SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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SYNCHRONOSS TECHNOLOGIES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

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Dear Stockholder:

 

I am pleased to invite you to our 2011 Annual Meeting of Stockholders, which will be held on May 10, 2011, at 10:00 a.m. (local time), at the Offices of Synchronoss Technologies, Inc., 750 Route 202 South, Suite 600, Bridgewater, New Jersey.

 

At the meeting, we will be electing one member of our Board of Directors, ratifying the appointment of Ernst & Young LLP as our independent registered public accountants for the 2011 fiscal year, approving an amendment to the Company’s 2006 Equity Incentive Plan, holding an advisory vote on executive compensation, holding an advisory vote on the frequency of conducting an advisory vote on executive compensation and to act upon such other matters as may properly come before the meeting or any adjournments or postponements thereof.

 

Enclosed are the following:

 

 

We encourage you to read these materials carefully.

 

It is important that your shares be represented and voted at the meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY OR VOTING INSTRUCTION CARD IN THE PRE-ADDRESSED ENVELOPE PROVIDED, OR VOTE VIA THE INTERNET ACCORDING TO THE INSTRUCTIONS IN THE PROXY STATEMENT, AS SOON AS POSSIBLE TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED AND VOTED AT THE ANNUAL MEETING. If you attend the Annual Meeting, you may vote your shares in person even though you have previously voted by proxy if you follow the instructions in the Proxy Statement. As discussed in the Proxy Statement, returning the proxy or voting instruction card does not deprive you of your right to attend the Annual Meeting.

 

If you have any questions concerning the annual meeting or the proposals, please contact our Investor Relations department at (800) 575-7606. For questions regarding your stock ownership or voting, you may contact our transfer agent, American Stock Transfer & Trust Co., by e-mail through their website at www.amstock.com or by phone at (800) 937-8124 (within the U.S. and Canada) or (718) 921-8124 (outside the U.S. and Canada).

 

On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the affairs of Synchronoss Technologies.

 

Sincerely,

 

 

Stephen G. Waldis

Chairman of the Board

 

Bridgewater, New Jersey

April 1, 2011

 

The use of cameras at the Annual Meeting is prohibited and they will not be allowed into the meeting or any other related areas, except by credentialed media. We realize that many cellular phones have built-in digital cameras, and while these phones may be brought into the venue, the camera function may not be used at any time.

 

SYNCHRONOSS TECHNOLOGIES, INC.

750 Route 202 South, Suite 600

Bridgewater, New Jersey 08807

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be Held on May 10, 2011

 

To the Stockholders:

 

You are cordially invited to attend the Annual Meeting of Stockholders of Synchronoss Technologies, Inc., a Delaware corporation. The meeting will be held at the Offices of the Company, 750 Route 202 South, Suite 600, Bridgewater, New Jersey, on May 10, 2011, at 10:00 a.m. (local time) for the following purposes:

 

1. To elect one member of the Company’s Board of Directors to serve until the 2014 annual meeting of stockholders of the Company;

 

2. To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for its fiscal year ended December 31, 2011;

 

3. To approve an amendment to the Company’s 2006 Equity Incentive Plan to increase the aggregate number of shares authorized for issuance under such plan by 3,000,000 shares of the Company’s Common Stock;

 

4. To hold an advisory vote on executive compensation;

 

5. To hold an advisory vote on the frequency of having an advisory vote on executive compensation; and

 

6. To act upon such other matters as may properly come before the meeting or any adjournments or postponements thereof.

 

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only stockholders of record at the close of business on March 15, 2011 are entitled to vote at the Annual Meeting and at any adjournments or postponements of the meeting. The stock transfer books will not be closed between the record date and the date of the Annual Meeting. A list of stockholders entitled to vote at the meeting will be available for inspection at Synchronoss’ principal executive offices at the address listed above for the ten-day period prior to the Annual Meeting.

 

By order of the Board of Directors

 

 

Ronald J. Prague

Secretary

 

Bridgewater, New Jersey

April 1, 2011

 

Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be held on May 10, 2011

 

The proxy statement and annual report to stockholders and the means to vote by Internet are available at www.synchronoss.com.

 

 

 

 

 

TABLE OF CONTENTS

 

SYNCHRONOSS TECHNOLOGIES, INC.

750 Route 202 South, Suite 600

Bridgewater, New Jersey 08807

 

PROXY STATEMENT

FOR THE

2011 ANNUAL MEETING OF STOCKHOLDERS

MAY 10, 2011

 

Why am I receiving these materials?

 

We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors of Synchronoss Technologies, Inc., a Delaware corporation (sometimes referred to as the “Company” or “Synchronoss”), is soliciting your proxy to vote at the 2011 Annual Meeting of Stockholders (the “Annual Meeting”). You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy on the Internet. The Company intends to mail this Proxy Statement and accompanying proxy card on or about April 1, 2011 to all stockholders of record entitled to vote at the Annual Meeting.

 

Who can vote at the Annual Meeting?

 

Only stockholders of record at the close of business on March 15, 2011 will be entitled to vote at the Annual Meeting. On this record date, there were 37,581,401 shares of common stock of the Company (“Common Stock”) outstanding. All of these outstanding shares are entitled to vote at the Annual Meeting (one vote per share of Common Stock) in connection with the matters set forth in this Proxy Statement. A list of stockholders entitled to vote at the Annual Meeting will be available for inspection at Synchronoss’ principal executive offices at 750 Route 202 South, Suite 600, Bridgewater, New Jersey for the ten-day period prior to the Annual Meeting.

 

Stockholder of Record: Shares Registered in Your Name

 

If on March 15, 2011 your shares were registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, then you are a stockholder of record and may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy on the Internet as instructed below to ensure your vote is counted.

 

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

 

If on March 15, 2011 your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

What am I voting on?

 

At the Annual Meeting, there are five matters scheduled for a vote of the stockholders:

 

 

How do I vote?

 

You may either vote “For” the nominee to the Board of Directors or you may “Withhold” your vote for the nominee you specify. For the advisory vote on the frequency of the vote on the compensation of our named executive officers, you may vote on the preferred frequency by choosing the option of “one year, “two years”, “three years” or abstaining from voting. For the other matters to be voted on, you may vote “For” or “Against” or abstain from voting. The procedures for voting are fairly simple:

 

Stockholder of Record: Shares Registered in Your Name

 

If you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card or vote by proxy on the Internet. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted. You may vote in person at the Annual Meeting only if you bring a form of personal picture identification with you. You may deliver your completed proxy card in person or you may vote by completing a ballot, which will be available at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted.

 

 

 

 

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

 

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received instructions for granting proxies with these proxy materials from that organization rather than from the Company. A number of brokers and banks participate in a program provided through Broadridge Financial Services which enables beneficial holders to grant proxies to vote shares via telephone or the Internet. If your shares are held by a broker or bank that participates in the Broadridge program, you may grant a proxy to vote those shares telephonically by calling the telephone number on the instructions received from your broker or bank, or via the Internet at Broadridge’s website at www.proxyvote.com. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

 

How many votes do I have?

 

On each matter to be voted upon, you have one vote for each share of Common Stock you own as of March 15, 2011.

 

What if I return a proxy card but do not make specific voting selections?

 

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “For” the election of Thomas J. Hopkins as a member of the Company’s Board of Directors, “For” the ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for its fiscal year ended December 31, 2011, “For” the amendment to the Company’s 2006 Equity Incentive Plan, “For” the approval of the compensation of the Company’s named executive officers, and “one year” as the frequency of an advisory vote on executive compensation. If any other matter is properly presented at the Annual Meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his best judgment.

 

Can I change my vote after submitting my proxy?

 

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:

 

 

Who is paying for this proxy solicitation?

 

We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

 

What if I share an address with another stockholder?

 

A number of brokers with account holders who are Synchronoss stockholders will be “householding” our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to

participate in “householding” and would prefer to receive a separate proxy statement and annual report, please notify your broker and direct your written request to Synchronoss Technologies, Inc., 750 Route 202 South, Suite 600, Bridgewater, NJ 08807 Attn: Secretary or contact Ronald J. Prague, Secretary at (866) 620-3940. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should contact their broker.

 

What does it mean if I receive more than one proxy card?

 

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.

 

How are votes counted?

 

Each share of Common Stock is entitled to one vote. Votes will be counted by the inspector of election appointed for the Annual Meeting. Prior to the Annual Meeting, the inspector will sign an oath to perform his or her duties in an impartial manner and according to the best of his or her ability. The inspector will determine the shares of Common Stock represented at the Annual Meeting and the validity of proxies and ballots, count all votes and ballots, and perform certain other duties. The determination of the inspector as to the validity of proxies will be final and binding.

 

What vote is required to approve each proposal?

 

 

 

If there are insufficient votes to approve any of the above matters, your proxy may be voted by the persons named in the proxy to adjourn the Annual Meeting in order to solicit additional proxies in favor of the approval of such proposals. If the Annual Meeting is adjourned for any purpose, at any subsequent reconvening of the meeting, your proxy will be voted in the same manner as it would have been voted at the original convening of the Annual Meeting unless you revoke or withdraw your proxy. Your proxy may be voted in this manner even though it may have been voted on the same or any other matter at a previous session of the Annual Meeting.

 

What is the quorum requirement?

 

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of the voting power of all outstanding shares are represented by stockholders present at the Annual Meeting or by proxy. On the record date, there were 37,581,401 shares of Common Stock outstanding and entitled to vote. Thus, 18,790,701 shares must be represented by stockholders present at the Annual Meeting or by proxy to have a quorum.

 

Your shares will be counted towards the quorum only if you submit a valid proxy vote (or one is submitted on your behalf by your broker, bank or other agent) or vote at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.

 

How can I find out the results of the voting at the Annual Meeting?

 

Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K to be filed by the Company with the SEC no later than four (4) business days after the Annual Meeting.

