NCI DEF 14A 2007
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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11730 Plaza America Drive, Suite 700
Reston, Virginia 20190
April 27, 2007
Dear Fellow Stockholder:
You are invited to attend the NCI, Inc. Annual Meeting of Stockholders to be held on Wednesday, June 13, 2007 at 10:00 a.m., local time, at the Sheraton Reston Hotel, 11810 Sunrise Valley Drive, Reston, Virginia 20191.
We have provided details of the business to be conducted at the meeting in the accompanying Notice of Annual Meeting of Stockholders, proxy statement and form of proxy. We encourage you to read these materials so that you may be informed about the business to come before the meeting.
Your participation is important, regardless of the number of shares you own. In order for us to have an efficient meeting, please sign, date and return the enclosed proxy card promptly in the accompanying reply envelope. You can find additional information concerning our voting procedures in the accompanying materials.
We look forward to seeing you at the meeting.
11730 Plaza America Drive, Suite 700
Reston, Virginia 20190
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 2007
You are invited to attend the NCI, Inc. Annual Meeting of Stockholders to be held on Wednesday, June 13, 2007 at 10:00 a.m., local time, at the Sheraton Reston Hotel, 11810 Sunrise Valley Drive, Reston, Virginia 20191.
The matters proposed for consideration at the meeting are:
Our Board of Directors has set April 23, 2007 as the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting. A complete list of stockholders eligible to vote at the Annual Meeting will be made available for examination by our stockholders, for any purpose germane to the Annual Meeting, during the ten (10) days prior to the Annual Meeting, between the hours of 9 a.m. and 5 p.m. (EDT), at the offices of the Company at 11730 Plaza America Drive, Suite 700, Reston, Virginia 20190. We will also produce the stockholder list at the Annual Meeting, and you may inspect it at any time during the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting, your vote is important. To assure your representation at the Annual Meeting, please sign and date the enclosed proxy card and return it promptly in the accompanying reply envelope, which requires no additional postage. Should you receive more than one proxy because your shares are registered in different names and addresses, each proxy should be signed and returned to assure that all your shares are voted.
The accompanying proxy statement and form of proxy are first being sent or given to our stockholders on or about April 27, 2007.
April 27, 2007
IT IS IMPORTANT THAT YOU COMPLETE AND RETURN
THE ENCLOSED PROXY CARD PROMPTLY
TABLE OF CONTENTS
11730 Plaza America Drive, Suite 700
Reston, Virginia 20190
PROXY STATEMENT FOR
2007 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors of NCI, Inc. (the Board) solicits the accompanying proxy to be voted at the 2007 Annual Meeting of Stockholders (the Annual Meeting) to be held on Wednesday, June 13, 2007, at 10 a.m. (EDT), at the Sheraton Reston Hotel, 11810 Sunrise Valley Drive, Reston, Virginia 20191, and at any adjournments or postponements thereof. In this proxy statement, unless the context requires otherwise, when we refer to we, us, our, the Company or NCI, we are describing NCI, Inc.
The mailing address of our principal executive offices is 11730 Plaza America Drive, Suite 700, Reston, Virginia 20190. This proxy statement, the accompanying Notice of Annual Meeting of Stockholders and the enclosed proxy card are first being sent or given to our stockholders on or about April 27, 2007.
PURPOSES OF THE MEETING
At the Annual Meeting, we will ask you to consider and act upon the following matters:
Record Date and Shareholders Entitled to Vote
Record Date. Our Board has fixed the close of business on April 23, 2007 as the record date (the Record Date) for purposes of determining stockholders entitled to receive notice of and to vote at the Annual Meeting. Only stockholders of record as of the Record Date will be entitled to vote at the Annual Meeting.
Our Common Stock. We have two classes of outstanding stock: our Class A Common Stock and our Class B Common Stock. As of April 10, 2007, a total of 13,327,760 shares were outstanding: 7,027,760 shares of Class A Common Stock and 6,300,000 shares of Class B Common Stock. Holders of Class A Common Stock are entitled to one (1) vote for each share of Class A Common Stock they hold on the Record Date. Holders of Class B Common Stock are entitled to ten (10) votes for each share of Class B Common Stock they hold on the Record Date.
Stockholder List. We will make a complete list of stockholders eligible to vote at the Annual Meeting available for examination during the ten (10) days prior to the Annual Meeting. During such time, you may visit us at our principal executive offices during ordinary business hours to examine the stockholder list for any purpose germane to the Annual Meeting.
Voting Requirements and Other Matters
Quorum. The holders of a majority in voting power of the common stock entitled to vote at the Annual Meeting must be present, either in person or by proxy, to constitute a quorum for the transaction of business at the Annual Meeting. In accordance with Delaware law, we will count abstentions and broker non-votes for the purpose of establishing a quorum.
Broker Non-Votes. A broker non-vote occurs when a stockholder that owns shares in street name through a nominee (usually a bank or a broker) fails to provide the nominee with voting instructions, and the nominee does not have discretionary authority to vote the shares with respect to the matter to be voted on, or when the nominee otherwise fails to vote the shares.
How to Vote Your Shares. Your shares cannot be voted at the Annual Meeting unless you are present either in person or by proxy. If you vote by mail and return a complete, signed and dated proxy card, your shares will be voted in accordance with your instructions. You may specify your choices by marking the appropriate box and following the other instructions on the proxy card. With respect to the election of directors, you may (i) vote For all of the nominees, or (ii) Withhold Authority with respect to some or all of nominees. On all other matters, you may (i) vote For a proposal, (ii) vote Against a proposal, or (iii) Abstain from voting on a proposal. If you vote by mail and you return a proxy card that is not signed, then your vote cannot be counted. If the returned proxy card is signed and dated, but you do not specify voting instructions, your shares will be voted For each proposal, in accordance with the Boards recommendations.
