SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the registrant [X]
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Check the appropriate box:
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(as permitted by Rule 14a-6(e)(2))
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material under Rule 14a-12
Brightpoint, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
________________________________________________________________________________
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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________________________________________________________________________________
(3) 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
calculated and state how it was determined.)
________________________________________________________________________________
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(5) Total Fee Paid:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
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(4) Date filed:
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________________________________________________________________________________
[BRIGHTPOINT LOGO]
YOUR SUCCESS IS OUR BUSINESS
April 11, 2005
Dear Brightpoint, Inc. Shareholders:
You are cordially invited to attend the 2005 Annual Meeting of
Shareholders ("Annual Meeting") of Brightpoint, Inc. (the "Company") that will
be held on Thursday, May 12, 2005, at 9:00 a.m. local time, at the Company's
offices located at 501 Airtech Parkway, Plainfield, Indiana 46168.
Your Board of Directors unanimously believes that the election of the
nominees specified in the accompanying Proxy Statement as directors is in the
best interests of the Company and its shareholders and, accordingly, recommends
a vote "FOR" such nominees. Further, your Board of Directors unanimously
believes that ratifying the appointment of Ernst & Young LLP as the Company's
independent registered public accounting firm for the fiscal year ended December
31, 2005 is in the best interests of the Company and its shareholders and,
accordingly, recommends a vote "FOR" such proposal.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU INTEND TO ATTEND THE
MEETING IN PERSON, PLEASE ENSURE YOU TAKE THE TIME TO CAST YOUR VOTE. YOU MAY
VOTE BY RETURNING YOUR SIGNED PROXY CARD, BY TELEPHONE OR VIA THE INTERNET. WE
APPRECIATE YOUR CONTINUED SUPPORT.
Sincerely yours,
Robert J. Laikin
Chairman of the Board and
Chief Executive Officer
[BRIGHTPOINT LOGO]
YOUR SUCCESS IS OUR BUSINESS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF BRIGHTPOINT, INC.
TO BE HELD THURSDAY, MAY 12, 2005
To the Shareholders of Brightpoint, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting ("Annual Meeting") of
Shareholders of Brightpoint, Inc. (the "Company") will be held on Thursday, May
12, 2005, at 9:00 a.m. local time, at the Company's offices located at 501
Airtech Parkway, Plainfield, Indiana 46168 for the following purposes:
1. To elect three (3) Class II directors to hold office until the
Annual Meeting of Shareholders to be held in 2008 and until their
successors have been duly elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent registered public accounting firm for the fiscal year
ending December 31, 2005; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Presentations will be made after the foregoing business has been conducted
at the Annual Meeting. A live webcast of the presentations, including audio and
slides, can be accessed through the Investors section of the Company's website
at www.brightpoint.com. A written report of the results of the Annual Meeting
will be posted on the Company's web site following the Annual Meeting.
Only shareholders of record at the close of business on April 6, 2005 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. You may submit your proxy vote with the enclosed paper card or you can
vote by telephone or via the Internet. Whether or not you attend the meeting it
is important that your shares be represented and voted. If the address on the
accompanying material is incorrect, please advise our Transfer Agent, American
Stock Transfer & Trust Company, in writing, at 59 Maiden Lane, New York, New
York 10038.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PAPER PROXY CARD IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU CHOOSE YOU MAY ALSO VOTE BY TELEPHONE OR VIA THE INTERNET.
YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT
AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE
THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
Notice of the Annual Meeting is hereby given,
By Order of the Board of Directors,
Steven E. Fivel
Executive Vice President, General Counsel and Secretary
BRIGHTPOINT, INC.
2005 PROXY STATEMENT
PAGE
GENERAL INFORMATION.................................................................................... 1
OUTSTANDING STOCK AND VOTING RIGHTS.................................................................... 3
VOTING PROCEDURES AND PROXY INFORMATION................................................................ 3
Voting by Telephone or via the Internet.................................................... 3
PROPOSAL I - TO ELECT THREE DIRECTORS TO SERVE UNTIL THE 2008 ANNUAL MEETING........................... 4
CORPORATE GOVERNANCE................................................................................... 8
DIRECTOR INDEPENDENCE.................................................................................. 9
MEETINGS OF DIRECTORS AND COMMITTEES................................................................... 9
BOARD COMMITTEES....................................................................................... 9
The Corporate Governance and Nominating Committee.......................................... 10
The Compensation and Human Resources Committee............................................. 10
The Audit Committee........................................................................ 11
Report of Audit Committee.................................................................. 11
EXECUTIVE COMPENSATION................................................................................. 13
Summary Compensation Table................................................................. 13
Option Grants in Last Fiscal Year.......................................................... 14
Aggregated Option Exercises and Fiscal Year-End Option Values.............................. 14
Director Compensation...................................................................... 15
Executive Officer Employment and Severance Agreements...................................... 16
2005 Bonus Plan............................................................................ 19
Report of the Compensation and Human Resources Committee of the Board of Directors
on Executive Compensation............................................................ 19
Compensation Committee Interlocks and Insider Participation................................ 21
STOCK PERFORMANCE GRAPH................................................................................ 22
VOTING SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................. 23
Section 16(a) Compliance................................................................... 25
Equity Compensation Plans.................................................................. 25
CERTAIN TRANSACTIONS................................................................................... 26
PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......... 27
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING.......................................................... 29
OTHER INFORMATION...................................................................................... 30
APPENDIX A - CORPORATE GOVERNANCE PRINCIPLES........................................................... 31
APPENDIX B - AUDIT COMMITTEE CHARTER................................................................... 35
APPENDIX C - CORPORATE GOVERNANCE AND NOMINATING COMMITTEE CHARTER..................................... 40
APPENDIX D - COMPENSATION AND HUMAN RESOURCES COMMITTEE CHARTER........................................ 42
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MAY 12, 2005
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of Brightpoint, Inc.
(the "Company") for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Thursday, May 12, 2005, at 9:00 a.m. local time, at the
Company's offices located at 501 Airtech Parkway, Plainfield, Indiana 46168,
including any adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting.
Management intends to mail this Proxy Statement and the accompanying form
of proxy to shareholders on or about April 12, 2005
GENERAL INFORMATION
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the shareholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
It is anticipated that all of the Company's Board of Directors and
Executive Officers will be present at the Annual Meeting and that a presentation
will be made after the conclusion of the business to be conducted at the Annual
Meeting.
The address and telephone number of the principal executive offices of the
Company are: 501 Airtech Parkway, Plainfield, Indiana 46168, telephone number:
(317) 707-2355.
The following questions and answers provide important information about
the Annual Meeting and this Proxy Statement:
Q. What am I voting on?
A. (i) The election of three Class II directors (Robert J. Laikin, Robert F.
Wagner and Richard W. Roedel), and (ii) ratifying the appointment of Ernst &
Young LLP as the Company's independent registered public accounting firm for the
fiscal year ending December 31, 2005.
Q. Who is entitled to vote?
A. Shareholders of record as of the close of business on April 6, 2005 (the
"Record Date"), are entitled to vote at the Annual Meeting. Each shareholder is
entitled to one vote for each share of the Company's common stock held on the
Record Date.
Q. How do I vote?
A. You may sign and date each paper proxy card you receive and return it in the
prepaid envelope. If you return your signed proxy but do not indicate your
voting preferences, we will vote on your behalf FOR all nominees for directors
and all proposals as specified in the Proxy Statement.
-1-
You may also vote by telephone or via the Internet. See Voting by Telephone or
via the Internet below for further details. Please note that there are separate
telephone and Internet voting arrangements depending upon whether shares are
registered in your name or in the name of a bank or broker.
Q. How may I revoke or change my vote?
A. You have the right to revoke your proxy any time before the meeting by (i)
notifying the Company's Secretary, or (ii) returning a later-dated proxy. You
may also revoke your proxy by voting in person at the Annual Meeting.
Q. What does it mean if I receive more than one proxy card?
A. It may mean that you are the registered holder of shares in more than one
account. Sign and return all proxy cards to ensure that all your shares are
voted. You may call American Stock Transfer & Trust Company at 1-800-937-5449 if
you have any questions regarding the share information or your address appearing
on the paper proxy card.
Q. Who will count the votes?
A. A Senior Vice President of the Company will tabulate the votes and act as the
independent inspector of election.
Q. What constitutes a quorum?
A. A majority of the outstanding shares, present or represented by proxy, of the
Company's common stock constitutes a quorum for the Annual Meeting. As of the
Record Date 17,752,281 shares of the Company's common stock $.01 par value per
share (the "Common Stock") were issued and outstanding.
Q. How many votes are needed for the election of the directors?
A. The directors will be elected by a plurality of the votes cast at the Annual
Meeting, meaning the three nominees receiving the highest number of votes will
be elected as directors. Only votes cast for a nominee will be counted, except
that a properly executed proxy that does not specify a vote with respect to the
nominees will be voted for the three nominees whose names are printed on the
proxy card (Robert J. Laikin, Robert F. Wagner and Richard W. Roedel).
Abstentions and broker non-votes (as described below) will have no effect on the
election of directors.
Q. How many votes are needed for the ratification of the appointment of Ernst &
Young LLP as the Company's independent registered public accounting firm for the
fiscal year ending December 31, 2005?
A. The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the Annual Meeting in person or by proxy and entitled to
vote at the Annual Meeting is required for the ratification of the appointment
of Ernst & Young LLP as the Company's independent registered public accounting
firm for the fiscal year ending December 31, 2005. Broker non-votes will not be
treated as entitled to vote on this matter and will therefore have no effect on
the proposal to ratify the appointment of Ernst & Young LLP as the Company's
independent registered public accounting firm.
-2-
Q. What is a "broker non-vote"?
A. A "broker non-vote" occurs when a broker submits a proxy that does not
indicate a vote for some of the proposals because the broker has not received
instructions from the beneficial owners of how to vote on such proposals and
does not have discretionary authority to vote in the absence of instructions.
Q. Where will the Annual Meeting be held?
A. The Annual Meeting will be held at the Company's offices located at 501
Airtech Parkway, Plainfield Indiana 46168 on Thursday, May 12, 2005, at 9:00
a.m. local time.
Q: How may I communicate with the Board of Directors?
A: The Board of Directors, through its Corporate Governance and Nominating
Committee, has established a process for shareholders to send communications to
the Board of Directors. You may communicate with the Board of Directors
individually or as a group by writing to: The Board of Directors of Brightpoint,
Inc. c/o Corporate Secretary, 501 Airtech Parkway, Plainfield, Indiana 46168 or
via e-mail: board.directors@brightpoint.com. You should identify your
communication as being from a Brightpoint shareholder. The Corporate Secretary
may require reasonable evidence that your communication or other submission is
made by a Brightpoint shareholder before transmitting your communication to the
Board of Directors.
OUTSTANDING STOCK AND VOTING RIGHTS
Only shareholders of record at the close of business on the Record Date
are entitled to notice of and to vote at the Annual Meeting. As of the Record
Date, there were issued and outstanding 17,752,281 shares of Common Stock, the
Company's only class of voting securities. Each share entitles the holder to one
vote on each matter submitted to a vote at the Annual Meeting.
VOTING PROCEDURES AND PROXY INFORMATION
The proxies will be voted in accordance with the instructions thereon.
Unless otherwise stated, all shares represented by such proxy will be voted as
instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of preparing,
assembling, printing and mailing this Proxy Statement, the proxy and any
additional soliciting material furnished to shareholders, will be borne by the
Company. In addition, arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy materials to the
beneficial owners of stock, and the Company may reimburse such persons for their
expenses.
VOTING BY TELEPHONE OR VIA THE INTERNET
For Shares Registered in the Name of a Brokerage Firm or Bank. A number of
brokerage firms and banks are participating in a program provided through ADP
Investor Communication Services that offers telephone and Internet voting
options. This program is different from the program provided by American Stock
Transfer & Trust Company for shares registered in the name of the shareholder.
If your shares are held in an account at a brokerage firm or bank participating
in the ADP program, you may vote those shares telephonically by calling the
telephone number referenced on your voting form. If your shares are held in an
account at a brokerage firm or bank participating in the ADP program, you
already have been offered the opportunity to elect to vote via the Internet.
Votes submitted via the Internet through the ADP program must be received by
11:59 p.m. (EDT) on May
-3-
11, 2005. The giving of such proxy will not affect your right to vote in person
should you decide to attend the Annual Meeting.
For Shares Directly Registered in the Name of the Shareholder.
Shareholders with shares registered directly with American Stock Transfer &
Trust Company may vote telephonically by calling American Stock Transfer & Trust
Company at 1-800-PROXIES (1-800-776-9437) or you may vote via the Internet at
www.voteproxy.com.
The telephone and Internet voting procedures are designed to authenticate
shareholders identities, to allow shareholders to give their voting instructions
and to confirm that shareholders' instructions have been recorded properly.
Shareholders voting via the Internet through either American Stock Transfer &
Trust Company or ADP Investor Communication Services should understand that
there may be costs associated with electronic access, such as usage charges from
Internet access providers and telephone companies, that must be borne by the
shareholder.
