatile component of an executives total compensation
package, due to fluctuations in the companys stock price,
and that the value of our executives long-term incentive
grants relative to the value of grants made by our peer group
may vary significantly from year to year.
The stock options granted to executive officers in February 2010
vest over a four-year period with 25% vesting on the first
anniversary and 75% vesting in equal monthly installments over
the following three years. The restricted stock awards to
executive officers in February 2010 vest 25% on each of the
first four anniversaries of the vesting commencement date.
December
2010 Grant
In December 2010, the Compensation Committee approved a grant of
60,125 shares of restricted stock for Mr. Small, our
Chief Business Officer in recognition of his performance in
leading several highly successful business development
initiatives for the company in 2010. The restricted stock award
vests 25% on each of the first four anniversaries of the vesting
commencement date. The Compensation Committee believed it was in
the companys best interests to provide this year-end award
to Mr. Small in the form of a restricted stock grant to
support the Compensation Committees goals of rewarding
performance while simultaneously creating long-term incentives
aligned with the interests of the companys shareholders.
27
2011
Long-Term Incentive Grants
In February 2011, the Compensation Committee approved grants of
stock options and restricted stock for Mr. Chasen,
Mr. Kinzer, Mr. Small, Mr. Henderson, and
Mr. Walsh as follows.
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Restricted Stock
|
|
|
Granted in
|
|
Granted in
|
Executive Officer
|
|
February 2011
|
|
February 2011
|
|
Michael L. Chasen
|
|
|
59,660
|
|
|
|
33,970
|
|
John E. Kinzer
|
|
|
27,120
|
|
|
|
15,440
|
|
Matthew H. Small
|
|
|
29,830
|
|
|
|
16,980
|
|
Raymond P. Henderson, III
|
|
|
29,830
|
|
|
|
16,980
|
|
Jonathan R. Walsh
|
|
|
6,780
|
|
|
|
3,860
|
|
In determining the 2011 annual equity grant levels, the
Compensation Committee considered the level, type and mix of
equity award grants made by the 2011 peer group companies in
2010, as well as Blackboards performance, the need for
executive retention, and the value of the executive
officers existing equity holdings and compensation
arrangements. In addition, the Compensation Committee considered
its recent adoption of an equity holding policy for certain
members of senior management as described below. The stock
options and restricted stock awards granted in February 2011
have the same vesting schedules as the stock option grants and
restricted stock awards made in February 2010.
Stock
Ownership and Trading Policy
In February 2011, the Compensation Committee adopted stock
ownership guidelines for certain executive officers in order to
promote alignment of the executive officers interests with
shareholder interests and create an additional long-term
incentive to improve the companys financial performance.
The equity ownership policy states that our CEO, CFO and CBO
shall be required, within five years of the implementation of
the policy, to maintain certain minimum equity ownership levels
in our common stock, including vested and unvested equity
holdings. In the event that a new CEO, CFO or CBO is hired or
appointed, that individual would have five years from his or her
date of employment or appointment to achieve compliance with the
equity ownership policy.
|
|
|
|
|
Position
|
|
Holding Requirement
|
|
Timeframe
|
|
CEO
|
|
4x annual base salary
|
|
5 years from implementation of policy or date of hire or
appointment to position
|
CFO, CBO
|
|
2x annual base salary
|
Compliance with the equity ownership policy will be reviewed
annually by the Compensation Committee. At this time, the
Compensation Committee has not adopted specific ownership
requirements or guidelines for our Board of Directors. Our Board
of Directors has adopted an insider trading policy which
prohibits executive officers and directors from short sales of
our stock and from transactions in put or call options in our
securities for speculative purposes.
Employee
Benefits and Perquisites.
In addition to the cash and equity components of our
compensation packages described above, we provide our executive
officers with certain personal benefits and perquisites, which
have been reviewed and approved by the Compensation Committee.
While the Compensation Committee does not consider these
perquisites to be a significant component of executive
compensation, it recognizes that they are an important factor in
attracting and retaining talented executives. During 2010, the
company provided supplemental long-term disability insurance
premiums for our executive officers, as well as reimbursement of
up to $6,000 for health and fitness expenses such as gym
memberships, and reimbursement of cell phone usage and equipment
costs, and expects to provide similar benefits during 2011. The
Compensation Committee believes these benefits help to recruit
and retain key talent at a minimal cost to the company.
Executive officers are eligible under the same plans as all
other U.S. employees for medical, dental, vision,
disability and basic life insurance. The executive officers may
also participate in our 401(k) plan under the same rules that
apply to other U.S. employees. The Board of Directors
approved matching contributions to the 401(k)
28
plan for 2010 and 2011 as part of its annual budget review
process for both years. Participants in our 401(k) plan are
eligible for a matching contribution from us of 33% of the
participants contributions, up to a total of 6% of the
participants pay. These benefits are intended to be
competitive with benefits offered by comparable companies.
Executive
Severance and
Change-in-Control
Agreements
We have
change-in-control
provisions in our 2004 Plan and these provisions apply equally
to all participants, including our executive officers. The
change-in-control
provisions were adopted to ensure that in the event we are
considering a
change-in-control
transaction, the transaction is neutral to the employees
economic interests as the employees would likely not be in a
position to influence performance and may not be in a position
to vest in their equity awards following a
change-in-control.
The 2004 Plan provides that the vesting of outstanding stock
option grants and restricted stock grants to employees will be
accelerated by one year in the event of a
change-in-control,
unless other provision is made by our Board of Directors. A
small portion of grants remain outstanding under our 1998
Amended and Restated Stock Incentive Plan, which does not
provide for automatic acceleration of vesting in the event of a
change-in-control.
In addition, certain of our executive officers and other
key employees stock option agreements and restricted stock
agreements provide for full acceleration of vesting subsequent
to a
change-in-control
in the event that such person is terminated or constructively
terminated during the first year following the
change-in-control.
Mr. Chasens 2009 RSU grant also provides for full
acceleration upon a
change-in-control.
We have entered into employment agreements with some of our
named executive officers under which they are eligible to
receive severance benefits and acceleration of vesting of their
equity awards in the event of termination of their employment
with us in certain situations and, in some cases, upon a change
in control of our company. These agreements reflect the
negotiations between the company and each of our executives, and
generally provide for severance of one year salary or less,
certain bonus amounts and certain other benefits such as payment
of health insurance premiums. The Compensation Committee
considers these severance benefits critical to attracting and
retaining high-caliber executives.
The stock option agreements and restricted stock agreements
approved by the Compensation Committee for our executive
officers provide for 12 months acceleration of
vesting in the event of a
change-in-control.
In addition, our executive officers are entitled to:
(1) full acceleration of vesting in the event that they are
terminated or constructively terminated within 12 months of
a
change-in-control;
and (2) 12 months acceleration of vesting if,
other than in connection with a
change-in-control,
their employment is terminated without cause or due to death or
disability. The Committee also believes that
change-in-control
and severance benefits, if structured properly, can minimize the
distractions to an executive and reduce the risk that an
executive officer may depart the company before a
change-in-control
transaction is consummated. We believe that our existing
arrangements allow our executive officers to focus on continuing
normal business operations and, in the case of
change-in-control
benefits, on the success of a potential business combination,
rather than worrying about how business decisions that may be in
the best interests of the company will impact their own
financial security. For more information, please read the
section Potential Payments Upon Termination or
Change-In-Control
below.
Tax
Considerations
Section 162(m)
Section 162(m) of the Internal Revenue Code, as amended, or
the Code, generally disallows a tax deduction for compensation
in excess of $1 million paid in any taxable year to the CEO
and certain other highly compensated officers. Certain
compensation, including qualified performance-based
compensation, as defined in the Code, will not be subject to the
deduction limit if certain requirements are met. In general,
Blackboard structures and administers its equity grants in a
manner intended to comply with the performance-based exception
to Section 162(m). Nevertheless, there can be no assurance
that compensation attributable to all awards granted under
Blackboards stock incentive plans will be treated as
qualified performance-based compensation under
Section 162(m). For example, because the vesting of the
shares of restricted stock is not subject to the achievement of
specified performance objectives, our current restricted stock
awards do not qualify as performance-based compensation;
accordingly, the compensation expense related to such awards to
our named executive officers count toward the $1 million
annual limit on deductibility. In addition, the Compensation
Committee reserves the right to use its judgment to authorize
compensation payments that may be subject to the limit when the
Compensation
29
Committee believes such payments are appropriate and in the best
interests of Blackboard and its stockholders, after taking into
consideration company performance and business conditions.