Vote RequiredElection of Directors. If a quorum is present, the seven (7) nominees for director who receive a plurality of the votes cast at the Annual Meeting, either in person or by proxy, will be elected. Because a plurality vote is required, broker non-votes will not affect the outcome of the vote on this matterthey are treated as neither votes for nor votes against the election of directors.
Vote RequiredRatification of Auditors. If a quorum is present, the ratification of the appointment of Ernst & Young LLP to serve as our independent auditors for the fiscal year ending December 31, 2007 requires at least a majority of the votes cast at the Annual Meeting, either in person or by proxy. Abstentions will have the same effect as a vote against this proposal, because abstentions on this proposal, although treated as present and entitled to vote for purposes of determining the total pool of votable shares, do not contribute to the affirmative votes that are needed to approve the proposal. Broker non-votes, however, are excluded from the pool of votable shares, and because they will be treated as unvoted for purposes of this proposal, will have the effect of neither a vote for nor a vote against the ratification of Ernst & Young LLP to serve as our independent auditors.
Other Business at the Meeting. We are not aware of (and have not received any notice with respect to) any business to be transacted at the Annual Meeting other than as described in this proxy statement. If any other matters properly come before the Annual Meeting, Charles K. Narang and Terry W. Glasgow, the named proxies, will vote the shares represented by proxies on such matters in accordance with their discretion and best judgment.
Ownership by Insiders. As of April 10, 2007, our directors and executive officers beneficially owned an aggregate of 6,885,897 shares of Class A Common Stock and Class B Common Stock (such number includes shares of common stock that may be issued upon exercise of outstanding options that are currently exercisable or that may be exercised within 60 days after April 10, 2007), which constitutes approximately 52% of our outstanding common stock and 91% of the voting control of common stock entitled to vote at the Annual Meeting.
Tabulation of Votes. Ms. Maureen Crystal, our Vice President of Investor Relations, has been appointed inspector of elections for the Annual Meeting. Ms. Crystal will separately tabulate the affirmative votes, negative votes, abstentions and broker non-votes with respect to each of the proposals.
Announcement of Voting Results. We will announce preliminary voting results at the Annual Meeting. We will disclose the final results in the first quarterly report on Form 10-Q that we file with the Securities and Exchange Commission (SEC) after the Annual Meeting.
Revoking Your Proxy. If you execute a proxy pursuant to this solicitation, you may revoke it at any time prior to its exercise by doing any one of the following:
To be effective, our Corporate Secretary must actually receive your notice or later-dated proxy before the Annual Meeting, or the Inspector of Elections must receive it at the Annual Meeting prior to the vote. Please note, however, that your attendance at the Annual Meeting without further action on your part will not automatically revoke your proxy.
Solicitation. The Board is making this solicitation of proxies on our behalf. In addition to the solicitation of proxies by use of the mail, our officers and employees may solicit the return of proxies by personal interview, telephone, email or facsimile. We will not pay additional compensation to our officers and employees for their solicitation efforts, but we will reimburse them for any out-of-pocket expenses they incur in their solicitation efforts.
We will request that brokerage houses and other custodians, nominees and fiduciaries forward our solicitation materials to beneficial owners of our common stock that is registered in their names. We will bear all costs associated with preparing, assembling, printing and mailing this proxy statement and the accompanying materials, the cost of forwarding our solicitation materials to the beneficial owners of our common stock, and all other costs of solicitation.
Householding of Proxy Materials. Some banks, brokers and other nominee record holders may be participating in the practice of householding proxy statements and annual reports. This means that only one copy of this proxy statement or the Companys annual report may have been sent to multiple stockholders in your household. The Company will promptly deliver a separate copy of either document to you if you call or write the Company at the following address or phone number: NCI, Inc., 11730 Plaza America Drive, Suite 700, Reston, Virginia 20190, phone: (703) 707-6900, Attention: Ms. Maureen Crystal, Vice President of Investor Relations. If you want to receive separate copies of the Companys annual report and proxy statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact the Company at the above address and phone number.
The following table sets forth certain information regarding the beneficial ownership of the Companys Common Stock as of April 10, 2007 by (i) each person or entity who is known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock or Class B Common Stock, (ii) each director, (iii) each of the executive officers named in the Summary Compensation Table set forth under the caption Executive Compensation below and (iv) all directors and executive officers as a group. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares such power with his spouse) with respect to all shares of common stock listed as owned by such person or entity.
Unless otherwise indicated, the address of each person is c/o NCI, Inc., 11730 Plaza America Drive, Reston, VA 20190.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides additional information as of December 31, 2006 regarding shares of the Class A common stock of the Company authorized for issuance under its equity compensation plan.
During 2006, the Board held five (5) meetings. Our Board is currently comprised of seven (7) members. Each current members term expires at the Annual Meeting (subject to the election and qualification of his successor, or his earlier death, resignation or removal).
Upon the unanimous recommendation of the Nominating/Governance Committee, the Board has nominated each of the seven (7) persons named below to serve as a director until the 2008 Annual Meeting of Stockholders (or until his successor has been duly elected and qualified, or until his earlier death, resignation or removal). Each nominee is a current member of the Board, has agreed to stand for election and serve if elected, and has consented to be named in this proxy statement.
If, at the time of or prior to the Annual Meeting, any nominee is unable to be a candidate when the election takes place, or otherwise declines to serve, the persons named as proxies may use the discretionary authority provided to them in the proxy to vote for a substitute nominee designated by the Board. At this time, we do not anticipate that any nominee will be unable to be a candidate for election or will otherwise decline to serve.
Under our Amended and Restated Bylaws, the Board has the authority to fill any vacancies that arise, including vacancies created by an increase in the number of directors or vacancies created by the resignation of a director. Any nominee so elected and appointed by the Board would hold office for the remainder of the term of office of all directors, which term expires annually at our annual meeting of stockholders.
Information Regarding the Nominees for Election as Directors
The name of each nominee for election as director, age as of April 27, 2007, and certain additional information with respect to each nominee concerning his principal occupation, other affiliations and business experience during the last five years, are set forth below.