PROPOSAL I
TO ELECT THREE DIRECTORS TO SERVE UNTIL THE 2008 ANNUAL MEETING
The Company's By-laws provide that the Board of Directors of the Company
is divided into three classes (Class I, Class II and Class III). At each Annual
Meeting of shareholders, directors constituting one class are elected for a
three-year term. At this year's Annual Meeting, three (3) Class II directors
will be elected to hold office for a term expiring at the Annual Meeting of
Shareholders to be held in 2008. Based upon the review of and recommendation by
the Company's Corporate Governance and Nominating Committee, the Board of
Directors has nominated Robert J. Laikin, Robert F. Wagner and Richard W. Roedel
to serve as Class II directors.
Each of the directors will be elected to serve during his term until a
successor is elected and qualified or until the director's earlier resignation
or removal.
At this year's Annual Meeting, the proxies granted by shareholders will be
voted individually for the election, as directors of the Company, of the persons
listed below, unless a proxy specifies that it is not to be voted in favor of a
nominee for director. In the event the nominees listed below shall be unable to
serve, it is intended that the proxy will be voted for such other nominees as
are designated by the Board of Directors.
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF THE NOMINEES SPECIFIED BELOW.
The following table sets forth the name, age and principal occupation of
the nominees for election at this Annual Meeting and the length of continuous
service as a director of the Company:
CLASS II DIRECTORS
(NOMINEES TO BE ELECTED AS CLASS II DIRECTORS AT THE ANNUAL MEETING)
(Term Expires in 2008)
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
--------------- --- ------------------------------------------
Robert J. Laikin.............. 41 Robert J. Laikin, founder of the Company, has been a
director of the Company since its inception in August 1989.
Mr. Laikin has been Chairman of the Board and Chief
Executive Officer of the Company since January 1994. Mr.
Laikin was President of the Company from June 1992 until
September 1996 and Vice President and Treasurer of the
Company from August 1989 until May 1992. From July 1986 to
December 1987, Mr. Laikin was Vice President and, from
January 1988 to February 1993, President of Century Cellular
Network, Inc., a company engaged in the retail sale of
cellular telephones and accessories.
Robert F. Wagner.............. 70 Robert F. Wagner has been a director of the Company since
April 1994 and is currently a member of the Company's
Compensation and Human Resources Committee. Mr. Wagner has
been engaged in the practice of law with the firm of Lewis &
Wagner since 1973.
Richard W. Roedel............. 55 Richard W. Roedel has been a director and Chairman of the
Company's Audit Committee since October 2002 and currently
is a member of the Company's Corporate Governance and
Nominating Committee. Mr. Roedel has been the Chairman of
the Board of Directors and a director of Take-Two
Interactive Software, Inc. ("Take-Two") a developer,
publisher and distributor of video games since April 2004.
He served as the Chief Executive Officer of Take-Two from
June 2004 to January 2005 and has been a consultant to
Take-Two since January 2005. Mr. Roedel is a director of
Dade Behring Holdings, Inc., a medical diagnostics equipment
and related product manufacturer and IHS Inc., a leading
content provider servicing the technical and business
information needs of engineering and energy companies. Mr.
Roedel is also a director of the Association of Audit
Committee Members, Inc., a non-profit association of audit
committee members. From 1999 to 2000, Mr. Roedel was
Chairman and Chief Executive Officer of the accounting firm
BDO Seidman LLP, the United States member firm of BDO
International. Before becoming Chairman and Chief Executive
Officer, he was the Managing Partner of BDO Seidman's New
York Metropolitan Area from 1994 to 1999, the Managing
Partner of its Chicago office from 1990 to 1994 and an Audit
Partner from 1985 to 1990. Mr. Roedel is a Certified Public
Accountant.
-5-
The following tables set forth similar information with respect to
incumbent Class III and Class I directors who are not nominees for election at
the Annual Meeting:
CLASS III DIRECTORS
(Term Expires in 2006)
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
---------------- --- ------------------------------------------
Catherine M. Dalton........... 42 Catherine M. Dalton has been a director of the Company since
October 2002 and is currently Chairperson of the Company's
Corporate Governance and Nominating Committee. Since 1997,
Ms. Dalton has been a Professor at the Kelley School of
Business at Indiana University where she is currently the
David H. Jacobs Chair of Strategic Management. Prior thereto
Ms. Dalton served on the faculties of Purdue University and
The Ohio State University.
Marisa E. Pratt............... 40 Marisa E. Pratt has been a director of the Company since
January 2003 and is currently a member of the Company's
Audit Committee. Since 1991, Ms. Pratt has been employed by
Eli Lilly in various finance and treasury related positions.
Since October of 2002, Ms. Pratt has been Vice President -
Finance of Eli Lilly Canada.
Jerre L. Stead................ 62 Jerre L. Stead has been a director of the Company since June
2000 and currently serves as the Company's Lead Independent
Director. Mr. Stead is a member of the Company's
Compensation and Human Resources Committee and the Company's
Corporate Governance and Nominating Committee. Since
December 2000, Mr. Stead has been the Chairman of the Board
of Directors and a director of IHS Inc. From August 1996 to
June 2000 Mr. Stead was Chairman of the Board of Ingram
Micro Inc., a worldwide distributor of information
technology products and services. Concurrently from August
1996 to March 2000, Mr. Stead served as the Chief Executive
Officer of Ingram Micro Inc. Mr. Stead served as Chairman,
President and Chief Executive Officer of Legent Corporation,
a software development company from January 1995 until its
sale in September 1995. From 1993 to 1994, Mr. Stead was
Executive Vice President of American Telephone and Telegraph
Company, a telecommunications company and Chairman and Chief
Executive Officer of AT&T Global Information Solutions, a
computer and communications company, formerly NCR Corp. He
was President of AT&T Global Business Communications
Systems, a communications company, from 1991 to 1993. Mr.
Stead was Chairman, President and Chief Executive Officer
from 1989 to 1991 and President from 1987 to 1989 of Square
D Company, an industrial control and electrical distribution
products company. In addition, he held numerous positions
during a 21-year career at Honeywell. Mr. Stead is a
director of Mindspeed Technologies, Inc., Conexant Systems,
Inc., Armstrong Holdings, Inc. and Mobility Electronics,
Inc.
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CLASS I DIRECTORS
(Term Expires in 2007)
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
---------------- --- ------------------------------------------
Eliza Hermann............... 43 Eliza Hermann has been a director of the Company since
January 2003 and is currently the Chairperson of the
Company's Compensation and Human Resources Committee and a
member of the Company's Corporate Governance and Nominating
Committee. Since 1985, Ms. Hermann has been employed by BP
plc where she has held a succession of international human
resources, strategic planning and business development
roles, and currently serves as the Vice President Human
Resources Strategy.
V. William Hunt............. 60 V. William Hunt has been a director of the Company since
February 2004 and is a member of the Audit Committee. Mr.
Hunt is Chairman of Hunt Capital Partners, LLC, a venture
capital and consulting firm based in Indianapolis. He serves
on the boards of Breeze Industrial Products, Clarian Health
Partners and InProteo. Until August 2001, he was the Vice
Chairman and President of ArvinMeritor Inc., a global
supplier of a broad range of integrated systems, modules and
components for light vehicle, commercial truck, trailer and
specialty original equipment manufacturers (OEMs) and
related after-markets. Prior to the July 2000 merger of
Arvin Inc. and Meritor Automotive Inc., Mr. Hunt was
Chairman and CEO of Arvin, a global manufacturer of
automotive components, including exhaust systems; ride
control products and air, oil and fuel filters. Mr. Hunt
joined Arvin as counsel in 1976, became Vice President,
Administration; Secretary in 1982; and Executive Vice
President in 1990; President in 1996; and CEO in 1998. A
member of Arvin's board of directors since 1983, he was
named Chairman in 1999. Before joining Arvin, Mr. Hunt
practiced labor relations law in Indianapolis and served as
labor counsel to TRW Automotive Worldwide. Stephen H.
Simon............ 39 Stephen H. Simon has been a director of the Company since
April 1994 and is currently a member of the Company's
Compensation and Human Resources Committee. Mr. Simon has
been President and Chief Executive Officer of Melvin Simon &
Associates, Inc., a privately-held shopping center
development company, since February 1997. From December 1993
until February 1997, Mr. Simon was Director of Development
for an affiliate of Simon Property Group, a publicly-held
real estate investment trust. From November 1991 to December
1993, Mr. Simon was Development Manager of Melvin Simon &
Associates, Inc. Mr. Simon is a director of Gracenote, Inc.,
Method Products, Inc. and Pacers Basketball Corporation.
-7-
Set forth below is a description of each of our Executive Officers:
Robert J. Laikin, See Class II Directors.
J. Mark Howell, age 40, has been President of the Company since September
1996 and Chief Operating Officer of the Company from August 1995 to April 16,
1998 and from July 16, 1998 to March 2003. He was Executive Vice President,
Finance, Chief Financial Officer, Treasurer and Secretary of the Company from
July 1994 until September 1996. From July 1992 until joining the Company, Mr.
Howell was Corporate Controller for ADESA Corporation, a company that owns and
operates automobile auctions in the United States and Canada. Prior thereto, Mr.
Howell was an accountant with Ernst & Young LLP.
Frank Terence, age 46, has been Executive Vice President, Chief Financial
Officer and Treasurer of the Company since April 2002. From August 2001 through
April 2002, Mr. Terence was the Chief Financial Officer of Velocitel, LLC, a
wireless telecommunications infrastructure company. From January 2000 through
January 2001, Mr. Terence was Chief Financial Officer of eTranslate, Inc., web
services company. From October 1994 through December 1999, Mr. Terence was
employed in various financial positions by Ingram Micro Inc., a technology
distribution company, which included Vice President and Chief Financial Officer
of its Frameworks Division and Vice President and Chief Financial Officer for
its Latin America Division. From 1990 to 1994, he held regional controllerships
and financial management roles for Borland International, a software development
company. From 1983 to 1990, he held various financial roles with NCR, Rockwell
International and PepsiCo. Mr. Terence is a Certified Management Accountant. On
March 15, 2005, the Company filed a Form 8-K announcing that Mr. Terence
experienced a stroke and, as a result of his medical condition, may not be able
to perform certain of his duties and responsibilities.
Steven E. Fivel, age 44, has been Executive Vice President, General
Counsel and Secretary of the Company since January 1997. From December 1993
until January 1997, Mr. Fivel was an attorney with an affiliate of Simon
Property Group, a publicly-held real estate investment trust. From February 1988
to December 1993, Mr. Fivel was an attorney with Melvin Simon & Associates,
Inc., a privately-held shopping center development company.
Lisa M. Kelley, age 38, has been Senior Vice President, Corporate
Controller and Chief Accounting Officer of the Company since July 2003. Ms.
Kelley was appointed by the Board of Directors to be the Acting Chief Financial
Officer and Principal Financial Officer during the period that Mr. Terence is
incapacitated. Ms. Kelley was formerly with Plexus Corp., a provider of product
realization services to original equipment manufacturers. During her tenure with
Plexus from 1992 to June 2003, she held several financial positions including
VP-Corporate Development, VP-Finance, Corporate Controller and Treasurer. From
1986 to 1992, Ms. Kelley held various financial positions with Virchow Krause &
Company LLP, a Midwest certified public accounting firm. Ms. Kelley is a
Certified Public Accountant and a Certified Management Accountant.
CORPORATE GOVERNANCE
The Board of Directors has adopted a set of Corporate Governance
Principles ("Governance Principles") which are consistent with the Board's
responsibility for management oversight. These Governance Principles are
designed to strengthen the Company and protect the interests of the shareholders
of the Company while helping to insure the continued vitality of the Board. A
copy of these Governance Principles is attached to this Proxy Statement as
APPENDIX A. Copies of these Governance Principles may also be accessed at the
Company's website, www.brightpoint.com.
-8-
Highlights of the Company's Governance Principles include:
- Requiring that the Board consist of a majority of Independent
Directors and adoption of a definition of Independent Director that
is designed to help ensure that persons who serve as Independent
Directors are truly independent;
- Appointing a Lead Independent Director to act as a liaison between
the Board and management;
- Limiting the payment by the Company of compensation of the members
of the Board to monies received for Board or Board Committee
service;
- Requiring the Chairperson of the Audit Committee to be a "Financial
Expert";
- Prohibiting Independent Directors or their family members from
conducting business with the Company;
- Establishing director compensation practices intended to more
closely align the interests of the Independent Directors with the
Company's shareholders; and
- Encouraging the Independent Directors to meet in executive session.
DIRECTOR INDEPENDENCE
The Board has determined that all of the Company's current Directors, with
the exception of Mr. Laikin (the Company's Chairman of the Board and Chief
Executive Officer) have met the independence requirements of the NASD
Marketplace Rules applicable to companies whose securities are quoted on NASDAQ
and the Company's Corporate Governance Principles. In making determinations
regarding a Director's independence, the Board considers all relevant facts and
circumstances, including the Director's commercial, banking, consulting, legal,
accounting, charitable and familial relationships, and such other criteria as
the Board may determine from time to time.
MEETINGS OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 2004, the Board of Directors
held seven (7) meetings. In addition, the Board took other action by unanimous
written consent in lieu of a meeting. During 2004, each member of the Board
participated in at least 75% of all Board and applicable committee meetings held
during the period for which he or she was a director. The Board of Directors and
the Board Committees met regularly in executive sessions.