 

Voting Confidentiality

 

Proxies, ballots and voting tabulations are handled on a confidential basis to protect your voting privacy. This information will not be disclosed, except as required by law.

 

When are stockholder proposals due for next year’s Annual Meeting?

 

If you wish to submit a proposal for inclusion in next year’s proxy materials or nominate a director, your proposal must be in proper form according to SEC Regulation 14A and Rule 14a-8, in conformance with the Company’s By-laws and submitted in writing to Synchronoss Technologies, Inc., 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807, Attn: Secretary to be received no later than the close of business on December 15, 2011. If you wish to submit a proposal to be presented at the 2012 Annual Meeting of Stockholders but which will not be included in the Company’s proxy materials, your proposal must be submitted in writing and in conformance with our Bylaws to Synchronoss Technologies, Inc., 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807, Attn: Secretary not before January 29, 2012 and no later than February 28, 2012. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included. You are advised to review the Company’s By-laws, which contain additional requirements about advance notice of stockholder proposals and director nominations. You may obtain a copy of the Company’s By-laws by writing to Synchronoss Technologies, Inc., 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807, Attn: Secretary.

 

Corporate Governance

 

We have adopted Corporate Governance Guidelines which set forth the framework within which our Board of Directors, or our Board assisted by its Committees, directs the affairs of the Company. The Guidelines address, among other things, the composition and functions of the Board, director independence, management succession and review, Board Committees, and selection of new Directors. The Board regularly reviews legal and regulatory requirements, evolving best practices, and other developments and may modify the Corporate Governance Guidelines from time to time as it deems appropriate. The Guidelines, together with our Code of Business Conduct and charter for each of the Committees of our Board are available on the investor page of our website at www.synchronoss.com.

 

Code of Business Conduct.  We have also adopted a code of business conduct that applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions) and directors. The full text of our code of business conduct is posted on our website at www.synchronoss.com. If we make any substantive amendments to the code of business conduct or grant any waiver from a provision of the code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.

 

Leadership Structure.  Our Board gives careful consideration to separating the roles of Chairman and Chief Executive Officer and has determined that the Company and its stockholders are best served by having Mr. Waldis, one of the Company’s founders, serve as both Chairman and Chief Executive Officer. Mr. Waldis’ combined role as Chairman and Chief Executive Officer promotes unified leadership and direction for the Board and executive management and it allows for a single, clear focus for the chain of command to execute our Company’s strategic initiatives and business plans. As the individual with primary responsibility for managing the Company’s day-to-day operations and with in-depth knowledge and understanding of the Company, Mr. Waldis is best positioned to chair regular Board meetings as we discuss key business and strategic issues.

 

Independence of our Board of Directors.  As required under the Nasdaq Global Market (“Nasdaq”) listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Our Board consults with our counsel to ensure that its determinations are consistent with all relevant laws and regulations regarding the definition of independent, including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time. Consistent with those considerations, after review of all relevant transactions or relationships between each director, or any of his family members, and us, our senior management and our independent registered public accounting firm, our Board has affirmatively determined that all of our directors are independent directors within the meaning of the applicable Nasdaq listing standards except for Stephen G. Waldis and James M. McCormick. Our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. Mr. Cadogan presides over these executive sessions. Stockholders interested in communicating with the independent directors regarding their concerns or issues may address correspondence to a director, or to the independent directors generally, in care of Synchronoss Technologies, Inc. at 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807, Attn: Secretary. Our Secretary has the authority to disregard any inappropriate communications or to take other appropriate actions with respect to any inappropriate communications. If deemed an appropriate communication, the Secretary will forward it, depending on the subject matter, to the chairperson of a Committee of our Board or a particular director, as appropriate.

 

Board’s Role in Risk Oversight.  Our Board, acting directly or through its Committees, is responsible for the oversight of risks facing the Company. Our Board has delegated its Audit Committee, through its charter, the primary responsibility for discussing guidelines and policies governing the process by which our management and other persons responsible for risk management assess and manage our exposure to major financial risk exposures and the steps management has taken to monitor and control such exposures, based on consultation with our management and independent auditors. In addition, the Board has delegated to other Committees the oversight of risks within their areas of responsibility and expertise. For example, its

Compensation Committee oversees the risks associated with our compensation practices, including an annual review of our risks assessment of our compensation policies and practices for our employees, and its Audit Committee reviews annually the audit plan of management audit, our information technology risks and mitigation strategies, the tax function and treasury operations. Our Board also believe its oversight of risk is enhanced by the current leadership structure discussed above because our Chief Executive Officer, who is ultimately responsible for our management of risk, also chairs regular Board meetings, and with his in-depth knowledge and understanding of the Company, is best able to bring key business issues and risks to our Board’s attention.

 

Board Self-Evaluation.  Our Board has established a bi-annual self-evaluation process to analyze and review their performance. Our Board reviews such results with the intention to utilize them to enhance their effectiveness.

 

Stockholders may communicate with our Board of Directors by sending a letter to Synchronoss Technologies, Inc., 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807, Attention: Secretary. Each such communication should set forth (i) the name and address of such stockholder as they appear on our books and, if the shares of our Common Stock are held by a nominee, the name and address of the beneficial owner of such shares and (ii) the number of shares of our Common Stock that are owned of record by such record holder and beneficially by such beneficial owner. The Secretary will review all communications from stockholders and regularly forward to our Board of Directors all correspondence that, in his opinion, deals with the functions of our Board of Directors or committees thereof, or that he otherwise determines to be appropriate for their attention.

 

There are currently six members of the Board of Directors:

 

William J. Cadogan

Charles E. Hoffman

Thomas J. Hopkins

James M. McCormick

Donnie M. Moore

Stephen G. Waldis

 

Meetings.  During 2010, our Board of Directors held five regular meetings and eight special meetings. Each director attended at least 75% of the meetings of our Board and of each Committee of which he served as a member during the period in which he served. Each director attended our 2010 Annual Meeting of Stockholders.

 

Board Structure and Committees.  Our Board of Directors has established an Audit Committee, a Compensation Committee, a Business Development Committee and a Nominating/Corporate Governance Committee. Our Board has delegated various responsibilities and authority to its Committees as generally described below. Our Board has determined that each member of our Audit, Compensation, Business Development and Nominating/Corporate Governance Committees is free of any relationship that would

interfere with his individual exercise of independent judgment with regard to us. The following table provides membership and meeting information for each of our Board committees during 2010:

 

 

 

 

Audit Committee.  Our Audit Committee of our Board oversees the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, and the qualifications, independence, and performance of the Company’s independent registered public accounting firm. Our Audit Committee also consults with our management and our independent registered public accounting firm prior to the presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. In addition, our Audit Committee:

 

 

Three directors comprise our Audit Committee:  Thomas J. Hopkins, William J. Cadogan and Donnie M. Moore. Our Audit Committee met seven times during 2010. Our Board annually reviews the Nasdaq listing standards definition of independence for Audit Committee members and has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(a)(2) and 5605(c)(2) of the Nasdaq listing standards). In addition to qualifying as independent under the Nasdaq rules, each member of our Audit Committee can read and has an understanding of fundamental financial statements. Our Board has determined that Donnie M. Moore, Chairman of the Audit Committee, and Thomas J. Hopkins are audit committee financial experts as defined by Item 407(d) of Regulation S-K of the Exchange Act. Our Board made a qualitative assessment of Messrs. Hopkins’ and Moore’s level of knowledge and experience based on a number of factors, including his respective formal education and experience. The designation does not impose on Messrs. Hopkins or Moore any duties, obligations or liability that are greater than are generally imposed on them as members of our Audit Committee and our Board, and their designation as Audit Committee financial experts pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of our Audit Committee or Board. Our Audit Committee charter can be found on the Investor Relations section of our website at www.synchronoss.com.

Compensation Committee.  Our Compensation Committee of our Board is comprised of three directors, William J. Cadogan, Charles E. Hoffman and Thomas J. Hopkins, each of whom are independent (as currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). Our Compensation Committee, which met seven times during 2010, is charged with the responsibility by our Board for:

 

 

A more detailed description of our Compensation Committee’s functions can be found in our Compensation Committee charter. The charter can be found on the Investor Relations section of our website at www.synchronoss.com.

 

Our Compensation Committee has also established a Key Employee Stock Options Committee whose purpose is to approve stock option grants to our newly hired employees subject to guidelines previously approved by our Compensation Committee. Our Compensation Committee appointed our Chief Executive Officer, Stephen G. Waldis, as the sole member of this Committee. Our Key Employee Stock Options Committee acted twelve times in 2010.

 

Our Compensation Committee retained Radford, a human relations firm and a division of AON Hewitt (“Radford”), as its independent compensation consultant in 2009 and continues to use the firm’s services. The compensation consultant serves at the pleasure of our Compensation Committee, and the compensation consultant’s fees are approved by our Compensation Committee. During 2010, Radford performed no services for us other than its services to our Compensation Committee and received no compensation from the Company other than its fees in connection with its retention as our Compensation Committee’s compensation consultant.

 

Compensation Committee Interlocks and Insider Participation.  None of the members of our Compensation Committee was at any time during the 2010 fiscal year an officer or employee of ours. No executive officer serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee. In 2010, we did not make any loans to directors or executive officers relating to purchases of our Common Stock or for any other purpose.