Nominees for Election as Director
Charles K. Narang founded our predecessor and wholly-owned subsidiary, NCI Information Systems, Inc., in 1989 and has served as our Chairman and Chief Executive Officer since that time. Mr. Narang has more than 30 years of experience in corporate management and the analysis of large financial and information management systems for the federal government and Fortune 100 clients. Mr. Narang holds a Masters degree in industrial engineering, a Master of Business Administration degree and is a Certified Public Accountant licensed in the Commonwealth of Virginia.
Terry W. Glasgow joined us in 2004 and has served as President and Chief Operating Officer since February 2007. He served as our Chief Operating Officer since May 2004. He served as our Executive Vice President of Federal Programs from January 2004 until May 2004. From 1991 through 2003, Mr. Glasgow was the Vice President/General Manager of Computer Sciences Corporations Army Programs business area, managing a business portfolio of over $400 million annually. Under his leadership, in excess of $3 billion of new business awards were captured. Mr. Glasgow also led several significant acquisitions, including the acquisition and integration of Nichols Research. Prior to 1991, Mr. Glasgow was Vice President of Ford Aerospace and Communications Army Programs in Colorado Springs. While at Ford Aerospace, Mr. Glasgow held numerous executive positions, including Controller of their Satellite Division and Vice President and Controller of their Command, Control and Communications Division.
James P. Allen has served on our board of directors since October 2004. Mr. Allen served as the Senior Vice President and Chief Financial Officer of Veridian Corporation, a publicly traded federal IT services contractor, from May 2000 until its sale to General Dynamics Corporation in August 2003. Prior to Veridian, he served as CFO for both GRC International, Inc. and CACI International Inc., both publicly traded companies in the federal IT services sector.
John E. Lawler has served on our board of directors since October 2004. Mr. Lawler is currently the CEO and Chairman of the Board of Sterling Wealth Management, Inc., a registered investment advisory firm and President of East West Financial Services, Inc., a diversified financial management, tax and consulting firm. Prior to forming these companies, Mr. Lawler served in executive positions of two major Washington, D.C. public affairs and governmental relations firms including Gray and Company which he assisted in its IPO and served as its Chief Financial Officer. Mr. Lawler also served in top administrative positions of the U.S. House of Representatives, including Chief of the Office of Finance. Mr. Lawler currently serves on a number of boards including L-1 Identity Solutions, (ID) an identity solutions and biometrics company traded on the New York Stock Exchange.
Paul V. Lombardi has served on our board of directors since October 2004. Mr. Lombardi served as President and Chief Executive Officer of DynCorp from 1997 until its sale to Computer Sciences Corporation (CSC) in 2003. Prior to his association with DynCorp, Mr. Lombardi was employed at PRC Inc. where he held a variety of executive level positions including Senior Vice President and General Manager of PRCs Applied Management Group, which provided information technology and systems integration in the federal IT services sector.
J. Patrick McMahon has served on our board of directors since January 2005. Mr. McMahon is a Partner in the law firm of Barton, Baker, McMahon, & Tolle, LLP where he practices corporate law with a primary focus on companies that offer information technology products and services to the federal government. Prior to this position, Mr. McMahon served as a legislative attorney for the Secretary of Defense where he worked with the staffs of all of the Uniformed Services and the staffs of the House and Senate Armed Services Committees. Mr. McMahons other government service positions included: legislative attorney for the Secretary of the Navy; Navy Judge Advocate Generals Office; Administrative Law Division; and U.S. Marine Corps officer.
Daniel R. Young has served on our board of directors since January 2005. Mr. Young is currently Managing Partner of the Turnberry Group, an advisory practice to CEOs and other senior executives. He was the Vice Chairman and Chief Executive Officer of Federal Data Corporation (FDC) before retiring after having served the company in various executive capacities for 25 years. Before joining FDC, Mr. Young was an executive with Data Transmission Company and prior to that, he held various engineering, sales and management positions at Texas Instruments, Inc. Mr. Young also served as an officer in the U.S. Navy. He is also a director of GTSI Corporation and Halifax Corporation.
THE BOARD OF DIRECTORS RECOMMENDATIONS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES NAMED ABOVE.
Independence and Composition
The Nasdaq listing standards require that a majority of our Board be independent directors, as defined in the Nasdaq listing standards. The Board, upon the unanimous recommendation of the Nominating/Governance Committee, has determined that Messrs. Allen, Lawler, Lombardi, McMahon and Young, representing a majority of our Board, are independent as defined in the Nasdaq listing standards. The Board made its determination based on information furnished by all directors regarding their relationships with the Company and research conducted by management. In addition, the Board consulted with the Companys counsel to ensure that the Boards determination would be consistent with all relevant securities laws and regulations as well as the Nasdaq listing standards.
Stockholder Communication with the Board
We believe that it is important for our stockholders to be able to communicate their concerns to our Board. Stockholders may correspond with any director, committee member, or the Board of Directors generally by writing to the following address: NCI, Inc., 11730 Plaza America Drive, Suite 700, Reston, Virginia 20190, Attention: Michele Cappello, Corporate Secretary. Please specify to whom your correspondence should be directed. Our Corporate Secretary has been instructed to promptly forward all correspondences to the relevant director, committee member, or the full Board of Directors, as indicated in your correspondence.
Director Attendance at Annual Meeting of Stockholders
We invite all of our directors to attend our annual meeting of stockholders, and we strongly encourage all of them to do so. All of our directors attended the 2006 Annual Meeting of Stockholders with the exception of Mr. Lombardi, who was out of the country at the time of the meeting.
Code of Ethics
In September 2005, we adopted our Board of Directors Code of Ethics, which sets forth the policies comprising our code of conduct. Our policies satisfy the SECs requirements for a code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions, as well as Nasdaqs requirements for a code of conduct applicable to all directors, officers and employees. Among other principles, our Board of Directors Code of Ethics includes guidelines relating to the ethical handling of actual or potential conflicts of interest, compliance with laws, accurate financial reporting, and procedures for promoting compliance with (and reporting violations of) such standards. A copy of our Board of Directors Code of Ethics is available on the Investor Relations page (Governance tab) on our website: www.nciinc.com and in print to any stockholder who requests it. We are required to disclose any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. We intend to use our website as a method of disseminating this disclosure, as permitted by applicable SEC rules.