BOARD COMMITTEES
The Board of Directors maintains an Audit Committee, a Corporate
Governance and Nominating Committee and a Compensation and Human Resources
Committee. The Audit Committee, Corporate Governance and Nominating Committee
and Compensation and Human Resources Committee are comprised solely of persons
who meet the definition of an Independent Director under the Company's
Governance Principles and NASD Marketplace Rules applicable to companies whose
securities are quoted on NASDAQ. Each of these committees has adopted a charter.
The Charter of the Audit Committee is attached hereto as APPENDIX B. The
charters of the Corporate Governance and Nominating Committee and the
Compensation and Human Resources Committee are attached hereto as APPENDIX C and
APPENDIX D, respectively. The functions of each of the Board Committees are
described below.
-9-
THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
The Corporate Governance and Nominating Committee is responsible for
developing and reviewing the effectiveness of the Company's corporate governance
guidelines, recommending appropriate Board and Board Committee structures and
membership, establishing procedures for the director nomination process and
recommending nominees for election to the Board. In 2004, the Corporate
Governance and Nominating Committee met ten (10) times. The Corporate Governance
and Nominating Committee will consider qualified nominees for the Company's
Board of Directors recommended by shareholders of the Company who follow the
procedures set forth under the caption "Shareholder Proposals for Next Annual
Meeting". The current members of the Corporate Governance and Nominating
Committee are:
Catherine M. Dalton, Chairperson
Richard W. Roedel
Jerre L. Stead
Eliza Hermann
THE COMPENSATION AND HUMAN RESOURCES COMMITTEE
The Compensation and Human Resources Committee has responsibility for
approving the compensation policies of the Company, and for reviewing and
recommending for approval by the Company's Board of Directors, all elements of
compensation for the Company's officers and other highly compensated members of
management. The Committee provides oversight of the administration of the
Company's compensation program. The Committee also provides oversight of the
administration of the issuance of the Company's securities under the Company's
equity based compensation plans and cash incentive and deferred compensation
plans for the Company's executives. The Committee also has responsibility for
reviewing the supplementary benefits paid to the Company's executive officers as
well as retirement and other benefit and any special compensation. The Committee
also reviews and recommends for approval by the Company's Board of Directors,
executive employment agreements, severance agreements and change in control
provisions for the Chief Executive Officer and other senior executives. The
Committee also directs the succession planning process for the Company's Chief
Executive Officer and other senior executives. The Committee provides oversight
of the Company's global diversity activities, and reviews its Charter and
evaluates its performance as a Committee on an annual basis.
The Compensation and Human Resources Committee met six (6) times in 2004.
In addition, the Committee took action by unanimous written consent in lieu of a
meeting. All Committee members participated in each meeting, which typically
lasted several hours. The Committee has direct access to independent legal
counsel and independent compensation consultants for survey data and other
information as it deems appropriate, and utilized these independent counsel and
consultants from time to time during the year.
The current members of the Compensation and Human Resources Committee are:
Eliza Hermann, Chairperson
Jerre L. Stead
Stephen H. Simon
Robert F. Wagner
-10-
THE AUDIT COMMITTEE
The Audit Committee has the power to select and oversee the performance of
the Company's independent registered public accountants and supervise the audit
and financial procedures of the Company. During 2004, the Audit Committee held
nine (9) meetings and also took action by unanimous consent in lieu of a
meeting. The current members of the Audit Committee are:
Richard W. Roedel, Chairperson
Marisa E. Pratt
V. William Hunt
none of whom are employees of the Company and each of whom meets the
independence and financial literacy requirements under current NASD Marketplace
Rules applicable to companies whose securities are quoted on NASDAQ. In
addition, the Board of Directors of the Company has determined that Mr. Roedel
is an "audit committee financial expert" as defined under Item 401(h) of
Regulation S-K of the United States Securities and Exchange Commission.
REPORT OF AUDIT COMMITTEE
The responsibilities of the Audit Committee are to oversee the Company's
financial reporting process and internal audit function on behalf of the Board
and to report the results of their activities to the Board. The Committee
fulfills its responsibilities through periodic meetings with the Company's
independent registered public accounting firm, internal auditors and members of
management.
Throughout the year the Audit Committee monitors matters related to the
independence of Ernst & Young LLP, the Company's independent registered public
accounting firm. As part of its monitoring activities, the Committee obtained a
letter from Ernst & Young LLP, containing a description of all relationships
between the independent registered public accounting firm and the Company. After
reviewing the letter and discussing it with management, the Committee discussed
with Ernst & Young LLP its overall relationship with the Company and any of
those relationships described in the letter that could impact Ernst & Young
LLP's objectivity and independence. Based on its continued monitoring activities
and year-end review, the Committee has satisfied itself as to Ernst & Young
LLP's independence. Ernst & Young LLP also has confirmed in its letter that, in
its professional judgment, it is independent of the Company within the meaning
of the Federal securities laws and within the requirements of Independence
Standard Board (ISB) Standard No. 1, Independence Discussion with Audit
Committees.
The Committee also discussed with management, the Company's internal
auditors and its independent registered public accounting firm, the quality and
adequacy of the Company's internal controls and the internal audit function's
management, organization, responsibilities, budget and staffing. The Committee
reviewed with both the independent registered public accounting firm and the
internal auditors their audit plans, audit scope, and identification of audit
risks.
The Committee discussed and reviewed with the independent registered
public accounting firm all matters required by auditing standards generally
accepted in the United States of America, including those described in SAS 61,
"Communication with Audit Committees." With and without management present, the
Committee discussed and reviewed the results of the independent registered
public accounting firm's examination of the financial statements. The Committee
also discussed the results of the internal audit examinations.
-11-
The Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ended December 31, 2004, with management and the
independent registered public accounting firm. Management has the responsibility
for the preparation and integrity of the Company's financial statements and the
independent registered public accounting firm has the responsibility for the
examination of those statements. Based on the above-mentioned review and
discussions with management and the independent registered public accounting
firm, the Committee recommended to the Board that the Company's audited
financial statements be included in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, for filing with the Securities and Exchange
Commission. The Committee also reappointed Ernst & Young LLP as the Company's
independent registered public accounting firm subject to shareholder
ratification of such appointment.
AUDIT COMMITTEE:
Richard W. Roedel, Chairperson
Marisa E. Pratt
V. William Hunt
-12-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses for the periods presented the compensation
for the person who served as our Chief Executive Officer and for each of our
other executive officers (not including the Chief Executive Officer) whose total
individual compensation exceeded $100,000 for our fiscal year ended December 31,
2004 (the "Named Executives").
Long-Term Compensation
Annual Compensation Awards
-------------------------------- ---------------------------------------
Other Annual Securities
Compensation Restricted Underlying All Other
Name and Principal Position Year Salary Bonus (1) Stock Options(2) Compensation(6)
------------------------------- ---- -------- -------- ------------ ---------- ---------- ---------------
Robert J. Laikin 2004 $670,000 $672,500 $ 6,500 - 100,000 $ 5,872
Chairman of the Board and 2003 $600,000 $600,000 $ 6,000 - - $ 420
Chief Executive Officer 2002 $450,000 $225 000 $ 5,500 - 298,927 -
J. Mark Howell 2004 $410,000 $228,750 $ 6,500 - 50,000 $ 2,760
President 2003 $400,000 $300,000 $ 3,000 - - $ 378
2002 $325,000 $162,500 $ 5,500 - 177,855 $ 537
Frank Terence 2004 $410,000 $203,750 $ 3,117 - 50,000 $ 3,850
Executive Vice President, Chief 2003 $350,000 $262,500 $ 3,500 - - $ 420
Financial Officer and Treasurer 2002 $181,278 $ 97,994 $ 182,578(4) - 241,070 $ 400
Steven E. Fivel 2004 $335,000 $170,625 $ 5,942 - 50,000 $ 3,045
Executive Vice President, 2003 $325,000 $243,750 $ 5,188 - $ 420
General 2002 $275,000 $137,500 $ 5,500 - 138,213 $ 597
Counsel and Secretary
Lisa M. Kelley(3) 2004 $204,500 $143,375 $ 34,428(5) 12,000(7) 20,000 $ 2,343
Senior Vice President, Chief 2003 $100,000 $ 75,000 $ 11,287(5) - 22,500 $ 378
Accounting Officer and - -
Controller 2002 - - - -
(1) Except as otherwise noted below, represents our matching contributions to
the respective employee's 401(k) accounts and includes immaterial refunds
of less than $5,000 per year from the 401(k) Plan paid in 2004, 2003 and
2002, relating to ERISA compliance testing for the years 2003, 2002 and
2001. Also includes payments received by the executive officers named
above pursuant to the offer to exchange certain stock options that we made
to our employees and directors during 2001.
(2) All option amounts and exercise prices have been adjusted to give
retroactive effect to a one for seven reverse split of our Common Stock
effected in June 2002 and the three for two stock splits of our Common
Stock effected in August and October of 2003.
(3) Ms. Kelley joined the Company in July 2003.
(4) Represents amounts paid for Mr. Terence's moving and relocation costs
during 2002.
(5) Represents amounts paid for Ms. Kelley's moving and relocation costs
during 2004 and 2003.
(6) Includes expenses associated with company provided physical examinations
in 2004.
(7) Represents a grant of 12,000 Restricted Stock Units ("RSUs") awarded as
Other Stock Based Awards under the Company's 2004 Long-Term Incentive Plan
(the "Plan"). Each RSU represents a contingent right to receive one share
of Brightpoint common stock. The RSUs vest in three equal annual
installments beginning on August 13, 2005, subject to, and in accordance
with the RSU agreement between the Company and Ms. Kelley. There are no
performance criteria associated with the vesting of these RSUs. Ms. Kelley
has no rights as a shareholder of the Company with respect to the RSUs,
including the right to vote and receive dividends and other distributions
(except for adjustments if the number of outstanding shares of common
stock is changed as a result of a stock dividend, stock split or the like
without additional consideration to the Company), until delivery of
certificates representing shares of common stock in satisfaction of the
RSUs. The dollar value of this award on the date of grant, August 13,
2004, was $155,040.
-13-
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to individual stock
options granted to each of the Named Executives during fiscal 2004:
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF
SHARES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM ($) (2)
OPTIONS EMPLOYEES IN PRICE --------------------------
NAME GRANTED (1) FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
--------------- ----------- ------------ -------- --------------- -------- ----------
Robert Laikin 100,000 21.55% $17.58 2/20/09 $485,703 $1,073,277
J. Mark Howell 50,000 10.78% $17.58 2/20/09 $242,851 $ 536,638
Frank Terence 50,000 10.78% $17.58 2/20/09 $242,851 $ 536,638
Steven E. Fivel 50,000 10.78% $17.58 2/20/09 $242,851 $ 536,638
Lisa M. Kelley 20,000 4.31% $17.58 2/20/09 $ 97,141 $ 214,655
(1) The options were granted under our 1994 Stock Option Plan. The options are
exercisable as to one-third of the shares covered thereby on the first,
second and third anniversaries of the date of grant. Does not include a
grant of 12,000 Restricted Stock Units ("RSUs") awarded to Ms. Kelley as
Other Stock Based Awards under the Company's 2004 Long-Term Incentive
Plan. See footnote (7) to the Summary Compensation Table for a description
of the RSUs.
(2) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming our Common Stock appreciates at the compounded rates
specified over the term of the options. These numbers do not take into
account provisions of options providing for termination of the option
following termination of employment or nontransferability of the options
and do not make any provision for taxes associated with exercise. Because
actual gains will depend upon, among other things, future performance of
the Common Stock, there can be no assurance that the amounts reflected in
this table will be achieved.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of
stock options by each of the Named Executives during the fiscal year ended
December 31, 2004, and the value of unexercised stock options held by the Named
Executives as of December 31, 2004:
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS AT
ACQUIRED ON 31, 2004 DECEMBER 31, 2004 (1)
EXERCISE VALUE REALIZED ------------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- -------------- ----------- ------------- ----------- -------------
Robert J. Laikin......... - - 114,636 199,642 $ 1,699,954 $ 1,783,694
J. Mark Howell........... - - 94,638 109,285 $ 1,216,650 $ 1,049,962
Frank Terence............ 32,142 $348,966 48,214 130,356 $ 790,280 $ 1,436,398
Steven E. Fivel.......... - - 74,193 96,071 $ 791,346 $ 829,196
Lisa M. Kelley........... 4,000 $ 41,812 3,500 47,000 (2) $ 49,606 $ 486,275
(1) Year-end values for unexercised in-the-money options represent the
positive spread between the exercise price of such options and the
year-end market value of the Common Stock.
(2) Includes 12,000 unexercisable Restricted Stock Units ("RSUs") for Ms.
Kelley. See footnote (7) to the Summary Compensation Table for a
description of the RSUs.