Section 409A
If an executive is entitled to nonqualified deferred
compensation benefits that are subject to Section 409A, and
such benefits do not comply with that section, the executive
would be subject to adverse tax treatment, including accelerated
income recognition in the first year that benefits are no longer
subject to a substantial risk of forfeiture and a 20% penalty
tax. With respect to equity and cash compensation, we generally
seek to structure such awards so that they do not constitute
deferred compensation under Section 409A of the
Code, thereby avoiding penalties and taxes on such compensation
applicable to deferred compensation.
Tax
Gross-up
In the event of a change in control, we have agreed to reimburse
Mr. Chasen for the sum of (i) the excess, if any, of
actual excise taxes imposed under Section 280G and
Section 4999 of the Code over any such excise taxes he
would have owed had his RSUs vested ratably on a monthly basis
until June 30, 2013, and (ii) any federal and state
income, employment, excise and other taxes payable by him as a
result of any reimbursements for Section 280G and
Section 4999 excise taxes, up to a maximum reimbursement
amount of one million dollars. If a change in control had
occurred on December 31, 2010, Mr. Chasen would not
have been entitled to the reimbursement of any taxes imposed
upon or payable by him. In May 2010, the Compensation Committee,
in recognition of evolving best practices, adopted a policy that
it will no longer enter into any future compensation
arrangements with executive officers that would provide for an
excise tax
gross-up.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2010, the members of the Compensation Committee included
Dr. Raduchel, Mr. Cowan, Ms. Kaplan, and
Mr. Novak, none of whom is a current or former officer or
employee of Blackboard and none of whom had a direct or indirect
material interest in any related person transaction involving
Blackboard. No interlocking relationships exist between the
Board of Directors or the Compensation Committee and the board
of directors or the compensation committee of any other entity.
None of our executive officers serves, or in the past year has
served, as a member of the board of directors or compensation
committee of any entity that has one or more executive officers
serving on our Board of Directors or Compensation Committee.
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K.
Based on such review and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy statement and
incorporated by reference into our Annual Report on
Form 10-K
for the year ended December 31, 2010.
Respectfully submitted by the Compensation Committee.
THE COMPENSATION COMMITTEE
Joseph L. Cowan, Chair
E. Rogers Novak, Jr.
Beth Kaplan
30
EXECUTIVE
COMPENSATION
The following table provides certain summary information
concerning compensation for the years ended December 31,
2010, 2009, and 2008 that we paid to those employees who were at
any point during the year ending December 31, 2010 our
principal executive officer or principal financial officer, the
next three most highly compensated executive officers who were
serving in such capacities as of December 31, 2010, and one
former executive officer whose status as an executive officer
ceased on December 31, 2010. We refer to these seven
individuals in this proxy statement as our named executive
officers.
SUMMARY
COMPENSATION TABLE
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Non-Equity
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Stock
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Option
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Incentive Plan
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Fiscal
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Awards
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Awards
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Compensation
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All Other
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Name and Principal Positions(s)
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Year
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Salary ($)
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($)(1)
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($)(1)
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($)(2)
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Compensation ($)
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Total ($)
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Michael L. Chasen
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2010
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572,917
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1,131,300
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1,239,576
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679,500
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18,828
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(3)
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3,642,121
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Chief executive officer,
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2009
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550,000
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6,113,600
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621,725
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1,117,932
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12,038
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(3)
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8,415,295
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president and director
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2008
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545,833
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575,000
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1,110,160
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663,039
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14,911
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(3)
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2,908,943
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Michael J. Beach
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2010
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176,250
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11,720
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(4)
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187,790
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Former chief financial
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2009
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375,000
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1,770,160
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310,863
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229,525
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8,107
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(5)
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2,693,655
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officer and treasurer
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2008
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370,833
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287,500
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499,572
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166,544
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7,221
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(5)
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1,331,670
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John E. Kinzer(8)
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2010
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330,000
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488,500
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560,889
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251,123
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16,741
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(6)
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1,647,253
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Chief financial officer
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Matthew H. Small
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2010
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388,750
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3,065,648
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619,788
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288,053
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19,855
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(3)
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4,382,094
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Chief business officer, chief
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2009
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375,000
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1,770,160
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310,863
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229,525
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10,480
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(3)
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2,696,028
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legal officer and secretary
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2008
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370,833
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287,500
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499,572
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166,544
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17,372
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(3)
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1,341,821
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Raymond P. Henderson III(8)
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2010
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345,000
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565,650
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619,788
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231,713
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16,036
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(7)
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1,778,186
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Chief technology officer; president, Blackboard Learn
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Judy K. Verses(9)
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2010
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347,917
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565,650
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619,788
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250,301
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20,429
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(6)
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1,804,085
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Former chief client officer,
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2009
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325,000
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1,770,160
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310,863
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156,830
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17,018
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(6)
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2,579,871
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president, sales & marketing
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Jonathan R. Walsh
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2010
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222,500
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143,298
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193,684
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90,000
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6,839
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(5)
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656,321
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VP Finance and Accounting
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2009
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195,000
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219,000
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93,259
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78,000
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7,844
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(5)
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593,103
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2008
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193,500
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143,750
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166,524
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78,000
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6,573
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(5)
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588,347
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(1)
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Represents the full grant date fair value of each option award
or restricted stock award, calculated in accordance with
Accounting Standards Codification (ASC) Topic 718, excluding
estimates of forfeitures in the case of awards with
service-based vesting conditions. The assumptions made in
valuing option and stock awards reported in this column are
discussed in Note 2 to the consolidated financial
statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, under the heading
Significant Accounting Policies and subheadings
Stock Options and Restricted Stock and
Restricted Stock Units. The amounts reported in the
Summary Compensation Table for these awards may not represent
the amounts that the named executive officers will actually
realize from the awards. Whether, and to what extent, a named
executive officer realizes value will depend on the future stock
price and the named executive officers continued
employment. Additional information on all outstanding option and
stock awards is reflected in the 2010 Outstanding Equity Awards
at Fiscal Year-End table.
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(2)
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All amounts are reported in the year earned, regardless of when
they are paid.
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(3)
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Consists of supplemental long-term disability insurance
premiums, 401(k) matching contributions paid by us for the
benefit of the named executive officer and reimbursement of
travel expenses of the named executive officers spouse to
a company event. None of the individual items exceeds $10,000.
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(4)
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Consists of supplemental long-term disability insurance premiums
and health benefits paid by us for the benefit of the named
executive officer; neither of the individual items exceeds
$10,000. Also includes a payment of $10,906 for accrued vacation
paid to the named executive officer upon termination of his
employment with us.
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31
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(5)
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Consists of supplemental long-term disability insurance
premiums, health benefits and 401(k) matching contributions paid
by us for the benefit of the named executive officer. None of
the individual items exceeds $10,000.
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(6)
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Consists of supplemental long-term disability insurance
premiums, 401(k) matching contributions paid by us for the
benefit of the named executive officer, health benefits, and
reimbursement of travel expenses of the named executive
officers spouse to a company event. None of the individual
items exceeds $10,000.
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(7)
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Consists of 401(k) matching contributions paid by us for the
benefit of the named executive officer and reimbursement of
travel expenses of the named executive officers spouse to
a company event. None of the individual items exceeds $10,000.
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(8)
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Because Mr. Henderson and Mr. Kinzer were not
executive officers of the company in 2008 and 2009, SEC rules do
not require their compensation for those years to be disclosed
in this table.
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(9)
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Ms. Verses became an employee of the company in 2008 and
was designated by the Board of Directors as an executive officer
in 2009. Because she was not an executive officer in 2008, SEC
rules do not require her compensation for that year to be
disclosed in this table. Ms. Verses resigned from her
position as an executive officer effective December 31,
2010.
|
2010
GRANTS OF PLAN-BASED AWARDS
The following table sets forth grants of stock options during
the fiscal year ended December 31, 2010 to each of the
named executive officers.