Attendance at Board and Committee Meetings
It is the Companys policy to encourage all Directors to attend in person its Annual Meeting of Stockholders each year as well as participate in person or, if not possible, via teleconference where feasible, in all Board of Directors and Committee meetings. Nevertheless, the Company recognizes that this may not always be possible due to conflicting personal or professional commitments. The Board held five (5) meetings during fiscal year 2006. One director could not attend the 2006 Annual Meeting of Stockholders or the Board of Directors meeting immediately following the Stockholders meeting.
With the exception of the Board meeting immediately following the 2006 Annual Meeting of Stockholders, each of our directors attended or participated 100% of the aggregate of (i) the remaining four of meetings of the Board, and (ii) the total number of meetings held by all committees of the Board on which such director served (during the period that such person served as a director or member of the committee, as applicable).
Non-management members of the Board met in executive session two (2) times in 2006.
Committees of the Board of Directors
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating/Governance Committee. Upon the unanimous recommendation of the Nominating/Governance Committee, the Board has determined that each member of our Audit Committee, Compensation Committee and Nominating/Governance Committee is independent, as director independence is specifically defined with respect to such members under the Nasdaq listing standards and applicable SEC rules and regulations. A copy of the charters for each of the committees is available both at the Investor Relations section of the Companys website located at www.nciinc.com and in print to any stockholder who requests it.
Audit Committee. The Audit Committee, which consists of Messrs. Allen (chairman), Lombardi and Lawler, reviews the professional services provided by our independent registered public accounting firm, the independence of our independent registered public accounting firm from our management, our annual and quarterly financial statements and our system of internal accounting controls over financial reporting. The Audit Committee also reviews other matters with respect to our accounting, auditing and financial reporting practices and procedures as it may find appropriate or may be brought to its attention. Upon the unanimous recommendation of the Nominating/Governance Committee, our Board has determined that each director meets the audit committee composition requirements in the Nasdaq listing standards and that Mr. Allen qualifies as an audit committee financial expert as defined in applicable SEC rules and regulations. The Audit Committee held nine (9) meetings during 2006.
Nominating/Governance Committee. The Nominating/Governance Committee which consists of Messrs. Lawler (chairman), McMahon and Young, oversees all aspects of our corporate governance functions, makes recommendations to the Board regarding corporate governance issues, identifies, reviews and evaluates candidates to serve as directors and makes such other recommendations to the board regarding affairs relating to our directors. The Nominating/Governance Committee held three (3) meetings during 2006.
Our Nominating/Governance Committee endeavors to identify individuals to serve on the Board who have expertise that is useful to us and complimentary to the background, skills and experience of other Board members. The Nominating/Governance Committees consideration of candidates for membership on the Board may include such factors as (a) the skills of each member of the Board, including each Directors business and management experience, accounting experience, and understanding of corporate governance regulations and public policy matters, (b) the characteristics of each member of the Board, which may include leadership abilities, sound business judgment and independence, and (c) the general composition of the Board, which may include public company experience of the Directors. The principal qualification for a director is the ability to act in the best interests of the Company and its stockholders. Each of the candidates for director named in this proxy statement have been recommended by the Nominating/Governance Committee and approved by the Board of Directors for inclusion on the attached proxy card. The Nominating/Governance Committee also considers director nominees recommended by stockholders. See the section of this proxy statement entitled Deadline for Stockholder Proposals for a description of how stockholders desiring to make nominations for directors and/or to bring a proper subject before a meeting should do so. The Nominating/Governance Committee evaluates director candidates recommended by stockholders in the same manner as it evaluates director candidates recommended by our directors, management or employees.
General. The Compensation Committee consists of Messrs. Lombardi (chairman), Young and Allen. The Compensation Committee held three (3) meetings during 2006. The Compensation Committee typically meets with the Chief Executive Officer and, where appropriate, and with the General Counsel and other members of management. The Compensation Committee also regularly meets in executive session without management. When determining executive compensation, the Compensation Committee typically reviews the following materials, among others:
These materials may also be reviewed during regular Board of Directors meetings.
Role of the Compensation Committee. The Compensation Committee is responsible for (i) overseeing the determination, implementation and administration of the remuneration (including compensation, benefits, bonuses and perquisites) of all directors and executive officers of the Company, (ii) reviewing and approving all equity compensation to be paid to other Company employees, and (iii) administering the Companys stock-based compensation plans. Our compensation program and policies are designed to help us attract, motivate and retain executives of outstanding ability in order to maximize return to stockholders.
Managements Role in the Compensation-Setting Process. Management plays a significant role in the compensation-setting process. The most significant aspects of managements role are:
The Chief Executive Officer works with the Compensation Committee Chair in establishing the agenda for Compensation Committee meetings. Management also prepares meeting information for each Compensation Committee meeting. The Chief Executive Officer also participates in Compensation Committee meetings at the Compensation Committees request to provide:
Delegation of Authority. Although our Chief Executive Officer may recommend to the Compensation Committee awards to our executive officers, the Compensation Committee approves the grant of all awards to executive officers under the Companys 2005 Performance Incentive Plan. However, annually, the Compensation Committee allocates a pool of stock options and delegates to management the right to grant stock options from the pool to non-executive employees based on specific guidelines for recruitment, performance incentive, and retention purposes (the Non-Executive Stock Option Allocation Guidelines). Any option grants which fall outside the Non-Executive Stock Option Allocation Guidelines must be approved by the Compensation Committee.