 

Nominating/Corporate Governance Committee.  The members of our Nominating/Corporate Governance Committee are William J. Cadogan, Charles E. Hoffman and Donnie M. Moore. Our Nominating/Corporate Governance Committee met once and acted once by unanimous written consent in 2010. All members of our Nominating/Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). In addition our Nominating/Corporate Governance Committee:

 

 

 

Our Nominating/Corporate Governance Committee charter can be found on the Investor Relations section of our website at www.synchronoss.com. Our Nominating/Corporate Governance Committee also reviews and makes recommendations to our Board regarding the size and composition of our Board and the appropriate qualities and skills required of our directors in the context of the then current make-up of our Board. The Committee has established procedures for the nomination process and leads the search for, selects and recommends candidates for election to our Board. Consideration of new director candidates typically involves a series of Committee discussions, the review of information concerning candidates and interviews with selected candidates. Candidates for nomination to our Board typically have been suggested by other members of our Board or by our executive officers. From time to time, our Nominating/Corporate Governance Committee may engage the services of a third-party search firm to identify director candidates. Our Nominating/Corporate Governance Committee also considers candidates proposed in writing by stockholders, provided such proposal meets the eligibility requirements for submitting stockholder proposals for inclusion in our next proxy statement and is accompanied by certain required information about the candidate. Candidates proposed by stockholders will be evaluated by our Nominating/Corporate Governance Committee using the same criteria as for all other candidates. In considering nominees for our Board, our Nominating/Corporate Governance Committee considers each candidate’s independence, personal and professional integrity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment and ability to serve our stockholders’ long-term interests. These factors, and others as considered useful by our Nominating/Corporate Governance Committee, are reviewed in the context of an assessment of the perceived needs of our Board at a particular point in time. As a result, the priorities and emphasis of our Nominating/Corporate Governance Committee and of our Board may change from time to time to take into account changes in business and other trends, and the portfolio of skills and experience of current and prospective directors. Although our Nominating/Corporate Governance Committee has not adopted a formal policy regarding the consideration of diversity in identifying director nominees, in searching for new directors, it does have several initiatives in an attempt to attract diverse candidates.

 

Business Development Committee.  The Business Development Committee of our Board reviews certain strategic business development and growth opportunities and recommends those that it determines are in line with our short term and long term strategic goals. Our Business Development Committee charter can be found on the Investor Relations section of our website at www.synchronoss.com. The members of our Business Development Committee are William J. Cadogan, Thomas J. Hopkins and Stephen G. Waldis. All members of our Business Development Committee other than Mr. Waldis are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). Our Business Development Committee met seven times during 2010.

 

This section provides information regarding the compensation policies for non-employee directors and amounts paid and securities awarded to these directors in 2010. Any director who is an employee of the Company does not receive any additional compensation for their service as a director.

 

Our Compensation Committee of our Board also engaged Radford to conduct a study to assess our non-employee director compensation practices and policies. Radford reviewed the compensation paid to our non-employee directors relative to market practices and our peer group companies, which are set forth below in the section entitled “Compensation Discussion & Analysis.” Based on this review, Radford advised us that the average of $54,500 paid to our non-employee directors in 2009 was between the 50th and 75th percentile of that paid at our peer group companies. However, annual equity compensation and resulting total compensation to the non-employee directors was below the 50th percentile of our peer group companies. Our Board, in considering Radford’s study, current market conditions and total compensation paid to non-employee directors

at our peer group companies, amended our non-employee director compensation program, effective as of January 1, 2010, as follows:

 

 

The annual retainer fees are paid to our directors in advance in four quarterly payments on or about the first day of each calendar quarter and the meeting fees for our Business Development Committee were paid at the end of each quarter. All of the annual equity grants to non-employee directors under our director compensation program are automatically granted on the first Tuesday of every year, and the options have an exercise price equal to the closing price reported on NASDAQ of our Common Stock on the date of the award. In addition, we currently have a policy to reimburse directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at Board of Directors and Committee meetings.

 

The following table sets forth all of the compensation awarded to, earned by, or paid to each person who served as a director during 2010, other than a director who is also an employee.

 

 

 

 

 

In 2009, we established stock ownership guidelines for our directors. The purpose of these guidelines is to place limitations on the number of shares of our Common Stock that a director may sell in any given year, based on established target share ownership levels. Under our guidelines, the target share ownership levels for directors are a number of shares having a value equal to one times the annual cash retainer for our directors. The number of shares and vested options needed to be owned is calculated annually based on the closing sales price of our Common Stock on Nasdaq for the last trading day in the prior year. Each of the directors has three years from the date the stock ownership guidelines were established or, for future directors, three years from his or her election to our Board, to achieve their targeted equity ownership level. By limiting the number of shares a director is able to sell, these guidelines are intended to increase directors’ equity stake in the Company in an effort to align their interests more closely with those of our stockholders. From time to time, we review these guidelines based on market conditions, our peer companies and other considerations to determine whether they should be revised. Under our trading policy, we prohibit all hedging or “short sales” involving our securities by our employees, including our directors.

 

We have entered into indemnification agreements with each of our directors. The form of agreement provides that we will indemnify each of our directors against any and all expenses incurred by that director because of his or her status as one of our directors, to the fullest extent permitted by Delaware law, our restated certificate of incorporation and amended and restated bylaws. In addition, the form agreement provides that, to the fullest extent permitted by Delaware law, but subject to various exceptions, we will advance all expenses incurred by our directors in connection with a legal proceeding.

 

Our restated certificate of incorporation and amended and restated bylaws contain provisions relating to the limitation of liability and indemnification of directors. The restated certificate of incorporation provides

that our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability:

 

 

Our restated certificate of incorporation also provides that if Delaware law is amended, after the approval by our stockholders of our restated certificate of incorporation, to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law. The foregoing provisions of the restated certificate of incorporation are not intended to limit the liability of directors or officers for any violation of applicable federal securities laws. As permitted by Section 145 of the Delaware General Corporation Law, our restated certificate of incorporation provides that we may indemnify our directors to the fullest extent permitted by Delaware law and the restated certificate of incorporation provisions relating to indemnity may not be retroactively repealed or modified so as to adversely affect the protection of our directors.

 

In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws provide that we are authorized to enter into indemnification agreements with our directors and officers and we are authorized to purchase directors’ and officers’ liability insurance, which we currently maintain to cover our directors and executive officers.

 

This section discusses the principles underlying our executive compensation policies, our recent decisions with respect to the executive officers who are named in the “Summary Compensation Table”, referred to herein as our “named executive officers”, and the most important factors relevant to an analysis of these decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and places in perspective the data presented in the tables and other quantitative information that follows this section.

 

Executive Summary

 

The following provides a brief overview of the more detailed disclosure set forth in this Compensation Discussion and Analysis:

 

 

 

Compensation Objectives and Pay-for-Performance Philosophy

 

As a provider of on-demand transaction management platforms, we operate in an extremely competitive and rapidly changing industry. We believe that the skill, talent, judgment and dedication of our executive officers and other key employees are critical factors affecting our long-term stockholder value. Therefore, our executive compensation program has several objectives:

 

 

We seek to achieve these objectives by:

 

 

We believe that the skill, talent, judgment and dedication of our executive officers are critical factors affecting our long-term value. Therefore, our goal is to maintain an executive compensation program that will

retain and attract qualified executives who are able to contribute to our long-term success and motivate them to a high level of performance.

 

Role of Compensation Committee

 

Our Compensation Committee of our Board oversees our compensation program for all employees, and approves the form and amount of all employees’ salary, bonus and equity-based compensation, including those of our executive officers. It also oversees the administration of our cash and equity-based incentive plans, and from time to time addresses other compensation matters. Our Compensation Committee is comprised of three non-employee members of our Board. Our Compensation Committee meetings typically have included, for all or a portion of each meeting, not only the committee members but also our Chief Executive Officer, Chief Financial Officer and General Counsel, in his capacity as Secretary of our Compensation Committee, although none participate in the determination of his own compensation or the compensation of directors. In addition, from time to time, our Compensation Committee meets in executive session. Mr. Waldis assesses the performance of our executive officers, consults with other members of management and makes recommendations to our Compensation Committee regarding the amount and the form of the compensation of the other executive officers and key employees, including the performance goals and weighting and equity compensation awards of executive officers. Mr. Waldis often participates in our Compensation Committee’s deliberations about the compensation of our named executive officers (other than himself). Our Compensation Committee typically discusses Mr. Waldis’ compensation with him but always makes decisions regarding his compensation when he is not present. Our Compensation Committee generally considers input from its compensation consultant before making major decisions. Other than as set forth above, no other executive officers participate in the determination of the amount or form of the compensation of named executive officers or directors.

 

Role of Compensation Consultant

 

Our Compensation Committee has the authority under its charter to select and retain, and is directly responsible for the appointment, compensation and oversight of, compensation consultants or any other third party it retains to assist in the evaluation of director and officer compensation as well as any other compensation matters. In 2009 and 2010, our Compensation Committee engaged Radford as its independent compensation consultant. During 2010, Radford reviewed and advised on all principal aspects of our executive officer compensation program and performed the following services:

 

 

Our Compensation Committee considers these analyses as one factor in making decisions with respect to compensation matters along with information it receives from management and its own judgment and experience. Radford generally attends regular Compensation Committee meetings and meets with our Compensation Committee and its members without management present.

 

In order to accomplish the objective of providing competitive total compensation, we, in consultation with Radford, annually compare our executive officer compensation program, including base salary, total cash compensation and equity awards, with compensation paid by a peer group of technology companies selected

by our Compensation Committee. In 2010, our Compensation Committee used the following as our peer group companies:

 

 

In selecting our peer group companies, our Compensation Committee and Radford analyzed various factors such as geography, revenue, employee headcount, market capitalization, product candidate pipeline, year-over-year growth and focus. Based on these criteria, the following companies were removed from the peer group companies used in 2009: Cbeyond, Inc., iPass, Inc., Omniture, Inc., Openwave Systems, Inc., Riverbed Technology, Inc., Shutterfly, Inc., Diamond Management & Technology Consultants, and Unica Corporation; and the following companies were added in 2010: CommVault Systems, Inc., NetSuite, Inc., Sourcefire, Inc., Success Factors, Inc. and Websense Security, Inc. We believe the 2010 peer group companies represent competition for our executive talent.