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All Other
|
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All Other
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Stock
|
|
Option
|
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Awards:
|
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Awards:
|
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Exercise or
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Grant Date
|
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Estimated Future Payouts Under
|
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Number of
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Number of
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Base Price
|
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Fair Value
|
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Type
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Non-Equity Incentive Plan Awards
|
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Shares of
|
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Securities
|
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of Option
|
|
of Stock and
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of
|
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Grant
|
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Approval
|
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Threshold
|
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Target
|
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Maximum
|
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Stocks or
|
|
Under-lying
|
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Awards
|
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Option
|
Name
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Grant*
|
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Date
|
|
Date
|
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($)
|
|
($)
|
|
($)
|
|
Units (#)
|
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Options (#)
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|
($/Sh)(1)
|
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Awards ($)(2)
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Michael L. Chasen
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AIB
|
|
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|
|
|
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625,000
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1,250,000
|
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|
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|
|
|
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|
|
|
|
|
|
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|
SO
|
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2/15/2010
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2/2/2010
|
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|
|
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|
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|
|
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|
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80,000
|
(3)
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37.71
|
|
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|
1,239,576
|
|
|
|
RS
|
|
|
2/15/2010
|
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|
2/2/2010
|
|
|
|
|
|
|
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|
|
|
|
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30,000
|
(4)
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|
|
|
|
|
|
|
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1,131,300
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Michael J. Beach
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AIB
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SO
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RS
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John E. Kinzer
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|
AIB
|
|
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|
|
|
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243,750
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426,563
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|
|
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|
|
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|
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|
|
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|
|
|
|
|
|
SO
|
|
|
2/26/2010
|
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2/26/2010
|
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|
|
|
|
|
|
|
|
|
|
|
|
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35,000
|
(3)
|
|
|
39.08
|
|
|
|
560,889
|
|
|
|
RS
|
|
|
2/26/2010
|
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|
|
2/26/2010
|
|
|
|
|
|
|
|
|
|
|
|
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12,500
|
(4)
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|
|
|
|
|
|
|
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|
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488,500
|
|
Matthew H. Small
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|
AIB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266,500
|
|
|
|
466,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SO
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(3)
|
|
|
37.71
|
|
|
|
619,788
|
|
|
|
RS
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
565,650
|
|
|
|
RS
|
|
|
12/15/2010
|
|
|
|
12/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,125
|
(4)
|
|
|
|
|
|
|
|
|
|
|
2,499,998
|
|
Raymond P.
Henderson III
|
|
AIB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266,500
|
|
|
|
333,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SO
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(3)
|
|
|
37.71
|
|
|
|
619,788
|
|
|
|
RS
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
565,650
|
|
Judy K. Verses
|
|
AIB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262,500
|
|
|
|
459,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SO
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(3)
|
|
|
37.71
|
|
|
|
619,788
|
|
|
|
RS
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
565,650
|
|
Jonathan R. Walsh
|
|
AIB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,800
|
|
|
|
95,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SO
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(3)
|
|
|
37.71
|
|
|
|
193,684
|
|
|
|
RS
|
|
|
2/15/2010
|
|
|
|
2/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800
|
(4)
|
|
|
|
|
|
|
|
|
|
|
143,298
|
|
|
|
|
*
|
|
Type of grant: AIB (annual incentive bonus); SO (stock option);
RS (restricted stock)
|
|
(1)
|
|
The stock options shown in this table were granted at an
exercise price equal to the fair market value of our common
stock on the date of grant as determined using the closing price
of the common stock on that date.
|
|
(2)
|
|
Represents the full grant date fair value of each stock option
award or restricted stock award, calculated in accordance with
ASC Topic 718, excluding estimates of forfeitures in the case of
awards with service-based
|
32
|
|
|
|
|
vesting conditions. The assumptions made in valuing option and
stock awards reported in this column are discussed in
Note 2 to the consolidated financial statements included in
our Annual Report on
Form 10-K
for the year ended December 31, 2010, under the heading
Significant Accounting Policies and subheadings
Stock Options and Restricted Stock and
Restricted Stock Units.
|
|
(3)
|
|
The options have a term of eight years from the date of grant
and become exercisable over four years with 25% vesting on the
first anniversary of the applicable vesting commencement date
and then in 36 equal monthly installments thereafter, subject in
each case to the executives continued service with us as
of such date.
|
|
(4)
|
|
The restricted stock vests 25% on each of the first four
anniversaries of the applicable vesting commencement date,
subject in each case to the executives continued service
with us as of such date.
|
Employment
Agreements
Mr. Chasen, Blackboards chief executive officer and
president, serves pursuant to the terms of an employment
agreement dated September 25, 2009. The initial term of
Mr. Chasens agreement began on September 25,
2009 and continues until June 30, 2013. Upon expiration of
the initial term, the agreement automatically extends until
terminated in accordance with its terms. Under the agreement,
Mr. Chasens base salary is subject to periodic review
and adjustment by the Compensation Committee of the Board of
Directors. He also participates in our annual cash incentive
bonus plan as described above under Compensation
Discussion and Analysis Compensation Analysis.
If we terminate Mr. Chasens employment without cause
(as defined in the agreement), or Mr. Chasen terminates his
employment with good reason (as defined in the agreement), then
we would be required to pay him a lump-sum amount equal to
$999,999 less applicable taxes and withholdings within
30 days following the effective date of termination and
additional payments of $999,999 less applicable taxes and
withholdings on each of the next two succeeding anniversaries of
the date of his termination. During his employment with us and
for three years following the termination of his employment,
Mr. Chasen will be subject to certain non-solicitation and
non-competition restrictions.
Mr. Beach, our former chief financial officer and
treasurer, served as an executive officer until
February 28, 2010 and continued to serve the company for a
transition period through July 31, 2010 pursuant to the
terms of an employment agreement dated September 1, 2006.
Mr. Beachs agreement was amended as of
October 23, 2008 in order to comply with the terms of
Section 409A of the U.S. Internal Revenue Code of
1986, as amended. The initial term of the agreement was one year
and it automatically renewed for successive one-year periods
until Mr. Beach provided us notice of his resignation. If,
prior to his resignation, we had terminated
Mr. Beachs employment without cause (as defined in
the agreement), or Mr. Beach had terminated his employment
with good reason (as defined in the agreement), then we would
have been required to pay to Mr. Beach his then-current
annual base salary for 12 months and pay for up to
12 months COBRA premiums. Mr. Beach remains
subject to certain non-solicitation and non-competition
restrictions for one year following the termination of his
employment.
Mr. Kinzer, our chief financial officer and treasurer,
serves pursuant to the terms of an employment agreement dated
August 9, 2010. The initial term of the agreement is one
year, and unless terminated pursuant to its terms, the agreement
renews automatically for additional one-year terms unless either
we or Mr. Kinzer provides notice of non-renewal within
30 days of the applicable renewal term. Under the
agreement, Mr. Kinzers annual base salary is subject
to periodic review and adjustment by our Board of Directors. He
will also be eligible to receive an annual bonus based on
performance targets set by our Board of Directors. He also
participates in our annual cash incentive bonus plan as
described above under Compensation Discussion and Analysis
Compensation Analysis. If we terminate
Mr. Kinzers employment without cause (as defined in
the agreement), or Mr. Kinzer terminates his employment
with good reason (as defined in the agreement), then we would be
required to pay to Mr. Kinzer his then-current annual base
salary for 12 months and pay for up to 12 months
COBRA premiums, plus he would be entitled to any earned bonus
for a completed calendar year if Mr. Kinzer is terminated
without cause or terminates his employment for good reason after
the end of a calendar year but prior to receiving his earned
bonus for such completed calendar year.
Mr. Small, our chief business officer, chief legal officer
and secretary, serves pursuant to the terms of an employment
agreement dated January 26, 2004. Mr. Smalls
agreement was amended as of October 18, 2008 in order to
comply with the terms of Section 409A of the
U.S. Internal Revenue Code of 1986, as amended. The initial
33
term of the agreement was two years, and unless terminated
pursuant to its terms, the agreement renews automatically for
additional one-year terms unless either we or Mr. Small
provides notice of non-renewal within 30 days of the
applicable renewal term. Under the agreement,
Mr. Smalls annual base salary is subject to periodic
review and adjustment by our Board of Directors. He will also be
eligible to receive an annual bonus based on performance targets
set by our Board of Directors. He also participates in our
annual cash incentive bonus plan as described above under
Compensation Discussion and Analysis
Compensation Analysis. If we terminate
Mr. Smalls employment without cause (as defined in
the agreement), he terminates his employment for good reason (as
defined in the agreement) or his employment agreement is not
renewed, then Mr. Small would be entitled to a cash payment
equal to one year of his annual base salary, plus any earned
bonus through the end of the then-current quarter, expense
reimbursements and fringe benefits, in a lump sum or in
accordance with normal payroll practices, at our election. He
would be further entitled, at our cost, to continue to
participate in all group insurance, life insurance, health and
accident, disability and other employee benefit plans, programs
and arrangements, other than bonus plans or stock option plans,
for a period of 12 months.
