There is a new SEC filing from SCO, a Schedule 14A, in which we learn that June 28 is the date for their shareholder meeting. They will vote for new directors and that's it. "No proposals have been submitted by stockholders of the Company for consideration at the Annual Meeting." The two newly nominated directors are
Omar T. Leeman and
J. Kent Millington.
Voting for directors is apparently like voting in old Russia:
At the Annual Meeting, eight directors are to be elected to serve until the next annual meeting of stockholders or until a successor for such director is elected and qualified, or until the death, resignation, or removal of such director. It is intended that the proxies will be voted for the eight nominees named below for election to the Company's Board of Directors unless authority to vote for any such nominee is withheld. Each of the nominees is currently a director of the Company, except for Omar T. Leeman and J. Kent Millington. Each person nominated for election has agreed to serve if elected, and the Board of Directors has no reason to believe that any nominee will be unavailable or will decline to serve. In the event, however, that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who is designated by the current Board of Directors to fill the vacancy. Unless otherwise instructed, the proxy holders will vote the proxies received by them "FOR" the nominees named below. The eight candidates receiving the highest number of affirmative votes of the shares entitled to vote at the Annual Meeting will be elected as directors of the Company.
There are only 8 candidates, so I believe that ensures their election. Am I missing something?
The document points out that certain shareholders, those beneficially owning more than 5% of the common stock for a year, can also suggest a candidate, but I'm thinking the odds of that happening are slim to none. I guess BayStar could do it, just for spite. The only others listed in the filing as holding more than 5% are Capital Guardian, Krevlin Advisors, and Ralph Yarro.
Darl now owns 2.6% or 481,218 shares, consisting of "7,003 shares of restricted common stock, 8,000 shares of common stock acquired in an open-market purchase, 3,615 shares of common stock acquired through our Employee Stock Purchase Plan, 100 shares of common stock, and options to purchase 462,500 shares of common stock."
Here's the information they provide on the two new shoo-in candidates:
Nominees Who Have Not Previously Served on the Board of Directors
Certain information with respect to the nominees who are not currently serving on the Board of Directors is set forth below. Omar T. Leeman was recommended to the Nominations Committee by the Company's outside counsel, and J. Kent Millington was recommended to the Nominations Committee by a non-management director.
Omar T. Leeman is President and Founder of Pinebrook Management Group, L.L.C., which provides management, sales, marketing, and strategy consulting services. From January 2001 to April 2002, Mr. Leeman was President, Chief Executive Officer, and Chairman of the Board of Talk2 Technology, Inc. From February 1983 to January 2001 Mr. Leeman worked at MCI Telecommunications, Inc. where he held several management positions, including President, MCI Business Markets. He also worked as a Regional Vice President at NEC America Inc., and held management positions at OC Tanner Company and Xerox Corporation. Mr. Leeman received a B.S. degree in Business Administration from the University of Hawaii.
J. Kent Millington is currently Entrepreneur in Residence at Utah Valley State College ("UVSC") where he teaches courses in entrepreneurship and new venture finance. Prior to joining UVSC in August 2004, he lived in Tokyo, Japan where he was Vice President of Asian Operations for Verio, Inc., a subsidiary of NTT Communications. From October 1996 to December 1997 he was President of Internet Servers Inc., a web hosting start-up that was sold to Verio in December 1997. Then he served as Vice President of the newly created Web Hosting Division of Verio until his assignment to Tokyo. From June 1993 to October 1996 he worked for EG&G, a large manufacturing and management services firm, as Business Development Director at the Idaho National Engineering Laboratory and
later as Deputy Director during the privatization of Kelly Air Force Base in San Antonio, Texas. He previously was Chief Executive Officer of two health insurance companies, owned industrial distribution companies, and was professor of entrepreneurship and finance. Mr. Millington holds a B.A. degree in History from the University of Utah, an MBA from Brigham Young University, and a Doctor of Business Administration from California Coast University.
Here is an interview with Leeman in 2001, just after he left MCI-Worldcom, where he was president of the special markets group at Worldcom. Yes, *that* Worldcom. More details here ("Leeman was president of special markets for WorldCom and president of business operations at MCI before the two firms merged.") and here.
