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DDi DEF 14A 2008 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box:
DDi Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
DDi Corp. 1220 N. Simon Circle Anaheim, California 92806
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
We cordially invite you to attend the Annual Meeting of Stockholders for DDi Corp. (the “Company”). This Annual Meeting will be held at 8:00 a.m., Pacific Daylight Time, on May 13, 2008, at the corporate headquarters of the Company located at 1220 N. Simon Circle, Anaheim, California 92806, for the following purposes:
The Board of Directors has nominated Robert J. Amman, Jay B. Hunt, Andrew E. Lietz, Bryant R. Riley, Steven C. Schlepp, Carl R. Vertuca, Jr. and Mikel H. Williams as the nominees for election to the Board of Directors. The Board of Directors has fixed the close of business on March 28, 2008 as the record date for the determination of stockholders entitled to notice of, and to vote at, this Annual Meeting. You are cordially invited to be present and to vote at this Annual Meeting in person. However, you are also requested to sign, date and return the enclosed proxy in the enclosed postage-paid and addressed envelope, or to submit a proxy by telephone or the Internet in accordance with the instructions on the enclosed proxy card, whether or not you expect to attend. In the event you have returned a signed proxy or submitted a proxy by telephone or the internet, but elect to attend this Annual Meeting and vote in person, you will be entitled to vote.
Anaheim, California April 11, 2008
DDi Corp. 1220 N. Simon Circle Anaheim, California 92806
PROXY STATEMENT
The Board of Directors of DDi Corp. (the “Company”) is soliciting proxies to be voted at the Annual Meeting of Stockholders of the Company to be held on May 13, 2008, at the corporate headquarters of DDi Corp. located at 1220 N. Simon Circle, Anaheim, California 92806, at 8:00 a.m., Pacific Daylight Time, and at any adjournments or postponements thereof (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders and described herein. This proxy statement describes issues on which the Company would like you, as a stockholder, to vote. It also gives you information on these issues so that you can make an informed decision. The approximate date on which this proxy statement and the enclosed form of proxy are first being sent or given to stockholders is April 14, 2008. The Board of Directors of the Company (the “Board of Directors” or the “Board”) has fixed the close of business on March 28, 2008 as the record date for the determination of stockholders entitled to receive notice of, and to vote at, the Annual Meeting (the “Record Date”). Common Stock. At the Record Date, 22,746,080 shares of common stock, par value $0.001 per share (“Common Stock”), were outstanding. Of that amount, 1,274,505 were held as treasury shares. Each share of Common Stock, excluding treasury shares, entitles its record holder on the Record Date to one vote on all matters. Series A Preferred. At the Record Date, 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share (“Preferred Stock”), were outstanding. Each share of Series A Preferred entitles its record holder to 1/100 of a vote on all matters. QUESTIONS AND ANSWERS Why am I receiving this annual meeting information and proxy? You are receiving this proxy statement from us because you owned shares of Common Stock and/or Preferred Stock of the Company as of the Record Date. This proxy statement describes issues on which you may vote and provides you with other important information so that you can make informed decisions. You may own shares of Common Stock or Preferred Stock in several different ways. If your stock is represented by one or more stock certificates registered in your name, you have a stockholder account with our transfer agent, BNY Mellon Shareowner Services, which makes you a stockholder of record. If you hold your shares in a brokerage, trust or similar account, you are a beneficial owner, not a stockholder of record. What am I voting on? You are being asked to vote on (a) the election of seven directors and (b) the ratification of the appointment of PricewaterhouseCoopers LLP, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008. When you sign and mail the proxy card or submit your proxy by telephone or the Internet, you appoint Mikel H. Williams and Kurt E. Scheuerman as your representatives at the Annual Meeting. (When we refer to the “named proxies,” we are referring to Messrs. Williams and Scheuerman.) This way, your shares will be voted even if you cannot attend the meeting. How does the Board of Directors recommend I vote on each of the proposals?
How do I vote my shares? Record holders may vote in person at the Annual Meeting, by using the proxy card or by telephone or by the Internet. Persons who beneficially own stock held:
Persons who beneficially own stock can vote at the Annual Meeting provided that they obtain a “legal proxy” from the person or entity holding the stock for him, typically a broker, bank or trustee. A beneficial owner can obtain a legal proxy by making a request to the broker, bank or trustee. Under a legal proxy, the bank, broker or trustee confers all of its legal rights as a record holder (which, in turn, have been passed on to it by the ultimate record holder) to grant proxies or to vote at the Annual Meeting. Set forth below are the various means – Internet, telephone and mail – for voting without attending the Annual Meeting. You may submit your proxy on the Internet. Stockholders of record and most beneficial owners of Common Stock and Preferred Stock may vote via the Internet. Instructions for doing so are provided along with your proxy card or voting instruction form. If you vote on the Internet, please do not mail in your proxy card. Subject to rules relating to broker non-votes, your Internet vote will authorize the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. You may submit your proxy by telephone. Stockholders of record and most beneficial owners of Common Stock and Preferred Stock may vote by telephone. Instructions for doing so are provided along with your proxy card or voting instruction form. If you vote by telephone, please do not mail in your proxy card. Subject to rules relating to broker non-votes, your telephone vote will authorize the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. You may submit your proxy by mail. Simply sign and date the proxy card or voting instruction form received with this proxy statement and mail it in the enclosed prepaid and addressed envelope. If you mark your choices on the card or voting instruction form, your shares will be voted as you instruct. What if I change my mind after I submit my proxy? You may revoke your proxy and change your vote irrespective of the method (i.e., telephone, Internet or mail) in which you originally voted by delivering a later-dated proxy or by voting at the Annual Meeting. The later-dated proxy may be delivered by telephone, Internet or mail and need not be delivered by the same means used in delivering the to-be-revoked proxy. You may do this at a later date or time by:
If you are a registered stockholder, you may obtain a new proxy card by contacting the Corporate Secretary, DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806, telephone (714) 688-7200. If your shares are held by a broker, bank or trustee, you may obtain a new voting instruction form by contacting your broker, bank or trustee. If you sign and date the proxy card or the voting instruction form and submit it in accordance with the accompanying instructions and in a timely manner, any earlier proxy card or voting instruction form will be revoked and your choices on the proxy card or voting instruction form will be voted as you instruct. How will my shares be voted? All proxies received and not revoked will be voted as directed. If you return a signed proxy card but do not mark your choices, your shares will be voted “FOR” all of the following: (a) the election of the Board of Directors’ nominees for directors and (b) the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008. As to any other business which may properly come before the Annual Meeting, the persons named in such proxies will vote in accordance with their best judgment, although the Company does not presently know of any other such business.