Ms. Verses, our former chief client officer and president
of sales and marketing, served as an executive officer until
December 31, 2010 and continued to serve the company for a
transition period through February 28, 2011 pursuant to the
terms of an employment agreement dated July 2, 2008.
Ms. Verses agreement was amended as of
November 18, 2008 in order to comply with the terms of
Section 409A of the U.S. Internal Revenue Code of
1986, as amended, and was further amended as of December 7,
2010. The initial term of Ms. Verses agreement was
one year and the agreement automatically renewed for successive
one-year periods until Ms. Verses provided us notice of her
resignation. Under the agreement, Ms. Verses annual
base salary was subject to periodic review and adjustment. She
also participated in our annual cash incentive bonus plan as
described above under Compensation Discussion and
Analysis Compensation Analysis. Under the
terms of the December 7, 2010 amendment, we are required to
pay Ms. Verses her current annual base salary for four
months following the termination of her employment and up to
four months of COBRA premiums. Ms. Verses remains subject
to certain non-solicitation and non-competition restrictions for
one year following the termination of her employment.
Mr. Walsh, our vice president of finance and accounting,
serves pursuant to the terms of an employment agreement dated
June 8, 2010. The initial term of the agreement is one
year, and unless terminated pursuant to its terms, the agreement
renews automatically for additional one-year terms unless either
we or Mr. Walsh provides notice of non-renewal within
30 days of the applicable renewal term. Under the
agreement, Mr. Walshs annual base salary is subject
to periodic review and adjustment by our Board of Directors. He
will also be eligible to receive an annual bonus based on
performance targets set by our Board of Directors. He also
participates in our annual cash incentive bonus plan as
described above under Compensation Discussion and
Analysis Compensation Analysis. If we
terminate Mr. Walshs employment without cause (as
defined in the agreement), or Mr. Walsh terminates his
employment with good reason (as defined in the agreement), then
we would be required to pay to Mr. Walsh his then-current
annual base salary for six months and pay for up to six
months COBRA premiums, plus he would be entitled to any
earned bonus for a completed calendar year if Mr. Walsh is
terminated without cause or terminates his employment for good
reason after the end of a calendar year but prior to receiving
his earned bonus for such completed calendar year.
34
2010
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth the outstanding equity awards
held by each of our named executive officers as of
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
Option
|
|
|
Units of Stock
|
|
|
Stock That
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Option Exercise
|
|
|
Expiration
|
|
|
That Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
Michael L. Chasen
|
|
|
90,095
|
|
|
|
|
|
|
|
27.96
|
|
|
|
3/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
91,666
|
|
|
|
108,334
|
(1)
|
|
|
27.96
|
|
|
|
3/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
166,458
|
|
|
|
3,542
|
(2)
|
|
|
32.65
|
|
|
|
2/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
72,917
|
|
|
|
27,083
|
(3)
|
|
|
28.75
|
|
|
|
2/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
23,958
|
|
|
|
26,042
|
(5)
|
|
|
29.20
|
|
|
|
2/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(12)
|
|
|
37.71
|
|
|
|
2/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
(7)
|
|
|
578,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(9)
|
|
|
1,548,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
(10)
|
|
|
4,956,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(13)
|
|
|
1,239,000
|
|
Michael J. Beach
|
|
|
834
|
|
|
|
|
|
|
|
32.65
|
|
|
|
7/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
938
|
|
|
|
|
|
|
|
28.75
|
|
|
|
7/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
521
|
|
|
|
|
|
|
|
29.20
|
|
|
|
7/31/2011
|
|
|
|
|
|
|
|
|
|
John E. Kinzer
|
|
|
10,000
|
|
|
|
|
|
|
|
28.41
|
|
|
|
4/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
13,750
|
|
|
|
1,250
|
(19)
|
|
|
33.09
|
|
|
|
4/2/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1,666
|
|
|
|
334
|
(4)
|
|
|
40.14
|
|
|
|
8/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
8,125
|
|
|
|
1,875
|
(20)
|
|
|
41.34
|
|
|
|
9/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
10,000
|
(21)
|
|
|
33.89
|
|
|
|
4/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
3,437
|
|
|
|
4,063
|
(5)
|
|
|
29.20
|
|
|
|
2/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
885
|
|
|
|
1,615
|
(22)
|
|
|
30.79
|
|
|
|
7/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(12)
|
|
|
39.08
|
|
|
|
2/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
(23)
|
|
|
232,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(13)
|
|
|
516,250
|
|
Matthew H. Small
|
|
|
2,917
|
|
|
|
37,917
|
(1)
|
|
|
27.96
|
|
|
|
3/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
1,875
|
(2)
|
|
|
32.65
|
|
|
|
2/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
10,314
|
|
|
|
12,188
|
(3)
|
|
|
28.75
|
|
|
|
2/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,043
|
|
|
|
13,021
|
(5)
|
|
|
29.20
|
|
|
|
2/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(12)
|
|
|
37.71
|
|
|
|
2/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
(7)
|
|
|
289,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(9)
|
|
|
774,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
(11)
|
|
|
991,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(13)
|
|
|
619,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,125
|
(14)
|
|
|
2,483,163
|
|
Raymond P. Henderson III
|
|
|
7,500
|
|
|
|
12,500
|
(15)
|
|
|
28.85
|
|
|
|
6/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(12)
|
|
|
37.71
|
|
|
|
2/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,375
|
(16)
|
|
|
387,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500
|
(17)
|
|
|
351,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,000
|
(18)
|
|
|
1,486,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(13)
|
|
|
619,500
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
Option
|
|
|
Units of Stock
|
|
|
Stock That
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Option Exercise
|
|
|
Expiration
|
|
|
That Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
Judy K. Verses
|
|
|
30,208
|
|
|
|
19,792
|
(6)
|
|
|
35.73
|
|
|
|
2/29/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
11,979
|
|
|
|
13,021
|
(5)
|
|
|
29.20
|
|
|
|
2/29/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
(8)
|
|
|
144,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(9)
|
|
|
774,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
(11)
|
|
|
991,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(13)
|
|
|
619,500
|
|
Jonathan R. Walsh
|
|
|
3,500
|
|
|
|
|
|
|
|
28.41
|
|
|
|
4/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,579
|
|
|
|
|
|
|
|
23.63
|
|
|
|
6/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
26.84
|
|
|
|
9/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
14,687
|
|
|
|
|
|
|
|
32.65
|
|
|
|
2/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1,666
|
|
|
|
334
|
(4)
|
|
|
40.14
|
|
|
|
8/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
10,937
|
|
|
|
4,063
|
(3)
|
|
|
28.75
|
|
|
|
2/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
3,593
|
|
|
|
3,907
|
(5)
|
|
|
29.20
|
|
|
|
2/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(12)
|
|
|
37.71
|
|
|
|
2/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
(7)
|
|
|
144,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
(9)
|
|
|
232,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800
|
(13)
|
|
|
156,940
|
|
|
|
|
(1)
|
|
Original option grant vested 25% on 2/01/2010 and the remainder
in 36 equal monthly installments thereafter.
|
|
(2)
|
|
Original option grant vested 25% on 1/01/2008 and the remainder
in 36 equal monthly installments thereafter.
|
|
(3)
|
|
Original option grant vests on a monthly basis over
48 months commencing as of 1/1/2008.
|
|
(4)
|
|
Original option grant vested 25% on 8/15/2008 and the remainder
in 36 equal monthly installments thereafter.
|
|
(5)
|
|
Original option grant vested 25% on 1/01/2010 and the remainder
in 36 equal monthly installments thereafter.
|
|
(6)
|
|
Original option grant vested 25% on 7/07/2009 and the remainder
in 36 equal monthly installments thereafter.
|
|
(7)
|
|
The restricted stock vests 30% on the second anniversary of the
vesting commencement date of 1/1/2008, an additional 30% on the
third anniversary, and 40% on the fourth anniversary, subject in
each case to the executives continued service with us as
of such date.
|
|
(8)
|
|
The restricted stock vests 30% on the second anniversary of the
vesting commencement date of 7/7/2008, an additional 30% on the
third anniversary, and 40% on the fourth anniversary, subject in
each case to the executives continued service with us as
of such date.