Charles K. Narang, 65, founded our predecessor and wholly-owned subsidiary, NCI Information Systems, Inc., in 1989 and has served as our Chairman and Chief Executive Officer since that time. Mr. Narang is our Principal Executive Officer. Mr. Narang has more than 30 years of experience in corporate management and the analysis of large financial and information management systems for the federal government and Fortune 100 clients. He holds a Masters degree in industrial engineering, a Master of Business Administration degree and is a Certified Public Accountant licensed in the Commonwealth of Virginia.
Terry W. Glasgow, 63, joined us in 2004 and has served as President and Chief Operating Officer since February 2007. He served as our Chief Operating Officer since May 2004. He served as our Executive Vice President of Federal Programs from January 2004 until May 2004. From 1991 through 2003, Mr. Glasgow was the Vice President/General Manager of Computer Sciences Corporations Army Programs business area, managing a business portfolio of over $400 million annually. Under his leadership, in excess of $3 billion of new business awards were captured. Mr. Glasgow also led several significant acquisitions, including the acquisition and integration of Nichols Research. Prior to 1991, Mr. Glasgow was Vice President of Ford Aerospace and Communications Army Programs in Colorado Springs. While at Ford Aerospace, Mr. Glasgow held numerous executive positions, including Controller of their Satellite Division and Vice President and Controller of their Command, Control and Communications Division.
Judith L. Bjornaas, 44, has served as our Chief Financial Officer since January 2004. Ms. Bjornaas is our Principal Financial Officer. Prior to that, she was our Vice President of Finance since joining us in 1995. Prior to joining NCI, Ms. Bjornaas was Vice President of Finance and Accounting for I-NET, Inc., a provider of network management and outsourcing services to the federal government, from 1987 through 1995. Prior to that, Ms. Bjornaas worked for Electronic Data Systems, a publicly traded provider of business and technology solutions, from 1985 to 1987 in various audit and accounting roles. She holds a Master of Business Administration degree and is a Certified Management Accountant.
Michele R. Cappello, 56, joined NCI in August 1997 and since that time has served as General Counsel and Vice President of Contracts and Purchasing. Ms. Cappello has over 25 years of experience in government contract procurement and is responsible for all legal, contractual and purchasing matters for the corporation. Prior to joining NCI, Ms. Cappello spent 10 years as in-house Counsel to Network Solutions, Inc. and its spin-off company, Netcom Solutions International as well as positions with Boeing Computer Systems and Computer Data Systems, Inc. Ms. Cappello received her JD from George Mason University School of Law.
OF THE BOARD OF DIRECTORS
The Audit Committee of the Companys Board of Directors is composed of Messrs. Allen, Lawler, and Lombardi. Upon the unanimous recommendation of the Nominating/Governance Committee, the Board has determined that each member of our Audit Committee is independent as defined under the Nasdaq listing standards and applicable SEC rules and regulations. Upon the unanimous recommendation of the Nominating/Governance Committee, our Board has also determined that each director meets the audit committee composition requirements in the Nasdaq listing standards and that Mr. Allen qualifies as an audit committee financial expert as defined in applicable SEC rules and regulations.
In accordance with a written charter adopted by the Board, the Audit Committee assists the Board in fulfilling its responsibility for overseeing the quality and integrity of NCI, Inc.s financial reporting processes. The Audit Committee reviews and reassesses the adequacy of the charter on a regular basis, and at least annually. The Audit Committee Charter was first adopted by the Board in March 2005 has been revised as of March 2006 and is available both at the Investor Relations section of the Companys website located at www.nciinc.com and in print to any stockholder who requests it.
Management is responsible for the Companys internal control over financial reporting and the financial reporting process. The Companys independent registered public accounting firm is responsible for performing an independent audit of the Companys consolidated financial statements in accordance with U.S. generally accepted accounting principles and issuing a report on those consolidated financial statements. The Audit Committee is responsible for monitoring and overseeing these processes. In fulfilling its responsibilities set forth in the Audit Committee Charter, the Committee has accomplished, among other things, the following:
Based on its discussions with management and the independent registered public accounting firm, and its review of the representations and information provided by management and the independent registered public accounting firm, the Audit Committee recommended to the Companys Board of Directors that the audited consolidated financial statements be included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for filing with the Securities and Exchange Commission.
Dated as of April 27, 2007
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
James P. Allen, Chairman
John E. Lawler
Paul V. Lombardi
COMPENSATION DISCUSSION AND ANALYSIS
Our Compensation Discussion and Analysis addresses the following topics:
In this Compensation Discussion and Analysis section, the term Committee refers to the Compensation Committee of NCIs Board of Directors.
Compensation Objectives and Elements of Executive Compensation
The primary objectives of our executive compensation program are to:
In designing and administering its executive compensation program, we attempt to strike an appropriate balance among these objectives. At present, the Board of Directors does not prescribe any stock ownership guidelines for our executive officers.
The Board, through the Compensation Committee, annually revisits the manner in which it implements our compensation policies in connection with executive staff. Our policies will continue to be designed to align the interests of our executives and senior staff with the long-term interests of the stockholders. Our executive compensation programs consist of three principal elements:
Executive officers also receive certain benefits and other perquisites.
The Compensation Committee Process
The Committee meets in executive session each year to evaluate the performance of the named executive officers, to determine their annual bonuses for the prior fiscal year, to establish their annual performance objectives for the current fiscal year, to set their base salaries for the next calendar year, and to consider and approve any grants to them of equity incentive compensation.
Although many compensation decisions are made in the first quarter of the year, our compensation planning process neither begins nor ends with any particular Committee meeting. Compensation decisions are designed to promote our fundamental business objectives and strategy. Business and succession planning, evaluation of management performance and consideration of the business environment are year-round processes.
Our process begins with establishing individual and corporate performance objectives for senior executive officers in the first quarter of each fiscal year. We engage in an active dialogue with the Chief Executive Officer concerning strategic objectives and performance targets. We review the appropriateness of the financial measures used in incentive plans and the degree of difficulty in achieving specific performance targets.