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How many shares must be present to hold the meeting? Shares of Common Stock and Preferred Stock will be counted as present at the Annual Meeting if the stockholder is present and votes in person at the Annual Meeting or has properly submitted and not revoked a proxy. A quorum must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. Shares representing a majority of the voting power of the Company’s outstanding shares of Common Stock and Preferred Stock entitled to vote as of the Record Date, present in person or by proxy, will be necessary to establish a quorum for the Annual Meeting. As noted above, treasury shares are not entitled to vote and, therefore, are not counted in determining a quorum. Abstentions and non-votes will be counted for purposes of determining the existence of a quorum at the Annual Meeting. How many votes must the director nominees receive to be elected? Directors are elected by a plurality, and the seven nominees who receive the highest number of “FOR” votes will be elected. There is no cumulative voting for the Company’s directors. A properly executed proxy withholding authority to vote for one or more nominees with respect to the election of directors will not be voted for the director(s) from whom authority to vote is withheld. However, the shares represented will be counted for purposes of determining whether there is a quorum. Withheld votes and broker non-votes, if applicable, will not be taken into account in determining the outcome of the election of directors. What happens if a nominee is unable to stand for election? The Board of Directors may reduce the number of seats on the Board or they may designate a substitute nominee. If the Board designates a substitute, shares represented by proxies will be voted for the substitute nominee. How many votes are required to ratify the appointment of the Company’s independent registered public accounting firm for 2008? The affirmative vote of a majority of the votes cast by holders of the shares of Common Stock and Preferred Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this Proposal, voting together as a single class, will constitute stockholder ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2008. Abstentions, but not broker non-votes, will be treated as shares present and entitled to vote on this proposal. Applying this standard, an abstention will have the effect of a vote “against” this proposal, and a broker non-vote will reduce the absolute number (but not the percentage) of the affirmative votes needed for approval of this proposal. What are broker non-votes? As indicated above, if you are a stockholder of record who submits a proxy but does not indicate how the proxies should vote on one or more matters, the named proxies will vote as recommended by the Company. However, if your shares are held by a broker and you do not provide instructions to the broker on how to vote (whether you use the Internet or telephone or return the enclosed voting instruction form), the absence of instructions may cause a “broker non-vote” on the matters for which you do not provide instructions. Accordingly, if you want to vote your shares on a matter, it is important that you provide voting instructions on that matter. When there is a broker non-vote, the stockholder grants a limited proxy that does not empower the holder to vote on certain types of proposals. Who pays the costs of proxy solicitation? The expenses of soliciting proxies for the Annual Meeting are to be paid by the Company. Solicitation of proxies may be made by means of personal calls upon, or telephonic or telegraphic communications with, stockholders or their personal representatives by directors, officers, employees and consultants of the Company who will not be specially compensated for such services. Although there is no formal agreement to do so, the Company may reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding this Proxy Statement to stockholders whose Common Stock or Preferred Stock is held of record by such entities. What business may be properly brought before the meeting and what discretionary authority is granted? Nominations for Directors for the Annual Meeting. The Bylaws of the Company (the “Bylaws”) set forth certain procedures relating to the nomination of directors (the “Nomination Bylaw”) and no person will be eligible for election as a director unless nominated in accordance with the provisions of the Nomination Bylaw. Under the terms of the Nomination Bylaw, to be timely for the Annual Meeting, a stockholder’s notice must have been delivered to or mailed and received at the principal executive offices of the Company by no later than March 9, 2008. The Company did not receive any director nominations for the Annual Meeting under the Nomination Bylaw. The presiding officer of the Annual Meeting will, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed by the Nomination Bylaw, and if he should so determine, he will so declare to the Annual Meeting and the defective nomination will be disregarded. Notwithstanding the provisions of the Nomination Bylaw, a stockholder also must comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder with respect to the matters set forth in the Nomination Bylaw.
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Stockholder Proposals for the Annual Meeting. The Bylaws set forth certain procedures relating to the procedures for properly bringing business before a meeting of the stockholders (the “Stockholder Proposal Bylaw”). Under the terms of the Stockholder Proposal Bylaw, to be timely for the Annual Meeting, a stockholder must have delivered a notice regarding a proposal delivered to the principal executive offices of the Company by no later than March 9, 2008. The Company did not receive any stockholder proposals for the Annual Meeting pursuant to the Stockholder Proposal Bylaw. The presiding officer of the Annual Meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of the Stockholder Proposal Bylaw, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Rule 14a-8. To the extent that a stockholder desires to have his or her proposal included in the Company’s proxy materials in accordance with Rule 14a-8 under the Exchange Act (“Rule 14a-8”), such proposal must have been received by the Company prior to the deadline for submission calculated in accordance with Rule 14a-8, and not be otherwise excludable under Rule 14a-8. The Company originally disclosed in its proxy materials for last year’s annual meeting that the deadline for submission of proposals for inclusion in the Company’s proxy materials relating to this year’s Annual Meeting was December 18, 2007. No proposals were submitted for inclusion prior to such deadline. The Company has no knowledge or notice that any business other than as set forth in the Notice of Annual Meeting will be brought before the Annual Meeting. As to other matters that properly come before the Annual Meeting and are not on the proxy card, the named proxies will vote the shares of Common Stock and Preferred Stock for which they hold proxies in accordance with their best judgment. For information related to the application of the Nomination Bylaw and the Stockholder Proposal Bylaw for the 2009 Annual Meeting, see the discussion in this Proxy Statement under the caption “Submission of Stockholder Proposals and Director Nominations for the 2009 Annual Meeting.” Is a list of stockholders entitled to vote at the meeting available? A list of stockholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting. It also will be available Monday through Friday from April 21, 2008 through May 12, 2008, between the hours of 9 a.m. and 4 p.m., Pacific Daylight Time, at the offices of the Corporate Secretary, 1220 N. Simon Circle, Anaheim, California 92806. A stockholder of record may examine the list for any legally valid purpose related to the Annual Meeting. Where can I find the voting results of the meeting? We will publish the final results in our quarterly report on Form 10-Q for the second quarter of fiscal 2008. You can read or print a copy of that report by going to the Company’s website, www.ddiglobal.com, and then choosing Investor Relations, SEC Filings. You can find the same Form 10-Q by going directly to the SEC EDGAR files at www.sec.gov. You can also get a copy by calling us at (714) 688-7200, or by calling the SEC at (800) SEC-0330 for the location of a public reference room.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Beneficial Ownership Table The following table sets forth certain information about the beneficial ownership of our Common Stock as of the Record Date by:
The Company is not aware of any holder beneficially owning more than 5% of the voting power of our outstanding Preferred Stock. None of the Company’s officers or directors owns any shares of Preferred Stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the “SEC”) based upon voting or investment power over the securities. Under the rules of the SEC, beneficial ownership includes shares over which the named stockholder exercises voting and/or investment power. Shares and percentages beneficially owned are based upon the number of shares of our Common Stock outstanding on the Record Date, together with options that are exercisable for such respective securities within 60 days of the Record Date for each stockholder. Shares of our Common Stock subject to options that are currently exercisable or will become exercisable within 60 days of the Record Date are deemed outstanding for computing the respective percentage ownership of the person holding the option, but are not deemed outstanding for purposes of computing the respective percentage ownership of any other person. Unless otherwise indicated in the footnotes below, we believe that the persons and entities named in the table have sole voting and investment power with respect to all shares beneficially owned, subject to applicable community property laws. The inclusion of shares in the table does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of the shares.
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No director, officer, affiliate of the Company or record or beneficial owner of more than 5% of the Common Stock or the Preferred Stock, or any associate of such person, is a party adverse to the Company in any material pending legal proceeding or has a material interest adverse to the Company in any such proceeding.