|
|
(9)
|
|
The restricted stock vests 25% on each of the first four
anniversaries of the vesting commencement date of
1/1/2009,
subject in each case to the executives continued service
with us as of such date.
|
|
(10)
|
|
The restricted stock units vest on June 30, 2013, subject
to the restricted stock unit agreement between the executive and
us. The executive has elected to receive half of any vested but
undelivered shares on December 31, 2015; the other half of
the vested shares will be delivered upon his separation from
service or as otherwise provided in the restricted stock unit
agreement.
|
|
(11)
|
|
The restricted stock vests 25% on the second anniversary of the
vesting commencement date of 1/1/2010, an additional 33.33% on
the third anniversary, and 41.67% on the fourth anniversary,
subject in each case to the executives continued service
with us as of such date.
|
|
(12)
|
|
Original option grant vests 25% on 1/01/2011 and the remainder
in 36 equal monthly installments thereafter.
|
|
(13)
|
|
The restricted stock vests 25% on each of the first four
anniversaries of the vesting commencement date of
1/1/2010,
subject in each case to the executives continued service
with us as of such date.
|
36
|
|
|
(14)
|
|
The restricted stock vests 25% on each of the first four
anniversaries of the vesting commencement date of
12/15/2010,
subject in each case to the executives continued service
with us as of such date.
|
|
(15)
|
|
Original option grant vested 25% on 6/15/2010 and the remainder
in 36 equal monthly installments thereafter.
|
|
(16)
|
|
The restricted stock vests 25% on each of the first four
anniversaries of the vesting commencement date of
6/15/2009,
subject in each case to the executives continued service
with us as of such date.
|
|
(17)
|
|
The restricted stock vests 25% on the third anniversary of the
vesting commencement date of 6/15/2009 and 75% on the fourth
anniversary, subject in each case to the executives
continued service with us as of such date.
|
|
(18)
|
|
The restricted stock vests 25% on 1/1/2012, an additional 33.33%
on 1/1/2013, and 41.67% on 1/1/2014, subject in each case to the
executives continued service with us as of such date.
|
|
(19)
|
|
Original option grant vested 25% on 4/2/2008 and the remainder
in 36 equal monthly installments thereafter.
|
|
(20)
|
|
Original option grant vested 25% on 9/17/2008 and the remainder
in 36 equal monthly installments thereafter.
|
|
(21)
|
|
Original option grant vested 25% on 4/1/2009 and the remainder
in 36 equal monthly installments thereafter.
|
|
(22)
|
|
Original option grant vested 25% on 7/15/2010 and the remainder
in 36 equal monthly installments thereafter.
|
|
(23)
|
|
The restricted stock vests 25% on each of the first four
anniversaries of the vesting commencement date of
2/17/2009,
subject in each case to the executives continued service
with us as of such date.
|
2010
OPTION EXERCISES AND STOCK VESTED
The following table sets forth, for each of the named executive
officers, information with respect to the exercise of stock
options and vesting of restricted stock during the year ended
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized on
|
Name
|
|
Acquired on Exercise (#)
|
|
Exercise ($)
|
|
Acquired on Vesting (#)
|
|
Vesting ($)
|
|
Michael L. Chasen
|
|
|
312,776
|
|
|
$
|
6,559,545
|
|
|
|
18,500
|
|
|
$
|
839,715
|
|
Michael J. Beach
|
|
|
171,336
|
|
|
$
|
2,438,228
|
|
|
|
9,250
|
|
|
$
|
419,858
|
|
John E. Kinzer
|
|
|
5,000
|
|
|
$
|
67,350
|
|
|
|
1,875
|
|
|
$
|
72,806
|
|
Matthew H. Small
|
|
|
180,169
|
|
|
$
|
2,363,764
|
|
|
|
9,250
|
|
|
$
|
419,858
|
|
Raymond P. Henderson III
|
|
|
|
|
|
|
|
|
|
|
3,125
|
|
|
$
|
128,063
|
|
Judy K. Verses
|
|
|
|
|
|
|
|
|
|
|
7,750
|
|
|
$
|
340,538
|
|
Jonathan R. Walsh
|
|
|
4,000
|
|
|
$
|
82,466
|
|
|
|
3,375
|
|
|
$
|
153,191
|
|
Potential
Payments upon Termination or
Change-in-Control
Our named executive officers are entitled to benefits and
payments under certain circumstances in the event of the
termination of their employment with us, a
change-in-control
of Blackboard or the termination of their employment within one
year after a
change-in-control.
As described above, Messrs. Chasen, Beach, Kinzer, Small,
Walsh and Ms. Verses entered into employment agreements
with us that provide for severance payments and other benefits
under certain circumstances.
Stock options held by our named executive officers are subject
to the terms of the plans pursuant to which they were issued.
All outstanding stock options held by our named executive
officers that were issued under our 1998 Amended and Restated
Stock Incentive Plan, or the 1998 Plan, are fully vested. Under
our Amended and Restated 2004 Stock Incentive Plan (2004
Plan), in the event of a
change-in-control,
the vesting of outstanding stock options would be accelerated by
one year. A
change-in-control
under the 2004 Plan generally includes the following events:
(i) the acquisition of 25% of our outstanding common stock
or 25% of the voting power of our outstanding securities
entitled to vote generally in the election of directors by an
individual, entity or group, subject to specified exceptions,
(ii) such time as the continuing directors, as defined in
the 2004 Plan, do not constitute a majority of the Board of
Directors, and (iii) consummation of a merger,
consolidation, reorganization, recapitalization or share
exchange involving us or a sale or other disposition of all or
substantially all of the our assets, unless our stockholders
immediately prior to such transaction beneficially own, directly
or indirectly, a majority of the outstanding shares of common
stock or a majority of the voting power of the then-outstanding
securities following
37
the transaction in substantially the same proportions as their
ownership prior to the transaction. The 1998 Amended and
Restated Stock Incentive Plan (the 1998 Plan) does
not provide for automatic acceleration upon a
change-in-control.
Under certain of the named executive officers stock option
agreements, the executive officers are entitled to an additional
year of acceleration following a
change-in-control
if they are terminated without cause or constructively
terminated, as such terms are defined in the agreements, within
one year following the
change-in-control.
In 2006, Messrs. Chasen and Small received a long-term
retention grant of stock options which vest over a three-year
period that began in 2010 and continues through 2012; in the
event of a
change-in-control,
a portion of the shares underlying these options will vest,
equal to 20% of the original number of shares under the option
plus an additional 12.5% for each year following the grant date.
Beginning with the option grants made in February 2007,
Messrs. Chasen, Beach and Small were entitled to two years
of additional acceleration following a
change-in-control
if they were terminated without cause or constructively
terminated within one year following the
change-in-control.
In February 2011, the Compensation Committee adopted a policy
that all equity grants to our executive officers should provide
for full acceleration following a
change-in-control
if the officer is terminated without cause or constructively
terminated within one year following the
change-in-control.
Certain existing equity grant agreements with
Messrs. Henderson, Kinzer and Walsh were amended to add
language to bring those agreements into compliance with the new
policy. None of the existing equity grant agreements with
Messrs. Chasen or Small required amendment in order to
bring them into compliance with the new policy.
The following descriptions provide estimates of the amounts
payable to our executive officers in the event of their
termination or a
change-in-control
assuming that such event occurred on December 31, 2010,
based on the stock option holdings, the fair market value of our
stock and the salaries of the executive officers as of such date.
Michael L. Chasen.
Upon a termination of his
employment by us without cause or by Mr. Chasen with good
reason, as each term is defined under his employment agreement,
as amended, Mr. Chasen would have been entitled to a
lump-sum severance payment of $999,999, less applicable taxes
and withholdings, within 30 days following the effective
date of termination and two additional payments of $999,999,
less applicable taxes and withholdings, on each of the first two
succeeding anniversaries thereafter. Following any such
termination, Mr. Chasen would be prohibited from soliciting
or hiring our employees for a period of six months, soliciting
our clients for 12 months and competing against us for six
months. Mr. Chasens stock options, restricted stock
and restricted stock units generally provide for acceleration of
vesting upon a
change-in-control.
In the event of a
change-in-control
occurring on December 31, 2010, vesting of certain stock
options, restricted stock and restricted stock units held by
Mr. Chasen would have accelerated, with additional value to
Mr. Chasen of $7,571,851 based on the closing price of our
common stock on December 31, 2010. If such a change in
control were followed within one year by Mr. Chasens
termination or constructive termination, vesting of certain
stock options, restricted stock and restricted stock units held
by Mr. Chasen would further accelerate, resulting in
additional value to Mr. Chasen of $1,939,192, for a total
increase in value of $9,511,043.