 

When establishing and adjusting the base salary, total cash compensation and equity awards for our executive officers, we have traditionally elected to set our respective executive officers’ salaries, bonuses and equity holdings at a level that we believe is competitive with executive officers with similar roles at our peer group companies. Typically, our Compensation Committee’s goal is to provide overall compensation generally in alignment with the market competitive pay practices at our peer group companies when targeted levels of performance are achieved as determined by the annual operating plan approved by our Board, however, from time to time, our Compensation Committee may use other benchmarks to determine executive compensation as it deems appropriate. In instances where an executive officer is uniquely key to our success, our Compensation Committee may provide compensation above this established benchmark. Our Compensation Committee’s choice of using, among other things, the competitive overall compensation of these peer group companies as its benchmark for compensation reflects our consideration of stockholders’ interests in paying what is necessary, but not significantly more than necessary, to achieve our corporate goals while conserving cash and equity as much as is practicable.

 

Our executive compensation program has the following principal elements: base salary, annual cash incentive bonus, and long-term incentive equity compensation. In addition, each of our named executive officers, and certain of our other key employees have certain contractual benefits in the event the executive’s employment is involuntarily terminated under certain circumstances. The primary purposes of our principal elements are as follows: (i) the base salary component is designed to attract executives, reward satisfactory performance and provide a minimum, fixed level of cash compensation; (ii) the annual cash incentive bonus component is tied to our overall performance and an individual executive’s contribution to our broader goals for the current fiscal year; and (iii) the long-term incentive equity component is designed to retain key executives and align their ownership interests with our long-term success and increased stockholder value. The termination-related benefits are designed to keep our executives’ attention focused on the business of the Company notwithstanding the possibility that their employment could be terminated at any time, including in the event of an acquisition of the Company. In addition to these compensation elements, our executives also participate in various benefit plans that are generally available to our salaried employees. In 2008, our stockholders also approved an employee stock purchase plan which we may implement in the future

 

Our Compensation Committee’s current intent is to perform at least annually a strategic review of our executive officers’ base salary, annual cash incentive bonus and restricted stock and option holdings to determine whether they provide appropriate incentives and motivation to our executive officers. Our Chief Executive Officer, as the manager of the members of the executive team, assesses our overall performance and

the executives’ achievements over the year against their individual goals, and makes a recommendation to our Compensation Committee with respect to any merit increase in salary, cash incentive bonus and stock option and restricted stock grants for each member of our executive team, other than himself. Our Compensation Committee meets to evaluate, discuss and modify or approve these recommendations, and to conduct a similar evaluation of our Chief Executive Officer’s contributions to corporate goals and achievement of individual goals.

 

We view all of the components of our executive compensation as related but distinct. Although our Compensation Committee does review total compensation, we do not believe that significant compensation derived from one component of compensation should negate or reduce compensation from other components. We determine the appropriate level for each compensation component based in part, but not exclusively, on our view of internal equity and consistency, and other factors we deem relevant, such as the executive’s contribution to our overall success. We believe that, as is common with our peer group companies, equity awards are equal in importance to base salary and annual cash incentive bonus considerations.

 

Base Salary.  We fix the base salary of each of our executives at a level we believe enables us to retain and hire individuals in the competitive environment in which our business exists. In general, the base salary of our executives is determined by evaluating the executive’s responsibilities, experience, length of services with us, individual performance during the prior year and their respective impact on our financial and operational results. We believe that base salaries should compensate the executives for the performance of their day-to-day responsibilities. We also take into account the base salaries paid by our peer group companies and the base salaries of other private and public companies with which we believe we compete for executive talent. Our Compensation Committee typically reviews executive salaries annually and makes salary adjustments based on changes in the executive’s responsibility and performance, our overall financial and operational results, our budget for salary increases, and the current competitive marketplace and economy. The budget is designed to allow salary increases to retain and motivate successful performers while maintaining affordability with our budget and business plan.

 

In setting 2010 compensation for our executive officers, our Compensation Committee, in consultation with Radford, reviewed the base salaries of our executive officers and analyzed various publicly available data and information on the base salary and total compensation paid to executive officers at various companies, including the Company’s peer group companies. Our Compensation Committee observed that our executive officers’ base salary was on average below the 50th percentile of base salaries of executive officers at our peer group companies. Based in part on its review of the foregoing peer group company data, and its view of our improved business outlook for 2010 and the fact that we did not increase the base salary of any of our named executive officers during 2009, our Compensation Committee increased the base salaries of our named executive officers (other than Messrs. Putnam and Mulica) by an average of 6%. As part of its restructuring of Mr. Putnam’s total compensation, our Compensation Committee increased his salary from $180,000 to $230,000 and restructured his commission structure, as more fully described below. Since Mr. Mulica joined the Company in July 2010 in connection with our acquisition of FusionOne, our Compensation Committee did not increase his base salary.

 

Annual Cash Incentive Bonus.  At the beginning of each year, including 2010, our Compensation Committee adopts an annual executive officer performance incentive compensation plan. The purpose of this plan is to motivate our executive officers to achieve our revenue, operating income and key strategic and operating goals that we expect to increase long-term stockholder value, as well as for their individual achievements. The performance metrics against which the executive officers are measured include both corporate and individual goals. Our Compensation Committee measures our performance against our specific performance goals established at the beginning of the fiscal year in determining the amount of each executive officer’s cash incentive bonus.

 

We have designed the bonuses for each executive officer to focus that executive officer on achieving key operational and/or financial objectives within a yearly time horizon. Whether a named executive officer receives a bonus under these arrangements, and the amount of that bonus, depends primarily on our performance relative to Company-wide financial objectives. Our Board believes that Company-wide incentives

foster teamwork among senior management and throughout the Company, and that consistently achieving better-than-expected financial results increases stockholder value and should be reflected in superior executive compensation. Under the Company-wide annual cash incentive plan, if we achieve results that are below certain threshold levels, our executive officers receive no cash incentive bonus, while results that are above certain threshold levels result in larger bonuses. As discussed below, the mix of the different types of performance goals and the weights assigned to each of such goals varies among the executives based on each individual’s role and responsibility within the Company.

 

Target Incentive Bonus Amounts.  For each of our named executive officers other than Mr. Putnam, such executive officer’s annual target bonus is set forth in his employment agreement, although our Compensation Committee periodically reviews each executive officer’s annual target bonus and has the ability to modify such bonus as it deems appropriate.

 

Our Compensation Committee, in consultation with Radford, also reviewed the 2010 cash incentive bonus component of our executive officers’ compensation which is based on a percentage of our executive officers’ base salaries. In connection with this review, our Compensation Committee analyzed various publicly available data and information on the cash incentive bonuses and total compensation paid to executive officers at various companies, including our peer group companies. As a result of this review, our Compensation Committee kept each of Messrs. Garcia’s and Irving’s annual target cash incentive bonus at 50% of his respective annual base salary, consistent with the percentage provided in each of their respective employment agreements, and between the 50th and 75th percentile of executive officers at our peer companies. In reviewing the cash incentive bonus paid to the chief executive officers of our peer group companies, our Compensation Committee observed that chief executive officers at our peer group companies had a target 90% of their base salary as their target cash incentive bonus. As a result of its review of the above information, our Compensation Committee increased the 2010 target incentive bonus for Mr. Waldis from 65% to 75% of his base salary. Although this kept Mr. Waldis below the 50th percentile of the bonus (as a percentage of salary) of chief executive officers at our peer group companies, our Compensation Committee thought this increase was appropriate based on all of the information it reviewed. Each of Messrs. Garcia, Irving and Waldis may earn in excess of his annual target bonus in the event that corporate and individual objectives set by the Compensation Committee are exceeded. Under our incentive compensation plan, each executive officer can earn up to 175% of his cash incentive bonus. Thus, the maximum amount each of Messrs. Irving and Garcia could have received in 2010 was 87.5% of their respective salaries and the maximum amount Mr. Waldis could have received in 2010 was 131.25% of his salary. In 2010, each of Messrs. Putnam and Mulica had a separate incentive compensation plan, as described below.

 

2010 Annual Incentive Bonus Compensation.  2010 Annual Incentive Bonus Compensation for our named executive officers, other than Messrs. Putnam and Mulica, was determined and paid out based upon the following criteria: 80% based upon our annual revenue and non-GAAP operating income as a percentage of revenue targets and 20% based upon our Compensation Committee’s subjective assessment of the named executive officer’s individual performance and the progress of the named executive officer towards our strategic objectives. For Mr. Waldis, due to our Compensation Committee’s belief that in his role as Chairman, Chief Executive Officer and President, he should spend a larger portion of his time in generating new business to increase revenue, our Compensation Committee set a weight of 86^2/3 of his 2010 annual cash incentive bonus based upon our annual revenue and non-GAAP operating income as a percentage of revenue targets and 13^1/3 was based on Mr. Waldis’ individual performance.

 

2010 Corporate Goals.  Our Compensation Committee established our 2010 revenue and non-GAAP operating income as a percentage of revenue as the performance targets applicable under the corporate objectives of the cash incentive bonus compensation plan for 2010. We use non-GAAP operating income and other non-GAAP financial measures internally in analyzing its financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of the non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. In calculating non-GAAP operating income we add back the deferred revenue write-down associated with our acquisition of FusionOne,

fair value stock-based compensation expense, acquisition-related costs, restructuring charges, changes in the contingent consideration obligation, deferred compensation expense related to earn outs and amortization of intangibles associated with acquisitions. The revenue and non-GAAP operating income as a percentage of revenue targets were based on our 2010 internal annual operating plan, which was developed by management and presented by Mr. Waldis, as Chairman, Chief Executive Officer and President, and Mr. Irving, as Chief Financial Officer, to our Board for its review and approval. The target performance levels under the annual cash incentive compensation plan are aligned with our annual operating plan to motivate our executive officers to achieve those performance goals in a manner that we believe will increase our stockholder value. As we expect to achieve our annual operating plan when it is set, we have similar expectations regarding the achievement of the goals under the annual incentive compensation plan.