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Securities Authorized for Issuance under Equity Compensation Plans The Company has three equity compensation plans — the 2003 Management Equity Incentive Plan, the 2003 Directors Equity Incentive Plan and the 2005 Stock Incentive Plan. The following table sets forth information regarding the number of shares of our Common Stock that may be issued pursuant to our equity compensation plans or arrangements as of the end of fiscal 2007. Equity Compensation Plan Information
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ELECTION OF DIRECTORS (Proposal 1) Currently, the Company’s Amended and Restated Certificate of Incorporation and Bylaws provide for seven directors. The Nomination and Corporate Governance Committee recommended to the Board, and the Board approved, the nomination of the following seven nominees, Robert J. Amman, Jay B. Hunt, Andrew E. Lietz, Bryant R. Riley, Steven C. Schlepp, Carl R. Vertuca, Jr. and Mikel H. Williams, for election at the Annual Meeting to serve a one-year term expiring at the annual meeting in 2009 and until their respective successors are elected and qualified. Each of the nominees presently serves as a director and has served continuously as a director of the Company since the date indicated in his biography below. All nominees have consented to be named and have indicated their intent to serve if elected. There are no family relationships between any director and any of the other directors or executive officers of the Company. Directors shall be elected by a plurality of the votes cast by the holders of shares of Common Stock and Preferred Stock present in person or represented by proxy at the Annual Meeting, voting together as a single class. If any of the nominees is unable, or declines, to serve as a director at the time of the Annual Meeting (which is not anticipated), the Board of Directors may reduce the number of seats on the Board or it may designate a substitute nominee(s). If the Board designates a substitute, the named proxies will vote for the election of any substitute nominee(s) as may be designated by the Board of Directors. The Board of Directors unanimously recommends a vote for the election of Robert J. Amman, Jay B. Hunt, Andrew E. Lietz, Bryant R. Riley, Steven C. Schlepp, Carl R. Vertuca, Jr. and Mikel H. Williams as Directors. Unless otherwise directed in the accompanying proxy, the persons named therein will vote for the election of the seven Director nominees listed above. All proxy voting procedures, including those by telephone and the internet, will include instructions on how to withhold your vote from any or all nominees. Information About the Director Nominees The following table sets forth information regarding the Director nominees, including age on the date of the Annual Meeting and business experience during the past five years.
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD The Board of Directors manages the business of the Company. It establishes overall policies and standards for the Company and reviews the performance of management. The directors are kept informed of the Company’s operations at meetings of the Board and its committees through reports and analyses from, and discussions with, management. Committees and Meetings of the Board The Board has established an Audit Committee, a Nomination and Corporate Governance Committee, a Compensation Committee and a Finance Committee. Each of the committees operates under a written charter adopted by the Board of Directors, which are available at http://www.ddiglobal.com. Copies of the committee charters may be obtained upon request, without charge, by contacting our Corporate Secretary at (714) 688-7200 or by writing to us at DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806, Attn: Corporate Secretary. Current committee membership and the number of meetings of the Board and each committee in 2007 are shown in the table below. Each of the incumbent directors attended at least 75% of the aggregate of the total number of meetings of the Board of Directors held during the Fiscal Year. Each of the incumbent directors who were members of a committee attended at least 75% of the aggregate of the total number of meetings held by all committees of the Board on which he served during the Fiscal Year.
Audit Committee. The Audit Committee provides oversight of the (a) financial reporting process, the system of internal control and the audit process of the Company and (b) the Company’s independent registered public accounting firm. The Audit Committee evaluates the performance of the independent registered public accounting firm, and makes decisions regarding the selection, retention and, where appropriate, the replacement of the independent registered public accounting firm. The Audit Committee also reviews with management and the Company’s independent registered public accounting firm the Company’s interim and year-end financial statements, and discusses with management and the independent registered public accounting firm any significant accounting and reporting issues and conformance of the Company’s financial statements with applicable accounting and regulatory requirements. The Audit Committee is responsible for recommending to the Board of Directors whether the Company’s audited financial statements should be included in the Company’s annual report on Form 10-K and whether the Company’s interim financial statements should be included in the Company’s quarterly reports on Form 10-Q. Compensation Committee. The responsibilities of the Compensation Committee include: (a) assisting the Board in developing and evaluating potential candidates for executive positions and overseeing the development of executive succession plans; (b) recommending to the Board, with the assistance of the other independent directors on the Board, the compensation, including incentive pay, of the chief executive officer; (c) approving the annual compensation of the other executive officers of the Company; and (d) administering the Company’s incentive compensation and stock based plans, including the Dynamic Details Senior Management Bonus Program and determining awards thereunder.
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The Company’s Chief Executive Officer works with the Compensation Committee Chair and the Vice President, General Counsel and Corporate Secretary in establishing the agenda for the Committee and makes compensation recommendations for the executive officers (other than himself). The Compensation Committee meets in executive session while discussing the compensation of the Chief Executive Officer. The Compensation Committee’s Chairman reports the committee’s recommendations on executive compensation to the Board. The Compensation Committee has the authority under its charter to obtain advice and assistance from internal or external legal, accounting or other advisors. The Compensation Committee may form and delegate authority to subcommittees as it deems appropriate and may delegate its responsibility to control and manage the plan assets of our employee benefit plans. In addition, under the terms of our stock incentive plans, the Compensation Committee may delegate its powers and authority under the stock incentive plan as it deems appropriate to a subcommittee and/or designated officers. Pursuant to this authority, the Committee granted to the Chief Executive Officer the authority to grant up to 418,571 stock options to non-officer employees of the Company in 2006. The Compensation Committee has the sole authority and resources to retain and terminate any compensation consultant to be used to assist in the evaluation of the Chief Executive Officer or other executive officer and has sole authority to approve the consultant’s fees and other retention terms. Finance Committee. The responsibilities of the Finance Committee include evaluating and making recommendations to the Board regarding debt and equity financing transactions and other significant financial matters and transactions. Nomination and Corporate Governance Committee. The Nomination and Corporate Governance Committee identifies and recommends candidates for election to the Board of Directors. It advises the Board of Directors on all matters relating to directorship practices, including the criteria for selecting directors, policies relating to tenure and retirement of directors and compensation and benefit programs for non-employee directors. The Nomination and Corporate Governance Committee also makes recommendations relating to the duties and membership of committees of the Board of Directors, recommends processes to evaluate the performance and contributions of individual directors and the Board of Directors as a whole, and approves procedures designed to provide that adequate orientation and training are provided to new members of the Board of Directors. The Nomination and Corporate Governance Committee also makes recommendations relating to the development of the Company’s corporate governance guidelines. Corporate Governance The board of directors has established guidelines that it follows in matters of corporate governance. The following summary provides some highlights of those guidelines. A complete copy of the guidelines is available online at http://www.ddiglobal.com or in paper form upon request to the Company’s Corporate Secretary. Code of Business Conduct and Ethics and Corporate Governance Guidelines. The Company is committed to having sound corporate governance principles. The Company’s Code of Business Conduct and Ethics, which is applicable to our directors, Chief Executive Officer, Chief Financial Officer and Controller as well as all of our other employees, is available at http://www.ddiglobal.com. Our Corporate Governance Guidelines can be found at http://www.ddiglobal.com. Copies of each of these documents may be obtained upon request, without charge, by contacting our Corporate Secretary at (714) 688-7200 or by writing to us at DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806, Attn: Corporate Secretary. Director Nomination Process. Nominations for directors submitted to the Nomination and Corporate Governance Committee by stockholders, other directors or management are evaluated according to the nominee’s knowledge, experience and background. While the Nomination and Corporate Governance Committee does not have any specific minimum qualifications for director candidates, the Nomination and Corporate Governance Committee may take into consideration such factors and criteria as it deems appropriate in evaluating a candidate, including his or her judgment, skill, integrity, diversity and business or other experience. The Nomination and Corporate Governance Committee is responsible for identifying and evaluating candidates for Board membership and selecting or recommending to the Board nominees to stand for election. Candidates may come to the attention of the Nomination and Corporate Governance Committee through current Board members, professional search firms, stockholders or other persons. The Nomination and Corporate Governance Committee evaluates all candidates selected for consideration, including incumbent directors, based on the same criteria as described above. After such evaluation, the candidates are then recommended by the Nomination and Corporate Governance Committee to the Board. The Board, after deliberation, acts to select the final slate of director nominees to be included in the Company’s proxy statement. The Nomination and Corporate Governance Committee will consider nominees recommended by stockholders. Any stockholder who wishes to recommend for the Nomination and Corporate Governance Committee’s consideration a prospective nominee to serve on the Board of Directors may do so by giving the candidate’s name and qualifications in writing to the Company’s Secretary at the following address: DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806, Attn: Corporate Secretary.