-14-
DIRECTOR COMPENSATION
- 2004 Board of Directors Compensation
For the fiscal year ended December 31, 2004, our non-employee directors
("Independent Directors") received annual cash compensation of $50,000 for
services rendered in their capacity as Board members. In addition, the Lead
Independent Director, the Corporate Governance and Nominating Committee
Chairperson, the Compensation and Human Resources Committee Chairperson and the
Audit Committee chairperson were entitled to receive $100,000, $20,000, $20,000
and $35,000 for services rendered in those roles. Our Lead Independent Director
declined the receipt of $50,000 of annual compensation for the fiscal year ended
December 31, 2004. Members of the Audit Committee received annual payments of
$10,000, for services rendered in their capacity as committee members.
In 2004 we adopted, and shareholders approved, an Amended and Restated
Independent Director Stock Compensation Plan (the "Director Stock Compensation
Plan") pursuant to which 900,000 shares of Common Stock are reserved for
issuance to non-employee directors. Pursuant to the Director Stock Compensation
Plan, subject to certain exceptions and the satisfaction of certain conditions,
a minimum of 30% of our Independent Director's annual board compensation (but
not committee compensation) for 2004 was paid in the form of shares of our
restricted Common Stock (this percentage has been increased to 50% in 2005). In
2004 an aggregate of 29,126 restricted shares of Common Stock were granted to
Independent Directors under the Director Compensation Plan.
We have adopted a Non-Employee Director Stock Option Plan (the "Director
Plan") pursuant to which 301,338 shares of Common Stock are reserved for
issuance to non-employee directors. The Director Plan terminated on April 7,
2004 and no additional option grants will be issued thereunder. Effective as of
December 31, 2002, the Board determined to suspend all future grants of options
under the Director Plan. All of the options that were granted under the Director
Plan were granted at fair market value on the date of grant and are exercisable
as to all of the shares covered thereby commencing one year from the date of
grant.
- 2005 Board of Directors Compensation
The Board of Directors, based upon the recommendation of the Corporate
Governance and Nominating Committee of the Board, approved the following
compensation payable to those persons who serve as Independent Directors of the
Company (determined in accordance with the Company's Corporate Governance
Principles), other than the Lead Independent Director, for 2005: (1) a $50,000
cash retainer; (2) 2,000 restricted shares of the Company's common stock which
shall constitute "Annual Awards" under the Director Stock Compensation Plan; and
(3) additional equity compensation equal to the difference resulting from
subtracting the value of the 2,000 Annual Awards referred to in (2) above from
$50,000, provided that such compensation is taken in the form of restricted
stock as "Elective Awards" under the Plan. The 2005 board compensation for
Independent Directors, other than the Lead Independent Director, is the same as
in 2004, except for the additional equity compensation described in (3) above.
The Board of Directors, upon recommendation of the Corporate Governance
and Nominating Committee, approved the following compensation to be received by
the Company's Lead Independent Director for 2005; (1) a $100,000 cash retainer;
(2) 2,000 restricted shares of the Company's common stock which shall constitute
Annual Awards under the Director Stock Compensation Plan; and (3) additional
equity compensation equal to the difference obtained by subtracting the value of
the 2,000 Annual Awards referred to in (2) above from $100,000, provided that
such compensation is taken in the form of restricted stock as Elective Awards
under the Director Stock Compensation Plan. The 2005 compensation that the Lead
Independent Director is entitled to receive is the same as in 2004, except for
the additional equity compensation described in (3) above.
-15-
In 2005 the additional compensation to be received by the Corporate
Governance and Nominating Committee chairperson, the Compensation and Human
Resources Committee chairperson and Audit Committee chairperson for services to
be rendered by them in those capacities will remain the same as in 2004. In
addition, the annual payments to be made to members of the Audit Committee for
services rendered in their capacity as Audit Committee members will remain the
same.
The Board of Directors of the Company, upon the recommendation the
Corporate Governance and Nominating Committee, also amended the "Required Share
Condition" under the Company's Corporate Governance Principles, and thereby the
Director Stock Compensation Plan, to increase the percentage of annual board
compensation an Independent Director must receive in restricted stock, subject
to the exceptions set forth below, from 30% to 50%. Under the Director Stock
Compensation Plan, Elective Awards are required to be received in the form of
restricted shares of the Company's common stock unless the director to receive
the Elective Award has holdings of Company common stock that meet the "Threshold
Amount" as defined in the Director Stock Compensation Plan, in which case the
director can elect to receive the additional compensation in cash or a
combination of cash and restricted shares of the Company's common stock.
EXECUTIVE OFFICER EMPLOYMENT AND SEVERANCE AGREEMENTS
- AMENDMENTS TO EMPLOYMENT AND SEVERANCE AGREEMENTS
The employment agreements in effect as of December 31, 2004 for Messrs.
Laikin Howell and Fivel are described below in the section entitled "Employment
and Severance Agreements". These agreements were amended on April 7, 2005 in
connection with changes to the employment and compensation arrangements for
these executives; these changes establish retention incentives and limit the
amount of severance pay the individuals may receive.
On April 7, 2005, we entered into amendments to the employment agreements
for Messrs. Laikin, Howell and Fivel. Pursuant to these amendments we codified
the previously agreed annual base compensation for Mr. Laikin ($705,000), Mr.
Howell ($405,000) and Mr. Fivel ($350,000). In addition, severance and change of
control caps ("Severance Caps") were implemented with respect to the total value
of the severance payments due if (i) in breach of the applicable employment
agreement, we terminate the employee's employment other than for disability or
Cause, or (ii) the employee terminates his employment for Good Reason. Any
accelerated vesting of annual equity awards upon a Change in Control will also
count toward, and be subject to, the Severance Cap (the total of the severance
payments and accelerated vesting the "Severance Total"). Pursuant to the
Severance Caps, the Severance Total may not exceed $9 million for Mr. Laikin,
$4.5 million for Mr. Howell and $2.25 million for Mr. Fivel. Any gross-up
payment designed to cover extra income or excise taxes owed by the employee if
the severance payments or benefits paid are deemed to constitute "parachute
payments" as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986,
and any acceleration of the restricted stock granted to the employees on April
7, 2005, will not count toward or be subject to the Severance Cap. Other than as
set forth above, the employment agreements for Messrs. Laikin, Howell and Fivel,
remain the same as they were as of December 31, 2004, and are described below in
the section entitled "Employment and Severance Agreements".
In addition, on April 7, 2005, we entered into Supplemental Retirement
Benefit Agreements ("Retirement Agreements") with each of Messrs. Laikin, Howell
and Fivel. The Retirement Agreements provide that we will implement a
supplemental retirement benefit providing each executive with a single-life
annuity. The benefit is expressed as the annual payment per a single-life
annuity commencing at age 62, with such annual payment equal to a certain
percentage of average base salary and bonus based on the Executive's final five
years of work, with such percentage not to be greater than 50%. If the
executive's employment is terminated other than for Cause, a discounted annual
single-life annuity benefit would commence being paid to Mr. Laikin at age 50,
to Mr. Howell
-16-
at age 53 and to Mr. Fivel at age 55, or upon termination if that event occurs
after the respective age. If the executive is terminated for Cause, then the
benefit would not commence until age 62.
Assuming annual salary increases of 5% per year, the anticipated payments
pursuant to the Retirement Agreements would be approximately $500,000 per year
to Mr. Laikin commencing at age 50, $344,000 per year to Mr. Howell commencing
upon age 53 and $229,000 per year to Mr. Fivel commencing upon age 55. Payment
under the Retirement Agreements is contingent upon termination of service.
- EMPLOYMENT AND SEVERANCE AGREEMENTS
We have entered into five-year "evergreen" employment agreements with each
of Messrs. Laikin and Howell, which are automatically renewable for successive
one-year periods and provide for an annual base compensation of $705,000 and
$420,000 respectively, and such bonuses as the Board of Directors may from time
to time determine. If we provide the employee with notice that we desire to
terminate the agreement or terminate the agreement without cause, there is a
final five-year term commencing on the date of such notice. The employment
agreements provide for employment on a full-time basis and contain a provision
that the employee will not compete or engage in a business competitive with our
business during the term of the employment agreement and for a period of two
years thereafter. The employment agreements also provide that if the employee's
employment is terminated by the employee, without Good Reason, as defined,
within 12 months after a "change of control," or if prior to and not as a result
of a change of control, the employee's employment is terminated either by the
employee for Good Reason or by us other than for disability or Cause, as
defined, the employee will be entitled to receive severance pay equal to the
highest of (a) $2,250,000 for Mr. Laikin and $1,625,000 for Mr. Howell or (b)
five times the total compensation (including salary, bonus and the value of all
perquisites) received from us during the twelve months prior to the date of
termination. If after or as a result of a change of control, the employee's
employment is terminated either by the employee for Good Reason or by us other
than for disability or Cause, the employee will be entitled to receive severance
pay equal to ten times the total compensation (including salary, bonus, the
value of all perquisites and the value of all stock options granted to the
employee) received from us during the twelve months prior to the date of
termination. In addition, (a) upon the occurrence of a change of control, (b) if
in breach of the agreement, we terminate the employee's employment other than
for disability or Cause, or (c) if the employee terminates his employment for
Good Reason at any time, the vesting of all options granted to the employee will
be accelerated so that the options become immediately exercisable. For purposes
of such agreements, a "change of control" shall be deemed to occur, unless
previously consented to in writing by the respective employee, upon (i)
individuals who constituted our then current Board of Directors ceasing to
constitute a majority of the Board of Directors, (ii) subject to certain
specified exceptions, the acquisition of beneficial ownership of 15% or more of
our voting securities by any person or entity not affiliated with the respective
employee or us, (iii) the commencement of a proxy contest against management for
the election of a majority of our Board of Directors if the group conducting the
proxy contest owns, has or gains the power to vote at least 15% of our voting
securities, (iv) the consummation under certain conditions by us of a
reorganization, merger or consolidation or sale of all or substantially all of
our assets to any person or entity not affiliated with the respective employee
or us, or (v) our complete liquidation or dissolution.
In addition, we have entered into a three-year "evergreen" employment
agreement with Mr. Fivel, which is automatically renewable for successive
one-year periods and provides for an annual base compensation of $350,000, and
such bonuses as the Board of Directors may from time to time determine. If we
provide the employee with notice that we desire to terminate the agreement
without Cause, there is a final three-year term commencing on the date of such
notice. The employment agreement provides otherwise for substantially the same
terms as the employment agreements described above, except that if the
employee's employment is terminated by the employee, without Good Reason, as
defined, within 12 months after a "change of control," or if prior to and not as
a result
-17-
of a change of control, the employee's employment is terminated either by the
employee for Good Reason or by us other than for disability or Cause, as
defined, the employee will be entitled to receive the highest of (a) $825,000 or
(b) three times the total compensation (including salary, bonus and the value of
all perquisites ) received from us during the twelve months prior to the date of
termination. If after or as a result of a change of control, the employee's
employment is terminated either by the employee for Good Reason or by us other
than for disability or Cause, the employee will be entitled to receive severance
pay equal to six times the compensation (including, salary, bonus, and the value
of all perquisites and the value of all stock options granted to the employee)
received or earned from us during the twelve months prior to the date of
termination. In addition, (a) upon the occurrence of a change of control, (b) if
in breach of the agreement, we terminate the employee's employment other than
for disability or Cause, or (c) if the employee terminates his employment for
Good Reason at any time, the vesting of all options granted to the employee will
be accelerated so that the options become immediately exercisable. We have also
entered into a three-year "evergreen" employment agreement with Mr. Terence on
April 22, 2002, which is automatically renewable for successive one-year periods
and provides for an annual base compensation of $410,000 and such bonuses as the
Board of Directors may from time to time determine. The employment agreement
provides for employment on a full-time basis and contains a provision that the
employee will not compete or engage in a business competitive with our business
during the term of the employment agreement and for a period of two years
thereafter. The employment agreement also provides that if the employee's
employment is terminated by the employee, without Good Reason, as defined,
within 12 months after a "change of control," or if prior to and not as a result
of a change of control, the employee's employment is terminated either by the
employee for Good Reason or by us other than for disability or Cause, as
defined, the employee will be entitled to receive severance pay equal to three
times the total compensation (including salary, bonus and the value of all
perquisites) received from us during the twelve months prior to the date of
termination. For purposes of such agreement, a "change of control" shall be
deemed to occur, unless previously consented to in writing by the employee, upon
(i) individuals who constituted our then current Board of Directors ceasing to
constitute a majority of the Board of Directors, (ii) subject to certain
specified exceptions, the acquisition of beneficial ownership of 15% or more of
our voting securities by any person or entity not affiliated with the respective
employee or us, (iii) the commencement of a proxy contest against management for
the election of a majority of our Board of Directors if the group conducting the
proxy contest owns, has or gains the power to vote at least 15% of our voting
securities, (iv) the consummation under certain conditions by us of a
reorganization, merger or consolidation or sale of all or substantially all of
our assets to any person or entity not affiliated with the respective employee
or us, or (v) our complete liquidation or dissolution. In addition, (a) upon the
occurrence of a change of control, (b) if in breach of the agreement, we
terminate the employee's employment other than for disability or Cause, or (c)
if the employee terminates his employment for Good Reason at any time, the
vesting of all options granted to the employee will be accelerated so that the
options become immediately exercisable.