 

The elements of the corporate objectives of the cash incentive compensation plan and amount achieved are set forth below:

 

 

 

 

Thus, as a result of our actual 2010 revenue being slightly above our target revenue for 2010 and our 2010 non-GAAP operating income as a percentage of revenue being in line with the target non-GAAP operating income as a percentage of revenue, our executive officers received slightly in excess of the target payout with respect to the corporate goal portion of their respective 2010 incentive cash bonus, as outlined below.

 

2010 Individual Goals.  In 2010, despite a difficult global economic environment, our revenues grew by 28%, compared to 2009, and our non-GAAP earnings per share increased to $0.70 from $0.57 in 2009. In addition, we acquired FusionOne, Inc., added several key customers, and successfully continued our international expansion. Due to these strong results, in early 2011, our Compensation Committee met to discuss the individual performance and contributions of our named executive officers and, with input from Mr. Waldis (other than his own bonus), awarded each of Messrs. Waldis, Garcia and Irving 75% of their respective target cash incentive bonus allocated to 2010 individual goals. Specifically, Mr. Waldis was instrumental in our acquisition of FusionOne and our successful addition of several new customers. Mr. Irving led our effort to exceed our business plan by controlling expenses, strengthening business processes and financial accountability, and improving our operational effectiveness. Mr. Garcia was instrumental in successfully delivering programs to our customers on time and on a cost effective basis and increasing our international expansion. For 2010, Mr. Mulica received his incentive compensation under his prior FusionOne compensation plan. Under this plan, he could receive up to $25,000 per quarter as his cash incentive bonus, based on his individual performance. Accordingly, Mr. Mulica received his full cash incentive compensation of $25,000 for the third quarter of 2010, based primarily on his participation in our acquisition of FusionOne. For the fourth quarter of 2010, we deferred our determination of Mr. Mulica’s cash incentive bonus for 2010 due to certain customer engagements in which Mr. Mulica was involved being delayed until 2011.

 

As a result, each of Messrs. Waldis, Irving, Garcia and Mulica was awarded the following amounts under their respective 2010 cash incentive compensation plan:

 

For 2010, the incentive compensation plan for Mr. Putnam, as our Executive Vice President of Sales, was based on the revenue generated by his sales team. Under his incentive compensation plan, Mr. Putnam receives 2% of the total contract value over the life of the original contract with respect to certain customers, and 1% of the collections received by the Company from customers for which his sales team was responsible for procuring. In 2010, Mr. Putnam received $50,000 with respect to the total contract value component and $488,500 on the collection portion for a total non-discretionary annual cash incentive bonus of $538,500.

 

Long-Term Incentive Equity Compensation.  We believe that equity awards align the interests of our employees with those of our stockholders. We grant equity awards to help achieve our strategic objectives by motivating our employees to achieve our financial goals, promoting retention through the use of multi-year vesting schedules and aligning the interest of our executives with our stockholders because the value of the equity awards to the recipient increases only with the appreciation of the price of our Common Stock. The authority to make equity grants to executive officers rests with our Compensation Committee, although our Compensation Committee does consider the recommendations of our Chief Executive Officer, as well as survey data provided by Radford. Generally, the size of each grant is set at a level that our Compensation Committee deems appropriate to create a meaningful opportunity for stock ownership based upon the individual’s position with the Company, the executive officer’s potential for future responsibility and promotion, and the executive officer’s performance in the recent period. Since our initial public offering, all awards of options to purchase shares of our Common Stock have been made at the closing sales price of a share of our Common Stock, as reported on Nasdaq on the date of grant; for any option grants to any executive officer or employee who joins us, the options will be granted on the closing sales price of our stock as reported on Nasdaq on the later of (i) the date of grant or (ii) the date the executive officer or employee joins the Company.

 

A stock option and/or restricted stock grant is typically made in the year that an executive officer commenced employment. Each year, our Compensation Committee considers annual replenishment equity awards of stock options and restricted stock for executives based on recommendations from our Chief Executive Officer and survey data provided by its compensation consultant. These equity awards are generally granted effective on the first Tuesday of December each year. We believe that the resulting overlapping vesting schedule from awards made in prior years, together with the number of shares subject to each award, helps ensure a meaningful incentive to remain in our employ and to enhance stockholder value over time. Beginning in December 2009, based on a recommendation by Radford, our Compensation Committee began awarding performance-based restricted stock awards in addition to stock options as part of the annual replenishment awards to our executive officers. Our decision to use performance-based restricted shares to satisfy a portion of our annual replenishment equity awards was based on a desire to demonstrate our commitment to pay for performance, reduce short-term dilution and stock plan share usage, while simultaneously maintaining competitive rewards to retain employee talent. The actual number of performance-based restricted shares each executive officer will receive in a given year is based on our financial performance during the fiscal year. Although its value may increase or decrease with changes in the stock price during the period before vesting, performance-based restricted shares will have value in the long term, thus encouraging retention, while the entire compensation value of a stock option depends on future stock price appreciation. Accordingly, we believe performance-based restricted shares can deliver significantly greater share-for-share compensation value at grant than stock options and we can offer comparable compensation value with potentially less dilution for our stockholders. The size of each annual grant is set at a level that our Compensation Committee deems appropriate based on its judgment to create a meaningful opportunity to realize value from equity based upon an executive officer’s position with us, his or her potential for future responsibility and promotion and performance in the fiscal year, and our performance in such fiscal year.

 

In December 2009, our Compensation Committee approved a performance-based restricted share award to each of our named executive officers (other than Mr. Mulica who was not employed by us until 2010). The actual number of performance-based restricted shares that could be issued, which could range from zero to one and one-half times the initial target amount, was dependent upon the achievement of our same revenue and non-GAAP operating income as a percentage of revenue targets applicable to the 2010 Annual Incentive Bonus Compensation discussed above. The performance-based restricted shares, if any, were to be issued when

the performance objectives were achieved. One-third of the performance shares vest on the date such shares were issued, and one-third on each of December 31, 2011 and December 31, 2012. Based on our 2010 revenue and non-GAAP operating income, the actual number of performance-based restricted shares earned by our named executive officers and issued to them in February 2011 are set forth below:

 

 

In 2010, our Compensation Committee again retained Radford to provide input on the annual replenishment grants for our executive officers (other than Mr. Mulica), including an analysis of equity grants provided to executive officers in the same positions at our peer group companies. Our Compensation Committee together with our Chief Executive Officer used input from Radford’s analysis, together with other publicly available data, our strong financial performance in 2010 and evaluation of such executive officer’s individual performance (using the same criteria discussed above under “2010 Annual Incentive Bonus Compensation”) and contribution to our strategic goals and to provide incentive for our executive officers to achieve our additional milestones in 2011, granted 50% of the equity awards in nonqualified stock options and 50% in performance based restricted shares, as set forth below.

 

 

Each of the nonqualified stock options had an exercise price of $27.55, the closing sales price of our Common Stock on the grant date, and becomes exercisable with respect to the first 25% of the shares subject to the option upon completion of 12 months of continuous service after the grant date, and with respect to an additional 1/48 of the shares subject to the option upon completion of each month of continuous service thereafter. The actual number of performance-based restricted shares, if any, to be issued to each named executive officer shall be determined by our Compensation Committee on or about February 1, 2012 based on our 2011 revenue and non-GAAP operating income as a percentage of our 2011 revenue. The performance-based restricted shares vest with respect to one-third of the shares on the date such shares are issued in 2012, provided such executive officer has been continually employed by the Company and one- third of the shares on each of December 31, 2012 and December 31, 2013, provided such executive officer has been continually employed by the Company. The value of the performance-based restrict shares subject to our 2010 grants to the named executive officers is reflected in Footnote * to the “Summary Compensation Table” and to the “Grants of Plan-Based Awards” tables below.

 

Upon joining us in connection with our acquisition of FusionOne, our Compensation Committee granted Mr. Mulica (i) non-qualified options to purchase 160,000 shares of our Common Stock and (ii) 20,000 restricted shares of our Common Stock under our 2010 New Hire Equity Incentive Plan. This was consistent with new hire grants to other executives. Each option had an exercise price of $19.32, the closing price of the Company’s Common Stock on the grant date. and had an becomes exercisable with respect to the first 50% of the shares subject to the option upon completion of 24 months of continuous service after Mr. Mulica joined the Company, and with respect to an additional 1/48 of the shares subject to the option upon completion of each month of continuous service thereafter. Fifty percent (50%) of the restricted shares vest upon completion of 24 months of continuous service after Mr. Mulica joined the Company, and an additional 1/48 of the shares vest upon completion of each month of continuous service thereafter. In October 2010, our Compensation Committee retained Radford to do an analysis of Mr. Mulica’s full compensation package in comparison to the compensation paid to similar executives at our peer group companies. Our Compensation Committee used

information provided by Radford, together with publicly-available information, and (i) granted Mr. Mulica non-qualified options to purchase 75,000 shares of our Common Stock and (ii) approved a performance-based restricted share award of a maximum of 120,000 shares of our Common Stock under our 2006 Equity Incentive Plan. These options were granted and performance-based restricted shares awarded to provide incentives for Mr. Mulica to achieve certain of our strategic goals and revenue targets. Each non-qualified option had an exercise price of $20.71, the closing sales price of our Common Stock on the grant date and becomes exercisable with respect to the first 25% of the shares subject to the option upon completion of 12 months of continuous service after the grant date, and with respect to an additional 1/48 of the shares subject to the option upon completion of each month of continuous service thereafter. One-half of the performance-based restricted shares, if any, to be issued to Mr. Mulica shall be determined by our Compensation Committee on or about February 1, 2012 based on our 2011 revenue, and the remaining one-half of the performance shares, if any, to be issued to Mr. Mulica shall be determined by our Compensation Committee on or about February 1, 2013 based on our 2012 revenue. The performance-based restricted shares vest upon issuance of such shares, provided Mr. Mulica has been continually employed by us.