I note there is a Litigation Oversight Committee:
In April 2004, the Board created the Litigation Oversight Committee to oversee the litigation with respect to IBM and related litigation. The Litigation Oversight Committee held meetings as necessary during fiscal year 2004. The members of the Litigation Oversight Committee are Messrs. Thompson (Committee Chair), Iacobucci and Yarro.
Just so we know who is overseeing this mess. There is one other new item:
Communications with Directors
Historically, the Company has not adopted a formal process for stockholder communications with the Board. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe our responsiveness to stockholder communications to the Board has been excellent. Nevertheless, during the upcoming year the Board or the Nominations Committee of the Board will give full consideration to the adoption of a formal process for stockholder communications with the Board and, if adopted, publish it promptly and post it to the Company's website.
There is also a section on KPMG resigning, listing all the specific items KPMG and SCO did not disagree about, as well as this sentence: "The Audit Committee has also considered whether the provision of non-audit services provided by KPMG LLP to the Company is compatible with maintaining their independence and has discussed with the auditors such auditors' independence." And we also find out how much SCO had to pay them to straighten out the books for 2003 and 2004. It's a lot of money.
J. Fred Skousen is leaving the board, and that means someone will need to replace him on the Audit Committe. Yup. That was one of his assignments. He was also Chair of the Nominations Committe, which oversees "corporate governance and director nominations"
And they let us know all the bonuses their executives are being paid for running this company into the ground:
(2) Mr. McBride was hired as our President and Chief Executive Officer in June 2002. With respect to 200,000 options issued to Mr. McBride during fiscal year 2002, vesting commences five years after
the date of grant, subject to acceleration of vesting if certain performance objectives are achieved. One such objective was our becoming profitable before the fourth quarter of fiscal year 2003, which in fact occurred. Accordingly, Mr. McBride is now vested as to 50,000 shares related to such grant. The bonus of $35,000 earned by Mr. McBride in fiscal year 2004 was paid during fiscal year 2005. Of the $755,278 bonus earned by Mr. McBride in fiscal year 2003, $480,134 was paid during fiscal year 2003 and the remaining $275,144 was paid during fiscal year 2004.
Mr. Young was hired as the Company's Chief Financial Officer in April 2004. The bonus of $30,000 earned by Mr. Young in fiscal year 2004 was paid during fiscal year 2005.
Mr. Sontag was hired as the Company's Senior Vice President and General Manager, SCOsource, in September 2002. The bonus of $20,000 earned by Mr. Sontag in fiscal year 2004 was paid during fiscal year 2005. Of the $281,746 bonus earned by Mr. Sontag in fiscal year 2003, $181,590 was paid during fiscal year 2003 and the remaining $100,156 was paid during fiscal year 2004.
Of the $133,981 in commission earned by Mr. Hunsaker in fiscal year 2004, $82,177 was paid during fiscal year 2004 and the remaining $51,804 was paid during fiscal year 2005. Of the $95,932 commission earned by Mr. Hunsaker in fiscal year 2003, $76,820 was paid during fiscal year 2003 and the remaining $19,112 was paid during fiscal year 2004.
Mr. Tibbitts was hired as our General Counsel in June 2003 and became the Corporate Secretary in September 2003. The bonus of $50,000 earned by Mr. Tibbitts in fiscal year 2004 was paid during fiscal year 2005. Of the $13,500 bonus earned by Mr. Tibbitts in fiscal year 2003, $7,500 was paid during fiscal year 2003. The remaining $6,000 was paid during fiscal year 2004.
Then there is the list of their option grants. There is, of course, a Compensation Committee, and here's what it can do, on top of the standard option grants: "The Compensation Committee also has the authority to make discretionary option grants to the Company's executive officers under the 1999, 2002 and 2004 Omnibus Stock Incentive Plans." Also, there are quarterly and annual performance "performance awards". I wonder how they define "performance"? Oh, don't forget the "equity incentives".
Say, is this starting to remind you of the old Canopy Group, in its wilder days?