We have also entered into a one-year "evergreen" employment agreement with
Ms. Kelley on June 9, 2003, which is automatically renewable for successive
one-year periods and provides for an annual base compensation of $225,000,
subject to any increase at the Company's discretion. She is also entitled to
such other discretionary cash bonuses and other compensation as the Company may
from time to time determine, provided that any discretionary bonus cannot exceed
50% of her base compensation. The employment agreement provides for employment
on a full-time basis and contains a provision that the employee will not compete
or engage in a business competitive with our business during the term of the
employment agreement and for a period of one year thereafter. The employment
agreement also allows the employee to terminate the agreement upon at least
thirty (30) days prior written notice and provides that if the employee's
employment is terminated by the employer other than due to death, disability or
for Cause, as defined, the employee shall be entitled to receive severance pay
equal to 12 months of her annual base salary, any earned but unpaid bonus and
reimbursement of certain business expenses. Moreover, upon a "change of
control," if the employee's
-18-
employment is terminated by us other than for death, disability or Cause, as
defined, the employee will be entitled to an acceleration of the vesting of any
unvested stock options held by her, which shall then remain exercisable for not
less than 180 days. For purposes of such agreement, a "change of control" shall
be deemed to occur, unless previously consented to in writing by the employee,
upon (i) individuals who constituted our then current Board of Directors ceasing
to constitute a majority of the Board of Directors, (ii) subject to certain
specified exceptions, the acquisition of beneficial ownership of 15% or more of
our voting securities by any person or entity not affiliated with the respective
employee or us, (iii) the commencement of a proxy contest against management for
the election of a majority of our Board of Directors if the group conducting the
proxy contest owns, has or gains the power to vote at least 15% of our voting
securities, (iv) the consummation under certain conditions by us of a
reorganization, merger or consolidation or sale of all or substantially all of
our assets to any person or entity not affiliated with the employee or us, or
(v) our complete liquidation or dissolution.
2005 BONUS PLAN
The Compensation and Human Resources Committee also established a 2005
bonus program for the Company's executive officers, including its Chief
Executive Officer, which is based upon certain pre-established targets for: (i)
income from continuing operations (up to 50%), (ii) return on invested capital
(up to 20%), and (iii) certain strategic objectives approved by the Committee
(up to 30%). If all of these targets are reached, Mr. Laikin, the Company's
Chief Executive Officer, will receive a cash bonus equal to 100% of his base
salary and each of the other executive officers will receive a cash bonus equal
to 50% of their respective base salaries as a bonus. If only certain of the
targets are reached then the executive officers, including the Chief Executive
Officer, would be entitled to receive the corresponding percentage of their
potential bonus under the program. The Compensation and Human Resources
Committee retains discretion to increase an award based on individual and
Company performance.
REPORT OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation and Human Resources Committee (the "Committee"), subject
to the approval of the Board of Directors, determines the compensation of the
Company's executive officers, including the Chief Executive Officer, and
oversees the administration of all executive compensation programs. As noted
above, the compensation policy of the Company is determined by the Compensation
and Human Resources Committee, which periodically reviews trends in compensation
practices. The executive compensation policy for the Company was reviewed and
approved during 2004 as follows:
Brightpoint offers executive compensation programs that align individuals'
financial incentives with our strategic direction and corporate values. Our
programs are designed to attract and retain key talent needed to manage our
business and enhance shareholder value. Our executive compensation program
includes cash (base pay and short term incentive) and non-cash (equity based
long term incentive) components. These programs aim to provide our executives
with:
- Base pay in the aggregate at the median of the relevant external
market comparator group,
- An opportunity for total cash to significantly exceed the market
median when exceptional individual and business performance is
achieved, and
- Equity to ensure alignment of individual performance with the
Company's long-term business objectives.
-19-
To put this policy into practice, the Committee reviews total compensation
survey data provided by independent consultants. In 2004 the Committee updated
the external comparator data in order to focus on those companies which either
participate in the Company's industry, or operate in a related industry and are
of a comparable size and scope of operations. The Committee has reviewed all
components of compensation of the Company's executives, including that of the
Chief Executive Officer, and conducted all of its deliberations and made its
determinations directly in keeping with both our stated compensation policy as
above and with this external comparator data.
Base Salary. The base salaries of the Company's executives, including the
Chief Executive Officer, are determined taking into account the median of the
comparator data set which reflects the external labor market for comparable
positions, and by relative individual job performance. An executive's salary
will also vary within this framework based on responsibilities, experience, and
leadership behaviors. A relatively greater emphasis is placed on the variable
(short and long term incentive) components of compensation so as to put a
greater portion of total pay "at risk" based on Company and individual
performance. Fiscal 2004 and previous base salary data for the Company's Named
Executives is shown in the "Summary Compensation Table" on page 13.
Short Term Incentives - Bonuses. Bonuses for the Company's executive
officers, including the Chief Executive Officer, in 2004 were awarded based on
predetermined targets and metrics related to the Company's income from
continuing operations, return on invested capital, and key strategic objectives.
In addition, the Committee awarded to the executive officers, including the
Chief Executive Officer, additional ("Discretionary") bonuses based on the
Company's performance. The total bonuses awarded to the Company's executive
officers with respect to fiscal 2004 are set forth in the "Summary Compensation
Table" on page 13.
Long Term Incentives - Equity (Stock Options and Restricted Stock). These
equity awards under the Company's Long-Term Incentive Plan or other stock option
plans are intended to align the interests of the executives with those of the
Company's shareholders. The size and grant of actual awards during 2004 was
determined by the Compensation and Human Resources Committee, taking into
account Company performance and total compensation comparator data using the
data set referred to above. The current share ownership for all executive
officers is shown in "Voting Security Ownership of Certain Beneficial Owners and
Management" on page 23.
COMPENSATION AND HUMAN RESOURCES COMMITTEE:
Eliza Hermann, Chairperson
Jerre L. Stead
Stephen H. Simon
Robert F. Wagner
-20-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2004, our Board of Directors,
which currently includes Mr. Laikin, neither modified nor rejected any
recommendations of the Compensation and Human Resources Committee. Also during
the fiscal year ended December 31, 2004, none of our executive officers served
on the board of directors or the compensation committee of any other company any
of whose executive officers serve on our Board of Directors or our Compensation
and Human Resources Committee.
-21-
STOCK PERFORMANCE GRAPH
The following line graph compares, from December 31, 1999 through December
31, 2004, the cumulative total shareholder return on the Company's Common Stock
with the cumulative total return on the stocks comprising the NASDAQ Market
Value Index and the Coredata Group Index (previously known as the Media General
Financial Services Electronics Wholesale Industry Group Index) ("Coredata Group
Index"). The comparison assumes $100 was invested on December 31, 1999 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of all cash dividends, if any, paid on such securities. The Company
has not paid any cash dividends and, therefore, the cumulative total return
calculation for the Company is based solely upon share price appreciation and
not upon reinvestment of cash dividends. Historical share price is not
necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
-------- -------- -------- -------- -------- --------
BRIGHTPOINT, INC. 100.00 26.67 23.92 8.60 42.20 47.81
COREDATA GROUP IINDEX 100.00 76.58 75.77 56.99 76.87 94.99
NASDAQ MARKET INDEX 100.00 62.85 50.10 34.95 52.55 56.97
-22-
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of the Record Date, based on
information obtained from the persons named below, (i) by each person known by
us to own beneficially more than five percent of our Common Stock, (ii) by each
of the Named Executives, (iii) by each of our directors, and (iv) by all of our
executive officers and directors as a group:
AMOUNT AND
NATURE OF PERCENTAGE OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP (2) SHARES OWNED
------------------------------------------- ------------- -------------
Timothy S. Durham (3)...................... 1,094,290 6.1
Barclays Global Investors, NA (4).......... 1,063,998 6.0
LSV Asset Management (5)................... 1,019,845 5.7
Robert J. Laikin (6)....................... 272,613 1.5
J. Mark Howell (7)......................... 130,602 *
Frank Terence (8).......................... 113,094 *
Steven E. Fivel (9)........................ 71,765 *
Lisa M. Kelley (10)........................ 14,441 *
Jerre L. Stead (11)........................ 36,889 *
Richard W. Roedel (12)..................... 28,466 *
Robert F. Wagner (13)...................... 14,185 *
Stephen H. Simon (14)...................... 13,210 *
V. William Hunt (15)....................... 9,152 *
Catherine M. Dalton (16)................... 9,000 *
Marisa K. Pratt (17)....................... 6,997 *
Eliza Hermann (18)......................... 6,966 *
All executive officers and directors
as a group (fourteen persons) (19)......... 727,380 4.0
----------------------
* Less than 1%.
(1) The address for each of such individuals, unless specified otherwise in a
subsequent footnote, is in care of Brightpoint, Inc., 501 Airtech Parkway,
Plainfield, Indiana 46168.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the Record Date upon the
exercise of options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such
person (but not those held by any other person) and which are exercisable
within 60 days of the Record Date have been exercised. Unless otherwise
indicated, we believe that all persons named in the table have sole voting
and investment power with respect to all shares of Common Stock
beneficially owned by them.
-23-
(3) Based solely on a joint Schedule 13D filed with the United States
Securities and Exchange Commission by Timothy S. Durham, Diamond
Investments, LLC, Henri B. Najem, Jr., Shelley Najem, Jeffrey Osler, Neil
Lucas, James F. Cochran, Jonathon B. Swain, Dr. Charles Durham, Mitza
Durham and Shannon Frantz. The address of Mr. Durham is 111 Monument
Circle, Suite 4800, Indianapolis, Indiana 46204.
(4) Based solely on a Schedule 13G filed with the United States Securities and
Exchange Commission by Barclays Global Investors, NA. The address of
Barclays Global Investors, NA is 45 Fremont Street, San Francisco, CA
94105.
(5) Based solely on a Schedule 13G filed with the United States Securities and
Exchange Commission by LSV Asset Management. The address of LSV Asset
Management is 1 N. Wacker Drive, Suite 4000, Chicago, IL 60606.
(6) Includes 172,612 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 100,000 shares owned by Mr. Laikin.
Includes 1 share allocated from the Brightpoint, Inc. 1999 Employee Stock
Purchase Plan ("ESPP"). Does not include options to purchase 192,966
shares. Does not include 18,700 Restricted Stock Units.
(7) Includes 119,936 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 10,500 shares owned by J. Mark Howell
and 166 shares allocated from the 401(k). Does not include options to
purchase 96,533 shares. Does not include 9,300 Restricted Stock Units.
(8) Includes 97,023 shares underlying options, which are exercisable within 60
days of the Record Date. Includes 8,037 shares owned by Mr. Terence and
8,034 shares held by the Frank Terence and Katrina Marie Terence Trust of
October 31, 2001. Mr. Terence and his spouse are trustees of this trust,
which is for the benefit of his minor child. Does not include options to
purchase 106,647 shares. Does not include 9,200 Restricted Stock Units.
(9) Includes 68,897 shares underlying options, which are exercisable within 60
days of the Record Date. Includes 2,569 shares owned by Mr. Fivel.
Includes 217 shares allocated from the ESPP and 82 shares allocated from
the 401(k). Does not include options to purchase 92,333 shares. Does not
include 8,200 Restricted Stock Units.
(10) Includes 10,167 shares underlying options which are exercisable within 60
days of the Record Date. Includes 4,000 shares owned by Ms. Kelley.
Includes 274 shares allocated from the ESPP. Does not include shares
underlying 35,233 options. Does not include 14,600 Restricted Stock Units.
(11) Includes (i) 29,250 shares beneficially owned by Mr. Stead, which shares
are owned of record by JMJS Group LLP, (ii) 3,639 shares underlying
options, which are exercisable within 60 days of the Record Date, and
(iii) 4,000 shares of restricted stock granted under the Company's Amended
and Restated Director Stock Compensation Plan, which are subject to
forfeiture as set forth in the Plan.
(12) Includes 22,500 shares underlying options, which are exercisable within 60
days of the Record Date. Includes 1,000 shares owned by Mr. Roedel and
4,966 shares of restricted stock under the Company's Amended and Restated
Director Stock Compensation Plan, which are subject to forfeiture as set
forth in the Plan.
(13) Includes 1,142 shares underlying options, which are exercisable within 60
days of the Record Date. Includes (i) 8,000 shares held by Robert F.
Wagner and Patricia D. Wagner, (ii) 78 shares held in a joint account by
Mr. Wagner and his emancipated son, of which shares Mr. Wagner disclaims
beneficial ownership, and (iii) 4,966 shares of restricted stock under the
Company's Amended and Restated Director Stock Compensation Plan, which are
subject to forfeiture as set forth in the Plan.
(14) Includes (i) 1,607 shares owned by Mr. Simon, (ii) 5,944 shares underlying
options, which are exercisable within 60 days of the Record Date, and
(iii) 5,609 shares of restricted stock under the Company's Amended and
Restated Director Stock Compensation Plan, which are subject to forfeiture
as set forth in the Plan.
(15) Represents 2,000 shares and 7,152 shares of restricted stock owned by Mr.
Hunt under the Company's Amended and Restated Director Stock Compensation
Plan, which are subject to forfeiture as set forth in the Plan.
(16) Represents 5,000 shares and 4,000 shares of restricted stock owned by Ms.