While we recognize that our compensation practices must be competitive in the marketplace, and that benchmarking is one of many factors that we consider in assessing the reasonableness of compensation, we do not believe that it is appropriate to establish compensation levels based entirely on benchmarking. For purposes of reviewing pay practices, we generally consider the following companies to be our peer group: CACI International Inc., Dynamics Research Corporation, MTC Technologies Inc., ManTech International Corporation, SRA International, Inc. and SI International, Inc. We also evaluate our pay practices against various salary surveys. Historically, we have not used compensation consultants but do reserve the right to do so if deemed necessary.
We review, on an annual basis, the performance of our Committee, the committee charter and the effectiveness of our compensation program in obtaining desired results.
We select and implement the elements of compensation for their ability to help us achieve the objectives of our compensation program and not based on any unique or preferential financial accounting or tax treatment. However, when awarding compensation, the Committee is mindful of the accounting impact that will be caused as a result of the compensation expense related to the Committees actions. In addition, Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a limit on tax deductions for annual compensation in excess of one million dollars paid by a corporation to its chief executive officer and the other four most highly compensated executive officers of the corporation. This provision excludes certain forms of performance based compensation from the compensation taken into account for purposes of the limit. While we have not adopted a policy requiring that all compensation be deductible and expect that we may pay compensation that is not deductible when necessary to achieve our compensation objectives, we consider the consequences of Section 162(m) and believe that we have structured our current compensation programs in a manner to allow us to fully deduct executive compensation under Section 162(m) of the Internal Revenue Code. The Board will continue to assess the impact of Section 162(m) of the Internal Revenue Code on its compensation practices and determine what further action, if any, is appropriate.
Components of our Executive Compensation
Our base compensation, which consists of salary, is a market-based plan referencing our peer group to ensure competitive pay levels. Base compensation is reviewed no less than annually. We consider the year-to-year rate increases to be in line with industry standards.
Short-Term Incentive Compensation
Our compensation philosophy emphasizes incentive pay to leverage both individual and organizational performance. Our short-term incentive compensation program, which consists of cash bonuses, rewards achievement of primarily annual organizational, business unit and individual objectives. In addition, we may also use discretionary cash bonuses as part of our executive compensation program. These discretionary awards are usually tied to extraordinary performance during the period.
Long-Term Incentive Compensation
Our long-term incentive compensation program, which consists of awards under our 2005 Performance Incentive Plan (the 2005 Plan), is designed to reward executives and other employees for long-term growth consistent with Company performance and stockholder return. The ultimate value of the long-term incentive compensation awards is dependent upon the actual performance of our stock price over time. The Compensation Committee must review and approve all award grants to the executive officers.
Our Compensation Decisions for Fiscal Year 2006 and Base Compensation for Fiscal Year 2007
This section describes the compensation decisions that we made with respect to the named executive officers for 2006 and during the first quarter of 2007.
During 2006, we applied the compensation principles described above in determining the compensation of our named executive officers. Prior to January 2007, our named executive officers were evaluated on a fiscal year from July 1 to June 30 performance cycle. Based on that period, our named executive officers received an increase in base salary beginning July 1, 2006 for performance during the period July 1, 2005 through June 30, 2006 performance cycle. During February 2007, the Committee determined that it was more appropriate to evaluate our named executive officers on a performance cycle mirroring our fiscal year (January 1 through December 31) and to adjust base salaries for our named executive officers beginning on February 1 of each year.
In summary, the compensation decisions made in fiscal 2006 and the first quarter of fiscal 2007 for the named executive officers were as follows:
We believe that these decisions:
The Chief Executive Officer presents to the Committee recommendations for base salary adjustments for the executive officers (other than himself) and those officers reporting directly to the Chief Executive Officer. Individual adjustments are reviewed and approved by the Compensation Committee based upon individual achievement and contribution. In addition, the Compensation Committee reviews peer company data for executive compensation, which it uses in determining the appropriate total executive compensation.
The following sets forth recent base salary information for our named executive officers.
In setting these base salaries, we considered:
Short-Term Incentive Compensation
The Compensation Committee is responsible for approving bonus awards recommended to it for Chief Executive Officer, the other executive officers, and those officers reporting directly to the Chief Executive Officer, and for approving the total actual bonus pool. Bonus awards for 2006 were reviewed and approved by the Compensation Committee at its meeting in February 2007, and bonus payments were made in March 2007. The payouts under the Short-Term Incentive Compensation Plan (the Bonus Plan) are determined by the Companys performance related to the following factors: revenue, net income, direct labor, direct labor utilization, and days sales outstanding, as well as a discretionary individual performance factor.
For fiscal year 2006, Company performance measures (and their respective weighting) include fiscal year 2006 revenue (25%), net income (35%), direct labor (5%), direct labor utilization (15%), and days sales outstanding (5%). Discretionary individual performance represents 20% of the total bonus. Bonus Plan award potential is a reflection of the achievement, at threshold, target, or maximum performance levels, within each of the Company performance measures as well as the individual discretionary performance factor. Under the Bonus Plan, total bonus potential for each of our named executive officers in 2006 was based on the following percentages of their respective 2005/2006 Base Salaries:
Generally, the bonus payments will be scaled linearly by the Committee if the performance level falls between the threshold and target or target and maximum performance levels.
In February 2007, the Committee met to review and approve bonus payments for fiscal year 2006 under the Bonus Plan. The Committee determined that:
In addition, in connection with the determination of the discretionary individual performance factor, the Committee reviewed the performance of our Chief Executive Officer, and our Chief Executive Officer provided the Committee with his evaluation of the performance of our other executive officers. The Committee determined that each of our named executive officers achieved the target discretionary individual performance level. Bonuses for 2006 under the Bonus Plan are reflected in the Non-Equity Incentive Plan Compensation column of our Summary Compensation Table below.
Other Short-Term Compensation
In addition to bonus payments under the Bonus Plan, the Committee elected to provide Mr. Narang, Mr. Glasgow, Ms. Bjornaas and Ms. Cappello with additional discretionary bonuses for 2006 performance. A portion of Ms. Bjornaas and Ms. Cappellos discretionary bonus was related to their efforts in connection with the Companys successful acquisition of Operational Technology Services, Inc. during January 2007. The discretionary bonuses for 2006 are reflected in the Bonus column of our Summary Compensation Table below.