 

Chief Executive Officer Compensation.  As our Chairman, Chief Executive and President, Mr. Waldis’ 2010 compensation consisted of base salary, cash incentive bonus and a stock option and performance-based restricted share grant. Since Mr. Waldis did not receive a salary increase in 2009 and based on our Compensation Committee’s analysis of the base salaries of chief executive officers at various companies, including the Company’s peer group companies, its consultation with its compensation consultant, and its view of our improved business outlook, and Mr. Waldis’ contribution to the achievement of our various strategic goals, our Compensation Committee increased his base salary to $475,000, which is still below the 50th percentile of the base salary of the chief executive officers of our peer group companies. The amount of his annual cash incentive bonus for 2010 is described above and for the above referenced reasons, his target cash incentive bonus was increased from 65% to 75%, which is still below the average of the cash incentive bonus of the chief executive officers of our peer group companies. In 2010, Mr. Waldis was awarded a stock option and performance-based restricted share grant under our long-term incentive compensation plan at the same time and in accordance with the same methods used for other executives, as described above. The actual value of awards paid to Mr. Waldis in 2010 are shown in the “Summary Compensation Table” below.

 

As our Chairman of the Board, Chief Executive Officer and President, Mr. Waldis’ responsibilities are much greater than those of the other executives, as he is informed and involved, in a detailed manner, with each department’s progress toward our shared Company goals. In our industry, the Chief Executive Officer must be deeply aware of a company’s strengths and obstacles, and have sharp strategic vision for the company’s future while maintaining our ability to adapt to changed circumstances and prospects quickly and thoughtfully. We believe Mr. Waldis displays these skills. The successful progress of our research and development programs and success of our customer engagements brings value to our financial performance and our stockholders, and we believe Mr. Waldis’ direction in the decisions and actions that drive this progress merit the compensation that he receives.

 

Post-Termination Protection.  We have agreed to change in control severance arrangements with our executive officers, each of which is described under the heading “Severance and Change in Control Arrangements.” Our Compensation Committee believes the change in control severance arrangements are important to protect our executive officers in the event of any involuntary termination associated with a change in control and that the amounts are reasonable when compared with similar arrangements adopted by peer companies. Our Compensation Committee believes these agreements enhance our ability to retain the services of our executive officers and appropriately balance our interests, and the interests of our executive officers and stockholders. Within this change in control severance arrangement, our Compensation Committee sought uniformity of results among the executive officers based on their positions with us. In addition, our Compensation Committee believes that the events triggering payment, both a change in control and an involuntary termination, and then only when there is no misconduct by the officer, are fair hurdles for the ensuing rewards. Each of our executive officers would receive severance under his respective employment agreement if he is terminated without “cause” as defined in his employment agreement. The severance

program is provided as a temporary source of income in the event of an executive officer’s involuntary termination of employment. No changes were made to these arrangements in 2010.

 

Other Benefits.  Our executives are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life and disability insurance and our 401(k) plan, in each case on the same basis as our other employees. We lease an automobile (and pay applicable insurance and gas) for Messrs. Waldis and Irving to be used primarily for business purposes. We also provide Mr. Garcia with a car allowance for an automobile to be used primarily for business purposes. There were no other special benefits or perquisites provided to any executive officer in 2010.

 

Summary.  We believe that our compensation philosophy and programs are designed to foster a performance-oriented culture that aligns employees’ interests with those of our stockholders. We believe that the compensation of our executive officers is both appropriate for and responsive to the goal of improving stockholder value.

 

Executive Officer Stock Ownership Guidelines.

 

We have established stock ownership guidelines for our executive officers. The purpose of these guidelines is to place limitations on the number of shares of our Common Stock that an executive officer may sell in any given year, based on established target share ownership levels. By limiting the number of shares an executive officer is able to sell, these guidelines are intended to increase executives’ and directors’ equity stake in the Company in an effort to align their interests more closely with those of our stockholders. Under our trading policy, we prohibit all hedging or “short sales” involving our securities by our employees, including our executive officers. Under the ownership guidelines that were in effect for 2010, the target share ownership levels for each executive officer were the number of shares and vested options held by him having a value equal to (a) three times the annual base salary for our Chief Executive Officer and (b) one and one-half times the annual base salary for other executive officers as of the closing sales price for our Common Stock for the last trading day in 2009 or the date such individual became an executive officer, whichever is later. Each of the executive officers had three years, from the later of the date the stock ownership guidelines were established, or three years from the date he is elected as an executive officer, to achieve their targeted equity ownership level. From time to time, we review these guidelines based on market conditions, ownership guidelines at our peer group companies and other considerations to determine whether they should be revised and, as a result, in February 2011, we revised our executive officer stock ownership guidelines. Effective as of such date, each executive officer who is subject to Section 16 of the Securities Exchange Act of 1934, as amended, or directly reports to the chief executive officer is required to own, as of the later of February 2, 2016 or five years from the date such individual begins reporting to the chief executive officer or becomes a Section 16 officer, must own a number of vested shares of our Common Stock having a value equal to (a) three times the annual base salary for our Chief Executive Officer and (b) one and one-half times the annual base salary for other executive officers. In the event an executive officer is not compliant at the end of such five year period, any future equity grants to such executive officer would be reduced by 20% until he is compliant. Such stock price shall be the closing sales price of our Common Stock on Nasdaq as of the earlier of February 2, 2011 or the date such executive officer joins the Company or becomes a Section 16 officer.

 

Tax Deductibility of Pay.  Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to our chief executive officer and our three other most highly paid named executive officers (other than our chief financial officer). There is an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements. To qualify for an exemption from the $1,000,000 limitation, the stockholders were asked to approve a limit under the incentive plan on the maximum number of shares for which a participant may be granted stock options in any calendar year. Because the incentive plan and option grants under the incentive plan comply with the applicable requirements for this exemption, any compensation deemed paid to a named executive officer when he or she exercises an option with an exercise price that is at least equal to the fair market value of the option shares on the grant date should qualify as performance-based compensation and should not be subject to the $1,000,000 deduction limitation. Restricted stock awards that are subject to time based vesting are generally not considered

performance-based under Section 162(m) of the Code and, as such, may not be fully deductible by us. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, our Compensation Committee has not adopted a policy requiring all compensation to be deductible. Although some amounts recorded as compensation by us to certain executives may be limited by Section 162(m) of the Code, that limitation does not result in the current payment of increased federal income taxes by the Company due to its significant net operating loss carry forwards. Our Compensation Committee may approve compensation or changes to plans, programs or awards that may cause the compensation or awards not to comply with Section 162(m) of the Code if it determines that such action is appropriate and in our best interests.

 

Accounting Matters.  We account for equity compensation paid to our employees under the rules of FASB ASC Topic No. 718, which requires us to estimate and record an expense over the service period of the award. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred. We structure cash bonus compensation so that it is taxable to our employees at the time it becomes available to them.

 

In 2010 our Compensation Committee reviewed our compensation policies and practices for all employees, including executive officers, and determined that our compensation programs (i.e., stock ownership guidelines, use of multiple metrics for annual incentive cash bonus and long-term incentive equity compensation including the issuance of performance shares), which are designed to align our executives’ compensation with our long-term business objectives and performance and discourage the taking of unnecessary risks, are not likely to have a material adverse effect on the Company. In keeping with our results-driven culture, our Compensation Committee expects our executives to deliver superior performance in a sustained fashion. As a result, a substantial portion of our executives’ overall compensation is tied to performance. Our Compensation Committee links our executives’ compensation to attainment of challenging goals that will drive us to achieve high revenue growth and profitability because they believe that solid performance in these areas will lead to long-term stockholder value.

 

We expect to implement a clawback policy in 2011 in accordance with the requirements of the Dodd-Frank Act and the regulations that will issue under that Act. We elected to wait until the SEC issues guidance about the proper form of a clawback policy in order to ensure that we implement a fully compliant policy at one time, rather than implementing a policy this year that may require amendment next year after the SEC regulations are released.

Compensation Committee Report⁽¹⁾

 

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement submitted by the following members of the Compensation Committee:

 

William J. Cadogan, Chairman
Charles E. Hoffman
Thomas J. Hopkins

 

 

  ⁽¹⁾ The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Synchronoss Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

 

The following table sets forth all of the compensation awarded to, earned by, or paid to our “principal executive officer,” “principal financial officer” and the three other highest paid executive officers (our “named executive officers”) for 2010:

 

 

 

 

 

 

The following table sets forth each equity award granted to our named executive officers during the year ended December 31, 2010. The FASB ASC Topic No. 718 value of these awards is also reflected in columns (d) and (e) of the Summary Compensation Table above.

 

 

 

 

 

With respect to each executive officer (other than Mr. Mulica’s August 3, 2010 grant), the option vests with respect to the first 25% of the shares subject to the option upon completion of 12 months of continuous service after the grant date, and with respect to an additional 1/48 of the shares subject to the option upon completion of each month of continuous service thereafter. With respect to Mr. Mulica’s August 3, 2010 grant, the option vests with respect to the first 50% of the shares subject to the option upon completion of 24 months of continuous service after the grant date, and with respect to an additional 1/48 of the shares subject to the option upon completion of each month of continuous service thereafter.

 

The following table sets forth information regarding each unexercised option and all unvested stock held by each of our named executive officers as of December 31, 2010.

 

 

 

 

 

The following table shows the number of shares acquired upon exercise of options by each named executive officer during the year ended December 31, 2010 and the number of shares of restricted stock held by each named executive officer that vested during the year ended December 31, 2010.