Dalton under the Company's Amended and Restated Director Stock
Compensation Plan, which are subject to forfeiture as set forth in the
Plan.
(17) Represents 31 shares and 6,966 shares of restricted stock owned by Ms.
Pratt under the Company's Amended and Restated Director Stock Compensation
Plan, which are subject to forfeiture as set forth in the Plan.
(18) Represents 6,966 shares of restricted stock owned by Ms. Hermann under the
Company's Amended and Restated Director Stock Compensation Plan, which are
subject to forfeiture as set forth in the Plan.
(19) Includes an aggregate of 501,860 shares underlying options, which are
exercisable within 60 days of the Record Date, including those listed in
notes (6) through (18), above. Does not include options to purchase an
aggregate of 523,712 shares. Does not include 60,000 Restricted Stock
Units.
-24-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to us with respect to our most recent fiscal year, we believe that all
required reports were filed on a timely basis.
EQUITY COMPENSATION PLANS
THE FOLLOWING TABLE PROVIDES CERTAIN INFORMATION WITH RESPECT TO ALL OF THE
COMPANY'S EQUITY COMPENSATION PLANS IN EFFECT AS OF DECEMBER 31, 2004.
Number of securities
remaining available for
Number of securities to Weighted-average issuance under equity
be issued upon exercise exercise price of compensation plans,
of outstanding options outstanding options excluding securities
and rights and rights reflected in column (a)
Plan Category (a) (b) (c)
----------------------------------------- ----------------------- ------------------- -----------------------
Amended and Restated Independent Director
Stock Compensation Plan (approved by
security holders) (1) 29,126 - 870,874
Equity compensation plans approved by
security holders: (2004 Long-Term
Incentive Plan, 1994 Stock Option Plan
and Non-Employee Director Stock Option
Plan) (2) 1,151,290 $ 8.83 1,488,000
Equity compensation plans not approved by
security holders (3) :
(1996 Stock Option Plan) 486,480 $ 10.95 148,622
--------- ------- ---------
Total 1,666,896 $ 9.47 2,507,496
========= ======= =========
(1) Represents 29,126 shares of restricted stock granted, and 870,874 shares
of restricted stock which remain eligible for grant, as initial, annual or
elective awards pursuant to the terms of the Company's Amended and
Restated Independent Director Stock Compensation Plan.
(2) The 1994 Plan has 1,111,654 shares issued at an average of $9.00 a share.
There are no remaining shares available for issue. The Non-Employee
Director Plan has 27,636 shares issued at an average of $2.10 a share.
There are no remaining shares available for issue. The 2004 Long-Term
Incentive Plan has 12,000 Restricted Stock Units issued, which were
granted as other stock based awards under the Plan. There are 1,488,000
shares available for issuance. Under the 2004 Plan the Company may issue
stock options, performance units, restricted shares, deferred stock, or
other stock-based awards.
(3) Represents the aggregate number of shares of common stock issuable upon
exercise of arrangements with option holders granted under our 1996 Stock
Option Plan. These options are 5 to 10 years in duration, expire at
various dates between January 20, 2005 and January 23, 2014, contain
anti-dilution provisions providing for adjustments of the exercise price
under certain circumstances and have termination provisions similar to
options granted under shareholder approved plans. See Note 14 to the
Consolidated Financial Statements included in the Company's Form 10-K for
the year ended December 31, 2004 for a description of the 1996 Stock
Option Plan.
-25-
CERTAIN TRANSACTIONS
We utilize the services of a third party for the purchase of corporate
gifts, promotional items and standard personalized stationery. Mrs. Judy Laikin,
the mother of Robert J. Laikin, our Chief Executive Officer, was the owner of
this third party until June 1, 2000 and is an independent consultant to this
third party. We purchased approximately $86,052 and $63,321 of services and
products from this third party during 2004 and 2003. We believe that these
purchases were made on terms no less favorable to us than we could have obtained
from an unrelated party.
During the fiscal years ended December 31, 2004 and 2003, we paid to an
insurance brokerage firm, for which the father of Robert J. Laikin acts as an
independent insurance broker, $205,000 and $225,415, respectively, in service
fees. In addition, we pay certain insurance premiums to the insurance brokerage
firms, which premiums were forwarded to our respective insurance carriers. We
believe these services were purchased on terms no less favorable to us than we
could have obtained from an unrelated party.
Our Articles of Incorporation and By-laws provide that we indemnify our
officers and directors to the extent permitted by law. In connection therewith,
we entered into indemnification agreements with our executive officers and
directors. In accordance with the terms of these agreements we have reimbursed
certain of our former executive officers and intends to reimburse our officers
and directors for their legal fees and expenses incurred in connection with
certain pending litigation and regulatory matters. We did not make any such
reimbursement payments during 2004.
-26-
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Company has engaged Ernst & Young LLP ("E&Y") as its independent
registered public accounting firm since October 1994. E&Y reported on the
financial statements of the Company for the fiscal year ended December 31, 2004
and the Audit Committee of the Board of Directors has appointed E&Y to audit and
report on the financial statements of the Company for the year ending December
31, 2005. Although shareholder approval of the appointment of E&Y is not
required by law, the Board of Directors believes that it is advisable to give
shareholders an opportunity to ratify this appointment. Furthermore, although
the appointment of E&Y is being submitted for shareholder ratification, the
Audit Committee reserves the right, even after ratification by shareholders, to
change the appointment of E&Y as auditors, at any time during the 2005 fiscal
year, if it deems such change to be in the best interests of the Company.
Representatives of E&Y will be present at the Annual Meeting.
Audit Fees. The aggregate fees for professional services rendered by E&Y
for the audit of the Company's annual financial statements for the years ended
December 31, 2004 and 2003, the review of the financial statements included in
the Company's Forms 10-Q for 2004 and 2003, audit of internal control over
financial reporting and statutory audits of foreign subsidiaries totaled
$1,543,853 and $1,041,515, respectively.
Audit-Related Fees. The aggregate fees for assurance and related services
by E&Y that are related to the performance of the audit or review of the
Company's financial statements, for the years ended December 31, 2004 and 2003,
and that are not disclosed in the paragraph captioned "Audit Fees" above, were
$155,499 and $53,820, respectively. The services performed by E&Y in connection
with these fees consisted of employee benefit plan audits and internal controls
consultation.
Tax Fees. The aggregate fees for professional services rendered by E&Y for
tax compliance, for the years ended December 31, 2004 and 2003, were $237,000
and $281,000, respectively. The aggregate fees billed by E&Y for professional
services rendered for tax advice and tax planning, for the years ended December
31, 2004 and 2003, were $137,000 and $215,050, respectively. The services
performed by E&Y in connection with these advisory and planning fees consisted
of the following: tax audits and consultation regarding various tax issues.
All Other Fees. There were no fees for products and services by E&Y, other
than the services described in the paragraphs captioned "Audit Fees",
"Audit-Related Fees", and "Tax Fees" above for the years ended December 31, 2004
and 2003.
The Audit Committee has established its pre-approval policies and
procedures, pursuant to which the Audit Committee approved the foregoing audit
and permissible non-audit services provided by E&Y in 2004. The Audit
Committee's pre-approval policy is as follows: Consistent with the Audit
Committee's responsibility for engaging our independent auditors, all audit and
permitted non-audit services require pre-approval by the Audit Committee. All
requests or applications for services to be provided by the independent
registered public accounting firm that do not require specific approval by the
Audit Committee will be submitted to the Chief Financial Officer and must
include a detailed description of the services to be rendered. The Chief
Financial Officer will determine whether such
-27-
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the independent auditor. Request
or applications to provide services that require specific approval by the Audit
Committee will be submitted to the Audit Committee by both the independent
auditor and the Chief Financial Officer, and must include a joint statement as
to whether, in their view, the request or application is consistent with the
Securities and Exchange Commission's rules on auditor independence. The Audit
Committee has designated the Vice President of Internal Audit to monitor the
performance of all services provided by the independent auditor and to determine
whether such services are in compliance with this policy. The Vice President of
Internal Audit will report to the Audit Committee on a periodic basis on the
results of its monitoring. The Vice President of Internal Audit and management
will immediately report to the chairman of the Audit Committee any breach of
this policy that comes to the attention of the Vice President of Internal Audit
or any member of management. The Audit Committee will also review the internal
auditor's annual internal audit plan to determine that the plan provides for the
monitoring of the independent auditor's services. Pursuant to these procedures
the Audit Committee approved the foregoing audit and permissible non-audit
services provided by E&Y in 2004.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2005.
-28-
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders who wish to present proposals appropriate for consideration
at the Company's Annual Meeting of Shareholders for its fiscal year ending
December 31, 2005 to be held in the year 2006 must submit the proposal in proper
form to the Secretary of the Company at its address set forth on the first page
of this Proxy Statement (or such other address as then constitutes its executive
offices) not later than December 13, 2005 in order for the proposition to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to such annual meeting. Such proposals must be presented in a manner
consistent with the Company's By-Laws and applicable laws. Any such proposals,
as well as any questions related thereto, should be directed to the Secretary of
the Company at 501 Airtech Parkway, Plainfield, Indiana 46168. Under the
Company's Corporate Governance Principles Nominees for Directors should be sent
to the Company's Lead Independent Director at: board.directors@brightpoint.com.
If a shareholder submits a proposal after the December 13, 2005 deadline
but still wishes to present the proposal at the Company's Annual Meeting of
Shareholders (but not in the Company's proxy statement) for the fiscal year
ending December 31, 2005, the proposal, which must be presented in a manner
consistent with the Company's By-Laws and applicable law, must be submitted to
the Secretary of the Company in proper form at the address set forth above no
later than February 27, 2006.
The Company did not receive notice of any proposed matter to be submitted
by shareholders for a vote at this Annual Meeting and, therefore, in accordance
with Exchange Act Rule 14a-4(c) any proxies held by persons designated as
proxies by the Company's Board of Directors and received in respect of this
Annual Meeting will be voted in the discretion of the Company's management on
such other matter which may properly come before the Annual Meeting. Moreover,
if the Company does not receive notice by February 27, 2006 of a proposed matter
to be submitted by a shareholder for shareholders vote at the Annual Meeting of
Shareholders for the fiscal year ending December 31, 2005, then, in accordance
with Exchange Act Rule 14a-4(c) any proxies held by persons designated as
proxies by the Company's Board of Directors in respect of such Annual Meeting
may be voted at the discretion of such persons on such matter if it shall
properly come before such Annual Meeting.
The qualities and skills sought in prospective members of the board are
determined by the Corporate Governance and Nominating Committee. The Corporate
Governance and Nominating Committee requires that director candidates be
qualified individuals who, if added to the Board, would provide the mix of
director characteristics and diverse experiences, perspectives and skills
appropriate for the Company. Criteria for selection of candidates will include,
but not be limited to: (i) business and financial acumen, as determined by the
Committee in its discretion, (ii) relevant education or training, (iii) a
commitment to business ethics and the "Brightpoint Values", (iv) tenure and
breadth of experience in a significant leadership capacity, as well as qualities
reflecting a proven record of accomplishment and ability to work with others,
(v) knowledgeable in the Company's industry, (vi) relevant experience and
knowledge of corporate governance practices, and (vii) expertise in an area
relevant to the Company. Any prospective director nominee must be "independent"
under NASDAQ Marketplace Rules and the Company's Corporate Governance
Principles. Such persons should not have commitments that would conflict with
the time commitments of a Director of the Company. Such persons shall be of high
repute and recognized integrity and not have been convicted in a criminal
proceeding or be named a subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses). Such person shall not have been
found in a civil proceeding to have violated any federal or state securities or
commodities law, and shall not be subject to any court or regulatory order or
decree limiting his or her business activity, including in connection with the
purchase or sale of any security or commodity. Such persons shall have other
characteristics considered appropriate for membership on the Board of Directors,
as determined by the Corporate Governance and Nominating Committee.
-29-
The Corporate Governance and Nominating Committee has complete discretion
in considering nominations to the Board. A shareholder who wishes to recommend a
qualified candidate to the Company's Board of Director's may write to the
Company's Secretary at the address set forth above, stating in detail the
qualifications of the person they recommend. Pursuant to the Company's By-Laws,
all nominations for the 2006 Annual Meeting must be submitted not less than 50
days nor more than 75 days prior to the Annual Meeting.
With respect to the deadlines discussed above, if the date of the Annual
Meeting to be held in 2006 is advanced by more than thirty days or delayed
(other than as a result of adjournment) by more than thirty days from the
anniversary of the Annual Meeting held in 2005, a shareholder must submit any
such proposal to the Company no later than the close of business on the sixtieth
day prior to the date of the 2006 Annual Meeting.
OTHER INFORMATION
A copy of the Company's 2004 Annual Report to Shareholders is being
furnished herewith to each stockholder of record as of the close of business on
April 6, 2005. Copies of the Company's Annual Report on Form 10-K will be
provided upon written request to the Company at 501 Airtech Parkway, Plainfield,
Indiana 46168, Attention Investor Relations. The Form 10-K also is available on
the Company's website at www.brightpoint.com.