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Director Independence. The Board of Directors has affirmatively determined that the following six members of the Board are independent as that term is defined by the NASDAQ Stock Market’s Marketplace Rules: Robert J. Amman, Jay B. Hunt, Andrew E. Lietz, Bryant R. Riley, Steven C. Schlepp and Carl R. Vertuca, Jr. Mr. Williams, our Chief Executive Officer, is our only non-independent director. Each member of the Compensation Committee and the Nomination and Corporate Governance Committee is independent under NASDAQ’s rules. In addition, each of the members of the Audit Committee is independent, as defined in Rule 4200(a)(15) of the NASDAQ Stock Market’s Marketplace Rules and as defined under the rules promulgated by the SEC. In making these independence determinations, the Board considered various relationship categories including: whether the director is an employee, amount of stock ownership, and commercial, industrial, banking, consulting, legal, accounting or auditing, charitable and familial relationships, as well as a range of individual circumstances. The Board has also determined that each member of our Compensation Committee is an “outside director” within the meaning of Rule 162(m) of the Internal Revenue Code and is a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934. Communications with the Board. You may send communications to the Company’s Board of Directors, to the non-management members of the Board or to an individual Board member by directing an e-mail to directors@ddiglobal.com or by sending a letter to DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806, Attn: Corporate Secretary. The Corporate Secretary will forward these communications to the intended recipients. Unsolicited advertisements or invitations to conferences or promotional materials, in the discretion of the Secretary, may not be forwarded to Directors. Director Attendance at Annual Stockholder Meetings. Under the Company’s Corporate Governance Guidelines, the Company’s directors are expected to attend annual meetings of the Company’s stockholders. Six of the Company’s directors attended the Company’s annual meeting of stockholders in 2007. Compensation of Directors Directors who are also employees of the Company are not paid any fees or remuneration, as such, for their service on the Board or on any Board committee. In 2007, we provided the following annual compensation to directors who are not employees:
Stock Options. Our Board of Directors grants stock options to non-employee directors from time to time. The following table includes certain information with respect to the value of all outstanding and unexercised options previously awarded to the Company’s non-employee directors as of the fiscal year ended December 31, 2007. At fiscal year end, the aggregate number of option awards outstanding for each director was as follows: Robert J. Amman 110,713; Jay B. Hunt 110,713; Andrew E. Lietz 110,713; Bryant R. Riley 10,000; Steven C. Schlepp 96,428; and Carl R. Vertuca, Jr. 110,713.
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Acceleration of Stock Options for Robert M. Guezuraga. On March 8, 2007, Robert M. Guezuraga advised the Board of Directors that he will retire from the Board effective as of May 8, 2007, the date of the Annual Meeting. In recognition of Mr. Guezuraga’s long service to the Company, the Board approved an amendment, which was effective upon Mr. Guezuraga’s retirement, to 96,428 stock options previously granted to Mr. Guezuraga under the Company’s 2005 Stock Incentive Plan, with exercise prices ranging from $5.67 to $7.79 per share, to accelerate the vesting and to extend the exercise period to one year following the effective date of his retirement.
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RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Proposal 2) Selection of Independent Registered Public Accounting Firm The Audit Committee has selected PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008 and has requested that the Board submit such selection for ratification by the stockholders at the Annual Meeting. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. Stockholder ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. The Board believes that submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification is advisable as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm; however, the Audit Committee may retain PricewaterhouseCoopers LLP notwithstanding the failure of the stockholders to ratify the selection. If the selection is ratified, the Audit Committee may, in its discretion, direct the appointment of a 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. Vote Required The affirmative vote of a majority of the votes cast by the holders of the shares of Common Stock and Preferred Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal, voting as a single class, will be required to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. Board Recommendation The Board of Directors unanimously recommends a vote in favor of the ratification of appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. Relationship of the Company with the Independent Registered Public Accounting Firm The following table sets forth the fees (excluding reimbursable out of pocket expenses) billed to us by PricewaterhouseCoopers LLP, our independent registered public accounting firm for each of the last two fiscal years.
Audit fees. This category includes fees for the annual audit of our consolidated financial statements (a portion of which are incurred and paid in the following fiscal year), the review of financial statements included in our quarterly reports on Form 10-Q during the respective fiscal year, and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements related to those fiscal years. Audit related fees. This category includes fees relating to due diligence associated with potential merger and acquisition transactions.
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Tax fees. This category consists of tax services, including tax compliance, tax advice and tax planning incurred during the respective fiscal year. All other fees. This category consists of licensing of accounting literature software. The Audit Committee of our Board of Directors has established a practice that requires the Audit Committee to pre-approve any audit or permitted non-audit services to be provided to us by our independent registered public accounting firm, PricewaterhouseCoopers LLP, in advance of such services being provided to us. Under the SEC rules, subject to certain de minimis criteria, pre-approval is required for all professional services rendered by our principal independent registered public accounting firm. We are in compliance with these SEC rules. Report of the Audit Committee of the Board of Directors Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act that might incorporate this Proxy Statement or future filings with the SEC, in whole or in part, the following report shall not be deemed to be incorporated by reference into any such filing. The Audit Committee has reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2007 with the Company’s management. The Audit Committee has discussed with PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The Audit Committee has also received the written disclosures and the letter from PricewaterhouseCoopers LLP required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees) and the Audit Committee has discussed the independence of PricewaterhouseCoopers LLP with that firm. Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the SEC.