Michael J. Beach.
Mr. Beach resigned as
an executive officer effective February 28, 2010 and
continued to serve the company for a transition period through
July 31, 2010. Pursuant to the terms of his employment
agreement, as amended, no amounts were payable to Mr. Beach
upon the termination of his employment.
John E. Kinzer.
Upon a termination of his
employment by us without cause or by Mr. Kinzer with good
reason, as each term is defined under his employment agreement,
as amended, Mr. Kinzer would have been entitled to a
payment of approximately $340,000 representing one year of his
base salary and payment of 12 months COBRA premiums
with an estimated cost to us of $16,950. Following any such
termination, Mr. Kinzer would be prohibited from soliciting
or hiring our employees for a period of 12 months,
soliciting our clients for 12 months and competing against
us for 12 months. Mr. Kinzers stock options and
restricted stock generally provide for acceleration of vesting
upon a
change-in-control.
In the event of a
change-in-control
occurring on December 31, 2010, vesting of certain stock
options and restricted stock held by Mr. Kinzer would have
accelerated, with additional value to Mr. Kinzer of
$337,594 based on the closing price of our common stock on
December 31, 2010. If such a change in control were
followed within one year by Mr. Kinzers termination
or constructive termination, vesting of certain stock options
and restricted stock held by Mr. Kinzer would further
accelerate, resulting in additional value to Mr. Kinzer of
$148,488, for a total increase in value of $486,081.
38
Matthew H. Small.
Upon a termination of his
employment by us without cause or by Mr. Small with good
reason, as each term is defined under his employment agreement,
as amended, or upon non-renewal of his employment agreement,
Mr. Small would have been entitled to a payment of
approximately $390,000, representing one year of his base
salary, and 12 months coverage under company benefit
plans in which Mr. Small was entitled to participate at the
time of his termination with an estimated cost to us of $19,550.
In addition, Mr. Small would be entitled to payment of his
earned but unpaid bonus which as of December 31, 2010 was
$253,500. Mr. Smalls stock options and restricted
stock generally provide for acceleration of vesting upon a
change-in-control.
In the event of a
change-in-control
occurring on December 31, 2010, vesting of certain stock
options and restricted stock held by Mr. Small would have
accelerated, with additional value to Mr. Small of
$2,166,674 based on the closing price of our common stock on
December 31, 2010. If such a change in control were
followed within one year by Mr. Smalls termination or
constructive termination, vesting of certain stock options and
restricted stock held by Mr. Small would further
accelerate, resulting in additional value to Mr. Small of
$1,756,837, for a total increase in value of $3,923,512.
Raymond P. Henderson
III.
Mr. Hendersons stock options and
restricted stock generally provide for acceleration of vesting
upon a
change-in-control.
In the event of a
change-in-control
occurring on December 31, 2010, vesting of certain stock
options and restricted stock held by Mr. Henderson would
have accelerated, with additional value to Mr. Henderson of
$382,088 based on the closing price of our common stock on
December 31, 2010. If such a change in control were
followed within one year by Mr. Hendersons
termination or constructive termination, according to the terms
of his equity grant agreements existing as of December 31,
2010, he would not have been entitled to any additional
acceleration of vesting for his stock options or restricted
stock.
Judy K. Verses.
Ms. Verses resigned from
her position as an executive officer effective December 31,
2010 and continued to serve the company for a transition period
through February 28, 2011. She is entitled to a payment of
approximately $116,667, representing four months of her base
salary. Following the termination of her employment, for a
period of one year, Ms. Verses is prohibited from
soliciting or hiring our employees, soliciting our clients, and
competing against us. Ms. Verses stock options and
restricted stock generally provide for acceleration of vesting
upon a
change-in-control.
Jonathan R. Walsh.
Upon a termination of his
employment by us without cause or by Mr. Walsh with good
reason, as each term is defined under his employment agreement,
Mr. Walsh would have been entitled to a payment of
approximately $112,500 representing six months of his base
salary. Following any such termination, Mr. Walsh would be
prohibited from soliciting or hiring our employees for a period
of 12 months, soliciting our clients for 12 months and
competing against us for 12 months. Mr. Walshs
stock options and restricted stock generally provide for
acceleration of vesting upon a
change-in-control.
In the event of a
change-in-control
occurring on December 31, 2010, vesting of certain stock
options and restricted stock held by Mr. Walsh would have
accelerated, with additional value to Mr. Walsh of $270,626
based on the closing price of our common stock on
December 31, 2010. If such a change in control were
followed within one year by Mr. Walshs termination or
constructive termination, according to the terms of his equity
grant agreements existing as of December 31, 2010, he would
not have been entitled to any additional acceleration of vesting
for his stock options or restricted stock.
39
Equity
Compensation Plan Information
The following table provides information as of December 31,
2010 about the securities authorized for issuance to our
employees, directors and other eligible participants under our
equity compensation plans, consisting of the 1998 Plan and the
2004 Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of Securities to
|
|
|
|
|
|
Equity Compensation
|
|
|
|
be Issued Upon Exercise
|
|
|
Weighted Average Exercise
|
|
|
Plans (Excluding
|
|
|
|
of Outstanding Options,
|
|
|
Price of Outstanding Options,
|
|
|
Securities Reflected
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
in First Column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,855,414
|
|
|
|
28.39
|
|
|
|
4,425,616
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,855,414
|
|
|
|
28.39
|
|
|
|
4,425,616
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Our Board has adopted written policies and procedures for the
review of any transaction, arrangement or relationship in which
Blackboard is a participant, the amount involved exceeds
$120,000, and one of our executive officers, directors, director
nominees or 5% stockholders (or their immediate family members),
each of whom we refer to as a related person, has a
direct or indirect material interest. The Audit Committee
charter adopted by the Board of Directors provides that the
Audit Committee shall review all related party transactions on
an ongoing basis, and all such transactions must be approved by
the Audit Committee. If a related person proposes to enter into
such a transaction, arrangement or relationship, which we refer
to as a related person transaction, the related
person must report the proposed related person transaction to
our chief legal officer, who then communicates the proposed
transaction to the Audit Committee. The policy calls for the
proposed related person transaction to be reviewed and, if
deemed appropriate, approved by the Audit Committee. Any
proposed related person transactions would be evaluated by the
Audit Committee based on the specific facts and circumstances of
each transaction. Relevant facts to be considered include the
nature and size of the transaction, the risks, costs and
benefits of the transaction to Blackboard, the related
persons interest in the transaction, any potential
conflicts of interest under Blackboards policies, and
whether the transaction is on terms no less favorable to our
company than could be obtained from independent third parties
under the same or similar circumstances, and are otherwise in,
or are not inconsistent with, the best interests of our company
and our stockholders. Other considerations may include customary
industry practices, whether comparable services or products are
available from an independent third party, accounting
consequences of the transaction under generally accepted
accounting principles, and whether additional costs or expenses
to us, such as costs for separate financial, legal or other
advisors, may be involved. In the event a director, a member of
a directors immediate family or an entity with which a
director is affiliated has an interest in the proposed
transaction, the director must recuse himself or herself from
the deliberations and approval and the Audit Committee will
consider the impact of the transaction on such directors
independence. Whenever practicable, the reporting, review and
approval will occur prior to entry into the transaction. If
advance review and approval is not practicable, the Audit
Committee will review, and, in its discretion, may ratify the
related person transaction. Since January 1, 2010,
Blackboard has not entered into any related person transactions
required to be disclosed under SEC rules.
PROPOSAL NO. 2
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
The Board of Directors recognizes the significant interest of
Blackboards stockholders in executive compensation
matters. In accordance with the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010, or the Dodd-Frank Act, and
as a matter of good corporate governance, we are providing our
stockholders with an opportunity to cast an advisory vote to
approve the compensation of our named executive officers as
disclosed, in
40
accordance with SEC rules, in the Compensation Discussion and
Analysis section of this proxy statement, the Summary
Compensation Table and other compensation tables, and the
related narrative discussion. This vote is not intended to
address any specific item of compensation, but rather the
overall compensation of our executive officers and the
philosophy, policies and practices described in this proxy
statement.