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
shareholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
Steven E. Fivel
Executive Vice President, General Counsel and Secretary
April 11, 2005
-30-
APPENDIX A
CORPORATE GOVERNANCE PRINCIPLES
The Board of Directors ("Board") of Brightpoint, Inc. ("Company" or
"Brightpoint") believes that effective corporate governance is built on
adherence to a number of "best practices." These practices are consistent with
the Board's responsibilities to effectively oversee the Company's strategy,
evaluate and compensate Company executives, and plan for management succession.
Most importantly, these practices are believed to strengthen the Company and
protect shareholders' interests. As such, the Board has developed and follows a
program of corporate governance that includes the following elements:
- Board Independence
- The Board shall be comprised of a majority of independent
directors. Director independence, at a minimum, is consistent
with applicable rules and regulations for Nasdaq-traded issuers.
The Board believes that independence is best achieved when
independent directors, their family members, or their primary
employers receive no consulting, legal, or other fees from
Brightpoint other than in their service as Board members.
- An Independent Director is specifically defined as a
director who:
- Is not an affiliate of the Company, the Company's
affiliates, any member of the Company's senior
management, or the Company's suppliers or customers;
- Has not been employed by the Company or its affiliates
within the past five years;
- Has no personal services contract, such as a
consulting or advising relationship, with the Company,
its affiliates, or the Company's executives;
- Has no business relationship with the Company or its
affiliates (other than in his or her service as a
Board member) that requires Brightpoint to make
disclosure under Nasdaq or Securities and Exchange
Commission rules and regulations;
- Is not affiliated with a not-for-profit organization
that receives substantial contributions from the
Company or its affiliates, as specified by Nasdaq
rules or regulations;
- Is not employed by an organization at which an
executive of Brightpoint serves as a Board member;
- Is not a family member of any individuals with the
aforementioned relationships;
- Has not been affiliated with or employed by a present
or former auditor of the Company or its affiliates
until five years after the end of either the
affiliation or auditing relationship.
- The Board is committed to Board Committee independence. Each
Board Committee will be chaired by an Independent Director of
the Board. Committee chairs, their family members, or their
primary employers shall receive no consulting, legal, or other
fees from Brightpoint other than in their service as Board
members. In compliance with Sarbanes-Oxley and Nasdaq rules and
regulations, the Audit Committee is comprised of three
Independent Directors. In addition, the Audit Committee chair
shall be deemed a "financial expert", as specified by Nasdaq
rules and Section 407(b) of the Sarbanes-Oxley Act of 2002 and
any rules implemented by the Securities and Exchange
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Commission. Committee chairs and members serve one year
renewable terms. Any director that is no longer considered an
Independent Director will be required to resign from any
Committee on which he or she serves.
- The Board presently believes that it is in the best interests of
the Company for the positions of Chief Executive Officer and
Board Chairperson to be combined, as this structure provides for
unified vision and leadership within the Company. This combined
leadership structure will be periodically evaluated. Should the
Board determine that such separation is appropriate, these
positions will be formally separated. The CEO/Chairperson serves
a critical role in establishing and maintaining effective
communications with the Company's shareholders, customers,
suppliers, employees, creditors, communities, governments, and
other stakeholders. Communications between the Company and
stakeholders will be primarily through the CEO/Chairperson of
the Board.
- When the Chief Executive Officer and Board Chairperson positions
are combined, the Board will maintain a Lead Independent
Director. This director will be selected by the Independent
Directors of the Board from among the Independent Directors of
the Board. The Lead Independent Director serves as an important
liaison between the Board and Management. A key role of the Lead
Independent Director is to work closely with the Corporate
Secretary so that Board members receive meeting agendas and
related materials with sufficient time to effectively prepare
for discussion at Board and/or Committee meetings. The Lead
Independent Director is also responsible for scheduling meetings
whereby the Independent Directors meet in executive session.
Executive sessions include only Independent Directors, with
guests invited at the discretion of the Independent Directors.
Management Board members and other Management representatives
will not, as a rule, be present in these sessions. The Lead
Independent Director sets the executive session meeting agendas
and presides over these meetings. The Lead Independent Director
also serves a central role as liaison between the Board and
external advisors retained by the Board. The Lead Independent
Director serves for a one year renewable term. The Lead
Independent Director is evaluated by the full Board on an annual
basis.
- As a matter of policy, and to ensure Board independence,
Independent Directors or directors who are not employed by the
Company or its affiliates, their family members, and their
primary employers will refrain from conducting any business with
the Company outside of directors' service as Board members. This
is consistent with the definition of an Independent Director
contained herein. Board member independence will be assessed and
affirmed annually. Consideration will be given to replacing
non-management directors no longer considered independent.
- Board Budget
- In recognition of the Board's commitment to maintaining
independence, the Board maintains an operating budget separate
from Company funds. These funds are provided by the Company.
This enables the Board to engage in activities such as
determining Director compensation and hiring external experts
such as the external auditors and compensation consultants
without having to request such operating funds from Management.
The Board's budget is overseen by the Lead Independent Director
and Audit Committee Chairperson.
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- Committee Charter
- The Board will maintain and make publicly available Board
Committee Charters for the three standing Board committees.
These Charters, the Company's Corporate Governance Guidelines,
and the Company's Code of Business Conduct and Ethics, which may
be modified as appropriate, are made available to the public via
the Company's website (www.brightpoint.com).
- Board Size
- The Board shall be comprised of between eight to 12 members.
Board size will be a function of the current needs of the
Company and the ability to effectively staff standing Board
committees. Board size will be, in part, a function of a
purposeful desire to enhance Board member diversity. Diversity
is accomplished through the inclusion of directors with varying
background characteristics and knowledge bases. Directors are
selected for their ability to provide unique diverse
perspectives and skills in their service as Board members.
Directors are re-evaluated as to their ability to meet Board
member diversity goals and effectively contribute to the Board
in the event their primary occupation or employment status
changes during their term. Consideration will be given to
replacing directors not fulfilling these goals due to their
occupational or employment status change.
- Director Compensation
- The Board believes that it is important to rely on director
compensation practices that promote director independence.
Directors' compensation is therefore in the form of a Board
retainer. No special fees are granted for Board or Committee
meeting attendance. The Lead Independent Director, Board
Committee chairs, and Audit Committee members receive additional
compensation in recognition of their additional service
responsibilities. The Board also believes that its Independent
Directors should make a meaningful investment in Company stock.
Consistent with this guideline, 50 percent of an Independent
Director's annual compensation will be, subject to receipt of
necessary approvals, in the form of restricted stock grants
until the fair market value of the Director's stock holdings in
the Company reach a level two times that of the Director's
annual Board retainer. Once a Director's stock holdings reach
this level, the Director generally may elect to receive the
annual retainer in the form of cash or a combination of cash and
restricted stock grants. Directors may also choose to have the
annual Board retainer paid entirely in restricted shares. Unless
the fair market value of the shares of Common Stock held by a
Director reaches a level of two times that of the annual Board
retainer the Director may not sell any restricted shares issued
as part of the Director's annual Board compensation until six
months after the Director's retirement/resignation from the
Board. Once a Director's stock holdings reach the two times
annual retainer level (which holdings shall be measured in
December of each year) all restricted shares previously issued
to the Director as part of the Director's annual Board retainer
and all restricted shares to be issued to the Director in the
ensuing year may be sold in the ensuing year without the need to
comply with the restrictions set forth above. Any director stock
transactions will be posted on the Company's website
(www.brightpoint.com).
- Board Meetings and Attendance
- The Board is committed to open communication among Board members
and between the Board and Management. Consistent with this, the
Board and Board Committees shall meet on a quarterly basis.
Board meeting dates are established on an annual basis and
approved by Board vote. Additional Board and/or Committee
meetings are scheduled on an "as needed" basis. The Board
believes that it is important for directors
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to participate in scheduled Board and/or Committee meetings.
Directors who participate in less than 75 percent of scheduled
Board and Committee meetings are subject to being terminated as
a Board member or not receiving re-nomination to the Board.
- Director Access to Management
- Consistent with the need for open communication channels between
the Board and Management, non-management directors have direct
access to Company Management outside of formal Board and/or
Committee meetings.
- Board Education and Evaluation
- The Board is committed to ensuring that directors receive
ongoing educational opportunities that enhance their abilities
to effectively serve the Company. To this end, the Board engages
in continuing education experiences. Each director is required
to attend one director training seminar per calendar year. Also,
the Board as a whole engages in a joint professional development
experience each year. Additionally, new Board members are
provided with a comprehensive manual that assists in their
orientation to the Board and the Company. The Board is also
committed to evaluating the overall effectiveness of the Board
and individual directors. Board and Board Committee evaluation
occurs annually. Directors are formally evaluated at the
conclusion of their Board term and prior to their consideration
for re-nomination to the Board.
- Change in Director Employment Status
- All Independent Directors shall notify the Company's Lead
Independent Director in writing upon the occurrence of any
change in status of principal occupation, any change or
additional responsibility and any new directorship, or change in
directorships. The Lead Independent Director will notify the
Committee of any such changes and the Committee shall determine
the communication provided to the Board of Directors.
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APPENDIX B
BRIGHTPOINT AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter, which has been adopted by the board of directors of Brightpoint,
Inc. ("Company") governs the operations of the Audit Committee of the Board of
Directors of the Company ("Committee"). The Committee shall review and reassess
the adequacy of the charter to ensure compliance with NASDAQ and SEC rules at
least annually and obtain the approval of the board of directors of the Company
for any changes in the charter recommended by the Committee. The Committee shall
be members of, and appointed by, the board of directors and shall comprise at
least three directors, each of whom are independent of management and the
Company ("Independent Directors"). Members of the Committee shall be considered
Independent Directors as long as they are in compliance with the definition of
Independent Directors as defined and set forth in the Company's Corporate
Governance Principles. All Committee members shall be financially literate, and,
at least one member shall be a "financial expert," as defined by SEC
regulations.
PURPOSE
The Audit Committee shall provide assistance to the board of directors in
fulfilling the board's oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to:
- the integrity of the Company's financial statements and the related public
reports, disclosures and regulatory filings in which they appear;
- the systems of internal control over financial reporting, operations, and
legal/regulatory compliance;
- the performance, qualifications and independence of the Company's
independent accountants;
- the performance, qualifications and independence of the Company's internal
audit function, and;
- compliance with the Company's ethics policies and applicable legal and
regulatory requirements.
In so doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent accountants, the internal
auditors, and management of the Company.
AUTHORITY
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company and the authority to engage and
determine the compensation of independent counsel and other advisers as it
determines necessary to carry out its duties.
ADMINISTRATION
The Committee will meet at least four times each year, one of which shall be an
annual meeting with authority to convene additional meetings, as circumstance
require.
The Committee shall fix its own rules of procedure, which shall be consistent
with the by-laws of the Company and this charter.
-35-
Unless a chair is elected by the board of directors, the members of the
Committee may designate a chair by majority vote of the full Committee.
The chair of the Committee or a majority of the members of the Committee may
call a special meeting of the Committee.
A majority of the Committee shall constitute a quorum.
The Committee may form subcommittees for any purposes that the Committee deems
appropriate and may delegate to such subcommittees such power and authority as
the Committee deems appropriate.
Following each of its meetings, the Committee shall deliver a report on the
meeting, in the form of minutes or otherwise, to the board of directors,
including a description of all actions taken by the Committee at the meeting.
Members of the Committee shall serve until their resignation, retirement or
removal by the board of directors or until their successors shall be appointed
and qualify. No member of the Committee shall be removed unless by a majority
vote of the full board of directors.
A member of the Committee shall promptly notify the chair of the Committee and
the board of directors if the member is no longer an Independent Director. The
chair of the Committee shall promptly notify the full board of directors if the
chair is no longer an Independent Director.
All Committee members are expected to attend each meeting, in person or via
tele- or video conference. The Committee may invite members of management,
counsel, auditors or others to attend meetings and provide pertinent
information, as necessary. Meeting agendas will be prepared and provided in
advance to members, along with appropriate briefing materials. Minutes of each
meeting will be prepared.
DUTIES AND RESPONSIBILITIES
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. While the Committee has the responsibilities and
powers set forth in this charter, it is not the duty of the Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. Management is responsible for the preparation, presentation, and
integrity of the Company's financial statements and for the appropriateness of
the accounting principles and reporting policies that are used by the Company.
The independent accountants are responsible for auditing the Company's financial
statements and for reviewing the Company's unaudited interim financial
statements.
In carrying out their responsibilities, the policies and procedures of the
Committee shall remain flexible, in order to best react to changing conditions
and circumstances. The following sections of this charter set forth the
principal duties and responsibilities of the Audit Committee, as a guide, with
the understanding that the Committee may supplement them as appropriate.
Relationship with the Independent Accountants
The independent accountants shall report directly to the Committee.
- The Committee shall be directly responsible for the appointment and
termination (subject to shareholder ratification, if applicable or required
as determined by the full board of directors),
-36-
compensation, and oversight of the work of the independent accountants,
including pre-approval of all audit services provided by the independent
accountants and resolution of any disagreements between management and the
independent accountants regarding financial reporting.
- At least annually, the Committee shall obtain and review a report by the
independent accountants describing:
- The accounting firm's internal quality control procedures.