Long-Term Incentive Compensation
The following grants of stock options were issued during February 2007 for fiscal 2006 performance. There were no grants of stock options to the named executive officers during fiscal 2006.
These options vest in four equal annual installments beginning in February 2008. Pursuant to SEC rules, these option grants are not reflected in the tables set forth below, even though the grants were based on 2006 performance. These option grants will be reflected in the tables set forth in our Proxy Statement for the 2008 annual meeting of stockholders.
Benefits and Other Perquisites
Our executive officers are eligible to participate in the employee benefit and welfare plans that the Company maintains on similar terms as employees who meet applicable eligibility criteria, subject to any legal limitations on the amounts that may be contributed or the benefits that may be payable under such plans. The Company leases an automobile for the use of our Chief Executive Officer.
We do not consider perquisites to be a principal component of our executive officers compensation. Costs attributed to the personal benefits described above for the named executive officers other than our Chief Executive Officer for the fiscal year ended December 31, 2006 are in total less than $10,000 per executive.
We believe that our executive officer benefit and perquisite programs provided are reasonable and competitive with benefits and perquisites provided to executive officers of our peer group companies, and are necessary to sustain a fully competitive executive compensation program.
Promotion of Terry W. Glasgow. On January 10, 2007, the Board of Directors of the Company approved the appointment of Terry W. Glasgow, Chief Operating Officer of the Company, to the additional position of President effective January 31, 2007. Mr. Glasgow received an increase of 25% in his base compensation in connection with his promotion.
Summary Compensation Table
The following table summarizes the compensation paid to or earned by our named executive officers serving as such during fiscal 2006.
Grants of Plan-Based Awards
This following table is our Short Term Incentive Compensation plan for 2006. Payments under the plan were paid to the participant during March 2007 and are reflected in the Non-Equity Incentive Plan Compensation column of our Summary Compensation Table above.
Outstanding Equity Awards as of December 31, 2006
The following table sets forth certain information with respect to option awards outstanding as of December 31, 2006 for each of the named executive officers.
Option Exercises and Stock Vested Table
NCI has not granted stock awards to any named executive officer and no named executive officer has exercised options during 2006.
Executive Employment Contracts and Potential Payments upon Termination or Change in Control
We do not have employment or severance agreements with any of our executives. Therefore, NCI does not have a predetermined termination or change of control compensation plan in place at this time for any of its named executive officers.
We pay each non-employee director $20,000 per year, paid quarterly, $1,000 for each board meeting attended and $1,000 for each committee meeting attended. The chairman of the Audit Committee receives an additional payment of $3,000 per year, the chairman of the Compensation Committee receives an additional payment of $1,500 per year and the chairman of the Nominating/Governance Committee receives an additional payment of $1,000 per year.
During August 2006, the Compensation Committee authorized a grant of 2,000 shares of non-qualified stock options of Class A common stock to each non-employee director which vest in three annual installments beginning one year from the grant date.
No member of the Board was paid any compensation for his service as a director other than the standard compensation arrangements for directors described above.
Directors Compensation Table
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this proxy statement and the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for filing with the Securities and Exchange Commission.
Dated as of April 27, 2007
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Paul V. Lombardi, Jr., Chairman
James P. Allen
Daniel R. Young
Certain Relationships and Related Transactions
Net Commerce Corporation
During 2006, we purchased services from Net Commerce Corporation, a government contractor, which is wholly-owned by Rajiv Narang, the son of Charles K. Narang, our founder, Chairman and Chief Executive Officer. Services were provided under a subcontract in support in the performance of certain imaging, indexing and retrieval services for the District of Columbia Department of Motor Vehicles. This relationship allows us to provide cost effective services in non-core business areas such as electronic imaging and retrieval services. The subcontract agreement, ended in May 2006, provides for payments on a time-and-materials basis based on labor utilization for the month. We believe that the terms of these agreements reflect then current market conditions. During 2006, approximately $281,000 was paid to Net Commerce under these agreements.
NCI employs Christopher C. Glasgow, son of Terry W. Glasgow, our President and Chief Operating Officer and a director, as a Senior Program Manager. Mr. Christopher Glasgow earned approximately $141,000 in salary and bonus during 2006.
In addition, certain of our other executive officers have relatives who work for us. In all of these cases, the amount of annual compensation paid to such family members in 2006 was less than $120,000.
Related Transaction Approval Policy
The Audit Committee is charged with monitoring and reviewing the material facts of any transactions with related parties and either approving or disapproving the entry into such transactions. In determining whether to approve or ratify a transaction with a related party, the Audit Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related partys interest in the transaction.
Independent Registered Public Accounting Firm For 2007
The Audit Committee has selected the firm of Ernst & Young LLP as NCI, Inc.s independent registered public accounting firm for the fiscal year 2007. Ernst & Young LLP has served as NCI, Inc.s independent registered public accounting firm since the 2000 year-end audit. Stockholder ratification of the selection of Ernst & Young LLP as the Companys independent registered public accounting firm is not required by law, by the Companys bylaws or otherwise. However, the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young LLP. In such event, the Audit Committee may retain Ernst & Young LLP, notwithstanding the fact that the stockholders did not ratify the selection, or select another nationally recognized independent registered public accounting firm without re-submitting the matter to the stockholders. Even if the selection is ratified, the Audit Committee reserves the right in its discretion to select a different nationally recognized 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.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will also be available to respond to appropriate questions from stockholders.
Fees Paid to Independent Registered Public Accounting Firm
The following table presents fees for audit services rendered by Ernst & Young LLP for the audit of the Companys annual consolidated financial statements for fiscal years 2006 and 2005, and fees billed for other services rendered by Ernst & Young LLP during those periods.