 

 

 

 

We have entered into employment agreements with our executive officers that contain severance/change in control provisions as described below, each of which expires on December 31, 2011. Each agreement automatically renews for addition twelve-month periods unless the Company provides written notice of its intent not to renew the agreement prior to the end of such term or renewal term. These individuals will only be eligible to receive severance payments if each such officer signs a general release of claims following an eligible termination. These severance arrangements are designed to promote stability and continuity of senior management. Under his employment agreement, if an executive officer dies, his estate will receive an amount equal to his target cash incentive bonus for the fiscal year in which his death occurred, prorated based on the number of days he was employed by the Company during that fiscal year. If an executive officer’s employment with the Company ends due to a Permanent Disability (as defined in his employment agreement), he shall be entitled to receive an amount equal to his target cash incentive bonus for the fiscal year in which his employment with the Company ended, prorated based on the number of days he was employed by the Company during that fiscal year. If an executive officer or his personal representative elects to continue health insurance coverage under COBRA for the executive officer and his dependents following the termination of his employment due to Permanent Disability, then the Company will pay the monthly premium under COBRA until the earliest of (a) the close of the 24-month period following the termination of his employment with the Company, (b) the expiration of his continuation coverage under COBRA or (c) the date he becomes eligible for substantially equivalent health insurance coverage in connection with new employment.

 

Stephen G. Waldis.  If prior to, or more than 12 months following, the occurrence of a change in control of the Company, Mr. Waldis’ employment is terminated for reasons other than cause or permanent disability, he shall receive a lump sum severance payment equal to two times his base salary, plus two times his average bonus received in the immediately preceding two years and, if Mr. Waldis resigns for good reason, the severance payment will be one and one-half times his base salary and average bonus. If within 12 months following a change in control, Mr. Waldis is terminated for reasons other than cause or permanent disability, or Mr. Waldis terminates his employment for good reason, he shall receive a lump sum severance payment equal to 2.99 times his base salary in effect at the time, plus two times his average bonus received in the immediately preceding two years.

 

Lawrence R. Irving, Robert Garcia and Michael Mulica.  If prior to, or more than 12 months following, the occurrence of a change in control of the Company, Messrs. Irving, Garcia or Mulica’s employment is terminated for reasons other than cause or permanent disability, he shall receive a lump sum severance payment equal to one and one-half times his base salary, plus one and one-half times his average bonus received in the immediately preceding two years and, if Mr. Irving, Garcia or Mulica resigns for good reason, the severance payment will be one times his base salary and average bonus. If within 12 months following a change in control, Mr. Irving, Garcia or Mulica is terminated for reasons other than cause or permanent disability, or Mr. Irving, Garcia or Mulica terminates his employment for good reason, he shall receive a lump sum severance payment equal to two times his base salary in effect at the time, plus two times his average bonus received in the immediately preceding two years.

 

Christopher Putnam.  If prior to, or more than 12 months following, the occurrence of a change in control of the Company, Mr. Putnam’s employment is terminated for reasons other than cause or permanent disability, he shall receive a lump sum severance payment equal to one and one-half times his base salary, plus all unpaid sales commissions earned by Mr. Putnam as of the time of the termination of his employment, and, if Mr. Putnam resigns for good reason, the severance payment will be one times his base salary plus all unpaid sales commissions earned by Mr. Putnam as of the time of the termination of his employment. If within 12 months following a change in control, Mr. Putnam is terminated for reasons other than cause or permanent disability, or Mr. Putnam terminates his employment for good reason, he shall receive a lump sum severance payment equal to two times his base salary in effect at the time, plus all unpaid sales commissions earned by Mr. Putnam as of the time of the termination of his employment.

 

Our Compensation Committee of our Board of Directors, as plan administrator of our 2000 Stock Plan and, 2006 Equity Incentive Plan and 2010 New Hire Equity Incentive Plan, has the authority to provide for

accelerated vesting of the shares of common stock subject to outstanding options held by our named executive officers and any other person in connection with certain changes in control of the Company.

 

In April 2006, our Compensation Committee approved agreements with each of Stephen G. Waldis, our President, Chief Executive Officer and Chairman, Lawrence R. Irving, our Chief Financial Officer and Treasurer, Robert Garcia, our Chief Operating Officer, and Christopher Putnam, our Executive Vice President of Sales, to provide that, effective upon the closing of our initial public offering, each of their outstanding options and restricted shares will vest and become exercisable in full if the officer’s employment is Involuntarily Terminated (as defined below) within twelve (12) months following a Change in Control (as defined below). Involuntary Termination includes the executive officer’s (i) discharge without cause or (ii) resignation following a change in position that materially reduces the officer’s level of authority or responsibility, a reduction in compensation or benefits, or relocation of the optionee’s workplace. A Change in Control includes: (i) a merger of the Company after which our own stockholders own 50% or less of the surviving corporation or its parent company; (ii) a sale of all or substantially all of our assets; (iii) a proxy contest that results in the replacement of more than one-half of our directors over a 24 month period; or (iv) an acquisition of 50% or more of our outstanding stock by any person or group, other than a person related to the Company, such as a holding company owned by our stockholders. Upon joining the Company, we agreed to provide Michael Mulica, currently our Executive Vice President of Business Development and Corporate Strategy, with the same vesting right with respect to any grants of options or restricted shares in the event of his Involuntary Termination within 12 months after a Change in Control as is provided for the above executive officers.

 

The table below reflects the potential payments and benefits to which the named executive officers would be entitled under our change in control severance plan adopted by our Board. There are no agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits in connection with the termination of their employment other than pursuant to the change in control severance plan described above. The amounts shown in the table below assume that each termination was effective as of December 31, 2010, and that all eligibility requirements under the change in control severance plan were met.

 

 

 

 

The Audit Committee of the Board consists of the three non-employee directors named below. The Board annually reviews the Nasdaq listing standards’ definition of independence for audit committee members and has determined that each member of the Audit Committee meets that standard. The Board has also determined that Thomas J. Hopkins and Donnie M. Moore are audit committee financial experts as described in applicable rules and regulations of the Securities and Exchange Commission.

 

The principal purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. The Audit Committee is responsible for selecting and engaging the Company’s independent registered public accounting firm and approving the audit and non-audit services to be provided by the independent registered public accounting firm. The Audit Committee’s function is more fully described in its Charter, which the Board has adopted and which the Audit Committee reviews on an annual basis.

 

The Company’s management is responsible for preparing the Company’s financial statements and the Company’s financial reporting process. Ernst & Young LLP, the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles.

 

The Audit Committee has reviewed and discussed with the Company’s management the audited financial statements of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “10-K”).

 

The Audit Committee has also reviewed and discussed with Ernst & Young LLP the audited financial statements in the 10-K. In addition, the Audit Committee discussed with Ernst & Young LLP those matters required to be discussed by Statement on Auditing Standards No. 61, as amended or supplemented, entitled “Communications with Audit Committees.” Additionally, Ernst & Young LLP provided to the Audit Committee the written disclosures and the letter required by Rule 3526 of the Public Company Accounting Oversight Board (Communications with Audit Committees Concerning Independence). The Audit Committee also discussed with Ernst & Young LLP its independence from the Company.

 

Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the 10-K for filing with the United States Securities and Exchange Commission.

 

Submitted by the following members of the Audit
Committee:

 

Donnie M. Moore, Chairman
William J. Cadogan
Thomas J. Hopkins

 

 

⁽¹⁾ The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Synchronoss Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Equity Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information as of March 15, 2011 with respect to the beneficial ownership of our Common Stock by persons known to us to own beneficially more than 5% of our Common Stock, each of our directors, our executive officers named in the Summary Compensation Table, and all of our executive officers and directors as a group. We have no other class of equity securities outstanding.

 

As of March 15, 2011, 37,581,401 shares of our Common Stock were outstanding. The amounts and percentages of our Common Stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission (“SEC”) governing the determination of beneficial ownership of securities. Under the SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of securities as to which such person has no economic interest.

 

 

 

 

We believe that, during the fiscal year ended December 31, 2010, our directors, executive officers, and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements. In making these statements, we have relied upon a review of the copies of Section 16(a) reports furnished to us and the written representations of our directors, executive officers, and greater than 10% stockholders.

 

Transactions, arrangements or relationships in which we were, are or will be a participant and the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest are subject to review, approval or ratification by our Board of Directors or a committee composed of members of our Board. Our Audit Committee has the principal responsibility for reviewing related person transactions pursuant to written policies and procedures adopted by our Board, subject to specified exceptions and other than those that involve compensation. In conformance with regulations of the Securities and Exchange Commission, these policies and procedures define related persons to include our executive officers, our directors and nominees to become a director of our company, any person who is known to us to be the beneficial owner of more than 5% of any class of our voting securities, any immediate family member of, or person sharing the household with, any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or in which such person has a 5% or greater beneficial ownership interest. As set forth in our policies and procedures, it is our general policy that related person transactions shall be consummated or shall continue only if approved or ratified by our Audit Committee or the disinterested members of our Board and only if the terms of the transaction are determined to be in, or not to be inconsistent with, the best interests of our company and our stockholders. The approval of our Compensation Committee is required to approve any transaction that involves compensation to our directors and executive officers. This approval process does not apply to any transaction that is available to all

of our employees generally. During 2010, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements, which are described where required under “Executive Compensation” and “Director Compensation.”

 

The Board does not intend to bring any other business before the meeting, and so far as is known to the Board, no matters are to be brought before the meeting except as specified in the notice of the meeting. In addition to the scheduled items of business, the meeting may consider stockholder proposals (including proposals omitted from the Proxy Statement and form of Proxy pursuant to the proxy rules of the SEC) and matters relating to the conduct of the meeting. As to any other business that may properly come before the meeting, it is intended that proxies will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.