- Any material issues raised by the most recent internal quality control
review, or peer review (PCAOB replaced the peer review), of the
accounting firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting
one or more independent audits carried out by the firm, and any steps
taken to deal with any such issues.
- All relationships between the independent accountant and the Company (to
assess the auditor's independence).
- The Committee shall set clear hiring policies for employees or former
employees of the independent accountants that comply with SEC regulations
and applicable regulations on any stock exchange or quotation medium where
the Company's securities are listed for trading.
Accounting Matters and Financial & Regulatory Reporting
- The Committee shall receive regular reports from the independent accountant
on the critical policies and practices of the Company, and all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management.
- Prior to their release, the Committee shall review and discuss with
management and the Company's Disclosure Committee, if then in existence,
earnings press releases, as well as financial information and earnings
guidance provided to analysts and rating agencies. The chair of the
Committee may represent the entire Committee for purpose of this review.
- The Committee shall review the interim financial statements and disclosures
under Management's Discussion and Analysis of Financial Condition and
Results of Operations with management and the independent accountants prior
to the filing of the Company's Quarterly Report on Form 10-Q. The Committee
shall also discuss the results of the quarterly review and any other matters
required to be communicated to the Committee by the independent accountants
under generally accepted auditing standards. The chair of the Committee may
represent the entire Committee for the purposes of this review.
- The Committee shall review with management and the independent accountants
the financial statements and disclosures under Management's Discussion and
Analysis of Financial Condition and Results of Operations to be included in
the Company's Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K), including
their judgment about the quality of accounting principles, the
reasonableness of significant judgments, and the clarity and completeness of
the disclosures in the financial statements. Also, the Committee shall
discuss the results of the annual audit and any other matters required to be
communicated to the Committee by the independent accountants under generally
accepted auditing standards.
- The Committee shall prepare its report to be included in the Company's
annual proxy statement, as required by SEC regulations.
-37-
Non-Audit Services Provided by the Independent Accountant
- The Committee shall pre-approve all non-audit services provided by the
independent accountants and shall not engage the independent accountants to
perform the specific non-audit services prohibited by law or regulation.
- The Committee may delegate pre-approval authority to a member of the Audit
Committee. The decisions of any Audit Committee member to whom pre-approval
authority is delegated must be presented to the full Audit Committee at its
next scheduled meeting.
Internal Audit
- The Internal Audit Director shall report to the Committee. The Committee may
delegate certain administrative responsibilities in connection with the
oversight of the Internal Audit Director to the Chief Financial Officer of
the Company or such other officer of the Company, from time to time. The
Committee shall review and approve the appointment, replacement or dismissal
of the Internal Audit Director.
- The Committee shall review with management and the Internal Audit Director,
the internal audit charter, plans, activities, staffing and organizational
structure of the internal audit function and shall approve the annual
internal audit plan and approval of the budget with respect thereto.
- The Committee shall review the effectiveness of the internal audit function,
including compliance with the Institute of Internal Auditors' Standards for
the Professional Practice of Internal Auditing.
Adequacy of Audit Scopes and Resources
- The Committee shall discuss with the internal auditors and the independent
accountants the overall scope and plans for their respective audits,
including the adequacy of staffing and resources.
Internal Controls
- The Committee shall discuss with management, the internal auditors, and the
independent accountants the adequacy and effectiveness of the accounting and
financial controls, including the Company's policies and procedures to
assess, monitor, and manage business risk, and legal and ethical compliance
programs (e.g., Company's Code of Conduct).
- The Committee shall review management's assertion on its assessment of the
effectiveness of internal controls as of the end of the most recent fiscal
year and the independent accountants' report on management's assertion.
Private & Executive Sessions
- The Committee shall meet separately and periodically with management, the
internal auditors, and the independent accountants to discuss issues and
concerns warranting Committee attention. The Committee shall provide
sufficient opportunity for the internal auditors and the independent
accountants to meet privately with the members of the Committee. The
Committee shall review with the internal auditors and the independent
accountants any audit problems or difficulties and management's response.
Other Matters
- The Committee shall establish procedures for the receipt, retention, and
treatment of complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters, and the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
-38-
- The Committee shall receive corporate attorneys' reports of evidence of a
material violation of securities laws or breaches of fiduciary duty.
- The Committee shall institute and oversee special investigations as needed.
- The Committee shall perform an evaluation of the Committee's and individual
members' performance at least annually to determine whether it is
functioning effectively.
- The Committee shall perform any other activities related to this charter as
may be requested by the board of directors or as the Committee determines is
necessary to carry out its duties and responsibilities.
-39-
APPENDIX C
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE CHARTER
The Board of Directors ("Board") of Brightpoint, Inc. ("Company" or
"Brightpoint") is committed to establishing and maintaining corporate governance
practices designed to aid the long-term success of the Company and effectively
enhance and protect shareholder value. Central to effective corporate governance
at Brightpoint is the Corporate Governance and Nominating Committee (the
"Committee"). This Committee reports to the Board on corporate governance
matters.
MEMBERSHIP
The Committee is comprised of no less than two independent members of the Board.
Director independence, at a minimum, is consistent with applicable rules for
Nasdaq-traded issuers. Specific director independence guidelines are specified
in the Company's "Corporate Governance Principles." These guidelines may be
found on the Company's web site (www.brightpoint.com). Committee membership
includes the chairs of other standing Board Committees and the Lead Independent
Director. The Committee also maintains a chair. The chair is an independent
member of the Board. The Committee chair and members serve one year renewable
terms.
MEETINGS
The Committee meets at least four times annually, and at other times as
necessary.
RESPONSIBILITIES
The Committee's responsibilities include the following:
- Develop and periodically review the effectiveness of the Board's
corporate governance guidelines. The Committee makes recommendations on
revisions to these guidelines as appropriate. Included among these
responsibilities is keeping the Board apprised of impending corporate
governance guidelines and "best practices."
- Monitor and protect the Board's independence.
- Oversee and review the Company's processes for providing information to
the Board.
- Recommend appropriate Board structures and membership, including the
removal of directors, as necessary.
- Recommend appropriate Board committee structures and membership
including the existence of a Lead Independent Director, in accordance
with the Corporate Governance Principles. The Board has determined that
there are three committees essential to effective governance. These are
the Audit, Compensation and Human Resources, and Corporate Governance
and Nominating Committees. The Board is committed to ensuring the
independence of these committees. Committee independence is evaluated in
light of the Sarbanes-Oxley Act of 2002, Nasdaq Rules and the Company's
"Corporate Governance Principles".
- Establish procedures for the director nomination process and recommend
nominees for election to the Board. The Committee evaluates the
background and qualifications of director nominees, including those
nominated by the Company's stockholders. To nominate a director
candidate for the Committee's consideration, please submit the
candidate's name and qualifications to the Company's Lead Independent
Director (Mr. Jerre L. Stead, c/o Brightpoint, Inc., 501 Airtech
Parkway, Plainfield, IN 46168 or via e-mail:
board.directors@brightpoint.com).
-40-
- Oversee formal evaluation of the Board, all Board committees and the
Company's Lead Independent Director. Included is formal assessment of
individual directors. All directors will be formally evaluated prior to
consideration for re-nomination to the Board.
- Oversee formal evaluation of the Company's CEO.
- Recommend and review director compensation policies.
- Secure the services of external search firms or other experts, as
necessary and appropriate. These services will be compensated from the
Company provided Board of Directors budget. This budget system is
designed to ensure the independence of such external advisors.
- Promote the quality of directors through continuing education
experiences.
- Establish (subject to full Board approval) Board meeting dates.
- The Committee shall annually review and evaluate the Committee charter.
-41-
APPENDIX D
COMPENSATION AND HUMAN RESOURCES COMMITTEE CHARTER
The Board of Directors ("Board") of Brightpoint, Inc. ("Company" or
"Brightpoint") is committed to establishing and maintaining executive
compensation practices designed to enhance the profitability of the Company and
enhance long-term shareholder value. The Board of Directors is also centrally
interested in executive development and succession planning. Toward these aims,
the Board of Directors has established a Compensation and Human Resources
Committee. This Committee reports to the Board on executive compensation,
executive development, and executive succession matters.
MEMBERSHIP
The Committee is comprised of no less than two independent members of the Board.
Director independence is, at a minimum, consistent with applicable rules for
Nasdaq-traded issuers, Rule 16b-3 of the Securities and Exchange Act of 1934,
and Section 162(m) of the Internal Revenue Code. Specific director independence
guidelines are specified in the Company's "Corporate Governance Principles."
These guidelines may be found on the Company's web site (www.brightpoint.com).
The Committee also maintains a chair. The chair is an independent member of the
Board. The Committee chair and members serve for one year renewable terms.
MEETINGS
The Committee meets at least four times annually, and at other times as
necessary.
RESPONSIBILITIES
The Committee's responsibilities include the following:
- Approve the Compensation philosophy of the Company.
- Formulate, evaluate, and approve compensation for the Company's
officers, as defined in Section 16 of the Securities and Exchange Act of
1934 and rules and regulations promulgated therein. Compensation
policies are intended to reward executives for their contributions to
the Company's growth and profitability, recognize individual initiative,
leadership, achievement, and other valuable contributions to the
Company. An additional goal is to provide competitive compensation that
attracts and retains qualified and talented executives. Compensation
programs and policies are reviewed and approved annually. Included in
this process is establishing the goals and objectives by which executive
compensation is determined. Executive officers' performance is evaluated
in light of these performance goals and objectives. The Committee may
consult the Chief Executive Officer on the performance of other Company
executives.
- Formulate, approve, and administer cash incentives and deferred
compensation plans for executives. Cash incentive plans are based on
specific performance objectives defined in advance of approving and
administering the plan.
- Oversee and approve all compensation programs involving the issuance of
the Company's stock and other equity securities of the Company. Stock
options will be granted in accordance with applicable rules for
Nasdaq-traded issuers. Any material modifications to existing stock
option plans are also made consistent with applicable rules for
Nasdaq-traded issuers.
-42-
- Review executive supplementary benefits, as well as the Company's
retirement, benefit, and special compensation programs involving
significant cost to the Company, as necessary and appropriate.
- Review compensation for terminated executives.
- Oversee funding for all executive compensation programs.
- Review compensation practices and trends of other companies to assess
the adequacy of the Company's executive compensation programs and
policies.
- Secure the services of external compensation consultants or other
experts, as necessary and appropriate. These services will be paid from
the Company provided Board of Directors budget. This system is designed
to ensure the independence of such external advisors.
- Prepare an annual report on executive compensation for inclusion in the
Company's proxy statement for each annual meeting of shareholders.
- Approve employment contracts, severance agreements, change in control
provisions, and other compensatory arrangements with Company executives.
- Monitor compliance by Directors with the required stock ownership
requirement, as specified in the Corporate Governance Principles
(available on the Company's website: www.brightpoint.com).
- Review matters relating to executive succession and management
development. Included is a formal annual evaluation of the Company's
Chief Executive Officer. The Chief Executive Officer assists the Board
in evaluating other key executives by providing the Board with an
assessment of senior executives. Included in the Chief Executive
Officer's assessment is the potential for senior executives with regard
to succession planning.
In recognition of the importance of diversity to the success of the Company, the
Compensation and Human Resources Committee of the Board of Directors also
monitors the Company's activities and progress regarding workforce Diversity.
-43-
ANNUAL MEETING OF SHAREHOLDERS OF
BRIGHTPOINT, INC.
MAY 12, 2005
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- COMPANY NUMBER
PROXIES from any touch-tone
telephone and follow the instructions. ------------------
Have your control number and proxy ACCOUNT NUMBER
card available when you call.
------------------
- OR - CONTROL NUMBER
INTERNET - Access ------------------
"WWW.VOTEPROXY.COM" and follow the
on-screen instructions. Have your
control number available when you
access the web page.
Please detach along perforated line and mail in the envelope provided IF you are
not voting via telephone or the Internet.
--------------------------------------------------------------------------------
BRIGHTPOINT, INC.
501 AIRTECH PARKWAY
PLAINFIELD, INDIANA 46168
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 12, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints STEVEN E. FIVEL and J. MARK HOWELL,
and each of them, Proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at the Annual Meeting of
Shareholders of Brightpoint, Inc. (the "Company") on Thursday, May 12, 2005 at
9:00 a.m. local time, at the Company's office located at 501 Airtech Parkway,
Plainfield, Indiana 46168 or at any adjournment or adjournments thereof,
according to the number of votes that the undersigned would be entitled to vote
if personally present, upon the following matters:
(Continued and to be signed on reverse side)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. ELECTION OF CLASS II DIRECTORS:
[ ] FOR ALL NOMINEES NOMINEES:
( ) Robert J. Laikin
( ) Robert F. Wagner
( ) Richard W. Roedel
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES.
[ ] FOR ALL EXCEPT
(See instructions below)
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, as shown here: -
2. PROPOSAL TO RATIFY THE [ ] [ ] [ ]
APPOINTMENT OF ERNST & YOUNG FOR AGAINST ABSTAIN
LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2005
3. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES AND PROPOSALS
LISTED ABOVE.
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.
Signature Signature of
of Shareholder ___________ Date________ Shareholder _____________ Date__________
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.