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COMPENSATION OF EXECUTIVE OFFICERS Compensation Discussion and Analysis for Named Executive Officers The following Compensation Discussion and Analysis describes the material elements of compensation for the Company’s named executive officers identified in the Summary Compensation Table below. Objectives of Compensation Program The primary objective of the Company’s compensation program, including our executive compensation program, is to maintain a compensation program that will fairly compensate our executives and employees, attract and retain qualified executives and employees who are able to contribute to our long-term success, induce performance consistent with clearly defined corporate goals and align our executives’ long-term interests with those of our stockholders. To that end, the Company’s compensation practices are intended to:
Role of the Compensation Committee The Compensation Committee makes all decisions for the total direct compensation – that is, base salary, cash incentive awards under the Company’s incentive bonus plan and stock-based awards – of the Company’s executive officers and other members of the Company’s senior management team, including the named executive officers. Independent board members who are not members of the Compensation Committee also participate in Committee deliberations regarding executive compensation. The Committee also oversees our employee benefit plans. The Compensation Committee considers the recommendations from Mikel Williams, our Chief Executive Officer, in determining executive compensation. In making his recommendations, Mr. Williams receives input from our Human Resources Department and has access to compensation data of publicly-traded companies, including our competitors, such as TTM Technologies and Merix Corp., that we obtain from SEC filings. This information is also available to the Compensation Committee. The Committee uses the available data primarily to ensure that the Company’s executive compensation program as a whole is competitive. The Compensation Committee annually reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives, and determines the Chief Executive Officer’s compensation levels based on this evaluation. In determining the long-term incentive component of the Chief Executive Officer’s compensation, the Committee considers corporate performance, the value of similar incentive awards to chief executive officers at comparable companies and the awards given to the Chief Executive Officer in past years. For the other named executive officers, the Committee receives a performance assessment and compensation recommendation from the Chief Executive Officer and also exercises its judgment based on the Board’s interactions with the named executive officers. As with the Chief Executive Officer, the performance evaluation of these executives is based on achievement of pre-agreed objectives by the executive, his or her contributions to the Company’s performance and other leadership accomplishments.
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Components of Executive Compensation for 2007 The elements of the Company’s compensation program are base salaries, bonus compensation based upon incentive goals and objectives and stock-based equity awards. Our compensation program is designed to balance our need to provide our named executive officers with incentives to achieve our short- and long-term performance goals with the need to pay competitive base salaries. There is no pre-established policy for allocating between cash and non-cash or short-term or long-term compensation. Each named executive officer’s current and prior compensation is considered in setting future compensation. Base Salaries Base salary is the guaranteed element of employees’ annual cash compensation. Base salaries are generally based on relative responsibility and are targeted to provide guaranteed cash compensation in line with median base salaries for similarly situated companies. The value of base salary reflects the employee’s long-term performance, skill set and the market value of that skill set. Base salaries for our named executive officers are reviewed on an annual basis and adjustments are made to reflect performance-based factors, as well as competitive conditions. The Company does not apply specific formulas to determine increases. In setting base salaries for 2007, the Compensation Committee considered the following factors:
In April 2007, the Compensation Committee increased the base salary of Sally L. Goff, the Company’s Chief Financial Officer, by 25% to $250,000. In December 2007, the Compensation Committee increased the base salary of Gerald P. Barnes, the Company’s Senior Vice President – Sales, by 25% to $250,000. The Compensation Committee approved both increases based upon the recommendation of Mr. Williams, the Chief Executive Officer, based primarily on individual performance and publicly available market data for similarly situated executives of the Company’s competitors. Cash Incentive Bonuses The Company believes that as an employee’s level of responsibility increases, a greater portion of the individual’s cash compensation should be variable and linked to both quantitative and qualitative expectations, including key financial, operational and strategic metrics. To that end, the Company has established an annual cash bonus program in order to align employees’ goals with the Company’s financial, strategic and tactical objectives for the current year. The Dynamic Details, Incorporated Senior Management Bonus Program for Fiscal 2007 For 2007, the Compensation Committee established the Dynamic Details, Incorporated Senior Management Bonus Program for the fiscal year ended December 31, 2007 (the “2007 Bonus Program”). Under the 2007 Bonus Program, bonus target amounts, expressed as a percentage of base salary, were established for participants at the beginning of the year. Bonus payouts for the year were then determined by (a) the achievement by the Company of certain financial goals/targets set forth in the Company’s annual budget related to the Company’s EBITDA from the Company’s consolidated operations including the total amount of expense accrued for bonus payments awarded under the 2007 Bonus Program and certain other adjustments (“Net Adjusted EBITDA”); and (b) each participating employee meeting pre-established annual personal objectives. Satisfactory individual performance is a condition to payment. The 2007 Bonus Program also provided the Compensation Committee with discretion to grant discretionary bonuses to participants, including the named executive officers, based upon individual performance or the occurrence of events that the Compensation Committee considers extraordinary. Such discretionary bonuses do not require a minimum Net Adjusted EBITDA achievement.
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The Compensation Committee considered the following when establishing the awards for 2007:
In fiscal 2007, the Net Adjusted EBITDA targets under the 2007 Bonus Program were not met and no amounts were paid out under the 2007 Bonus Program for Company performance. The Compensation Committee, however, awarded discretionary bonuses, in addition to the personal performance bonuses earned, to certain participants after considering the individual contributions in fiscal 2007. Mr. Williams received a discretionary bonus in the amount of $22,500, and Ms. Goff and Messrs. Mathews and Barnes each received a discretionary bonus in the amount of $10,000 in recognition of their contributions in fiscal 2007. These discretionary bonuses were well below the target bonuses the named executive officers would have received under the 2007 Bonus Program had the Company met its Net Adjusted EBITDA target.