Blackboards executive compensation program is designed by
the Compensation Committee to attract, retain, and motivate
talented executives; reward executives for strong business
performance; and align the interests of our shareholders and
executives to ensure executives maintain focus on the
companys long-term strategy and success. A significant
portion of executive compensation is tied to the companys
financial results and the attainment of certain financial,
operational and strategic objectives. The Board of Directors
believes that that the executive compensation program reflects a
pay-for-performance
philosophy that rewards innovation and provides appropriate
incentives to ensure that Blackboards strategic and
operational goals are met.
We encourage you to carefully review the section entitled
Compensation Discussion and Analysis beginning on
page 16 of this proxy statement for additional details on
Blackboards executive compensation program, including our
compensation philosophy and objectives, as well as the factors
the Compensation Committee considered in determining the
structure and amounts of the 2010 compensation of our executive
officers. We are asking our stockholders to indicate their
support for our named executive officers compensation as
described in this proxy statement by casting a nonbinding
advisory vote FOR the following resolution at the
Annual Meeting:
RESOLVED, that the stockholders of Blackboard Inc.
approve, on an advisory basis, the compensation of the
Companys named executive officers, as disclosed in the
Proxy Statement for the 2011 Annual Meeting of Stockholders
pursuant to the compensation disclosure rules of the SEC,
including the Compensation Discussion and Analysis, the
executive compensation tables and the related narrative
discussion.
This resolution, commonly referred to as a say on
pay resolution, will be considered approved if it receives
the affirmative vote of the majority of the shares of common
stock represented in person or by proxy at the meeting.
Abstentions will have the same effect as votes against. Broker
non-votes will have no effect.
The results of this advisory vote are not binding upon
Blackboard. However, the Board of Directors and the Compensation
Committee value the opinions expressed by stockholders in their
vote and otherwise, and will consider the outcome of the vote
when making future compensation decisions regarding
Blackboards executive compensation program.
The Board
of Directors recommends a vote FOR the advisory resolution
on the compensation of our named executive officers.
PROPOSAL NO. 3
ADVISORY
VOTE ON THE FREQUENCY OF HOLDING FUTURE ADVISORY VOTES
ON EXECUTIVE COMPENSATION
In accordance with the Dodd-Frank Act, Blackboard is providing
its stockholders with the opportunity to cast a nonbinding
advisory vote on whether future advisory votes on executive
compensation, or say on pay advisory votes, should
take place every three years, every two years, or every year.
Stockholders may also abstain from voting on this proposal.
Our Board of Directors believes that a say on pay
advisory vote should be submitted to the stockholders once every
three years, and therefore recommends that you vote for a
three-year interval for the advisory vote on executive
compensation. The Board of Directors and the Compensation
Committee believe this frequency is consistent with
Blackboards executive compensation program, which is
designed to promote a connection between executive compensation
and sustained long-term company performance as measured by the
successful attainment of financial, operational and strategic
objectives, thereby creating long-term increases in shareholder
value. We value and encourage input on corporate governance
matters (including compensation matters) and welcome the
opportunity to engage in constructive dialogue with our
stockholders outside of the annual meeting regarding our
compensation philosophy and the core elements of our
compensation program, policies and practices. We believe
41
an advisory vote on executive compensation every three years
would allow for an accurate assessment of executive performance
against the long-term strategic goals and objectives of the
company.
Stockholders may indicate their preferred voting frequency by
choosing the option of three years, two years, or one year, or
they may abstain from voting on the proposal.
Stockholders are not voting to approve or disapprove the Board
of Directors recommendation of holding future advisory
votes on executive compensation every three years, but are
instead asked to indicate their preferences, on an advisory
basis, as to whether the non-binding advisory vote on the
approval of our executive compensation practices should be held
every year, every two years, or every three years. The choice
that receives the highest number of the affirmative votes of the
shares of common stock represented in person or by proxy at the
meeting, even if less than a majority, will be deemed to be the
frequency preferred by the stockholders. Abstentions and broker
non-votes will have no effect. While this is an advisory vote
and, therefore, nonbinding, the Board of Directors will give
careful consideration to the choice which receives the most
affirmative votes before determining the action the Board deems
most appropriate for Blackboard and its stockholders.
The Board
of Directors recommends a vote for 3 YEARS on the frequency
of future advisory votes on executive compensation.
PROPOSAL NO. 4
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected the
firm of Ernst & Young LLP as our independent
registered public accounting firm for the year ended
December 31, 2011 and the Board has directed the submission
of the selection of Ernst & Young LLP for ratification
by our stockholders at the Annual Meeting. Ernst &
Young LLP has served as our independent registered public
accounting firm since 2000. 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 desire to
do so and will also be available to respond to appropriate
questions from stockholders.
Principal
Accounting Fees and Services
The following table sets forth approximate aggregate fees billed
to us for fiscal years 2009 and 2010 by Ernst &Young
LLP:
APPROXIMATE
AGGREGATE FEES BILLED TO US
FOR FISCAL YEARS 2009 AND 2010 BY ERNST &YOUNG
LLP
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2009
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2010
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(In thousands)
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Audit Fees(1):
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|
$
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1,792.5
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|
|
$
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1,800.5
|
|
Audit-Related Fees(2):
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|
|
201.5
|
|
|
|
587.2
|
|
Tax Fees(3):
|
|
|
593.1
|
|
|
|
539.7
|
|
All Other Fees(4):
|
|
|
2.1
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,589.2
|
|
|
$
|
2,929.4
|
|
|
|
|
(1)
|
|
Audit fees consisted of audit work performed in the audit of our
consolidated financial statements, as well as work generally
only the independent registered public accounting firm can
reasonably be expected to provide, such as statutory audits or
accounting consultations billed as audit services, and consents
and assistance with and review of documents filed with the SEC.
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(2)
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|
Audit-related fees consist of fees related to assurance and
related services that are reasonably related to the performance
of the audit and review of our consolidated financial statements
and which are not included under Audit Fees, such as employee
benefit plan audits, due diligence in connection with
acquisitions, accounting
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42
|
|
|
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consultations and audits in connection with acquisitions,
internal control reviews, attest services that are not required
by statute or regulation, and consultation regarding financial
accounting and reporting standards.
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(3)
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Tax fees consisted of fees related to tax compliance, tax
planning, tax advice and tax due diligence related to mergers
and acquisitions.
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(4)
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All other fees consist of all other products and services
provided by the independent registered public accounting firm
that are not reflected in any of the previous three categories,
such as research and use of online accounting research tools.
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Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Registered Public Accounting
Firm
The Audit Committee of the Board of Directors has implemented
procedures under our Audit Committee Policies and Practices (the
Audit Committee Policy) to ensure that all audit and
permitted non-audit services provided to us are pre-approved by
the Audit Committee. Specifically, the Audit Committee
pre-approves the use of our independent registered public
accounting firm for specific audit and non-audit services or may
delegate to the chairman of the Audit Committee the authority to
pre-approve such services. Also, services that are expected to
be provided to us by the independent registered public
accounting firm during the following 12 months may be
pre-approved by the Audit Committee in advance, provided that a
monetary limit is established with respect to each pre-approved
service and the pre-approved services are specified in
sufficient detail so that management will not be called upon to
make a judgment as to whether a service fits within the
pre-approved services. All of the audit, audit-related, tax and
all other services provided by Ernst & Young LLP to us
in 2010 and described in the table above were approved by the
Audit Committee by means of specific pre-approvals or pursuant
to the procedures contained in the Audit Committee Policy. All
non-audit services provided in 2010 were reviewed with the Audit
Committee, which concluded that the provision of such services
by Ernst & Young LLP was compatible with the
maintenance of that firms independence in the conduct of
its auditing functions.
Board
Recommendation
Although stockholder approval of the Audit Committees
selection of Ernst & Young LLP as our independent
registered public accounting firm for the year ended
December 31, 2011 is not required by law, the Board of
Directors and the Audit Committee believe that it is advisable
to provide stockholders an opportunity to ratify this selection.
Ratification of the selection of Ernst & Young LLP as
our independent registered public accounting firm requires the
affirmative vote of a majority of the shares present or
represented and entitled to vote, either in person or by proxy.
Abstentions will have the same effect as a vote against. Broker
non-votes will have no effect. If the stockholders do not ratify
the selection of Ernst & Young LLP, the Audit
Committee will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee, in its
discretion, may direct the appointment of a different
independent registered public accounting firm at any time during
the year if they determine that such a change would be in the
best interests of Blackboard and its stockholders.