Audit, Audit-Related and Non-Audit services provided by our independent registered public accounting firm, Ernst & Young, are subject to a policy of the Company regarding the Pre-Approval of Audit and Non-Audit Services. The Audit Committee monitors audit services engagements, reviews such engagements at least quarterly, and approves any changes in the terms, conditions, fees, or scope of such engagements. The Audit Committee has pre-approved certain services, including the following:
The following services require specific pre-approval of the Audit Committee:
In accordance with SEC rules and regulations, the following services will not be provided by the independent registered public accounting firm:
All fees paid for fiscal year 2006 were pre-approved by the Audit Committee.
Each year, the independent registered public accounting firms retention to audit the Companys financial statements, including the associated fee, is approved by the Audit Committee and the appointment of the independent registered public accounting firm is presented to the stockholders for ratification. The Audit Committee of the Board of Directors believes that the provision of services by Ernst & Young LLP is compatible with maintaining such auditors independence.
During the course of the fiscal year and in accordance with this policy, the Audit Committee will evaluate known potential engagements of the independent registered public accounting firm, including the scope of work proposed to be performed and the proposed fees, and approve or reject each service, taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent registered public accounting firms independence from management.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
DEADLINE FOR STOCKHOLDER PROPOSALS
Pursuant to Securities Exchange Act Rule 14a-8(e), proposals of stockholders intended to be presented at the 2008 Annual Meeting of Stockholders must be received by the Secretary of the Company at our principal executive offices at 11730 Plaza American Drive, Suite 700, Reston, Virginia 20190, not later than December 28, 2007 for inclusion in the proxy statement for that meeting. Under our Bylaws, a stockholder must comply with certain procedures to nominate persons for election to the Board of Directors or to propose other business to be considered at an Annual Meeting of stockholders. These procedures provide that stockholders desiring to make nominations for Directors and/or to bring a proper subject before a meeting must do so by notice timely delivered to the Secretary of the Company not less than 45 days or more than 75 days prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding years Annual Meeting of stockholders. In the case of proposals for the 2008 Annual Meeting of Stockholders, the Secretary of the Company must receive notice at our principal executive offices in Reston, Virginia not earlier than February 11, 2008 and not later than March 23, 2008 (other than proposals intended to be included in the proxy statement and form of proxy, which, as noted above, the Company must receive by December 28, 2007). If the 2008 Annual Meeting of Stockholders is not held within 30 days of the anniversary of the 2007 Annual Meeting of Stockholders, the Secretary of the Company must receive notice of any proposal at our principal executive offices in Reston, Virginia no later than the later of the 90th day prior to the 2008 Annual Meeting of Stockholders or the 10th day following the day on which the public announcement of the 2008 Annual Meeting of Stockholders was made.
Generally, such stockholder proposal must comply with all of the requirements of Rule 14a-8 as promulgated under the Exchange Act. In addition, any such proposal must set forth (i) as to each nominee for Director, all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as Directors under the proxy rules of the SEC, (ii) as to any other business, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of the stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (a) the name and address of the stockholder (as they appear in the Companys books) and beneficial owner, (b) the class and number of shares of the Company that are owned beneficially and of record by the stockholder and the beneficial owner, and (c) whether either the stockholder or the beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Companys voting stock required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Companys voting stock to elect the nominee or nominees
Management proxies will be authorized to exercise discretionary authority with respect to any stockholder proposal not included in our proxy materials unless (a) assuming the meeting is held within 30 days of the anniversary of the 2007 Annual Meeting of Stockholders we receive notice of such proposal by the later of the 45th day prior to such Annual Meeting and (b) the conditions set forth in Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met.
Management knows of no matters that are to be presented for action at the Annual Meeting other than those set forth above. If any other matters properly come before the Annual Meeting, the persons named in the enclosed form of proxy will vote the shares represented by proxies in accordance with their best judgment on such matters.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our Directors, officers and certain persons who own more than 10% of our common stock to file with the Securities and Exchange Commission reports concerning their beneficial ownership of our equity securities. These persons are required to furnish us with copies of all Section 16(a) forms that they file. To our knowledge, based solely on our review of the copies of such forms received by us from our Directors, officers and greater than 10% beneficial owners, all of these reports were filed on a timely basis. We believe that all Directors and officers of NCI, Inc. subject to Section 16(a) reporting are current in their reporting obligations thereunder, except as noted above.
April 27, 2007
PROXY FOR ANNUAL MEETING OF STOCKHOLDERSJUNE 13, 2007
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of NCI, Inc. hereby appoints Charles K. Narang and Terry W. Glasgow, or either of them, his/her true and lawful agents and proxies, each with full power of substitution, to represent and to vote as specified in this proxy all Common Stock of the Company that the undersigned stockholder would be entitled to vote if present in person at the Annual Meeting of Stockholders of NCI, Inc. to be held at the Sheraton Reston Hotel, 11810 Sunrise Valley Drive, Reston, Virginia 20191, on Wednesday, June 13, 2007 at 10 a.m. (EDT).
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES TO WHICH THIS PROXY RELATES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES TO WHICH THIS PROXY RELATES WILL BE VOTED FOR ALL NOMINEES WITH RESPECT TO THE ELECTION OF DIRECTORS IN PROPOSAL 1 AND FOR THE RATIFICATION OF ERNST & YOUNG LLP IN PROPOSAL 2, AND THIS PROXY AUTHORIZES THE ABOVE DESIGNATED PROXIES TO VOTE IN THEIR DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF TO THE EXTENT AUTHORIZED BY RULE 14a-4(c) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
The Board of Directors recommends a vote FOR ALL NOMINEES for directors in proposal 1 and
FOR proposal 2.
Please sign, date and return promptly in the enclosed envelope.
Please mark your vote in blue or black ink as shown here n
r FOR all nominees
r WITHHOLD AUTHORITY for all nominees.
r FOR ALL EXCEPT (See instructions below).
r FOR r AGAINST r ABSTAIN
The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement, in which Proposals 1 and 2 are fully explained.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED RETURN ENVELOPE.
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as an executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.