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Dynamic Details, Incorporated Senior Management Bonus Program for Fiscal 2008 On December 4, 2007, the Compensation Committee of the Board of Directors of the Company adopted the Dynamic Details, Incorporated Senior Management Bonus Program for the fiscal year ending December 31, 2008 (the “2008 Bonus Program”). Selected employees, including all of the Company’s executive officers, are eligible to participate in the 2008 Bonus Program. Each participant in the 2008 Bonus Program has been assigned a target annual cash bonus. Participants may earn their bonuses based on (a) the achievement by the Company of its Net Adjusted EBITDA target for 2008; and (b) each participating employee meeting pre-established personal objectives. Target bonuses for 2008 are generally in line with the percentages of base salary and the corporate-personal mixes that were in effect for 2007. The Compensation Committee increased the 2008 corporate performance target of Net EBIDTA to approximately $28.3 million. The Committee also modified the bonus payout schedule with respect to the Net Adjusted EBITDA achievement thresholds for bonus percentage payouts. Under the 2008 Bonus Program, if 70% of the Net EBITDA target is achieved, then 30% of the EBITDA bonus is paid. Between 70% and 100%, the bonus is calculated on a pro rata basis up to 100%. Between 100% achievement and 150% achievement, the bonus is calculated on a pro rata basis up to 200%. The following table shows the differences in the payout schedule for 2008 as compared to 2007:
The 2008 Bonus Program provides the Compensation Committee with discretion to grant additional discretionary bonuses to participants, including the Company’s named executive officers, in the event that the Company achieves Net EBIDTA of 150% or more of the Company’s target. The 2008 Bonus Program also provides the Compensation Committee with discretion to grant discretionary bonuses to participants, including the named executive officers, based upon individual performance or the occurrence of events that the Compensation Committee considers extraordinary. The schedule below shows the award guidelines for the 2008 awards for named executives who are currently employed with the Company:
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Long-Term Incentives Long-term incentive awards are a key element of the Company’s total compensation package for the named executive officers. We also have adopted an equity incentive approach intended to reward longer-term performance and to help align the interest of our named executive officers with those of our stockholders. We believe that long-term performance is achieved through an ownership culture that rewards performance by our named executive officers through the use of equity incentives. Our equity incentive plans have been established to provide our employees, including our named executive officers, with incentives to help align those employees’ interests with the interests of our stockholders. Our equity incentive plans have provided the principal method for our named executive officers to acquire equity interests in the Company. The size and terms of the awards for an individual recipient will depend upon the level of responsibility of the recipient; the expected future contributions to the growth and development of the Company; the value of past service; and the number of options and restricted shares owned by other executives in comparable positions within the Company. The Company’s 2005 Stock Incentive Plan provides for a variety of long-term awards including stock options, restricted stock, restricted share units and performance awards. In 2007, the Compensation Committee used primarily restricted stock as the means to provide the long-term component to the overall compensation package. Restricted Share Awards Historically, the Company primarily awarded equity compensation in the form of stock options. However, the accounting treatment for stock options changed with the adoption of SFAS 123R, which made the accounting treatment for stock options less attractive. In 2007, the Compensation Committee reassessed the relative advantages and disadvantages of various forms of equity compensation and concluded that awarding restricted share awards would be a more motivating form of incentive compensation for the Company’s senior management employees and would permit the Company to issue fewer shares, thereby reducing the potential dilutive impact on the Company’s stockholders. As a result, the Compensation Committee issued restricted share awards to members of senior management, including the named executive officers in December 2007. Mr. Williams was awarded 40,000 restricted shares, and the other named executive officers were each awarded 20,000 restricted shares. The size of the restricted share awards made to each named executive officer was based on the named executive officer’s specific position and level of responsibility. The Compensation Committee intends to continue to evaluate its equity compensation program and may in the future issue either restricted share awards, stock options or a combination thereof as it deems appropriate. Stock Options Stock options provide for financial gain derived from the potential appreciation in stock price from the date that the option is granted until the date that the option is exercised. The grant date is established when the Compensation Committee approves the grant and all key terms have been determined. The exercise price of stock option grants is set at the fair market value on the date of grant, which is the closing price on the Nasdaq Global Market. Under the stockholder-approved 2005 Stock Incentive Plan, the Company may not grant stock options at a discount to the fair market value or reduce the exercise price of outstanding options, except with the approval of the stockholders or except in the case of a stock split or other similar event. The Company does not grant stock options with a so-called “reload” feature, nor does it loan funds to employees to enable them to exercise stock options. Stock options are generally granted at regularly-scheduled meetings of the Compensation Committee that coincide with the Company’s regular Board Meetings. On occasion, the Compensation Committee has granted options between regularly scheduled meetings to provide stock options to newly-hired executives and executives receiving a promotion. The Company is working to eliminate “off cycle” grants to the extent possible. Perquisites and Other Benefits The Company does not provide significant perquisites or personal benefits to our named executive officers, except that all of the named executive officers receive car allowances. The costs associated with these benefits for named executive officers are included in the Other Compensation column of the Summary Compensation Table. In 2006, the Compensation Committee approved relocation assistance to Mr. Mathews in connection with his promotion to Senior Vice President – Manufacturing Operations. The relocation assistance, which has extended over a two year period, consists of transaction costs relating to the sale of his home in New Hampshire and the purchase of a new home in California, up to $3,000 per month for rent and living expenses for a temporary residence in California, physical relocation expenses, and a gross up of income taxes, to the extent the relocation benefits are taxable.
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Employment and Severance Agreements Each of the named executive officers, as well as certain other key employees, is a party to an employment agreement with the Company. A description of the terms of the agreements with the named executive officers can be found beginning on page 26 of this Proxy Statement under the caption “Employment Contracts and Termination of Employment and Change of Control Arrangements.” The principal purpose of the employment agreements is to protect the Company from certain business risks (e.g., threats from loss of confidentiality or trade secrets, disparagement, solicitation of customers and employees) and to define the Company’s right to terminate the employment relationship. In return, the executive officers are provided assurances with regard to salary, other compensation and benefits, as well as certain severance benefits. The employment agreements are intended to preserve employee morale and productivity and encourage retention. They are also intended to align executive and stockholder interests by enabling executives to consider corporate transactions that are in the best interests of the stockholders and other constituents of the Company without undue concern over whether the transactions may jeopardize the executives’ own employment. Financial Restatements Our Compensation Committee does not have an established practice regarding the adjustment or recovery of awards or payment if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment previously made. The Compensation Committee will determine whether to seek recovery of incentive compensation in the event of a financial restatement or similar event based on the facts and circumstances surrounding a financial restatement or similar event, should one occur. Among the key factors that the Compensation Committee will consider is whether the executive officer engaged in fraud or willful misconduct that resulted in need for a restatement. In addition, individual performance objectives for executive officers under our 2007 or 2008 Bonus Programs include compliance with laws and Company policies and procedures. As a result, an executive’s bonus may be adversely affected to the extent a financial restatement or similar event involved a violation of law or Company policy. The Impact of Favorable Accounting and Tax Treatment on Compensation Program Design Favorable accounting and tax treatment of the various elements of our compensation programs is an important consideration in their design; however, it is not the sole consideration. Section 162(m) of the Internal Revenue Code limits the deductibility of certain items of compensation paid to the Chief Executive Officer, Chief Financial Officer and to each of the named executive officers, or collectively Covered Employees, to $1.0 million annually. Although the Company’s 2007 Bonus Program and 2008 Bonus Program have not been designed to provide for the deductibility of bonus compensation to Covered Employees, the Company’s 2005 Stock Incentive Plan has been designed to provide for the deductibility of compensation to the Covered Employees for the incentive awards under that Plan. Similar to the decisions made with respect to the 2007 and 2008 Bonus Programs, the Compensation Committee reserves the right to provide for compensation to Covered Employees that may not be deductible. Effective January 2006, the Company began expensing equity awards in accordance with SFAS 123R. This results in significantly higher accounting expenses for our stock option awards. Stock Ownership Requirements The Board has historically encouraged its members and members of senior management to acquire and maintain stock in the Company to link the interests of such persons to the stockholders. However, neither the Board nor the Compensation Committee has established stock ownership guidelines for members of the Board or the executive officers of the Company. Securities Trading Policy/Hedging Prohibition Officers and other employees may not engage in any transaction in which they may profit from short-term speculative swings in the value of the Company’s securities. This includes “short sales” (selling borrowed securities which the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (selling owned, but not delivered securities), “put” and “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price) and hedging transactions, such as zero-cost collars and forward sale contracts. In addition, this policy is designed to ensure compliance with all insider trading rules.