The Board
of Directors recommends a vote FOR the ratification
of the selection of Ernst & Young LLP.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and holders of more than 10% of our common
stock to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock. Such
reporting persons are required by regulations of the SEC to
furnish us with copies of all such filings. Based solely on our
review of the copies of such filings received by us with respect
to the fiscal year ended December 31, 2010, and written
representations from our directors and executive officers that
no other reports were required, we believe that all such
reporting persons complied with all Section 16(a) filing
requirements for the fiscal year ended December 31, 2010.
43
STOCKHOLDER
PROPOSALS
Proposals of stockholders intended for inclusion in the proxy
statement to be furnished to all stockholders entitled to vote
at our 2012 annual meeting of stockholders, pursuant to
Rule 14a-8
promulgated under the Exchange Act by the SEC, must be received
at our principal executive offices not later than
December 28, 2011. Under our by-laws, stockholders who wish
to make a proposal at the 2012 annual meeting, other than one
that will be included in our proxy statement, must notify us
between February 3, 2012 and March 5, 2012. If a
stockholder who wishes to present a proposal fails to notify us
by March 5, 2012 and such proposal is brought before the
2012 annual meeting, then under the SECs proxy rules, the
proxies solicited by management with respect to the 2012 annual
meeting will confer discretionary voting authority with respect
to the stockholders proposal on the persons selected by
management to vote the proxies, including discretionary
authority to vote in opposition to the matter. If a stockholder
makes a timely notification, the proxies may still exercise
discretionary voting authority under circumstances consistent
with the SECs proxy rules. Stockholders should submit
their proposals to Blackboard Inc., 650 Massachusetts Avenue NW,
6th Floor, Washington, DC 20001, Attention: Matthew H.
Small, Corporate Secretary. Stockholders are also advised to
review our by-laws, which contain additional requirements about
advance notice of stockholder proposals and director nominations.
CODE OF
ETHICS
We have adopted a code of ethics as defined by
regulations promulgated under the Securities Act and the
Exchange Act that applies to all of our directors and employees
worldwide, including our principal executive officer, principal
financial officer and principal accounting officer. A current
copy of our Code of Business Conduct and Ethics is available on
our website at
http://investor.blackboard.com.
In addition, we intend to post on our website all disclosures
that are required by law or NASDAQ stock market listing
standards concerning any amendments to, or waivers from, any
provision of the code.
EXPENSES
AND SOLICITATION
The cost of solicitation of proxies will be borne by us. In
addition to soliciting stockholders by mail, we may request
banks, brokers and other custodians, nominees and fiduciaries to
solicit their customers who have our stock registered in the
names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their
reasonable
out-of-pocket
costs. Solicitation by our officers and employees, without
additional compensation, may also be made of some stockholders
in person or by mail, telephone or email following the original
solicitation. We may retain a proxy solicitation firm to assist
in the solicitation of proxies, and we will bear all reasonable
solicitation fees and expenses if we retain a proxy solicitation
firm.
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
In some cases, only one copy of the proxy statement and the
annual report is being delivered to multiple stockholders
sharing an address. However, this delivery method, called
householding, is not being used if we have received
contrary instructions from one or more of the stockholders.
Brokers with account holders who are our stockholders will also
be householding our proxy materials. We will deliver promptly,
upon written or oral request, a separate copy of this proxy
statement and the annual report to a stockholder at a shared
address to which a single copy of the documents was delivered.
To request a separate delivery of these materials now or in the
future, a stockholder may submit a written request to Investor
Relations, Blackboard Inc., 650 Massachusetts Avenue NW,
6th Floor, Washington, DC 20001. Additionally, any
stockholders who are presently sharing an address and receiving
multiple copies of the proxy statement and annual report and who
would prefer to receive a single copy of such materials may
instruct us accordingly by directing that request to us in the
manner provided above. If you have received notice from your
broker that they will be householding communications to your
address and you would prefer to receive a separate set of annual
meeting materials, please notify your broker. Stockholders who
currently receive multiple copies of the annual meeting
materials at their addresses and would like to request
householding of their communications should also contact their
brokers.
44
OTHER
BUSINESS
The Board of Directors knows of no other matters to be brought
before the Annual Meeting. If any other matters are properly
brought before the Annual Meeting, the persons appointed in the
accompanying proxy intend to vote the shares represented thereby
in accordance with their best judgment on such matters, under
applicable laws.
OTHER
INFORMATION
The Report of the Compensation Committee and the Report of the
Audit Committee set forth in this proxy statement and the stock
performance graph set forth in our Annual Report on
Form 10-K,
shall not be deemed to be soliciting material or to
be filed with the SEC or subject to
Regulation 14A or 14C under the Exchange Act or to the
liabilities of Section 18 of the Exchange Act. In addition,
they shall not be deemed incorporated by reference by any
statement that incorporates this proxy statement by reference
into any filing under the Securities Act of 1933, as amended, or
the Exchange Act (other than our Annual Report on
Form 10-K,
where it shall be deemed to be furnished), whether
made before or after the date hereof, except to the extent that
we specifically incorporate this information by reference.
45
BLACKBOARD INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 3, 2011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John E. Kinzer
and Matthew H. Small as proxies, each with full power of substitution, to represent and vote
as designated on the reverse side, all the shares of Common Stock of Blackboard Inc. held of record by the undersigned on April 14, 2011,
at the Annual Meeting of Stockholders to be held at 650 Massachusetts Avenue, NW, First Floor, Washington, District of Columbia 20001, on
June 3, 2011 at 11:00 a.m., or any adjournment or postponement thereof.
This proxy, when properly executed, will be voted
in the manner directed herein by the undersigned stockholder. If no direction is given, this proxy will be voted FOR all director
nominees named herein, FOR Proposal No. 2, for 3 YEARS for Proposal No. 3, and FOR Proposal No. 4.
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment
or postponement thereof. Attendance of the undersigned at the meeting or at any adjournment or postponement thereof will not be deemed
to revoke this proxy unless the undersigned shall revoke this proxy in writing or shall deliver a subsequently dated proxy to the Corporate
Secretary of Blackboard Inc. or shall vote in person at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on June 3, 2011.
The proxy statement and annual report to stockholders are available at
http://investor.blackboard.com/phoenix.zhtml?c=177018&p=proxy.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
BLACKBOARD INC.
JUNE 3, 2011
PROXY VOTING INSTRUCTIONS
MAIL Date, sign and mail your proxy card in the envelope provided as soon as possible.
- OR -
TELEPHONE Call toll-free 1-800-PROXIES (1-800-776-9437) from any touch-tone telephone and follow
the instructions. Have your proxy card available when you call.
- OR -
INTERNET Access www.voteproxy.com and follow the on-screen instructions. Have your proxy card
available when you access the web page.
COMPANY NUMBER
ACCOUNT NUMBER
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until 11:59 PM
Eastern Time the day before the cut-off or meeting date. Please detach along perforated line and
mail in the envelope provided IF you are not voting via telephone or the Internet.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF ALL DIRECTOR NOMINEES,
AND
FOR PROPOSALS 2 AND 4.
[Detach along perforated line.]
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE.
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New Address:
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To change the address on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
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o
New Address
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1.
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Election of Directors:
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NOMINEES:
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o
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FOR ALL NOMINEES: E. Rogers Novak Jr. and Joseph L. Cowan
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o
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WITHHOLD AUTHORITY FOR ALL NOMINEES
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o
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FOR ALL EXCEPT:
(See instructions below.)
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O
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E. Rogers Novak Jr.
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O
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Joseph L. Cowan
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INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold.
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FOR
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AGAINST
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ABSTAIN
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2.
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Advisory vote on executive compensation.
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o
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o
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o
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3 YEARS
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2 YEARS
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1 YEAR
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ABSTAIN
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3.
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Advisory vote regarding the frequency of future advisory votes on executive compensation.
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o
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o
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o
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o
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FOR
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AGAINST
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ABSTAIN
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4.
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To ratify the selection of the Companys independent registered public accounting firm.
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o
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o
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o
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This proxy is solicited on behalf of the Board of Directors
of Blackboard Inc. This proxy, when properly executed, will be voted in accordance with the instructions given above. If no
instructions are given, this proxy will be voted FOR election of each director nominee, FOR proposal 2,
for 3 YEARS for proposal 3, and FOR proposal 4. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting or any adjournments or postponements thereof.
MARK X HERE IF YOU PLAN TO ATTEND THE MEETING.
o
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by authorized person.
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