Termination of the Deferred Compensation Plan...
I was surprised to read in this quarter's 10Q that the deferred compensation plan was terminated. I wondered if this was a tea-leaf that foreshadowed some future change in control event that might be precipitated by the recent Becker/Drapkin investment. But, after reading the company's history regarding the plan, termination made sense.
In 1996, the Deferred Compensation Plan was designed to provide a select group of management or highly compensated employees and Directors with the opportunity to defer up to 100% of their base compensation and bonuses earned. The Company made certain matching contributions, a portion of which was to be in the form of options to purchase the Company's common stock granted from the 1996 Incentive Stock Option Plan and a portion in shares of the Company's common stock, subject to vesting provisions.
After the heady days of the dot.com era, the matching funds from the company were limited to an annual maximum of $12,500 and the cash contributed by the company was invested in Company common stock. The company's contribution became vested in a step-wise schedule, not becoming fully vested until after 5 years employment had past.
The deferred compensation plan was rewritten in 2009 (as detailed in the 10K submitted in March 2009). Importantly, the company no longer matched employee contributions after March, 2009. Vesting of past contributions still applied and some contributions would not be completely vested until the end of 2013.
Not surprisingly, when the company matching funds were stopped, directors and employees no longer elected to defer their salaries and fees. Consequently, now that all of the past contributions have vested, it became time to terminate the program for lack of interest.