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Compensation Committee Interlocks and Insider Participation In 2007, our Compensation Committee consisted of Jay B. Hunt, Andrew E. Lietz, Steven C. Schlepp and Bryant R. Riley. No member of the Compensation Committee is or was an officer or employee of the Company or any of its subsidiaries. During 2007, no member of the Compensation Committee had a current or prior relationship that must be described under the SEC rules relating to disclosure of related party transactions. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our Board of Directors or our Compensation Committee. The following report of our Compensation Committee shall not be deemed soliciting material or to be filed with the Securities and Exchange Commission or be subject to Regulation 14A or 14C under the Securities Act or to the liabilities of Section 18 of the Securities Exchange Act, nor shall any information in this report be incorporated by reference into any past or future filing under the Securities Act or the Securities Exchange Act, except to the extent that we specifically request that it be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Securities Exchange Act. Compensation Committee Report The Compensation Committee, comprised of a majority of independent directors, reviewed and discussed the foregoing Compensation Discussion and Analysis with the Company’s management and based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2007 and in the proxy statement on Schedule 14A relating to the Annual Meeting.
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Summary Compensation Table The following table summarizes compensation of our Chief Executive Officer, Chief Financial Officer and our other most highly compensated executive officers other than our Chief Executive Officer and Chief Financial Officer who were serving as executive officers at the end of 2007 (collectively, the “named executive officers”).
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Grants of Plan-Based Awards The table below sets forth information on grants of options and stock awards to the named executive officers in fiscal year 2007.
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Outstanding Equity Awards at Fiscal Year End The following table summarizes the outstanding equity awards held by the named executive officers as of December 31, 2007.
Option Exercises and Vesting of Restricted Share Awards No stock options were exercised by the named executive officers in 2007, and no restricted share awards vested in 2007 for the named executive officers. Employment Contracts and Termination of Employment and Change of Control Arrangements The Company currently has employment agreements with the following named executive officers: Mikel Williams, Sally L. Goff, Michael R. Mathews and Gerald P. Barnes. Although there are some differences in benefit levels depending on the employee’s job level and seniority, the basic elements of the employment agreements are comparable for all named executive officers. Base Salary. Each employment agreement establishes the base salary for the named executive officer, which may be increased, but not decreased on an annual basis. The current base salaries for the named executive officers are as follows: Mr. Williams — $375,000; Ms. Goff — $250,000; Mr. Mathews — $275,000; and Mr. Barnes — $250,000. Term and Termination. The employment agreements have no specific term and are subject to termination by either the Company or the named executive officers at any time with or without cause. Covered terminations. Under the employment agreements, the named executive officers are eligible for payments if their employment is terminated (a) involuntarily by the company without cause, or (b) for Good Reason by the employee, as defined in the respective employment agreement. Under Mr. Williams’ employment agreement, Good Reason includes, among other situations, the completion of a transaction that results in the Company’s stock (or the stock of its successor) not being listed on a U.S. national securities exchange.
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Severance Payments. Under the Employment Agreements, the named executive officers are eligible for severance payments if their employment is terminated (a) involuntarily by the Company without cause or (b) by the Executive Officer for Good Reason., as defined in the respective Employment Agreements. For Mr. Williams, severance payments consist of 24 months of base salary, payment of a pro rata portion of the then-current target cash bonuses for the year in which the termination occurs (assuming 100% achievement of target objectives), plus a bonus payment equal to 200% of his base salary (i.e., a 100% payout of target bonuses for the 24-month severance period). For the other named executive officers, severance payments consist of base salary for 12 months and payment of a pro rata portion of the then-current target cash bonuses for the year in which the termination occurs. The Employment Agreements with the named executive officers (other than Mr. Williams) also provide additional “double trigger” assurances following a change in control. In such a situation, in lieu of a pro-rata bonus payment, Ms. Goff and Messrs. Mathews and Barnes would receive a bonus payment equal to a 100% payout of the target bonus for the year in which the termination occurred, but only if his or her employment is terminated without cause or for Good Reason within twelve months following a change in control. Benefit continuation. In the event of termination of employment without cause or for Good Reason, the named executive officer’s basic employee benefits such as health insurance would be continued for the duration of the severance period. Accelerated vesting of equity awards. In the event of termination of employment without cause or for good reason, any unvested equity awards at the time of termination of employment that would have vested during the severance period becomes vested and the post-termination exercise period for stock options will be extended to one-year. In addition, all stock options and restricted stock awards awarded under the Company’s 2005 Stock Incentive Plan provide for the acceleration of all unvested stock options upon a change in control. The employment agreements of Messrs. Williams, Mathews and Barnes also provide upon termination of employment due to death or disability for the acceleration of vesting of stock options and restricted stock awards to the extent such options or awards would have vested during the severance period. Nonsolicitation and Noncompetition. Each named executive officer has agreed to non-solicitation and confidentiality provisions in his or her respective Employment Agreement. The Employment Agreements provide that the named executive officers will not solicit customers or employees of the Company during their employment with the Company or following termination for the duration of the applicable severance period. The Employment Agreements further provide that the named executive officers will not accept employment with certain identified competitors of the Company during their employment or following termination for the duration of the applicable severance period. Tax Matters. The Employment Agreement with Mr. Williams provides that the Company will indemnify Mr. Williams, on a fully grossed-up basis, for any tax imposed by Section 4999 of the Code on “excess parachute payments” (as defined in Section 280G of the Code) in connection with certain changes in control or under Section 409A of the Code. If any payment due to an Executive Officer is subject to a six-month delay pursuant to Section 409A of the Code, the Company will pay the Executive Officer interest on such delayed payments. Miscellaneous. The Company has agreed to indemnify each Executive Officer to the fullest extent permitted by law against any claims or losses arising in connection with such officer’s service to the Company or any affiliate. Under the Employment Agreement with Mr. Mathews, the Company will reimburse Mr. Mathews for certain relocation expenses and pay certain living expenses for Mr. Mathews until he relocates his permanent residence from New Hampshire to California.
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The following table sets forth the potential payments upon termination of the named executive officers as of December 31, 2007, assuming the termination event had taken place on December 31, 2007. The amounts shown include amounts earned through December 31, 2007, and are estimates of the amounts which would be paid out to the executives upon their termination following a termination event. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company, and such amounts may be subject to re-negotiation at the time of actual termination. The amounts shown for accelerated vesting of equity incentive awards reflect the market price of shares of restricted stock that would vest upon termination, based upon the closing price of our common stock on December 31, 2007. The exercise prices of all stock options that would be accelerated upon termination were greater than the closing price of our common stock at December 31, 2007. The amounts shown in the table below do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include accrued salary and vacation pay and distributions of plan balances under the Dynamic Details 401(k) plan. The named executive officers are not entitled to any severance benefits upon involuntary termination for cause or voluntary termination without good reason.
(Footnotes continued on the next page.)