 

Our Board of Directors currently consists of six directors. The director who is nominated for election to the Board of Directors this year, his age as of April 1, 2011, his position and office held with the Company and certain biographical information are set forth below. The director to be elected will hold office until the 2014 Annual Meeting of Stockholders and until his successor is elected, or until such director’s death, resignation or removal. The nominee listed below is currently a director of the Company who was previously elected by the stockholders. It is the Company’s policy to encourage nominees for director to attend the Annual Meeting.

 

Directors are elected by a plurality of the votes cast at the Annual Meeting, meaning the nominee receiving the most “For” voting (among votes properly cast in person or by proxy) will be elected. An instruction to “Withhold” authority to vote for the nominee will result in the nominees receiving fewer votes, but will not count as a vote against the nominee. Abstentions and “broker non-votes” (i.e., shares held by a broker or nominee that are represented at the meeting, but with respect to which such broker or nominee is not instructed to vote on a particular proposal and does not have discretionary voting power) will have no effect on the outcome of the election of candidate for director. Because the election of director is not a matter on which a broker or other nominee is generally empowered to vote, broker non-votes are expected to exist in connection with this matter. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominee named below. If the nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by our current Board of Directors, if any. The person nominated for election has agreed to serve if elected. We have no reason to believe that the nominee will be unable to serve.

 

Director Qualifications.  The following paragraphs provide information as of the date of this proxy statement about each member of our Board of Directors, including the nominee. The information presented includes information each director has provided about his age, positions he currently holds, his business experience for the past ten years, and other publicly-held companies, if any, of which he currently serves as a director or has served as a director during the past ten years. In addition to the information presented below regarding each director’s experience and qualifications that lead our Board of Directors to the conclusion that he should serve as a director of our Company, we also believe that all of our directors have a reputation for integrity and adherence to high ethical standards. Each of our directors has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment to the Company and our Board of Directors.

 

 

Nominees

 

Thomas J. Hopkins, 54, has been a member of our Board of Directors since December 2004. Mr. Hopkins is a Managing Director of Colchester Capital, LLC, an investment and advisory firm. Prior to Colchester Capital, Mr. Hopkins was involved in investment banking, principally at Deutsche Bank (and its predecessor Alex, Brown & Sons), Goldman, Sachs & Co. and Bear Stearns. He began his investment banking career at Drexel Burnham Lambert. Prior to investment banking, Mr. Hopkins was a lawyer for several years. Mr. Hopkins received a bachelor of arts degree from Dartmouth College, a juris doctorate from Villanova University School of Law and a master in business administration degree from the Wharton School at the University of Pennsylvania. We believe Mr. Hopkins’ qualifications to sit on our Board of Directors include his extensive financial expertise and his years of experience providing strategic advisory services to complex organizations.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
THE NOMINEE NAMED ABOVE STANDING FOR ELECTION.

Continuing Directors — Term Ending in 2013

 

Charles E. Hoffman, 62, has been a member of our Board of Directors since June 2006. From 2001 until 2008, Mr. Hoffman was President and Chief Executive Officer of Covad Communications Group, Inc. Prior to 2001, Mr. Hoffman was President and Chief Executive Officer of Rogers AT&T. Prior to his time with Rogers, Mr. Hoffman served as President, Northeast Region, for Sprint PCS. Preceding his time with Sprint PCS, Mr. Hoffman spent 16 years at SBC Communications in various senior management positions, including Managing Director-Wireless for SBC International. Mr. Hoffman also serves as a director of Tollgrade Communications Inc. Mr. Hoffman received a bachelor of science degree and a master in business administration degree from the University of Missouri, St. Louis. We believe Mr. Hoffman’s qualifications to sit on our Board of Directors include his diversified background of managing and directing both private and public technology-based companies.

 

James M. McCormick, 51, is a founder of Synchronoss, has been a member of our Board of Directors since our inception in 2000 and served as our Treasurer from September 2000 until December 2001. Mr. McCormick is founder and Chief Executive Officer of Vertek Corporation. Prior to founding Vertek in 1988, Mr. McCormick was a member of the Technical Staff at AT&T Bell Laboratories. Mr. McCormick received a bachelor of science in computer science from the University of Vermont and a master of science degree in computer science from the University of California — Berkeley. We believe Mr. McCormick’s qualifications to sit on our Board of Directors include his over 25 years in the consulting, telecommunications and services business, including as one of our founders.

 

Donnie M. Moore, 62, has been a member of our Board of Directors since April 2007. From 1989 until his retirement in 2001, Mr. Moore was Senior Vice President, Finance and Administration and Chief Financial Officer for Cognos Incorporated, a publicly-held company providing business intelligence and performance management solutions. From 1986 to 1989, Mr. Moore was Vice President, Finance and Chief Financial Officer of Cognos. Before joining Cognos, Mr. Moore held various positions at the Burroughs Corporation from 1973 to 1986, including Corporate Director, Plans and Analysis. Mr. Moore holds a bachelor of science degree in engineering from the University of Oklahoma and a master in business administration degree from the University of Houston. We believe Mr. Moore’s qualifications to sit on our Board of Directors include his extensive experience in the software industry and his financial expertise.

 

Continuing Directors — Term Ending in 2012

 

William J. Cadogan, 62, has been a member of our Board of Directors since October 2005. From April 2001 until December 2006, Mr. Cadogan served as a Senior Managing Director with Vesbridge Partners, LLC, formerly St. Paul Venture Capital, a venture capital firm. Mr. Cadogan served as Chief Executive Officer and Chairman of the board of directors of Mahi Networks, Inc., a leading supplier of multi-service optical transport and switching solutions, from November 2004 until its merger with Meriton Networks in October 2005. Prior to joining St. Paul Venture Capital in April 2001, Mr. Cadogan was Chairman and Chief Executive Officer of Minnesota-based ADC, Inc., a leading global supplier of telecommunications infrastructure products and services. Mr. Cadogan received a bachelor’s degree in electrical engineering from Northeastern University and a master in business administration degree from the Wharton School at the University of Pennsylvania. We believe Mr. Cadogan’s qualification to sit on our Board of Directors include his experience as a CEO leading complex global organizations, combined with his operational and corporate governance expertise.

 

Stephen G. Waldis, 43, has served as Chairman of the Board of Directors since February of 2001 and has served as our President and Chief Executive Officer since founding Synchronoss in 2000. From 1994 to 2000, Mr. Waldis served as Chief Operating Officer at Vertek Corporation, a privately held professional services company serving the telecommunications industry (“Vertek”). From 1992 to 1994, Mr. Waldis served as Vice President of Sales and Marketing of Logical Design Solutions, a provider of telecom and interactive solutions. From 1989 to 1992, Mr. Waldis worked in various technical and product management roles at AT&T. Mr. Waldis received a degree in corporate communications from Seton Hall University. We believe Mr. Waldis’ qualifications to sit on our Board of Directors include his extensive experience in the software and services industry including as our President and Chief Executive Officer and one of our founders.

 

The Audit Committee of the Board of Directors has appointed Ernst & Young LLP, independent registered public accounting firm, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2011 and has further directed that management submit the appointment of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has audited the Company’s financial statements since its formation in 2000. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

 

Neither the Company’s Bylaws nor other governing documents or law require stockholder ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm. However, the Board is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.

 

To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP, as the independent registered public accounting firm of the Company for its fiscal year ended December 31, 2011, the Company must receive a “For” vote from the majority of all the outstanding shares that are present in person or represented by proxy and cast either affirmatively or negatively at the Annual Meeting. Abstentions and broker non-votes will not be counted “For” or “Against” the proposal and will have no effect on the proposal. Because this is a matter on which a broker or other nominee is generally empowered to vote, broker non-votes are not expected to exist in connection with this matter.

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES

 

The following table represents aggregate fees billed to the Company for fiscal years ended December 31, 2010 and December 31, 2009 by Ernst & Young LLP, the Company’s principal accountant.

 

 

 

 

All services described above for 2010 were approved by the Audit Committee.

PRE-APPROVAL POLICIES AND PROCEDURES

 

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services rendered by Ernst & Young LLP, our independent registered public accounting firm. The Audit Committee can pre-approve specified services in defined categories of audit services, audit-related services and tax services up to specified amounts, as part of the Audit Committee’s approval of the scope of the engagement of Ernst & Young LLP or on an individual case-by-case basis before Ernst & Young LLP is engaged to provide a service. The Audit Committee has determined that the rendering of the services other than audit services by Ernst & Young LLP is compatible with maintaining the principal accountant’s independence.

 

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.

 

The Board of Directors unanimously recommends that stockholders approve an amendment to the Company’s 2006 Equity Incentive Plan (the “2006 Plan”) to increase the maximum total number of shares of Common Stock we may issue under the 2006 Plan by 3,000,000 shares.

 

In 2010, we increased our employee population from 511 employees to 758 employees, or by almost 50%. We anticipate continued growth through 2011 and in the future. Equity awards are used as compensation vehicles by most, if not all, of the companies with which we compete for talent, and we believe that providing equity awards is critical to attract and retain key contributors. Accordingly, our Board has approved an increase to the share reserve to ensure a sufficient number of shares will be available for recruiting and retention purposes. Should stockholder approval of this Proposal 3 not be obtained, no additional shares will be added to the share reserve under the 2006 Plan.

 

The effect of the proposed share increase would be as follows:

 

Equity Compensation Plan Information

 

The following table presents information as of December 31, 2010 with respect to shares of our Common Stock that may be issued under our existing equity compensation plans.

 

 

 

 

In 2010, our stockholders approved certain changes to 2006 Plan, including the manner in which the plan’s share-counting provisions operate, eliminate our ability to reprice or lower the exercise price of outstanding options and stock appreciation rights (“SARs”) without first obtaining stockholder approval of such a program, imposing a 7-year maximum term for options and SARs, and providing that for every award of restricted stock or stock units, we deduct 1.50 shares from the plan’s share reserve (and one share from the share reserve for each share issued pursuant to a stock option or SAR).