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TRANSACTIONS WITH MANAGEMENT AND OTHERS Transactions with Related Persons, Promoters and Certain Control Persons The Company had no related party transactions since the beginning of 2007 and there are no currently proposed transactions. Related party transactions are transaction in excess of $120,000 involving the Company and its subsidiaries and related persons. Related persons include the Company’s directors, director nominees and executive officers since the beginning of the Company’s last fiscal year, beneficial owners of 5% or more of any class of the Company’s voting securities and members of their respective immediate Family, as defined in the SEC’s rules. Review, Approval or Ratification of Transactions with Related Persons The Audit Committee charter provides that the Audit Committee shall review and approve all related party transactions. We have a number of policies, procedures and practices that relate to the identification, review and approval of related party transactions. In accordance with our Corporate Governance Guidelines, our Board reviews on an annual basis the relationships that each director has with the Company, either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company. Following such annual review, only those directors who the Board affirmatively determines have no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) will be considered independent directors, subject to additional qualifications prescribed under the listing standards of Nasdaq and under applicable law. As part of the annual review process, the Office of the Corporate Secretary distributes and collects questionnaires that solicit information about any direct or indirect transactions with the Company from each of our directors and officers, reviews the responses to these questionnaires and reports the results to the Nomination and Corporate Governance Committee. Our Code of Business Conduct and Ethics requires all employees to avoid any situation that involves conflict with their duty to, or with any interest of, the Company to avoid actual or apparent conflicts of interest in personnel and professional relationships. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities of DDi Corp. Officers, directors and greater-than-ten-percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
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To our knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required during the year ended December 31, 2007 or prior years and except as disclosed in the following paragraph, the Company’s officers, directors and greater-than-ten-percent beneficial owners complied with all Section 16(a) filing requirements. Bryant R. Riley filed a late Form 4 in December 2007 in connection with a grant of stock options. SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2008 ANNUAL MEETING Nominations for Directors for the 2009 Annual Meeting No person will be eligible for election as a director unless nominated in accordance with the provisions of the Nomination Bylaw. Nominations of persons for election to the Board of Directors may be made by (a) the Board of Directors or (b) any stockholder who (i) will be entitled to vote for the election of directors at the annual meeting and (ii) complies with the notice procedures set forth in the Nomination Bylaw. Nominations by stockholders must be made in written form to the Secretary of the Company. Under the Nomination Bylaw, to be timely for an annual meeting, a stockholder’s notice must be delivered to or mailed and received at the Company’s principal executive offices not more than 90 days nor less than 60 days prior to the first anniversary of the date of the Company’s immediately preceding annual meeting of stockholders; provided, however, that in the event the annual meeting is called for a date that is not within 30 calendar days of the anniversary date of the date on which the immediately preceding annual meeting of stockholders was held, to be timely, notice by the stockholder must be so received at the Company’s principal executive offices at DDi Corp., 1220 N. Simon Circle, Anaheim, California 92806, Attn: Corporate Secretary not later than the close of business on the 10th calendar day following the day on which public announcement of the date of the annual meeting is first made. To be effective, the written notice must include: (a) as to each person, if any, whom the stockholder intends to nominate for election or reelection as a director: (i) the name, age, business address and residence address of such person; (ii) the principal occupation or employment of such person; (iii) the number of shares of stock of the Company which are beneficially owned by such person, and any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (b) as to the stockholder giving notice, (i) the name and address of the stockholder proposing such nomination, as he/she appears on the Company’s books, and (ii) the class and number of shares of the Company which are beneficially owned by the stockholder. Under the Nomination Bylaw, in order to be timely for the 2009 Annual Meeting, a stockholder’s notice regarding a director nomination must be delivered to or mailed and received at the Company’s principal executive offices not earlier than February 12, 2009 and not later than March 14, 2009. Stockholder Proposals for the 2009 Annual Meeting Under the terms of the Stockholder Proposal Bylaw, to be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors; or (c) otherwise properly brought before an annual meeting by a stockholder. For business (other than the nomination of directors, which is governed by the Nomination Bylaw) to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a stockholder’s notice must be delivered to or mailed and received at the Company’s principal executive offices not less than 60 days nor more than 90 days prior to the anniversary of the date of the Company’s immediately preceding annual meeting of stockholders; provided, however, that in the event the annual meeting is not held within 30 calendar days of the anniversary date of the date on which the immediately preceding annual meeting of stockholders was held, to be timely, notice by the stockholder must be so received not later than the close of business on the 10th calendar day following the day on which public announcement of the date of the annual meeting is first made. Under the Stockholder Proposal Bylaw, in order to be timely for the 2009 Annual Meeting, a stockholder’s notice regarding a proposal must be delivered to or mailed and received at the Company’s principal executive offices not earlier than February 12, 2009 and not later than March 14, 2009. To be effective, the written notice must include, as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and address, as they appear on the Company’s books, of the stockholder proposing such business; (c) the class and number of shares of the Company which are beneficially owned by the stockholder; (d) any material interest of the stockholder in such business; and (e) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Exchange Act in his or her capacity as a proponent of a stockholder proposal.
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Stockholder Proposal for Inclusion in Proxy Statement for the 2009 Annual Meeting If you want us to consider including a proposal in the Company’s proxy materials relating to the 2009 Annual Meeting in accordance with SEC Rule 14a-8, you must submit such proposal to the Company no later than December 15, 2008. If such proposal is in compliance with all of the requirements of Rule 14a-8, and not otherwise excludable under Rule 14a-8, we will include it in the proxy statement and set it forth on the form of proxy issued for such annual meeting of stockholders. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included. You should direct any such stockholder proposal to the attention of the Secretary of the Company at our address set forth on the first page of this Proxy Statement. AVAILABILITY OF ANNUAL REPORT You may obtain, without charge, a copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, including the financial statements and the financial statement schedules required to be filed with the SEC pursuant to rule 13a-1 of the Exchange Act. You may also obtain copies of exhibits to the Form 10-K, but the Company will charge a reasonable fee to stockholders requesting such exhibits. You should direct your request in writing to the Company at the Company’s address set forth on the first page of this Proxy Statement, attention: Kurt E. Scheuerman, Corporate Secretary. This Proxy Statement and our 2007 Annual Report may also be viewed on the Internet at www.ddiglobal.com. OTHER MATTERS The Board of Directors does not intend to present any items of business other than those stated in the Notice of Annual Meeting of Stockholders. If other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy will vote the shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is included in the proxy.
Anaheim, California April 11, 2008
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PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS OF DDI CORP. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE The undersigned stockholder(s) of DDi Corp., a Delaware corporation (the “Company”), hereby appoints Mikel H. Williams and Kurt E. Scheuerman, or either of them, proxies, each with full power of substitution, for and in the name of the undersigned at the Annual Meeting of Stockholders of the Company to be held on May 13, 2008, and at any and all adjournments or postponements thereof (the “Meeting”), to vote all shares of the common stock and preferred stock of the Company held of record by the undersigned on March 28, 2008, which the undersigned would be entitled to vote if personally present at the Meeting, as indicated on the reverse side of this card, and to vote in their discretion on any other matters that may come before the Meeting. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED. IN THE ABSENCE OF ANY DIRECTION, THE SHARES WILL BE VOTED FOR PROPOSAL 2 AND FOR THE NOMINEES NAMED IN PROPOSAL 1 ON THE REVERSE SIDE AND IN ACCORDANCE WITH THEIR DISCRETION ON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. To ensure timely receipt of your proxy and to help the Company reduce costs, you are encouraged to submit your proxy by Internet or by telephone: simply follow the instructions on the reverse side of this card. (CONTINUED AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE)
FOLD AND DETACH HERE
FOLD AND DETACH HERE WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and telephone proxy submission is available through 11:59 PM Eastern Time the day prior to annual meeting day Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
If you submit your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. To submit your proxy by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. DDi Corp’s Proxy Statement and its 2007 Annual Report may be viewed online at www.ddiglobal.com.
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